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Appeal No. 760 of 1962. Appeal by special leave from the judgment and order dated July 16, 1959 of the Andhra Pradesh High Court in Writ Petition No. 1123 of 1956. K. R. Chaudhuri, for the appellant. A. Ranganadham Chetty and B. R. G. K. Achar, for the respondent. February 21, 1964. The appellant filed a writ petition in the High Court questioning the validity of section 11 (2) of the Hyderabad General Sales Tax Act, No. XIV of 1950, (hereinafter referred to as the Act). The material facts on which the petition was based were these. The appellant acted as agent in the then State of Hyderabad to both resident and non resident principals in regard to sale of betel leaves. Under the Act betel leaves were taxable at the purchase point from May 1, 1953, by virtue of a notification in that behalf. We are here concerned with the assessment period from May 1, 1953 to March 31, 1954, covered by the assessment year 1953 54. The appellant collected sales tax from the purchasers in connection with the sales made by it on the basis that the incident of the tax lay on the sellers and assured the purchasers that after paying the tax to the appellant, there would be no further liability on them. After realising the tax, however, the appellant did not pay the amount realised to the Government but kept it in the suspense account of its principals, namely, 870 the purchasers. When the accounts were scrutinized by the Sales Tax Department, this was discovered and thereupon the appellant was called upon to pay the amounts realised to the Government. The appellant however objected to the payment on the ground that it was the seller and the relevant notification for the relevant period imposed tax at the purchase point, i.e. on the purchaser. This objection was over ruled and the appellant was directed to pay the amount to Government. The main contention raised on behalf of the appellant in the High Court was that section 11 (2) of the Act, which authorised the Government to recover from any person, who had collected or collects, after May 1, 1950, any amount by way of tax otherwise than in accordance with *.he provisions of the Act, as arrears of land revenue, was beyond the legislative competance of the State legislature. The argument was that the Act was passed under Entry 54 of List 11 of the Seventh Schedule to the Constitution, which enables the State legislature to enact a law taxing transactions of sale or purchase of goods. The entry therefore vests power in the State legislature to make a law for taxing sales and pur chases of goods and for making all necessary incidental provisions in that behalf for the levy and collection of sales or purchase tax. But it was urged that that entry did not empower the State legislature to enact a law by which a dealer who may have collected a tax without authority is required to hand over the amount to Government, as any collection without the authority of law would not be a tax levied under the law and it would therefore not be open to the State to collect under the authority of a law enacted under Entry 54 of List II any such amount as it was not a tax on sale or purchase of goods. The High Court held section 11 (2) good as an ancillary provision with regard to the collection of sales or purchase tax and therefore incidental to the taxing power under Entry 54 of List 11. Further the High Court took the view that assuming that Entry 54 of List II could not sustain section 11 (2), it could be sustained under Entry 26 of List H. Consequently the writ petition was dismissed. The High Court having refused a certificate to appeal to this Court, the appellant obtained special leave and that is how the matter has come up be fore us. 871 It is necessary to read section II of the Act in order to appre ciate the point urged on behalf of the appellant. Section 11 is in these terms: 1 1 (1) No person who is not registered as a dealer &hall collect any amount by way of tax under this Act nor shall a registered dealer make any such collection before the 1st day of May, 1950, except in accordance with such conditions and restrictions, if any, as may be prescribed Provided that Government may exempt persons who are not registered dealers from the provisions of this sub section until such date, not being later than the 1st day of June, 1950, as Government may direct. (2) Notwithstanding to the contrary contained in any order of an officer or tribunal or judgment, decree or order of a Court, every person who has collected or collects on or before 1st May, 1950, any amount by way of tax otherwise than in accordance with the provisions of this Act shall pay over to the Government within such time and in such manner as may be prescribed the amount so collected by him. and in default of such payment the said amount shall be recovered from him as if it were arrears of land revenue. " It will be seen that section 11 (1) forbids an unregistered dealer from collecting any amount by way of tax under the Act. That provision however does not apply in the present case, for the appellant is admittedly a registered dealer. Further section II (1) lays down that a registered dealer shall not make any such collection before May 1, 1950, except in accordance with such conditions and restrictions, if any, as may be prescribed. This provision again does not apply, for we are not concerned here with any collection made by the appellant before May 1, 1950. The prohibition therefore of section 11 (1) did not apply to the appellant. Then comes section 11 (2). It applies to collections made after May 1, 1950 by any person whether a registered dealer or otherwise and lays down that any amount collected by way of tax otherwise than in accordance with the provisions of the Act shall be paid over to 872 the Government and in default of such payment, the said amount shall be recovered from such person as if it were arrears of land revenue. It is clear from the words "other wise than in accordance with the provisions of this Act" that though the amount may have been collected by way of tax it was not exigible as tax under the Act. Section 11 (2) thus provides that amounts collected by way of tax though not exigible as tax under the Act shall be paid over to Government, and if not paid over they shall be recovered from such person as if they were arrears of land revenue. Clearly therefore s, 11 (2) as it stands provides for recovery of an amount collected by way of tax as arrears of land revenue though the amount was not due as tax under the Act. The first question therefore that falls for consideration is whether it was open to the State legislature under its powers under Entry 54 of List II to make a provision to the effect that money collected by way of tax, even though it is not due as a tax under the Act, shall be made over to Government. Now it is clear that the sums so collected by way of tax are not in fact tax exigible under the Act. So it cannot be said that the State legislature was directly legislating for the imposition of sales or purchase tax under Entry 54 of List II when it made such a provision, for on the face of the provision, the amount, though collected by way of tax. was not exigible as tax under the law. The provision however is attempted to be justified on the ground that though it may not be open to a State legislature to make provision for the recovery of an amount which is not a tax under Entry 54 of List 11 in a law made for that purpose, it would still be open to the legislature to provide for paying over all the amounts collected by way of tax by persons, even though they really are not exigible as tax, as part of the incidental and ancillary power to make provision for the levy and collection of such tax. Now there is no dispute that the heads of legislation in the various Lists in the Seventh Schedule should be interpreted widely so as to take in all matters which are of a character incidental to the topics mentioned therein. Even so, there is a limit to such incidental or ancillary power flowing from the legislative entries in the various Lists in the Seventh Schedule. These incidental and ancillary powers have to be exercised in aid of the main topic of legislation, 873 which in the present case, is a tax on sale or purchase of goods. All powers necessary for the levy and collection of the tax concerned and for seeing that the tax is not evaded are comprised within the ambit of the legislative entry as ancillary or incidental. But where the legislation under the relevant entry proceeds on the basis that the amount concerned is not a tax exigible under the law made under that entry, but even so lays down that though it is not exigible under the law, it shall be paid over to Government, merely because some dealers by mistake or otherwise have collected it as tax, it is difficult to see how such provision can be ancillary or incidental to the collection of tax legitimately due under a law made under the relevant taxing entry. We do not think that the ambit of ancillary or incidental power goes to the extent of permitting the legislature to provide that though the amount collectedmay be wrongly by way of tax is not exigible under the law as made under the relevant taxing entry, it shall still be )aid over to Government, as if it were a tax. The legisla turd cannot under Entry 54 of List II make a provision to the effect that even though a certain amount collected is not a tax on the sale or purchase of goods as laid down by the law, it will still be collected as if it was such a tax. This is what section 11 (2) has provided. Such a provision cannot in our opinion be treated as coming within incidental or ancillary powers which the legislature has got under the relevant taxing entry to ensure that the tax is levied and collected and that its evasion becomes impossible. We are therefore of opinion that the provision contained in section 1 1 (2) cannot be made under Entry 54 of List 11 and cannot be justified even as an incidental or ancillary provision permitted under that entry. An attempt was made to justify the provision as providing for a penalty. But as we read section 11 (2) we cannot find anything in it to justify that it is a penalty for breach of any prohibition in the Act. Penalties imposed under taxing statutes are generally with respect to attempts at evasion of taxes or to default in the payment of taxes properly levied (see sections 28 and 46 of the Indian Income Tax Act. 1922). The Act also provides for penalties, for example section 19 and section 20. The latter section makes certain acts or omissions of an 874 assessee offences punishable by a magistrate subject to com position under section 21. Section 11 (2) in our opinion has nothing to do with penalties and cannot be justified as a penalty on the dealer. Actually section 20 makes provision in cl. (b) for penalty in case of breach of section II (1) and makes the person committing a breach of that provision liable, on conviction by a Magistrate of the first class, to a fine. We are therefore of opinion that section 11 (2) cannot be justified under Entry 54 of List II either as a provision for levying the tax or as an incidental or ancillary provision relating to the collection of tax. In this connection we may refer to cl. (c) of section 20, which provides that any person who fails "to pay the amounts specified in sub section (2) of section 11 within the prescribed time" shall on a conviction by a Magistrate be liable to fine. It is remarkable that this provision makes the person punish able for his failure to pay the amount which is not authorised as a tax at all under the law, to Government. It does not provide for a penalty collecting the amount wrongly by way of tax from purchasers which may have been justified as a penalty for the purpose of carrying out the objects of the taxing legislation. If a dealer has collected anything from a purchaser which is not authorised by the taxing law, that is a matter between him and the purchaser, and the purchaser may be entitled to recover the amount from the dealer. But unless the money so collected is due as a tax, the State cannot by law make it recoverable simply because it has been wrongly collected by the dealer. This cannot be done directly for it is not a tax at all within the meaning of Entry 54 of ,List II, nor can the State legislature under the guise of incidental or ancillary power do indirectly what it cannot do directly. We are therefore of opinion that s.11 (2) is not within the competence of the State legislature under Entry 54 of List II. The respondent in this connection relies on the decision of this Court in The Orient Paper Mills Limited vs The State of Orissa("). That case in our opinion has no application to the facts of the present case. In that case the dealer had been assessed to tax and had paid the tax. Later in view of the judgment of this Court in State of Bombay vs The United Motors (India) Limited(2) the amounts paid in (1) ; (2) ; 875 respect of goods despatched for consumption outside the State were held to be not taxable. The dealer then applied for refund of tax, which was held to be not exigible. The refund was refused and and the dealer went to the High Court by a writ petition claiming that it was entitled to refund under section 14 of the Orissa Sales Tax Act (which was the law under consideration in that case). The High Court allowed the petition in part and there were appeals to this Court both by the dealer and the State. In the meantime, the Orissa legislature amended the law, by introducing section 14A, in the principal Act, which provided that refund could be claimed only by a person from whom the dealer had actually realised the amount as tax. That provision was challenged in this Court but was upheld on the ground that it came within the incidental power arising out of Entry 54 of List 11. That matter dealt with a question of refund and it cannot be doubted that refund of the tax collected is always a matter covered by incidental and ancillary powers relating to the levy and collection of tax. We are not dealing with a case of refund in the present case. What section II (2) provides is that something collected by way of tax, though it is not really due as a tax under the law enacted under Entry 54 of List II must be paid to the Government. This situation in our opinion is entirely different from the situation in the Orient Paper Mills Limited 's case("). The respondent further relies on a decision of the Madras High Court in Indian Aluminium Co. vs The State of Madras(2). That decision was with respect to section 8 B of the Madras General Sales Tax Act of 1939 as amended by Madras Act 1 of 1957. Though the words in section 8 B (2) were not exactly the same as the words in section 11 (2), with which we are concerned here, the provision in substance was to the same effect as section 11 (2). In view of what we have said above, that decision must be held to be incorrect. Lastly, we come to the contention of the respondent that section 11 (2) is within the legislative competence of the State legislature in view of Entry 26 of List 11. That entry deals with "trade and commerce within the State subject to the provisions of entry 33 of List III". It is well settled that (1) ; (2) [1962] XIII S.T.C. 967. 876 taxing entries in the legislative Lists I and II of the Seventh Schedule are entirely separate from other entries. Entry 26 of List 11 deals with trade and commerce and has nothing to do with taxing or recovering amounts realised wrongly as tax. It is said that section 11 (2) regulates trade and commerce and the State legislature therefore was competent under Entry 26 of List II to enact it. We have not been able to understand what such a provision has to do with the regulation of trade and commerce; it can only be justified as a provision ancillary to a taxing statute. If it cannot be so justified as we hold that it cannot we are unable to uphold it as regulating trade and commerce under Entry 26 of List II, There is in our opinion no element of regulation of trade and commerce in a provision like s, 11 (2). We are therefore of opinion that the State legislature was Incompetent to enact a provision like section 11 (2). We may also add that the provision contained in section 20(c), being consequential to section 11 (2) will fall along with it. In consequence it was not open to the Sales Tax Officer to ask the appellant to make over what he had collected from the purchasers ,wrongly as sales tax. It is not disputed, as appears from the final assessment order of the Sales Tax Officer, that the appellant was not liable to pay the amount as sales tax for the relevant period. We therefore allow the appeal and quash the assessment order dated September 27, 1956 insofar as it is based on section II (2). The appellant will get his costs in this Court as well as in the High Court. Appeal allowed.
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The appellant collected sales tax from the purchasers of betel leaves in connection with the sales made by it.
But it did not pay the amount collected to the Government.
The Government directed the appellant to pay the amount to the Government and it thereupon filed a writ petition in the High Court questioning the validity of section 11(2) of the Hyderabad General Sales Tax Act 1950.
The main contention of the appellant before the High Court was that section 11(2) of the Act which authorises the Government to recover a tax collected without the authority of law was beyond the competence of the State Legislature because a tax collected without the authority of law would not be a tax levied under the law and it would therefore not be open to the State to collect under the authority of a law enacted under the Entry 54 of List II of the VII Schedule to the Constitution any such amount as it was not a tax on sale or purchase of goods.
The High Court held that a. 11(2) was good as an ancillary provision with regard to the collection of sales or purchase tax and therefore incidental to the power under Entry 54, List II.
The High Court also held that even if section 11(2) cannot be justified under that entry it could be justified under Entry 26, List II and in the result the writ petition was dismissed.
The present appeal is by way of special leave granted by this Court.
Held: (i) It cannot be said that the State Legislature was directly legislating for the imposition of sales or purchase tax under Entry 54, list II when it made the provisions of a. 11(2) for on the face of the provisions the amount, though collected by way of tax was not exigible as tax under the law.
(ii) It is true that the heads of legislation in the various lists in the Seventh Schedule should be interpreted widely so as to take in all matters which are of a character incidental to the topic mentioned therein.
Even so there is a limit to such incidental or ancillary powers These have to be exercised in aid of the than topic of legislation, which in the present case is a tax on sale or purchase of goods.
The ambit of ancillary or incidental powers does not so to the extent of permitting the legislature to provide that though the amount collected, may be wrongly, by way of tax is not exigible under the law as made under the relevant taxing entry, it shall still be paid over to the Govern ment as if it were a tax.
Therefore the provision contained in a. 11(2) cannot be made under Entry 54, List II and cannot be justified as incidental or ancillary provisions permitted under that Entry.
(iii) Section 11(2) cannot be justified as providing for a for the breach of any provision of the Act.
(iv) Entry 26, List II deals with trade and commerce and has nothing to do with taxing or recovering amount realised wrongly as tax.
There is no element of regulation of trade and commerce in a provision like section 11(2) and therefore that section cannot be justified under Entry 26.
List II.
869 (v) The provision in section 20(c) is also invalid as it is merely consequential to section 11(2).
The Orient Papers Mills Ltd. vs State of Orissa, ; , distinguished.
State of Bombay vs United Motors (India) Ltd., [1953] S.C.R. 1069, referred to.
Indian Aluminium Co. vs State of Madras, (1962) XIII Sales Tax Cases 967.
held to be wrongly decided.
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The business collected sales tax on betel leaves from buyers when they made sales.
However, the business did not give the collected tax money to the government.
The government told the business to pay the money. So, the business asked the High Court to review if Section 11(2) of the Hyderabad General Sales Tax Act of 1950 was valid. They did this by filing a writ petition (a formal request to the court).
The business argued that Section 11(2) of the Act was not legal. This section let the government take a tax that was collected without the law's permission. The business said that a tax collected without legal authority is not a real tax. So, the state can't use Entry 54 of List II of the Constitution's VII Schedule to collect this money, because it's not a tax on buying or selling goods.
The High Court said that Section 11(2) was okay as a supporting rule for collecting sales or purchase tax. They believed it was related to the power given in Entry 54, List II.
The High Court also said that even if Section 11(2) wasn't allowed under Entry 54, it could be allowed under Entry 26, List II. Because of this, the court rejected the business's request.
The business is now appealing this decision using special permission from this Court.
Held: (i) The State Legislature wasn't directly creating a sales or purchase tax under Entry 54, list II when it made Section 11(2). This is because the money, even though collected as tax, wasn't actually a required tax under the law.
(ii) It's true that the areas of law in the Seventh Schedule lists should be interpreted broadly. This way, they include things related to the main topic.
But there's a limit to these related powers. They must help the main topic of the law, which in this case is a tax on selling or buying goods.
The power to add related rules doesn't let the legislature say that even if money is wrongly collected as tax and isn't required by law, it must still be given to the government as if it were a tax.
So, Section 11(2) can't be made under Entry 54, List II. It also can't be allowed as a related rule under that Entry.
(iii) Section 11(2) can't be allowed as a penalty for breaking any rule of the Act.
(iv) Entry 26, List II deals with trade and business and isn't about taxing or getting back money wrongly taken as tax.
There's no control of trade and business in a rule like Section 11(2). So, that section can't be allowed under Entry 26, List II.
(v) The rule in Section 20(c) is also not valid because it depends on Section 11(2).
The Orient Papers Mills Ltd. vs State of Orissa case was different.
The State of Bombay vs United Motors (India) Ltd. case was referenced.
The Indian Aluminium Co. vs State of Madras case was decided incorrectly.
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Civil Appeal No. 2132 of 1977. Appeal by special leave from the judgment and order dated the 23rd September, 1976 of the Gujarat High Court in First Appeal No. 76 of 1963 D.V. Patel, R. Shroff, Gopal Subramaniam and D.P. Mohanty for the Appellant. M.N. Phadke, S.C. Patel and R.N. Poddar for the Respondent. The Judgment of the Court was delivered by MISRA J. The present appeal by special leave is directed against the Full Bench decision of the High Court of Gujarat at Ahmedabad dated 23rd of September, 1976. The sole question for consideration in this appeal is whether Civil Court has jurisdiction to entertain and decide the suit giving rise to the present appeal. There is an old institution known as Edroos Dargah of Hazrat Sayedina Mohomed Bin Abdulla El Edroos at Surat. Village Orma is an inam village held by the said institution. The dispute in the present case relates to the property of the said village orma comprising its soil, trees, lanes, roads together with cultivated lands of about 1093 acres with land revenue alienated Rs. 2,747.10.5. Pursuant to the Bombay Personal Inams Abolition Act, 1952 (Act 42 of 1953) hereinafter referred to as 'the 1952 Act ', the State of Bombay and after the reorganization of States, the State of Gujarat, declared that the said Act was applicable to village Orma from I st of August, 1955 and, therefore, the exemption from the payment of land revenue was extinguished from the 1st of August, 1955. Accordingly the State of Bombay through its Mamlatdar of Olpad sent a notice to the Sajjadanashin of the institution to that effect and also demanded the village records from his possession. He also proceeded to take further and consequential action and declared that the rights of the institution in public roads, lanes, village site and land etc. are extinguished. In the circumstances the Sajjadanashin was obliged to file the suit which was later on numbered as suit No. 9 of 1956. The stand of the plaintiff is that village Orma was an inam village held by the religious institution of Edroos Dargah and the 885 provisions of section 4 of the 1952 Act have no application in view of clause (2) of section 3 of the said Act. The defendant State contested the suit on grounds inter alia that the village in question was a personal inam within the meaning of section 2 (1) (a) of the 1952 Act and the State Government alone is competent to decide the question whether the grant is a personal inam or not and the Civil Court has no jurisdiction to decide the question. B The pleadings of the parties gave rise to fourteen Issues and the Trial Court decided all the substantial issues against the plaintiff. Consequently it dismissed the suit holding that the inam in question was personal inam. Feeling aggrieved, the plaintiff went up in appeal to the High Court. The appeal came up for hearing before a learned Single Judge. He took up the question of jurisdiction first. The stand of the plaintiff appellant was that the Civil Court had the jurisdiction to entertain the suit and in support of his contention he placed reliance on Sayed Mohmed Baquir El Edroos vs The State of Bombay.(1) The learned Single Judge, however, doubted the correctness of the proposition laid down in that case and referred the case to a larger Bench and it was eventually decided by a Full Bench of that Court. It appears that during the pendency of the appeal another Act was passed known as the Gujarat Devasthan Inams Abolition Act, 1969 (Act 16 of 1969) hereinafter referred to as 'the 1969 Act '. It came into force on I 5th of November, 1969. By this Act devasthan inams or inams held by religious and charitable institutions were also abolished. The inevitable result of the 1969 Act is that whether the inam in question is a personal inam or a devasthan inam it cannot subsist. The plea of the plaintiff, on the basis of which he filed the suit, was no more available to him after the passing of the latter Act. But the question was still to be enquired into because if the plaintiff succeeds in establishing that the inam in question was a religious or charitable inam, it would be abolished only by the 1969 Act and, therefore, the plaintiff will be entitled to all the benefits of devasthan inam open to him till the enforcement of that Act. The High Court, therefore, proceeded to hear the appeal despite the passing of the 1969 Act and by its judgment dated 2nd of September, 1976 came to the conclusion that the exclusive jurisdiction to decide the question was with the State 886 Government and the Civil Court has no jurisdiction to entertain the suit. In view of its finding on the question of jurisdiction, the High Court did not think it necessary to enter into other issues involved in the case. The plaintiff has now come to challenge the judgment of the Full Bench on obtaining special leave of this Court to appeal. In the present appeal the plaintiff again reiterates that the Civil Court has jurisdiction to entertain the suit. In order to appreciate the contentions, of the counsel of the parties on the question of jurisdiction, it will be appropriate to refer to the relevant provisions of the 1952 Act Section 2 (1) (e) defines personal inams. Insofar as it is material, it reads: "2. (1) In this Act, unless there is anything repugnant in the subject or context, (e) "personal inam" means (i) a grant of a village, portion of a village, land or total partial exemption from the payment of land revenue entered as personal inam in the alienation register kept under section 53 of the Code. (ii) . . Explanation 1: If any question arises whether any grant is a personal inam such question shall be referred to the State Government and the decision of the State Government shall be final and the entry, if any, in respect of such grant in the alienation register kept under section 53 of the Code shall be deemed to have been amended accordingly. Explanation II. . " The expression 'Code ' has been defined in section 2 (1) (b) of the Act as the Bombay Land Revenue Code 1879 (Bombay V of 1879). Section 3 of the Act insofar as it is material, reads: "3. Act not to apply to certain inams and grants Nothing in this Act shall apply to (1) . . (2) devasthan inams or inams held by religious or charitable institutions. 887 (3) . (4) . (5) . Explanation: For the purposes of this section inams held by religious or charitable institutions means Devasthan or Dharmadaya inams granted or recognised by the ruling authority for the time being for a religious or charitable institution and entered as such in the alienation register kept under section 53 of the Code or in the records kept under the rules made under the (XXIII of 1871). " Section 4 of the Act reads: "4. Abolition of personal inams and rights in respect of such inams. Notwithstanding anything contained in any usage, settlement, grant, sanad or order or a decree or order of a Court or any law for the time being in force, with effect from and on the appointed date . (i) all personal inams shall be deemed to have been extinguished, (ii) save as expressly provided by or under the provisions of this Act, all rights legally subsisting on the said date in respect of such personal inams shall be deemed to have been extinguished: Provided that in the case of a personal inam consisting of exemption from the payment of land revenue only, either wholly or in part, such exemption shall be deemed to have been extinguished: (a) if the amount of such exemption is or exceeds Rs. 5,000 with effect from the 1st day of August, 1953, and (b) in all other cases, with effect from the 1st day of August, 1955." Mr. D.V. Patel, senior counsel for the appellant, assisted by Mr. G. Subramaniam, has contended that the High Court has gravely erred in holding that the Civil Court had no jurisdiction to deal with the suit. According to the learned counsel unless the 888 jurisdiction of the Civil Court is barred specifically or by necessary implication the Civil Court would have jurisdiction. Admittedly there is no specific bar under the 1952 Act. No provision has been brought to our notice specifically excluding the jurisdiction of the Civil Court. Now the question is whether the jurisdiction of the Civil Court has been excluded by necessary implication. The only bar is provided by Explanation I to section 2 (1) (e). Explanation r provides that if any question arises whether any grant is personal inam, such question shall be referred to the State Government and the decision of the State Government shall be final. Whether Explanation I to section 2 (1) (e) excludes the jurisdiction of the Civil Court by necessary implication is the question for consideration. The finality of the decision of the State Government contemplated by the explanation, says the learned counsel, is only for the purpose of the Act, namely, the 1952 Act, and this finality cannot stand in the way of the Civil Court to entertain the suit. In support of his contention the learned counsel has strongly relied upon two decisions: Secretary of State, Represented by the Collector n of South Arcot vs Mask and Company,(1) and Dhulabhai and Ors. vs The State of Madhya Pradesh and Anr.(2) In the first case the Privy Council dealing with the jurisdiction of the Civil Court observed as follows (at page 236): "It is settled law that the exclusion of the jurisdiction of the civil courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. It is also well settled that even if jurisdiction is so excluded, the civil courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with, or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. " In Dulabhai 's case (supra) Hidayatullah C.J., speaking for the Court, on an analysis of the various decisions cited before the Court expressing diverse views, laid down the following propositions: (1) Where the statute gives a finality to the orders of the special tribunals the Civil Court 's jurisdiction must he held to be excluded if there is adequate remedy to 889 do what the Civil Courts would normally do in a suit. A Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure. B (2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. C Where there is no express exclusion the examination of the remedies and the scheme or the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case lt is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by the said statute or not. (3) Challenge to the provisions of the particular Act as ultra views cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals. (4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of Certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit. G (5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected a suit lies. (6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the 890 authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry. (7) An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply. " If we consider the present case, in the light of the principles laid down by the Supreme Court in the above noted case, in our opinion the finality of the decision of the Government as contemplated by Explanation I to section 2 (1) (e) cannot exclude the jurisdiction of the Civil Court. Except for the Explanation, there is no other provision in the Act touching upon the jurisdiction of the Civil Court and none has been referred to before us by either party. The Act does not give any details about the reference to and the enquiry by the Government. No appeal has been provided for and it cannot be said that the case of the plaintiff has been considered by the Government in the same way as it would have been considered if the case had been filed before a Civil Court. The very first principle laid down in the case of Dhulabhai postulates that where a statute gives a finality to the orders of the special tribunal the Civil Court 's jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit. From a perusal of the provisions of the Act it cannot be said that there is adequate remedy available to the plaintiffs on reference made to the Government. Even according p to the second principle laid down by the Supreme Court where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find out the adequacy or the sufficiency of the remedies provided may be relevant. The Act does not give any details about the reference to be made to the Government, the procedure to be followed by the Government, the opportunity to be afforded to the aggrieved party. In the absence of any such details in the Act it is not possible to hold that the use of the expression 'finality of the decision of the Government ' in Explanation I to section 2 (1) (e) of the 1952 Act was meant to bar the jurisdiction of the Civil Court. The High Court in our opinion has committed a manifest error in travelling beyond the 1952 Act and referring to the provi 891 sions of the 1969 Act. The High Court referred to section 4 of the 1969 Act, which exclusively vests the power to decide whether any village, portion of a village, or land is held in devasthan inam, in the authorised officer, and the State Government is empowered to authorise any officer under the proviso to section 4 (l) to decide questions arising under clauses (a) (b) or (c) of section 4. Subsection (2) of section 4 of the said Act enables the person aggrieved by the decision of the authorised officer to go up in appeal to the State Government within sixty days from the date of the decision. The High Court also referred to section 20 of the 1969 Act which specifically bars the jurisdiction of the Civil Court. It reads: "20. No Civil Court shall have jurisdiction to settle, decide or deal with any question which is by or under this Act required to be settled, decided or dealt with, by the officer authorised under the proviso to sub section (I) of section 4 or section 25 or the Collector, the Gujarat Revenue Tribunal in appeal, or the State Government in appeal or revision or in exercise of their power of control. " On the basis of the provisions of the 1969 Act the High Court came to the conclusion that Explanation 1 to section 2 (1) (e) of the 1952 Act and section 20 or the 1969 Act put beyond the pale of any doubt that the jurisdiction of the Civil Court had been taken away by the legislature to determine the question whether a particular inam is a personal or a devasthan inam. We are concerned in the present case with the provisions of the 1952 Act. There is no corresponding provision like section 20 of the 1969 Act in the 1952 Act nor is there any detailed procedure of appeal and revision in that Act as contemplated by the 1969 Act. The High Court in our opinion was not justified in invoking the provisions of the 1969 Act while deciding the case under the 1952 Act. The counsel for the State of Gujarat on the other hand referred to the definition of personal inam as given in section 2 (1) (e) of the 1952 Act and according to the learned counsel the inam in question is a personal inam in view of the definition itself which says: Personal inam means a grant of a village, portion of a village, land or total partial exemption from the payment of land revenue entered as personal inam in the alienation register kept 892 under section 53 of the Code. " So, entry of the nature of the inam in the alienation register is a decisive factor. In the instant case the inam in question has been entered as personal inam in the alienation register. Therefore, perforce it has to be taken as a personal inam and the plaintiff cannot escape the definition of the expression 'personal inam ' as given in section 2 (1) (e). Likewise, for a devasthan inam also it is necessary to be so entered in the alienation register kept under section 53 of the Code in view of Explanation to section 3 of the 1952 Act. The counsel for the appellant on the other hand referred to Explanation I to section 2 (1) (e) of the 1952 Act which indicates that the entry in the register is not an essential part of the definition of the personal inam but it is only descriptive. If the Government decides the case contrary to t he entry in the alienation register, the alienation register shall be deemed to have been amended accordingly. This part of the Explanation takes away the rigour of the entry in the alienation register. If the entry in the alienation register will be deemed to have been automatically amended by the decision of the Government on the question whether it is a personal inam or a devasthan inam there is no sanctity attached to such entry which is mainly intended to serve the purpose of realisation of land revenue. The entry cannot be said to be so sacrosanct that it cannot be changed. Indeed the explanation itself contemplates a change in view of the decision of the Government on the question. It was next contended for the State that the Revenue Court alone has exclusive jurisdiction to correct the entries in the revenue records and the counsel referred to section 53 of the Bombay Land Revenue Code. It reads: "53. A Register shall be kept by the Collector in such form as may from time to time be prescribed by the State Government of all lands, the alienation of which has been established or recognized under the provisions of any law for the time being in force; and when it shall be shown to the satisfaction of the Collector that any sanad granted in relation to any such alienated lands has been permanently lost or destroyed, he may, subject to the rules and the payment of the fees prescribed by the State Government under section 213, grant to any person whom he may deem entitled to the same a certified extract from the said Register, which shall be endorsed by the Collector to the effect that it has been issued in lieu of the sanad said to have been lost or destroyed, and shall be deemed to be as valid a proof of title as the said sanad. " 893 Section 203 of the said Code provides for appeal from any order passed by the Revenue officer to his superior and on the strength of these provisions it is sought to be argued that the plaintiff could have gone up in appeal against the decision of the officer under section 53 of the Code and the jurisdiction of the Civil Court is completely barred. If we refer to section 212 of the Code, the argument of the counsel for the State cannot be accepted. Section 212 con templates that whenever in this Code it is declared that a decision or order shall be final such expression shall be deemed to mean that no appeal lies from such decision or order. If this is what finality means under section 212 it cannot be argued with any force on behalf of the State that the jurisdiction of the Civil Court is barred. C For the foregoing discussion the decision of the Full Bench of the High Court cannot be sustained. We accordingly accept the appeal, set aside the judgment of the High Court dated 23rd September, 1976 and remand the case to the High Court for deciding other points involved in the case. The parties shall, however, bear their own costs. P.B.R. Appal allowed.
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A notice was issued to the Sajjadanashin of the appellant institution stating that consequent on the coming into force of the Bombay Personal Inams Abolition Act 1952 exemption from payment of land revenue was extinguished in respect of the inam village and that he should hand over the village records to mamlatdar.
The appellent in a suit filed in the Civil Court claimed that the inam was held by a religious institution and that, therefore, the provisions of the 1952 Act had no application to it.
In replication the State claimed that under the provisions of the 1952 Act the State Government alone was competent to decide the question whether the grant was a personal or a religious inam and that the Civil Court had no jurisdiction to decide it.
Holding that it was a personal inam the Trial Court dismissed the appellant 's suit.
When the appellant 's appeal was pending before the High Court the Gujarat Devasthan Inams Abolition Act, 1969 was passed abolishing the inams held by religious charitable institutions as well.
On the question of jurisdiction to decide whether an inam was personal or religious the High Court held that it was the State Government and not the Civil Court which had exclusive jurisdiction in this respect.
In appeal to this Court it was contended on behalf of the appellant that unless the jurisdiction of the Civil Court is barred specifically or by necessary implication the Civil Court would have jurisdiction and that the finality contemplated by Explanation I to section 2 (1) (e) (which provides that if any question arises whether any grant is a personal inam such question shall be referred to the State Government and that the decision of the State Government shall be final) is only for the purposes of the 1952 Act and could not stand in the way of the Civil Court entertaining the suit.
883 Allowing the appeal, ^ HELD: 1.
The finality of the decision of the Government as contemplated by Explanation I to section 2(1) (e) of the Act cannot exclude the jurisdiction of the Civil Court.
Except for the Explanation, there is no other provision in the Act touching upon the jurisdiction of the Civil Court.
[890 C D] 2.
In Dulabhai vs State of Madhya Pradesh, ; this Court held that where a statute gave finality to the orders of the special tribunal the .
Civil Court 's jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit.
Under the provisions of the 1952 Act it cannot be said that an adequate remedy is available to the plaintiffs on reference made to the Government.
[888 G.H] 3.
The second principle laid down in the above case is that where there is an express bar to the jurisdiction of the Court, an examination of the scheme of the Act to find out the adequacy or the sufficiency of the remedies provided there in may be relevant.
In the absence of any details in the enactment about the reference to be made to the Government, the procedure to be followed by the Government, and the opportunity to be afforded to the aggrieved party, it cannot be held that the expression "finality of the decision of the Government" used in the Explanation was meant to bar the jurisdiction of the Civil Court.
[890 F G] 4.
The High Court, however, erred in travelling beyond the provisions of the 1952 Act by referring to the provisions of the 1969 Act and coming to the conclusion that Explanation I to section 2(1) (e) of the 1952 Act and section 20 of the 1969 Act put beyond the pale of any doubt that the jurisdiction of the Civil Court had been taken away by the legislature to determine the question whether a particular Inam was a personal or devasthan inam.
The High Court was not justified in invoking the provisions of the 1969 Act while deciding a case under the 1952 Act.
[891 E G] 5.
An entry in the alienation register as to whether an inam is personal or religious cannot be said to be so sacrosanct that it cannot be changed.
Explanation 1 to section 2 (1) (e) of the 1952 Act indicates that the entry in the register is not an essential part of the definition of personal inam but is only descriptive.
If the Government decides a case contrary to the entry in the register of alienation the register shall be deemed to have been amended.
If an entry in the register would be deemed to have been automatically amended by the decision of the Government, there is no sanctity to such entry.
The explanation itself contemplates a change in view of the decision of the Government on the question.
An entry in the register is mainly intended to serve the purpose of realisation of land revenue.
[892 C D] 6.
Section 203 of the Bombay Land Revenue Code provides for an appeal to a superior officer from an order passed by the revenue officer.
This section cannot be said to completely bar the jurisdiction of the Civil Court because section 212 of the Code contemplates that whenever it is declared that a decision or order shall be final such expression shall be deemed to mean that no appeal lies from such decision or order.
If this is what finality meant under section 212 it cannot be said that the jurisdiction of the Civil Court is barred.
[893 A C] 884
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Someone sent a notice to the head of a religious group. The notice said that because of a new law (the Bombay Personal Inams Abolition Act of 1952), they no longer had an exemption from paying taxes on their land. They were told to give the land records to the local official.
The religious group then filed a lawsuit in a regular court. They claimed that the land was owned by a religious organization. Because of this, they argued, the 1952 law should not apply to them.
The government responded that only the government could decide if the land was for personal use or religious use, based on the 1952 law. They said the regular court didn't have the power to make that decision.
The trial court agreed with the government. It said the land was for personal use and dismissed the religious group's lawsuit.
While the religious group was appealing this decision, a new law was passed (the Gujarat Devasthan Inams Abolition Act, 1969). This law also got rid of tax exemptions for land owned by religious charities.
The higher court said that only the state government, not the regular court, could decide if the land was for personal or religious use.
The religious group appealed to a higher court. They argued that regular courts should have the power to decide cases unless a law specifically prevents them from doing so. They also said that the part of the 1952 law that makes the government's decision "final" only applies to that specific law and shouldn't stop the regular court from hearing the case.
The higher court agreed with the religious group.
**HELD:**
1. The fact that the government's decision is "final" under the 1952 law does not mean that regular courts can't hear the case. The law only mentions this "final" decision in one small part.
2. In a previous case (Dulabhai vs State of Madhya Pradesh), the court said that if a law gives a special court the power to make final decisions, then regular courts can't hear the case if there's a good way to fix the problem through that special court. But in this case, the 1952 law doesn't provide a good enough way for the religious group to get their problem solved by the government.
3. The previous case also said that if a law clearly prevents regular courts from hearing a case, then it's important to look at the whole law to see if it provides good ways to fix problems. The 1952 law doesn't explain how the government should make its decision, what steps it should follow, or if the religious group gets a chance to present their side. Because of this, the part of the law that says the government's decision is "final" doesn't mean that regular courts can't hear the case.
4. The higher court made a mistake by using the 1969 law to help decide the case. The case was about the 1952 law, so the court shouldn't have considered the 1969 law.
5. Just because a record says land is for personal use doesn't mean that it can never be changed. The 1952 law suggests that the record is not the most important thing when deciding if land is for personal use. If the government makes a decision that goes against what's in the record, then the record should be changed to match the decision. So, the record doesn't have special importance. It's mainly used to help collect taxes.
6. Another law (the Bombay Land Revenue Code) allows people to appeal a local official's decision to a higher official. But this doesn't completely prevent regular courts from hearing the case. The law also says that when a decision is "final," it just means that you can't appeal it to another official. So, "final" doesn't mean that you can't take the case to a regular court.
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ivil Appeal No. 1009 of 1980. From the Judgment and Order dated 15.1.80 of the Punjab and Haryana High Court in L.P.A. No. 592 of 1975. P.P. Rao and Jitender Sharma for the appellants. Rajinder Sachhar, Govind Mukhoty, Dr. Shankar Ghosh, S.C. 474 Mohanta, Mahabir Singh, T.C. Sharma, P.P. Singh, S.K. Verma, C.M. Nayyar and C.V.S. Rao for the Respondents. The Judgment of the Court was delivered by SINGH, J. This appeal by special leave is directed against the order of the High Court of Punjab and Haryana dated 15th January, 1980 quashing the Notification dated 3rd May, 1973 issued by the State Government of Haryana promot ing the appellants to the Haryana Service of Engineers Class I post (Public Health Branch). The facts giving rise to this appeal are that the appel lants S/Sh. J.C. Yadav, B.R. Batra, O.P. Juneja, S.L. Cho pra, M.S. Miglani, C.P. Taneja, Surjit Singh and V.P. Gulati and respondents Vyas Dev were members of the Haryana Service of Engineers Class II in the Public Health Branch. Members of the Class II service are eligible for promotion of Class I posts in accordance with the provisions of the Haryana Service of Engineers Class 1 Public Works Department (Public Health Branch) Rules 1961 (hereinafter referred to as 'the Rules '). In 1971 the appellants were promoted to the post of Executive Engineers in the cadre of Class 1 on ad hoc basis while Vyas Dev respondent was not considered for promotion. He made representation but nothing came out in his favour. Later a Committee was constituted under Rule 8 for selecting suitable members of Class 12 service promotion to Class I post. The Committee considered the case of appellants and Vyas Dev respondent, but it did not find the respondent suitable for promotion, his name was not included in the select list prepared by the Committee while the names of the appellants were included therein. The Selection Committee 's recommendation was approved by the Public Service Commission and it was forwarded to the State Government. Since the appellants did not possess the requisite minimum period of service of eight years ' in Class II service as required by Rule 6(b) and as no other suitable candidates were avail able, the Selection Committee made recommendation to the State Government for granting relaxation to the appellants. The Committee 's recommendation was reiterated by the Public Service Commission. The State Government accepted the recom mendations and appointed the appellants to Class I service by the Notification dated May 3, 1973. Vyas Dev, respondent challenged validity of the appel lants ' promotion by means for a writ petition under Article 226 of the Constitution before the High Court of Punjab and Haryana on the ground that the appellants did not possess requisite qualification for promo 475 tion to Class I service, therefore their promotions were contrary to Rules. His further grievance was that he was not considered along with the appellants for promotion and he was not afforded opportunity of hearing before he was super seded. A learned single Judge of the High Court dismissed the petition on the finding that the Selection Committee had considered the case of Vyas Dev along with the appellants for promotion but he was not found suitable. As regards the appellants ' promotions the learned Judge held that since the State Government had relaxed Rule 6(b) in their favour their promotions were sustainable in law. The learned Judge fur ther held that no personal hearing was necessary to be afforded to Ved Vyas before his supersession. On appeal by the respondent a Division Bench of the High Court set aside the order of the single Judge and quashed the appellants promotions on the sole ground that the State Government had no authority in law to grant relaxation to the appellants under Rule 22 in a general manner, as the power of relaxa tion could be exercised only in individual cases to mitigate hardship caused to an individual. On these findings the Division Bench set aside the appellants ' promotions. The appointment and promotion to Class I Engineering Service in the State of Haryana are regulated by the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules 1961. Initially these Rules had been framed by the Governor of Punjab before the formation of the Haryana State. There is no dispute that subsequently the State of Haryana had adopted these Rules and the recruitment to Class I service of Engineers in PWD (Public Health Branch) is regulated by the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules, 1961 as amended from time to time. Rule 5 provides for appointment to Class I service by direct appointment, by transfer of an officer already in service of the State Government or of the Union Government, or by promotion from Class II Service. Rule 6 prescribes qualifications for appointment to Class I service. The relevant provisions of the Rule are as under: "6. Qualifications: No person shall be appointed to the service, unless he: (a) possesses one of the University Degree or other qualifi cations prescribed in Appendix 8 of these rules: Provided that Government may waive this qualification in the case of particular officer belonging to Class II Service: 476 (b) in the case of an appointment by promotion from Class II Service, has eight years completed Class II and has passed the professional examination of the department Rule 8 provides for constitution of the Committee for making selection for appointment to Class I service by promotion. The Committee is required to prepare a list of officers suitable for promotion on the basis of the criteria of merit and suitability with due regard to seniority. Rule 9 lays down, field of eligibility as well as criteria for promotion to the post of Executive Engineer, Superintending Engineer and Chief Engineer. Rule 15 provides for departmental exami nations, according to this Rule the officers appointed to the Service, Unless they have already done so, shall pass such departmental examination and within such period as may be prescribed by the Government. The Rule confers power on the Government to prescribe for any other test in addition to the departmental examination for promotion or appointment to any rank in the service. Rule 22 confers power on the Government to relax any of the Rules as it may consider necessary. There is no dispute that none of the appellants had completed eight years ' service in Class II service as required by Rule 6(b) and as such they were not eligible for promotion to the post of Executive Engineer. On the recom mendation of the Selection Committee and with the approval of the Public Service Commission the State Government re laxed the requirement of eight years ' service so far as the appellants were concerned. Consequently, the appellants were promoted and appointed as Executive Engineers under the Notification dated 3rd May, 1973. The sole question for consideration is whether the relaxation granted by the State Government in favour of the appellants is valid. Rule 22 which confers power on the Government to relax requirement of Rules, is as under: "Rule 22. Power to relax . . Where Government is satisfied that the operation of any of these Rules causes undue hardship to any particular case, it may by order dispense with or relax the requirements of that Rule to such extent, and subject to such conditions, as it may consider necessary for dealing with the case in a just and equitable manner. 477 The Rule confers power on the Government to dispense with or to relax the requirement of any of the Rules to the extent and with such conditions as it may consider necessary for dealing with the case in a just and equitable manner. The object and purpose of conferring this power on the Government is to mitigate undue hardship in any particular case, and to deal with a case in a just and equitable man ner. If the Rules cause undue hardship or Rules operate in an inequitable manner in that event the State Government has power to dispense with or to relax the requirement of Rules. The Rule does not restrict the exercise of power to individ ual cases. The Government may in certain circumstances relax the requirement of Rules to meet a particular situation. The expression "in any particular case" does not mean that the relaxation should be confined only to an individual case. One of the meanings of the expression "particular" means "peculiar or pertaining to a specified person thing time or place not common or general". The meaning of the word particular in relation to law means separate or special, limited or specific. The word 'case ' in ordinary usage means 'event ', 'happening ', 'situation ', 'circumstances '. The expression 'case ' in legal sense means 'a case ', 'suit ' or 'proceeding in Court or Tribunal '. Having regard to these meanings the expression 'in any particular case ' would mean; in a particular or pertaining to an event, situation or circumstance. Rule 22 postulates relaxation of Rules to meet a particular event or situation, if the operation of the Rules causes hardship. The relaxation of the Rules may be to the extent the State Government may consider necessary for dealing with a particular situation in a just and equitable manner. The scope of Rule is wide enough to confer power on the State Government to relax the requirement of Rules in respect of an individual or class of individuals to the extent it may consider necessary for dealing with the case in a just and equitable manner. The power of relaxation is generally contained in the Rules with a view to mitigate undue hardship or to meet a particular situation. Many a times strict application of service rules create a situation where a particular individual or a set of individuals may suffer undue hardship and further there may be a situation where requisite qualified persons may not be available for appointment to the service. In such a situation the Govern ment has power to relax requirement of Rules. The State Government may in exercise of its powers issue a general order relaxing any particular Rule with a view to avail the services of requisite officers. The relaxation even if granted in a general manner would enure to the benefit of individual officers. The State of Haryana was formed in March, 1966 prior to that it was part of the State of Punjab. The service rules relating to Public 478 Works Department as applicable to the State of Punjab were made applicable to Haryana. Rule 6(b) which prescribed qualification for appointment to Class I service lays down that no person shall be appointed to the service by promo tion from Class II service unless he has completed eight years ' service in Class II and has passed departmental examination prescribed under Rule 15. None of the appellants had completed eight years ' service in Class II. In fact no other member of Class II service possessing the requisite qualifications was available for selection to Class I post. The respondent no doubt possessed the requisite qualifica tion with regard to the eight years length of service in Class II but he did not possess requisite educational quali fication. Thus no qualified officer of Class II service was available for promotion to Class I service although a number of vacancies were existing in Class I service. Having regard to these facts the Selection Committee made recommendation for the relaxation of Rule 6(b) in favour of the appellants, who were found otherwise suitable. The Public Service Com mission also agreed with the recommendation made by the Selection Committee. The non availability of suitable Class II officers in Engineering Department possessing the neces sary and prescribed qualifications for promotion to Class I posed a problem for the State Government, as on account of the large scale expansion of Engineering Department a number of posts in Class I service were lying vacant. A similar situation prevailed in the Building and Road Branch of Public Works Department. In the circumstances, the State Government with a view to meet the particular situation decided to relax the qualifying length of service to such officers who had completed four years of service in Class II, it therefore relaxed the requirement of Rule 6(b) to the extent that a member of Class II service having four years ' service was qualified for being considered for promotion to Class I service. These facts would clearly show that the relaxation had been granted to particular individuals with a view to meet the situation, which was in public interest. We find no legal infirmity in the order of relaxation. In B.S. Bansal vs State of Punjab and Ors., a Bench of the Punjab and Haryana High Court held that if the power of relaxation could be exercised in order to meet a general situation, then the whole purpose of the Rule would be frustrated and the Government would be armed with an arbitrary power which could cause great hardship to some officers. We have already referred to the relevant facts which show that in the instant case, power of relaxation was exercised by the State Government to meet a particular situation, it did not result into any injustice or cause hardship to any one. If power of 479 relaxation is exercised on extraneous consideration for oblique purposes or mala fide, the court has power to strike down the same but exercise of power of relaxation to meet a particular situation cannot be held to be arbitrary or illegal. In B.S. Jain vs State of Haryana, the High Court set aside the promotions made in pursuance of the relaxation granted under Rule 22 placing reliance on the decision of the Division Bench in B.S. Bansal 's case. On appeal, this Court in Ashok Gulati vs B.S. Jain, ; observed that the findings of the High Court that the State Government could not have relaxed the condition of passing the departmental professional examination by taking recourse to Rule 22 which conferred power of relaxation on the State Government could hardly be sustained. In Jit Singh & Ors. vs State of Pubjab & Ors. , ; the State Government 's order granting relaxation under Rule 14 of the Punjab Police Service Rules 1959 in respect of the period of service, was questioned. Rule 14 was almost identical in terms as Rule 22 of the instant case. In Jit Singh 's case (supra) promotion of Inspectors to the post of Deputy Superintendent of Police was involved. Under the Police Service Rules 1959 a Police Inspector having six years ' continuous service was eligible for promo tion to the post of Deputy Superintendent of Police. The State Government in exercise of its power under Rule 14 granting relaxation to Inspectors who had been found fit for promotion, as a large number of vacancies had occurred in the cadre of Deputy Superintendent of Police and no suitable persons having the requisite period of service were avail able. Promotions made pursuant to the relaxation were chal lenged before the High Court. The High Court dismissed the writ petition on the ground that the petitioners before it were not qualified for promotion. On appeal before this Court, the High Court 's judgment was upheld. This Court took the view that since the appellants before it were not eligi ble for promotion as their names were not included in the Select List prepared by the Public Service Commission and further as they had not completed six years ' of continuous service prior to the respondents, they were not entitled to any relief. The appeal was accordingly dismissed by this Court. While considering the question of validity of relaxa tion, the Court made observation that Rule 14 did not permit any general relaxation of the nature ordered by the State Government. The Court, however, did not examine the matter in detail as it was of the view that since the appellants in that case were not eligible for promotion they could not question the validity of the appointment of those who had been promoted on the basis of relaxation being granted by the State Government. The Court upheld the promotions in view of the extra 480 ordinary situation in which the State Government made ap pointments iv derogation of requirement of Rules. On a careful scrutiny of the Rules in its various as pects we do not agree with the observations made in Jit Singh 's case (supra). Though Rule 22 is not happily worded, as apparently it gives an impression that no general relaxa tion can be granted by the State Government, out on a close scrutiny of the scope of the power we find that a narrow construction of the Rules would nullify the Government 's power of relaxing Rules to meet a particular situation. Rule 22 is beneficial in nature it must be construed in a liberal manner and it should not be interpreted in a manner to defeat the very object and purpose of such power. Power to grant relaxation may be exercised in case of an individual to remove hardship being caused to him or to a number of individuals who all may be similarly placed. This power may also be exercised to meet a particular situation where on account of the operation of the Rules hardship is being caused to a set of individual officers. In the instant case the appellants were found suitable for promotion by the screening committee, the Commission and the State Govern ment, and the contesting respondent Yvas Dev was not found suitable even otherwise for promotion, the State Government granted relaxation of Rule 6(b) in favour of the appellants. In such a situation, it is beyond comprehension that the power of relaxation under Rule 22 was exercised arbitrarily or that it caused hardship or injustice to any one. On the formation of the new State of Haryana no promotion from Class II officers could be made to Class I service without granting any relaxation since 1966 to 1978. In 1971 72 eleven vacancies in the post of Executive Engineers were filled by promotion from Class II officers although none of them had completed requisite period of service prescribed by the Rules for promotion. In 1976 77 and 1977 78 sixteen and nine vacancies respectively in the post of Executive Engi neers were filled by promotion by granting relaxation as no officer of Class II service possessing requisite number of years of service was available for promotion. In 1978 79 seven officers of Class II service were promoted to the post of Executive Engineer but only one of them possessed the requisite period of service and all others were granted relaxation. These facts clearly show that in the absence of relaxation there could be no promotion to the post of Execu tive Engineer and the officers who were found suitable would have suffered great hardship. In 1973 also the State Govern ment with a view to meet the particular situation exercised its power of relaxation in appellants ' favour. Having regard to these facts and circumstances, we find no illegality in the appellants ' promotions, pursuant to the relaxation granted by the State Government. 481 In Bansal 's case (supra) the High Court, and even in Jit Singh 's case (supra) this Court did not set aside the promo tions made by the Government pursuant to relaxation of Rules on the ground that the petitioner who challenged the promo tions was himself not qualified, and he had no legal right to hold the post in dispute, although in both these cases Government 's order granting general relaxation was held to be outside the scope of Rule 22 and Rule 14 of the Punjab Police Service Rules 1959. In the instant case the High Court has set aside the appellants ' promotions following Bansal 's case interpreting Rule 22 but it failed to notice that in that case the High Court did not set aside the promotions instead it dismissed the petition on the ground that the petitioner therein was not qualified and none of his rights were affected. The High Court failed to notice that Vyas Dev respondent was considered for promotion but he was not found suitable, therefore he was not entitled to any relief. Since no legal right of the respondent was adversely affected the High Court should not have quashed the appel lants ' promotions. On behalf of the appellants an alternative submission was made that since the appellants had already completed eight years ' of service in Class H service during the pend ency of the writ petition their appointment stood regula rised. To support this submission reliance was placed on the decision of this Court in Ram Sarup vs State of Punjab, [1979] 1 SCC 168. In that case appointment to the post of Labour cum Conciliation Officer was made in breach of Rule 4 Clause (I) of the Punjab Labour Service Class I and II Rules 1955 as Ram Sarup did not possess five years ' experience, required by sub clause (I) of Rule 4, In spite of that he had been appointed to the post of Labour cum Conciliation Officer. Subsequently, Ram Sarup was reverted on the ground that he was not qualified to be appointed as a Labour cum Conciliation Officer as he did not possess the minimum qualification of length of service. This Court held that the appointment of Ram Sarup made in breach of Rules was irregu lar, but not wholly void and since Ram Sarup had completed five years of experience of working of labour laws before his reversion, his appointment to the post of Labour cum Conciliation Officer stood regularised with effect from the date he completed five years of service. On these findings order of reversion was set aside by this Court. Undisputa bly, the appellants completed eight years of service before January 15, 1980, the date on which the Division Bench of the High Court set aside their promotions. In view of the principles laid down in Ram Sarup 's case (supra) the appel lants ' appointment, even if irregular, stood regularised on the 482 date they completed eight years of their service and there after their promotions could not be set aside. We accordingly allow the appeal, set aside the judgment and order of the Division Bench dated 15.1.1980 and restore the order of the learned single Judge dismissing the re spondents ' writ petition. There will be no order as to costs. N.P.V. Appeal al lowed.
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The appointment and promotion to Class I Engineering Service in the State of Haryana are regulated by the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules, 1961.
Rule 5 provides for appointment to Class I Service, inter alia, by promotion from Class II Service.
Rule 6(b) prescribed that no person shall be promoted unless he has completed eight years service in Class II and has passed professional examination to the department.
Rule 22 confers power on the Government to relax any of the Rules it may consider necessary.
The appellants and the contesting respondent were mem bers of the Haryana Service of Engineers Class II in the Public Health Branch.
In 1971 the appellants were promoted to the post of Executive Engineers in the cadre of Class I service on ad hoc basis while the respondent was not consid ered for promotion.
Later, a Committee constituted under Rule 8 for selecting suitable candidates for promotion to Class I post, considered the names of the appellants and the respondent but did not find the respondent suitable.
Hence it included the appellant 's|ant 's names only in the select list.
The appellants did not possess the requisite minimum period of service of 8 years in Class II service but since no other suitable candidates were available, the Committee recommended to the Govt.
for granting relaxation to the appellants.
The State Public Service Commission approved the recommendations.
The State Government accepted the recommendations and appointed the appellants to Class I service by a Notification dated May 3, 1973.
471 The contesting respondent filed a Writ Petition before the High Court challenging the validity of the appellants ' promotion on the ground that since the appellants did not possess the requisite qualification for promotion to Class I Service their promotions were contrary to rules.
A Single Judge of the High Court dismissed the petition holding that since the Government had relaxed Rule 6(b) in appellants ' favour, their promotions were sustainable in law.
On appeal, the Division Bench quashed the appellants ' promotion on the ground that the State Government had no authority in law to grant relaxation to the appellants under Rule 22 in a general manner as the power of relaxation could be exercised only in individual cases to mitigate hardship caused to an individual.
Hence the appeal by special leave.
Allowing the Appeal, this Court, HELD: 1. Power to grant relaxation may be exercised in case of an individual to remove hardship being caused to him or to a number of individuals who all may be similarly placed.
This power may also be exercised to meet a particu lar situation where on account of the operation of the rules hardship is being caused to a set of individual officers.
[477G H] 2.
I Rule 22 of the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules 1961 confers power on the Government to dispense with or to relax the requirement of any of the Rules to the extent and with such conditions as it may consider necessary for dealing with the case in just and equitable manner.
The object and purpose of conferring this power on the Government is to mitigate undue hardship in any particular case.
If the Rules cause undue hardship or operate in an inequitable manner, the State Government has power to dispense with or to relax the requirement of Rules.
The Rule does not restrict the exercise of power to individ ual cases.
The Government may in certain circumstances relax the requirement of Rules to meet a particular situation.
[477A B] 2.2.
The expression "in any particular case" does not mean that the relaxation should be confined only to an individual case.
One of the meanings of the expression "particular" means "peculiar or pertaining to a specified person thing time or place not common or general".
The meaning of the word 'particular ' in relation to law means separate or special, limited or specific.
The word 'case ' in ordinary usage means 472 'event ', 'happenings ', 'situation ', 'circumstances '.
The expression 'case ' in legal sense means 'a case '. 'suit ' or 'proceeding in Court or Tribunal '.
Having regard to these meanings the expression 'in any particular case ' would mean in a particular or pertaining to an event, situation or circumstance.
[477C D] 2.3.
Rule 22 postulates relaxation of Rules to meet a particular event or situation, if the operation of the Rules causes hardship. '[he Scope of the said Rule is wide enough to confer power on the State Government to relax the re quirement of Rules in respect of an individual or class of individuals to the extent it may consider necessary dealing with the case in a just and equitable manner.
[477E F] 2.4 The power of relaxation is generally contained in the rules with a view to mitigate undue hardship or to meet a particular situation.
Many a time strict application of service rules create a situation where a particular individ ual or a set of individuals may suffer undue hardship and further there may be a situation where requisite qualified persons may not be available for appointment to the service.
In such a situation, the Government has power to relax requirement of rules.
The state Government may in exercise of its powers issue a general order relaxing any particular rule with a view to avail the service of requisite officers.
The relaxation even if granted in a general manner would enure to the benefit of individual officers.
[477F G] 2.5 Rule 22 is a beneficial one.
It must be construed in a liberal manner and should not be interpreted in a manner to defeat the very object and purpose of such power.
A narrow construction would nullify Government 's power of relaxing rules of meet a particular situation.
[480C] Jit Singh & Ors.
vs State of Punjab & Ors.
, ; differed; Ashok Gulati vs B.S. Jain, ; referred to.
In the instant case, the non availability of Class II officers in Engineering Department possessing the necessary and prescribed qualifications for promotion to Class I posed a problem for the State Government, as on account of the large scale expansion of Engineering Department a number of posts in Class I service were lying vacant.
A similar situa tion prevailed in the Building and Road Branch of Public Works Department.
In the circumstances, the State Government with a 473 view to meet the particular situation decided to relax the qualifying length of service to such officers who had com pleted four years of service in Class 1I.
It, therefore, relaxed the requirement of Rule (b) to the extent that a member of Class II service having four years service was qualified for being considered for promotion in Class I service.
These facts would clearly show that the relaxation had been granted to particular individuals with a view to meet the situation which was in public interest.
There is no legal infirmity in the order of ' relaxation.
[478D F] 3.
I If power of relaxation is exercised on extraneous consideration for oblique purposes or mala fide, the Court has power to strike down the same, but bona fide exercise of power of relaxation to meet a particular situation cannot be held to be arbitrary or illegal.
[479A] 3.2 Since the appellants were found suitable for promo tion by the screening committee, the Commission and the State Government, and as the contesting respondent was not found suitable even otherwise for promotion, the State Government granted relaxation of Rule (b) in favour of the appellants.
In such a situation, it cannot be said that the power of relaxation under Rule 22 was exercised arbitrarily or that it caused hardship to any one.
In the absence of relaxation, there could be no promotion to the post of Executive Engineer and the officers who were found suitable would have suffered great hardship.
Therefore, the State Government with a view to meet the particular situation exercised its power of relaxation in appellants ' favour.
Having regard to the facts and circumstances of the case, there is no illegality in the appellants ' promotion, pursu ant to the relaxation granted by the State Government.
[480D E; G H] Ashok Gulati vs B.S. Jain, AIR 1987 424; Jit Singh & Ors.
vs State of Punjab & Ors.
, ; and Ram Sarup vs State of Punjab, [1979] 1 SCC 168 referred to.
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The rules for hiring and promoting engineers to a high-level position (Class I Engineering Service) in Haryana are found in a document called the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules, 1961.
Rule 5 explains how people can be appointed to Class I Service, including being promoted from a lower-level position (Class II Service).
Rule 6(b) says that someone can't be promoted unless they've worked for eight years in Class II and passed a professional exam for the department.
Rule 22 gives the government the power to change or ignore any of the rules if they think it's needed.
The people who are appealing this case (the appellants) and the person they are arguing against (the respondent) all worked as engineers in the Class II level in the Public Health Branch.
In 1971, the appellants were promoted to a higher position called Executive Engineer in Class I, but only temporarily. The respondent was not considered for a promotion at that time.
Later, a committee that was created to choose people for Class I positions looked at the appellants and the respondent. They didn't think the respondent was qualified.
So, the committee only put the appellants' names on the list of people who could be promoted.
The appellants didn't have the required eight years of experience in Class II. But, because there weren't any other qualified people available, the committee asked the government to make an exception for the appellants.
The State Public Service Commission agreed with the committee.
The state government accepted the recommendations and officially appointed the appellants to Class I service on May 3, 1973.
The respondent filed a legal challenge (a Writ Petition) in the High Court, saying that the appellants' promotions were not valid because they didn't meet the requirements for Class I service. The respondent argued that the promotions went against the rules.
A single judge in the High Court dismissed the case, saying that the government had the power to make an exception to Rule 6(b) for the appellants, so their promotions were legal.
However, another court (the Division Bench) overturned the first court's decision. They said the government didn't have the authority to make a general exception to Rule 22 for the appellants. They said the power to make exceptions could only be used for individual cases to help someone who was facing a difficult situation.
That's why the appellants are now appealing this decision.
The higher court agreed with the appellants and stated:
1. The power to make exceptions can be used for one person who is facing a hardship, or for a group of people who are in a similar situation. This power can also be used when the rules are causing problems for a group of officers.
2. Rule 22 of the Haryana Service of Engineers Class I PWD (Public Health Branch) Rules 1961 gives the government the power to ignore or change any of the rules as much as they think is needed to handle a situation fairly.
The reason for giving the government this power is to help people who are facing unfair difficulties. If the rules are causing problems or seem unfair, the government can ignore or change them. The rule doesn't say that this power can only be used for individual cases. The government can change the rules to deal with a specific situation.
2.2. The phrase "in any particular case" doesn't mean that the exception can only be for one person. "Particular" can mean something that is specific to a person, thing, time, or place, and not common. In law, "particular" means separate, special, limited, or specific.
The word "case" usually means an event, happening, situation, or circumstance. In a legal sense, "case" means a lawsuit or legal process in a court or tribunal.
So, the phrase "in any particular case" means in a situation that is specific to an event or circumstance.
2.3. Rule 22 allows the rules to be changed to deal with a specific event or situation if the rules are causing problems. The rule is broad enough to give the government the power to change the rules for one person or a group of people, as much as they think is needed to handle the situation fairly.
2.4 The power to make exceptions is usually included in the rules to help with unfair difficulties or to deal with a specific situation. Sometimes, following the rules exactly can create a situation where someone or a group of people face unfair problems. Also, there might be times when there aren't enough qualified people available for a position.
In these situations, the government has the power to change the rules. The government can issue a general order that changes a specific rule to make it possible to hire the needed officers. Even if the exception is made in a general way, it can still help individual officers.
2.5 Rule 22 is helpful. It should be understood in a broad way and not in a way that defeats its purpose. A narrow understanding would limit the government's power to change the rules to deal with a specific situation.
The court looked at other similar cases for guidance.
In this case, the government faced a problem because there weren't enough Class II officers in the Engineering Department who had the necessary qualifications for promotion to Class I. This was because the Engineering Department was growing quickly, and many Class I positions were empty.
A similar situation was happening in the Building and Road Branch of the Public Works Department.
So, the government decided to make an exception to the rule about the length of service required. They decided that officers who had completed four years of service in Class II could be considered for promotion to Class I.
This shows that the exception was made for specific people to deal with a situation that was in the public's best interest. There is nothing illegal about the decision to make the exception.
3. If the power to make exceptions is used for the wrong reasons or in bad faith, the Court can strike it down. However, using the power in good faith to deal with a specific situation is not arbitrary or illegal.
3.2 The screening committee, the Commission, and the state government all agreed that the appellants were qualified for promotion. The respondent was not considered qualified. So, the state government made an exception to Rule (b) for the appellants.
In this situation, it can't be said that the power to make exceptions under Rule 22 was used unfairly or that it caused problems for anyone. Without the exception, there could be no promotions to the position of Executive Engineer, and the qualified officers would have faced a difficult situation.
Therefore, the state government used its power to make an exception for the appellants to deal with the specific situation. Considering the facts of the case, there is nothing illegal about the appellants' promotion, which was based on the exception made by the state government.
The court referred to other similar cases for guidance.
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tion (Civil) No. 339 of 1986. (Under Article 32 of the Constitution of India) S.P. Pandey and Mrs Rekha Pandey for the Petitioner. J.R Dass, D.K Sinha, D Goburdhan and R.K. Mehta for the Respondent. PG NO 308 The Judgment of the Court was delivered by RANGANATH MISRA, J. A letter addressed to the learned Chief Justice of this Court from two citizens of Patna in regard to the Mental Hospital at Kanke near Ranchi in Bihar State was considered as a public interest litigation and registered as an application under Article 32 of the Constitution. On 7.4.1986, this Court called upon the State of Bihar to file its counter affidavit and the Chief Judicial Magistrate of Ranchi or any other Judicial Magistrate nominated by him to visit the hospital and submit a report about the conditions prevailing in the Hospital. The Chief Judicial Magistrate visited the hospital on 8.6.1986, and on several other occasions thereafter and submitted a detailed report on 15th of July, 1986. He found that there were 1580 beds. The Hospital was in the sole management of the Health Department of the State of Bihar. The State received financial contributions from West Bengal and Orissa. There is a Managing Committee of the Hospital consisting of 14 members in all with the Commissioner of South Chotanagpur Division as its Chairman. The sanctioned strength of medical officers was 16 but only 9 had been filled up and there were 7 vacancies. In the Hospital the male patients wing had 10 blocks in all, apart from the Isolation Ward, the Medical Ward and the Infirmary Ward. These are in 10 double storied blocks and three single storied wards in charge of separate doctors. The female patients ' unit consisted of two double storied and two single storied blocks. Each block had the capacity of 120 patients. Some of the patients had to pay for their treatment while the treatment to the general category was intended to be free. All the three residential quarters within the complex meant for the medical officers were occupied by others, one by the suspended Superintendent, the other by the retired Superintendent and the third one was by the Acting Superintendent. Three doctors were residing in the quarters meant for non gazetted officers and the remaining doctors were staying in private houses at Ranchi about 11 kilometers away. The Chief Judicial Magistrate found that there was acute shortage of water in the Hospital. There was only one tubewell within the campus located in the male block. There were five ordinary wells but there was no motor pumps installed in any one of them. These wells were the only source of supply of water. Several representations had been made to the State Government for supplying water on permanent basis to the Hospital but there was no response from the Government. PG NO 309 The Chief Judicial Magistrate was surprised that none of the toilets within the hospital complex was in order. The sanitary fittings were not operating having got chocked. The patients were, therefor, forced to ease themselves in the adjacent open field. Consequently the environment had become polluted and unhygienic. Though there were fan points and even electric fans were hanging from the roof in some places, no fan excepting the one in the chamber of the Superintendent was in working condition. He also found that though there were electric connections with bulbs and tubes yet light was not available and, therefore, total darkness prevailed in the campus between dusk and dawn. The Superintendent explained to the Chief Judicial Magistrate that the Hospital had no electrician and the Institution had to depend upon the mercy of the State Electricity Board and despite correspondence there was no response. He found that old iron cots had been provided in the year 1925 and only 300 more had been added by purchase. The total number of patients were 1580. Most of the iron cots having been broken were out of use and, therefore, only 300 beds were actually available. None of the wards had doors and windows in working condition. The Superintendent pointed to him that he had made repeated requests to the Public Works Department of the State Government but no letter had even been acknowledged. In the absence of device to close the doors and windows there had been occasions when mentally ill patients had jumped through the windows or had run out from the rooms. To meet such situations, the broken cots were mostly used to block the passages. The Chief Judicial Magistrate further found that the mattresses and linen were in very bad shape, he noticed several patients to be lying on the bare floor; some of the patients were using a single blanket both as mattress and cover. Some patients were naked in the absence of clothing and others were found wearing torn shirts and pants. Mosquito nets were not available pillows were not provided and the patients were left to their fate. The Chief Judicial Magistrate noticed marks of buy bitings as also mosquito biting on the body of the patients. In the absence of clothing the patients were forced to wear the same shirt and pant for four to six weeks without a wash on account of unavailabiliy of water. The Superintendent told the Chief Judicial Magistrate that Government of Bihar had sanctioned Rs. 3 a day per patient for the two meals and breakfast and it was wholly inadequate. The Managing Committee had recommended for sanction of Rs. 10 per patient per day but PG NO 310 there had been no response. The diet as prescribed included an egg, 250 gms. of milk every day and meat and fish, once in a week, but in the absence of appropriate funds those had been discontinued for years. The Chief Judicial Magistrate having visited the place on several occasions noticed that there was no account of the stock of medicines; life saving drugs were not stored properly in the absence of a refrigerator. The instruments were not in working condition and the employees meant for working the instruments were idlying away their time. The patients were now referred to Medical College Hospital at Ranchi for X ray and E.C.G. as and when necessary. Many of the patients told the Chief Judicial Magistrate that they had not been getting any medicine for months together. The Chief Judicial Magistrate had noticed that several doctors were not available in the Hospital for days together. Some of the patients in the wards complaind to him that the doctor was not visiting the ward even for one hour in a week; he carne across a weak and emaciated patient who told him that he had not been given any food for two days on the plea that he was suffering from diarrhoea and he had not even been given any treatment. C)n the 11th of July, 1980, when he visited the Hospital along with the local Additional District Magistrate? he found not a single doctor on duty though that was the time when all the doctors, were supposed to be on duty within the campus. Though this was the actual position. the attendance register showed all the doctors to be present as required according to the duty chart . The Chief Judicial Magistrate collected the death rate from the Superintendent for the period between 1977 and 1986 which are as per the particulars given below: Year Male Female Total 1977 38 11 49 1978 72 12 84 1979 74 31 l05 1980 66 24 90 1981 39 33 172 PG NO 311 1982 173 50 231 1983 87 44 131 1984 152 94 246 1985 90 69 159 From 1 1 1986 30 6 1986 49 25 74 In Paragraph 28 of the Report the Chief Judicial Magistrate stated: "This chart clearly shows abrupt rise in the graph of death rate after 1980. 1984 was the most unfortunate year for Arogyashala, when maximum escapes and deaths took place. Mass scale escapes and deaths of patients in 1984 is said to be the result of internal politics in the Arogyashala campus, for which, the then Superintendent and Dr. Durga Bhagat and Deputy Superintendent. Dr. B.B. Singh are said to be largely responsible. " The Magistrate further reported that the present acting Superintendent had failed to improve the administration. He lacked adequate control over his colleagues and the staff. The out going Superintendent residing within the campus was inciting the people and the acting Superintendent was gradually losing his grip and control over the administration. The innocent, miserable and vioceless patients were the victims of the situation. The practice prevailing in the Hospital had been that the Superintendent alone was competent to admit patients and as such the guardians and attendants of the patients seeking admission into the Hospital had been exploited by a group of persons friendly with the Superintendent and those who did not come to terms with the Superintendent had been denied the benefits of the Hospital. This led to friction and unpleasant relationship. He recommended that a non medical man, if possible, a retired army officer or a District Judge could be posted as the head of the Hospital to take control and tone up the deteriorating situation. He found that a large garden was attached to the Hospital but on account of the all pervading mismanagement there was no return but one Dr. Buxy had recently been put in charge of the garden and had improved the same. Last of all in his report he adverted to the fact that some petients who had recovered and their number he found was about 300, being both men and women were not in a position either to return to their take to any employment in the absence of any facility. He found that these persons who PG NO 312 no more required treatment should be removed from the Hospital so that there would be room available for patients who required treatment; unnecessary expenditure on such large number of people could be avoided and the standard of discipline within the Institution could be improved and there could be a general toning up of the atmosphere. Along with the report he gave various relevant details in the annexures. Annexure 11 is a list of criminal patients who had come from different jails for treatment and had been declared fit for discharge. We may refer to the cue of one Rupa Santhal. This person was admitted to the Hospital on 28.9.1947 at the instance of the Superintendent of Chittagang Hill Tract Jail, where on being convicted by the Deputy Commissioner of Chittagang Hill Tract for an offence punishable under Section 326 IPC, he had been imprisoned for undergoing the sentence. Obviously he could not have been detained in jail for 41 years for the offence under Section 326 IPC. Several letters were sent from the Hospital but there was no response. We may also refer to the case of Madhu Mahanta who was admitted to the Hospital on 15.11.1950 at the instance of the Superintendent, District Jail, Keonjhar in the State of Orissa. He had been convicted under Section 302 IPC and was languishing in the Hospital for 36 years though he had been cured several years back. The Magistrate has given a list of 13 persons of this category. We are astonished that even when prisoners are transferred for treatment from jails where they were undergoing sentences of imprisonment, no follow up action has been taken from the jails on their own and even when the Hospital authorities had required the prisoners to be taken back no response has been made. This only exhibits total callousness. We have given sumptuous extracts from the report of the Chief Judicial Magistrate with a view to bringing out as clear a picture as possible of the shocking and savage conditions that prevail in the mental hospital. There can be no two opinion that the hospital was in a shape a shade worse than Oliver Twist 's Orphanage. From all accounts, perhaps. many of zoos housing animals have better conditions than those that prevail in this hospital. While the mentally ill require a soothing environment for treatment, as psychatrists say, the State of Bihar as converted what was once a prestigious mental hospital Into a den to house about sixteen hundred patients. The reports of the Chief Judicial Magistrate gives the reader the feeling of a medieval torture house. On 11.8.1986, the Court noticed the report and observed: PG NO 313 "The report makes a painful reading and shows how badly is this institution managed and in what in human condition the patients are made to live & work there. It is surprising that the State of Bihar has allowed this institution to de generate into the present condition. It is necessary that immediate steps should be taken to improve the functioning of this institution in all respects. We would therefore direct the Chief Secretary and Health Secretary to the Government of Bihar to file affidavit or affidavits putting forth a definite scheme for improving the working of the Institution and for remedying the drawbacks and deficien cies pointed out in the report, including the neglect of patients by the Medical Superintendent attached to the Institution. This matter must have urgent priority since it concerns the well being of the mentally handicapped. We would therefore direct that the affidavit be filed within three weeks from today setting out a time bound programme for improving the functioning of the Institution. We would like to observe that the Chief Judicial Magistrate has made an excellent job of the task assigned to him and we express our sense of appreciation for the work done by him. These observations may be sent to the High Court of Patna and the Chief Judicial Magistrate". On 1.9.1986, the Health Secretary filed a short affidavit together with a scheme for the improvement of the Hospital. The opening words of the scheme have to be quoted to be believed: "The Government of Bihar are aware of the conditions prevailing in the Mansik Arogyashala, Kanke, and the Government for sometime in past have been discussing measures to be taken for improvement of the same. The subject was discussed by the representatives of the State of Bihar with the members of the Planning Commission at a meeting held at New Delhi in the month of january, 1986, and accordingly it is contemplated to develop the Mansik Arogyashala, Ranchi on the lines of NIMHANS in Bangalore The scheme indicated that a letter had been written to the Director, NIMHANS at Bangalore for information on 17th of April, 1986, i.e. 4 1/2 months before the scheme was filed PG NO 314 in this Court. There is no indication as to what was received from the Director or as to what further follow up action was taken during the 4 1/2 months. The scheme indicated that out of 16 sanctioned posts three posts were earmarked for West Bengal Government and were vacant; out of 13 posts, 9 had been filled up and 4 were vacant and were to be filled up by October, 1986. The scheme admitted with reference to the water supply system that the internal system was choked and was not functioning. In the year 1985 86, Rs.10 lakhs had been sanctioned for renovation of water supply system and the Public Health Engineering Department could utilise only Rs.61,000 during the financial year; therefore, the balance amount of Rs.9,39,000 was again to be sanctioned in the year 1986 87. The lavatories and bathrooms were not in working condition as accepted and the scheme proposed that the Superintendent of the Hospital is to supervise the sanitary system. In regard to electricity it was indicated that the electric fittings, fixtures and other equipments would be replaced by March, 1987 which meant six months beyond the date when the scheme was framed. It was proposed that a 100 KV Generator set was to be installed. In regard to cots and mattresses it was stated that 400 of them would be acquired in the year 1986 87 and the remainder in the year 1987 88. It was stated that the doors and windows required total replacement and it was indicated that Rupees six lakhs were sanetioned during the financial year for repair work. In regard to diet it was indicated in the scheme: "In the State of Bihar, the rate of the diet per patient for the hospital is Rs.3.00 per day except the T.B. patient to whom the rate of diet is Rs.4.15 per day. In the year 1986 87, rate of diet per patient has been increased to Rs.3.55. The Superintendent of Kanke hospital has been directed to improve dietary management". It was admitted that E.C.G. machine was out of order and efforts would be made to instal the machine in the financial year. It was also proposed in the scheme that there would be a regular Superintendent posted soon. In regard to supply of medicines it was stated that the prescribed rate was Rs.1.00 per patient per day and it has been increased to Rs.1.90 per patient per day from 1986. PG NO 315 On 20th of October, 1986, this Court made the following order: "1. In respect of each patient in the Ranchi Mansik Arogayashala the daily allocation for diet will be increased from the existing inadequate articles of that value shall be supplied to each patient. Arrangements should be made forthwith to supply adequate quantity of pure drinking water to the hospital, if necessary, by engaging water tankers to transport potable water from outside. Immediate arrangements should be made for the restoration of proper sanitary conditions in the lavoratories and bathrooms of the hospital. All patients in the hospital who are not at present having mattresses and blankets should be immediately supplied the same within 15 days from today. Such of the patients who have not been given cots should also be provided cots within six weeks from today so that no patient shall be thereafter without a cot. The ceiling limit at present invogue in respect of cost of medicines allowable for each patient will stand removed, with immediate effect and the patients will be supplied medecines according to the prescription made by the doctors irrespective of the costs. The State Government shall forthwith take steps to appoint a qualified Psychiatrist and a Medical Superintendent for the hospital and they should be posted and takecharge in the Institution within six weeks from today. The Chief Judicial Magistrate, Ranchi to whom a copy of this order will be forwarded by the Registry shall visit the hospital once in 3 weeks and submit quarterly reports to this Court as to whether the aforesaid directions given by us are being complied with. " On 20th of November, 1986, the Health Secretary gave a report as to programme relating to aspects covered by the scheme. It indicated that no reply had been received from NIMHANS and therefore, an officer had been sent from Bihar PG NO 316 to obtain the information. The medical officers against the vacant posts had been posted; water supply and electricity were yet to be attended to. The repair to the building was in progress and other aspects were yet to be attended. A Superintendent in the rank of Civil Surgeon had been posted. The Chief Judicial Magistrate furnished a further report in December, 1986. While he noticed certain improvements, he pointed out that there were 400 female patients and there was only one lady doctor in the Hospital. There was no lady Psychiatrist or Psychologist. The Superintendent had written to the Government about it but there has been no response. On 14th of September, 1987, the Court noticed the fact that the State of West Bengal was in huge arrears in the matter of payment of contribution to the running of the Hospital. Counsel for State of Bihar had agreed to send details of the arrears to the State of West Bengal within a fortnight and the Court directed the West Bengal Government to pay the same. The State of West Bengal filed its affidavit through the Joint Secretary in the Department of Health and Family Welfare. The affidavit while accepting the fact that 38% of the seats in the hospital were reserved for West Bengal alleged that in the absence of furnishing of proper accounts by the State of Bihar, the payment of contribution had not been made in time by the State of West Bengal after 1979 80. It agreed to pay Rs.20 lakhs during the year and the balance in suitable instalments in future. The State of Orissa has pointed out in its affidavit that it has been regularly paying its contribution of Rs.3 lakhs and was not in arrears. The Deputy Director (Medical) Health Services, Government of Bihar filed an affidavit claiming that the rate of diet had been enhanced with effect from 1.12.1986 and in diet all the patients were provided rice, bread, dal, vegetable, egg, milk, loaf, biscutt, tea, fruit . Fish, meat and chicken were being provided alternatively thrice a week. Old Pipe lines had been replaced and the flow of water was increased; storage facility for water had been arranged. Medicine as per requirement is being provided without refering to any ceiling limit. new X ray machine has been purchased; the old E.C.G. machine has been condemned and a new one has been purchased. One of the petitioners filed an affidavit denying many of the aforesaid claims. On 14th of March, 1988, this Court made the following order: PG NO 317 "We have perused the affidavit filed by Shri Subodh Chandhra Naryayan, one of the petitioners, wherein several allegations of mismanagement have been made. It has also been alleged that in spite of the direction of this Court that the daily diet expenses should be Rs.10 per patient actually Rs.7 is being spent and though this Court had directed that there should be no ceiling of expenses for medicines beyond Rs.2 per patient is not being issued. We are of the view that copy of the affidavit should be sent to the Chief Secretary, State of Bihar with a direction that he would personally look into the matter and should send a report within four weeks. " A report, beyond the time indicated in the order dated 14th of March, 1988, was furished by the Chief Secretary and the same was covered by an affidavit of the Joint Secretary of Department of Health and Family Welfare of the State Government. The Chief Secretary reported: "The entirc hospital complex is spread over a sprawling area. The buildings are old. but they have been extensively repaired and white washed. Many old cots. matresses linen etc. have been replaced by new ones. Government has spent several lakhs of rupees on improvements in the running of the Agrogyashala during the last two years. In course of my visit, l did not find that patients were being given inadequate food or medicine. ' ' He also found that the toilets had not been attended to, the position of water supply was not satisfactory, the automatic boiler had not yet been repaired or replaced. The Court 's Order of 14th of March, 1988, indicated that the affidavit filed by Subodh Chandra Narayan containing several allegations of mismanagement was to be forwarded to the Chief Secretary and with reference to the allegations therein, he was to send his report. We do not find that the report of the Chief Secretary covers all the aspects. The hospital authorities would not, in their own interests, be too ready to expose their own deficiencies during the visit of the Chief Secretary. Therefore, to have been satisfied and to report that during his visit he did not find any patient being given inadequate food or medicine is no appraisal of the situation. The fact that lakhs of rupees had been spent on improvement is indeed of no consequence PG NO 318 until the Agorgyashala is restored to acceptable hospital standards. The report gives us a feeling that the Chief Secretary was more conscious about the expenditure made by the State Government than assessing the actual situation. From his report, however, it is clear that inspite of several orders made by this Court and assurances held out by the State Government of Bihar, the defects were not being remedied. The awareness of the governmental authorities of the sordid situation prevailing in the hospital, as admitted in the scheme furnished to this Court, the non compliance in an effective way with the directions made from time to time by this Court and the general lethargy shown in rising from slumber leaves a clear impression in our mind that the institution cannot be run as a mental hospital of that magnitude unless there be change in the administrative set up, the control is altered and a total new service to patient oriented thrust given to the institution. In a welfare State and we take it that the State of Bihar considers itself to be one such it is the obligation of the State to provide medical attention to every citizen. Running of the mental hospital, therefore, is in the discharge of the State 's obligation to the citizens and the fact that lakhs of rupees have been spent from the public exchequer (perhaps without or inadequate return) is not of any consequence. The State has to realise its obligation and the Government of the day has got to perform its duties by running the hospital in a perfect standard and serving the petients in an appropriate way. The reports and affidavits of the Government of Bihar and its officers (not the reports furnished to the Court by the judicial officers) have not given us the satisfaction of the touch of appropriate sincerity in action. The scheme which was furnished to the Court was a half hearted one and no attempt therein was made to bring about any improvement except attending to certain obvious deficiencies and shortfalls. The hospital has been in existence from pre independence period. There have been epoch making breaks through in the field of psychiatry and treatment of psychiatric patients. The approach to mental health and the techniques of psychiatry have changed. Psychologists have developed their art and their tools. The method of care ar d attention for the mentally ill has also undergone a sea change. When we had called upon the State of Bihar to give a scheme for improving the conditions of the hospital, this Court had not intended a scheme for removing the deficiencies in the old hospital; we had really intended to look forward to a scheme of re orientation which the scheme did not even remotely touch except to say that NIMHANS at Bangalore has contacted. PG NO 319 The state Government authorities have not been able to assess the priorities. Provision of beds, though the scheme indicated had to be fully made by end of March, 1988, the report of the Chief Secretary and the accommpanying affidavit have not cleared that position. Provision for electricity and water has taken too long, though both are basic necessities of life. The fact that the existing lavatories have taken more than two years to repair is a slur on the administration. There does not seem to be the slightest interest on the part of the persons handling the matter, to improve the environment. In these cir cumstances, it becomes difficult for the Court with any sense of confidence to leave the management to the Health Department of the State of Bihar if the institution has to run as a good and useful hospital. We are cognizant of the position that it is difficult for the Court to monitor the management of a hospital particularly when it is located a thousand kilometres away; but since there have been some improvements with the Court 's intervention, to get out of the picture at this stage would only mean that the situation will again deteriorate no sooner the Court 's attention is withdrawn. As we have already pointed out mere restoration of the hospital to its old position would only bring into existence an archaic institution sans modernism. In our opinion, it will be much better if a Committee of Management is appointed with full powers to look after all aspects of the institution. It is appropriate to take note of the position that this institution receives contribution from two other States. 38 % of these beds, being about 600, are reserved for the State of West Bengal and the Government of West Bengal is to pay for the same. Similarly 75 beds are reserved for the State of Orissa and a sum of Rs. 3 lakhs is payable by the Orissa Government. There is no reason why the management of the hospital should be left exclusively to the Health Department of State of Bihar and the participating Governments should not be associated in such management. Taking note of the performances of the State administration of Bihar in regard to the hospital we are of the view that association of the States of West Bengal and Orissa in the management is likely to bring about some positive result. We would, accordingly, constitute a Committee of Management for the Mental Hospital in the manner indicated below. Chairman A consenting sitting Judge of the Patna High Court, Ranchi Bench, to be nominated by the Chief Justice of Patna High Court. PG NO 320 Members (1) Commissioner of Ranchi Division. (2) Station Commander, Ramgarh area, Ranchi. (3) Secretary of Health, Bihar Government. (4) Secretary of Health, West Bengal Government. (5) Secretary of Health, Orissa Government. (6) Deputy Commission of Ranchi. (7) Principal of the Ranchi Medical College. (8) District Judge, Ranchi. (9) Superintendent of the Hospital. The Commissioner of Ranchi Division and the Station Commander shall be Vice Chairmen and in the absence of the Chairman, shall in the order indicated act as Chairman when any of them too is absent. The Superintendent shall act as the Secretary. We hope and expect that the concerned Governments and authorities would accord the necessary consent/permission to the nominated officers to act on the Committee and the Committee would be able to have its first meeting in the first half of November, 1988. The Committee should meet every month in the first six months with a view to removing the defects and deficiencies within a time frame say of six months at the most and for reviewing the improvements in the conditions of the hospital. If it is satisfied that the situation has improved, the meetings thereafter may be quarterly. The Commissioner of the Ranchi Division shall make a monthly report with in 2 weeks of the end of every month about the state of the hospital during the first year and such reports as and when received by the Registry should be placed before the Court. The State of West Bengal is in arrears in regard to its contribution for several years. Though counsel for the State of Bihar had undertaken to furnish accounts, the same has not yet been done. The Committee shall ensure that the accounts are furnished to the State of West Bengal by the 15th of December, 1988. In its affidavit, the State of West Bengal has indicated that it would pay Rs.20 lakhs out of the dues during the current financial year and would pay the balance in suitable instalments. As the improvement to the hospital would involve huge expenditure, we direct the State PG NO 321 of West Bengal to pay Rs.50 lakhs out of its dues by 31st of March, 1989 and the balance amount shall be paid in two six monthly instalments, one by 30th of September, 1989, and the other by 31st of March, 1990. The Government of West Bengal and the Committee shall ensure that this time frame is adhered to. The entire arrears collected from the West Bengal Government shall be earmarked for development of the hospital to be expended in the manner approved by the Committee and no portion thereof would be otherwise spent. We are of the view that if the hospital is transformed into a better one, just as the hospital run by NIMHANS at Bangalore, the quality of the hospital would improve and the patients would have the benefit of modern scientific treatment. The Committee shall, therefore, take expeditious steps to explore the possibility of transforming the Mental Hospital at Ranchi into the pattern obtaining in the hospital run by NIMHANS at Bangalore by taking such steps as are necessary and furnish a report to this Court by the end of February, 1989 when that question will have to be considered by this Court after hearing the concerned State Governments and the parties. The State of Bihar shall provide a basic fund of Rs.50 lakhs in the year ending 31st of March, 1989, to be spent for improvement of the Hospital in the manner approved by the Committee and in case the Committee is of the view that further funds are necessary, it would be open to the Committee to make a report to this Court whereupon appropriate directions shall be given. There have been repeated allegations that the lady patients who have already been cured are not being released from the hospital. At one stage the explanation offered by the hospital authorities and the State administration was that the relations, even though notified, are not taking them back. The hospital is not a place where cured people should be allowed to stay. It is, therefore, necessary that there should be a rehabilitation centre for those who after being cured are not in a position to return to their families or on their own seek useful employment. The Committee shall, therefore, take immediate steps to have a rehabilitation centre at a convenient place around Ranchi where appropriate rehabilitation schemes may be operated and the patients after being cured, irrespective of being male or female, if they are not being taken back by the members of their families could be rehabilitated. The funds made available to the Committee may be utilised for such purpose. PG NO 322 We must reiterate that Court monitoring of an institution like the present one is indeed difficult but we cannot close the proceedings at this stage for the reasons we have already indicated. Parties including the Committee shall have liberty to move this Court from time to time. We make it clear that the directions regarding payment of the funds are pre emptory in nature and no application for modification thereof shall be entertained. This matter shall be deemed to be pending to deal with the various reports from the Committee and for purposes of giving other directions.
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A letter petition in regard to the Mental Hospital at Ranchi was considered as a public interest application under Article 32 of the Constitution, and the Court called upon the State of Bihar to file its counter affidavit.
At the same time, the Court directed the Chief Judicial Magistrate to visit the hospital and submit a report about the conditions prevailing there.
The hospital was in the sole management of the Health Department of the State of Bihar.
The State of Bihar received financial contributions from the States of West Bengal and Orissa on the basis of the number of beds reserved for each State.
The report submitted by the Chief Judicial Magistrate made a painful reading.
In the affidavit submitted by the State of Bihar it was stated that the Government was aware of the conditions and had since taken some steps to improve the working of the hospital, and had also drawn up a scheme to develop the hospital on the lines of NIMHANS in Bangalore.
From time to time, the Court had issued directions and made specific orders regarding provision of better food.
clothing, medical treatment, housing and improvement of sanitation, etc.
While keeping the matter pending, the Court, HELD: (1) In a welfare State it is the obligation of the State to provide medical attention to every citizen.
The State has to realise its obligation and the Government of the day has got to perform its duties by running the hospital in a perfect standard and serving the patients in an appropriate way.
[318D E] (2) It is clear that inspite of several orders made by this Court and assurances held out by the State Government of Bihar.
the defects were not being remedied.
The awareness PG NO 307 of the governmental authorities of the sordid situation prevailing in the hospital, as admitted in the scheme furnished to the Court, the non compliance in an effective way with the directions made from time to time by the Court and the general lethargy shown in rising from slumber leaves a clear impression that the institution cannot be run as a mental hospital of that magnitude unless there be change in the administrative set up, the control is altered and a new service to patient oriented thrust given to the institution.
[3I8 C] (3) The scheme which was furnished to the Court was a halfhearted one and no attempt therein was made to bring about any improvement except attending to certain obvious deficiencies and short falls.
The Court had looked forward to a scheme of re orientation which the scheme did not even remotely touch.
[318F G] (4) The State Government authorities have not been able to assess the priorities.
There does not seem to be the slightest interest on the part of the persons handling the matter, to improve the environment.
In these circumstances, it is difficult to leave the management exclusively to the Health Department of the State of Bihar if the institution has to run as a good and useful hospital.
Association of the States of West Bengal and Orissa in the management is likely to bring about some positive result.
It would, therefore, be much better if a Committee of Management is appointed with full powers to look after all aspects of the institution.
[319A; B D] (5) The Court accordingly constituted a Committee of Management for the Mental Hospital and gave directions regarding the financial contribution from the participating States, and also laid down guidelines regarding the functioning and management of the hospital.
The Court further directed that the Committee shall take expeditious steps to explore the possibility of transforming the hospital into the pattern obtaining in the hospital run by NIMHANS at Bangalore.
[321C D]
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Someone wrote a letter about the Mental Hospital in Ranchi. The court treated this letter as a case of public interest under Article 32 of the Constitution, which protects people's rights. The court asked the state of Bihar to respond with their side of the story.
At the same time, the court told the main judge in the area (Chief Judicial Magistrate) to visit the hospital. They wanted a report about what the hospital was like.
The hospital was run only by the Health Department of the state of Bihar.
Bihar got money from West Bengal and Orissa. This money was based on how many beds each state had reserved at the hospital.
The report from the Chief Judicial Magistrate was very upsetting to read.
Bihar said they knew about the problems. They said they had started making things better. They also had a plan to make the hospital like NIMHANS in Bangalore, a well-known mental health center.
The court gave instructions many times about how to improve the hospital. This included better food, clothes, medical care, housing, and cleanliness.
The court kept the case open and DECIDED: (1) A good government (welfare state) must give medical care to all its people. The state needs to understand this and run the hospital well. They need to treat patients properly.
(2) Even though the court had given orders and Bihar had promised to fix things, the problems were still there. The government knew the hospital was in bad shape. They didn't follow the court's orders. They seemed lazy and didn't care. This shows that the hospital needs new management. Someone needs to take control and focus on helping patients.
(3) Bihar's plan was weak. It only fixed some obvious problems. The court wanted a plan that would completely change the hospital for the better, but this plan didn't even come close.
(4) The people in charge in Bihar didn't seem to understand what was important. They didn't seem interested in making the hospital better. Because of this, the Health Department of Bihar shouldn't be the only ones running the hospital. West Bengal and Orissa should also be involved. This could help make things better. It would be best to have a Management Committee with the power to handle everything about the hospital.
(5) The court created a Management Committee for the Mental Hospital. It gave instructions about how much money each state should contribute. It also gave rules about how the hospital should be run. The court also said the Committee should quickly find out if the hospital could be changed to be like NIMHANS in Bangalore.
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Civil Appeal No. 1349 of 1982. (From the judgment and order dated the 8.3.1982 of the Jammu & Kashmir High Court in W.P. No. 668 of 1981. AND Civil Appeal No. 1997 of 1982. Appeal by special leave from the judgment and order dated the 8th March, 1982 of the Jammu & Kashmir High Court in W.P. No. 668 of 1982. AND Writ Petitions Nos. 2186 82 of 1982. (Under article 32 of the Constitution of India) K.K. Venugopal S.P. Gupta, R. Satish, E.C. Aggarwala and Krishnamanan, for the appellants in C.A. 1349/82 & for the Petitioners in WP. 2186 89 of 1982. P.R. Mridul and Vimal Dave for the Respondents in Civil Appeals. S.N. Kacker and Altaf Ahmed, for the Respondents in W.Ps. S.N. Kackar and Altaf Ahmed for the Appellant in C.A. 1997/82. The following Judgments were delivered AMARENDRA NATH SEN, J. Four Petitioners belonging to the cadre of Subordinate Judicial Service in the State of Jammu & Kashmir and whose names were recommended by the High Court 598 for appointment as District Judges, filed a Writ Petition in the High Court of Jammu & Kashmir (Writ Petition No. 668 of 1982) challenging the validity of appointment as District Judges of the Respondents Nos. 3,4,5 and 6 made by the Governor of the State. In the said Writ Petitions had made the State through the Chief Secretary, Respondent No, 1, the High Court of Jammu & Kashmir through the Registrar, the Respondent No. 2 and the four persons who were appointed District Judges by the Governor, as Respondents 3, 4, 5, and 6. A learned Single Judge of the High Court directed notice to issue to Respondents Nos 1 to 2 in the first Instance to show cause as to why the Petition should not be admitted and the Learned Single Judge further directed that the matter should be listed before a larger Bench for admission. The Learned Single Judge also granted stay of the operation of the order appointing the Respondents Nos. 3 to 6 pending disposal of the admission matter. The matter came up before a Division Bench on 27.2.1982 for admission of the petition and at that time a question was raised as to whether it would be proper for the High Court to hear the Writ Petition since the Court on the administrative side had already taken a decision which forms the basis of the claim of the petitioners in the Writ Petition. On 27.2.1982 after the arguments had been heard at length, the matter was adjourned to 8.3.1982 for further arguments. It appears that on 8.3.1982 when the matter came up for further arguments learned Counsel for the Respondents submitted that in fairness and on the grounds of judicial propriety, the High Court might not hear the Writ Petition. It appears that it was submitted by the learned counsel for the Petitioners that they would have no objection to that course being adopted provided a certificate of fitness to file an appeal in the Supreme Court was granted in their favour. It appears that the learned Counsel for the Respondents did not have any objection to the grant of this prayer of the Petitioners. In view of the agreement between the learned Counsel for the parties, the High Court declined to hear the petition on the ground of judicial propriety and vacated the order for stay passed on 27.11.1981; and the High Court granted a certificate of fitness to the Petitioners to file an appeal in the Supreme Court, holding that the point involved in the Writ Petition relating to the interpretation of article 109 of the Constitution of Jammu & Kashmir, raises a substantial question of law of general public importance and the case was a fit one in which a certificate of fitness should be granted, 599 Civil Appeal No. 1349 of 1982 is the Appeal filed by the Appellants on the strength of the certificate granted by the High Court. Against the Judgment and Order of the High Court dated 8.3.1982 granting certificate of fitness for filing an appeal in this Court after declining to hear the Writ Petition and after vacating the stay, the State obtained Special Leave from this Court to prefer an appeal and Civil Appeal No. 1997 of 1982 has been filed by the State with leave of this Court against this judgment and Order of the High Court dated 8.3.1982. The Writ Petitioners in the High Court who are also the Appellants in Civil Appeal No. 1349 of 1982 in this Court by certificate granted by the High Court, have filed a Writ Petition in this Court under article 32 of the Constitution substantially for the same reliefs claimed in the Writ Petition in the High Court and now forming the subject matter of Civil Appeal No. 1349 of 1982 in this Court. In the Writ Petition filed in this Court the Petitioners have prayed for the issue of a Writ of Certiorari or in the nature thereof, quashing the order of appointment of respondents nos. 3 to 6 as District Judges, for a Writ, Order or Direction in the nature of quo warranto quashing the appointment of Respondents Nos. 3 to 6 as District Judges and a Writ of Mandamus directing the State to appoint the Petitioners as District and Sessions Judges in accordance with the recommendations made by the High Court of Jammu & Kashmir. The Writ Petition filed by the Petitioners bears writ Petition Nos. 2186 to 2189 of 1982. This judgment will dispose of all the three matters. As certain preliminary objections have been raised, we consider it proper to deal with the same in the first place. An objection has been taken with regard to the maintainability of Civil Appeal No. 1349 of 1982 filed in this Court with certificate granted by the High Court. It has been urged that this appeal is incompetent as the certificate granted by the High Court is invalid and improper. The argument is that the High Court in its judgment has not decided any point raised in the Writ Petition and the High Court has declined to deal with the matter on the ground of judicial propriety. It is commented that the only decision of the High Court is the refusal on the part of the High Court to hear the Writ Petition on the ground of judicial pro 600 priety and this decision cannot be the subject matter of a certificate for fitness for filing an appeal in the Supreme Court. It is on this ground that the State obtained Special Leave from this Court against the judgment of the High Court and Civil Appeal No. 1997 of 1982 has been filed by the State with leave granted by this Court. It is, no doubt, true that the High Court did not deal with the Writ Petition on its merits as it had been submitted before the High Court on behalf of the Respondents that the High Court should not hear the Writ Petition on the ground of judicial propriety, because the decision taken by the High Court on the administrative side forms the basis of the claim of the Petitioners in the Writ Petition and the Petitioners were agreeable to the course being adopted by the High Court, provided certificate of fitness to file an appeal in the Supreme Court was granted in their favour. The judgment of the High Court records that the counsel for the Respondents had stated that the respondents had no objection to the grant of the said prayer of the Petitioners and the judgment further records that in view of the agreement between the counsel for the parties, the Court granted certificate of fitness to the Petitioners to file an appeal in the Supreme Court while declining to hear the petition on the ground of judicial propriety. It is true that the High Court while granting the certificate had not gone into the merits of the writ petition, as the High Court had declined to hear the petition on the ground of judicial propriety. It is, however, to be noted that the High Court had adopted the said course as the said course was agreed upon by the learned counsel for the parties. It may also be noted that the High Court in its judgment has pointed out that the interpretation of article 109 of the Constitution of Jammu & Kashmir is involved in the writ petition and the said question is a substantial question of law of general public importance. It appears to us to be rather unfortunate that the State should adopt this attitude and should raise these objections particularly after having agreed before the High Court to the certificate being granted. It appears that in the peculiar facts and circumstances of this case, the High Court which found it embarrassing to deal with the writ petition particularly in view of the objection raised on behalf of the 601 State on the ground of judicial propriety, granted certificate with the agreement of the parties and declined to hear the matter. We have no doubt in our mind that the question raised in the writ petition is a substantial question of law of general public importance. If on the ground of any technicality, the certificate granted by the High Court can be said to be not a proper one, this Court can always grant special leave in a proper case which deserves to be considered by this Court. We may further note that the High Court while declining to hear the matter on the ground of judicial propriety had also vacated the stay which had been earlier granted by the High Court. The real effect of the order amounts to a virtual refusal to entertain the writ petition. The certificate granted by a High Court in any case after declining to hear the same on any ground may not be appropriate and may not be held to be valid and may have to be revoked. The present case, however, is a fit case, particularly in view of the peculiar facts and circumstances of this case and the important question of law of general public importance involved, where this Court should grant special leave to the Petitioners. Accordingly, we revoke the certificate granted by the High Court and we grant special leave to the Petitioners for the filing of this appeal. We treat this appeal as one filed with leave granted by this Court. The other preliminary objection is with regard to the maintainability of the Writ Petition filed by the Petitioners under article 32 of the Constitution. It is urged that there is no violation of fundamental rights of the Petitioners and the jurisdiction of this Court under article 32 of the Constitution is not, therefore, attracted and the writ petition filed in this Court is not maintainable. It has, however, been pointed out on behalf of the Petitioners that the violation of articles 14 and 16 of the Constitution has been alleged and the Writ Petition under article 32 is, therefore, competent. The subject matter of the writ petition is absolutely the same as that of the appeal No. 1349 of 1982 and identical questions are involved in these two proceedings. As we have granted special leave to the Petitioners in Civil Appeal No. 1349 of 1982, the merits of the case have in any event to be decided. The question of maintainability of the writ petition involving the very same questions becomes purely academic, The preliminary objections are accordingly disposed of. We now proceed to deal with the case on its merits. 602 The validity of the appointment of respondents 3, 4, 5 and 6 as District Judges is the subject matter of challenge in the writ petition filed in the High Court and also in this Court. Mr. Venugopal, learned counsel appearing on behalf of the appellants who filed the writ petition in the High Court and who have also filed the writ petition in this Court, have urged two main grounds in support of their contention that the appointment of respondents nos. 3, 4, 5 and 6 are illegal and invalid. (1) The first ground of attack is that on a proper consideration of article 109 and article 111 of the Constitution of Jammu and Kashmir, the Governor does not have any power to appoint District Judges from the cadre of Subordinate Judges of the State and this power is vested in the High Court. (2) The second ground of attack is that even if it be held on a consideration of the aforesaid Articles that the Governor is the authority competent to make the appointment, the appointment must be made by the Governor in consultation with the High Court; and, as in the instant case, the appointments have been made without any consultation with the High Court, the appointments must be held to be in breach of the constitutional provisions and, therefore, illegal and invalid. Mr. Venugopal has drawn our attention to article 109 and article 111 of the Constitution of Jammu and Kashmir. The said two Articles read as follows: "109. Appointment of district Judges. (1) Appointment of persons to be, and the posting and promotion of district Judges in the State shall be made by the Governor in consultation with the High Court. (2) A person not already in the service 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 pleader and is recommended by the High Court for appointment." "111. Control over subordinate courts The control over district courts and courts subordinate thereto includ 603 ing the posting and promotion of, and the grant of leave to, persons belonging to the judicial service of the State and holding any post inferior to the post of district judge shall be vested in the High Court, but nothing in this section shall be construed as taking away from any such person any right of appeal which he may have under the law regulating the conditions of his service or as authorising the High Court to deal with him otherwise than in accordance with the conditions of his service prescribed under such law. Mr. Venugopal has rightly pointed out that the aforesaid two Articles of the Constitution of Jammu and Kashmir correspond to article 233 and article 235 of the Constitution of India. Mr. Venugopal has fairly submitted that though the aforesaid two Articles 109 and 111 of the Constitution of Jammu & Kashmir have not come up for consideration in any particular decision, the corresponding two articles in the Constitution of India have been considered and interpreted in a number of decisions of this Court and the view that has been expressed by this Court on the interpretation of articles 233 and 235 of the Constitution of India is contrary to the view he wants us now to accept. Mr. Venugopal has submitted that the view that has been expressed by this Court in the earlier decision should be reconsidered in the interest of judicial administration and for safeguarding the independence of the judiciary. It is his submission that when a judicial officer in the category of subordinate Judges is promoted to the category of District Judges and becomes a District Judge, the Officer concerned is so appointed as District Judge by promotion. Such appointment by promotion, according to Mr. Venugopal, clearly comes within article 235 of the Constitution of India which deals with control over subordinate courts and provides: "The control over district courts and courts subordinate thereto including the posting and promotion of, and the grant of leave to, persons belonging to the judicial service of a State and holding any post inferior to the post of district judge shall be vested in the High Court, but nothing in this article shall be construed as taking away from any such person any right of appeal which he may have under the law regulating the conditions of his 604 service or as authorising the High Court to deal with him otherwise than in accordance with the conditions of his service prescribed under such law." Mr. Venugopal has also drawn our attention to article 233 which corresponds to article 109 of the Constitution of Jammu & Kashmir. article 233 reads as follows: "(1) Appointment of persons to be, and the posting and promotion of, district Judges in any State shall be made by the Governor of the State in consultation with the High Court exercising jurisdiction in relation to such State. (2) A person not already in the service of the Union or of the State shall only be eligible to be appointed a district judge if he has been for not less than seven years an advocate or a pleader and is recommended by the High Court for appointment." Mr. Venugopal argues that article 233 is intended to govern the appointment of persons to the District Judges in any State and the posting and promotion of District Judges. It is his argument that article 233 does not deal with the case of promotion of subordinate Judges to the post of a District Judge and the promotion of person belonging to the judicial service of the State and holding any post inferior to the post of a District Judge is vested in the High Court by virtue of the provisions contained in article 235 of the Constitution of India which corresponds to article 111 of the Constitution of Jammu & Kashmir. It is to be noted that in the case of State of Assam and Anr. vs Kuseswar Saikia and ors.(1) this Court had to deal with a similar situation and consider similar arguments. The State of Assam and the Legal Secretary to the Govt. of Assam filed an appeal in this Court against the judgment and order of the High Court of Assam, challenging a writ of quo warranto issued by the High Court against Upendra Nath Rajakhowa, District and Sessions Judge, Darrang at Tejpur, declaring that he was not entitled to hold that office. 605 The writ was issued by the High Court at the instance of Respondents Nos. 1, 2, 3 in the appeal before the Supreme Court and these Respondents on conviction by Upendra Nath Rajakhowa in a Sessions Trial challenged their conviction inter alia on the ground that Shri Rajakhowa was not entitled to hold the post of District and Sessions Judge, Darrang as his appointment as District Judge was invalid. The High Court held that the appointment of Rajakhowa as District and Sessions Judge was void because the Governor had no power to make the appointment under Article 233 of the Constitution and Shri Rajakhowa could only be promoted by the High Court under Article 235. According to the High Court, this was a case of 'promotion ' of a person belonging to the judicial service of the State and the High Court was the authority to make the 'promotion ' under Article 235. This view of the High Court was negatived by this Court and this Court allowed the appeal and held at pp. 931 33: "Chapter VI of Part VI of the Constitution deals with Subordinate Courts. The history of this Chapter and why judicial services came to be provided for separate from other services has been discussed in The State of West Bengal vs Nripendra Nath Bagchi(1). This service was provided for separately to make the office of a District Judge completely free of executive control. The Chapter contains six articles (233 to 237). We are not concerned with article 237 in the present case. Article 235 vests in the High Court the control over District Courts and Courts subordinate thereto, including the posting and promotion and grant of leave to persons belonging to the judicial service of a State and holding any post inferior to the post of District Judge. By reason of the definitions given in article 236 the expression 'judicial service ' means a service consisting exclusively of persons intended to fill the post of District Judge and other Civil Judicial posts inferior to the District Judge, and the expression 'District Judge ' includes among others an additional District Judge and an additional Sessions Judge. The promotion of persons belonging to the judicial service but holding post inferior to a District Judge vests in the High Court. As the 606 expression 'District Judge ' includes an Additional District Judge and an Additional Sessions Judge, they rank above those persons whose promotion is vested in the High Court under article 235. Therefore, the promotion of persons to be additional District Judge as Additional Sessions Judges is not vested in the High Court. That is the function of the Governor under article 233. This follows from the language of the Article itself: (a) Appointments of persons to be, and the posting and promotion of, district Judges in any State shall be made by the Governor of the State in consultation with the High Court exercising jurisdiction in relation to such State. The language seems to have given trouble to the High Court. The High Court holds: (1) 'appointment to be ' a District Judge is to be made by the Governor in consultation with the High Court vide article 233; and (2) 'promotion of ' a District Judge and not promotion 'to be a District Judge ' is also to be made by the Governor in consultation with the High Court vide article 233. The High Court gives the example of selection grade posts in the Cadre of District Judges which according to it is a case of promotion of a District Judge. The reading of the article by the High Court is with respect, contrary to the grammar and punctuation of the article. The learned Chief Justice seems to think that the expression 'promotion of ' governs 'District Judges ' ignoring the comma that follows the word 'of '. The article, if suitably expanded, reads as under: 'Appointments of persons to be, and the posting and promotion of (persons to be), District Judges etc. ' 607 It means that appointment as well as promotion of persons to be District Judges is a matter for the Governor in consultation with the High Court and the expression 'District Judge ' includes an additional District Judge and an additional Sessions Judge. It must be remembered that District Judges may be directly appointed or may be promoted from the subordinate ranks of the judiciary. The article is intended to take care of both. It concerns initial appointment and initial promotion of persons to be either District Judges or any of the categories included in it. Further promotion of District Judges is a matter of control of the High Court. What is said of District Judges here applies equally to additional District Judges and Additional Sessions Judges. Therefore, when the Governor appointed Rajkhowa an Additional District Judge, it could either be an 'appointment ' or a promotion under Article 233. If it was an appointment is was clearly a matter under article 233. If the notification be treated as 'promotion ' of Rajkhowa from the junior service to the senior service it was a 'promotion ' of a person to be a District Judge which expression, as shown above, includes an Additional District Judge. In our opinion it was the latter. Thus there is no doubt that the appointment of Rajkhowa as Additional District Judge by the Governor was a promotion and was made under article 233, it could not be made under article 235 which deals with posts subordinate to a District Judge including an additional District Judge and an additional Sessions Judge. The High Court was in error in holding that the appointment of Rajkhowa to the position of an additional District Judge was invalid because the order was made by the Governor instead of the High Court. The appointment or promotion was perfectly valid and according to the constitution. " In the case of State of West Bengal vs Nripendra Nath Bagchi (1), this Court while considering articles 233 and 235 of the Constitution elaborately traced the background and the history of the constitu 608 tional provisions relating to the judiciary and this Court held at page 786: "Articles 233 to 235 make a mention of two distinct powers, The first is power of appointments of persons, their postings and promotion and the other is power of control. In the case of the District Judges, appointments of persons to be and posting and promotion are to be made by the Governor but the control over the District Judge is of the High Court. " The view that on proper construction of Article 233 and 235 the appropriate authority to make the appointment of District Judges is the Governor and not the High Court has also been reiterated by this Court in later decision of this Court. In a recent decision of this Court in the case of Chief Justice of Andhra Pradesh and Ors. vs V.A. Dixitulu and Ors.(1) 5 Judges Bench of this Court held at page 46: "Article 233 gives the High Court an effective voice in the appointment of District Judges. Clause (1) of the Article peremptorily requires that appointments of persons to be, and the posting and promotion of district judges ' shall be made by the Governor in consultation with the High Court. Clause (2) of the Article provides for direct appointment of District Judges from Advocates or pleaders of not less than seven years standing, who are not already in the service of the State or of the Union. In the matter of such direct appointments, also, the Governor can act only on the recommendation of the High Court. Consultation with the High Court under Article 233 is not an empty formality. An appointment made in direct or indirect disobedience of this constitutional mandate, would be invalid. 'Service ' which under clause (1) of Article 233 is the first source of recruitment of District Judges by promotion means the 'Judicial services ' as defined in Article, 236. " In another recent decision of this Court in the case of Hari Datt Kainthla & Anr. vs State of Himachal Pradesh and Ors.(2) 609 this Court referred to earlier decision of this Court and observed at page 372: "Article 233 confers power on the Governor of the State to appoint persons either by direct recruitment or by promotion from amongst those in the judicial service as District Judges. " We have to note that on a proper interpretation of article 233 and 235 of the Constitution this Court has consistently held that the appointing authority is the Governor and this view has held the field for ever two decades. In our opinion this is the correct view on proper interpretation of the said articles and requires no reconsideration. The argument of Mr. Venugopal that this interpretation will lead to the subservience of the judiciary and the independence of the judiciary will be undermined is not convincing, as the power to make the appointment conferred on the Governor has to be exercised by him in consultation with the High Court. This provision regarding exercise of power by the Governor in consultation with the High Court is incorporated to safeguard the independence of the judiciary. We have earlier pointed out that article 109 and article 111 of the constitution of Jammu & Kashmir correspond to article 233 and 235 of the Constitution of India. In view of the interpretation of article 233 and 235 of the Constitution of India consistently given by this Court, and with which we are in entire agreement, we hold that on a proper interpretation of article 109 and 111 of the Constitution of Jammu and Kashmir, the Governor is the authority competent to appoint the District Judges and the power of appointment of District Judges is not vested in the High Court. The first contention of Mr. Venugopal cannot, therefore, be accepted and is negatived. We now proceed to deal with other contentions of Mr.Venugopal, namely, even if the Governor be held to be the appointing authority the appointment by the Governor must be made in consultation with the High Court and in the instant case, the appointments of the District Judges have not been made in consultation with the High Court and the appointments must, therefore, be held to be invalid and illegal. It is necessary to state certain facts before we proceed to consider this question. Four vacancies for the posts of District and Sessions Judges in the State became available for being filled up 610 out of 12 Judicial Officers who were eligible for selection to the posts in questions. The Judicial Officers eligible for selection in the order of seniority are: 1. Shri Qazi Mohd. Muzaffar Ud Din 2. Pavitar Singh 3. Shri Harcharan Singh Bahri 4. Shri Sheikh Maqbool Hussain 5. Shri G.L. Manhas 6. Shri M.M. Gupta 7. Shri H.N. Mehra 8. Shri Jagmohan Gupta 9. Shri Mohd Yasin Kawoosa 10. Shri O.P. Sharma 11. Shri Bashir Ud Din 12. Shri Sudesh Kumar Gupta The High Court at a meeting of all the Judges held on 29.8.1981 considered the matter and the High Court taking into consideration the merit and suitability of all the 12 eligible officers in the cadre of sub judges, found the following Sub Judges fit to be promoted as District and Sessions Judges against the available vacancies: 1. Shri M.M. Gupta 2. Shri O.P. Sharma 3. Shri Bashir Ud Din 4. Shri Sudesh Kumar Gupta It is to be noticed that the respective position of the aforesaid officers in the seniority list was 6, 10, 11 and 12. On 31.8.1981 the Registrar of the High Court forwarded to the Government the recommendations of the High Court of the said four Judicial Officers for filling up the said for vacancies. The letter of the Registrar to the Law Secretary to the Government reads as follows: 611 "Shri G.H. Nehvi, Secretary to Govt., Law Department, Jammu & Kashmir Govt., Srinagar. No. 9245/GS dated 31.8.1981 Sub : Appointments and posting of District & Sessions Judges Sir, There are four vacancies available in the cadre of District & Sessions Judges: two of them being available on account of deputation of Shri Ghulam Hassam Nehvi as Law Secretary and the creation of Additional District & Sessions Judge 's Court at Ramben and, two others on account of the proposed retirement of M/s. Mohammad Saleem Durrani and Mohammad Shaffi. The matter regarding replacement was considered in the meeting of the Court held on 28.8.1981. The Court considered the comparative merit, ability and suitability of all the eligible officers in the cadre of Sub Judges and found the following sub judges fit to be promoted as District & Sessions Judges against the available vacancies: (1) Shri M.M. Gupta at present Third Civil Subordinate Judge, (Excise Magistrate), Jammu; (2) Shri O.P. Sharma, at present Sub Judge (C.J.M.) Jammu. (3) Shri Bashir ud Din, at present, Sub Judge, Special Judicial Mobile Magistrate, Traffic, Kashmir. (4) Shri S.K. Gupta, at present, Sub Judge (Deputy Registrar, Jammu Wing), Jammu. The four therefore may be promoted as officiating District and Sessions Judges and that their postings may be ordered as under : 612 (1) Shri M.M. Gupta, Second Additional District & Sessions Judge, Srinagar (Single Member Tribunal for Anti Corruption Cases, Kashmir) (2) Shri O.P. Sharma, District & Sessions Judge, Rajouri; (3) Shri Bashir ud Din, Second Additional District & Sessions Judge, Jammu (Single Member Tribunal for Anti Corruption cases, Jammu Province); (4) Shri S.K. Gupta, 1st Additional District and Sessions Judge, Srinagar (Special Judge Anti Corruption, Kashmir) I am, therefore, to request you kindly to obtain the sanction of the competent authority and convey the same to me as early as possible, Yours faithfully Sd/ (S.M. Rizvi) Registrar 31.8.1981 In reply to the said letter of the Registrar, the Law Secretary addressed as follows : No. LD (A) 81/143 Sept. 15,1981, My dear Rizvi, Please refer to your letter No. 9245/GS dated 31.8.1981, regarding appointment and posting of District & Sessions Judges. I have been directed to request you kindly to send us copy of the resolution of the Hon 'ble High Court on the subject and also the Annual Confidential Reports for the last 5 years pertaining to the officers proposed for promotion and also those who are superseded. 613 With regards, Yours Sd/ (G.H. Nehvi) Shri S.M. Rizvi. Registrar, High Court of J & K, Srinagar" It appears that on 24.9.1981, the Under Secretary to the Government, Law Department, had sent a reminder to the Registrar of the High Court drawing his attention to the earlier letter dated 15.9.1981. On 5.10.81 the High Court sent a detailed letter to the Government justifying the selection made by the High Court setting out in detail the reasons for supersession of the senior Officers. In this long letter, running into 15 pages (pp. 24 39) in paper book of C.A. No. 1997 of 1982), the High Court made its comments on all the officers who have been superseded. The High Court also forwarded a copy of the resolution dated 29.8.1981. The concluding portion of this long letter reads : "I would, therefore, request you kindly to have the matter expedited and communicate the sanction of the Governor to the proposal already made as early as possible. The ACRs of the Officers concerned for the years 1976 77, 1977 78 and 1978 79 as also the court resolution dated 29.8.1981 are enclosed herewith as desired. " The resolution of the Full Court which was sent along with the letter may be set out: 614 LIST OF ITEMS DISCUSSED IN JUDGES MEETING HELD ON 29.8.1981 PRESENT: The Hon 'ble Mufti Baha Ud Din Acting Chief Farooqui Justice The Hon 'ble Justice Dr. A.S. Anand Judge The Hon 'ble Mr. Justice I.K. Kotwal Judge The Hon 'ble Mr. Justice G.M. Mir Judge Preamble Resolved 3/ Appointment of Shri Ghulam 3/ After having consi Hassan Nehvi, Distt. & Sessions dered the comperative Judge, as Law Secretary and crea merit, ability and sui of Additional District Court at tability of all the officers in Ramber filling up of officers in the cadre the vacancy in this behalf of Sub Judges we are of the opinion that the following sub Judges are fit to be promoted as District & Sessions Judges, against the available vacancies: 1. Shri M.M. Gupta at present Third Civil Subordinate Judge (Excise Magistrate, Jammu) 2. Shri O.P. Sharma, Sub Judge, C.J.M. Jammu. Shri Bashir Ud Din, Sub Judge (Special Mobile Magistrate Traffic), Srinagar. Shri Sudesh Kumar Gupta, Sub Judge (Deputy Registrar, Jammu). We direct that recommendation shall be made to the Governor accordingly. We further direct that their place of postings shall be as follows: 1. Shri M.M. Gupta, Second Addl. Judge (Single Member Tribunal), Srinagar. 615 2. Shri O.P. Sharma, District & Sessions Judge, Rajouri. Shri Bashir Ud Din, 2nd Addl. District & Sessions Judge, SM. T. Jammu) 4. Shri S.K. Gupta (Ist Additional District and Sessions Judge) Special Judge, Anti Corruption Srinagar. The further recommendation shall go to the Governor accordingly. Sd/ Hon 'ble Acting Chief Justice Sd/ Hon 'ble Justice Dr. A.S. Anand Sd/ Hon 'ble Mr. Justice I.K. Kotwal Sd/ Hon 'ble Mr. Justice G.M. Mir It appears that the meeting was attended by all the Judges of the High Court. On the 16th November, 1981, the Secretary to the Government, Law Department, addressed the following letter to the Registrar of the High Court: No. LD (A) 81/143 Dated: 16.11.1981 The Registrar, High Court of J & K, Jammu. Subject: Appointment of District and Sessions Judges. Sir, The Governor has been pleased to approve the promotion of the following Judicial Officers as District and Sessions Judges: 1. Qazi Mohammad Muzaffar Ud Din. Shri Pavitar Singh. 616 3. section Harcharan Singh Bahri. Sheikh Maqbool. The appointment of Qazi Mohammed Muzaffar ud Din will however, be deferred till he is cleared of the charges against him. A post for this purpose will be kept vacant and in case he is exonerated of the charges, his appointment will be given retrospective effect from the date of the issue of the orders regarding other three. Accordingly, a separate proposal may be sent by the High Court regarding the post of the promoted Officers. Yours faithfully. Sd/ Secretary to Government Law Department. It appears that after the recommendations made by the High Court and the detailed reasons by the High Court for recommending the petitioners in supersession of the other officers had been for warded to the State Government by the High Court, the State Cabinet constituted a sub Committee which had gone into the matter and had made its recommendations. It appears that on the basis of the recommendations made by the Sub committee of the State Cabinet the letter of the Law Secretary dated 16th November 1981 to the Registrar of the High Court was addressed, informing the High Court of the Governor 's approval to the promotion of Respondents Nos. 3, 4, 5 and 6 as District and Sessions Judges. On receipt of the aforesaid communication from the Government dated 16.11.1981 the High Court on 24.11.1981, at a meeting of the Judges recorded the following minutes: "Copy of extract from the Minutes of Judges meeting held on 24.11.1981 Preamble Resolved 1. Law Secretary 's letter 1) Considered. The posting No. LD(A) 81/143 dated of the Offices is pro 16.11.1981 regarding posed as under : 617 appointment of S/Shri i) Shri Pavitar Singh Qazi Mohd. Muzaffar District and Sessions UD Din, Pavitar Singh, Judge, Leh Kargil. H.S. Bahri and Sheikh ii) S.Harcharan Singh Maqbool Hussain as Bahri District & District and Sessions Sessions Judge, Judge. Submission of Rajouri. proposal regarding their iii) Sheikh Maqbool Hussain posting. 1st Addl. District & Sessions Judge, Srinagar. It shall be pointed out to the Government that the Communication of the posting shall not be deemed as consultation with the Court in terms of Section 109 of the Constitution of Jammu and Kashmir in so far as the promotion of these officers is concerned. Thereafter, on 26.11.1981, the following order was passed by the State Government: "Government of Jammu and Kashmir Civil Secretariat: Law Department Sub: Officiating appointment of District & Sessions Judges. ORDER NO. 717 LD (A) of 1981 dated 26.11.1981 Sanction is accorded to the officiating appointing of the following sub Judges as District and Sessions Judges in the scale of Rs. 1100 1600 against available vacancies with the posting as shown against each in consultation with the Hon 'ble High Court: (1) Shri Pavitar Singh District and Sessions Judge, Leh Kargil (2) Shri Harchran Singh District and Sessions Judge, Rajouri 618 (3) Sheikh Maqbool Ist Additional District and Hussain Sessions Judge, Srinagar, Special Judge, Anti Corrup tion, Kashmir, Srinagar. By order of the Governor Sd/ G.H. Nehvi Secretary to Government Law Department. Mr. Venugopal, learned counsel for the Petitioners has argued that the High Court after due consideration of the respective merits and suitability of all the officers, recommended the names of the petitioners for appointment as District Judges and thereafter at the request of the Government, the High Court had on 5.10.1981 forwarded to the Government detailed reasons and the High Court had also forwarded the confidential reports of the officers which were in the possession of the High Court. Mr. Venugopal points out that without any further reference to the High Court, the State Government on the basis of the report of a Cabinet Sub Committee, chose not only ignore the recommendations made by the High Court but also to appoint respondents nos. 3 to 6 without any kind of consultation with the High Court about the appointment of the said respondents. Mr. Venugopal has argued that the State Government should as a rule accept the recommendations made by the High Court. He contends that in any event the State Govt. cannot appoint any officer as District and Sessions Judge without consultation with the High Court as consultation with the High Court is the mandatory requirement of article 109 of the Constitution of Jammu and Kashmir which empowers the Governor to make the appointments in consultation with the High Court. It is the contention of Mr. Venugopal that this requirement of consultation with the High Court constitutes a salutary safeguard for preserving the independence of the judiciary. The consultation envisaged must be full and effective and the point of view of the High Court in the matter of appointment has to be discussed, understood and properly appreciated and generally accepted. Mr. Venugopal has argued that the responsibility of judicial administration in the State basically rests on the High Court and the High Court for properly discharging its functions, must necessarily have proper judicial officers competent to discharge the duties to be entrusted to them. It is the argument of Mr. Venugopal that the High Court which has complete control over its judicial officers 619 has all relevant records of the officers and is in a proper position to understand and appreciate their performance and merits, must necessarily be the best Judge as to the suitability for promotion of these officers as District Judges. In this connection Mr. Venugopal has referred to a number of decisions of this Court. Mr. Venugopal has submitted that in the instant case, in the matter of appointment of the Respondents Nos. 3, 4, 5 and 6 there has not been any kind of consultation with the High Court and the said respondents have been appointed without any reference to the High Court and even without a formal intimation to the High Court that the recommendations made by the High Court were not acceptable and the State Governments was going to appoint Respondents Nos. 3 to 6 herein. It is the submission of Mr. Venugopal that these appointments must therefore, be held to be violative of the Constitution and must, therefore, be held to be invalid and illegal and should be quashed. Mr. Kacker, learned counsel appearing on behalf of the State, has submitted that it is open to the State Government not to accept the recommendations of the High Court and the Governor may refuse to accept the recommendations made by the High Court with out assigning any reason whatsoever. Mr. Kackar argues that the requirement of the Constitution is that the appointment of District Judges by the Governor of the State must be made by him in consultation with the High Court. It is his argument that the consultation does not mean either concurrence or recommendation and no particular form or procedure is also necessary to be followed in the matter of this consultation. He submits that in the instant case, the State Government had asked for all the relevant materials which were in the possession of the High Court and the High Court had forwarded to the State Government the annual confidential reports and other materials and also the comments of the High Court with regard to each and every candidate on the eligible list. Mr. Kacker contends that consideration by the State Government of all these materials placed by the High Court results in and amounts to consultation within the meaning of the Article. Mr. Kacker submits that on a consideration of all the materials issued by the High Court, the State Government decided not to accept the recommendations made by the High Court and decided to appoint Respondent Nos. 3, 4, 5 and 6 as District Judges. It is the submission of Mr. 620 Kacker that there has been consultation within the meaning of the Article and there has been sufficient compliance with the Constitutional requirement as to consultation. In the case of Chandra Mohan vs State of Uttar Pradesh,(1) this Court while considering article 233 of the Constitution observed after setting out article 233 (1) at pp. 82 83 : "We are assuming for the purpose of these appeals that the 'Governor ' under article 233 shall act on the advice of the Ministers. So the expression 'Governor ' used in the Judgment means Governor acting on the advice of the Ministers. The Constitutional mandate is clear. The exercise of the power of appointment by the Governor is conditioned by his consultation with the High Court, that is to say, he can only appoint a person to the post of District Judge in consultation with the High Court. The object of consultation is apparent. The High Court is expected to know better than the Governor in regard to the suitability or otherwise of a person, belonging either to the 'Judicial service ' or to the Bar, to be appointed as district judge. Therefore, a duty is enjoined on the Governor to make the appointment in consultation with a body which is the appropriate authority to give advice to him. This mandate can be disobeyed by the Governor in two ways, namely, (i) by not consulting the High Court at all, and (ii) by consulting the High Court and also other persons. In one case he directly infringes the mandate of the Constitution and in the other he indirectly does so far his mind may be influenced by other persons not entitled to advise him. That this constitutional mandate has both a negative and positive significance is made clear by the other provisions of the Constitution. Wherever the Constitution intended to provide more than one consultant, it has said so: See articles 124 (2) and 217 (1) Wherever the Constitution provided for consultation of a single body or individual it said so: See article 222, article 124 (2) goes further and makes a distinction between persons who shall be consulted and persons who may be consulted. These provisions indicate that the duty to consult is so integrated with the exercise of the power that the power can be exercised only in consultation with the person or persons designated therein. To state it 621 differently, if A is empowered to appoint B in consultation with C he will not be exercising the power in the manner prescribed if he appoints B in consultation with C and D". In the case of Chandramouleshwar Prasad vs Patna High Court & Ors.,(1) a 5 Judge Bench of this Court held at p. 674 675: "consultation with the High Court under article 233 is not an empty formality. So far as promotion of Officers to the cadre of District Judge is concerned the High Court is best fitted to adjudge the claims and merits of persons to be considered for promotion. The Governor cannot discharge the function under article 233 if he makes an appointment of a persons without ascertaining the High Court 's views in regard thereto It was strenuously contended on behalf of the State of Bihar that the materials before the Court amply demonstrate that there had been consultation with the High Court before the issue of the notification of October 17, 1968. It was said that the High Court had given the Government its views in the matter; the Government was posted with all the facts and there was consultation sufficient for the purpose of article 233. We cannot accept this. Consultation or deliberation is not complete or effective before the parties thereto make their respective points of view known to other or others and discuss and examine the relative merits of their views. If 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 our opinion, the notification of October 17, 1968 was not in compliance with article 233 of the Constitution. In the absence of consultation the validity of the notification of 17th October, 1968 cannot be sustained. In the case of High Court of Punjab and Haryana etc.v. State of Haryana,(2) the view expressed by this Court in Chanderamouleshwar 622 prasad 's case (supra) noted by another Constitution Bench of 5 Judges at p. 377: "In Chandramouleshwar Prasad vs Patna High Court & Ors. ; it was said that under article 233 the appointment of person to be District Judge rests with the Governor but he must make the appointment in consultation with the High Court. The Governor should make up his mind after there has been deliberation with the High Court. The consultation is not complete or effective before the parties thereto make there respective points of view known to the other or others. It was said that the Governor cannot discharge his functions under Article 233 if he makes the appointment of a person without ascertaining the points of view of the High Court with regard thereto. " In the case of Chief Justice of Andhra Pradesh and Ors. vs V.A. Dixitulu and Ors. (supra), the same view has been reiterated in the following observation at p. 46: "Article 233 gives the High Court an effective voice in the appointment of District Judges. Clause (1) of the Article peremptorily requires that 'appointments of persons to be, and the posting and promotion of, district Judges" shall be made by the Governor 'in consultation with the High Court. "Clause (2) of the Article provides for direct appointment of District Judges from advocates or pleaders of not less than seven years standing, who are not already in the service of the State or of the Union. In the matter of such direct appointments, also, the Governor can act only on the recommendation of the High Court. Consultation with the High Court under article 233 is not an empty formality. An appointment made in direct or indirect disobedience off his constitutional mandate, would be invalid (See Chandra Mohan vs State of U.P.(1) and Chandramouleshwar vs Patna High Court(2) 'Service ' which under clause (1) of Article 233 is the first source of recruitment of District Judges by promotion, means the 'judicial services ' as defined in Article 236. " 623 In a recent decision of this Court in Hari Datt Kainthla & Anr. vs State of Himachal Pradesh & Ors. (supra) this Court reaffirmed the views earlier expressed at p. 372 373: "Article 233 confers power on the Governor of the State to appoint persons either by direct recruitment or by promotion from amongst those in the judicial service as District Judges but this power is hedged in with the condition that it can be exercised by the Governor in consultation with the High Court. In order to make this consultation meaningful and purposive the Governor has to consult High Court in respect of appointment of each person as Distt. Judge which includes an Additional Distt Judge and the opinion expressed by the High Court must be given full weight. article 235 invests control over subordinate courts including the officers manning subordinate courts as well as the ministerial staff attached to such courts in the High Court. Therefore, when promotion is to be given to the post of District Judge from amongst those belonging to subordinate judicial service, the High Court unquestionably will be competent to decide whether person is fit for promotion and consistent with its decision to recommend or not to recommend such person. The Governor who would be acting on the advice of the Minister would hardly be in a position to have intimate knowledge about the quality and qualification of such person for promotion. Similarly when a person is to be directly recruited as District Judge from the Bar the reasons for attaching full weight to the opinion of the High Court for its recommendation in case of subordinate judicial service would mutatis mutandis apply because the performance of a member of the Bar is better known to the High Court that the Minister or the Governor. In Candra Mohan vs State of Uttar Pradesh and Ors. (supra) at page 83, a Constitution Bench of the Court observed as under: "The Constitutional mandate is clear. The exercise of the power of appointment by the Governor is condi 624 tioned by his consultation with the High Court, that is to say, he can only appoint a person to the post of District Judge in consultation with the High Court. The object of consultation is apparent. The High Court is expected to know better than the Governor in regard to the suitability or otherwise of a person, belonging either to the "judicial service" or to the Bar, to be appointed as a district judge. Therefore, a duty is enjoined on the Governor to make the appointment in consultation with a body which is the appropriate authority to give advice to him. " This view was reaffirmed in Chandramouleshwar Prasad vs Patna High Court & Ors. (supra) observing: "The High Court is the body which is intimately familiar with the efficiency and quality of officers who are fit to be promoted as District Judges. The High Court alone knows their merits as also demerits. " The facts which we have earlier set out establish that after the High Court had forwarded its recommendations and thereafter sent the detailed comments alongwith a copy of the resolution as requested by the Government. The State Government without any further intimation to the High Court or without any kind of discussion with the High Court had made the appointment of respondents Nos. 3, 4, 5 and 6, ignoring the recommendations made by the High Court. The facts further go to indicate that on receipt of the detailed comments and the resolution a cabinet sub committee had considered the matter and on the recommendations made by the Cabinet sub committee, the Governor did not act on the recommendations made by the High Court but made the appointments on the recommendations of the sub committee. The recommendations of the sub committee were never communicated to the High Court and the State Government had not discussed or sought the views of the High Court on the findings and recommendations of the cabinet sub committee. It is, therefore, abundantly clear from the facts of the present case that the counter proposals sought to be made by the Government in the matter of appointment were never communicated to the High Court and the High Court 's views on the said proposals of the Government were never asked for and the 625 High Court was not at all consulted in the matter of Government 's proposals to appoint respondents Nos. 3, 4, 5 and 6 as District Judges. It is well settled that consultation or deliberation is not complete or effective before the parties thereto make their respective points of view known to the other or others and discuss and examine the relative merits of their views. If one party makes a proposal to the other who has a counter proposal in his minds 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 done after consultation. We are, therefore, of the opinion that in the instant case there has not only been no effective or complete consultation but, in fact, there has been complete lack of consultation in the matter of appointment of Respondents Nos. 3, 4, 5 and 6. We must, therefore, hold that the appointment of the Respondents Nos. 3, 4, 5 and 6 in the absence of consultation with the High Court must be held to be violative of the constitutional requirement and therefore, invalid. The impugned order appointing respondents Nos. 3, 4, 5 and 6 has, therefore, necessarily to be quashed. Before concluding we consider it necessary to emphasize that independence of the judiciary is one of the basic tenets and a fundamental requirement of our Constitution. Various Articles in our Constitution contain the relevant provisions for safeguarding the independence of the Judiciary. Art 50 of the Constitution which lays down that "the State shall take steps to separate the judiciary from the executive in the public services of the State", postulates separation of the judiciary from the executive. Unfortunately, for some time past there appears to be an unhappy trend of interference in the matter of judicial appointments by the executive both at the State and the Central level. The unfortunate interference by the executive results in prolonged and unnecessary delay in making the appointments and judicial vacancies continue for months and in cases for years with the result that the cause of justice suffers. It is common knowledge that members of the Bar who are considered suitable to be on the Bench are reluctant to join the Bench and the Office of a Judge has for various reasons ceased to attract the tenanted members of the Bar. The further unfortunate fact is that even in cases when competent 626 members of the Bar may be persuaded to accept the office of a High Court Judge or join the higher judicial service, they ultimately withdraw their consent in view of the delay in making the appointments and because of various restrictions sought to be imposed. As in the present case we are not really concerned with the appointment of a Judge of the High Court or of a direct appointment to the higher judicial service from the Bar, we do not purpose to dilate on this subject. Article 235 of the Constitution vests the control of judicial administration completely in the High Court excepting in the matter of initial appointment and posting of district judges and the dismissal, removal or termination of services of these officers. Even in these matters the requirement of the Constitution is that the Governor must act in consultation with the High Court. If in the matter of appointment, the High Court is sought to be ignored and the executive authority chooses to make the appointment, independence of the judiciary will be affected. Persons who are interested in being appointed District Judges, whether directly or by promotion, will try to lobby with the executive and curry favour with the Government for getting these appointments and there is every possibility of the independence of such persons so appointed being undermined with the consequence that the cause of justice will suffer. We are of the opinion that healthy convention and proper norms should be evolved in the matter of these appointments for safeguarding the independence of the judiciary in conformity with the requirements of the constitution. We are of the opinion that normally, as a matter of rule, the recommendations made by the High Court for the appointment of a District Judge should be accepted by the State Government and the Governor should act on the same. If in any particular case, the State Government for good and weighty reason find it difficult to accept the recommendations of the High Court, the State Government should communicate its views to the High Court and the State Government must have complete and effective consultation with the High Court in the matter. There can be no doubt that if the High Court is convinced that there are good reasons for the objections on the part of the State Government, the High Court will undoubtedly reconsider the matter and the recommendations made by the High Court. Efficient and proper judicial administration being the main object of these appointments, there should be no difficulty in arriving at a consensus as both the High Court and the State Government must necessarily approach the 627 question in a detached manner for achieving the true objective of getting proper District Judges for due administration of justice. It appears that in the instant case, the State Government without any kind of intimation to the High Court or any discussion or deliberation with the High Court refused to accept the recommendations made by the High Court and proceeded to make the appointments only on the basis of seniority without any kind of consultation with the High Court. Seniority, undoubtedly, is a relevant factor in considering promotion. It is, however, to be borne in mind that in the matter of promoting the Subordinate Judge to a District Judge, seniority is not the only criterion, though it is a material factor to be considered. The true test in the matter of promotion is the suitability of the candidate. In considering the suitability, no doubt, the seniority plays a very important role. A senior Subordinate Judge may by virtue of the longer period of his service and wider experience be normally considered to be more suitable than any junior Officer. The greater length of service also gives the High Court an opportunity of judging his performance and merit for a longer period. If, howsoever, on a proper consideration of the performance and merit of the officer for this longer period, the High Court comes to the conclusion that the performance of the officer concerned though for a period longer than any officer junior to him is not satisfactory and meritorious enough, to entitle him to be promoted, the High Court cannot be compelled to recommend such an officer only on the ground of his seniority for promotion. It has to be borne in mind that in such a case the High Court has the further advantage of judging the suitability of the officer, taking into consideration his performance over a longer period of time. The High Court by virtue of its control over the officers must be considered to be the best judge of the ability and suitability of any officer as the High Court has in its possession all relevant materials regarding the performance of the officer. The High Court of the State is primarily entrusted with the judicial administration in the State; and for efficient and due discharge of its responsibility, the High Court needs to have proper officers in proper places. The High Court must be recognised to be the best judge of the requirements for proper and efficient administration of justice and it should generally be left to the High Court to decide as to which of 628 the officers will best serve the requirements in furtherance of the cause of justice. High Court 's main concern is efficient judicial administration in the State for properly serving the cause of justice. While making any recommendation, no other extraneous matter weighs with the High Court. The High Court judges the suitability for promotion in a detached manner taking into consideration all material facts and relevant factors for promoting the cause of justice and efficient judicial administration in the State. It may be a problem for the High Court to properly post a person as a District Judge whom the High Court considers not be suitable for the post and to entrust him with the responsibility of a District Judge. The appointment of Respondent Nos. 3, 4, 5 and 6 made by the State Government in violation of the constitutional provisions are, therefore, set aside. The said vacancies are directed to be filled up in accordance with law. We, however, wish to make it clear that quashing the appointments of Respondents Nos. 3, 4, 5 and 6 will not render any orders passed and judgments delivered by them during the period they have continued to function as District Judge on the basis of the invalid appointments made, illegal, invalid and void. To prevent any kind of confusion in the matter of administration of justice and in the larger interest of justice order passed and judgments delivered by the Respondents Nos. 3, 4, 5 and 6 have to be held valid and binding, as if their appointments so long as the same have not been set aside, were valid for the purposes of dealing the matters disposed of by them. The appeal filed by the appellants and the writ petition filed by them in the High Court of Jammu and Kashmir are accordingly allowed to the extent indicated above with costs against the State Government. In view of this order no order is necessary on the writ petition filed in this Court. PATHAK, J. I entirely agree with my learned brother Sen in his observations concerning the incompetence of the certificate granted by the High Court and the maintainability of the writ petition and in the order granting special leave to appeal to the appellants. On the merits I agree with my learned brother that the promotions of respondents Nos. 3, 4, 5 and 6 as District and Sessions 629 Judges by the State Government is contrary to law inasmuch as there was no consultation between the State Government and the High Court before the promotions were effected. This contention of the appellants must succeed. I do not propose to express any opinion on the other contention of the appellants that the promotions fall outside the scope of Article 233 of the Constitution. P.B.R. Appeal allowed.
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Independence of the judiciary is one of the basic tenets and a fundamental requirement of our Constitution.
Various articles of the Constitution provide or safeguarding the independence of the judiciary.
Article 50 provides separation of the judiciary from the executive.
For some time past there appears to be a trend of interference by the executive, both at the State and Central levels, in judicial appointments.
This has resulted in prolonged and unnecessary delay in making the appointments to judicial offices.
For various reasons judicial offices have ceased to attract talented members of the Bar and even when competent members of the Bar are persuaded to accept the office of a High Court Judge or of a District Judge they eventually withdraw their consent both because of the inordinate delay in making the appointments as well as of the various restrictions sought to be imposed.
594 Article 235 of the Constitution vests control of the judicial administration completely in the High Court except in certain circumstances.
In these matters the constitutional requirement is that the Governor must act in consultation with the High Court.
If, in the matter of these appointments, the High Court is sought to be ignored and the executive chooses to make the appointments, the independence of the judiciary would be affected.
It is necessary that healthy conventions and proper norms should be evolved for safeguarding the independence of the judiciary in conformity with the requirements of the Constitution.
Normally, as a matter of rule, the recommendations made by the High Court for the appointment of a District Judge should be accepted by the State Government and the Governor should act on the same.
Where the State Government does not agree with the recommendations of the High Court it should communicate its views to the High Court so that the High Court may consider the matter once again.
The State Government must have complete and effective consultation with the High Court in the matter.
Efficient and proper judicial administration being the main object of these appointments, there should be no difficulty in arriving at a consensus as both the High Court and the State Government must necessarily approach the question in a detached manner for achieving the objective of getting proper District Judges for the due administration of justice.
Facts : To fill up four vacancies of District Judges in the State, the High Court, after considering the merit and suitability of 12 eligible officers in the cadre of Sub Judges, recommended four names to the Governor.
The State Government asked the High Court to send the confidential reports of all the officers considered for the post.
While sending the reports, the High Court had also sent its comments justifying the selection and set out in detail the reasons for supersession of senior officers.
However on the basis of the recommendations of a Cabinet Sub Committee constituted by the State Government to make its recommendations on this point, the Law Secretary communicated to the Registrar of the High Court approval of the Governor for the promotion and appointment as District and Sessions Judges certain officers other than those recommended by the High Court.
While giving postings to them the High Court recorded a minute that their postings "should not be deemed as consultation with it in terms of Article 109 of Jammu & Kashmir Constitution.
Four of the Sub Judges whose names had been recommended by the High Court for appointment as District and Sessions Judges but were rejected by the Government, filed a writ petition in the High Court questioning the validity of the Government 's action.
In that petition, the High Court was made one of the respondents.
On the question whether it would be proper for the High Court to hear a writ petition impugning an order passed by it in its administrative capacity, with the consent of both the petitioners and the respondent State, the High Court declined to hear the petition.
Since, however, the respondent State did not 595 have any objection to grant to the petitioners a certificate of fitness to file an appeal in this Court, the High Court granted the certificate holding that the petition involved interpretation of Article 109 of the Constitution of Jammu & Kashmir and also that it raised a substantial question of law of general public importance.
Meanwhile the State obtained special leave to appeal against the order of the High Court alleging that the High Court had not decided any point raised in the writ petition on the ground of judicial propriety and that therefore the High Court should not have granted the certificate of fitness to appeal.
The petitioners in the High Court had also filed a writ petition under Article 32 of the Constitution for substantially the same reliefs claimed by them in their writ petition in High Court.
It was contended on behalf of the appellants that Article 233 (which corresponds to Article 109 of the Constitution of Jammu & Kashmir and which has been judicially interpreted by this Court in a number of cases) deals with appointment, posting and promotion of District Judges but does not deal with promotion of subordinate judges to the post of District Judges and that promotion of subordinate judges is vested in the High Court and that therefore appointments made by the Government without consulting the High Court were void The State on the other hand contended that consultation contemplated by this Article does not mean either concurrence or recommendation and no particular form or procedure was necessary to be followed by the Governor for consultation with the High Court and that in this case all the material which the High Court had submitted to the Governor amounted to consultation within the meaning of the Article.
Allowing the appeal, ^ HELD : On a proper interpretation of Articles 109 and 111 of the Constitution of Jammu & Kashmir, the Governor is the competent authority to appoint District Judges and the power of appointment is not vested in the High Court.
This is settled by a long line of decisions of this Court.
[609 E F] Merely because the power of appointing these officers is vested in the Governor, it cannot be said that it would lead to the subservience of the judiciary to the executive and the independence of the judiciary would be undermined.
The power to make the appointments conferred on the Governor has to be exercised by him in consultation with the High Court.
This provision has been incorporated in the Constitution to safeguard the independence of the judiciary.
[609 C D] It is equally well settled that consultation or deliberation is not complete or effective before the parties thereto make their respective points of view known to the other or others and discuss and examine the relative merits of 596 their views.
If 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 done after consultation.
[625 B C] Chandra Mohan vs State of Uttar Pradesh, [1967] 1 S.C.R.77, Chandra mouleshwar Prasad vs Patna High Court & Ors., , High Court of Punjab and Haryana etc.
vs State of Haryana, [1975]3 S.C.R. 368; followed.
In the instant case the counter proposals sought to be made by the Government in the matter of these appointments were never communicated to the High Court and the High Court 's views on these proposals were never asked for.
The High Court was not at all consulted in the matter of the Government 's proposal to appoint the respondents as District Judges.
[624 G H; 625A] Secondly, the Government, without any discussion or deliberation with the High Court, refused to accept its recommendation and made the appointment on the basis of seniority.
Though seniority is a relevant factor in promoting subordinate judges as District Judges it is not the only criterion.
The true test is the suitability of the candidate.
If on a consideration of all the relevant factors the High Court comes to a conclusion that the performance of a senior officer was not meritorious enough to entitle him to promotion, it cannot be compelled to recommend such an officer merely on the ground of seniority because the High Court is primarily entrusted with the judicial administration in the State.
The High Court has the advantage of judging the suitability of a person, taking into consideration his overall performance in the previous job over a long period of time.
[627 B F] After declining to hear the petition on grounds of judicial propriety, the High Court granted the certificate with the consent of the parties since the petition involved interpretation of Article 109 of the Constitution of Jammu & Kashmir.
It is unfortunate that the State, after having agreed to the course adopted by the High Court, should raise objections as to the validity of the certificate at the stage of appeal in this Court.
Undoubtedly the question raised is a substantial question of law of general public importance.
Even assuming that the certificate granted by the High Court was not proper this Court could always grant special leave where the question raised deserves to be considered by it.
[600 F H; 601 A B] In the instant case while declining to hear the matter the High Court vacated the stay granted earlier, the result of which was an eventual refusal to entertain the writ petition, In the facts and circumstances of this case this is a special case in which this Court can revoke the certificate and grant special leave to the petitioners for filing an appeal, [601 D E] Since the question involved in this case is substantially the same, both in the appeal as well as in the petition under Article 32 of the Constitution the question of maintainability of the writ petition becomes purely academic.
[601 H] 597 [Pathak, J. agreed with the observations of the majority in concurring the incompetence of the certificate granted by the High Court and the maintainability of the writ petition and in the order granting special leave to appeal.
On merits his Lordship agreed with the majority that the promotions made by the State Government were contrary to law inasmuch as there was no consultation between the State Government and the High Court before the promotions were made.
[628 G H; 629 A] His Lordship, however, did not propose to express any opinion on the appellants ' contention that the promotions fall outside the scope of Article 233 of the Constitution.
[629 B]
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Having an independent judiciary is a key part of our Constitution.
Several parts of the Constitution protect the judiciary's independence.
Article 50 says that the judicial branch should be separate from the executive branch.
Recently, it seems the executive branch (at both state and national levels) has been interfering with judicial appointments.
This has led to long and unnecessary delays in filling judicial positions.
Because of these issues, qualified lawyers are less interested in becoming judges. Even when good lawyers are willing to be High Court or District Judges, they sometimes withdraw their applications. This is because of the long delays in the appointment process and the limits placed on the job.
Article 235 of the Constitution gives the High Court complete control over the judicial system, except in certain situations.
In these situations, the Governor must talk with the High Court before making decisions.
If the High Court is ignored when making appointments, and the executive branch makes the appointments on its own, the judiciary's independence is threatened.
It's important to develop good practices and rules to protect the judiciary's independence, as the Constitution requires.
Usually, the State Government should accept the High Court's recommendations for District Judge appointments, and the Governor should follow them.
If the State Government disagrees with the High Court's recommendations, it should explain its reasons to the High Court. Then, the High Court can reconsider the matter.
The State Government must have a full and honest discussion with the High Court on these matters.
The main goal of these appointments is to have an efficient and fair judicial system. So, the High Court and State Government should easily reach an agreement. They both need to approach the issue without bias, aiming to find the best District Judges to ensure justice.
Facts: There were four open District Judge positions in the State. The High Court reviewed 12 qualified Sub Judges and recommended four people to the Governor.
The State Government asked the High Court for the confidential reports of all the Sub Judges who were considered.
Along with the reports, the High Court sent its reasons for choosing those four and explained why some more senior officers were not selected.
However, a Cabinet Sub Committee created by the State Government made its own recommendations. The Law Secretary then told the High Court's Registrar that the Governor had approved different officers for promotion to District and Sessions Judges. These were not the people the High Court had recommended.
When assigning these people to their new positions, the High Court stated that these assignments "should not be considered as consultation" according to Article 109 of the Jammu & Kashmir Constitution.
Four Sub Judges, who were recommended by the High Court but rejected by the Government, filed a legal challenge in the High Court. They argued that the Government's decision was not valid.
The High Court was named as one of the parties in this legal challenge.
The question was whether the High Court should hear a case that challenged its own decision made in its administrative role. With the agreement of both the Sub Judges and the State, the High Court decided not to hear the case.
However, the State did not object to giving the Sub Judges permission to appeal the decision in a higher court. The High Court granted this permission, stating that the case involved interpreting Article 109 of the Jammu & Kashmir Constitution and raised an important legal question of public interest.
Meanwhile, the State requested special permission to appeal the High Court's order. They argued that the High Court had not decided any specific issue in the legal challenge due to concerns about judicial fairness. Therefore, the State claimed that the High Court should not have granted permission to appeal.
The Sub Judges also filed a separate legal challenge under Article 32 of the Constitution, seeking the same relief they had requested in the High Court.
It was argued that Article 233 (which is similar to Article 109 of the Jammu & Kashmir Constitution and has been interpreted by the Court in previous cases) deals with the appointment, posting, and promotion of District Judges, but not the promotion of subordinate judges to District Judges. It was argued that the High Court has the power to promote subordinate judges. Therefore, the Government's appointments without consulting the High Court were invalid. The State argued that the consultation required by this Article does not mean agreement or a specific recommendation. They claimed that the Governor did not need to follow a particular process for consulting with the High Court. In this case, the State argued that all the information the High Court provided to the Governor was enough to be considered consultation under the Article.
Allowing the appeal, it was HELD: According to a correct interpretation of Articles 109 and 111 of the Constitution of Jammu & Kashmir, the Governor has the authority to appoint District Judges, and the High Court does not have this power.
This has been decided in many previous court cases.
Just because the Governor has the power to appoint these officers, it does not mean that the judiciary will be controlled by the executive branch or that the judiciary's independence will be weakened.
The Governor must consult with the High Court when making these appointments.
This requirement was included in the Constitution to protect the judiciary's independence.
It is also well-established that consultation or discussion is not complete or effective unless the parties involved share their views with each other and discuss and examine the strengths and weaknesses of their views.
If one party makes a proposal to the other, but the other party has a different idea that they don't share, then simply implementing that different idea cannot be considered a decision made after consultation.
In this case, the Government's different ideas about the appointments were never shared with the High Court, and the High Court's opinions on these ideas were never requested.
The High Court was not consulted at all about the Government's plan to appoint certain people as District Judges.
Secondly, the Government refused to accept the High Court's recommendations and made the appointments based on seniority, without any discussion or consideration with the High Court.
While seniority is important when promoting subordinate judges to District Judges, it is not the only factor.
The most important thing is whether the person is qualified for the job.
If the High Court decides that a senior officer's performance is not good enough for a promotion after considering all the relevant factors, it cannot be forced to recommend that officer just because of their seniority. The High Court is responsible for the judicial system in the State.
The High Court can judge a person's qualifications by considering their overall performance in their previous job over a long period of time.
After declining to hear the case due to concerns about judicial fairness, the High Court granted permission to appeal with the agreement of the parties. This was because the case involved interpreting Article 109 of the Constitution of Jammu & Kashmir.
It is unfortunate that the State agreed to the High Court's approach but then challenged the validity of the permission to appeal in this Court.
The question raised is definitely an important legal question of public interest.
Even if the permission granted by the High Court was not correct, this Court can always grant special permission if the question deserves to be considered.
In this case, while declining to hear the matter, the High Court lifted a previous order that had put the appointments on hold. This effectively meant the High Court refused to hear the legal challenge. In these specific circumstances, this Court can cancel the permission granted by the High Court and grant special permission to the Sub Judges to file an appeal.
Since the legal question in this case is basically the same in both the appeal and the legal challenge under Article 32 of the Constitution, whether the legal challenge can be maintained is not really important.
Justice Pathak agreed with the majority's view that the permission granted by the High Court was not correct and that the legal challenge could be maintained. He also agreed with the order granting special permission to appeal. On the main points of the case, he agreed with the majority that the promotions made by the State Government were against the law because there was no consultation between the State Government and the High Court before the promotions were made.
However, he did not want to express an opinion on the argument that the promotions were outside the scope of Article 233 of the Constitution.
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tition Nos. 5669 of 1980 and 1345 of 1981 (Under Article 32 of the Constitution of India) G. L. Sanghi, section K. Dholakia, section C. Gupta, D. section Gupta, P. Narashiman and R. C. Bhatia for the Petitioners in WP. No. 1345 of 1981. A. K. Sen, Anil Kumer Gupta, Brij Bhushan and Mrs. Renu Gupta for the Petitioners in WP. No. 5669 of 1980. V. C. Mahajan, N. C. Talukdar, V. B. Saharya and R. N. Poddar for Respondents Nos. 1 & 2. P. P. Rao, Girish Chandra, A. Mariarputham, Miss A. Subhashini and Miss Aruna Mathur for Respondent. (Delhi High Court) K. K. Venugopal, Mrs. Urmila Kapoor and K. Lakshmi Venugopal for Respondent No. 4. (G.S. Dakha) Dr. L. M. Singhvi, A. M. Singhvi, K. Lakshmi Venugopal and Mrs. Shobha Dikshit for Respondents 5 & 6. 360 M. C. Bhandare and section section Srivastava for Respondent No. 7. M. C. Bhandare for the Intervener (Delhi High Court Bar Association) A. K. Ganguli for the intervener (Delhi High Court & Delhi Bar Associations) B.P. Maheshwari (Delhi Bar Council) The following Judgments were delivered CHANDRCHUD, C. J. Once again, we are back to the irksome question of inter se seniority between promotees and direct recruits. The contestants, this time, are judicial officers of Delhi. Our familiarity, generally, with the difficulties in the way of judicial officers and our awareness of their just aspirations make our task difficult and sensitive. The conclusion to which we have come in this judgment is not different from the one reached by our learned Brother Sabyasachi Mukharji. In this Judgment, Brother Mukharji has discused, more fully, the various aspects of this matter as also the decisions which were cited before us. Our reasons for writing this separate opinion are, the general importance of this case. the fact that it concerns the higher judiciary and our respectful disagreement with Brother Mukharji on the interpretation of some of the provisions with which we are concerned in these Writ Petitions. There are many decisions bearing upon the familiar controversy between promotees and direct recruits and this will be one more. Perhaps, just another. Since those various decisions have not succeeded in finding a satisfactory solution to the controversy, we would do well by confining our attention to the language and scheme of the rules which are under scrutiny herein, instead of seeking to derive a principle of universal application to the cases like those before us. Previous judgments of this Court are, of course, binding to the extent that they are relevant and they cannot be ignored. But, if they turn upon their own facts, the general set up of the particular service, its historical development and the words of the impugned provisions, no useful purpose will be served by discussing those cases at length, merely to justify an observation at the end that they have no application and are distinguishable. 361 We have two writ Petitions before us which are filed under Article 32 of the Constitution by promotee Additional District and Sessions judges of Delhi. We will not describe them as `Members of the Delhi Higher Judicial Service ' because, that precisely is the question to be decided. If they are members of that service they shall have won their point. They were working at the relevant time in temporary posts which were created by the Delhi Administration in the cadre of Additional District and Sessions Judges. In that capacity, some of them are working on deputation as members of one or the other of the Tribunals in Delhi, like the Industrial Tribunal or the Sales Tax Tribunal. The Union of India, the Delhi Administration, the High Court of Delhi and direct recruits to the Delhi Higher Judicial Service are impleaded as respondents to the petitions. The Delhi Higher Judicial Service was constituted on May 15, 1971 with a complement of 12 posts. The Delhi Higher Judicial Service Rules, 1970 which were framed by the Lieutenant Governor of Delhi in consultation with the Delhi High Court, were published in the Delhi Gazette on August 27, 1970. Those Rules were framed under Article 309 of the Constitution. Rule 2(b) provides that `Cadre Post ' means any post specified in the Schedule and includes a temporary post carrying the same designation as that of any of the posts specified in the Schedule any other temporary post declared as cadre post by Administrator. Rule 2(d) provides that a `Member of the Service ' means a person appointed in substantive capacity to the Service under the provisions of the Rules. `Service ' is defined by the Rule 2(e) to mean the Delhi Higher Judicial Service. A person who is appointed to the Delhi Higher Judicial Service by promotion from the Delhi Judicial Service is called the `Promoted Officer ', while a person who is appointed to that Service from the Bar is called the `Direct recruit '. By Rule 4, the authorised permanent strength of the Service and the posts included therein shall be as specified in the Schedule. Part III of the aforesaid Rules deals with the method of recruitment to the Service. Recruitment of promotees is dealt with by Rule 5(1), according to which, recruitment of persons to the service from the Delhi Judicial Service shall be made by the administrator in consultation with the High Court. `Administrator ' means the 362 Administrator appointed under Article 239 of the Constitution for the Union Territory of Delhi. Appointment of direct recruits is dealt with by Rule 5(2), according to which, in regard to the persons not already in the Delhi Judicial Service, appointment to service shall be made by the Administrator on the recommendation of the High Court. In other words, promotees are appointed to the Service in consultation with the High Court while direct recruits are appointed to the service on the recommendation of the High Court. Rules 7 and 8 which are crucial to the controversy between the promotees and direct recruits read thus : "Rule 7 REGULAR RECRUITMENT : Recruitment after the initial recruitment shall be made : (a) by promotion on the basis of selection from members of the Delhi Judicial Service, who have completed not less than 10 years of Service in the Delhi Judicial Service. (b) by direct recruitment from the Bar. Provided that not more than 1/3rd of the substantive posts in the Service shall be held by direct recruits." "Rule 8 (1) The inter se seniority of members of the Delhi Judicial Service promoted to the Service shall be the same as in the Delhi Judicial Service. (2) The seniority of direct recruits vis a vis promotees shall be determined in the order of rotation of vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by Rule 7 provided that the first available vacancy will be filled by a direct recruit and the next two vacancies by promotees and so on. " Rule 9 lays down the qualifications for direct recruits by providing that they should be citizens of India, that they must have practised as advocates for not less than 7 years and that they must have attained the age of 35 years but not attained the age of 45 years on January 1 of the year in which they are appointed. 363 The initial recruitment to the Service was made by the Administrator in consultation with the High Court in accordance with Rule 6, from amongst the District Judges and Additional District Judges who were functioning in the Union Territory of Delhi on deputation from other States and those whose names were recommended by the respective States for such appointment. Those persons who were appointed to the Service as part of the initial recruitment stood confirmed with effect from the very date of their appointment. That is provided by Rule 12(1). Sub rule (2) of Rule 12 provides that all other candidates who are appointed to the service shall be on probation for a period of two years. Rule 13 requires that all persons appointed to the Service on probation shall be confirmed at the end of the said period of two years: provided that the Administrator may, on the recommendation of the High Court extend the period of probation but not so as to exceed three years on the whole. After the successful completion of probation, the officer is confirmed in the service by the Administrator in consultation with the High Court as provided in Rule 15. Rules 16 and 17, which occur in part V of the Rules called `Temporary Appointments ', are also important for our purpose though they fall in a category distinct and separate from the one in which Rules 7 and 8 fall. They read thus: "Rule 16(1) The Administrator may create temporary posts in the service. (2) Such posts shall be filled, in consultation with the High Court, from amongst the members of the Delhi Judicial Service." "Rule 17 Notwithstanding anything contained in these rules, the Administrator may, in consultation with the High Court, fill substantive vacancies in the Service by making temporary appointments thereto from amongst members of the Delhi Judicial Service. " The Schedule to the Rules shows that the initial authorised permanent strength of the Delhi Higher Judicial Service was 16, out of which one was to be a District and Sessions Judge and 12 were to be Additional District and Sessions Judges. The remaining 3 were appointed in Leave Deputation reserve vacancies. Out of these 16 364 posts, one was a super time scale post, three were selection grade posts and twelve were time scale posts. The contention of the petitioners is that seniority between promotees and direct recruits must be determined in accordance with the respective dates of their continuous officiation as Additional District and Sessions Judges and that, direct recruits who are appointed as Additional District and Sessions Judges after the promotees are so appointed, cannot rank higher in seniority over the promotees. It is urged that promotees discharge identical functions and bear the same responsibilities as direct recruits and upon their appointments, they constitute one common class. Therefore, to give seniority to the direct recruits who are appointed later in point of time is violative of Articles 14 and 15 of the Constitution. In support of these contentions, the promotees have filed charts showing what, according to them, is a grave and glaring act of injustice done to them in the matter of seniority. These charts show, indisputably, that promotees who have been functioning as temporary Additional District and Sessions Judges for an unbroken period of anything between 8 to 12 years are regarded as juniors to the direct recruits who have been appointed as Additional District and Sessions Judges much later. A few illustrations will help appreciate the grievance of the promotees. Shri G.S. Dakha, who is one of the respondents to these writ petitions, was appointed directly to the Service on September 27, 1978. However, he ranks higher in seniority over Shri C.D. Vasishta and Shri O.P. Singla who were appointed as temporary Additional District and Sessions Judges on June 7, 1977 and April 1, 1978 respectively. Miss Usha Mehra, who was appointed directly as an Additional District and Sessions Judge on April 22, 1980, is regarded as senior to several promotees who were appointed as temporary Additional District and Sessions Judges long before her. Shri D.C. Aggarwal, Shri B.K, Agnihotri, Shri Mahesh Chandra, Shri S.R. Goel and Shri P.L. Singla were all appointed as temporary Additional District and Sessions Judges on March 24, 1972, which was 8 years before Miss Usha Mehra was appointed as a direct recruit from the Bar. Twenty five other members of the Delhi Judicial Service were appointed as temporary Additional District and Sessions Judges on various dates between August 31, 1973 and December 11, 1979. All these have been shown as junior to Miss Usha Mehra. 365 The answer to the question as regards the infringement of the constitutional protection of equality and equal opportunity will depend upon the meaning which can reasonably be given to the rules which we have cited above. Therefore, in the first place, we shall have to decide whether the rules justify the rankings in the seniority list. It is only if the language of the rules justifies those rankings that the question will arise whether the rules violate the provisions of Articles 14 and 16. Logically, we must begin this inquiry with the question as to the interpretation of the proviso to Rule 7. Does that proviso prescribe a quota or does it merely provide for a ceiling ? In other words, does the proviso require that, at any given point of time, 1/3rd of the substantive posts in the Service shall be reserved for direct recruits or does it only stipulate that the posts held by direct recruits shall not be more than 1/3rd of the total number of substantive posts in the Service ? The proviso reads thus: "Provided that not more than 1/3rd of the substantive posts in the Service shall be held by direct recruits. " This language is more consistent with the contention of the promotees that the proviso merely prescribes, by way of imposing a ceiling, that the direct recruits shall not hold more than 1/3rd of the substantive posts. Experience shows that any provision which is intended to prescribe a quota, generally provides that, for example, "1/3rd of the substantive posts shall be filled in by direct recruitment." A quota provision does not use the negative language, as the proviso in the instant case does, that "not more than" one third of the substantive posts in the Service shall be held by direct recruits. If the matter were to rest with the proviso, its interpretation would have to be that it does not prescribe a quota for direct recruits : it only enables the appointment of direct recruits to substantive posts so that, they shall not hold more than 1/3rd of the total number of substantive posts in the Service. However, it is well recognised that, when a rule or a section is a part of an integral scheme, it should not be considered or construed in isolation. One must have regard to the scheme of the fasciculus of the relevant rules or sections in order to determine the true meaning of any one or more of them. An isolated consideration of a provision leads to 366 the risk of some other inter related provision becoming otiose or devoid of meaning. That makes it necessary to call attention to the very next rule, namely, rule 8. It provides by clause 2 that : "The seniority of direct recruits vis a vis promotees shall be determined in the order of rotation of vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by Rule 7 provided that the first available vacancy will be filled by a direct recruit and the next two vacancies by promotees and so on." (emphasis supplied) This provision leaves no doubt that the overall scheme of the rules and the true intendment of the proviso to Rule 7 is that 1/3rd of the substantive posts in the Service must be reserved for direct recruits. Otherwise, there would neither be any occasion nor any justification for rotating vacancies between direct recruits and promotees. Rule 8 (2), which deals with fixation of seniority amongst the members of the Service, provides, as it were, a key to the interpretation of the proviso to Rule 7 by saying that the proviso prescribes "quotas" and reserves vacancies for both categories. The language of the proviso to Rule 7 is certainly not felicitous and is unconventional if its intention was to prescribe a quota for direct recruits. But the proviso, as I have stated earlier, must be read along with Rule 8 (2) since the two provisions are inter related. Their combined reading yields but one result, that the proviso prescribes a quota of 1/3rd for direct recruits. The process of reading the Rules as parts of a connected whole does not end with Rules 7 and 8. Rules 16 and 17 are also relevant for the present purpose and have, indeed, an important bearing on the question of reservation of vacancies for direct recruits to the extent of one third of the substantive posts in the Service. Clause (1) of Rule 16 confers power upon the Administrator to create temporary posts in the Service. By clause (2) of Rule 16, such posts are required to be filled, in consultation with the High Court, from amongst the members of the Delhi Judicial Service, that is to say, the promotees. Rule 17, which is in the nature of a non obstante provision, provides that not withstanding anything contained in the Rules, the, Administrator may, in consultation with the High Court, fill substantive vacancies in the Service by making temporary appointments thereto from amongst the members of the Delhi 367 Judicial Service. The position which emerges from the provisions contained in Rules 16 and 17 is that it is permissible to create temporary posts in the Service and, even substantive vacancies in the Service can be filled by making temporary appointments. The twofold restriction on this dual power is that the High Court must be consulted and such appointments must be made from amongst the promotees only. If temporary appointment to the Service, either in temporary posts or in substantive vacancies, can be made within the framework of the Rules and have to be made, if at all, from amongst the promotees and promotees only, the quota rule contained in the proviso to Rule 7 must inevitably break down when such appointments are made. The simple reason leading to that consequence is that direct recruits cannot be appointed either to temporary posts in the Service or to substantive vacancies in the Service which are filled in by making temporary appointments. Thus, even though the proviso to Rule 7 prescribes a quota of one third for direct recruits, Rules 16 and 17 permit the non observance of the quota rule in the circumstances stated in those rules. At this stage, it is necessary to call attention to the definition of `Cadre Post ' in Rule 2 (b) and to clear the misunderstanding which is likely to arise on account of that definition. Rule 2 (b) provides that `Cadre Post ' means any post specified in the Schedule and includes a temporary post carrying the same designation as that of any of the posts specified in the Schedule. This definition may, at first sight, create an impression that every temporary post of an Additional District and Sessions Judge is a Cadre Post, whether or not that post is included in the Service. That is not so. The first part of the definition says that `Cadre Post ' means a post specified in the Schedule. Posts which are specified in the Schedule are posts in the Service. Therefore, by reason of the first part of the definition, posts in the Service are Cadre Posts. It is the second part of the definition which is likely to create a misunderstanding of the true position. That part of the definition says that Cadre Post includes a temporary post carrying the same designation as that of any of the posts specified in the Schedule. This provision is consequential to and in consonance with Rule 16. Since it is permissible under that rule to create temporary posts in the Service, such posts are also regarded as Cadre Posts. It would have been anomalous to treat a post in the Service as an ex cadre post merely for the reason that the post is temporary. Normally, an ex cadre post means a post outside the cadre of posts comprised in a Service. 368 Therefore all posts in the Service, whether permanent or temporary, are generally regarded as Cadre Posts, But, regardless of the normal pattern of service rules, what is necessary to appreciate is that Rule 2 (b) has the limited effect of making every post in the Service a Cadre Post, whether the post is permanent or temporary. The inclusive clause contained in the second part of Rule 2 (b) has to be read in the context of the first part of that Rule and must take its meaning from what precedes it. Therefore, every promotee who holds the post of an Additional District and Sessions Judge in the Service is the holder of a Cadre Post, whether the post is permanent or temporary. Direct recruits hold cadre posts in all events because, they can only be appointed to substantive posts in the Service on a permanent basis. Rules 16 and 17 forbid their appointments to temporary posts in the Service or to substantive vacancies in the Service on a temporary basis. Though this is the true scope and meaning of Rule 2 (b), it is unnecessary to be dogmatic about it. As will appear presently, even if it is assumed for the purposes of argument that temporary posts not included in the Service are also Cadre Posts, that will not make any difference to the principle on the basis of which the Seniority List of the Service will have to be drawn. But, before adverting to that principle, it would be useful to draw attention to Rule 2 (d) which provides that a Member of the Service ' means a person appointed in substantive capacity to the Service under the provisions of the Rules. This Rule shows that two conditions must co exist in order that a person can become a `Member of Service '. Firstly, his appointment has to be in a substantive capacity and secondly, the appointment has to be to the Service, that is, to a post in the Service. Persons who hold posts bearing designations similar to the designations of posts comprised in the Service cannot, for that reason alone, become members of the Service. It is only when they are appointed in a substantive capacity to a post in the Service, that they became members of the Service. The acceptance of the alternative hypothesis, that temporary posts bearing the same designation as that of the posts specified in the Schedule are Cadre posts whether such posts are comprised in the Service or not, will, at any rate, justify the proposition that, accor 369 ding to the scheme of the rules in this case, `Service '. is a narrower body than the `Cadre '. By the definition contained in Rule 2 (d), membership of the Service is limited to persons who are appointed in a substantive capacity to the Service. By the second part of Rule 2 (b), if read in an extended sense, which is what the alternative hypothesis requires, every temporary post which carries the same designation as that of any of the posts specified in the Schedule is a Cadre Post, whether such post is comprised in the Service or not. Such posts and the posts specified in the Schedule will together constitute the Cadre under Rule 2 (b), if an extended meaning is given to the second part of that rule. In this background and with this understanding of the interpretation and effect of Rules 2(b), 2(d), 7, 8, 16 and 17, it will be easier to deal with the question of seniority between direct recruits and promotees. The contention of the petitioners which we have to examine is that the rule of seniority provided in Rule 8 is constitutionally invalid. We are not concerned in this case with the provision contained in Rule 8 (1) which governs the inter se seniority of members of the Delhi Judicial Service who are promoted to the Delhi Higher Judicial Service. Members of the subordinate judicial service promoted to the Delhi Higher Judicial Service retain their former seniority. We are concerned with clause (2) of Rule 8, which provides, in so far as relevant, that the seniority of direct recruits vis a vis the promotees shall be determined in the order of rotation of vacancies between the direct recruits and promotees based on the quota of vacancies reserved for both the categories by Rule 7, provided that the first available vacancy will be filled by a direct recruit, the next two vacancies by promotees and so on. This Court has taken the view in many cases that whenever the rules provide for recruitment to a Service from different sources, there is no inherent infirmity in prescribing a quota for appointment of persons drawn from those sources and in working out the rule of quota by rotating the vacancies as between them in a stated proportion. (See, for example, Mervyn Coutinho vs Collector of Customs, Bombay,(1) section C. Jaisinghani vs Union of Indiu,(2) Bishan Sarup 370 Gupta vs Union of India, (1) A.K. Subraman vs Union of India,(2) V. B. Badami vs State of Mysore(3) and Paramjit Singh Sandhu vs Ram Rakha.(4) Therefore, Rule 8 (2) cannot be held to be unconstitutional merely because, it reserves one third of the vacancies in the Service for direct recruits and provides that the first available vacancy in the Service will be filled in by a direct recruit, the next two by promotees and so on. However, instances are not unknown wherein, though the provision of a rule or a section is not invalid, the manner in which that provision is implemented in practice leads to the creation of disparities between persons who, being similarly circumstanced, are entitled to equal treatment. Care has therefore to be taken to apply the provisions of Rule 8(2) in such a manner as not to lead to the violation of the guarantee of equality and equal opportunity contained in Articles 14 and 16 of the Constitution. For that purpose. it is necessary to ascertain as to which of the promotees can be regarded as belonging to the same class as the direct recruits. The pre requisite of the right to inclusion in a common list of seniority is that all those who claim that right must, broadly. bear the same characteristics. The mere circumstance that they hold posts which carry the same designation will not justify the conclusion that they belong to the same class. Persons who are appointed or promoted on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement cannot rank for purposes of seniority with those who are appointed to their posts in strict conformity with the rules of recruitment, whether such latter class or posts are permanent or temporary. The rules in the instant case do not require that person belonging to the former category have to satisfy any particular prescription like consultation with the High Court. We are informed that in practice, persons who are promoted to the Delhi Higher Judicial Service on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement are appointed only after their names are cleared or approved by the High Court. That may or may not be so. The point of the matter is that there is no provision in the Rules which requires that such appointments must also be made in accor 371 dance with any set formula. The courtesy shown by the authorities to the High Court when certain appointments are made, is one thing; The obligation imposed by the Rules on the authorities that the High Court shall be consulted when certain other appointments are made is quite another. Indeed, there is a distinction between the process of consultation with the High Court and the screening of the promotees done by the High Court, may be at the instance of the authorities, when their names are considered for appointment as Additional District and Sessions Judges on an ad hoc, fortuitous or stop gap basis. Thus, persons belonging to the Delhi Judicial Service who are appointed to temporary posts of Additional District and Sessions Judges on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement. constitute a class which is separate and distinct from those who are appointed to posts in the Service in strict conformity with the rules of recruitment. In view of this, the former class of promotees cannot be included in the list of seniority of officers belonging to the Service. It is however difficult to appreciate how, in the matter of seniority, any distinction can be made between direct recruits who are appointed to substantive vacancies in the Service on the recommendation of the High Court under Rule 5(2) and the promotees who are appointed in consultation with the High Court to posts in the Service under Rules 16 and 17. Rule 16 provides for the appointment of promotees to temporary posts in the Service, while Rule 17 provides for appointment of promotees to substantive vacancies in the Service on a temporary basis. Promotees who are appointed to the Service under either of these two rules must be considered as belonging to the same class as direct recruits appointed under Rule 5(2). They perform similar functions, discharge identical duties and bear the same responsibilities as direct recruits. They are appointed on a regular basis to posts in the Service in the same manner as direct recruits are appointed, the only distinction being that whereas the latter are appointed on the recommendation of the High Court promotees are appointed in consultation with the High Court. There fore, no distinction can be made between direct recruits on one hand and promotees appointed to the Service on the other, in the matter of their placement in the seniority list. Exclusion from the seniority list of those promotees who are appointed to posts in the Service, 372 whether such appointment is to temporary posts or to substantive vacancies in a temporary capacity, will amount to a violation of the equality rule since, thereby, persons who are situated similarly shall have been treated dissimilarly in a matter which constitutes an important facet of their career. A representative order of appointment under Rule 16, which is annexed to one of the writ petitions, shows why promotees appointed under that rule (and for similar reasons, those appointed under Rule 17) cannot be discriminated against in the matter of seniority in comparision with direct recruits. That order reads thus: "DELHI ADMINISTRATION DELHI NOTIFICATION Dated the 22 March 1972 No. F. 1(76)/70 Judl.(i) In pursuance to the provisions of sub rule (2) of rule 16 of the Delhi Higher Judicial Service Rules, the Administrator of Delhi, is pleased to appoint in consultation with the High Court, the following members of the Delhi Judicial Services, temporarily to the Delhi Higher Judicial Service, till further orders, with effect from the date they take over charge of their offices, against the four posts of Additional District and Sessions Judges, created vide his notification No. F1(13)/ 72 Judl. dated the 13th March, 1972. Shri Dalip Chand Aggarwal 2. Shri Bishma Kumar Agnihotri 3. Shri Sadhu Ram Goel 4. Shri Pyare Lal Singla. By Order. (Desh Deepak) Secretary (Law & Judicial) Delhi Administration, Delhi. " This order shows that, firstly, by a notification dated March 13, 1972, the Administrator created temporary posts in the Service under Rule 16(1); secondly, four promotees were appointed to those posts in the Delhi Higher Judicial Service; and thirdly, that they were appointed `till further orders '. The appointments were neither ad 373 hoc, nor fortuitous, nor in the nature of stop gap arrangement. Indeed, no further orders have ever been passed recalling the four promotees and, others similarly situated, to their original posts in the subordinate Delhi Judicial Service. Promotees who were appointed under Rule 16 have been officiating continuously, without a break, as Additional District and Sessions Judges for a long number of years. It is both unrealistic and unjust to treat them as aliens to the Service merely because the authorities did not take up to the necessity of converting the temporary posts into permanent ones, even after some of the promotees had worked in those posts from five to twelve years. Considering the history of the Delhi Higher Judicial Service, it is clear that the phrase `till further orders, is only a familiar official device to create and perpetuate temporary posts in the Service when the creation of permanent posts is a crying necessity. The fact that temporary posts created in the Service under Rule 16(1) had to be continued for years on end shows that the work assigned to the holders of those posts was, at least at some later stage, no longer of a temporary nature. And yet, instead of converting the temporary posts into permanent ones, the authorities slurred over the matter and imperilled, though unwittingly, the reasonable expectations of the promotees. Unwittingly ' because, no one appears to have been interested in belittling the contribution of the promotees who held temporary posts in the Service or in consciously jeopardising their prospectus. The tragedy is that no one was interested in anything at all. Or else, why was direct recruitment not made from time to time, at regular intervals? If that were done, the undesirable situation which confronts us to day could have been easily avoided. The proviso to Rule 7 prescribes a system of quota and rota. why was that rule put in cold storage by creating temporary posts in the Service when permanent posts were clearly called for? Permanent posts could have been allocated to direct recruits and promotees in the ratio of one to two. In these circumstances, it will be wholly unjust to penalise the promotees for the dilatory and unmindful attitude of the authorities. It is not fair to tell the promotees that they will rank as juniors to direct recruits who were appointed five to ten years after they have officiated continuously in the posts created in the Service and held by them, though such posts may be temporary. This Court, at least, must fail them not. From an earlier part of this judgment it would appear how, though the proviso to Rule 7 prescribes a quota of one third for 374 direct recruits and provides for rotation of vacancies between them and the promotees who are appointed to the Service, that rule must inevitably break down when appointments to promotees are made to the Service under Rules 16 and 17. Appointments under these two Rules have to be made from amongst the promotees only. Whenever appointments are made to the Service under either of these Rules, neither the quota reserved for direct recruits nor the rule of rotation of vacancies between them and the promotees can have any application. The question then is, in situations resulting in the suspension of the rule of `quota and rota ', which its the equitable rule for determining seniority between direct recruits on the one hand and promotees who are appointed under Rules 16 and 17 on the other ? It is difficult to evolve a rule which will cause no hardship of any kind to any member of the Service. Therefore, the attempt has to be to minimise, as far as possible, the inequities and disparities which are inherent in a system which provides for recruitment to the Service from more than one source. While doing this, the one guiding principle which must be kept in mind is that classification is a gloss on the right to equality. It is but a step in the process of working out the equities between persons who are entitled to equal treatment. It is therefore necessary to ensure that classification is made on a broad, though rational, basis so as not to produce the self defeating result of denying equality to those who in substance, are situated similarly. That is why, it would be hyper technical to make a sub classification between promotess appointed under rule 16 and those appointed under Rule 17, with the object of denying to the latter the equality of status and opportunity with the former and with direct recruits. It is true that under Rule 16, promotees are appointed to temporary posts in the Service while, under Rule 17 they are appointed in a temporary capacity to substantive vacancies in the Service. But this kind of service jargon clouds the real issue as to whether persons appointed under different rules necessarily belong to different classes and tends to produce inequalities by an artful resort, dictated by budgetary expediency, to the familiar device of fixing dissimilar labels on posts which carry the same duties and responsibilities and are subject to similar pre appointment tests. It may even be that in the process of consultation, the High Court exercises greater vigilance in regard to appointments proposed under Rule 16 than in regard to appointments which are proposed under Rule 17. 375 But, the fact that the High Court chooses to adopt, of its own volition any particular approach in the matter of appointments made under different rules, cannot justify the proposition that persons appointed under different rules necessarily belong to different classes. The requirement for appointments under both the Rules is, equally, that they must be made in consultation with the High Court. The High Court is, therefore, expected to apply the same standard and adopt the same approach whether appointments are proposed to be made under Rule 16 or Rule 17. Any attempt to sub divide the promotees according as to whether they are appointed under Rule 16 or Rule 17 will result in the creation of a distinction where no difference exists. The object of classification is to find a remedy to such situations, not to create or perpetuate them. It may bear emphasis that promotees appointed under Rules 16 and 17 to the Higher Judicial Service can rank for seniority along with direct recruits only if they are appointed in consultation with the High Court as required by those Rules and if they satisfy the requirement laid down in Rule 7(a) that they must have completed not less than ten years of service in the Delhi Judicial Service. The best solution to the situation which confronts us is to apply the rule which was adopted in S.B. Patwardhan vs State of Maharashtra.(1) It was held by this Court in that case that all other factors being equal, continuous officiation in a non fortuitous vacancy ought to receive due recognition in fixing seniority between persons who are recruited from different sources, so long as they belong to the same cadre, discharge similar functions and bear the same responsibilities. Since the rule of `quota and rota ' ceases to apply when appointments are made under Rules 16 and 17, the seniority of direct recruits and promotees appointed under those Rules must be determined according to the dates on which direct recruits were appointed to their respective posts and the dates from which the promotees have been officiating continuously either in temporary posts created in the Service or in substantive vacancies to which were appointed in a temporary capacity. Our attention was drawn to several decisions but most of them turn of their own facts. For example, the promotees placed great reliance on the decision in Baleshwar Dass vs State of U.P.(2) In that 376 case, there was only one rule of recruitment to both the permanent and temporary posts in the cadre. Besides, no rotation of vacancies was prescribed for the purpose of fixing seniority. The position which arises in the case before us did not therefore arise in that case. However, the observations made by Krishna Iyer, J. in that case are not without relevance for the present purpose. The learned judge observed : "We must emphasis that while temporary and permanent posts have great relevancy in regard to the career of government servants, keeping posts temporary for long, sometimes by annual renewals for several years, and denying the claims of the incumbents on the score that their posts are temporary makes no sense and strikes us as arbitrary, especially when both temporary and permanent appointees are functionally identified. If, in the normal course, a post is temporary in the real sense and the appointee knows that his tenure cannot exceed the post in longevity, there cannot be anything unfair or capricious in clothing him with no rights. Not so, if the post is, for certain departmental or like purposes, declared temporary, but it is within the ken of both the government and the appointee that the temporary posts are virtually long lives. It is irrational to reject the claim of the `temporary ' appointee on nominal score of the terminology of the post. We must also express emphatically that the principle which has received the sanction of this Court 's pronouncements is that officiating service in a post is for all practical purposes of seniority as good as service on a regular basis. It may be permissible, within limits, for government to ignore officiating service and count only regular service when claims of seniority come before it provided the rules in that regard are clear and categorical and do not admit of any ambiguity and cruelly arbitrary cut off of long years of service does not take place or there is functionally and qualitatively, substantial difference in the service rendered in the two types of posts. While rules regulating conditions of service are within the executive power of the State or its legislative power under proviso to Article 309, even so, such rules have to be reasonable, fair and not grossly unjust if they are to survive the test of Articles 14 and 16." 377 In A. Janardhana vs Union of India,(1) the Court had to consider the validity of rules of seniority which were applicable to the Military Engineering Service. The recruitment to the Service was made from two sources, directly and by promotion. The appellant was a promotee of 1962 who, it was argued in that case, could find a place in the seniority list in 1989, when it would be time for him to retire. D.A. Desai, J. observed in that case : ". In other words, after having rendered service in a post included in the service, he is hanging outside the service without finding a berth in service, whereas direct recruits of 1976 have found their place and berth in the service. This is the situation that stares into one 's face while interpreting the quota rota rule and its impact on the service of an individual. But avoiding any humanitarian approach to the problem, we shall strictly go by the relevant Rules and precedents and the impact of the Rules on the members of the service and determine whether the impugned seniority list is valid or not. But, having done that we de propose to examine and expose an extremely undesirable, unjust and inequitable situation emerging in service jurisprudence from the precedents namely, that a person already rendering service as a promotee has to go down below a person who comes into service decades after the promotee enters the service and who may be a schoolian, if not in embryo, when the promotee on being promoted on account of the exigencies of service as required by the Government started rendering service. A time has come to recast service jurisprudence on more just and equitable foundation by examining all precedents on the subject to retrieve this situation. " No two cases are alike and. therefore an attempt has been made in this judgment to consider the language and implication of the Rules which govern appointments to the Delhi Higher Judicial Service. But, the observations which we have extracted above are not without relevance to the decision of the case before us. They lend considerable support to the conclusion which has been recorded in this judgment. 378 The decision of this Court in Joginder Nath vs Union of India(1), does not afford any assistance on the question which is in issue before us. That case arose out of a controversy between the promotees inter se and not between promotees and direct recruits. The seniority list which is impugned in this case has been prepared on the basis that the rule of `quota and rota ' will continue to apply notwithstanding the fact that appointments are made to the Service under Rule 16 and 17. As pointed out earlier, the rule of `quota and rota ' which is prescribed by the proviso to Rule 7 would cease to apply when appointments are made to the Service under Rules 16 and 17. The seniority list has therefore to be quashed. A new seniority list shall have to be prepared by the authorities on the basis of the view taken in this judgment. The new seniority list will include (i) direct recruits and (ii) promotees appointed under Rules 16 and 17. They will rank for seniority as explained above. The question of the seniority of respondent 4, Shri G.S. Dakha has to be dealt with on a different basis. He was appointed as an Additional District and Sessions Judge in a vacancy reserved for members of the scheduled castes. He will retain his position in the seniority list since that position is due to him as a member of a scheduled caste. The case of Miss Usha Mehra has caused us some anguish. She was appointed as a direct recruit on April 22, 1980. The rule of `quota and rota ' was in operation since the inception of the Delhi Higher Judicial Service and she must have joined the Service on the basis of certain reasonable expectations flowing out of a senior position. Though comparatively young, she had a fairly large practice at the Bar when she was appointed as an Additional District and Sessions Judge. A strong plea has been made on her behalf that her place in the seniority list should not disturbed. We wish that were possible. It would be incongruous to do so because, if the rule of `quota and rota ' ceased to apply when appointments were made to the Service under Rules 16 and 17, her present position in the seniority list which has been accorded to her on the basis of that rule cannot be maintained. For this 379 consequence the promotees are not to blame, and certainly, not any of the direct recruits. The promotees had made a representation to the High Court as long back as in the year 1977 but, for a reason not easy to understand, the High Court did not dispose of that representation for over three years, Indeed, one of the contentions of the High Court before us is that those writ petitions are premature because the representation of the promotees is still pending before it. Miss Mehra was appointed three years after the promotees had made their representation to the High Court, which was the most appropriate authority for them to approach. A timely disposal of the representation by the High Court would have saved the predicament in which some of the direct recruits like Miss Mehra will now find themselves. It was urged that the promotees ought not to grudge one little exception in favour of Miss Mehra since they have derived quite some benefits from the operation of Rules 16 and 17. It is true that the promotees have derived a substantial benefit by the operation of Rules 16 and 17. They monopolised all the appointments to temporary posts as also temporary appointments to substantive vacancies in the Service. Simultaneously, they also derived benefit from the rule of `quota and rota '. For example, though N.L. Kakkar and Shri R.K. Sinha were promoted to the Service in 1972, they were placed in the seniority list above Shri N.C. Kochar who was recruited directly in 1971. That was done in conformity with the quota and rota rule of 1 : 2. If, at least some of the temporary posts had been converted into permanent ones as they ought to have been, one out of every three posts would have gone to a direct recruit. But as pointed out by us, the difficulty in the way of maintaining Miss Mehra 's present position in the seniority list is that doing so would be inconsistent with the view which we have taken in this judgment. We cannot, therefore, make an exception in the case of any particular direct recruit. It is patent that this judgment will upset the balance between direct recruits and promotees in the Delhi Higher Judicial Service. If the authorities desire to restore that balance, appropriate rules shall have to be framed for future application. But, more than merely framing the rules, care shall have to be taken to implement the rules both in letter and in spirit. That will call for greater concern and understanding on the part of the authorities for the future of a system, which one believes, has stood the people well. 380 In the result, the proviso to Rule 7 and Rule 8(2) bear the meaning and interpretation which is given to them in this judgment, those provisions do not by themselves suffer from any constitutional infirmity. But, the seniority list which is challenged by the promotees in these Writ Petitions is violative of the provisions of Articles 14 and 16 of the Constitution. That list is quashed and the Writ Petitions are allowed to the extent indicated above. There will be no order as to costs. SABYASACHI MUKHARJI, J. With great respect I find myself unable to agree with the learned Chief Justice on certain aspects of the relevant rules in this case. I would, therefore, like to state my reasons with such relevant rules as are necessary. These two Writ petitions under article 32 of the Constitution question the validity of Rule 8(2) of Delhi Higher Judicial Service Rules, 1970 hereinafter referred to as the said rules and the fixation of inter se seniority of the promotees and direct recruits of Delhi Higher Judicial Service. In the first one, namely Writ Petition No. 5669 of 1980, the petitioners are, one Shri O.P. Singla, who was at the relevant time working as an Additional District & Sessions Judge and at the time of the institution of the petition working as the Presiding Officer, Industrial Tribunal in Tis Hazari Court, Delhi alongwith Shri D.C. Aggarwal, Additional District and Sessions Judge, Delhi. The respondents to this application are the Union of India, Delhi Administration, Delhi High Court, respondent No. 4, Shri G.S. Dakha, Additional District and Sessions Judge, Tis Hazari, Delhi and respondent No. 5 Miss Usha Mehra, Additional District and Sessions Judge, Tis Hazari, Delhi. In the second petition there are 32 petitioners who are Additional District and Sessions Judges in the Delhi Higher Judicial Service alongwith Delhi Judicial Service Association. The respondents to the said petition are apart from the Union of India, Delhi Administration, Delhi High Court, Shri G.S, Dakha, who is a respondent to the other petition also, Miss Usha Mehra (who is also a respondent in other petition) and two other respondents, namely, Shri C.D. Vashist, Additional District and Sessions Judge, Tis Hazari, Delhi and one Shri S.P. Singh Chowdhary, Additional District and Sessions Judge, Tis Hazari, Delhi. 381 The immediate cause which prompted the filing of the second petition, according to the petitioners, was the advertisement published in the 'Indian Express ' dated 30th January, 1981 which invited applications for filling three permanent posts in the cadre of Delhi Higher Judicial Service. The case of the petitioners is that petitioners in both these petitions are promotee Additional District and Sessions Judges in the Delhi Higher Judicial Service and they had joined the service long time back. The petitioners in the first petition namely, Writ Petition No. 5669 of 1980 had joined the Delhi Higher Judicial Service in the beginning of 1972 and have been serving since then with ability. The other relevant facts have been stated in the judgment of my brother, the learned Chief Justice. It is, therefore, not necessary for me to state these again. The controversy in these two writ petitions is inter se seniority between the promotees and the direct recruits and for this, one must refer to some other relevant provisions of the said rules and mainly to rules 7 and 8 alongwith Rules 16 and 17 of the said rules. The rules are as follows: "Rule 7. REGULAR RECRUITMENT: Recruitment after the initial recruitment shall be made: (b) by promotion on the basis of selection from members of Delhi Judicial Service, who have completed not less than 10 years of service in the Delhi Judicial Service: (b) by direct recruitment from the Bar. Provided that not more than 1/3rd of the substantive posts in the service shall be held by direct recruits. " There is a further proviso which is not really relevant for the present controversy and which provides that where a member of the Delhi Judicial Service is considered for such appointment under Clause (a), all persons senior to him in the Service shall also be considered, irrespective of the fact whether or not they fulfil the requirements as to the minimum of 10 years service. There is an 382 Explanation for calculation of period of 10 years which again is not relevant for the present purpose. Rule 8 is as follows: "8. (1) The inter se seniority of members of Delhi Judicial Service promoted to the service shall be the same as in the Delhi Judicial Service. (2) The seniority of direct recruits vis a vis promotees shall be determined in the order of rotation vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by rule 7 provided that the first available vacancy will be filled by direct recruitment and the next two vacancies by promotees so on. " Rule 9 deals with the qualifications for direct recruits and provides that they (1) should be citizen of India, (2) must have practised as an advocate for not less than seven years, (3) must have attained the age of 35 years and not attained the age of 45 years on 1st January of the year in which his appointment is made. The submission of the petitioners is that the officers intended to hold the posts of District Judges cannot artificially be prevented from holding such posts substantively, either because of delay in making posts permanent or by being discriminated against in the fixation of seniority in the cadre vis a vis direct recruits to the service, who have lesser years of practice at the Bar as compared to the period of promotee officers ' judicial service period and period of practice at the Bar, if any, put together. The petitioners have given instances of the incongruities, according to them, that will result if the present system is allowed to continue. The petitioners themselves and through their association had made several representations in January, 1978, July, 1978 and December, 1978 and also sought remedy against what they call injustice and they also submitted that direct recruitment from the Bar might not be made by the High Court to the Delhi Higher Judicial Service until the question was resolved. The petitioners contend that the present interpretation and the present seniority list create anomalous positions. 383 After the petitions were filed, rules nisi were issued and certain interim orders were passed. It is not necessary to set out the details of the said orders made by this Court from time to time. It may be mentioned, however, that on the 29th September, 1981 this Court issued rules nisi in both these matters and further ordered that there would be no reversion either from the category of promotees who were working as District and Sessions Judges or from the category of direct recruits who were also working in the same capacity. Several intervention applications were allowed. On 27th April, 1982 this Court further directed that if any officer who was then working on deputation returns to the parent cadre, it might become necessary to revert the junior most officer who is at present holding the post of Additional District and Sessions Judge, but this Court noted that even then such a reversion should as far as possible, be avoided. In these petitions, charts of the gradation list have been annexed. According to the list, Shri Dakha, respondent No. 4 has been shown as number 6 and Miss Usha Mehra, respondent No.5 as number 9. This is so because of artificial reading of Rule 7 and Rule 8 of the said rules, according to the petitioners By the same process, it is indicated that Miss Usha Mehr who had joined as Additional District and Sessions Judge on probation on 24th April 1980 supersedes by the working of Rule 7 and Rule 8 in improper and illegal way, 22 officers, including Shri Mahesh Chandra, whose date of birth was 12th October, 1928 and whose date of appointment as Additional District and Sessions Judge was 8 years before Miss Mehra. She also supersedes Shri S.R. Goel who was born on 12th October, 1929 and who had joined the service on 24th March, 1972 8 years before Miss Mehra had joined as Additional District and Sessions Judge; more or less similar is the position in case of Shir Y.B. Gupta, Shri P.K. Bahri, Shri H.P. Bagchi and Mrs. Santosh Duggal who was born on 21st March, 1931 and had joined the service as Additional District and Sessions Judge on 29th September, 1975 and numerous other officers last of whom had joined on 23rd August, 1979 and most of whom were at least 10 years older than respondent No. 5, Miss Mehra. Similarly Shri Dakha supersedes 16 officers by joining as Additional District and Sessions Judge in 1978 and is superseding officers who had joined in 1972, 1973, 1974, 1975 and some of whom were much 384 older than him in age. Shri J.B. Goel will also be superseding some of the officers who have been indicated in the chart. This anomaly has been caused by the operation of Rule 7(b) of the said rules read with sub rule (2) of Rule 8. Rule 7 which deals with regular recruitment provides two modes of recruitment, namely (1) by promotion on the basis of selection and (2) by direct recruitment from the Bar. So far as direct recruitment from the Bar is concerned, it clearly states that "not more than 1/3rd of the substantive ports in the Service shall be held by direct recruits". Reading it simply without anything else and unaided or uninfluenced by service parlance and without being inhibited by any a interpretation of other statutes in the context of some other Rules, it appears that it merely provides that in case a year there is vacancy for recruitments from the Bar as well as by promotion, more than 1/3rd of substantive posts should not be filled in by direct recruitment. It says this and no more. It is difficult to contend that there is any quota of Bar recruits of 1/3rd The Rule does not say that 1/3rd of direct recruits must for each year be 1/3rd of the recruitments made. It puts a ceiling on number of Bar recruits in a year where Bar recruits are available and willing to be appointed. It does not fix any quota far them. As the working of the rule would, indicate, it was for unnecessary and hypothetical situation which never arose in years subsequent to the framing of the rules. The framers of the Rules perhaps thought and assumed that many Bar recruits would be willing to join the service and selections would be made from Bar regularly and timely eliminating thereby the chances of the promotees whose knowledge and experience were also necessary to be retained for the better administration of the judicial service. Many factors have worked otherwise and the assumption upon which this rule had been framed has not proved to be correct. If Rule 7 was standing itself simpliciter, no problem would have arisen. The problem, however, arises by virtue of sub rule (2) of Rule 8. Sub rule (1) of Rule 8 stipulates that inter se seniority of the members of Delhi Judicial Service promoted to the service shall be the same as in the Delhi Judicial Service. This creates no problem for the present controversy. Sub rule (2) of Rule 8, however, stipulates that seniority of direct recruits vis a vis promotees shall be determined in the order of rotation of vacancies between direct recruits and promotees based on quotas of vacancies reserved for both categories by Rule 7 provided that first available vacancy shall be by direct recruitment and the next two vacancies by promotees. 385 and so on. Sub rule (2) or the makers of sub rule (2) of Rule 8 presumed and assumed a factual position that quotas of vacancies have been reserved for both categories by Rule 7 which is really not a fact. Rule 7 does not reserve any quota for either of the categories. Rule 7 only provides for ceiling of direct recruits by providing that in case there were recruitment from Bar as well as by promotions, in such a case Bar recruits would not be more than 1/3rd of the substantive posts in the Service. This brings the problem of so interpreting the rules as to avoid any possible injustice to any section, if possible. In this task in the instant case there is one advantage that though there are numerous decisions, dealing with rights and privileges of promotees vis a vis direct recruits, there is no case, at least none to which attention was drawn in this case, where the rule dealing with position between direct recruits and promotees in a service composed of two different types of recruits, is worded in the manner as provided in the rules in the instant case. It is well settled that bereft of anything where a service consists of recruitments made from two different sources and the rules and regulations provide for their recruitment and their rights inter se, primarily and essentially those rights have to be adjusted within the scheme of the rules though it might in some cases lead to certain amount of imbalances or injustices because a service is built on various considerations and various factors induce the legislature or the rule making authority to induce different and diverse knowledge, diverse aptitudes and requirements needed for running of the service. The legislature or the rule making authorities have better knowledge and better capacities to adjust those factors. It is common knowledge that administration of justice in this vast land of ours, where there are growing expectations with the explosion of ideas with new problems, call for fusion of different calibres, talents and aptitudes. Administration of justice calls for independence of mind, freshness of outlook, uninhibited by normal service life and routine. It also calls for experience in writing judgments and knowledge gathered in conducting cases from lower rank and gaining experience thereby and any ideal system would be where there is complete fusion between these two sources and streams of knowledge to enrich the machinery of the administration of justice. But the machinery of the administration of justice fused in that manner must work with a sense of justice within itself but if, as very often is the case in this country, where there are recruitments from different sources instead of creating harmony and that harmony utilised with dedication for the purpose of the institution, creates disharmony and discontent amongst the various segments of that 386 institution generating amongst many a brooding sense of injustice, real or imaginary. Justice should be the end of all law. But then what is justice? Is it merely creating situations for the realisations of one 's just expectations or is it adjustment of the rights and expectations of many in the administration with sense of justice within the machinery administering justice in accordance with the rules designed to attract talents? Independence, experience and knowledge must be the aim and purpose of these rules intended to regulate their conditions and if these rules are not clear, these should be so interpreted, where the courts are not fettered or bound by precedents, to ensure that justice flows, such justice is essential for society to survive. It is important because it enables the individuals in the administration of justice to serve justice and to identify themselves with the process. But by rules, we cannot make justice certain in this uncertain age but all we can ensure is, attempt to prevent injustice. Most of the problems as are apparent in working out these types of schemes and rules have been due to the failure to see the reality and the desire to proceed on adhocism. The rules in question have been noted in the instant case in detail. There is no quota as such. Rule 8(2) proceeds on the misconception that there is quota fixed for direct recruits, which rule 7 does not. Rule 8(2) cannot on plain literal meaning also be construed or interpreted to mean that it was deemed by the legislature and the rule making body to engraft any quota. There is no deemed quota, if that was the intention then the rule would have said so. It has not. Rule 8(2) proceeds on wrong assumption. Therefore, it should be given effect to in so far as it can be without reading any quota for the subsequent years. How it should be so read would be presently indicated. There is another aspect of the matter. Rule 16 permits making additional appointments. Before the actual situation, where Rule 7 and Rule 8(2) can be adjusted is dealt with, it would be relevant to note some of the decisions cited at the Bar though, most of these are not relevant. On the wording of rule 7 read in conjunction with rule 8(2) one is on virgin ground In the case of Mervyn Coutinho & Ors vs Collector of Customs Bombay & Ors. , this Court noted that there was no inherent vice in the principle of f fixing seniority by the rotation in a case where a service is composed of fixed proportion of direct recruits and promotions (emphasis supplied). There as indicated by the emphasis supplied that the rule proceeded on different basis than the present one. In 387 the instant case in view of the specific and clear language of proviso to rule 7 read with rule 8 it cannot be said that recruitment to the service was "in fixed proportion". In that view of the matter, the observations of this Court in the said decision would dot throw much light in resolving the present controversy. In the case of S.G. Jaisinghani vs Union of India &. Ors., this Court was concerned with the Seniority Rules of the Income tax Service. There the context in which controversy arose must be considered in the context of the rules. This Court noted that in order to improve the Income tax administration, the Government of India on 29.9.1944 reconstituted and classified the prevailing Income tax Service as Class I and Class II. The reorganisational system provided for recruitment of Income tax officer Class I, Grade II service partly by promotion and partly by direct recruitment. The reorganisational system was set out in certain Government communication. Reading of the rules would indicate that there was a fixed proportion, in the instant case there is none. In the light of this, it is not necessary to deal with the observations made by this Court in the context of the said rules, In the case of Chandramouleshwar Prasad vs Patna High Court & Ors. this Court was concerned with a situation and rules entirely different from the terminology of proviso to rule 7 of the present rules. It, is therefore, also not necessary to persue the said decision any further. Some reliance was placed on the decision of this Court in the case of V.B. Badami Etc. vs State of Mysore & Ors. The Court observed in the context of the rules before this Court in that case that as long as the quota rule remained neither promotees could be allotted any of the substantive vacancies of the quota of direct recruits nor could direct recruits be allotted promotional vacancies. Two more principles were settled; one was that quotas which were fixed were unalterable. Quotas which were fixed could only be altered by fresh determination of quotas under the relevant rule. The other was that one group could not claim the quota fixed for the other group either on the ground that the quotas were not filled up or on the ground that because there had been a number in excess of quota the same should be absorbed depriving the other group of quota. 388 The observations made in that decision would have been very apposite and might have helped the present respondents if it was possible to find that there was any fixed or unalterable quota so far as direct recruits are concerned in this case as in that case and further that ad hoc arrangements or promotions meeting the exigencies of the service had not been made in accordance with the procedure envisaged by the rules itself, namely rule 16 in the instant case. The case of Bishan Sarup Gupta vs Union of India & Ors. also deals with quota rule in connection with Income tax officers. In view of the present rules in the instant case, it is also not necessary to deal with the said decision. The facts of this case and the rule under which the problem has to be adjusted have been set out hereinbefore. Some of the general principles enunciated in some decisions of this Court might be noted in resolving the unfortunate controversy that has arisen in this case. In the case of Joginder Nath and Ors. vs Union of India & Ors this Court had to construe the Delhi Judicial Service Rules, 1970 in the context of seniority and confirmation. But this was not in the context of inter se seniority between promotees and direct recruits. The question was the seniority amongst the members of the promotees who were members of the Delhi Judicial Service Rules who became absorbed in Delhi Higher Judicial Service. In view of the main controversy in this case that is only an incidental point but so far as that controversy i.e. the question of seniority amongst the promotee officers of the Delhi Higher Judicial Service, it would suffice to say that in so far as that controversy affects any position whereas in the instant case, the same will be guided by the ratio of the decision in Joginder Nath & ors. case (supra). But so far as the controversy regarding the fixation of the seniority list between promotees and direct recruits which is the main point here, the same will be dealt with separately. In approaching the present controversy. it is necessary to keep certain basic fundamental principles in mind which are of importance in service jurisprudence. Service Jurisprudence in this country has developed in a peculiar way. It has sought to infuse both fresh blood and old experience but somehow our administrators did 389 not foresee the need for expanding administration and the personnel necessary for this expansion, as a result in making appointments and even in granting promotions, there has been a good deal of ad hoc arrangements with the result that it has created in practically every branch of our administration feeling of discontent and misunderstanding between promotees and direct recruits. This has, to a very large extent, damaged the friendly atmosphere which should prevail among the members of the administration, if the administration has to remain a vehicle of social progress and transformation which the Indian administration must, in view of the very great possibility and the transitory nature through which it is passing in spite of the severe personal and economic hardships that the members of the administration go through. The decision in the case of S.B. Patwardhan & Ors. vs State of Maharashtra & Others may be noted, in resolving the present controversy though the decision in that case was rendered in the context of the controversy of the Engineering Service. Rule 8 (1) of the relevant rules in that case before this Court dealt with the various categories which manned the Class II sub divisional posts which were compiled in two lists, one list of Bombay Service of Engineers, Class II cadre of permanent Deputy Engineers and the other list of officiating Deputy Engineers. It is not necessary for the present controversy to set out the details of the same. The controversial provision was rule 8 (iii) which was as follows: "The probationers recruited directly to the Bombay Service of Engineers, Class II cadre in any year shall, in a bunch, be placed senior to promotees confirmed during that year. " Learned Chief Justice observed that this rule was highly discriminatory against the promotees and gave preferential treatment to direct recruits. Its main justification was said to be that persons who were promoted as officiating Deputy Engineers did not belong to cadre so long as they were not confirmed as Deputy Engineers whereas direct recruits appointed on probation as Deputy Engineers either from that class or cadre on the very date of their appointment since after a satisfactory completion of probation, confirmation was guaranteed to them. Learned Chief Justice felt that this needed careful examination. More or less similar submissions were made in the present writ petitions. This Court further noted that there was no universal rule, either that a cadre consisted of both per 390 manent or temporary employees or that it must consist of both. That is primarily a matter of rules and regulations governing the particular service in relation to which the question regarding the composition of the cadre arises. The Court noted several decisions on this point. At page 800 of the report, learned Chief Justice observed as follows: "We are not unmindful of the administrative difficulties in evolving a code of seniority which will satisfy all conflicting claims. But care ought to be taken to avoid a clear transgression of the equality clauses of the Constitution. The rules framed by the State Governments were constitutionally so vulnerable that the administration was compelled to adopt inconsistent postures from time to time leaving the employees no option save to resort to courts for vindication of their rights. In this process, courts, high and low, had to discharge functions which are best left to the expertise of the appropriate departments of the Government. Having struck down certain rules, we do not want to take upon ourselves the task of framing rules of seniority. That is not the function of this Court and frankly it lacks the expertise and the data to do so. We however hope that the Government will bear in mind the basic principles that if a cadre consists of both permanent and temporary employees, the accident of confirmation cannot be an intelligible criterion for determining seniority as between direct recruits and promotees. All other Sectors being equal continuous officiation in a non fortuitous vacancy ought to receive due recognition in determining rules of seniority as between persons recruited from different sources so long as they belong to the same cadre dissimilar functions and bear similar responsibilities. Saying anything beyond this will be trespassing on a field which does not belong to the courts." (Emphasis supplied) The aforesaid observations have to be borne in mind in deciding the present controversy. In the case of Rajendra Narain Singh and others vs State of Bihar and Others the question was about the interpretation of the Bihar Police Service (Recruitment) Rules 1953. In that case Rule 3 of the relevant rules was thus: 391 "The Governor shall decide in each year to number of vacancies to be filled in that year. Provided that the number of vacancies to be filled by promotion in the service in any one year shall not, unless the Governor is satisfied that there is not a sufficient number of officers fit for promotion, be less than half the total number of vacancies to be filed in any such year. " The Court further observed that Rule 3 of Bihar Police Service (Recruitment) Rules was not really a quota rule and it did not lay down any proportion, all it did was to insist that the number of vacancies to be filled in by promotion should not be less than half of the total number of vacancies to be filled in any year. Adding to the number of vacancies and filling them by promotion did not certainly violate the rule requiring, that no less than half of the vacancies must be filled by promotees. The observations of this Court in the case of A. Janardhana vs Union of India and Others may be referred to. This Court said thus after pointing out anomalies similar to the facts of the instant case "It is therefore, time to clearly. initiate a proposition that a direct recruit who comes into service after the promotee was already unconditionally and without reservation promoted and whose promotion is not shown to be invalid or illegal according to relevant statutory or non statutory rules should not be permitted by any principle of seniority to score a march over a promotee because that itself being arbitrary would be violative of Articles 14 and 16. Mr. Ramamurthi, learned counsel for some of the direct recruits, in this connection urged that if at the time when the promotee was recruited by promotion his appointment/promotion was irregular or illegal and which is required to be regularised, any subsequent direct recruit coming in at a later date can seek relief and score a march over such irregular or illegal entrant. We find it difficult to subscribe to this view. Though we have dwelt at some length on this aspect any enunciation of general principle on the lines indicated by us would require a reconsideration of some of the decisions of this court. We say no more save that we have solved the riddle in this case in accordance 392 with the decisions of this court and interpretation of relevant rules. " The decision in the case of Baleshwar Dass & Ors. Etc vs State of U. P. & Ors. was also referred to. There in the context of different rules namely U.P. Service of Engineers (Junior and Senior Scales) Irrigation Branch Rules, this Court observed that officiating service in a post is for all practical purposes of seniority as good as service on a regular basis. It may be permissible within limits, for government to ignore officiating service and count only regular service when claims of seniority arise before it, provided the rules in that regard are clear and categoric and do not admit of any ambiguity and an arbitrary cut of long years of service does not take place. While rules regulating conditions of service are within the executive power of the State or its legislative power under proviso to Article 309, such rules have to be reasonable, fair and not grossly unjust if they are to survive the test of articles 14 and 16 of the Constitution. This Court further noted that for purposes of seniority, one has to go normally by the order of appointment to the Service in a substantive capacity. But no fixed connotations can be attributed to expressions like `substantive capacity ', `service ', `cadre ' and the like because probation even for temporary appointments is provided for in the rules may mean that even temporary appointments can be substantive For there cannot be probation for government servant who is not be absorbed substantively in the service on completion thereof. Permanency carries with it other rights than mere seniority and promotion. Permanent posts and temporary posts are in official terminology sharply different, but in that case the Court further noted that from this alone, there was no difference, in the historical context of U.P. Service of Engineers. The Court noted in that even the case of temporary engineers required consultation with the Public Service Commission. In the context Rule 16 of the Rules in the instant case requiring consultation with the High Court may be noted. In the aforesaid decision this Court noted that a person is said to hold a post in a substantive capacity when he holds it for an indefinite period, especially of long duration in contradistinction to a person who holds it for a definite or a temporary period or holds it on probation subject to confirmation. If the appointment was to a post and capacity in which the appointment was to be made was of indefinite duration, if the proper authority had been consul 393 ted and had approved, if the tests prescribed have been taken and passed, if probation has been prescribed and has been approved, one may well say that the post was held by the incumbent in a substantive capacity. applying these tests to the facts and circumstances of this case dealing with the officers holding the post for a long time, there is no doubt that the petitioners officers have held the positions in substantive capacities. This can be looked at from another point of view. Most of the petitioners are holders of temporary posts in substantive capacities. These posts have been created by the Administrator under rule 16. See also rule 17 which begins with the non obstante clause. By reason of rule 2(b) and rule 2(d), the petitioners being holders of temporary posts in substantive capacities are holding `cadre posts ' and are also a members of the service. Appointment in a substantive capacity is different from appointment to a substantive post. This has been held in the case of Baleshwar Dass (supra) (pages 449, 467 469)= ; at paragraph 23, page 779, though, as was contended on behalf of the High Court the context of the relevant rule was somewhat different from the present one but that difference is not of much significant distinction in principle. It is, therefore, erroneous to contend that the holders of substantive posts, i.e. the 12 posts originally at the inception of the service, and 22 posts now, alone are members of the service. All incumbents holding either substantive posts or temporary posts in substantive capacities are members of the service, in the context of the present rule. That actual terms of rule 7 have been noted but is manifest that in the context of the present circumstances, Rule 7 can have only application to recruitments to the substantive posts in the service. It provides two different sources of recruitment. and without fixing any actual quota, but a ceiling of not more than 1/3 of the substantive posts to be held by direct recruitments. Rules 7 and 8 do not exist in isolation. These have to be read with the other rules, particularly Rule 16. The principles of harmonious construction must be accepted so that all the rules are rendered operative and one does not make the other nugatory. Rule 16 is a rule of relaxation or an additional rule of recruitment providing for temporary posts being filled up in addition to the substantive posts. The effect of the creation of temporary posts is to expand the area of membership of the service '. As the filling up of the temporary posts under Rule 16 is confined to recruitment from the members of Delhi Judicial Service, Rule 7 cannot be made applicable for the 394 recruitment to temporary posts. Therefore, there is no quota rule applicable with regard to temporary posts. In the aforesaid view of the matter, it appears that by definition, temporary posts of District and Sessions Judges are `cadre posts '. See in this connection Rule 2(b) of the said rules. Holders of such temporary posts become members of the Delhi Higher Judicial Service if they are appointed to such posts in substantive capacity under rule 2(d) and rule 2(e) of the said rules. A person can be said to hold a post, permanent or temporary, in a substantive capacity only if his appointment to that post is not fortuitous or adhoc. A person appointed to a post as a stop gap arrangement cannot be said to hold that post in substantive capacity. In addition to the requirement that the appointment should not be fortuitous stop gap or ad hoc nature, no appointment to a temporary post can be regarded as substantive unless it is made in compliance with the rules and regulations which have to be complied with while making appointments to permanent posts. In the instant case for example, an appointee to a temporary post of Additional District and Sessions Judge can only hold that post in a substantive capacity if he has completed not less than ten years of service in the Delhi Judicial Service as required by Rule 7(a) and if he was appointed on the basis of selection from amongst the members of the Delhi Judicial Service in consultation with the High Court as enjoined by Rule 5(1) of the said rules. The proviso to Rule 7(b) does not prescribe any quota of 1/3rd for direct recruits. As has been noted, it merely indicates a ceiling i.e. that not more than 1/3rd of the substantive posts of service shall be held by direct recruits. Even if one assumes that proviso to rule 7(b) provides for a quota of 1/3rd for direct recruits, rule 16(1) which empower the Administrator to create temporary posts in the service, read with rule 16(2) which provides that temporary posts shall be filled in, in consultation with the High Court from amongst the members of the Delhi Judicial Service either constitutes an exception to the quota rule or in the alternative proceeds on the basis of relaxation or abrogation of quota rule. By rule 16(2) a direct recruit cannot be appointed to a temporary posts. In other words, only promotees can be appointed posts. If the source of recruitment to temporary posts is one and one only namely, the members of the Delhi Judicial Service, no question of applying the quota rule can possibly arise. The quota rule can have application only if there is more than one. source of recruitment. If temporary posts in the service 395 are created as has been done in this case by the Administrator as envisaged by rule 16(1) and if such posts have been filled in as it appears to have been done here in consultation with the High Court from amongst members of Delhi Judicial Service as required under Rule 16(2) of the Rules, quota rule assuming that there is any, cannot apply to such appointments. The validity of such appointments is not open to the exception that these violate the quota rule, if any. As has been mentioned hereinbefore it is impossible to find in Rule 7 any quota rule simply because Rule 8 assumes, that quota rule is there in Rule 7, and then proceeds to make a rotational system. It would not be proper to accept the position that there is any quota rule specially in view of the fact that working of the said rules over all these years indicate that the rule was not adhered to and the fulfilment of the rule cannot be adhered to if the appointments under Rule 16 is given effect to and also in view of the fact that if the quota rule is adhered to in conjunction with rule 8(2), it will result in manifest injustice. As between direct recruits, on the one hand, and the members of the Delhi Judicial Service who were appointed in substantive capacity to temporary posts of Additional District & Sessions Judges on the other hand, the seniority must be governed by the rules of continuous officiation in the cadre post i.e. a direct recruit who is appointed after a member of the Delhi Judicial Service is appointed in a substantive capacity to a temporary post of Additional District & Sessions Judge, cannot and should not rank higher than the latter in the list of seniority; if a direct recruit is appointed after a member of the Delhi Judicial Service thus promoted, he would rank lower in seniority than the latter. The following conclusions follow: (1) Rule 7(b) is not in the nature of a quota rule; (2) The temporary posts can be held in substantive capacity; (3) The holders of such temporary posts are members of the Delhi Higher Judicial Service. (4) Rule 8(2) which provides for a rotation of vacancies between direct recruits and promotees "based on the quota of vacancies reserved for both categories by Rule 7", must be read so as to restrict its application to simultaneous appointments of direct recruits and promotees or in the case of first and initial appointment. Any other construction will make the rule incongruous as well as invalid offending articles 14 and 16 of the Constitution. 396 The history of Delhi Judicial Service shows that placement of the promotees on probation is a matter of idle curiosity. Promotees were placed on probation retrospectively as is shown by the recent instances which occurred during the pendency of these writ petitions. By an order dated 6th September, 1983, the Secretary (Law and Judicial), Delhi Administration, notified that five promotees were placed on probation with effect from various dates ranging from 1.10.1981 to 10.5.83. The promotee at Serial No. 1, Smt. Santosh Duggal was placed on probation retrospectively from 1st October, 1981, that means her probationary period of 2 years would be over within three weeks of the letter dated 6th September, 1983, it is also interesting to note that Shrimati Duggal had been working as a Judicial member of the Customs and Excise Gold Control Appellate Board since October, 1982. Such probations are meaningless formalities. Therefore, promotees who were appointed in substantive capacities in the sense indicated above can be placed on probation now if that has not been done so far. As has been noted in the decision of A. Janardhana vs Union of India and ors. at 608 of the Report, if proviso to rule 7(b) is read with rule 8(2) and in the manner contended by the respondents, it might so happen that a candidate 's position may be placed in such a way that by legal fiction, he will be placed as senior to a person as a District and Sessions Judge by national placement at a time when he did not even reach the age at which he or she would have become eligible for appointment. That would be unfortunate and would produce incongruous result. Indeed such a result had happened in A. Janardhana 's case (supra). An argument was advanced on behalf of the respondents that there is no provision for probation for the appointments under rules 16 & 17 of the said rules, but sub rule (2) of rule 12 required that all candidates shall be on probation for a period of two years. An appointment on probation is not a jurisprudential sine qua non for absorption into the services, though normally and generally various rules of different services make such provisions as rule 12(2) here. But as has been noted in the working out the practice of Delhi Judicial Service placement of promotees on probation has not been very strictly followed. The promotees cannot suffer for this. It was, then, urged that there was no process of selection. It may be mentioned that Rule 7(a) provides for recruitment to the Delhi Higher Judicial Service alia inter by promotion on the basis 397 of selection from the members of Delhi Judicial Service, who have completed not less than ten years of Service in the Judicial Service. It may be mentioned that in actual practice all appointments have been made by selecting people from Delhi Judicial Service and sometimes officers have been passed over on the basis of assessment of comparative merits. It may be appropriate here to note on the question whether the petitioners were appointed regularly that all the promotees were appointed to temporary posts in accordance with qualifications laid down under Rule 7(a), namely, by selection and after completion of a minimum of ten years judicial service, The selections were made by the Full Court of the High Court and appointments were made on merit cum seniority basis so much so that persons found not fit for promotions were ignored as in the case of Shri C.D. Vashist and Shri S.P. Singh Chowdhary. On behalf of the respondents attention was drawn to the decisions of this Court in the case of M. Veeraian Chowdhary & 42 ors vs The Government of A.P. & 87 Ors. (Civil Appeal No. 2030 of 1981) as well as the decision of this court in this case of S.P. Gupta etc. vs Union of India and Ors. Inasmuch as the context of the provisions involved in those two decisions are entirely different from the context of the rules in the instant case, the respondents cannot have any support from the aforesaid two decisions. Another argument canvassed was that Bar recruits had joined the services and some of them with a very good practice about which we have no doubt that they had and they had joined the service at great sacrifice, would suffer if any alteration of the gradation list was now made. It was submitted that if necessary at all the same should be done prospectively, if the seniority list is revised, it should be done prospectively without affecting the positions of these Bar recruits where seniority on the old basis in the light of the High Court 's understanding before these petitions were filed had been existing. One should give anxious considerations to this aspect of the matter. One should be hesitant and loath to upset the just expec 398 tations of the members of the legal profession who have joined the service and one would be very sorry to do that. Judicial appointments are no longer attractive for any lawyer of any kind of success. One would be hesitant to put further disincentives for those with professional experience to join Judicial service, and therefore be reluctant to interfere with the just expectations of professional entrants who had entered Judicial service at sacrifice of considerable money and position. But the provisions of the rule as well as of the Constitution must be given effect to. In the instant case members of the Judicial service, the petitioners had made representations to the High Court in 1977. The two entrants who would a be vitally affected by the re adjustment of the list would be Shri G.S. Dakha who joined the service on 27th of September, 1973 and Miss Usha Mehra who joined the service on probation on 24th of April, 1980. At that time challenge in the form of representation to existing seniority before the High Court was there. Shri J.B. Goel had joined the service on 10th November, 1980 and Shri B.S. Chaudhary had joined the service on 10th November, 1982. So far as Shri Dakha as a member of Scheduled Caste and Tribe, his position may not be affected on other grounds. We say no more on this aspect. So far as Miss Mehra is concerned, she was appointed on probation in April, 1980 and got her confirmation during the pendency of the present petitions. Miss Mehra is still young and has a long tenure. It is hoped that she will overcome any temporary or momentary loss of seniority and would continue to render her valuable service to the administration of justice. In judicial careers many just expectations get upset as experiences of recent times would indicate. The interpretation indicated above and the principles mentioned herein before in adjusting the rights between the promotees and direct recruits in the background of the rules prevailing in the instant case are appropriate and rational. One should insist that government must abolish this system of making appointments from two different sources in ad hoc manner. If appointments have to be made from two different sources, then the authorities should so plan that the recruits come from two different sources in time and officers from one source are not required to function substantively and effectively in the jobs which are intended to be performed by recruits of other source and face the prospect of being either pushed back or thrown out. Nothing more need to be said. 399 The rules nisi are made absolute. Current gradation list of the Judicial Department of the Delhi Administration specially with reference to respondents Nos. 4 and 5 is quashed with a direction to the respondents Nos. 1 to 3 prepare the gradation list of the Delhi Higher Judicial Service on the basis of the principles indicated in this judgment. This, however, will not in any way prejudice the claim of seniority of respondent No. 4, Shri G.S. Dakha on the ground of his being member of Scheduled Caste or Scheduled Tribe. This direction will also not in any way affect the seniority of the promotee officers of the Delhi Higher Judicial Service amongst themselves. That position would be guided by the principles laid down by this Court in Joginder Nath and Ors. ' case (supra) (indicated hereinbefore). In the fact and circumstances of the case, parties will bear their own costs.
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Regular recruitment after the initial recruitment to the Delhi Higher Judicial Service under Rule 7 of the Delhi Judicial Service Rules, 1970 is made by promotion on the basis of selection from members of the Delhi Judicial Service who have completed not less than 10 years of service and by direct recruitment from the Bar subject to the provision that not more than one third of the substantive posts in the service shall be held by direct recruits.
In the case of promoted officers, the appointment to the service shall be made by the Administrator in consultation with the High Court while the appointment of direct recruits shall be made on the recommendations of the High Court.
Rule 2(b) provides that cadre post means any post specified in the Schedule and includes a temporary post carrying the same designation as that of any of the post specified in the Schedule and any other temporary post declared as cadre post by the Administrator.
Under rule 16 the Administrator is empowered to create temporary post in the service and such temporary post shall be filled in consultation with the High Court from amongst the members of the Delhi Judicial Service.
Under rule 17 the Administrator may in consultation with the High Court fill substantive vacancies in the service by making temporary appointments thereto from amongst members of the Delhi Judicial Service.
Rule 8 speaks of seniority while the inter se seniority of members of the Delhi Judicial Service promoted to the service shall be the same as in the Delhi Judicial Service, the seniority of direct recruits vis a vis promotees shall be determined in the order or rotation of vacancies between the direct recruits and promotees based on the quotas of vacancies reserved for both categories by rule 7 provided that the first available vacancy will be filled by a direct recruit and the next two vacancies by promotees and so on.
352 The Administrator have appointed the writ petitioners and also the defendants by resorting to Rule 16 and Rule 7 respectively.
But when the seniority list was prepared some of the defendants who are direct recruits were ranked higher than the promoted officers who have been appointed several years earlier under Rule 16.
Hence the two writ petitions by the promoted officers contending that seniority between promotees and direct recruits must be determined in accordance with the respective dates of their continuous officiation as Additional District and Sessions Judges and that direct recruits who are appointed as Additional District and Sessions Judges after the promotees are so appointed cannot rank higher in seniority over the promotees and that promotees discharge identical functions and bear the same responsibilities as direct recruits and upon their appointments they constitute only common class and hence to give seniority to the direct recruits who are appointed later in point of time is violative of articles 14 and 16 of the Constitution.
Allowing the petitions in part, the Court ^ HELD : (Per majority) Per Chandrachud, C. J. 1:1.
The impugned seniority list, which is challenged by the promoted officers has been prepared on the basis that the rule of quota and rota will continue to apply notwithstanding the fact that appointments are made to the service under rules 16 and 17 of the Delhi Judicial Service Rules and is violative of articles 14 and 16 of the Constitution since the rule of quota and rota prescribed by the proviso to rule 7 would cease to apply when appointments are made to service under rules 16 and 17.
[378B C] 1:2.
But the provisions contained in proviso to rule 7 and rule 8(2) of the Delhi Judicial Service Rules 1970 do not by themselves suffer from any infirmity and therefore constitutionally valid.
[380A] 2:1.
When a rule or a section is part of an integral scheme it should not be considered or construed in isolation.
One must have regard to the scheme of the fasciculus of the relevant rules or sections in order to determine the true meaning of any one or more of them.
An isolated consideration of the provision leads to the risk of some other inter related provisions becoming otiose or devoid of meaning [365H: 366A] 2:2.
The negative language of the proviso to rule 7 makes it clear that it merely prescribes, by way of imposing a ceiling that the direct recruits shall not hold more than one third of the substantive posts.
The language of the proviso to rule 7 is certainly not felicitous and is unconventional if its intention was to prescribe a quota for direct recruits.
But the proviso must be read along with rule 8(2) since the two provisions are inter related.
Their combined reading yields but one result, that the proviso prescribes a quota of one third for direct recruits.
Otherwise there would neither be any occasion nor any justification for rotating vacancies between direct recruits and promotees [366C E] 2:3.
In the process of reading the rules as parts of a connected whole, rules 16 and 17 are equally relevant.
The position which emerges from the provisions contained in rules 16 and 17 is that it is permissible to create 353 temporary posts in the service and, even substantive vacancies in the service can be filled by making temporary appointments.
The two fold restriction on this dual power is that the High Court must be consulted and such appointments must be made from amongst the promotees only.
If temporary appointments to the service either in temporary posts or in substantive vacancies can be made within the framework of the rules and have to be made, if at all from amongst the promotees and promotees only, the quota rule contained in the proviso to rule 7 must inevitably breakdown when such appointments are made, the simple reason being that direct recruits cannot be appointed either to temporary post in the service to substantive vacancies in the service which are filled in by making temporary appointments.
Thus even though the proviso to rule 7 prescribes a quota of one third for direct recruits, rules 16 and 17 permit the non observance of the quota rule in the circumstances stated in those rules.
[366F; 367A D] 3 : 1.
Normally, an ex cadre post means a post outside the cadre of posts comprised in a service.
Therefore all posts in the service whether permanent or temporary, are generally regarded as cadre posts.
But, regardless of the normal pattern of service rule rule 2 (b) has the limited effect of making every post in the service a cadre post, whether the post is permanent or temporary.
The inclusive clause contained in the second part of rule 2 (b) has to be read in the context of the first part of that rule and must take its meaning from what precedes it.
This provision is consequential to and in consonance with Rule 16.
Since it is permissible under Rule 16 to create temporary posts in the service, such posts are also regarded as cadre posts.
It would have been anomalous to treat a post in the service as an ex cadre post merely for the reason that the post is temporary.
[367H; 368A B; 367G] Therefore, every promotee who holds the post of an Additional District and Sessions Judge in the service is the holder of a cadre post, whether the post is permanent or temporary direct recruits hold cadre post in all events because, they can only be appointed to substantive post in the service on a permanent basis.
Rules 16 and 17 forbid their appointments to temporary post in the service or to substantive vacancies in the service on a temporary basis.
[368C D] 3 : 2.
Rule 2 (d) which provides that a member of the service means a person appointed in substantive capacity to the service under the provisions of the rules shows that two conditions must co exist in order that a person can become a member of the service.
Firstly, his appointment has to be in a substantive capacity and secondly, the appointment has to be to the service, that is to a post in the service.
Persons who hold appointments bearing designations similar to the designations of the posts comprised in the service cannot, for that reason alone become members of the service.
It is only when they are appointed in a substantive capacity to a post in the service, that they become members of the service.
[368E G] 3 : 3.
By the definition contained in rule 2 (d), the membership of the service is limited to persons who are appointed in a substantive capacity to the service.
By the second part of rule 2 (b), if read in an extended sense every temporary post which carries the same designation as that of any of the post 354 specified in the schedule is a cadre post whether such post is comprised in the service or not.
Such posts and the posts specified in the Schedule will together constitute the cadre under rule 2 (b).
[369B C] 4 : 1.
Whenever the rules provide for recruitment to a service from different sources, there is no inherent infirmity in prescribing a quota for appointment of persons drawn from those sources and in working out the rule of quota by rotating the vacancies as between them in a stated proportion.
Therefore rule 8 (2) cannot be held to be unconstitutional merely because it reserves one third of the vacancies in the service for direct recruits and provides that the first available vacancy in the service will be filled in by a direct recruit, the next two by promotees and so on.
[369G; 370B] Mervyan Coutinho vs Collector of Customs, Bombay, ; ; S.C. Jaisinghani vs Union of India, ; , Bishan Sarup Gupta vs Union of India, ; ; A.K. Subraman vs Union of India, [1975] 2 SCR 979 V.B. Badami vs State of Mysore, [1976] 2 SCC 901 and Paramjit Singh Sandhu vs Ram Rakha, ; ; referred to.
4 : 2.
However, there being instances wherein though the provision of rule or a section is not invalid, the manner in which that provision is implemented in practice leads to the creation of disparities between persons who, being similarly circumstanced are entitled to equal treatment.
The provisions of rule 8 (2) must therefore be applied carefully and in such a manner as not to lead to the violation of the guarantee of equality and equal opportunity contained in articles 14 and 16 of the Constitution by ascertaining as to which of the promotees can be regarded as belonging to the same class as the direct recruits.
[370C D] 4 : 3.
The pre requisite of the right to inclusion in a common list of seniority is that all those who claim that right must, broadly, bear the same characteristics.
The mere circumstance that they hold posts which carry the same designation will not justify the conclusion that they belong to the same class.
Persons who are appointed or promoted on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement cannot rank for purposes of seniority with those who are appointed to their posts in strict conformity with the rules of recruitment, whether such later class posts are permanent or temporary.
The rules in the instant case do not require that persons belonging to former category have to satisfy any particular prescription like consultation with the High Court.
[370E F] 5 : 1.
There is no provision in the Rules which requires that ad hoc appointments must also be made in accordance with any set formula.
The courtesy shown by the authorities to the High Court when certain appointments are made is one thing and the obligation imposed by the rules on the authorities that the High Court shall be consulted when certain appointments are made is another.
Indeed, there is a distinction between the process of consultation with the High Court and the screening of the promotees done by the High Court, may be at the instance of the authorities, when their names are considered for appointment as Additional District and Sessions Judge on an ad hoc, fortuitous 355 or stop gap basis.
Thus, persons belonging to the Delhi Judicial Service who are appointed to temporary posts of Additional District and Sessions Judge on an ad hoc basis or for fortuitous reasons or by way of a stop gap arrangement constitute a class which is separate and distinct from those who are appointed to posts in the service in strict conformity with the rules of recruitment.
In view of this, the former class of promotees cannot be included in the list of seniority of officers belonging to the service.
[370H; 371A D] 5:2.
However, in the matter of seniority no distinction can be made between direct recruits who are appointed to substantive vacancies in the service on the recommendation of the High Court under rule 5 (2) and the promotees who are appointed in consultation with the High Court to posts in the service under rules 16 and 17.
Promotees who are appointed to the service under either of these two rules must be considered as belonging to the same class as direct recruits appointed under rule 5 (2).
They perform similar functions, discharge identical duties and bear the same responsibilities as direct recruits.
They are appointed on a regular basis to posts in the service in the same manner as direct recruit are appointed, the only distinction being that whereas the latter are appointed on the recommendation of the High Court, promotees are appointed in consultation with the High Court Exclusion from the seniority list of those promotees who are appointed to posts in the service, whether such appointment is to temporary posts or to substantive vacancies in a temporary capacity will amount to a violation of the equality rule since, thereby, persons who are situated similarly shall have been treated dissimilarly in a matter which constitutes an important facet of their career.
[371E H; 372A] 5:3.
In situations resulting in the suspension of the rule of 'quota and rota ', it is difficult to evolve an equitable rule for determining seniority between direct recruits on the one hand and promotees who are appointed under rules 16 and 17 on the other which will cause no hardship of any kind to any member of the service.
Therefore, the attempt has to be made to minimise, as far as possible, the inequities and disparities which are inherent in a system which provides for recruitment to the service from more than one source by keeping in mind one guiding principle, namely that the classification is gloss on the right to equality and to ensure that classification is made on a broad, though rational, basis so as not to produce the self defeating result of denying equality to those, who in substance, are situated similarly.[374C E] 6 Since the rule of quota and rota ceases to apply when appointments are made under rules 16 and 17, the seniority of direct recruits and promotees appointed under those rules must be determined according to the dates on which direct recruits are appointed to their respective posts and the dates from which the promotees have been officiating continuously either in a temporary post created in the service or in substantive vacancies to which they were appointed in a temporary capacity.
[375F G] S.B. Patwardhan vs State of Maharashtra, ; ; applied; Baleshwar Dass vs State of U.P., [1981] 1 SCR 449 distinguished; A. Janardhana vs Union of India, ; ; followed Joginder Nath vs Union of India, ; ; held inapplicable.
356 Per Sabyasachi Mukharji, J. 1:1.
The proviso to rule 7 merely provides that in case in an year there is vacancy for recruitments from the Bar as well as by promotion more than one third of substantive posts should not be filled in by direct recruitment, and nothing more and therefore it cannot be said that there is any quota of Bar recruits of one third.
The rule does not say that one third of direct recruits must for each year be one third of the recruitments made.
It puts a ceiling on number of Bar recruits in an year where Bar recruits are available and willing to be appointed.[384C E] 1:2.
Sub rule (2) or the makers of Sub rule (2) of Rule 8 presumed and assumed a factual position that quotas of vacancies have been reserved for both categories by Rule 7 which is really not a fact Rule 7 does not reserve any quota for either of the categories Rule 7, 0.4 provides for ceiling of direct recruits by providing that in case there were recruitments from the Bar as well as by promotions in such a case Bar recruits would not be more than one third of the substantive posts in the service.
[384H: 385A B] 2:1.
It is well settled that breft of anything where a service consists of recruitments made from two different sources and the rules and regulations provide for their recruitment and their rights, inter se, primarily and essentially those rights have to be adjusted within the scheme of the rules though it might in some cases lead to certain amount of imbalances or injustices because a service is built on various considerations and various factors induce the legislature or the rule making authority to induce different and diverse knowledge, diverse aptitudes and requirements needed for running of the service.
The legislature or the rule making authorities have better knowledge and better capacities to adjust those factors.[385D F] 2:2.
Rule 8 (2) proceeds on the misconception that there is quota fixed for direct recruits, which rule 7 does not.
Rule 8 (2) cannot on plain literal meaning also be construed or interpreted to mean that it was deemed by the legislature and the rule making body to engraft any quota.
There is no deemed quota, if that was the intention then the rule would have said so.
The rule is silent and proceeds on wrong assumption Therefore, the rule should be given effect to in so far as it can be without reading any quota for the subsequent years.[384E F] Mervyn Coutinho & Ors.
vs Collector of Customs Bombay & Ors ; ; S.C. Jaisinghani vs Union of India & Ors., [1967] 2 SCR p. 703, Chandra mouleshwar Prasad vs Patna High Court & Ors., ; ; V.B. Badamai Etc.
vs State of Mysore & Ors.
, [1976] 1 SCR 815=2 SCC 901; and Bishab Sarup Gupta vs Union of India & Ors., [1975] Suppl.
SCR 491; held inapplicable.
357 Joginder Nath and Ors.
vs Union of India & Ors.
,[1975] 2 SCR 553 referred to.
Service jurisprudence in India has developed in a peculiar way.
It has sought to infuse both fresh blood and old experience but somehow our administrators did not for a see the need for expanding administration and the personal necessary for this expansion, as a result in making appointments and even granting promotions, there has been a good deal of ad hoc arrangements crating in practically every branch of administration feeling of discontent and misunderstanding between promotees and direct recruits, and damaging the friendly atmosphere which should prevail among the members of the administration, if administration has to remain a vehicle of social progress and transformation which the Indian administration must, in view of the very great possibility and the transitory nature through which it is passing in spite of the severe personal and economic hardships that the member of the administration go through.
[388H; 389A C] 3:2.
In Baleshwar Dass & Ors.
vs State of U.P. & Ors.
[1981]1.
SCR. 449, the Supreme Court noted that a person is said to hold a post in a substantive capacity when he holds it for an indefinite period, especially of long duration in contradistinction to a person who holds it for a definite or a temporary period or holds that on probation and subject to confirmation.
If the appointment was to post and the capacity in which the appointment was to be made was of indefinite duration, if the proper authority had been consulted and had approved, if the tests prescribed have been taken and passed, if probation has been prescribed, and has been approved it can be said that the post was held by the incumbent in a substantive capacity.
Applying these tests to the facts and circumstances of this case dealing with the officers holding the post for a long time there is no doubt that the petitioners officers have held the positions in substantive capacities [392G H; 393A B] Further by reason of rule 2 (b) and rule 2 (d) the petitioners being holders of temporary post in substantive capacities are holding 'cadre posts ' and are also members of the Service.
Appointment in a substantive capacity is certainly different from appointment to a substantive post.
Therefore the holders of substantive posts i.e. the 12 posts originally at the inception of service and 22 posts now, alone are not members of the service.
All incumbents holding either substantive posts or temporary post in substantive capacities are members of the service in the context of the present rule.
[393C E] S.B. Patwardhan & Ors.
vs State of Maharashtra & Ors., [1977] 3 SCR p. 775; Rajendra Narain Singh & Ors.
vs State of Bihar & Ors,.[1980] 3 SCR 450; A. Janardhana vs Union of India & Ors.
, ; at 627; and Baleshawr Dass & Ors.
vs State of U.P. & Ors.
[1981] 1 SCR 449; referred to.
The principles of harmonious construction must be accepted so that all the rules are rendered operative and one does not make the other rule nuga 358 tory.
In the context of the present circumstances rule 7 can have only application to recruitments to the substantive posts in the service.
Rule 7 provides two different sources of recruitment and without fixing any actual quota.
but a ceiling that not more than one third of the substantive posts be held by direct recruitments.
Rule 7 and 8 does not exist in isolation and must be read with the other particularly rule 16.
Rule 16 is a rule of relaxation or an additional rule of recruitment providing for temporary posts being filled up in addition to the substantive posts.
The effect of the creation of temporary posts is to expand the area of membership of the service.
As the filling of the temporary posts under rule 16 is confined to recruitment from the members of Delhi Judicial Service Rule 7 cannot be made applicable for the recruitment to temporary posts.
Therefore, there is no quota rule applicable with regard to temporary posts.
[393F H] 4:1.
Assuming that proviso to rule 7 (b) provides for a quota of one third for direct recruits, rule 16 (1) which empowers the administrator to create temporary posts in the service read with rule 16 (2) which provides that temporary posts shall be filled in, in consultation with the High Court from amongst the members of the Delhi Judicial Service either constitutes an exception to the quota rule or in the alternative proceeds on the basis of realization or abrogation of quota rule.
By Rule 16 (2) a direct recruit cannot be appointed to a temporary post.
In other words, only promotees can be appointed to temporary post.
If the source of recruitment to temporary posts is one and one only namely, the members of the Delhi Judicial Service, no question of applying the quota rule can possibly arise.
The quota rule can have application only if there is more than one source of recruitment as envisaged by rule 16 (1) and if such posts have been filled in as it appears to have been done here in consultation with the High Court from amongst members of Delhi Judicial Service as required under rule 16 (2) of the rules, quota rule assuming that there is any, cannot apply to such appointments.
The validity of such appointments is not open to the exception that these violate the quota rule, if any.
[394F H; 395A B] 4:2.
As between direct recruits on the one hand and the members of the Delhi Judicial Service who were appointed in substantive capacity to temporary posts of Additional District and Sessions Judge on the other hand, the seniority must be governed by the rules of continuous officiation in the cadre post i.e. a direct recruit who is appointed in a substantive capacity to a temporary post of Additional District and Sessions Judge cannot and should not rank higher than the latter in the list of seniority, if a direct recruit is appointed after a member of the Delhi Judicial Service thus promoted he would rank lower in seniority than the latter.
[395D E] 4:3.
An appointment on probation is not a jurisprudential sine qua non for absorption into the services, though normally and generally various rules of different services make such provisions as rule 12 (2) here.
During the pendency of the Writ Petitions some of the promotees were placed on probation retrospectively by different orders.
Such probations are meaningless formalities.
In the 359 instant case, the placement of promotees on probation has not been very strictly followed for which the promotees cannot suffer.
[396G H] 4:4.
It cannot be said that the petitioners were not appointed regularly in accordance with the qualifications laid down under rule 7 (a).
In fact the selections were made by the full court of the High Court and appointments were made on merit cum seniority basis.
[397B C] M. Verraian Chowdhary & 42 Ors.
vs The Government of A.P. & 87 Ors.
C. A. No. 2030 of 1981; S.P. Gupta etc.
vs Union of India & Ors.
, [1981] Supp.
SCC 87, held inapplicable.
OBSERVATION [One should insist that Government must abolish this system of making appointments from two different sources in ad hoc manner.
If appointments have to be made from two different sources then the authorities should so plan that recruits come from two different sources in time and officers from one source are not required to function substantively and effectively in the jobs which are intended to be performed by recruits of other source and face the prospect of being either pushed back or thrown out.] [398G H]
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Regular hiring after the first hiring for the Delhi Higher Judicial Service is done by promoting people from the Delhi Judicial Service who have worked for at least 10 years. It's also done by hiring directly from lawyers. However, direct hires can't hold more than one-third of the permanent positions in the service.
For promotions, the person in charge makes the appointment after talking to the High Court. For direct hires, the appointment is made based on what the High Court recommends.
Rule 2(b) says that a "cadre post" is any job listed in the official schedule. This also includes temporary jobs that have the same title as a job in the schedule, and any other temporary job that the person in charge says is a cadre post.
Rule 16 says that the person in charge can create temporary jobs in the service. These temporary jobs are filled by people from the Delhi Judicial Service, after talking to the High Court.
Rule 17 says that the person in charge can fill permanent job openings temporarily by appointing people from the Delhi Judicial Service, after talking to the High Court.
Rule 8 talks about seniority, which is how long someone has worked in a job. If people from the Delhi Judicial Service are promoted, their seniority in the new service stays the same as it was in the Delhi Judicial Service. But the seniority of direct hires compared to promotees is based on a rotation system. This system follows the rules about how many jobs are reserved for each group. The first job opening goes to a direct hire, the next two go to promotees, and so on.
The person in charge appointed the people who filed the lawsuit and the defendants (those being sued) by using Rule 16 and Rule 7, respectively.
But when the seniority list was created, some of the direct hires were ranked higher than the promotees, even though the promotees had been appointed several years earlier under Rule 16.
So, the promotees filed two lawsuits. They argued that seniority between promotees and direct hires should be based on when they started working continuously as Additional District and Sessions Judges. They also said that direct hires who are appointed as Additional District and Sessions Judges after the promotees can't be ranked higher in seniority. The promotees argued that they do the same work and have the same responsibilities as direct hires. They said that once they are appointed, they are all in the same group. So, giving seniority to direct hires who were appointed later is against Articles 14 and 16 of the Constitution, which guarantee equality.
The Court allowed the petitions (lawsuits) in part and HELD: (According to the majority opinion) Per Chandrachud, C.J.:
1:1. The seniority list that the promotees are challenging was created based on the idea that the quota and rotation rules still apply, even when appointments are made under Rules 16 and 17 of the Delhi Judicial Service Rules. This violates Articles 14 and 16 of the Constitution because the quota and rotation rules in Rule 7 should not apply when appointments are made under Rules 16 and 17.
[378B C] 1:2. But the rules in Rule 7 and Rule 8(2) of the Delhi Judicial Service Rules 1970 are not flawed and are therefore constitutional.
[380A] 2:1. When a rule or a section is part of a bigger plan, it should not be looked at or understood by itself.
You have to consider the whole group of related rules or sections to figure out what any one of them really means. Looking at one rule by itself could make other related rules useless or meaningless.
[365H: 366A] 2:2. The wording of Rule 7 makes it clear that it only sets a limit on how many permanent positions can be held by direct hires: one-third.
The wording of Rule 7 isn't ideal if its goal was to set a quota (a specific number) for direct hires. But this rule must be read together with Rule 8(2) because they are related. Together, they mean that Rule 7 sets a quota of one-third for direct hires. Otherwise, there would be no reason to rotate job openings between direct hires and promotees.
[366C E] 2:3. When reading the rules as a whole, Rules 16 and 17 are also important.
These rules say that it's okay to create temporary positions in the service, and even permanent job openings can be filled with temporary appointments. There are two limits on this power: the High Court must be consulted, and the appointments must be made from among the promotees. If temporary appointments can be made within the rules, and if they have to be made from among the promotees, then the quota rule in Rule 7 must be ignored when these appointments are made. This is because direct hires can't be appointed to temporary positions or to permanent job openings that are filled temporarily. So, even though Rule 7 sets a quota of one-third for direct hires, Rules 16 and 17 allow the quota rule to be ignored in certain situations.
[366F; 367A D] 3:1. Normally, an "ex cadre post" means a job that is not part of the regular group of jobs in a service.
So, all jobs in the service, whether permanent or temporary, are usually considered cadre posts. But Rule 2(b) makes every job in the service a cadre post, whether it's permanent or temporary. The second part of Rule 2(b) has to be understood in the context of the first part. This rule is related to Rule 16. Since Rule 16 allows temporary jobs to be created in the service, these jobs are also considered cadre posts. It would be strange to treat a job in the service as an ex cadre post just because it's temporary.
[367H; 368A B; 367G] Therefore, every promotee who holds the job of Additional District and Sessions Judge in the service is the holder of a cadre post, whether the post is permanent or temporary. Direct hires always hold cadre posts because they can only be appointed to permanent jobs in the service. Rules 16 and 17 don't allow them to be appointed to temporary jobs or to permanent job openings on a temporary basis.
[368C D] 3:2. Rule 2(d) says that a "member of the service" is someone who has been appointed to a permanent position in the service under the rules. This means that two things have to be true for someone to be a member of the service.
First, their appointment has to be permanent. Second, the appointment has to be to the service, meaning to a job in the service. People who hold appointments with titles similar to those of jobs in the service don't automatically become members of the service. They only become members when they are appointed to a permanent position in the service.
[368E G] 3:3. According to Rule 2(d), only people who are appointed to the service in a permanent position can be members of the service.
If the second part of Rule 2(b) is read broadly, every temporary job that has the same title as a job in the official schedule is a cadre post, whether or not that post is part of the service. These posts and the posts listed in the schedule together make up the cadre under Rule 2(b).
[369B C] 4:1. When the rules allow for hiring into a service from different sources, it's not wrong to set a quota for appointments from those sources and to use a rotation system to fill job openings in a specific proportion.
So, Rule 8(2) can't be considered unconstitutional just because it reserves one-third of the job openings in the service for direct hires and says that the first opening goes to a direct hire, the next two to promotees, and so on.
[369G; 370B] Mervyan Coutinho vs Collector of Customs, Bombay, ; ; S.C. Jaisinghani vs Union of India, ; , Bishan Sarup Gupta vs Union of India, ; ; A.K. Subraman vs Union of India, [1975] 2 SCR 979 V.B. Badami vs State of Mysore, [1976] 2 SCC 901 and Paramjit Singh Sandhu vs Ram Rakha, ; ; referred to.
4:2. However, there are times when a rule is not invalid, but the way it's carried out creates unfair differences between people who should be treated equally.
So, Rule 8(2) must be applied carefully so that it doesn't violate the guarantee of equality in Articles 14 and 16 of the Constitution. It's important to figure out which promotees are similar enough to the direct hires to be considered part of the same group.
[370C D] 4:3. To be included in a common seniority list, everyone who wants to be included must have similar characteristics.
Just holding jobs with the same title doesn't mean that people belong to the same group. People who are appointed or promoted temporarily or for accidental reasons can't be ranked for seniority with those who are appointed to their jobs according to the rules, whether those jobs are permanent or temporary. The rules in this case don't require that the people in the first group meet any specific requirements, such as consulting with the High Court.
[370E F] 5:1. There is no rule that says temporary appointments must be made according to a specific formula.
It's one thing for the authorities to be polite to the High Court when making certain appointments, and it's another thing for the rules to require the authorities to consult with the High Court when making certain appointments. There's a difference between consulting with the High Court and the High Court screening promotees when their names are being considered for temporary appointment as Additional District and Sessions Judge. So, people from the Delhi Judicial Service who are appointed to temporary jobs as Additional District and Sessions Judge on a temporary basis are a separate group from those who are appointed to jobs in the service according to the rules. Because of this, the first group of promotees can't be included in the seniority list of officers belonging to the service.
[370H; 371A D] 5:2. However, when it comes to seniority, no distinction can be made between direct hires who are appointed to permanent job openings in the service based on the High Court's recommendation under Rule 5(2) and the promotees who are appointed to jobs in the service under Rules 16 and 17 after consulting with the High Court.
Promotees who are appointed to the service under either of these two rules must be considered part of the same group as direct hires appointed under Rule 5(2). They do similar work, have the same responsibilities, and are appointed to jobs in the service in the same way as direct hires. The only difference is that direct hires are appointed based on the High Court's recommendation, while promotees are appointed after consulting with the High Court. Excluding from the seniority list those promotees who are appointed to jobs in the service, whether those appointments are to temporary jobs or to permanent job openings on a temporary basis, would violate the rule of equality. This is because people who are in similar situations would be treated differently in a matter that is important to their careers.
[371E H; 372A] 5:3. When the quota and rotation rule is suspended, it's hard to create a fair rule for determining seniority between direct hires and promotees who are appointed under Rules 16 and 17. Any rule will likely cause some hardship to someone in the service.
So, the goal should be to minimize the unfairness that is built into a system that allows hiring into the service from more than one source. The guiding principle should be that classifications (groupings) should be made broadly and rationally so as not to deny equality to those who are essentially in the same situation.
[374C E] 6. Since the quota and rotation rule doesn't apply when appointments are made under Rules 16 and 17, the seniority of direct hires and promotees appointed under those rules must be determined by the dates on which the direct hires are appointed to their jobs and the dates from which the promotees have been continuously working in a temporary job created in the service or in permanent job openings to which they were appointed temporarily.
[375F G] S.B. Patwardhan vs State of Maharashtra, ; ; applied; Baleshwar Dass vs State of U.P., [1981] 1 SCR 449 distinguished; A. Janardhana vs Union of India, ; ; followed Joginder Nath vs Union of India, ; ; held inapplicable.
Per Sabyasachi Mukharji, J.:
1:1. Rule 7 simply says that if there are job openings to be filled by both lawyers and promotees in a year, no more than one-third of the permanent jobs should be filled by direct hires. It doesn't say that there is a quota of one-third for lawyers.
The rule doesn't say that one-third of the hires each year must be direct hires. It sets a limit on the number of lawyer hires in a year when lawyers are available and willing to be appointed.
[384C E] 1:2. Rule 8(2) assumes that Rule 7 reserves quotas for both groups, which is not true. Rule 7 doesn't reserve any quota for either group. Rule 7 sets a limit on direct hires by saying that if there are hires from both lawyers and promotees, the lawyer hires can't be more than one-third of the permanent jobs in the service.
[384H: 385A B] 2:1. When a service hires from two different sources and the rules provide for their hiring and their rights, those rights must be adjusted within the rules. This might lead to some unfairness because a service is built on different ideas and factors that the lawmakers or rule-makers use to bring in different knowledge, skills, and needs for running the service.
The lawmakers or rule-makers have better knowledge and ability to adjust those factors.
[385D F] 2:2. Rule 8(2) is based on the wrong idea that there is a quota for direct hires, which Rule 7 doesn't create.
Rule 8(2) can't be interpreted to mean that the lawmakers and rule-makers intended to create a quota. There is no quota implied. If that was the intention, the rule would have said so. The rule is silent and based on a wrong assumption. So, the rule should be followed as much as possible without adding any quota for future years.
[384E F] Mervyn Coutinho & Ors. vs Collector of Customs Bombay & Ors ; ; S.C. Jaisinghani vs Union of India & Ors., [1967] 2 SCR p. 703, Chandra mouleshwar Prasad vs Patna High Court & Ors., ; ; V.B. Badamai Etc. vs State of Mysore & Ors. , [1976] 1 SCR 815=2 SCC 901; and Bishab Sarup Gupta vs Union of India & Ors., [1975] Suppl. SCR 491; held inapplicable.
Joginder Nath and Ors. vs Union of India & Ors. ,[1975] 2 SCR 553 referred to.
Service law in India has developed in a unique way. It has tried to bring in both new ideas and old experience. But our leaders didn't see the need to expand the government and the staff needed for this expansion. As a result, there have been many temporary arrangements in hiring and promotions. This has created feelings of unhappiness and misunderstanding between promotees and direct hires in almost every part of the government. This has damaged the friendly atmosphere that should exist among government workers if the government is to be a way to make society better. This is especially important in India because of the big changes it's going through, despite the personal and economic hardships that government workers face.
[388H; 389A C] 3:2. In Baleshwar Dass & Ors. vs State of U.P. & Ors. [1981]1. SCR. 449, the Supreme Court said that a person holds a job in a permanent way when they hold it for a long time, not just for a temporary period or on probation.
If the appointment was to a job and was meant to be for a long time, if the correct authority was consulted and approved, if the required tests were taken and passed, and if probation was required and approved, then the job can be said to be held in a permanent way. Applying these ideas to the facts of this case, the officers have held their positions in a permanent way.
[392G H; 393A B] Also, according to Rules 2(b) and 2(d), the officers who hold temporary jobs in a permanent way are holding "cadre posts" and are also members of the Service.
Being appointed in a permanent way is different from being appointed to a permanent job. So, only the people holding the 12 original permanent jobs, and now the 22 jobs, are not the only members of the service. All people holding either permanent jobs or temporary jobs in a permanent way are members of the service under these rules.
[393C E] S.B. Patwardhan & Ors. vs State of Maharashtra & Ors., [1977] 3 SCR p. 775; Rajendra Narain Singh & Ors. vs State of Bihar & Ors,.[1980] 3 SCR 450; A. Janardhana vs Union of India & Ors. , ; at 627; and Baleshawr Dass & Ors. vs State of U.P. & Ors. [1981] 1 SCR 449; referred to.
The rules should be understood in a way that makes all of them work together, so that one rule doesn't cancel out another.
In this case, Rule 7 can only apply to hiring for the permanent jobs in the service. Rule 7 provides two different sources of hiring and sets a limit that no more than one-third of the permanent jobs can be held by direct hires.
Rules 7 and 8 don't exist separately and must be read with the other rules, especially Rule 16. Rule 16 is a rule that allows for temporary jobs to be filled in addition to the permanent jobs. Creating temporary jobs expands the membership of the service. Since filling the temporary jobs under Rule 16 is limited to members of the Delhi Judicial Service, Rule 7 can't be applied to hiring for temporary jobs. So, there is no quota rule that applies to temporary jobs.
[393F H] 4:1. Even if Rule 7(b) sets a quota of one-third for direct hires, Rule 16(1), which allows the person in charge to create temporary jobs in the service, and Rule 16(2), which says that temporary jobs should be filled by members of the Delhi Judicial Service after consulting with the High Court, either create an exception to the quota rule or ignore it completely.
Under Rule 16(2), a direct hire can't be appointed to a temporary job. Only promotees can be appointed to temporary jobs. If the source of hiring for temporary jobs is only the members of the Delhi Judicial Service, then the quota rule can't apply. The quota rule can only apply if there is more than one source of hiring, as mentioned in Rule 16(1). If temporary jobs have been filled by members of the Delhi Judicial Service after consulting with the High Court, as required by Rule 16(2), then the quota rule can't apply to those appointments. The validity of those appointments can't be challenged by saying that they violate the quota rule.
[394F H; 395A B] 4:2. When comparing direct hires to members of the Delhi Judicial Service who were appointed in a permanent way to temporary jobs as Additional District and Sessions Judge, seniority should be based on how long they have been continuously working in the cadre post. A direct hire who is appointed in a permanent way to a temporary job as Additional District and Sessions Judge shouldn't be ranked higher than the promotee in the seniority list if the direct hire was appointed after the promotee.
[395D E] 4:3. Being on probation is not always required for being permanently added to the service, even though many rules for different services make such provisions, like Rule 12(2) here.
During the lawsuits, some of the promotees were placed on probation retroactively (going back in time) by different orders. These probations are meaningless formalities. In this case, the placement of promotees on probation has not been strictly followed, but the promotees shouldn't be punished for this.
[396G H] 4:4. It can't be said that the petitioners (those filing the lawsuit) were not appointed according to the qualifications in Rule 7(a).
The selections were made by the full court of the High Court, and appointments were made based on merit and seniority.
[397B C] M. Verraian Chowdhary & 42 Ors. vs The Government of A.P. & 87 Ors. C. A. No. 2030 of 1981; S.P. Gupta etc. vs Union of India & Ors. , [1981] Supp. SCC 87, held inapplicable.
OBSERVATION [The government should get rid of this system of making appointments from two different sources in a temporary way. If appointments have to be made from two different sources, the authorities should plan things so that hires come from the two sources at the right time. Officers from one source shouldn't have to work permanently in jobs that are meant to be done by hires from the other source, and then face the risk of being pushed back or thrown out.]
[398G H]
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Civil Appeal No. 5 of 1969. 126 From the Judgment and Order dated 20th June, 1968 of the Bombay High Court in Appeal No. 48/66. K. Jayaram, Amicus Curiae for the Appellant. Y. section Chitaley, M. V. Goswami and Ambrish Kumar for the Respondent. The Judgment of the Court was delivered by UNTWALIA, J. The plaintiff appellant filed a suit in the Trial Court in the year 1963 alleging certain unjustifiable and illegal actions on the part of his employer, the respondent in this appeal. The reliefs claimed in the suit were the following: "(a) That it may be declared that the defendant has removed the plaintiff from service illegally and without any reason. (b) That it may be declared that the defendant failed and neglected to re employ the plaintiff although the defendant restarted the factory. (c) That the defendant be ordered to reinstate the plaintiff to his former job with due benefits and advantages. (d) In the alternative the defendant may be ordered to pay to the plaintiff such compensation as to the Hon 'ble Court may deem fit. (e) For costs of the suit. (f) For such further and other reliefs as this Hon 'ble Court may deem fit. " On contest by the respondent, the Trial Court held that the dispute raised by the appellant was in the nature of an industrial dispute and hence the Civil Court had to jurisdiction to try it. The appellant took the matter in appeal before the First Appellate Court. It allowed the appeal and held that the dispute raised was of a civil nature and the case was cognizable by a Civil Court. The respondent filed the second appeal in the High Court and the High Court has agreed with the view of the Trial Court. It has said that the appellant had not claimed damages by pleading wrongful dismissal and breach of the contract of his service. The facts pleaded by him all converged to show that the dispute was an industrial dispute cognizable only by an industrial court and not by a Civil Court. The appellant has presented his appeal in this Court by a certificate granted by the High Court. 127 The Court is obliged to Mr. K. Jayaram for assisting it as Amicus Curiae in this case. After having appreciated the entire facts and the circumstances of the case, we are of the opinion that it is not quite correct to say that the suit filed by the appellant is not maintainable at all in a Civil Court. The correct position of law is that the main reliefs asked for by him which when granted will amount to specific performance of the contract of service and therefore they cannot be granted. There are a number of decisions of this Court to that effect; to wit Dr. section B. Dutt vs University of Delhi(1), section R. Tiwari vs District Board Agra & Anr.(2) and Indian Airlines Corporation vs Sukhdeo Rai.(3) Reference was also be made in this connection to the decision of this Court in Premier Automobiles Ltd. vs Kamlekar Shantaram Wadke of Bombay and Ors.(4) But then in the alternative, the appellant had also prayed for awarding compensation to him. And reading the plaint as a whole, it can legitimately be culled out that he had made out a case, whether it was right on fact or not, that is a different question, that he was wrongfully dismissed from service. This relief could be granted by the Civil Court if it found that the plaintiff 's case was true. The High Court, in our opinion, is not right in saying that no such case had at all been made out in the plaint. In our opinion, as we have earlier said, reading the plaint as a whole, such case can be spelt out. That being so to this limited extent, the matter could be examined by the Civil Court. We accordingly allow the appeal set aside the judgments of the courts below and send back the case to the Trial Court for disposing it of in accordance with law in the light of this judgment. There will be no order as to costs. Since the suit has become very old, the Trial Court is directed to dispose it of as expeditiously as possible. N.V.K. Appeal allowed.
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The appellant filed a suit against his employer, the respondent, for a declaration that he had been removed from service illegally and without any reason and that he should be reinstated in his former job with due benefits and advantages.
He also claimed compensation.
The trial court held that the dispute raised by the appellant was in the nature of an industrial dispute and that the civil court had no jurisdiction to try the same.
The First Appellate Court allowed the appeal and held that the dispute raised was of a civil nature and the case was cognizable by a civil court.
In the respondent 's second appeal, the High Court agreed with the view of the trial court and held that the appellant had not claimed damages by pleading wrongful dismissal and breach of the contract of his service and that the facts pleaded in the plaint showed that the dispute was an industrial dispute cognizable only by an industrial court and not by a civil court.
In the further appeal to this Court the point for consideration was whether on the facts pleaded by the appellant the dispute was an industrial dispute cognizable only by an industrial court and not by a civil court.
Allowing the appeal, ^ HELD:(1) It is not quite correct to say that the suit as filed by the appellant is not maintainable at all in a civil court.
The main reliefs asked for by the appellant which when granted will amount to specific performance of the contract of service and, therefore, they cannot be granted.
But the appellant in the alternative has also claimed for awarding compensation to him.
[127A C] (2) Reading the plaint as a whole, it can legitimately be culled out that the appellant had made out a case that he was wrongfully dismissed from service.
This relief could be granted by the civil court if it found that the plaintiff 's case was true.
The High Court was not right in saying that no such case had at all been made in the plaint.
To this limited extent the matter could be examined by the civil court.
[127D E] Dr. section B. Dutt vs University of Delhi, ; ; section R. Tewari vs Distt.
Board Agra & Anr., ; ; Indian Airlines Corp. vs Sukhdeo Rai, , Premier Automobiles Ltd. vs Kamlekar Shantaram Wadke of Bombay & Ors., ; ; referred to.
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The person appealing (the appellant) sued his employer because he said he was fired illegally and without a good reason. He wanted to be given his old job back with all the benefits he used to have. He also wanted money to make up for what happened.
The first court to hear the case said that the problem was actually a labor dispute, like something between a company and a union. Because of this, the court said it didn't have the power to make a decision.
The next court that heard the case (the First Appellate Court) disagreed. It said that the problem was a regular legal issue and that a regular court could decide what to do.
When the employer appealed again, the High Court agreed with the first court. They said the person fired didn't ask for money because he was wrongly fired or because the company broke his work contract. The High Court said that the details of the case showed it was a labor dispute that only a special labor court could handle.
In the final appeal to this Court, the question was whether the details of the case meant it was a labor dispute that only a labor court could handle, not a regular court.
The Court allowed the appeal, and HELD:
(1) It's not completely true to say that the person fired can't bring his case to a regular court at all. The main things he's asking for would force the company to keep him employed, which courts usually don't do. But, he also asked for money as an alternative.
(2) If you read the whole complaint, it looks like the person fired is claiming he was wrongly fired from his job. A regular court could give him money if it believes what he's saying is true. The High Court was wrong to say he didn't make this claim in his complaint. The regular court can look at the case to this extent.
(Citations removed as they are irrelevant to the task)
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ivil Appeal No. 1086 of 1971. From the Judgment and Order dated 28.4.71 of the Gujarat High Court in S.C.A. No. 671 of 1970. R.F. Nariman, A.K. Verma and D.N. Misra for the Appellant. V.J. Francis, (N.P.), Krishan Kumar, Vimal Dave & Co., M.N. Shroff, (N.P.) and Girish Chandra for the Respondent. The Judgment of,the Court was delivered by OZA, J. This appeal on certificate by the High Court of Gujarat is filed against the judgment of the Gujarat High Court dated 28th April, 1971 holding Standing Order No. 3 framed under Section 466(1)(A)(f) read with Section 147 of The Bombay Provincial Corporations Act, 1949 ( 'Act ' for short) as illegal and without the authority of law. This Act applies to the city of Baroda and the present appellant the Municipal Corporation, Baroda is governed by this Act. It is not in dispute that octroi on the import of goods is chargeable under the scheme of the Act. Before this Standing Order which is the subject matter of challenge before the High Court and before us, was framed, a trans porter who brought the goods within the limits of the Munic ipal Corporation in view of Section 147 of this Act was to pay the octroi duty chargeable on the goods on the assump tion that the goods have been imported for sale, consumption or use in the limits of the city of Baroda. Under the scheme as it was in force if the goods were not consumed or sold within the limits of the Municipal Corporation and are taken out on the other end, and if the octroi post authority was satisfied that the goods which had entered are being taken out then the transporter had to get the tax which he had paid at the octroi post refunded. According to the appellant corporation this procedure took time at both the ends and for those transporters who were carrying goods which only were in transit in the city of Baroda still had to suffer the inconvenience of paying the octroi duty when they en tered the city limits and then satisfy the authorities at the post from where they went out of town and also had to pay first the tax and then claim a refund, in order to avoid inconvenience and the burden on the transporter this Stand ing Order was provided so that when a transporter enters the corporation limits with goods which are only in transit and not to be 865 unloaded for sale or consumption within the corporation limits and if the transporter so chooses on payment of supervision fees the transporter can carry the goods through the corporation limits without payment of octroi under the supervision of the staff of the corporation and for this purpose under this Standing Order fee of Rs.2 per heavy vehicle was prescribed. It is alleged that originally the fee suggested was Rs.5 but on a representation made by the respondent association itself this was reduced to Rs.2 per vehicle. By the impugned judgment, the High Court of Gujarat came to the conclusion that under Section 466(1)(A)(f) of the Act no doubt the Commissioner had the authority to frame stand ing orders but he can only frame standing orders in respect of goods on which octroi was payable under Section 466(1)(A)(f) and as the goods admittedly for which this fee was prescribed were goods not to be imported for sale or consumption the octroi was not payable thereon and therefore no standing orders could be framed under Section 466(1)(A)(f) and therefore standing order providing for fees as discussed above was beyond the authority of the Commis sioner under this Act. The High Court also accepted the second contention of the respondent that although the Corporation claim to charge the fee as a fee for the convenience of the transporter but after examining the scheme, the learned Judges of the High Court came to the conclusion that there is no quid pro quo established nor it is established that the charge and the collection made on the basis of this charge had any ration ale ratio with the services rendered by the corporation. Aggrieved by this decision of the High Court the Municipal Corporation has come up in appeal. The main contention advanced on behalf of the appellant was that imposition of this fee by the Corporation could not be said to be an imposition as it was optional, as when a transporter brings goods and enters into the Corporation limits it was open to him either to choose to take advantage of this Standing Order by paying supervision fees and taking the goods straight under the supervision of the Corporation authorities without ' the payment of octroi duty but if a transporter chooses not to take advantage of this Standing Order it was not compulsory and it was open to the trans porter to pay the octroi in accordance with the normal rule and follow the normal procedure by satisfying the checkpost authorities on the other end and claim refund and get it after following the due procedure. It was therefore contend ed that in fact this was an option given to the transporter so that if they so 866 choose they may follow this Standing Order and save them selves from the hardship of paying the octroi and then claiming the refund and for that purpose stopping at the entry checkpost and again at the exit checkpost and also to satisfy the checkpost authorities that the goods which had entered the corporation limits are being taken out in the same state and it also involved handling of sum by the transporter so that it may be possible for him to pay the octroi on the entry checkpost itself. It was therefore contended firstly that it being an option given to the transporter, it could not be said to be an imposition or a tax and the question of the authority of the Commissioner does not arise. That in view of language of Section 466(1)(A)(f) it is clearly with the authority of the Commis sioner to frame Standing Orders, and the Standing Orders had the approval of the Standing Committee and also of the State Government and therefore it could not be said that the Standing Orders are not framed in accordance with Section 466. It was also contended that the affidavit filed in the High Court by the appellant clearly shows that how this fee is collected and spent for the purpose of giving a facility to the transporter for carrying the goods in transit under the supervision of the corporation authorities so that they have not to suffer the inconvenience and it was contended that in substance therefore the requirement of quid pro quo is satisfied and in fact the fee is charged only to facili tate the transporter in carrying the goods in transit with out payment of octroi and without undue detention in the process of payment of octroi at the entry and claiming refund at the exit. It is alleged that a notice was issued suggesting this procedure as prescribed in Standing Orders, a representation was made by the respondent association accepting the suggestion of the Corporation but suggested that Rs.5 per vehicle suggested by the Corporation would be too much and it should be reduced to Rs.2 and it was on this representation that in fact the Corporation, the present appellant, chose to reduce the supervision charges to Rs.2 per vehicle. It was therefore contended that now this is not open to the respondent association to say that this is not in accordance with law. Learned counsel for the respondent stated that although a representation about the supervision fee was made by the association but it could not be said that there was any agreement entered into by the association nor it could be said that the Association could enter into such an agreement with the corporation. It was contended that the High Court was right in reaching the conclusion that the Commissioner had no authority under Section 466, and that in fact quid pro quo is not satisfied as no service is rendered to the transporter. Learned counsel 867 for the parties referred to the decision of this Court on the question of fee and the principle of quidpro quo. Section 466(1)(A)(f) reads: "466(1) The Commissioner may make standing orders consistent with the provisions of this Act and the rules and by laws in respect of the following matters namely: (A) (a) xxx xxx xxx xxx xxx xxx (f) determining the supervision under which, the routes by which and the time within which goods intended for immediate exportation shall be conveyed out of the City and the fees payable by persons so conveying the goods;" This contemplates the authority with the Commissioner to make Standing orders consistent with this Act, rules or by laws in respect of the Act. Clause (f) talks of supervision under which and the routes by which and the time when goods introduced for immediate exportation shall be conveyed out of the city and the fee is payable by the person carrying the goods. It is therefore clear that this clause (f) con templates that Commissioner may by Standing Order prescribe the procedure for the goods which are introduced in the city limits, for immediate exportation and also the fees which could be charged. It is therefore clear that this provision which confers the authority on the Commissioner to frame Standing Orders do not talk of goods on which octroi is payable. But Section 466 pertains t9 collection of octroi. Sub section (2) of this Section provides: "(2) No order made by the Commissioner under clause (A) of sub section (1) shall be valid unless it is approved by the Standing Commit tee and confirmed by the State Government, and no order made by the Commissioner under clause (B) or paragraph (e) of clause (c) of sub section (1) shall be valid unless it is ap proved by the Standing Committee. " It is not in dispute that these .Standing Orders have been approved by the Standing Committee and confirmed by the State Government which is clear from the Notification which reads as under: 868 BARODA MUNICIPAL CORPORATION "The Standing Orders made by the Municipal Commissioner, Baroda Municipal Corporation, Baroda under Section 466(1)(A)(f) of the Bombay Provincial Municipal Corporation Act, 1949 vide his order No. 2441 dated 16.8.69 and approved by the Standing Committee under its Resolution No. 882 dated 28th Novem ber, 1969 and confirmed by Government under their Resolution P.H.D. No. BMC 4470 160 P. Dated the I2th March, 1970. Section 147 of this Act reads: "Until the contrary is proved any goods im ported into the City shall be presumed to have been imported for the purpose of consumption, use or sale therein unless such goods are conveyed from the place of import to the place of export, by such routes, within such time, under such supervision and on payment of such fees therefore as shall be determined by the standing orders. " It is clear from this Section that when any goods are brought within the corporation limits a presumption arises that they have been brought in for the purposes or sale or consumption and the burden lies on the person who imports the goods to prove that they are not for sale or consumption and it is on the basis of language of Section 147 that the normal procedure before this Standing Order was introduced, was that the goods when entered into the corporation limits, have to stop at the checkpost and pay octroi duty on the goods as provided by the rules. For getting out of the local limits, the transporter has to satisfy the checkpost author ities that the goods on which he has paid octroi and import ed are being exported out of the city and it is only after satisfying the authorities about the goods on which octroi is paid being exported that the transporter can claim refund of the octroi duty already paid. It is therefore clear that the language of Section 147 in the scheme of the Octroi clearly indicates a presumption which is a rebuttable pre sumption. Burden however lay on the transporter to establish that the goods are not for consumption or sale. So far as this scheme before the introduction of disputed Standing Order is concerned, there is no controversy. The only con troversy is the Standing Order which has been introduced. It is also clear that so far as this Standing Order No. 3 is concerned wherein the transporter is to pay a supervision fees it is not compulsory as it is the option of the trans por 869 ter to take advantage of this Standing Order if he so chooses otherwise follow the normal procedure of payment of octroi and claiming refund as is clear from the affidavit filed before the High Court by the appellant 's officer i.e. Octroi Superintendent. Paragraph 14 of this affidavit reads: "Thus the system of clearing the through traffic on charging normal supervision fees is really in the larger interest of the import ers. As I have pointed out hereinabove this is not obligatory but purely voluntary and op tional. Those who do not want to avail of this facility need not avail it and allow the other procedure already indicated hereinabove. " It is therefore clear that there is no compulsion on the transporter to pay a supervision fee. It is only an option so that if the transporter wishes to take advantage of this scheme and save time he can choose to follow it. It is thus clear that so far as the authority of the Commissioner under Section 466 of the Act is concerned and the manner in which the Standing Orders are framed, it is clear that the Commissioner had the authority and the Stand ing Orders have been framed in accordance with procedure prescribed under Section 466 and therefore on that count the judgment of the High Court could not be sustained. The High Court took the view that the State Legislature could enact Section 466 only if it can be brought within the ambit of Entry 52 of this State list as, that is the only entry which authorises the State Legislature to impose a tax on entry of goods into a local area and the learned Judges felt that as under Section 466 and under the standing order in question a supervision fee is charged on goods which are not for sale or consumption in the local limits. This could not be justified under Entry 52. The learned Judges there fore took the view that Standing Orders which the Commis sioner could frame under Section 466 could be in respect of goods on which octroi is payable and not pertaining to the goods on which the octroi is not payable. It appears that while taking this view the High Court was examining this fees prescribed as a tax and it is on the basis of this that the High Court took the view that no such tax could be levied on goods on which no octroi is payable. So far as the question as to whether this fees could be said to be a tax is concerned, there is no difficulty as even the learned counsel appearing for the appellant do not contend that it can be said to be a tax and as it is not a tax the imposi tion could not be said to be 870 bad because the State Legislature had no authority to impose it. It was contended by the learned counsel that in view of Section 147 quoted above any import within the local limits would draw a presumption that it is for consumption or sale and therefore octroi duty on the goods becomes payable. By this Standing Order, the Corporation has attempted to make it convenient to the transporter not to involve in the payment of octroi duty at the entry and after satisfying the authorities at the exit end claim the refund of the octroi paid, thereby the Corporation intended to help the trans porter in saving time and also in payment of the octroi at one end and later on claiming a refund. This in fact was the service rendered by the corporation to the benefit of the transporter and this fees which was charged was just to meet the approximate expenses that the Corporation may have to incur to provide this facility as has been clearly stated by the corporation officer in his affidavit before the High Court and in fact even the corporation accepted the sugges tion of the petitioner association when the association suggested to the appellant corporation to reduce this fees from Rs.5 to Rs.2 which is clear from the letter written by the Association to the Corporation dated 31st March, 1970. As regards this aspect of the matter, the learned Judges of the High Court came to the conclusion that there was no quid pro quo established which could justify the levy of this fees as fees for the services rendered in the interest of the transporter. In Southern Pharmaceuticals & Chemicals Trichur & Ors. etc. vs State of Kerala & Ors. etc. ; , this Court after considering the various decision distinguished fees from tax in these words. " 'Fees ' are the amounts paid for a privilege, and are not an obligation, but the payment is voluntary. Fees are distinguished from taxes in that the chief purpose of a tax is to raise funds,for the support of the Government or for a public purpose, while a fee may be charged for the privilege or benefit conferred, or service rendered or to meet the expenses connected therewith. Thus, fees are nothing out payment for some special privilege granted or service rendered. " As regards the principle of quid pro quo rule in the same judgment it was observed: "That is because the Constitution did not contemplate it to be an essential element of a fee that it should be credited to a separate fund and not to the consolidated fund. It is also 871 increasingly realised that the element of quid pro quo stricto senso is not always a sine qua non of a fee. It is needless to stress that the element of quid pro quo is not necessarily absent in every tax. " In the light of these observations if the affidavit filed on behalf of the appellant Corporation explaining the amount expected to be collected and spent in the process of super vision is examined it could not be said as was stated by the High Court that it did not satisfy the quid pro quo princi ple. It is in this background that the question that this Standing Order does not impose a compulsory levy but it only gives an option to the transporter to take advantage of this provision makes it further clear that it is not a levy or an imposition of tax but merely a fees charged for the privi lege or services rendered to the payer. In Sreenivasa Gener al Traders & Ors. etc. vs State of Andhra Pradesh & Ors. etc. ; , this Court considered series of decisions on the question and observed: "There is no generic difference between a tax and a fee. Both are compulsory exactions of money by public authorities. Compulsion lies in the fact that payment is enforceable by law against a person inspite of his unwillingness or want of consent. A levy in the nature of a fee does not cease to be of that character merely because there is an element of compul sion or coerciveness present in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual who obtains the benefit of the service. It is now increasingly realized that merely because the collections for the service rendered or grant of a privi lege or licence are taken to the consolidated fund of the State and not separately appropri ated towards the expenditure for rendering the service is not by itself decisive. Presumably the attention of the Court in the Shirur Mutt case was not drawn to article 266 of the Consti tution. The Constitution nowhere contemplates it to be an essential element of fee that it should be credited to a separate fund and not to the consolidated fund. It is also increas ingly realized that the element of quid pro quo in the strict sense is not always a sine qua non for a fee. It is needless to stress that the element of quid pro quo is not neces sarily absent in every tax: Constitutional Law of India by H.M. Seervail Vol. 2, 2nd Edn. p. 1252, para 22.39. " 872 It is therefore clear that in order to establish a quid pro quo concept it is not necessary to establish exactly that the amount collected is spent on the services rendered as it was further observed in this decision: "The traditional view that there must be actual quid pro quo for a fee has under gone a sea change in the subsequent decisions. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary motive of regulation in public in public interest. If the element of revenue for general purpose of the State predominates, the levy becomes a tax. In regard to fees there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary and essential purpose is to render specific services to a specified area or class; it may be of no consequence that the State may ultimately and indirectly be bene fitted by it. The power of any legislature to levy a fee is conditioned by the fact that it must be 'by and large ' a quid pro quo for the services rendered. However, co relationship between the levy and the services rendered expected is lone of the general character and not of mathematical exactitude. All that is necessary is that there should be a "reasona ble relationship" between the levy of the fee and the services rendered. " It is therefore clear that so far as the charging of super vision fees is concerned it reasonably appears to be a charge for the services rendered from the affidavit filed by the Officers of the Appellant Corporation and therefore the High Court was not right in coming to the conclusion that this fees was not justified as it is not established that it reasonably satisfies that it is in consideration of the services or privilege conferred on the transporter on goods in transit. In our opinion, therefore, the judgment of the High Court could not be sustained. The appeal is therefore al lowed. The judgment of the High Court is set aside and it is held that the Standing Order No. 3 passed by the appellant Municipal Corporation is valid and enforceable. The appel lant shall also be entitled to costs of this appeal. Costs quantified at Rs.5,000. R.S.S. Appeal allowed.
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The respondent who was carrying on the business of transporting goods challenged before the High Court the imposition of supervision fee levied under Standing Order No. 3 on the goods in transit through the limits of the Municipal Corporation of Baroda.
Before the framing of Standing Order No. 3, a transporter was required to pay octroi at the point of entry in the city and claim refund thereof at the point of exit after satisfying the authority that the goods which had entered were being taken out.
Standing Order No. 3 framed under section 466(1)(A)(f) read with section 147 of the Bombay provincial Corporations Act 1949, provided that when a transporter entered into the corporation limits with goods which were only in transit, he could on payment of supervision fee carry the goods through the corporation limits under the supervision of the staff of the Corporation without payment of octroi at the point of entry.
The High Court held Standing Order No. 3 as illegal and without the authority of law.
The High Court observed that under section 466(1)(A)(f) the Commissioner had the authori ty to frame standing orders only in respect of goods on which octroi was payable and as octroi was not payable on the goods which were in transit, no standing orders could be framed under the Section The High Court further held that quid pro quo was not satisfied as no service was rendered to the transporter.
Before this Court it was contended on behalf of the appellant that the levy of supervision fee was optional; the procedure under Standing Order No. 3 was introduced to avoid hardship to the transporter; it was open to him to follow the normal procedure of paying the octroi and claiming refund; the requirement of quid pro quo was in substance 563 satisfied, and the fee was charged only to facilitate the transporter in carrying the goods in transit.
Allowing the appeal, this Court, HELD: (1) The procedure under Standing Order No. 3 is not compulsory and it is the option of the transporter to take advantage of this Standing Order if he so chooses otherwise follow normal procedure of payment of octroi and claiming refund.
[868H 869A] (2) Clause (f) of section 466(1)(A) contemplates that the Commissioner may by standing order prescribed the proce dure for the goods which are introduced in the city limits.
for immediate exportation and also the fees which could be charged.
It is clear that this provision which confers the authority on the Commissioner to frame standing orders does not talk of goods on which octroi is payable.
The Commis sioner therefore had the authority under section 466, and the Standing Orders have been framed in accordance with the procedure prescribed under that section.
[867D E; 869D] (3) It appears that while taking the view that the levy could not be justified under Entry 52 of the State List which authorises the State Legislature to impose a tax on entry of goods into a local area, the High Court was examin ing the fees prescribed as a tax, and it was on that basis that the High Court took the view that no such tax could be levied on goods on which no octroi was payable.
But, as it is not a tax, the imposition could not be said to be bad on the ground that the State Legislature had no authority to impose it.
[869E 870A] (4) In order to establish a quid pro quo concept it is not necessary to establish exactly that the amount collected is spent on the services rendered.
[872A] Sourthen Pharmaceuticals & Chemicals Trichur & Ors. etc.
vs State of Kerala & Ors. etc.
; , and Sreeni vasa General Traders & Ors.
vs State of Andhra Pradesh & Ors.
, ; , referred to.
(5) So far as the charging of supervision fee is con cerned, it reasonably appears to be a charge for the serv ices rendered.
The High Court was, therefore, not right in coming to the conclusion that this fee was not justified because, according to the High Court, it was not established that the fee was in consideration of the services or privi lege conferred on the transporter.
[872F]
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A business that transported goods challenged a fee in court. This fee was for supervising goods that were passing through the city of Baroda. The fee was created by something called Standing Order No. 3.
Before this rule, transporters had to pay a tax called octroi when they entered the city. Then, they could get a refund when they left, if they proved they were taking the same goods out.
Standing Order No. 3 was created using the Bombay Provincial Corporations Act of 1949. It said that if a transporter was only passing through the city, they could pay a supervision fee. This allowed them to move goods through the city under the watch of city staff, without paying octroi when entering.
The High Court decided that Standing Order No. 3 was illegal and not authorized by law.
The High Court said that the person in charge, called the Commissioner, only had the power to make rules for goods that had to pay octroi. Since goods passing through didn't pay octroi, no rules could be made for them. The High Court also said the transporter wasn't getting anything in return for the fee.
The city argued that the supervision fee was optional. They said it was created to make things easier for transporters. Transporters could still choose to pay octroi and get a refund. The city also claimed that the fee was used to help the transporters who chose to pay it.
The court allowed the city's appeal and made these points: (1) Transporters don't have to use Standing Order No. 3. They can choose to pay octroi and get a refund instead.
(2) The law allows the Commissioner to create rules for goods entering the city for immediate export, and to charge fees for this. This law doesn't only apply to goods that pay octroi. So, the Commissioner had the power to make these rules.
(3) The High Court thought the fee was like a tax on goods entering the city. They said that because octroi wasn't paid on these goods, the city couldn't tax them. But this fee isn't a tax, so the city has the power to charge it.
(4) To show that someone is getting something in return for a fee, you don't have to prove that the money collected is spent directly on the services provided.
(5) The supervision fee seems like a reasonable charge for the services provided. The High Court was wrong to say that the fee wasn't justified because it wasn't proven that the transporter was getting something in return.
| 2,659
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Appeal No. 1661 of 1990. From the Judgment and Order dated 26.10. 1989 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. CD/SB/A No. 424 of 1983(A) in Order No. 729/89 A. H.N. Salve, Ms. Meenakshi Arora, Ms. Ayesha Khatri, Ms. Shirin Jain and Ms. Indu Malhotra for the Appellant. KTS Tulsi, Additional Solicitor General, A.S. Rao and p. Parmeshwaran for the Respondent. The Judgment of the Court was delivered by FATHIMA BEEVI, J. The appellant is a federation of glass manufacturers in India. The Federation entered into a contract with M/s. Magadi Soda Company Ltd., Kenya, for supply of 5000 metric ' tomes of soda ash dense at the rate of US $ 155 per metric tome c.i.f. Bombay. The consignment arrived from Mombasa, Kenya on 23.12. 198 1. The goods were cleared on payment of customs duty of 516 Rs.32, 15,904.21 from Bombay. The appellant on distribution of the goods to various members of the federation, received complaints that the soda ash which had been supplied was of sub standard quality. 'The sellers M/s. Crescent Dyes & Chemicals as well as their agents were approached. They sent a team of experts to examine the goods. The inspection confirmed that the goods were defective. As per agreement dated 9.2. 1982, M/s. Crescent Dyes & Chemical sent a Credit note of US $ 2,40,000 as compensation on account of the defective goods sent by M/s. Magadi Soda Company Ltd. The amount remitted on account of the import made was only US $ 5,35,000 as against the earlier contracted amount of US $ 7,75,000. In view of such reduction, the appellant filed a refund application before the Customs Department to the tune of Rs.9.95,892.65. The Assistant Collector was not satisfied as to the extent of deterioration of the goods before clearance as provided by Section 22 of the and rejected the refund application vide order dated 19.7.1982. The appeal preferred against the order dated 19.7.1982 was rejected by the Collector of Customs on 23.12. 1982 on the reasoning that the damage was discovered after the goods were out of customs control. The further appeal to the Tribunal was also unsuccessful. The Tribunal by the order dated 26.10. 1989 held that the alleged inferior nature of goods was discovered after clearance. This appeal is filed under Section 130E of the against the order of the Tribunal dated 26.10. The question involved in the present appeal is whether the appellant is entitled to the refund of customs duty on account of the compensation given by the seller to the appellant on supply of goods?The appellant who imported the goods detected defects and the foreign supplier accepted the defects and damages and agreed for payment of compensation. According to the appellant, goods supplied were not in accordance with the contractual specification. The defects 'being inherent in nature resulted in diminution in the real value of the goods and what had been agreed upon by the foreign seller is reduction in price on account of these defects. The appellant claimed that it would be entitled to refund of customs duty under Section 22 of the Act for reasons set out thus. The value to be assessed under Section 14 of the Act is the real price at which goods imported are ordinarily sold at the time and place of importation and not the price erroneously indicated 517 by the seller at the time of filling the bill of entry. The buyer who successfully sets up diminution of price on ac count of breach of warranty, which claim is accepted by the seller, can seek refund or adjustment in the customs duty payable where the duty has been paid erroneously on the full price prior to such diminution. The claim under Section 22 of the Act would be maintainable where imported goods were defective and had deteriorated in quality even prior to the import when the assessment has to be on the basis of the real value of goods. The contract dated 30.9.1981 is for the supply of 5000 metric tonnes of soda ash dense. The complaint was that the sodium carbonate content was less than the specified 97%, that there was moisture in the soda ash dense supplied and hence it had turned lumpy. M/s. Crescent Dyes & Chemicals Ltd. was the agent of the seller M/s. Magadi Soda Company Ltd. The consignment. arrived in Bombay sometime in Decem ber, 1981. The appellants filed their bill of entry with the customs and the goods were cleared on payment of customs duty of Rs.32,15,904.21, on 28.12. the complaint about damage and deterioration was made long after clearance. The team of experts examined the goods and confirmed the de fects. The customs authorities were not associated with such inspection. It is maintained by the appellant that the credit received was recorded in the letter dated 15.3. 1982 and the letter indicated that the amount remitted on account of the import made was only US $ 5,35,000. The reduction in the amount remitted was to the extent of US $ 2,40,000. The appellant claimed that on account of the reduction in the value of the consignment, the appellant is entitled to refund of customs duty proportionately. The Collector of Customs pointed out that: "The duty is leviable on the basis of the value of the such or like goods at the time of clearance. It has not been proved that the alleged defect on account of which the price has been reduced was present in the goods at the time 01 clearance. At least some of the defects of the type pointed out, viz., the lumpy character, are such as could develop due to exposure to moisture etc. during the period the goods were out of customs. In any case, the customs were not associated even with the post clearance examination. Any alleged reduc tion in value on the basis of a postclearance agreement between the buyer and the supplier or 518 some alleged grounds which the customs had no chance to verify ' prior to clearance is fraught with great risks to Revenue. (emphasis supplied) According to the appellant, this reasoning is wrong. The appellant stated that most of the defects were due to non adherence to specification provided under the contract. The defects being inherent in character, the appellant could not have known about the same at the time of clearance of the consignment from customs. The ground of deterioration of goods was not relevant as the claim for refund was based on the ground of diminution in value of the goods as the same were not as per the standard contracted for. The assessable value of the goods under Section 14 of the Act is the price at which such goods were actually sold in the course of international trade. It is the real price of the goods actually imported which is ordinarily the basis for assessa ble value. Where goods do not conform to the description or stipulation as to quality or fitness, it is open to the buyer to treat the defect as a breach of warranty. It is also open to the buyer to set up against the seller the breach of warranty in diminution of the price. It is the diminished price which will be the real price of the goods and not the price claimed by the buyer initially which is reflected as c.i.f. value on the invoice. Customs duty paid on the c.i.f. value is a duty paid under mistake of fact. At the time of clearance of goods, the buyer did not have any knowledge of the defects in the goods. Where defect which constitutes a breach of warranty and which the buyer elects to treat as a breach of warranty became apparent and ulti mately culminated in diminution of price, it would be open to the buyer to claim refund of the customs duty paid under mistake of fact. It is not relevant as to when the defect became apparent to the buyer. The fact that the documents proving the true and real value of the goods were not in existence at the time when the goods were cleared from the customes is wholly irrelevant This in short, is the argu ment advanced on behalf of the appellant. Duties of customs shall be levied under Section 12 at such rate as may be specified under the Customs Tariff Act or any other law for the time being in force on goods im ported into or exported from India. Section 14 of the Cus toms Act provides that value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade. Such price shall be calculated with reference to the rate of exchange as in force on the date on which 519 a bill of entry is presented under Section 46. The duty is ordinarily chargeable with reference to the tariff value in the case of goods entered for home consumption on the date on which the bill of entry in respect of such goods is presented. Section 22 provides for payment of duty on damaged or deteriorated goods. It reads thus: "22. Abatement of duty on damaged or deterio rated goods. (1) Where it is shown to the satisfaction of the Assistant Collector of Customs (a) that any imported goods had been damaged or had deteriorated at any time before or during the unloading of the goods in India; or (b) that any imported goods, other than ware housed goods, had been damaged at any time after the unloading thereof in India but before their examination under Section 17, on account of any accident not due to any wilful act, negligence or default of the importer, his employee or agent; or (c) that any warehoused goods had been damaged at any time before clearance for home consump tion on account of any accident not due to any wilful act, negligence or default of the owner, his employee or agent; such goods shall be chargeable to duty in accordance with the provisions of sub section (2). (2) The duty to be charged on the goods re ferred to in sub section (1) shall bear the same proportion to the duty chargeable on the goods before the damage or deterioration which the value of the damaged or deteriorated goods bears to the value of the goods before the damage or deterioration. " Where it is shown to the satisfaction of the Assistant Collector that any imported goods have been lost or de stroyed at any time before clearance for home consumption. the Assistant Collector of 520 Customs shall remit the duty on such goods. The period of six months has been prescribed under Section 27 to claim refund of duty paid with protest. Refund is allowed when the Assistant Collector of Customs is satisfied that the whole or any part of the duty paid should be refunded. No claim for refund of any duty shall be entertained except in ac cordance with the provisions of Section 27. Chapter VII of the deals with the clearance of imported goods. The imported goods unloaded in a customs area remain in the custody of the approved person until they are cleared for home consumption. Without permission in writing of the appropriate officer, such goods are not removed or otherwise dealt with. The importer shall give a declaration as to the truth of the contents of the bill of entry supported by the invoice. The order permitting clear ance of the goods for home consumption is made on payment of the import duty, if any, assessed. Thus, under the scheme of the Act, the importer is entitled to clear the goods on payment of duty assessed and such assessment is to be made with reference to the tariff value of the goods where tariff values are fixed. In other cases, the price at which the goods are ordinarily sold for delivery at the time and place of importation represents the tariff value for the purpose of the assessment. When the value is assessed on the basis of the invoice and the goods are cleared, the implication is that no remission is allowed and no abatement has been occasioned. There is no express provision which enables the proper officer to make a re assessment for the purpose of remission on the ground that the goods at the time of their importation or at the time of the clearance was sub standard or damaged and the invoice price does not represent the real value. Even if it is assumed that in view of the provisions contained in Section 28(a) enabling the proper office to determine the amount of duty due in cases where duty has not been levied or has been short levied or erroneously refunded after issuing show cause notice, there is a corresponding right on the importer to claim refund of the excess duty levied, it is necessary for the importer to prove to the satisfaction of the proper officer that the goods at the time of the clearance was chargeable to a lesser or lower duty for anyone of the reasons contained in Section 22 which alone provides for abatement of duty. Any error in the assessment of the value by itself does not enable the importer to claim re assess ment or refund. It has necessarily to be shown that on account of the damaged or deteriorated condition of the imported goods before or during the unloading the goods in India, the duty to be charged on the goods was propor 521 tionate to the value of the damaged or deteriorated goods. The question of redetermining the value of the imported goods can arise only in a case where such damage or deterio ration before the clearance is proved to the Satisfaction of the proper officer. When there had been no indication of any such condition and the duty has been assessed on the basis of the invoice value and duty is paid, the assessment would be binding. The importer on finding the goods cleared and distributed not to his entire satisfaction may have a claim in contract against the seller for providing sub standard, damaged or deteriorated goods for the value in the invoice, and it may be open to the buyer to realize from the seller such damages as he would in law be entitled to. That claim for damages cannot have any bearing to the assessment at the time of the clearance. The price at which the goods had been sold is represented by the invoice price and whatever amount is realized on subsequent agreement is only by way of com pensation as damages. It cannot be said that the damages thus received represents the difference in price that had been paid and that ought to have been paid. When the seller had agreed to compensate the buyer for the quality of the goods imported, the buyer does not get the right to claim abatement of duty on the assumption that the real price was some thing less than what has been indicated in the invoice. Learned counsel for the appellant referred para 574 at page 12 1, Vol. Halsbury 's Laws of England: "574. Goods not in accordance with contract. Where it is shown to the satisfaction of the Commissioners of Customs and Excise that goods were imported in pursuance of a contract of sale and that their description, quality, state or condition was not in accordance with the contract, or that they were damaged in transit, and also that the importer, with the consent of the seller, either returned the goods to him or destroyed them unused, the importer is entitled to obtain from the Com missioners repayment of any customs duty paid on their importation. The foregoing, however, does not apply to the goods imported on ap proval, or on sale or return, or on other similar terms. " It deals with the returning of goods or destroying the goods unused without acceptance and not where the goods have been accepted and used and the importer had been compensated for the reduction in 522 standard. The learned counsel also referred to the decision in Biggin & Co. Ltd. vs Premanite, LD., Berry Wiggins & Co. LD. ; Cehave NV vs Bremer, ; Ford Motor Company of India vs Secretary of State for India, [1937] 381 L.R. 65 I.A. 32 and vacuum Oil Co. vs Secretary of State for India, [1932] L.R. 59 I.A.258. On the basis of these decisions, the learned counsel for the appellant contended that when the seller has allowed the reduction, the real price of the goods is that which has been accepted by the seller and that the assessment made on a higher value on the basis of the invoice price is in excess and such excess is refundable to the appellant. It is not necessary to elaborate on the principle stated in the decisions on the facts of the present case. It is admitted case of the appellants that the alleged inferior nature of goods was discovered by the appellant after clearance. Until the refund application was made, no requisition appears to have been made to the customs author ities to have the value of the goods determined for the purpose of Section 22. The correspondence between the appel lants and the sellers ,red their agents could only reveal that the appellant put forward a claim for compensation on the ground that the goods imported had become lumpy and was also of inferior standard. Ultimately the sellers agreed to reimburse the appellants and pay compensation to the tune of US $ 2,40,000. What appellants have received from the sell ers is compensation for the damage for breach of warranty. It does not appear that the value was reduced or amount remitted by the appellant was the reduced value of tire goods. The amount was the total compensation extended by the sellers to the appellants. From that fact of payment of compensation or reimbursement by the sellers it cannot be taken that at the time and place of importation the goods imported was worth only the amount stated in the invoice less the compensation paid. In other words, there is no proof that the real value of the goods at the time and place of importation was less than that what had been entered in the invoice and stated in the Bill of Entry. So long as examination of the goods had not been made or its value re assessed to the satisfaction of the assessing authorities, it cannot be said that duty was charged not on the real value of the goods but on a higher amount. The contention that the inherent defect in the supply of goods resulted in the diminution of the value of the goods cannot be counte nanced when it is conceded that what had been paid by the seller is only compensation for the breach of war 523 ranty. Furthermore, there is no material on record to show that even by the team of experts there had been a re assess ment of the value of the goods. What had been estimated is only quantum of damages sustained by the buyers and to that extent they had been compensated. That arrangement between the buyer and the seller cannot be linked with the assess ment of duty and no claim for abatement of duty under the provisions of Section 22 or a claim for refund under Section 27 could be legitimately entertained. For the reasons given above, the appeal must fail. The appeal is dismissed with no order as to costs. V.P.R. Appeal dismissed.
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The appellant Federation entered into a contract with a Soda Company of Kenya, for supply of 5000 metric tonnes of soda ash dense and the consignment arrived at Bombay on 23.12.1981.
The goods were cleared on payment of customs duty of Rs.32,15,904.21.
The appellant on distribution of the goods to various members of the Federation, received complaints that the soda ash which had been supplied was of sub standard quality.
When the sellers as well as their agents were approached, they sent a team of experts to examine the goods and on inspection the goods were found defective.
As per agreement dated 9.2.1982, the sellers sent a credit note of US $ 2,40,000 as compensation on account of the defective goods.
The amount remitted on account of the import made was only US $ 5,35,000 as against the earlier contracted amount of US $ 7,75,000.
In view of such reduction, the appellant filed a refund application before the Customs Department to the tune of Rs.9.95,892 65.
The Assistant Collector rejected the refund application as he was not satisfied to the extent of deterioration of the goods before clearance as provided by Section 22 of the .
The appeal preferred was rejected by the Collector of Customs on the reasoning that the damage wad discovered after the goods were out of customs control.
The further appeal to the Tribunal was rejected hold ing that the alleged inferior nature of goods was discovered after clearance.
514 Under Section 130E of the , present appeal was made to this Court, contending that the goods supplied were not in accordance with the contractual speci fication, the defects being inherent in nature resulted in diminution in the real value of the goods and what had been agreed upon by the foreign seller was reduction in price on account of the defects, and claimed that it would be enti tled to refund of customs duty under Section 22 of the Act.
On the question, whether the appellant was entitled to the refund of customs duty on account of the compensation given by the seller to the appellant on supply of goods, dismissing the appeal, this Court, HELD: 1.01.
When the value is assessed on the basis of the invoice and the goods are cleared, the implication is that no remission is allowed and no abatement has been occasioned.
There is no express provision which enables the proper officer to make a re assessment for the purpose of remission on the ground that the goods at the time of their importation or at the time of the clearance was sub standard or damaged and the invoice price does not represent the real value.
[520E F] 1.02.
Any error in the assessment of the value by itself does not enable the importer to claim re assessment or refund.
It has necessarily to be shown that on account of the damaged or deteriorated condition of the imported goods before or during the unloading of the goods in India, the duty to be charged on the goods was proportionate to the value of the damaged or deteriorated goods.
[520G 521A] 1.03.
The question of redetermining the value of the imported goods can arise only in a case where such damage or deterioration before the clearance is proved to the satis faction of the proper officer.
When there had been no indi cation of any such condition and the duty has been assessed on the basis of the invoice value and duty is paid, the assessment would be binding.
The importer on finding the goods cleared and distributed not to his entire satisfaction may have a claim in contract against the seller for provid ing sub standard, damaged or deteriorated goods for the value in the invoice, and it may be open to the buyer to realize from the seller such damages as he would in law be entitled to.
That claim for damages cannot have any bearing to the assessment at the time of the clearance.
The price at which the goods has been sold is represented by the invoice price and whatever amount is realized on subsequent agree ment is only by way of compensation as damages.
It cannot be said that the damages thus received represents the differ ence in price that had been paid and that ought to have been 515 paid.
When the seller had agreed to compensate the buyer for the quality of the goods imported, the buyer does not get the right to claim abatement of duty on the assumption that the real price was something less than what has been indi cated in the invoice.
[521A D] 1.04.
There is no material on record to show that there had been a re assessment of the value of the goods.
What had been estimated is only quantum of damages sustained by the buyers and to that extent they had been compensated.
That arrangement between the buyer and the seller cannot be linked with the assessment of duty and no claim for abate ment of duty under the provisions of Section 22 or a claim for refund under Section 27 could be legitimately enter tained.
[523A B] Biggin & Co. Ltd. vs Premanite, LD., Berry Wiggins & L.D., ; Cehave NV vs Bremer, ; Ford Motor Company of India vs Secretary ' of State for India, [1937 8] L.R. 659.
A. 32 and Vaccum Oil Co. vs Secretary of State for India, [1932] L.R. 59, IA 258, referred to.
Halsbury 's Laws of England, para 574 at page 121, Vol. 12; referred to.
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A company called the Federation made an agreement with a Soda Company in Kenya. The Soda Company would supply 5000 metric tons of soda ash, which arrived in Bombay on December 23, 1981.
The Federation paid about 3.2 million rupees in customs fees to get the goods released.
After the Federation gave the soda ash to its members, they complained that the quality was not good enough.
The Federation contacted the Soda Company and their agents. The company sent experts who checked the soda ash and agreed it was defective (faulty).
On February 9, 1982, the Soda Company agreed to give the Federation a credit note (a refund) of $240,000 to make up for the bad soda ash.
The Federation only sent $535,000 to the Soda Company, instead of the original amount of $775,000.
Because of this price reduction, the Federation asked the Customs Department for a refund of about 995,892 rupees.
The Assistant Collector (a customs official) denied the refund. He didn't believe the goods had become bad enough before they were released, as required by Section 22 of the law.
The Collector of Customs (another official) also denied the appeal, saying the damage was found after the customs office no longer controlled the goods.
The Tribunal (a court-like body) also rejected the appeal. They said the poor quality of the goods was discovered after they had been released.
The Federation then appealed to this Court under Section 130E of the law. They argued that the soda ash wasn't what they had agreed on in the contract. They said the defects were always there and lowered the value of the goods. The price reduction by the Soda Company was proof of these defects, and the Federation should get a refund of customs fees under Section 22 of the law.
The Court had to decide if the Federation deserved a refund of customs fees because the Soda Company gave them money back for the bad goods. The Court dismissed the appeal, and HELD:
1.01. When the value of goods is based on the invoice (bill) and the goods are released, it means no discount or reduction has been allowed.
There is no rule that allows an officer to change the assessment (value) of goods because they were of poor quality or damaged when they were imported or released. Also, the invoice price still doesn't represent the actual value of the goods.
[520E F] 1.02. Finding an error in how the value was assessed doesn't automatically mean the importer (Federation) can ask for a new assessment or refund.
The Federation had to show that the goods were damaged or got worse before or during unloading in India. The customs fees should then be based on the value of the damaged goods.
[520G 521A] 1.03. The value of imported goods can only be changed if the damage or worsening happened before the goods were released, and the customs officer is convinced.
If there was no sign of damage and the fees were based on the invoice value, then that assessment is final.
If the importer finds the goods unsatisfactory after release, they may have a contract claim against the seller for providing poor quality or damaged goods. The buyer can then try to get damages (money) from the seller.
However, that claim for damages doesn't affect the original customs assessment. The price the goods were sold at is the invoice price. Any later agreement for compensation is just that: compensation.
It can't be said that the compensation represents the difference between what was paid and what should have been paid.
If the seller agrees to compensate the buyer for the quality of the imported goods, the buyer doesn't automatically get the right to reduce the customs fees. This is because you cannot assume the real price was less than what was on the invoice.
[521A D] 1.04. There's no evidence that the value of the goods was reassessed.
The only thing that was estimated was the amount of damages the buyers suffered, and they were compensated for that.
This agreement between the buyer and seller can't be connected to the customs assessment. A claim for reducing customs fees under Section 22 or a claim for a refund under Section 27 can't be allowed.
[523A B] Biggin & Co. Ltd. vs Premanite, LD., Berry Wiggins & L.D., ; Cehave NV vs Bremer, ; Ford Motor Company of India vs Secretary ' of State for India, [1937 8] L.R. 659.
A. 32 and Vaccum Oil Co. vs Secretary of State for India, [1932] L.R. 59, IA 258, referred to.
Halsbury 's Laws of England, para 574 at page 121, Vol. 12; referred to.
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Civil Appeal No. 2150 of 1968. (Appeal by Special Leave from the Judgment and Order dated 5.9.1968 of the Punjab & Haryana High Court in L.P.A. No. 458/68). V.C. Mahajan, Hardev Singh and R.S. Sodhi, for the appel lant. O.P. Sharma, for the respondents 1 and 2. K.R. Nagaraja and P.N. Puri, for respondent No. 3. The Judgment of the Court was delivered by BEG, C.J. This appeal under Article 136 of the Consti tution is directed against a very detailed Judgment of the Punjab & Haryana High Court on a Writ Petition No. 1875 of 1965 filed under Articles 226 and 227 of the Constitution, assailing an order of the Additional Director, Consolidation of Holdings, passed on 8 June, 1965. A perusal of that order, together with the earlier order of 4 May, 1965, and the application for restoration dated 15 May, 1965, filed by Gurdev Singh, respondent No. 3, shows: Gurdev Singh, who had 370 some complaint against the Consolidation Scheme, was not present so that his petition was ordered to be filed by the Additional Director, Consolidation on 4 May, 1965. Gurdev Singh, soon thereafter i.e. on 15 May, 1965, filed an appli cation for restoration supported by an affidavit, attribut ing his absence on 4 May, 1965, to his illness. The. order dated 8 June, 1965, of the Additional Director, shows that the applicant Gurdev Singh 's assertion that he could not attend due to illness, over which he had no control, was accepted by the Additional Director, who proceeded to exer cise his powers under section 42 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (hereinafter referred to as the Act) and to set right the grievance of the applicant, Gurdev Singh, after going into all the relevant records. The learned Judge of the High Court, who heard the petition also went through the records very carefully, came to the conclusion that an assertion of rights by the petitioner/ appellant, a member of the Sanjam Group, merely because of some report contained in the "Fard Badar," could not take away the effect of entries in the revenue records. The learned Judge held that no injustice was caused to the petitioner/appellant also, there was no ground for interference under Article 226 of the Constitu tion. The learned counsel for the appellant has relied upon the case of Harbhajan Singh vs Karam Singh& Ors. reported in ; , where this Court held that the Addl. Director exercising the powers of the State Government has no jurisdiction under section 42 of the Act to review his previous order. Section 42 of the Act runs as follows: "The State Government may at any time for the purpose of satisfying itself as to the legality or propriety of any order passed, scheme prepared or confirmed or repartition made by any officer under this Act, call for and examine the record of any case pending before or disposed of by such officer and may pass such order in reference thereto. as it thinks fit: Provided that no order or scheme or repar tition shall be varied or reserved without giving the parties interested notice to appear and opportunity to. be heard except in case where the State Government is satisfied that the proceedings have been vitiated by unlawful consideration. " The proviso to Section 42 lays down that notice to interested parties to appear and opportunity to be heard are conditions precedent to passing of an order under Section 42. The fact that the Additional Director was satisfied that the respondent, Gurdev Singh, did not have an opportu nity of being ,heard due to his illness, seems to us to amount to a finding that the proviso. could not be complied with so that the previous order could not be held to be an order duly passed under Section 42 of the Act. It could be ignored as "non est. " The view taken in Harbhajan Singh 's case (supra) would not apply to the 371 instant case although Section 42 of the Act does not contain a power of review. Orders which are 'non est ' can be ignored at any stage. On the facts and circumstances of this case, we think that this is not a fit case for interference under Article 136 of the Constitution. The appellant, if he has acquired any rights by reason of long possession, can assert them whenever any proceedings are taken before a competent au thority to dispossess him. What we have held here or whatever has been held by the High Court will not affect such other rights, if any, as the Appellant may have ac quired by reason of possession. We do not know and refrain from deciding who is actually in possession and for how long and in what capacity. This appeal is dismissed. Parties will bear their own costs. _ P.H.P. Appeal dismissed.
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Gurdev Singh had certain complaints about the Consolida tion Scheme.
He was not present when his application was being considered.
Therefore, the application was dis missed by the Additional Director, Consolidation.
Thereaf ter, Gurdev Singh respondent No. 3 filed an application for restoration supported by an affidavit attributing his ab sence to his illness.
The Additional Director accepted the ground of respondent No. 3 about illness and granted necessary relief to him.
The appellant filed a writ.peti tion in the High Court under Articles 226 and 227 of the Constitution.
The High Court held that the assertion of rights by the appellant merely because of some report con tained in the "Fard Badar" could not take away the effect of the entries in the revenue records The High Court also held that no injustice was caused to the appellant and, there fore, there was no ground for interference under Article 226.
In an appeal by Special Leave, the appellant contended that the Additional Director had no power to review his previous order.
The power to review conferred by section 42 of the Act has to be exercised only after hearing the interested parties.
Since respondent No. 3 was not given an opportunity of being heard on account of his illness, it shows that the order passed was non est and can be ignored at any stage.
The court dismissed the appeal on the ground that this was not a fit case for interference under Article 136.
the Court, however, observed that if the appellant has any right on account of long possession or otherwise he can assert them by adopting proper proceedings and that his rights would not be affected by whatever is stated m the Judgment of this Court as well as the High Court.
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Gurdev Singh had issues with the plan to combine and rearrange land holdings.
He wasn't there when his request was being looked at.
So, the person in charge, the Additional Director, Consolidation, turned down his request.
After that, Gurdev Singh (respondent No. 3) asked for his request to be brought back, saying he was sick and that's why he wasn't there. He provided a sworn statement (affidavit) to back this up.
The Additional Director believed that respondent No. 3 was sick and gave him what he asked for.
The person making the appeal (the appellant) then filed a legal request (writ petition) in the High Court under Articles 226 and 227 of the Constitution.
The High Court said that the appellant's claim of rights based on a report in the "Fard Badar" (a record of changes) didn't change the official land records. The High Court also said that the appellant wasn't treated unfairly, so there was no reason for them to step in under Article 226.
The appellant appealed, arguing that the Additional Director didn't have the power to change his earlier decision (review his order).
The power to review, given by section 42 of the Act, must be used only after talking to everyone involved. Since respondent No. 3 wasn't given a chance to be heard because he was sick, the order wasn't valid (non est) and could be ignored at any point.
The court rejected the appeal because it wasn't a good reason to interfere under Article 136.
However, the Court said that if the appellant has any rights due to being in possession of the land for a long time or for other reasons, he can make those claims through the proper legal steps. His rights won't be affected by anything said in this Court's ruling or the High Court's ruling.
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ivil Appeal No. 140 of 1990. From the Judgment and Order dated 8.2.89 of the Madras High Court in L.P.A. No. 131 of 1987. A.K. Sen, N.D.B. Raju, K. Rajeshwaran and N, Ganapathy for the Appellants. K.R. Choudhary and V. Balachandran for the Respondents. The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J. Special Leave is granted. This appeal is from a decision of the Madras High Court which denied the appellants claim for setting aside a judi cial sale. The facts giving rise to the appeal, as found by the Courts, may be summarised as follows. Arumugham respondent 1 obtained money decree on the basis of a promissory note from the Subordinate Judge, Salem, in O.S. No. 388/1968. Sethuramalingam the judgment debtor appealed to the High Court but could not get the decree stayed. He could not furnish security for the decre tal amount which was a condition for stay. The decree was put into execution notwithstanding the pendency of the appeal. In February 1973, his two items of properties; (i) three houses and (ii) 10.93 acres of land were brought to court sale. They were purchased by Kuppa Goundar, respondent No. 2 for Rs.7550 and Rs.15,050 respectively. In October 1975, the High Court allowed the appeal on merits. The promissory note which was the basis of the suit was disbe lieved and rejected. The trial court judgment was set aside and the plaintiff was non suited. Thereupon the judgment debtor moved the executing court for setting aside the sale. He has alleged inter alia, that the sale 81 was vitiated by material irregularities and properties were deliberately sold for under value. The sale was collusive between decree holder and the auction purchaser. The latter was sambandhi of the former and just a name lender. It was also his contention that since the decree has been reversed, the sale should be nullified and restitution should be ordered. The Court rejected all the contentions relating to material irregularities for want of satisfactory evidence. The Court also held that subsequent reversal of the decree could not be depended upon since the sale has been confirmed in favour of the auction purchaser who was a stranger to the litigation. The judgment debtor appealed to the High Court and succeeded at first instance, before learned single Judge. The learned Judge found in effect that (a) the sale was vitiated by material irregularities resulting in fetch ing a low price to properties; (b) the decree holder and auction purchaser are close relatives and the sale seems to be collusive; and (c) after the Court sale they seemed to have entered into an agreement for selling the second item of properties for Rs.96,000. With these conclusions the sale was set aside. But on appeal, the Division Bench of the High Court has expressed contrary views on all those points and reversed the decision of learned single Judge. 'the judgment debtor died during the pendency of the appeal before the High Court. His legal representatives have now appealed. Mr. A.K. Sen, learned counsel for the appellants raised a number of questions. The important and central issue, however, relates to the underlying jurisdiction of the Court to set aside the confirmed sale upon subsequent reversal or modification of the decree. The question is whether the auction purchaser 's interest should be protected as against the judgment debtor who has since succeeded in getting rid off the decree against him. There are two authorities of this Court bearing on the question: (i) Janak Raj vs Gurdial Singh and Anr., ; and (ii) Sardar Govindrao Mahadik and Anr. vs Devi Sahai & Ors. , ; In Janak Raj case, the appellant was a stranger to the suit in which there was an ex parte money decree. In the execution of the decree, the immovable property of the judgment debtor was brought to sale in which the appellant became the high est bidder. The judgment debtor filed an application for setting aside the ex parte decree and the court allowed it before confirming the sale. Thereupon the judgment debtor objected to the confirmation of sale on the ground that the auctionpurchaser was in conspiracy and collusion with the decree holder and as such not entitled to have the sale confirmed. The execution court, 82 however, overruled the objection and confirmed the sale, Mitter, J., agreed with that view and observed (at 79): "The result is that the purchaser 's title relates back to the date of sale and not the confirmation of sale. There is no provision in the Code of Civil Procedure of 1908 either under O. XXI or elsewhere which provides that the sale is not to be confirmed if it be found that the decree under which the sale was ordered has been reversed before the confirmation of sale. It does not seem ever to have been doubted that once the sale is confirmed the judgmentdebtor is not entitled to get back the property even if he succeeds thereafter in having the decree against him reversed. 'The question is, whether the same result ought to follow when the reversal of the decree takes place before the confirma tion of sale. There does not seems to be any valid reason for making a distinction between the two cases. It is certainly hard on the defendant judgment debtor to have to lose his property on the basis of a sale held in execution of a decree which is "not ultimately upheld. Once however, it is held that he cannot complain after confirmation of sale, there seems to be no reason why he should be allowed to do so because the decree was reversed before such confirmation. The Code of Civil Procedure of 1908 contains elaborate provisions which have to be followed in cases of sales of property in execu tion of a decree. It also lays down how and in what manner such sales may be set aside. Ordinarily, if no application for setting aside a sale is made under any of the provisions of rr. 89 to 91 of O. XXI, or when any application under any of these rules is made and disallowed, the court has no choice in the matter of confirming the sale and the sale must be made absolute. If it was the intention of the Legis lature that the sale was not to be made absolute because the decree had ceased to exist, we should have expected a provi sion to that effect either in O. XXI or in Part II of the Code of Civil Procedure of 1908 which contains sections 36 to 74 (inclusive) . . " Finally, the learned judge rounded off the judgment thus (at 86): " . . The policy of the Legislature seems to be that 83 unless a stranger auction purchaser is protected against the viccissitudes of the fortunes of the suit, sales in execu tion would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified. The Code of Civil Procedure of 1908 makes ample provision for the pro tection of the interest of the judgment debtor who feels that the decree ought not to have been passed against him. ' ' In Sardar Govindrao Mahadik, D.A. Desai, J., while referring to the principle in Janak Raj case said (at 224): "Ordinarily, if the auction purchaser is an outsider or a stranger and if the execution of the decree was not stayed of which he may have assured himself by appropriate enquiry, the court auction held and sale confirmed and resultant sale certificate having been issued would protect him even if the decree in execution of which the auction sale has been held is set aside. This proceeds on the footing that the equity in favour of the stranger should be protected and the situa tion is occasionally reached on account of default on the part of the judgment debtor not obtaining stay of the execu tion of the decree during the pendency of the appeal. " The learned Judge further said: "But what happens if the auction purchaser is the decree holder himself? In our opinion, the situation would materi ally alter and this decree holder auction purchaser should not be entitled to any protection. At any rate, when he proceeds with the execution he is aware of the fact that an appeal against the original decree is pending. He is aware of the fact that the resultant situation may emerge where the appeal may be allowed and the decree which he seeks to execute may be set aside. He cannot force the pace by exe cuting the decree taking advantage of the economic disabili ty of a judgment debtor in a money decree and made the situation irreversible to the utter disadvantage of the judgment debtor who wins the battle and loses the war. Therefore, where the auction purchaser is none other than 84 the decree holder who by pointing out that there is no bidder at the auction, for a nominal sum purchases the property, to wit, in this case for a final decree for Rs.500, Motilal purchased the property for Rs.300, atrocious situation, and yet by a technicality he wants to protect himself. To such an auction purchaser who is not a stranger and who is none other than the decree holder, the court should not lend its assistance." In Janak Raj case, a stranger auction purchaser was protected against vicissitudes of fortunes of the litiga tion. In S.G. Mahadik case such protection was not afforded to auction purchaser who happens to be the decree holder himself. The reason seems to be that the decree holder is not a stranger to the suit. Indeed, he is not since he is eonomine party to the appeal against the decree which he seeks to execute. He is aware of the fact that due to eco nomic hardship the judgment debtor was unable to have the decree stayed. He however, does not wait for final outcome of the litigation which he has initiated. He exploits the helpless situation of the judgment debtor and hastens the execution of the decree. The Court, therefore, should not lend its assistance to him to retain the property purchased if the decree is subsequently reversed. 'There is thus a distinction maintained between the decree holder who purchases the property in execution of his own decree which is afterwards modified or reversed, and an auction purchaser who is not party to the decree. Where the purchaser is the decree holder, he is bound to restore the property to the judgment debtor by way of restitution but not a stranger auction purchaser. The latter remains unaf fected and does not lose title to the property by subsequent reversal or modification of the decree. 'The Courts have held that he could retain the property since he is a bona fide purchaser. 'This principle is also based on the premise that he is not bound to enquire into correctness of the judgment or decree sought to be executed. He is thus distin guished from an eonomine party to the litigation. 'There cannot be any dispute on this proposition and it is indeed based on a fair and proper classification. 'The innocent purchaser whether in voluntary transfer or judicial sale by or in execution of a decree or order would not be penalised. The property bona fide purchased ignorant of the litigation should be protected. 'The judicial sales in particular would not be robbed off all their sanctity. It is a sound rule based on legal and equitable considerations. But it is 85 difficult to appreciate why such protection should be ex tended to a purchaser who knows about the pending litigation relating to the decree. If a person ventures to purchase the property being fully aware of the controversy between the decree holder and judgment debtor, it is difficult to regard him as a bona fide purchaser. The true question in each case, therefore, is whether the stranger auction purchaser had knowledge of the pending litigation about the decree under execution. If the evidence indicates that he had no such knowledge he would be entitled to retain the property purchased being a bona fide purchaser and his title to the property remains unaffected by subsequent reversal of the decree. 'The Court by all means should protect his purchase. But if it is shown by evidence that he was aware of the pending appeal against the decree when he purchased the property, it would be inappropriate to term him as a bona fide purchaser. In such a case the Court also cannot assume that he was a bona fide or innocent purchaser for giving him protection against restitution. No assumption could be made contrary to the facts and circumstances of the case and any such assumption would be wrong and uncalled for. 'The Patna High Court in Chhota Nagpur Banking Associa tion vs C.T.M. Smith & Anr., [1943] Patna 325 expressed a similar view. Fazl Ali, CJ., as he then was, said (at 327) that where there is clear and cogent evidence that a strang er purchaser was fully aware of the merits of the controver sy in regard to the property purchased by him and was also aware that the validity of the decree was under challenge, there is no room for presumption that he was a bona fide purchaser. Reference may also be made to the decision of the Sind Judicial Commissioner 's Court in Jamnomal Gurdinornal vs Gopaldas and Anr., AIR 1924 Sind 101 where similar com ment was made. 'The Madras High Court in R. Raghavachari v.M.A.Pakkiri Mahorned Rowther and Ors., AIR 19 has however, taken a contrary view. It was held that restitution under Section 144 CPC cannot be demanded as against a bona fide purchaser who was not a party to the decree. 'The High Court also remarked that the reversal of the decree by the appel late Court or the knowledge of the purchaser about the pendency of the appeal makes no material difference to the operation of that rule. This proposition, we are, however, unable to accept. In our opinion, the person who purchases the property in court auction with the knowledge of the pending appeal against the decree cannot resist restitution. His knowledge about the pending litigation would make all 86 the difference in the case. He may be a stranger to the suit, but he must be held to have taken calculated risk in purchasing the property. Indeed, he is evidently a specula tive purchaser and in that respect he is in no better posi tion than the decree holder purchaser. The need to protect him against restitution therefore, seems to be unjustified. Similarly the auction purchaser who was a name lender to the decree holder or who has colluded with the decree holder to purchase the property could not also protected to retain the property if the decree is subsequently reversed. There is one other aspect which is more important than what we have discussed hitherto. It was emphasized by Lord Cairns in Rodger vs The Comptoir D ' Escompte De Paris, [1869 71] LR 3 P.C. 465 at 475: ". that one of the first and highest duties of all Courts is to take care that the act of the Court does no injury to any of the suitors, and when the expression "the act of the Court", is used, it does not mean merely the act of the Primary Court, or of any intermediate Court of Appeal, but the act of the Court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case. It is the duty of the aggregate of those Tribunals, if I may use the expres sion, to take care that no act of the Court in the course of the whole of the proceedings does an injury to the suitors in the Court. " This is also the principle underlying Section 144 of the Code of Civil Procedure. It is the duty of all the Courts as observed by the Privy Council "as aggregate of those tribu nals" to take care that no act of the court in the course of the whole of the proceedings does an injury to the suitors in the Court. The above passage was quoted in the majority judgment of this Court in A.R. Antulay vs R.S. Nayak and Ors. , ; at 672. Mukherjee, J., as he then was, after referring to the said observation of Lord Cairns, said (at 672): "No man should suffer because of the mistake of the Court. No man should suffer a wrong by technical procedure of irregularities. Rules or procedures are the handmaids of justice and not the mistress of the justice. Ex debito justitiae, we must do justice to him. If a man has been wronged so long as it lies within the human machinery of administration of justice that wrong must be remedied. " 87 It is well to remember that the Code of Civil Procedure is a body of procedural law designed to facilitate justice and it should not be treated as an enactment providing for punishments and penalties. 'he laws of procedure should be so construed as to render justice wherever reasonably possi ble. It is in our opinion, not unreasonable to demand resti tution from a person who has purchased the property in court auction being aware of the pending appeal against the de cree. We have carefully considered the evidence in the case. The judgment debtor who has been examined in the case has stated that the auction purchaser is a sambandhi of the decree holder. 'the decree holder 's daughter has been given in marriage to the son of auction purchaser. That evidence remains unchallenged. The evidence further indicates that after the purchase both of them have entered into an agree ment with a third party for sale of the second item of properties for Rs.96,000 and a case seems to be pending on the basis of that agreement. The evidence also discloses that the auction purchaser had no money of his own to pur chase the property. These circumstances are sufficient to hold that the auction purchaser was not a bona fide purchas er. The auction sale in his favour must, therefore, fall for restitution. 'he Court cannot lend assistance for him to retain the property of the judgment debtor who has since succeeded in getting rid of the unjust decree. In the result the appeal is allowed, the judgment of the Division Bench of the High Court is reversed and that of learned single Judge is restored. The appellants, however, must pay the costs of this appeal to the auction purchaser which we quantify at Rs.5,000. R.S.S. Appeal allowed.
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Respondent No. 1 obtained a money decree against the original appellant, who has been substituted by legal heirs, on the basis of a promissory note.
The appellant appealed to the High Court but could not get the decree stayed because he was unable to furnish security for the decretal amount.
The decree was put into execution notwithstanding the pend ency of the appeal, and two items of appellant 's properties were purchased by respondent No. 2 at the court sale.
Later, the High Court allowed the appellant 's appeal on merits and set aside the decree.
Thereupon, the appellant moved the executing court for setting aside the court sale inter alia on the ground that (1) the sale was vitiated by material irregularities and properties were deliberately sold for under value; (2) the sale was collusive between decree holder and the auction purchaser; the latter, being the sambandhi of the former, was just a name lender; and (3) since the decree had been reversed, the sale should be nullified and restitution should be ordered.
The executing court rejected these con tentions and held that subsequent reversal of the decree could not be depended upon since the sale had been confirmed in favour of the auction purchaser who was a stranger to the litigation.
The learned Single Judge of the High Court, however, allowed the appellant 's appeal and held inter alia that (a) the sale was vitiated by material irregularities resulting in fetching a low price; and (b) the decree holder and auction purchaser were close relatives and the sale seemed to be collusive.
But on appeal, the Division Bench reversed the decision of the learned Single Judge.
Allowing the appeal, this Court, HELD: (1) A distinction is maintained between the decree holder who purchases the property in execution of his own decree which is 79 afterwards modified or reversed, and an auction purchaser who is not party to the decree.
[84E] (2) Where the purchaser is a decree holder, he is bound to restore the property to the judgment debtor by way of restitution but not a stranger auction purchaser.
The latter remains unaffected and does not lose title to the property by subsequent reversal or modification of the decree, and could retain the property since he is a bona fide purchaser.
This principle is also based on the premise that he is not bound to enquire into correctness of the judgment or decree sought to be executed.
He is thus distinguished from an eonomine party to the litigation.
[84E F] Janak Raj vs Gurdial Singh, ; and Sardar Govindrao Mahadik vs Devi Sahai, ; , referred to.
(3) The true question in each case is whether the stranger auction purchaser had knowledge of the pending litigation about the decree under execution.
If it is shown by evidence that he was aware of the pending appeal against the decree when he purchased the property, it would be inappropriate to term him as a bona fide purchaser.
Indeed, 'he is evidently a speculative purchaser and in that respect he is in no better position than the decree holder purchas er.
[85B C] Chhota Nagpur Banking Association vs C.T.M. Smith, [1943] Patna 325 and Jamnomal Gurdinomal vs Gopaldas, AIR 1924 Sind 101, referred to.
R. Raghavachari vs M.A. Pekkiri Mahomed Rowther, AIR 1917 Mad 250, overruled.
(4) Similarly, the auction purchaser who was a name lender to the decree holder or who has colluded with the decree holder to purchase the property could not also be protected to retain the property if the decree is subse quently reversed.
[86B] (5) The Code of Civil Procedure is a body of procedural law designed to facilitate justice and it should not be treated as an enactment providing for punishment and penal ties.
The laws of procedure should be so construed as to render justice wherever reasonably possible.
[87A B] Rodger vs The Comptoir De Paris, [1869 71] LR 3 PC.
465 at 475 80 and A.R. Antulay vs R.S. Nayak, ; , referred to.
(6) The evidence on record is sufficient to hold that the auction purchaser was not a bona fide purchaser.
The auction sale in his favour must, therefore, fall for resti tution.
The Court cannot lend assistance for him to retain the property of the judgment debtor who has since succeeded in getting rid of the unjust decree.
[87D E]
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Person 1 won a court order for money against the original person appealing (who is now replaced by family members) based on a written promise to pay.
The person appealing asked a higher court to stop the order, but they couldn't because they couldn't promise to pay the money if they lost.
The order was enforced even though the appeal was still happening. Person 2 bought two pieces of the appellant's property at a court sale.
Later, the higher court said the appeal was valid and canceled the original court order.
Then, the person appealing asked the court to cancel the sale, saying that: (1) the sale was unfair because of serious errors and the properties were sold for too little money on purpose; (2) the sale was a secret agreement between the person who won the original order and the buyer, who was just helping them; and (3) because the original order was canceled, the sale should be canceled too, and the property should be given back.
The court turned down these arguments. It said that canceling the original order later didn't matter because the sale had already been approved and the buyer was not involved in the original case.
However, a single judge in the higher court said the appeal was valid and ruled that: (a) the sale was unfair because of serious errors that led to a low price; and (b) the person who won the original order and the buyer were close relatives, so the sale seemed to be a secret agreement.
But another group of judges overturned the single judge's decision.
The Court said: (1) There's a difference between the person who won the order buying the property and someone who wasn't part of the case buying it at auction.
(2) If the person who won the order buys the property, they have to give it back to the person who lost if the order is changed or canceled. But someone who wasn't part of the case doesn't have to. The outside buyer is protected and doesn't lose the property if the order is later changed or canceled, because they bought it fairly. This is because they don't have to check if the original court order was correct. So, they are different from someone who was actually part of the case.
(3) The real question is whether the outside buyer knew about the ongoing case about the court order being enforced. If they knew about the appeal when they bought the property, they can't be considered a fair buyer. They are taking a risk and are no better than the person who won the original order.
(4) Also, someone who is just helping the person who won the order, or who made a secret agreement with them to buy the property, can't keep the property if the order is later canceled.
(5) The Code of Civil Procedure is a set of rules to help make fair decisions, not to punish people. Court rules should be used to make fair decisions whenever possible.
(6) The evidence shows that the buyer wasn't a fair buyer. So, the sale must be canceled, and the property must be given back. The Court can't help the buyer keep the property from the person who lost the original case but has now won on appeal.
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Criminal Appeal No. 538 of 1983. From the Judgment and Order dated 6.4.1982 of the Andhra Pradesh High Court in Crl. A. No. 469 of 1981. G. Narasimhulu for the Appellants. T.V.S.N. Chari, Ms. Suruchi Aggarwal and Ms. Manjula Gupta for the Respondent. The Judgment of the Court was delivered by KULDIP SINGH, J. Nethala Pothuraju, Nethala Dhananjaya, Nethala Remudu and four others (hereinafter referred to as 'A 1 to A 7 ') were tried for the offences under Sections 147, 148, 323, 379 and 302 read with Section 149 I.P.C. on the allegations that they caused the death of Madda Laksha mandas of village Ramaraogudem on November 1, 1980 near the Tobacco garden of A 1. The Trial Court acquitted A 7 of all the charges A 1 to A 6 were, however, found guilty for the offences punishable under Sections 148 and 302 read with section 149 I.P.C. They were sentenced to imprisonment for life. On appeal, the High Court confirmed the conviction and sentence of A 1 to A 3. The conviction and sentence of A 4 to A 6 was set aside by the High Court and they were acquit ted on the following reasoning: . . . We feel that it would be safe to accept the evidence of P.Ws. 1 and 2 to the extent it is corroborated by the evidence 6 of P.W.3 in so far as the presence and partic ipation of the accused in the attack on the deceased is concerned. Accepting the evidence of P.W.3 we hold that the identity of A 1 to A 3 in the unlawful assembly consisting of A 1. to A 3 and some other unidentified persons is satisfactorily established. The manner in which the attack was made on the deceased can only lead to one inference namely that the common object of the unlawful assembly was to kill the deceased. We accordingly confirm the conviction and sentence of A 1 to A 3 under Sections 148 and 302 read with 149 I.P.C. We set aside the conviction and sentence of A 4 to A 6 under Sections 148 and 302 read with 149 I.P.C. and acquit them." This Court granted leave to appeal on the limited ques tion of applicability of Section 149 I.P.C. The learned counsel for the appellants has contended that after the acquittal of four accused persons by the courts below the conviction of the appellants under Section 148 and on applying 149 I.P.C. cannot be sustained. It is argued that the appellants, being three in number, could not have formed an unlawful assembly within the definition of Section 141 I.P.C. In our view, there is force in the contention of the learned counsel for the appellants. The appellants being only three in number, there was no question of their forming an unlawful assembly within the meaning of Section 141 I.P.C. It is not the prosecution case that apart from the seven accused persons there were some other unidentified persons who were involved in the crime. The High Court clearly fell into error in confirming the conviction and sentence of the appellants under Sections 148 and on apply ing 149 I.P.C. on the ground that they formed an unlawful assembly alongwith some unidentified persons. The prosecu tion case from the very beginning was that A1 to A7, the named persons, formed the Unlawful assembly. A 4 to A 7 having been acquitted, the remaining three appellants cannot be convicted under Sections 148 and on applying 149 I.P.C. We, therefore, set aside the conviction of the appellants under the said sections. The question still remains as to whether the appellants can be convieted under Section 302 read with Section 34 I.P.C. Both Sections 149 and 34 I.P.C. deal with a combina tion of persons who become liable to be punished as sharers in the commission of offences. The non applicability of Section i49 I.P.C. is, therefore, no bar in convicting the appellants under 7 Section 302 read with section 34 I.P.C. if the evidence discloses commission of an offence in furtherance of the common intention of them all. PW 1, the wife of the deceased, PW 2, the daughter of the deceased and PW 3, an adjoining land owner, are the three eye witnesses to the occurrence. It is in evidence that the complainant and the accused belonged to opposite factions and there was long standing enmity between the parties. During the last 30 years, there had been murders and rioting between the two factions. The deceased Madda Lakshamandas was undergoing life imprisonment for the murder of one of the persons belonging to the group of the accused. He had come on parole. On the day of occurrence at about 7.00 A.M. when he was passing near the field of A 1 he was attacked by the accused party. According to the eye witness es, A 1 and A 3 were armed with spears, A 2, A 4, A 5 and A 6 with knives and A 7 was armed with a stick. All of them way laid the deceased and dragged him into the Tobacco garden of A 1. It is in evidence that all the accused indis criminately inflicted injuries on the deceased with their respective weapons. When the deceased fell down the ac cused kept on giving him spear, knife and stick blows. The deceased was crying for water and when his daughter brought water A 2 caught hold of her and pushed her aside. She was also given beating by fists. Thereafter, A 1 left the spear and took a stick and gave beating to the deceased on his heals and chest and A 3 chopped of the fingers of left hand of the deceased with the knife. A 2 further gave blows to the deceased on his head. The deceased died instantaneously on the spot. Thereafter, at the asking of A 1, A 2 and A 3 dragged the dead body from the field of A 1 and placed the same on the road. There were as many as 18 injuries on the person of the deceased. Seven of those were deep penetrating wounds, 8 lacerated wounds and remaining were abrasions. The injuries caused fracture on the right perietal bone result ing in the opening of the skull. The fourth rib was broken and there was an injury to the lung. There were injuries all over the body. Keeping in view the manner of attack as disclosed by the eye witnesses and the number and nature of injuries, we have no hesitation in holding that the appellants made the mur derous attack on the deceased and caused his instantaneous death. We are satisfied that the appellants acted in fur therance of their common intention of murdering the de ceased. We, therefore, hold the appellants guilty under Section 302 read with Section 34 I.P.C. 8 Accordingly, we convert the conviction of the appellants to one under Section 302 read with section 34 I.P.C. and keep them sentenced to fife imprisonment. Appellants A 1 and A 3 are on bail under orders of this Court. We cancel the bail order. These appellants shall surrender to their bail bonds to undergo the sentence of imprisonment. T.N.A Appeal disposed of.
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Appellants (A1 to A3) were tried for the offences under Sections 147, 148, 323 and 309 read with section 149 of the Indian Penal Code.
The Trial Court acquitted A 7 of all the charges but convicted A 1 to A 6 under sections 148 and 302 read with section 149 and sentenced them to imprisonment for life.
On appeal the High Court acquitted A 4 to A 6 but confirmed the conviction and sentence of the appellants.
In appeal to this Court it was contended on behalf of the appellants that in view of the acquittal of four ac cused, the appellant 's conviction under section 148 and on applying section 149 cannot be sustained.
The appellants being three in number could not have formed unlaWful assem bly under section 141 IPC.
Disposing the appeal, this Court, HELD: 1.
The High Court erred in confirming the convic tion and sentence of the appellants under Section 148 and on applying 149 I.P.C. on the ground that they formed an unlaw ful assembly alongwith some unidentified persons.
The prose cution case was that the seven named accused formed the unlawful assembly and not that apart from the seven accused persons there were some other unidentified persons who were involved in the crime.
Four accused having been acquitted there was no question of the remaining three appellants forming an unlawful assembly within the meaning of section 141 of the Indian Penal Code.
Accordingly the appellants cannot be convicted under section 148 and an applying 149 I.P.C. Their conviction under the said sections is set aside.
[6F G] 5 2.
Both sections 149 and 34 I.P.C. deal with a combina tion of persons who become liable to be punished as sharers in the commission of offences.
The non applicability of Section 149 I.P.C. is, therefore, no bar in convicting the accused under Section 302 read with section 34 I.P.C. if the evidence discloses commission of offence in furtherance of the common intention of them all.
[6H, 7 A] 2.1 Keeping in view the manner of attack and the number and nature of injuries there is no hesitation in holding that the appellants acted in furtherance of their common intention, made the murderous attack on the deceased and caused his instantaneous death.
Therefore, they are held guilty under Section 302 read with Section 34 I.P.C. and are sentenced to life imprisonment.
[7G H]
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People called A1, A2, and A3 were accused of breaking laws. These laws are listed as Sections 147, 148, 323, and 309, along with Section 149 of the Indian Penal Code (a set of laws).
The first court (Trial Court) said A7 was not guilty of any crime. But, it said A1 through A6 were guilty under Sections 148 and 302, along with Section 149. They were sentenced to prison for life.
The next court (High Court), after an appeal, said A4 through A6 were not guilty. But, it agreed with the first court's decision for A1, A2, and A3, and kept their life sentences.
A1, A2, and A3 then appealed to a higher court (this Court). Their lawyers argued that since four people were found not guilty, A1, A2, and A3 could not be found guilty under Section 148 or Section 149. The lawyers said that because there were only three people left, they could not have formed an illegal group under Section 141 of the Indian Penal Code.
This Court made the following decisions:
1. The High Court made a mistake by saying A1, A2, and A3 were guilty under Section 148 and Section 149. The High Court said they were part of an illegal group with some unknown people. But, the prosecution (the lawyers trying to prove them guilty) said the illegal group was made up of the seven people who were named as defendants. The prosecution did not say there were other, unnamed people involved. Since four of the seven were found not guilty, the remaining three (A1, A2, and A3) could not have formed an illegal group under Section 141. So, they cannot be found guilty under Section 148 or Section 149. The Court canceled their conviction under those sections.
2. Sections 149 and 34 of the Indian Penal Code both deal with people who work together to commit a crime. These people can be punished as if they all committed the crime. So, even if Section 149 does not apply, the accused can still be found guilty under Section 302 along with Section 34. This is possible if the evidence shows they committed the crime together with a common plan.
2.1 The way they attacked the victim, the number of injuries, and how serious the injuries were, show that A1, A2, and A3 had a common plan. They attacked the victim with deadly force and caused his death right away. Because of this, they are found guilty under Section 302 along with Section 34 of the Indian Penal Code. They are sentenced to prison for life.
| 1,499
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Civil Appeal No. 592 of 1960. Appeal by special leave from the judgment and order dated June 17, 1959, of the Commercial Tax officer, Calcutta, in case No. 54(c) of 1969 60. 277 N. a. Chatterjee and section a. Mazumdar, for the appellants. B. Sen and P. E. Bose, for respondents Nos. 1 and 2. K. N. Rajagopal Sastri and T. M. Sen, for respondent No. 3. 1961. October 31. The Judgment of the Court was delivered by SINHA, a. J. This is a direct appeal by special leave granted by this court on September 7, 1969, against the order, dated July 17, 1959, passed by the first respondent the Commercial Tax officer assessing the appellant to central sales tax amounting to Rs. 42,647 odd, for the period July 30, 1957 to March 31, 1958, under the (LXXIV of 1956) which hereinafter will be referred to as the Act. The second respondent is the State of West Bengal, and the third respondent is the Union of India. In view of the order we propose to make in this ease, it is not necessary to state in any detail the facts and circumstances leading up to this appeal. The appellant is a partnership firm, under the Indian Partnership Act, with its principal place of business at 18, Netaji Subhas Road, Calcutta, within the jurisdiction of the first respondent. The appellant alleges that he carries on business of two kinds, namely, (1) of a dealer in coal and coke, and (2) of a middleman bringing about sales of coal and coke between colliery owners and consumers. In respect of its business as a dealer, the appellant is a registered dealer under the Bengal Finance (Sales Tax) Act (Bengal Act VI of 1941). Its second business as a middleman relates mainly to sales of coal and coke in the course of interstate trade or commerce, and the tax in question relates to this second branch of its business. The Act came into operation in the State of West Bengal on July 1, 1957, when the appellant 278 applied for and obtained a certificate of registration under the Act on July 30, 1957. In May 1958, the appellant made its return under the Act in respect of the period aforesaid, showing the turnover as nil. But in spite of its showing cause against the proposed assessment, the first respondent determined Rs.9,17,196 as the appellant 's turnover in respect of the period aforesaid and assessed central sales tax thereon at Rs. 42,617.82nP. under section 8(2) of the Act, and issued Demand Notice. The appellant moved this Court and obtained the special leave to appeal from the order of the first respondent making assessment and later a demand on the basis of the assessment. From the statement of facts given above, it is clear that the appellant did not exhaust all his remedies under the Act itself; and came directly to this Court as if the order of Assessment passed by the first respondent was final. The question, therefore, arises whether this court should entertain the appeal, when even the facts have not been finally determined by the final fact finding authority under the Act, nor has the jurisdiction of the High Court been involved to exercise its power under the Act. But Mr. Chatterjee, on behalf of the appellant, has contended in the first instance that the powers of this Court are wide enough to enable him to approach this Court direct, when according to him, there had been an assessment of tax without the authority of law. There is no doubt that the powers of this Court under article 136 of the Constitution are as wide as they could be, because, unlike the preceding articles of the constitution, there is no limitation that the Judgment, decree or order should be final in the sense that the appellant in this Court has exhausted all the remedies provided by law before invoking the jurisdiction of this Court to grant "special leave to appeal from any judgment, decree determination sentence or order in any case or matter passed or 279 made by any Court or Tribunal in the territory of India. " In spite of the wide amplitude of the jurisdiction of this Court to entertain appeals by special leave, this Court has imposed certain limitations on its own powers for very good reasons, and has refused ordinarily to entertain such appeals when the litigant has not availed himself of the ordinary remedies available to him at law. But Mr. Chatterjee, on behalf of the appellant, invited our attention to the decision of this Court in Mahadayal Premchandra vs Commercial Tax officer, Calcutta (1) in which this Court interfered with the order of assessment passed by the Commercial Tax officer of Calcutta, and this Court had been moved by way of special leave to appeal against the original order of the Taxing officer. It is claimed on behalf of the appellant that decision completely covers the points in controversy in the present case also. It is contended that was also a case, like the present one of commission agents who had been charged sales tax. There are several reasons why the authority of that decision cannot be invoked in favour of the appellant on the preliminary question whether this Court should at all entertain the appeal. In that case, in the reported decision, of this Court, no such question, as we have to determine, had been raised. Apparently, counsel for both the parties were anxious to have the final determination of the controversy by this Court. Secondly, there were special circumstances in that case, which are not present in the instant case. The most outstanding feature of that case was, as pointed out by this Court, that the Assessing Authority had not exercised its own judgment in the matter of the assessment in question. The Assessing Authority had, contrary to its own judgment, taken instructions from the Assistant Commissioner and followed those directions This Court had also pointed out that even (1) 280 though the Assessing Authority was satisfied on the materials placed by the assessee that he was not liable to pay sales tax, he carried out the directions of a superior officer. This Court further pointed out that there had been complete failure of justice on account of the, fact that the assessee had been given no opportunity to meet the points made by the Assistant Commissioner, and the assessment order was made behind his back. The Court was led to make the following very significant observations: "The procedure adopted was, to say that least, unfair and was calculated to undermine the confidence of the public in the impartial and fair administration of the sales tax Department concerned. We would have, simply on this ground, set aside the assessment order made by the first respondent and remanded the matter back to him for his due consideration in accordance with law, but as the matter is old and a remand would lead to unnecessary harassment of the appellants, we have preferred to deal with the appeal on merits." (p. 560). It was in those circumstances that this Court went into the whole controversy on its merits and determined the appeal in favour of the assessee. That case, therefore, in no precedent in favour of the appellant. The next case relied upon by the counsel for the appellant is The State of Bombay vs M/s. Ratikal Vadilal(1). That was a case in which the State of Bombay had appealed to this Court on special leave against the order of the Sales Tax Tribunal, Bombay, by which the Tribunal had allowed the appeal before it and set aside the order of the Collector of Sales Tax, under the Bombay Sales Tax Act. The respondents in that case were commission agents doing business as clearing and (1) ; 281 transport contractors. They had applied to the Collector of Sales Tax, Bombay, for the determination of the question if they could be called "dealers" within the meaning of the Act after giving the facts and circumstances of their case. In that case also no steps had been taken to have a reference made to the High Court, and this Court observed that it has been frequently noticed that appeals had been filed to this court without exhausting all the remedies open to appellants and that ordinarily this Court would not allow the High Courts to be bypassed and the appropriate course for an appellant was to exhaust all his remedies before invoking the jurisdiction of this Court under article 136 of the constitution. But this Court went into the merits of this case because both the parties invited the Court to do so and did not insist upon the preliminary is an being decided. It is clear, therefore, that neither of the two cases relied upon by counsel for the appellant is an authority for the proposition that he can come up to this Court on special leave directly against the judgment of the Assessing Authority, without exhausting all his remedies under the Act. There are cases in which this Court was moved directly against the order of assessment, after ignoring the orders of the High Court refusing to have a reference made, or decision the point referred, against the assessee. In those circumstances, this Court refused to entertain the appeal and held that the appellant was not entitled to invoke the jurisdiction of this Court under article 136, without coming up in appeal from the final decision inter parties given by the High Court. The latest decision of this Court on that question is the case of Chandi Prasad Chokhani vs The State of Bihar (1). In that case, the previous decisions of the Court have all been considered on extenso. We are in entire agreement with what has been laid down by this Court in that batch of cases. other decision of a Division Bench of (1) ; 282 this Court is the case of Kanhaiyalal Lohia vs Commissioner of Income tax, West Bengal (1). In that case, this Court has taken the same view and dismissed the appeal as 'incompetent. ' The present case in a much simpler one, in which there are no special circumstances and in which the facts have not yet been finally deter mined. It may also be noted that the appellant has not challenged the vires of the Act or of any other law. We, therefore, think that we should dismiss this appeal as 'incompetent ', without expressing any opinion on the merits of the controversy. It will be open to the appellant to take such steps as it may be advised, in pursuing such remedies as may be available to it under the law. The appeal is accordingly dismissed, but in the circumstances without Costs. Appeal dismissed.
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In respect of its business as a middleman relating mainly to sales of coal and coke in the course of inter State trade, the appellant firm was assessed to Central sales tax under section 8(2) of the , by the Commercial Tax officer.
The appellant without availing itself of the remedies under the Act, applied for and obtained special leave to appeal under article 136 of the Constitution of India directly against the order of assessment When the appeal was taken up for hearing, the question was raised as to whether it should be entertained, when even the facts had not been finally determined by the final fact finding authority under the Act, nor had the jurisdiction of the High Court been invoked to exercise its powers under the Act.
Held, that an assessee is not entitled ordinarily to come up to the Supreme Court directly against the judgment of the Assessing Authority and invoke the Court 's jurisdiction under article 136 of the Constitution without first exhausting the remedies provided by the taxing statutes.
Mahadayal Premchandras vs Commercial Tax Officer Calcutta, and The State of Bombay vs M/s. Ratilal Vedilal, [1961] 2 section C. R. 367, explained.
Chandi Prasad Chokhani vs The State of Bihar, [1962] 2 section G. R. 276 and Kanhaiyalal Lohia v, Commissioner of Income Tax Bengal, [1962] 2 section C. R. 839, followed.
^ Held, further, that in the present case, in which there, were no special circumstances and in which the facts had not yet been finally determined, the appeal must be considered to be incompetent.
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The company acted as a middleman, mostly selling coal and coke between states. Because of this, the Commercial Tax Officer charged them Central sales tax, following the rules in section 8(2) of the law.
Instead of using the legal options available to them, the company asked for and received special permission to appeal directly to the Supreme Court under article 136 of the Indian Constitution. When the appeal was heard, the court questioned whether it should even be considered. The facts of the case hadn't been fully decided by the final authority, and the High Court hadn't been asked to use its power in the case.
The court decided that someone being taxed usually can't go straight to the Supreme Court to appeal the decision of the person who determined their tax. They must first use all the other ways to fix the problem that are provided by the tax laws.
The court explained their decision by referencing the cases of Mahadayal Premchandras vs Commercial Tax Officer Calcutta, and The State of Bombay vs M/s. Ratilal Vedilal, [1961] 2 section C. R. 367.
The court also agreed with the decisions in the cases of Chandi Prasad Chokhani vs The State of Bihar, [1962] 2 section G. R. 276 and Kanhaiyalal Lohia v, Commissioner of Income Tax Bengal, [1962] 2 section C. R. 839.
The court also decided that in this specific case, there were no special reasons to make an exception. Because the facts hadn't been fully decided yet, the appeal was not valid.
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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.
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The businesses in question made mild steel rods, bars, and rounds. They believed that because the items they made were listed as item 1 in the Fifth Schedule, they deserved a higher tax break. This tax break was explained in section 33(1) (b) (B) (i) (a) and section 80 I of the Income Tax Act of 1961.
The Income Tax Officer disagreed with the businesses. But, the Appellate Assistant Commissioner, the Tribunal, and the High Court agreed with the businesses. So, the government's tax department appealed to this Court.
The tax department argued that iron and steel stop being just a metal when they are made into ingots in steel mills. An ingot is a block of metal. Then, these ingots are made into semi-finished products like billets, blooms, and slabs. The tax department said this is when raw materials are changed into a different form. They said that "iron and steel (metal)" means the iron and steel in the form of billets, blooms, and slabs coming from the steel mill. They argued that anything made after that, like rails, rods, bars, angles, pipes, sheets, and coils, are "articles made of iron and steel." They believed that rolling mills making bars and rods were not covered by item 1 of the Fifth Schedule.
On the other hand, the businesses argued that making ingots, billets, and blooms is just a step in making steel. When semi-finished steel is made into plates, bars, or rods, it becomes finished steel. These bars, rods, and rounds are still iron and steel in a finished form. They are used to make other iron and steel products through processes like rolling, cutting, and forging. The businesses claimed that these products of iron and steel are different from just "iron and steel (metal)."
The Court rejected the government's appeals and decided: 1. When understanding sections 33(1)(b)(B)(i)(a) and 80 I of the Income Tax Act of 1961, it's important to remember why tax breaks were given to certain important industries. The history shows that the government wanted to give tax breaks to industries important for the country's growth. Iron and steel, along with other metals, were always on these lists.
2. Tax breaks should be understood broadly to cover all manufacturing related to important industries. The only limit is what the specific rules say. Items 1 and 2 in the list make a distinction between the base metal and items made from it. Pig iron and iron scrap are put in furnaces to make ingots, billets, and blooms. These are all iron and steel in different forms, with the latter called "semi-finished steel." Similarly, bars, rods, rounds, and wire rods are finished forms of iron and steel. They need to be in these forms before manufacturers can use them to make things like wires, rails, pipes, and tubes.
3. Whether something is a raw material or an article made of iron and steel depends on the item itself, not the type of mill that makes it. The rules don't differentiate between basic steel mills, integrated steel mills, or other types of mills.
4. The government's instructions that machinery in "rolling mills" shouldn't get the higher tax break may not be correct. It shouldn't matter if the same machinery is used in rolling mills or other mills. If machinery in steel mills that make ingots, billets, bars, and rods gets the higher tax break, then the same machinery in rolling mills that make bars and rods from ingots or billets should also get the higher tax break.
5. When deciding this, the court shouldn't focus on how manufacturing is classified for other purposes. The court should look at the item being made and ask if it's a raw material for making other metal items or if it's already a finished article made of the metal.
6. In this case, the items are raw materials. The mild steel rods, bars, and rounds made by the businesses are finished forms of the metal, not articles made of iron and steel. They are raw materials used to make things like grills or windows by cutting or turning them. Rods and wire rods are finished forms of the metal, not products made from iron and steel.
7. Forgings and castings are articles made of iron and steel, so they are not covered by item 1. Items 11 and 21 were added to give tax breaks for these items. Even if mild steel rods, bars, and rounds aren't considered "iron and steel (metal)," they could be considered "forgings and castings" under item 11.
8. The High Court was correct in deciding that the businesses were entitled to the higher tax break, even if they only used iron scrap to make their products.
*(Case citations are omitted to avoid complexity)*
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tion (Criminal) No. 307 of 1988. (Under Article 32 of the Constitution of India) Ram Jethmalani, U.R. Lalit, Ms. Kamini Jaiswal and Arvind Nigam for the Petitioner. T.U. Mehta, Dushiant Dave, M.N. Shroff and Mrs. section Dikshit for the Respondents. The Judgment of the Court was delivered by RAY, J. The petitioner who is the brother of detenu, Adbul Latif Abdul Wahab Sheikh of Ahmedabad has challenged in this writ petition the order of detention dated May 23, 1988 passed by the respondent No. 1, the Commissioner of Police, Ahmedabad City, Gujarat issued under Section 3(2) of the Gujarat Prevention of AntiSocial Activities Act, 1985 and served on the detenu while the detenu was in custody at Sabarmati Central Prison under a judicial order of remand made by the Designated Court, Ahmedabad in respect of C.R. No. 40 of 1987, on the grounds inter alia that there has been absolute non application of mind on the part of the detaining authority 895 in clamping the order of detention and also on other grounds. In order to decide the various contentions raised in this writ petition, it is necessary to consider the back ground as well as the various orders of detention passed against the detenu by the detaining authority, the respond ent No. 1. On September 11, 1984, the detenu was served with a show cause notice under Section 59 of the Bombay Police Act, 1951 calling upon him to show cause as to why he should not be externed from the limits of Ahmedabad City Police Commissioner 's jurisdiction and its surrounding areas as also from the rural areas of Gandhinagar, Kheda and Mehsana District limits for the activities of February, 1983. In 1985 the detenu was arrested for alleged offences under Sections 307, 143, 147, 148, 149 and 324 of Indian Penal Code in C.R. No. 37 of 1985. On February 14, 1985 the detenu was granted bail in the said case by the Sessions Court, Ahmedabad. On March 18, 1985 communal riots broke out in Ahmedabad city and on March 24, 1985 an order of detention under the National Security Act was passed against the detenu by the respondent No. 1. During the communal riots one Police Sub Inspector, Mr. Rana was killed in Kalupur P.S.F.I.R. was lodged against the detenu and six other accused on May 9, 1985. In the FIR the detenu was named as accused No. 2. On July 6, 1985 charge sheet was submitted in C.R. No. 37 of 1985. On September 27, 1985 enquiry was completed in externment proceedings and arguments were heard. On November 12, 1985, the detenu surrendered to police and he was arrested and taken into custody. In the said case accused Nos. 6 and 7 were discharged, the detenu along with accused No. 4 was tried in the said charge by the Principal Judge, Sessions Court who by his Judgment dated May, 26, 1986 acquitted the detenu and the co accused after recording of the evidence of witnesses and considering the same. The detenu was, however, enlarged on bail by the Magistrate in the said case vide his order dated June 23, 1986 as no case was made out against the detenu under Sec tion 307 I.P.C. and the offence, if any, was only under Section 324 I.P.C. The detenu was released from jail on June 23, 1986 and immediately as he came out, an order of deten tion under the Prevention of Anti Social Activities Act (PASA) was served on the detenu there and then and he Was once again taken into custody. It is relevant to mention in this connection that on January 18, 1986 the order of ex ternment of the detenu from Ahmedabad City and rural areas of Gandhinagar etc. was made while he was in custody. The detenu preferred an appeal against the externment order which was heard by the Deputy Secretary (Home). The State Government confirmed the order of externment on June 23, 1986. On August 7, 1986, 896 the State Government revoked the order of detention dated June 23, 1986 on the ground that no Advisory Board was constituted. On the same day, however, the State Government passed the second order of detention under PASA and the same was served on the detenu on the same day. The detenu filed a Special Criminal Application No. 862 of 1986 challenging the externment order dated January 18, 1986 and its confirmation order dated June 23, 1986 before the High Court of Gujarat. The detenu also filed another Special Criminal Application No. 889 of 1986 before the High Court challenging the second order of detention dated August 7, 1986. The Special Crimi nal Application No. 889 of 1986 was dismissed by the High Court on October 21, 1986. Against this judgment the detenu filed a Special Leave Petition (Crl.) No. 3762 of 1986 before this Court and the said Petition was finally heard in part on January 23, 1987 and it was adjourned to February 3, 1987. This Court released the detenu on parole only on January 23, 1987 for the reason that the detenu was required to be in Ahmedabad because the Corporation elections were to take place on January 25, 1987. Unfortunately, the mother of the detenu expired on January 23, 1987, but in spite of the order of parole made by this Court, the State Government permitted the detenu to attend his mother 's funeral by granting him parole for only four hours and after the funer al, the detenu was again taken into custody. Thereafter, the detenu was released on parole on January 24, 1987. The elections for the Corporation were held on January 25, 1987 and the detenu was declared elected from all the wards from which he had contested. On February 3, 1987, the appeal of the detenu was heard finally by this Court and this Court extended the parole granted to him till the judgment was delivered in the case. However, on February 3, 1987 in spite of the orders of parole, the detenu was kept in custody and was released only on the next day i.e. February 4, 1987. This Court by its judgment dated February 9, 1987 quashed the detention order and directed the respondents to set the detenu at liberty forthwith. The detenu in terms of his earlier bail orders was required to be present before Kalupur P.S. every morning at 11 a.m. and he continued to do so from February 9 to Febru ary 14, 1987. On February 14, 1987 when the detenu reported at Kalupur P.S. along with his Advocate to record his presence, he was asked to wait there. At about 12.30 p.m., he was informed that he was taken into custody for breach of orders of externment dated January 18, 1986. The FIR against this case was registered and the detenu was produced before the Metropolitan Magistrate at about 1.30 p.m. The Metropol itan Magistrate 897 granted bail to the detenu. At that time the detenu received the news that disturbances had broken out in the city of Ahmedabad and, therefore, he declined to avail of the bail order and requested the Magistrate to take him into custody. On February 15, 1987, the order of detention under Section 8(a) of the National Security Act was passed against the detenu by the Commissioner of Police, Ahmedabad City. The detenu was served with the order which was confirmed by the State Government on February 18, 1987. This order of deten tion was challenged by the detenu by a writ petition under Section 32 of the Constitution of India before this Court being Writ Petition (Crl.) No. 246 of 1987. This Court issued rule returnable on April 4, 1987. Pending disposal of the writ petition, the detenu was released on April 3, 1987 by the AdviSory Board constituted under the National Securi ty Act. Furthermore, to harass the detenu two FIRs being C.R. Nos. 34 and 40 of 1987 were lodged against the detenu in Kalupur P.S. On June 22, 1987 the detenu on receiving notices of two meetings, one of the General Body and the other of Suez Refugee Committee of the Ahmedabad Municipal Corporation to be held on June 26 and June 23, 1987 respec tively, made an application to the Home Secretary, Govern ment of Gujarat seeking permission to visit Ahmedabad for one month. As no reply was received by the detenu, the detenu moved Crl. Petition No. 1345 of 1987 before the High Court for permission to visit Ahmedabad. the aforesaid Miscellaneous applications were rejected by the High Court. Thereafter, the detenu filed Special Leave Petition (Crl.) No. 1952 of 1987 before this Court against the impugned order of externment of the detenu for a period of two years with effect from January 18, 1986. Notice was issued on the said petition but as the period of externment expired, the said petition was finally disposed of by this Court. On October 16, 1987, the detenu was arrested by the police for an alleged offence committed by the detenu in respect of the incident of February 14, 1987 i.e. breach of externment order dated January 18, 1986. The detenu applied for bail to the Designated Court, Ahmedabad but the bail application was rejected vide order dated November 24, 1987. The detenu filed an appeal before this Court under Section 16 of the Terrorist and Disruptive Activities (Prevention) Act, 1985. This appeal being Criminal Appeal No. 316 of 1988 was dis posed of by this Court on April 27, 1988 setting aside the impugned order of the Designated Court rejecting application for bail and remitting the case to the Designated Court for a decision afresh. The Designated Court was also directed to enlarge the applicant on bail on such terms as it deems fit pending disposal of the application 898 for bail on merits. The respondents being afraid that this Court may allow the said Criminal Appeal No. 3 16 of 1987 made another order of detention on January 25, 1988 and served the order on the detenu on the same day. This deten tion order was made under Section 3 of the Gujarat Preven tion of Anti Social Activities Act, 1985. This order of detention was challenged by Criminal Writ Petition No. 114 of 1988 before this Court. Rule was issued and the petition was heard on merits. The detention order was withdrawn as the Advisory Board refused to confirm the order of deten tion. The detenu was released on March 14, 1988. The detenu accordingly went home. However, when Criminal Appeal No. 316 of 1988 came up for hearing before this Court on April 7, 1988 an allegation was made that detenu had absconded. This Court however, ordered on April 7, 1988 that the detenu should surrender within a week. In compliance of the said order the detenu surrendered on April 13, 1988 and on May 23, 1988 the order of detention was made as stated hereinbe fore. It has been stated in the writ petition that in the grounds of detention in support of the present order of detention dated May 23, 1988, no act on the part of the detenu is alleged between March 14, 1988 and April 13, 1988. It has also been stated that it was the only period of less than a month during which the detenu was a free man. After April 13, 1988 the detenu has been continuously in custody and prior to March 14, 1988 also the detenu was continuously in custody for nearly three years save for short periods during which he was released on parole by this Court. No prejudicial act has been alleged against the detenu during the days when the detenu was out on parole. It has been further stated that no prejudicial activity of any kind is alleged against the detenu after March 14, 1988 being the date on which the earlier order of detention stood revoked by virtue of the Advisory Board 's decision. The action of respondents is plainly vindictive in total defiance of law and disgraceful blot on any civilised admin istration of justice. It has also been stated that there has been no application of mind at all to the most glaring fact that the Designated Court in defiance of this Court 's order did not grant interim bail to the detenu by its order dated May 13, 1988. There was no possibility therefore, of the detenu being released on bail. It is impossible to justify the statement made in the grounds of detention that there are full possibilities that the detenu may be released on bail in this case. This statement, it has been stated is recklessly false. It has also been stated that the entire material which forms the basis of the present order of detention and the grounds of detention was available at the 889 time of the detention order of January 25, 1988. The detaining authority, the respondent No. 1 has filed an affidavit in reply. In para 16 of the said affidavit it has been stated that it is true that the detenu was released by the Advisory Board on April 3, 1987; but it is not true to say that two FIRs were lodged against the detenu with a view to harass him. These two FIRs i.e. C.R. Nos. 34 and 40 of 1987 were registered against the detenu on February 14, 1987 at P.S. Kalupur i.e. prior to the order dated April 3, 1987 passed by the State Government. C.R. No. 34/87 was registered at P.S. Kalupur against the detenu for breach of externment order while C.R. No. 40/87 was registered against the detenu at P.S. Kalupur for an offence of provocative speech made by the detenu. " In para 32, the respondent No. 1 merely denied the aver ments made in para 3(III) of the petition wherein it was specifically averred that there was no specific material for passing the detention order against the detenu. In para 34, the respondent No. 1 has denied the statement that there is no application of mind to the facts of the case stated in the petition. It has also been stated that the statement that there is no material to justify the action taken by the competent authority is not true. It appears from the grounds of detention which was served under section 9 of the said Act that three criminal cases have been mentioned. These are: 1. P.S. Kalupur U/s 25(a)(c) of Arms pending in Court Case No. 372/85 Act, Sections 4, 5 of Explosive Act. P.S. Kalupur U/s 120(b) of I.P.C. Pending for Case No. 456/87 U/s 25(1)(e)(c) of examination Arms Act and U/s (1) of the Terrorists Act, 1985 3. P.S. Kalupur U/s 307, 120(b) of IPC Pending for Case No. 2/88 U/s 3(1) of Terrorists examination. Act, U/s 4, 5 of Explo sives Act, U/s 25(1)(c) (1) of Arms Act and U/s 135(1) of Bombay Police Act. 900 It has also been stated therein that after careful consideration of the facts of the complaint of the aforesaid offences it is apprehended that detenu 's criminal activities will adversely affect the public order because the activi ties, the weapons kept by the detenu and his associates cannot except create terror in the State of Gujarat. It has been further stated that: "You are arrested for committing the said offences, even though you are released on bail from the Court. At present you are in jail in the case registered in Kalupur Police Station offence register No. 40/87 and there are full possibilities that you may be released on bail in this offence also. " Out of these cases in respect of Case No. 2/88 which was registered on January 2, 1988 the name of the detenu is not mentioned in the F.I.R. In Case No. 372/85 also which was registered on June 26, 1985, the name of the detenu is not in the FIR. The detenu, however, was arrested on October 17, 1987 i.e. after a lapse of more than two years and three months. In Case No. 456/87 which was registered on October 16, 1987, the detenu was arrested on October 16, 1987. This case related to the seizure of a revolver from the person of the detenu who kept the same without any licence in viola tion of the provisions of Arms Act. The detaining authority while issuing the order of detention against the detenu, the brother of the petitioner who is already in custody, did not at all consider the fact that the Designated Court declined to grant bail to the detenu by its order dated May 13, 1988 in Crl. No. 511 of 1988. The detaining authority also was not aware that no application for bail on behalf of the detenu was filed between May 13 to May 23, 1988 i.e. the date when the detention order was made. Had this fact been known to the detaining authority, the detaining authority could have considered whether in such circumstances he would have been subjectively satisfied on the basis of cogent materials, fresh facts and evidences that it was necessary to detain him in order to prevent him from acting in a manner prejudicial to the maintenance of public order. In Rameshwar Shaw vs District Magistrate, Burdwan & Anr., ; the petitioner_was detained by the order of the District Magistrate under the provisions of . The order recited that the District Magistrate was satisfied that it was necessary to detain the petitioner with a view to prevent him from acting in a manner prejudicial to the maintenance of public order. This 901 order was served on the petitioner while he was in jail custody as. an under trial prisoner in connection with a criminal case pending against him. It was urged on behalf of the petitioner that the detention was not justified under the provisions of Section 3(1)(a) of the Act and as such it was invalid. It was held that the satisfaction of the de taining authority under section 3(1)(a) is his subjective satisfaction and as such it is not justiciable. It is not open to the detenu to ask the Court to consider the question as to whether the said satisfaction of the detaining author ity can be justified by the application of objective tests. The reasonableness of the satisfaction of the detaining authority cannot be questioned in a court of law; the ade quacy of the material on which the said satisfaction pur ports to rest also cannot be examined by a court of law. It has also been observed that if any of the grounds furnished to the detenu is found to be irrelevant while considering the application of clauses (i) to (iii) of Section 3(1)(a) and in that sense of the Act, the satisfaction of the de taining authority on which the order of detention is based is open to challenge and the detention order is liable to be quashed. Similarly, if some of the grounds supplied to the detenu are so vague that they would virtually deprive the detenu of his right of making an effective representation that again may introduce a serious infirmity in the order of his detention. It has been further observed that an an abstract proposition of law, there may not be any doubt that Section 3(1)(a) of the Act does not preclude the authority from passing an order of detention against a person whilst he is in detention in jail but in deciding the question as to whether it is necessary to detain a person, the detaining authority has to be satisfied that if the said person is not detained he may act in a prejudicial manner and this conclu sion can be reasonably reached by the authority generally in the light of the evidence about the past prejudicial activi ties of the said person. The past conduct or antecedent history of a person can be taken into account in making a detention order, but the past conduct or antecedent history of the person, on which the authority purports to act, should ordinarily be proximate in point of time and would have a rational connection with the conclusion drawn by the authority that the detention of the person after his release is necessary. The detention of a person without a trial is a very serious encroachment on his personal freedom and so at every stage, all questions in relation to the said detention must be carefully and solemnly considered. The detaining authority considered the antecedent history and past conduct which was not proximate in point of time to the order of detention and as such the detention order was held to be not justified and so the same was set aside. 902 In Alijan Mian vs District Magistrate, Dhanbad and Ors. etc. , [1983] 4 SCC 301 detention orders were served on the petitioners in jail. The detaining authority was alive to the fact that the petitioners were in jail custody on the date of the passing of the detention orders as evident from the grounds of detention. It was stated therein that the position would have been entirely different if the petition ers were in jail and had to remain in jail for a pretty long time. In such a situation there could be no apprehension of breach of public order from the petitioners. But the detain ing authority was satisfied that if the petitioners were enlarged on bail, of which there was every likelihood, it was necessary to prevent them from acting in a manner preju dicial to public order. It was held that the pendency of a criminal prosecution is no bar to an order of preventive detention, nor is an order of preventive detention a bar to prosecution. it is for the detaining authority to have the subjective satisfac tion whether in such a case there is sufficient material to place a person under preventive detention in order to pre vent him from acting in a manner prejudicial to public order or the like in future. In Ramesh Yadav vs District Magistrate, Etah and Ors., the order of detention under section 3(2) of was made at a time when the petitioner had already been in Mainpur jail as an under trial prisoner in connection with certain pending criminal cases. The grounds of detention were served on the petition er along with the order of detention. The petitioner asked for certain papers with a view to making an effective repre sentation but when the request was rejected, the petitioner made a representation. The Board did not accept the peti tioner 's plea. The petitioner 's detention was confirmed by the State Government. This was challenged in the writ peti tion. Apart from specifying five grounds in the grounds of detention, a reference was made to the fact that the detenu creates public terror on account of his criminal activities which are absolutely prejudicial to ' the maintenance of public order. It was further mentioned in the detention order that though the petitioner was detained in district jail yet he filed an application for bail in the court of law and the same has been fixed for heating on September 17, 1984, and there is a positive apprehension that after having bail he will be out of jail and the detaining authority is convinced that after being released on bail he will indulge in activities prejudicial to the maintenance of public order. It was observed that: 903 "On a reading of the grounds, particularly the paragraph which we have extracted above, it is clear that the order of detention was passed as the detaining authority was apprehensive that in case the detenu was released on bail he would again carry on his criminal activi ties in the area. If the apprehension of the detaining authority was true, the bail appli cation had to be opposed and in case bail was granted, challenge against that order in the higher forum had to be raised. Merely on the ground that an accused in detention as an under trial prisoner was likely to get bail an order of detention under the should not ordinarily be passed. " In Suraj Pal Sahu vs State of Maharashtra and Ors., ; Sabyasachi Mukharji, J while agreeing with the views expressed in Ramesh Yadav vs District Magistrate, Etah & Ors., (supra) observed that the principle enunciated in the said case would have to be judged and applied in the facts and circumstances of each case. Where a person accused of certain offences whereunder he is undergoing trial or has been acquitted, the appeal is pending and in respect of which he may be granted bail may not in all circumstances entitle an authority to direct preventive detention and the principle enunciated by the aforesaid decision must apply but where the offences in respect of which the detenu is accused are so interlinked and continuous in character and are of such nature that these affect continuous maintenance of essential supplies and thereby jeopardize the security of the State, then subject to other conditions being fulfilled, a man being in detention would not detract from the order being passed for preventive detention. In Vijay Narain Singh vs State of Bihar & Ors., ; at 459 wherein an order of detention under Section 12(2) of Bihar Control of Crimes Act, 198 1 was served on the petitioner while he was in jail as an under trial pris oner in a criminal case under Section 302 I.P.C. and was allowed to be enlarged on bail by the High Court but not yet enlarged, it was held that: "It is well settled that the law of preventive detention is a hard law and therefore it should be strictly construed . the law of preventive detention should not be used merely to clip the wings of an accused who is in volved in a criminal prosecution. " 904 In the case of Raj Kumar Singh vs State or Bihar and Ors., ; Mukharji, J. observed that while adequacy or sufficiency is no ground for a challenge, rele vancy or proximity is relevant in order to determine whether an order of detention was arrived at irrationally or unrea sonably. It has been further observed that: "Preventive detention as reiterated is hard law and must be applied with circumspection rationally, reasonably and on relevant materi als. Hard and ugly facts make application of harsh laws imperative. The detenu 's rights and privileges as a free man should not be unnec essarily curbed. " In Binod Singh vs District Magistrate, Dhanbad, Bihar and Ors., ; at 420 21 the petitioner was arrested in connection with the criminal case and he was already in custody. The order of detention dated January 2, 1986 under Section 3(2) of was served on the petitioner in jail. It was observed by the Court that; " . . There must be awareness of the facts necessitating preventive custody of a person for social defence. If a man is in custody and there is no imminent possibility of his being released, the power of preventive detention should not be exercised. A bald statement is merely an ipse dixit of the officer. If there were cogent materials for thinking that the detenu might be released then these should have been made apparent. Eternal vigilance on the part of the authority charged with both law and order and public order is the price which the democracy in this country extracts from the public officials in order to protect the fundamental freedoms of our citizens." In Poonam Lata vs M.L. Wadhawan & Anr., ; the court observed that: "The fact that the detenu is already in deten tion does not take away the jurisdiction of the detaining authority in making an order of preventive detention. What is necessary in such a case is to satisfy the court when detention is challenged on that ground that the detaining authority was aware of the fact that the detenu was already in custody and 905 yet he was subjectively satisfied that his order of detention became necessary. " In Smt. Shashi Aggarwal vs State of U.P. and Ors. , ; at 440 the detenu was detained by the District Judge, Meerut by an order dated August 3, 1987 made under Section 3(2) of . The detention order was approved by the State Government on receipt of the opinion of the Advisory Board. It was chal lenged by a writ petition before this Court. The Court observed that: "In the instant case, there was no material made apparent on record that the detenu, if released on bail, is likely to commit activi ties prejudicial to the maintenance of public order. The detention order appears to have been made merely on the ground that the detenu is trying to come out on bail and there is enough possibility of his being bailed out. We do not think that the order of detention could be justified on that basis. " On a consideration of the aforesaid decisions the prin ciple that emerges is that there must be awareness in the mind of the detaining authority that the detenu is in custo dy at the time of service of the order of detention on him and cogent relevant materials and fresh facts have been disclosed which necessitate the making of an order of deten tion. In this case, the detenu was in jail custody in con nection with a criminal case and the order of detention was served on him in jail. It is also evident that the applica tion for bail filed by the detenu was rejected by the Desig nated Court on 13th May, 1988. It is also not disputed that thereafter no application for bail was made for release of the detenu before the order of detention was served on him on 23rd May, 1988. It appears that in the grounds of deten tion there is a statement that at present you are in jail yet "there are full possibilities that you may be released on bail in this offence also. " This statement clearly shows that the detaining authority was completely unaware of the fact that no application for bail was made on behalf of the detenu for his release before the Designated Court and as such the possibility of his coming out on bail is non exist ent. This fact of non awareness of the detaining authority, in our opinion, clearly establishes that the subjective satisfaction was not arrive&at by the detaining authority on consideration of relevant materials. There is also nothing to show from the grounds of detention nor any fresh facts have been disclosed after the detention order dated January 25, 1988 was set aside by the Advis 906 ory Board on March 13, 1988, on the basis of which the detaining authority could come to his subjective satisfac tion that the detenu, if released on bail will indulge in acts prejudicial to the maintenance of public order and as such an order of detention is imperative. In the grounds of detention three criminal cases have been mentioned. Out of those three criminal cases, criminal case No. 372/85 was lodged on June 26, 1985 i.e. much before the present deten tion order and several orders of detention were made in the meantime. This criminal case is, therefore, not proximate in time to the making of the order of detention. So it is a stale ground. Another criminal case No. 456/87 is dated October 16, 1987 on the basis of which the previous order of detention was made. This case has nothing to do with the maintenance of public order as it pertains to the recovery of a revolver from the detenu on a search of the person of the detenu, without any valid licence under the Arms Act. The third case No. 2/88 is dated January 2, 1988. This case was in existence at the time of making of the detention order dated January 25, 1988. Moreover, the name of the detenu is not in the F.I.R. The statements of some of the associates of the detenu have been annexed to the grounds of detention. These statements do not disclose any activity after 14th March, 1988 or any activity of the time when the detenu was a free person. Considering all these facts and circumstances we are constrained to hold that there has been no subjective satisfaction by the detaining authority on a consideration of the relevant materials on the basis of which the impugned order of detention has been clamped on the detenu. It also appears that the detenu was in detention as well as in jail custody for about three years except released on parole for short; periods. The only period during which he was a free person was from 14th March, 1988 to 13th April, 1988. During this period no act prejudicial to the maintenance of public order has been alleged to have been committed by the detenu. It is convenient to mention here that Section 15(2) of PASA Act says that a detention order may be revoked by State Government; but such revoca tion on expiry of detention order will not bar making of a fresh detention order provided where no fresh facts have arisen after expiry or revocation of the earlier detention order made against such person. The maximum period of deten tion in pursuance of subsequent detention order cannot extend beyond twelve months from the date of detention of earlier order. This Court in considering similar provision in Section 13(2) of in Kshetra Gogoi vs The State of Assam, ; at 43 held the order of detention as illegal stating that: " . . Under Section 13(2) what is required is that fresh 907 facts should have arisen after the expiry of the previous detention. Facts arising during the period of detention are, therefore, not relevant when applying the provisions of Section 13(2). " It is highlighted in this connection that in the affida vit in reply filed by the respondent No. 1, the detaining authority, he merely denied the specific averments made in para 3(III) that no act prejudicial to the maintenance of law and order on the part of the detenu is alleged to have been committed by the detenu between 14th March to 13th April, 1988 etc. without specifically denying those state ments. In this background, a mere bald statement that the detenu who is in jail custody is likely to be released on bail and there are full possibilities that he may continue the above offensive activities without reference to any particular case or acts does not show on the face of the order of detention that there has been subjective satisfac tion by the detaining authority in making the order of detention in question. We, therefore, quash the order of detention and direct the respondents to set the detenu at liberty forthwith. Y.L. Petition allowed.
|
The Commissioner of Police, Ahmedabad, Respondent No. 1 therein passed an order of detention dated 23.5.1988 against Abdul Latif Abdul Wahab, petitioner 's brother under section 3(2) of the Gujarat Prevention of Anti Social Activities Act, 1985 and served the same on the detenu, while he was in jail, in pursuance of an order of remand made by the Desig nated Court, Ahmedabad in CR No. 40 of 1987.
The petitioner, detenu 's brother challenged the validity of this order on the ground, amongst others, that there has been absolute non application of mind on the part of the detaining author ity in making the order of detention.
The grounds of detention furnished to the detenu, makes mention of three criminal cases viz. Case No. 372/85, Case No. 456/87 and Case No. 2/88 pending against the detenu at P.S. Kalupur, out of which case No. 372/85 is stated to be pending in Court and the other two pending for examination.
The detaining authority acting on the basis of the said complaints apprehended that detenu 's criminal activities will adversely affect the public order because the activi ties, the weapons kept by the detenu and his associates cannot except create terror in the State of Gujarat.
The detaining authority further felt that the detenu though in jail, there are full possibilities that he may be released on bail in that offence.
It may be pointed out that in case No. 2/88, the name of the detenu does not find place in the FIR.
Likewise in case No. 372/85 aforesaid, detenu 's name is not there.
891 In case No. 456/87, registered on 16.10.87 the detenu was arrested the same day.
The case related to the seizure of a revolver from the person of detenu.
The detaining authority while issuing the order of detention against the detenu, did not at all consider the fact that the Designated Court declined to grant bail to the detenu by its order dt.
May 13, 1988.
The detaining authority also was not aware that no application for bail by detenu was filed between May 13 to May 23, 1988 i.e. when the detention order was made.
The Court in order to decide the various contentions advanced by the parties felt it necessary to consider the background as well as the various detention orders passed against the detenu.
The first in the series is an order dt.
11th September, 1984 when the Respondent No. 1 issued to the detenu a notice to show cause why he should not be externed from the boundaries of Ahmedabad and the surroundings rural areas.
In 1985 the detenu was arrested u/s 307, 143, 147, 148 & 324, I.P.C. CR case No. 37/85 wherein he was granted bail by the Sessions Judge on February 14, 1985.
On 24th March 1985, Commr. of Police passed an order of detenu 's detention.
On 6th July 1985 charge sheet in CR Case No. 37 of 1985 was submitted.
On 27th September, 1985 inquiry into the externment proceedings was completed.
On Dec. 12, 1985 the detenu surrendered and was taken into custody.
On May 26, 1986, the detenu was acquitted in that case.
The detenu was released from the jail on June 23, 1986 and as soon as he came out of the jail, an order of detention under Preven tion of Anti Social Activities Act was served on the detenu there and then and he was once again taken into custody.
It may be mentioned in this connection that on Jan. 18, 1986, the order of externment of the detenu from Ahmedabad city and rural areas of Gandhi Nagar etc. was made when the detenu was in jail.
The State Govt.
on appeal by the detenu confirmed the order of externment.
However on August 7, 1986, the Govt.
revoked the order of detention, as Advisory Board could not be constituted.
On the same day the State Govt.
passed the second order of detention under PASA and the same was served on the detenu the same day.
The detenu challenged the validity of both the externment order as also the detention order in the High Court.
The High Court re jected the petition challenging the order of detention and he filed petition for special leave in this Court.
This Court released the detenu on parole on 23.1.87 as he was to participate in municipal elections which were to take place on 25th Jan. 1987.
The detenu was released on parole on 24th Jan. 1987.
He won the election from all the wards wherefrom he had contested.
This Court on February 9, 1987 quashed the detention order and 892 directed the respondents to set the detenu at liberty.
On February 14, 1987 when the detenu went to the police station with his advocate to mark his presence as required by the earlier bail order, he was again taken into custody for breach of order of externment of 18.1.1986.
He was granted bail.
On February 15, 1987 an order of detention under section 8(a) of the National Security Act was passed against the detenu.
The detenu challenged the same but in the meantime Advisory Board released him.
On October 16, 1987, the detenu was again arrested for an incident of Feb. 14, 1986.
He applied for bail before the Designated Court which was refused.
Against that order he preferred an appeal to this Court under section 16 of the Terrorists and Disruptive Activities (Prevention) Act 1985.
This Court set aside the order of the Designated Court and remitted the matter back to the said Court with a direction to decide the matter afresh and enlarge the detenu on bail pending the disposal of the application for bail.
Another order of detention was passed against the detenu on Jan. 25, 1988 which was later withdrawn as the Advisory Board declined to confirm the same.
The detenu was released on March 14, 1988.
At the hearing of the appeal by this Court on 7.4.88 an application was made that the detenu has absconded whereupon this Court ordered that the detenu should surrender within a week 's time.
He accordingly surrendered on April 13, 1988.
On May 23, 1988 the order of detention in question was made which is hereby challenged.
The contention raised on behalf of the petitioner is that in the grounds of detention furnished in support of the order of detention, no prejudicial act on the part of the detenu is alleged between March 14, 1988 and April 13, 1988 during which small period he was a free man; as he was in jail for nearly three years prior to March 14, 1988 except for short periods when he was on parole, and after April 13, 1988 again he was under custody.
It is urged that no preju dicial activity has been shown, when the detenu was on parole.
As such the action of the respondent is wholly vindictive and in total defiance of law.
According to him there has been no application of mind at all to the most glaring fact that the Designated Court in defiance of this Court 's order did not grant interim bail to the detenu by its order dt.
13.5.88.
There was no possibility therefore of the detenu being released on bail.
It was thus impossi 893 ble to prove the statement made in the grounds of detention that there were full possibilities that the detenu may be released on bail in this case.
Allowing the petition, this Court, HELD: The detention of a person without a trial is a very serious encroachment on his personal freedom and so at every stage, all questions in relation to the detention must be carefully and solemnly considered.
[901G] The past conduct or antecedent history of a person can be taken into account in making a detention order but the past conduct or antecedent history of the person, on which the authority purports to act, should ordinarily be proxi mate in point of time and would have a rational connection with the conclusion drawn by the authority that the deten tion of the person after his release is necessary.
[901F G] There must be awareness in the mind of the detaining authority that the detenu is in custody at the time of service of the order of detention on him, and cogent rele vant materials and fresh facts have been disclosed which necessitate the making of an order of detention.
[905D E] In the instant case, the detenu was in jail custody in connection with a criminal case and the order of detention was served on him in jail.
It is also evident that the application for bail filed by the detenu was rejected by the Designated Court on May 13, 1988.
The statement in the grounds of detention that at present you are in jail yet "there are full possibilities that you may be released on bail in this offence also" clearly shows that the detaining authority was completely unaware of the fact that no appli cation for bail was made on behalf of the detenu for his release before the Designated Court and as such the possi bility of his coming out on bail is non existent.
This fact of non awareness of the detaining authority clearly estab lishes that the subjective satisfaction was not arrived at by the detaining authority on consideration of relevant materials.
The only period during which he was free person was from March 14, 1988 to April 13 1988.
During this period no act prejudicial to the maintenance of public order has been alleged to have been committed by the detenu.
[905E G; 906E F] A mere bald statement that the detenu is in jail custo dy is likely to be released on bail and there are full possibilities that he may continue 894 the offensive activities without reference to any particular case or acts does not show on the face of the order of detention that there has been subjective satisfaction by the detaining authority in making the order of detention in question.
[907C D] The order of detention was accordingly quashed and the detenu directed to be set at liberty forthwith.
[907D] Rameshwar Shaw Burdwan & Anr.
vs Distt.
Magistrate Burdwan & Anr., ; referred to; Alijan Mian vs Distt.
Magistrate Dhanbad & Ors.
, [1983] 4 SCC 301 referred to; Ramesh Yadav vs Distt.
Magistrate, Etah & Ors., referred to; Suraj Pal Sahu vs State of Maharashtra & Ors., ; referred to; Vijay Narain Singh vs State of Bihar & Ors., referred to; Raj Kumar Singh vs State of Bihar & Ors., ; referred to; Binod Singh vs Distt.
Magis trate Dhanbad & Ors., ; at 420 21; Poonam Lata vs
M.L. Wadhawan and Anr., ; referred to and Smt.
Shashi Aggarwal vs State of U.P. & Ors., ; at 440, referred to.
|
The police chief of Ahmedabad made an order on May 23, 1988, to hold Abdul Latif Abdul Wahab, the petitioner's brother. This was under a law to prevent anti-social behavior in Gujarat. The order was given to him while he was in jail, following a court order related to a previous case.
The petitioner, the brother of the person being held (detenu), argued that the order was not valid. He said the police chief did not properly consider the situation when making the order.
The reasons for the detention mentioned three criminal cases against the detenu at a police station. One case was ongoing in court, and the other two were still under investigation.
The police chief believed the detenu's actions would negatively affect public order. They thought the detenu's activities and weapons would create fear in Gujarat.
The police chief also believed that even though the detenu was in jail, he might be released on bail.
In one of the cases, the detenu's name was not in the initial police report (FIR). In another case, the detenu's name was also missing.
In the third case, the detenu was arrested on the same day it was registered, October 16, 1987. This case involved a revolver found on the detenu.
When ordering the detention, the police chief didn't consider that the court had already refused to grant the detenu bail on May 13, 1988.
The police chief also didn't know that the detenu hadn't applied for bail between May 13 and May 23, 1988, when the detention order was made.
To make a decision, the Court felt it needed to look at the history of the case and previous detention orders against the detenu.
The first order was on September 11, 1984. The police told the detenu to explain why he shouldn't be banned from Ahmedabad and surrounding areas.
In 1985, the detenu was arrested for a case involving serious charges. He was released on bail by a judge on February 14, 1985.
On March 24, 1985, the police chief ordered the detenu's detention. On July 6, 1985, the police filed a charge sheet (official accusation) in the case.
On September 27, 1985, the investigation into banning the detenu was finished. On December 12, 1985, the detenu turned himself in and was arrested.
On May 26, 1986, the detenu was found not guilty in that case.
The detenu was released from jail on June 23, 1986. As soon as he left, he was given another detention order under the law to prevent anti-social activities and taken back into custody.
On January 18, 1986, an order banning the detenu from Ahmedabad and nearby areas was made while he was in jail.
The state government agreed with the ban after the detenu appealed. However, on August 7, 1986, the government canceled the detention order because an advisory board (a group that reviews detention cases) could not be formed.
On the same day, the government issued a second detention order under the same law and gave it to the detenu.
The detenu challenged both the ban and the detention order in the High Court. The High Court rejected the challenge to the detention order, and he appealed to a higher court.
This higher court released the detenu on parole (temporary release) on January 23, 1987, so he could participate in local elections.
The detenu was released on parole on January 24, 1987. He won the election in all the areas he ran in.
On February 9, 1987, this Court canceled the detention order and told the authorities to release the detenu.
On February 14, 1987, when the detenu went to the police station with his lawyer as required by his earlier bail, he was arrested again for violating the ban order from January 18, 1986.
He was granted bail. On February 15, 1987, another detention order was issued under the National Security Act.
The detenu challenged this order, but the advisory board released him. On October 16, 1987, the detenu was arrested again for an incident from February 14, 1986.
He asked the court for bail, but it was refused. He appealed this decision to a higher court under a law dealing with terrorism.
This Court overturned the lower court's decision and sent the matter back, ordering the lower court to reconsider bail and release the detenu while the application was being decided.
Another detention order was issued against the detenu on January 25, 1988, but it was later withdrawn because the advisory board didn't approve it.
The detenu was released on March 14, 1988. During a court hearing on April 7, 1988, it was said that the detenu had run away. The Court ordered him to surrender within a week.
He surrendered on April 13, 1988. On May 23, 1988, the current detention order was made, which is now being challenged.
The petitioner argues that the reasons given for the detention don't show any harmful actions by the detenu between March 14, 1988, and April 13, 1988, when he was free. He had been in jail for about three years before March 14, 1988, except for short periods on parole, and was back in custody after April 13, 1988.
It's argued that no harmful activity has been shown while the detenu was on parole. Therefore, the authorities' actions are unfair and against the law.
According to the petitioner, the authorities didn't properly consider that the court, ignoring a higher court's order, didn't grant the detenu temporary bail on May 13, 1988.
Therefore, it was impossible for the detenu to be released on bail. It was thus impossible to prove the statement made in the grounds of detention that there were full possibilities that the detenu may be released on bail in this case.
Allowing the petition, this Court, HELD: Detaining someone without a trial is a serious violation of their freedom. Therefore, all questions about the detention must be carefully considered.
A person's past behavior can be considered when making a detention order. But this past behavior should be recent and related to the reason for the detention. It would have a sensible link to why the authorities thought the person needed to be detained after release.
The authorities must know that the person is in custody when the detention order is given. They must also have new and relevant information that makes the detention necessary.
In this case, the detenu was in jail for a criminal case, and the detention order was given to him there. The court had rejected his bail application on May 13, 1988.
The statement in the detention order that "there are full possibilities that you may be released on bail in this offense also" shows that the authorities didn't know that the detenu hadn't applied for bail and therefore had no chance of being released.
This lack of awareness shows that the authorities didn't make their decision based on relevant information.
The only time the detenu was free was from March 14, 1988, to April 13, 1988. During this time, he wasn't accused of any actions that harmed public order.
A simple statement that the detenu is in jail, might be released on bail, and might continue harmful activities, without mentioning specific cases or actions, doesn't prove that the authorities properly considered the situation when making the detention order.
The court canceled the detention order and ordered the detenu to be released immediately.
Rameshwar Shaw Burdwan & Anr. vs Distt. Magistrate Burdwan & Anr., ; referred to; Alijan Mian vs Distt. Magistrate Dhanbad & Ors. , [1983] 4 SCC 301 referred to; Ramesh Yadav vs Distt. Magistrate, Etah & Ors., referred to; Suraj Pal Sahu vs State of Maharashtra & Ors., ; referred to; Vijay Narain Singh vs State of Bihar & Ors., referred to; Raj Kumar Singh vs State of Bihar & Ors., ; referred to; Binod Singh vs Distt. Magistrate Dhanbad & Ors., ; at 420 21; Poonam Lata vs M.L. Wadhawan and Anr., ; referred to and Smt. Shashi Aggarwal vs State of U.P. & Ors., ; at 440, referred to.
| 4,963
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Appeal No. 874 of 1975. Appeal by Special Leave from the Judgment and Order dated 5 3 75 of the Rajasthan High Court in D.B. Civil Appeal No. 18 of 1975. M.C. Bhandare, S.M. Jain, S.K. Jain and Mohd. Fasiuddin, for the Appellant. P.C. Bhartari, for Respondent No. 3. K.J. John, for Respondent No. 4. The Judgment of the Court was delivered by GOSWAMI, J. The appellant and the respondents 3 and 4 were the former existing stage carriage operators of Jaipur Sainthal route which was nationalised on January 25, 1973. All of them applied for the grant of non temporary stage carriage permits of Jaipur Padampura route as alterna tive route permits. The Regional Transport Authority, Jaipur (briefly the RTA) by it 's order of July 22, 1974, granted nontemporary permits to the appellant and respondent No. 4 and rejected the application of respondent No. 3. That led to an appeal to the State Transport AppeLlate Tribunal at Jaipur, Rajasthan, by respondent 460 No. 3. The notice of appeal was served upon the appellant but since he did not appear the appeal was heard ex parte and by its order dated December 17, 1974, the State Trans port Appellate Tribunal set aside the order of the RTA and granted the permit in favour of respondent No. 3. The appellant filed a writ application under Article 226 of the Constitution before the Rajasthan High Court and the learned single Judge by a rather long speaking order dismissed the same summarily. A further appeal by the appellant to the Division Bench met with the same fate. The High Court also refused to grant certificate to appeal to this Court. Hence this appeal by special leave. Mr. Bhandare, the learned counsel on behalf of the appellant, submits that the order of the State Transport Appellate Tribunal (briefly the Tribunal) is invalid inas much as the appeal was heard in the absence of a proper notice of appeal as required under the law. He draws our attention to rule 108(c) of the Rajasthan Motor Vehicles Rules. 1951, which reads as follows : "Upon receipt of an appeal preferred in accordance with sub rule (b) the Appellate Tribunal may appoint a date, time and place for hearing of the Appeal, giving the State Transport Authority, or the Regional Transport Authority, as the case may be, and the appellant. not less than thirty days notice thereof". Although the above rule does not contain any provision for service of notice on the respondent, it is, however, implic it that a notice similar to one intended under the rule for service on the appellant must also be served on the respondent. Mr. Bhandare could not dispute the factual service of notice on the appellant in view of the Tribunal 's finding. He however, submits that the notice which was served on the appellant did not recite the place for the hearing of the appeal although the date and time were noted therein. It is true that the Tribunal could not, in law, hear the appeal without intimating the respondent. about the date, time and place for hearing of the appeal but since the appellant had received the notice from the Tribunal indicat ing the date and time for hearing of the appeal, the omis sion in the notice to describe the place where the appeal is to be heard is not fatal enough to make the appeal proceed ing invalid before the Tribunal. The appellant, admittedly, is a resident of Jaipur where also the office of the Tribu nal is situated. He was also a stage carriage permit holder and not a stranger to the office of the Transport Authori ties. Besides, although the notice of the appeal fixed the date of hearing on October 8, 1974, the appeal was adjourned on that day to October 21, 1974 and again to November 12, 1974 and it was only on December 12, 1974 that the final hearing of the appeal took place. It is, therefore, clear that the appellant was duly notified about the hearing of the appeal and in view of the fact that he did not make any effort to be present during this entire period, when the appeal was pending, he could not be allowed to take advan tage of the mere omission of the place of hearing of the appeal in the notice. Besides, the RTA was present as provided for under section 64(1) of the (briefly the Act) before the Tribunal to defend its own order. The submission of the appellant is, therefore, of no avail. 461 Mr. Bhandare next submits that the Tribunal failed to comply with section 47 of the Act and did not at all consid er the relevant matters (a) to (f) provided therein. It is well settled that in considering an application for a stage carriage permit the RTA shall have regard to the matters described in section 47. Before we go to consider about the submission of the learned counsel with reference to the order of the Tribunal it is manifest, on the face of the order of the RTA, that Authority, even at the first in stance, did not make any reference to the relevant consider ations under section 47 of the Act. The only reason given by the RTA in rejecting the application of respondent No. 3 is that "there is no other vacancy". There is nothing to show that the case of respondent No. 3 was at all considered by the RTA on merits. The Tribunal, on the other hand, has considered various aspects of the matter although without a reference to section 47 as such. For example, the condition of the vehicles of the two parties was duly considered by the Tribunal. The fact that the respondent 3 had a later model of vehicle being 1965 model whereas the appellant had only a 1962 model vehicle tilted the balance in favour of the respondent No. 3. This aspect can well arise under clauses (a) and (b) of section 47. We are unable to say that the relevant considerations under section 47, on the facts and circumstances of the grant of the particular permit, were not kept in view by the Tribunal in considering the appeal. The Tribunal and the learned single Judge duly considered the whole matter and the Division Bench was justified in summarily rejecting the special appeal. The second submission of the learned counsel also fails. In the result the appeal is dismissed but we will make no order as to costs. P.H.P. Appeal dismissed.
|
The appellant and respondents No. 3 and 4 applied for the grant of nontemporary stage carriage permits.
The Regional Transport Authority granted the permits to the appellant and respondent No. 4 and rejected the application of respondent No. 3.
Respondent No. 3 filed an appeal to the State Transport Appellate Tribunal.
The notice of appeal was served upon the appellant where the date and time were mentioned but the place was not mentioned.
Since the appellant did not appear the appeal was heard ex parte.
The Tribunal set aside the order of the Transport Authority and granted the permit in favour of respondent No. 3.
A writ petition filed by the appellant against the order of the Tribunal was dismissed summarily by the learned Single Judge by a long speaking order.
A Division Bench dismissed the appeal filed by the appellant.
In an appeal by Special Leave the appellant contended: 1.
The notice as required by rule 108(c) of the Rajasthan Motor Vehicles Rules, 1951 served on the appellant was not proper notice since it did not mention the place of the hearing of the appeal.
The Tribunal did not consider the relevant matters as mentioned in section 47(a) to (f).
HELD: 1.
The omission to mention the place is not fatal.
The appellant is a resident of Jaipur where also the office of the Tribunal is situated.
He was a Stage Carriage permit holder and not a stranger to the Transport authorities.
In fact, hearing of the appeal was adjourned twice even after the date mentioned in the notice.
[460 F] 2.
The Regional Transport Authority did not make any reference to the relevant considerations under section 47 of the Act.
The Tribunal on the other hand has considered various aspects of the matter as required by section 47 although without a reference to that section.
The Tribunal and the learned Single Judge duly considered the whole matter and the Division Bench was justified in summarily rejecting the special appeal.
[461 B D]
|
Someone applied for permission to run a bus service.
The local transportation group gave permission to one person and one company, but not to another person.
That person who was denied permission appealed the decision to a higher transportation board.
The company that got permission was told about the appeal, including when it would happen. But the notice didn't say where the appeal hearing would be.
Because the company didn't show up, the appeal was heard without them being there to argue their side.
The transportation board changed the original decision and gave permission to the person who had appealed.
The company that originally got permission filed a legal challenge against the board's decision. But a judge quickly dismissed it with a detailed explanation.
A group of judges then dismissed the company's appeal of that decision.
The company then asked for special permission to appeal again. They argued that: 1.
The notice they received about the first appeal was not good enough because it didn't say where the hearing would be, as required by transportation rules.
The transportation board didn't think about the important things they were supposed to consider when making their decision.
The court decided: 1.
Leaving out the location in the notice wasn't a big problem.
The company was located in the same city as the transportation board.
The company already had permission to run a bus service, so they weren't new to dealing with transportation officials.
The appeal hearing was actually delayed twice, even after the date that was on the notice.
2.
The local transportation group didn't say they considered the important factors they should have when making their decision.
But the transportation board did think about those factors, even though they didn't specifically mention them.
The transportation board and the judge both carefully considered the situation. The group of judges was right to quickly dismiss the appeal.
| 3,605
|
o. 115 of 1956, and Petition No. 132 of 1956. Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights. B. D. Sharma, for the petitioners. C. K. Daphtary, Solicitor General of India, Porus A. Mehta and R. H. Dhebar, for the respondents, 651 1957. February 13. The Judgment of the Court was delivered by section K. DAS J. These two petitions for the issue of appropriate writs restraining the respondents from prosecuting and trying the two petitioners 'on certain criminal charges in circumstances to be presently stated, raise the same question of law and have been heard together. This judgment will govern them both. Baij Nath Prasad Tripathi, petitioner in Petition No. 115 of 1956, was a Sub inspector of Police in the then State of Bhopal. He was prosecuted in the Court of Shri B. K. Puranik, Special Judge, Bhopal, and convicted of offences under section 161, Indian Penal Code, and section 5 of the Prevention of Corruption Act, 1947. He was sentenced to nine months ' rigorous imprisonment on each count. He preferred an appeal against the conviction and sentences to the Judicial Commissioner of Bhopal. The Judicial Commissioner held by his judGment dated March 7, 1956, that no sanction according to law had been given for the prosecution of the petitioner and the Special JudGe had no jurisdiction to take cognizance of the case; the trial was accordingly ab initio invalid and liable to be quashed. He accordingly set aside the conviction and quashed the entire proceedings before the Special Judge. He then observed: "The parties would thus be relegated to the position as if no legal charge sheet had been submitted against the appellant." On April 4, 1956, the Chief Commissioner of Bhopal passed an order under section 7(2) of the Criminal Law Amendment Act, 1952 (No. XLVI of 1952) that the petitioner shall be tried by Shri section N. Shri vastava, Special Judge, Bhopal, for certain offences under the Prevention of Corruption Act read with section 161, Indian Penal Code. The case of the petitioner is that he cannot be prosecuted and tried again for the same offences under the aforesaid order of April 4, 1956. Sudhakar Dube, petitioner in Petition No. 132 of. 1956, was also a Sub Inspector of Police in the then State of Bhopal. He was also prosecuted in the Court of Shri B. K. Puranik, Special Judge, Bhopal, on a 84 652 charge of having accepted illegal gratification for showing official favour to one Panna Lal. The learned Special Judge by an order dated January 10, 1956, came to the conclusion that no legal sanction for the prosecution of the petitioner had been given by the competent authority and the sanction given by the Inspector. General of Police was not valid in law; he therefore held that the whole trial was null and void and he could not take cognizance of the offences in question. Accordingly he quashed the proceedings. On February 7, 1956, the Chief Secretary to the Government of Bhopal accorded fresh sanction for the prosecution of the petitioner for offences under section 161, Indian Penal Code, and section 5 of the Prevention of Corruption Act. The petitioner then moved this Court for appropriate writs restraining the respondents from prosecuting and trying him for the offences stated in the fresh sanction aforesaid. On behalf of both the petitioners the contention is that by reason of cl. (2) of article 20 of the Constitution and section 403 of the Code of Criminal Procedure, the petitioners cannot now be tried 'for the offences in question. It is necessary to read here some of the relevant sections bearing on the point at issue. Section 6 of the Criminal Law Amendment Act, 1952 (prior to the amendment made in 1955), so far as is relevant for our purpose, is in these terms : "6. (1) The State Government may, by notification in the Official Gazette, appoint as many special Judges as may be necessary for such area or areas as may be specified in the notification Co try the following offences, namely: (a) an offence punishable under section 161, section 165, or section 165 A of the Indian Penal Code (Act XLV of 1860), or sub section (2) of section 5 of the Prevention of Corruption Act, 1947 (II of 1947); (b) any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a" '. Sub section (1) of section 7 of the same Act lays down: "7. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or in 655 any other law the offences specified in subsection (I of section 6 shall be triable by special Judges only". The same section also states that when trying any case, a special Judge may also try any offence other than an offence specified in section 6 with which the accused may, under the Code of Criminal Procedure, 1898, be charged at the same trial. It is not necessary for our purpose to read the other sections "of the Criminal Law Amendment Act, 1952. We then go to the Prevention of Corruption Act, 1947, section 6 whereof is relevant for our purpose. That section is in these terms: " 6. (1) No Court shall, take cognizance of an offence punishable under section 16l or section 165 of the Indian Penal Code or under sub section (2) of section 5 of this Act, alleged to have been committed by a public servant except with the previous sanction,(a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save by or with the sanction of the Central Government. . [of the] Central Government; (b) in the case of a person who is employed in connection with the affairs of [a State] and is not removable from his office save by or with the sanction of the State Government. . . [of the] State Government; (c) in the case of any other person, of the authority competent to remove him from his office. (2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove, the public servant from his office at the time when the offence was alleged to have been committed. " It is under this section that sanction was necessary for the prosecution of the petitioners. Clause (2) of article 20 of the Constitution, on which the petitioners rely, states: 654 "No person shall be prosecuted and punished for the same offence more than once. " Section 403 (1) of the Code of Criminal Procedure, on which learned counsel for the petitioners has placed the greatest reliance, is in these terms: " A person who has once been tried by a Court of competent jurisdiction for ail offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under section 236, or for which he might have been convicted under section 237." Now, it is necessary to state that the point taken by learned counsel for the petitioners is really concluded by three decisions (a) one of the Privy Council,(b) another of the Federal Court and (c) the third of this Court itself. The Privy Council decision is in Yusofalli Mulla vs The King (1); the Federal Court decision in Basdeo Agarwalla vs King Emperor (2) ; and the decision of this Court (not yet reported) was given in Budha Mal vs State of Delhi (3) on October 3, 1952. The Privy Council decision is directly in point, and it was there held that the whole basis of section 403 (1) was that the first trial should have been before a Court competent to hear and determine the case and to record a verdict of conviction or acquittal; if the Court was not so competent, as for example where the required sanction for the prosecution was not obtained, it was irrelevant that it was competent to try other cases of the same class or indeed the case against the particular accused in different circumstances, for example if a sanction had been obtained. So is the decision of this Court where the following observations were made with regard to the point in question: " Section 403, Criminal Procedure Code, applies to cases where the acquittal order has been made by a Court of competent jurisdiction but it does not bar (1) A.I.R. 1949 P.C. 264. (2) (3) Criminal Appeal No. 17 Of 1952 decided on October 3, 1952. 655 a retrial of the accused in cases where such an order has been made by a court which had no jurisdiction to take cognizance of the case. It is quite apparent on this record that in the absence of a valid sanction the trial of the appellant in the first instance was by: a magistrate who had no jurisdiction to try him. " After the pronouncements made in the decisions referred to above, it is really unnecessary to embark on a further or fuller discussion of the point raised, except merely to state that we have heard learned counsel for the petitioners who made a vain attempt with a crusading pertinacity worthy of a better cause, to show that the Privy Council decision was wrong and the decision of this Court required reconsideration, and having heard learned counsel in full, we are of the view that the decisions referred to above state the legal position correctly. It is clear beyond any doubt that el. (2) of article 20 of the Constitution has no application in these two cases. The petitioners are not being prosecuted and punished for the same offence more than once,, the earlier proceedings having been held to be null and void. With regard to section 403, Code of Criminal Procedure, it is enough to state that the petitioners were not tried, in the earlier proceedings, by a Court of competent jurisdiction, nor is there any conviction or acquittal in force within the meaning of section 403. (1) of the Code, to stand as a bar against their trial for the same offences. Learned counsel for the petitioners invited our attention to sections 190, 191, 192, 529 and 530 of the Code of Criminal Procedure and submitted that in certain circumstances the Code drew a distinction between 'jurisdiction ' and I taking cognizance '. The whole fabric of the argument of learned counsel was founded on this distinction. Assuming, however, that in certain cases one Magistrate may take cognizance and another Magistrate may try an accused person, it is difficult to appreciate how any Court can try the petitioners of these cases in the absence of a sanction in view of the mandatory provisions of section 6 of the Prevention of Corruption Act, 1947. If no Court can take cognizance of the offences in question without a legal sanction, it is obvious 666 that no Court can be said to be a Court of competent jurisdiction to try those offences and that any trial in the absence of such sanction must be null and void, and the sections of the Code on which learned counsel 1 for the petitioners relied have really No. bearing on the matter. Section 530 of the Code is really against the contention of learned counsel, for it states, inter alia, that if any Magistrate not being empowered by law to try all offender, tries him, then the proceedings shall be void. Section 529 (e) is merely an exception in the matter of taking cognizance of an offence under section 190, sub section (1), cls. (a) and (b); it has no bearing in a case where sanction is necessary and no sanction in accordance with law has been obtained. As part of his arguments, learned counsel for the petitioners referred to certain observations made by Braund J. in a decision of the Allahabad High Court, Basdeo vs Emperor (1), where the learned Judge drew a distinction between 'taking cognizance ' and 'jurisdiction '. The distinction was drawn in a case where a Magistrate duly empowered to commit cases to the Sessions Court committed ail accused person to the Court of Session in disregard of the provisions of section 254 of the Code of Criminal Procedure, and the question was whether the irregularity so committed rendered the Sessions Court incompetent to try the case. The facts there were entirely different from the facts of the present cases and there was no occasion nor necessity for considering such mandatory provisions as are contained in section 6 of the Prevention of Corruption Act. We do not think that the observations made in that case can be pressed in service in support of the argument of learned counsel for the petitioners in these cases, treating those observations as though they laid down any abstract propositions of law not dependent on the context of the facts in connection with which they were made. Out of deference to learned counsel for the petitioners, we have indicated and considered very briefly the arguments advanced before us. As we have said (1) A.I.R. T045 All. 657 before, the point is really concluded by decisions of the highest tribunal, decisions which correctly lay down the law. The result therefore is that these petitions are devoid of all merit and must be dismissed. Petitions dismissed.
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The accused was tried and convicted by a Special judge for offences under section 161 of the Indian Penal Code and section 5 of the Prevention of Corruption Act.
On appeal the whole proceedings were quashed as being ab initio invalid for want of proper sanction.
The authorities accorded fresh sanction and directed the accused to be tried by a Special judge for the same offences.
It was contended by the accused that the second trial was barred by article 20 (2) of the Constitution of India and by section 403 Of the Code of Criminal Procedure.
Held, that the trial was not barred.
article 20 (2) had no application in the case.
The accused was not being prosecuted and punished for the same offence more than once, the earlier proceedings having been held to be null and void.
The accused was not tried in the earlier proceedings by a Court of competent jurisdiction, nor was there any conviction or acquittal in force within the meaning of section 403(1) of the Code to stand as a bar against the trial for the same offence.
Yusofalli 'Mulla vs The King, A.I.R. (1949) P. C. 264, Basdeo Agarwalla vs King Emperor, and Budha Mal vs of Delhi, Criminal Appeal No. 17 Of 1952, decided on October 1952, followed.
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Someone was found guilty by a Special Judge for breaking a law (section 161 of the Indian Penal Code) and another law about stopping corruption (section 5 of the Prevention of Corruption Act).
When the person appealed, the entire case was thrown out. This happened because the court said the case was invalid from the start ("ab initio") since they didn't have the right permission ("sanction") to begin with.
The authorities then gave new permission and ordered the person to be tried again by a Special Judge for the same crimes.
The person argued that this second trial was against the Indian Constitution (article 20 (2)) and another law (section 403 of the Code of Criminal Procedure). Article 20 (2) basically says you can't be punished twice for the same crime. Section 403 is about how previous court decisions can affect new trials.
The court decided that the second trial was allowed.
Article 20 (2) didn't apply here.
The person wasn't being punished twice for the same thing. The first trial was considered meaningless since it was thrown out.
The person wasn't properly tried in the first case by a court that had the power to do so. Also, there was no valid guilty or not guilty verdict from the first case that could prevent a new trial for the same crime, according to section 403(1) of the Code.
The court followed the rulings in these previous cases: Yusofalli 'Mulla vs The King, A.I.R. (1949) P. C. 264, Basdeo Agarwalla vs King Emperor, and Budha Mal vs of Delhi, Criminal Appeal No. 17 Of 1952, decided on October 1952.
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il Appeal No. 861 of 1975. (Appeal by Special Leave from the Judgment and Order dated 1 3 1975 of the Allahabad High Court (Lucknow Bench) in writ petition No. 405 of 1974.) A.K. Sen and S.K. Bisaria, for the appellant. C.P. Lal for respondents 1 3. Yogeshwar Prasad and R.N. Trivedi, for respondents. No. 8. The Judgment of the Court was delivered by JASWANT SINGH, J. This appeal by special leave is di rected against the judgment and order dated March 31, 1975, of Lucknow Bench of 65 the Allahabad High Court dismissing the writ petition No. 405 of 1974 filed by the appellant challenging the recommen dation made by a Selection Committee of the Lucknow Univer sity (hereinafter referred to as 'the University ') for appointment of respondent No. 8 as Professor of Anthropology in the Faculty of Arts of the University. The facts giving rise to this appeal are: towards the end of the year 1973, the University put up an advertisement inviting applications from candidates possessing the follow ing qualifications to fill up a vacant post of Professor of Anthropology : "Essential: First or high second class Master 's degree and Doctorate in the subject con cerned with a good academic record, experience of teaching post graduate classes not less than 7 years and/or having conducted and successfully guided research work for 7 year 's in recognised institution and having published work of high standard in the subject concerned. " Preferential: High academic distinctions. " The appellant and( respondent No. 8 were the only two candidates who applied for the post in response to the advertisement. Their respective qualifications are as set out hereunder : S.No. Name Age Qualifications & Experience 1. Dr. G. Sarana, 38 years H.S. (U. P. Bd) 1949 1 Div. Head of Deptt. Inter (B.H.U.) 1951 1 Div. of Anthropology, B.A. (L.U.) 1953 I Div. Karnatak University, M.A. (L. U.) 1965 I Div. Dharwar. Ph. D. (Harvard (U) 1966. Published 28 research papers and 3 books. Worked as : (1) Temp. Lecturer in Anthro pology L.U. July, 1955 April, 1962. (2) Lecturer in Anthropol ogy Punjab U April August, 1962. (3) Visiting Lecturer Univ. of California at Santa Barbara July 1965 June 1966. (4) Karnatak Univer sity (September 1966 upto date as Reader and since 27 June 1970) as Profes sor. 66 S.No. Name Age Qualifications & Experience 2.Dr. K.S. Mathur, 44 years H.S. (U. P. Bd) 1944 1 Divn. Reader and Head of the Inter (U. P. Bd) 1946 I Divn. Deptt. of Anthropology, B. Com (L. U.) 1950 I Divn. Lucknow University. Ph.D. (Australian National U) 1960. Published several research papers, Worked as: (1) Lecturer in Anthropology L.U. 1951 64. (2)Reader in Anthropology L.U. 1964 continuing (3) Sociologist National Council of Appl. Economic Research, New Delhi March ' September 1960. On February 27, 1974,, a Selection Committee consisting of Shri A.K.K. Mustafi, Vice Chancellor of the University, Dr. K.N. Shukla, Dean, Faculty of Arts and Professor & Head of the Department of Hindi of the University, and three experts viz., Dr. S.C. Dube, Dr. S.R.K. Chopra and Dr. T.B. Mayak, respondents 3, 4, 5, 6 and 7 respectively met to interview the candidates and to make their recommendation to the Executive Council of the University. After interviewing the aforesaid two candidates, the Selection Committee re solved to recommend respondent No. 8 herein for appointment to the aforesaid post of Professor of Anthropology. On coming to know of the recommendation, the appellant filed the aforesaid petition 'under Article 226 of the Constitution challenging the recommendation mainly on the ground that two out of the aforesaid three experts viz., Dr. S.C. Dube and Dr. S.R.K. Chopra were biased against him and in favour of respondent No. 8. It was alleged by the appel lant that the respondent had close relations with the afore said two. experts as he was instrumental in obtaining many remunerative assignments for them. It was. further averred by the appellant that whenever Dr. Dube visited Lucknow, he stayed with respondent No. 8. It was also averred by the appellant that Dr. Chopra had strained relations with him on account of straight election contest between him and the latter for the office of the President of Anthropology Section of the Indian Science Congress for 19574. The appellant further averred that in 1968 when he was serving in the Punjab University as a Lecturer in the Department of Anthropology headed by Dr. Chopra, the latter stubbornly opposed his application for leave to avail of the offer of fellowship from Harvard University and stopped forwarding his salary bills to the Executive, Council with the ulterior object of depriving him of the opportunity to attain higher academic qualification and thereby better his future pros pects with the result that he was compelled to resign his job and surrender three months ' salary in lieu of notice to avail of the offer. 67 The petition was vigorously contested by respondent No. 8. On consideration of the material placed before it, the High Court, however, dismissed the application holding that though respondent No. 8 was the head of the department of Anthropology, he was not the only person responsible for bestowing various assignments either on Dr. Dube or on Dr. Chopra and that it was the Executive Council and the Academic Council which were responsible for giving those assignments to Dr. Dube and Dr. Chopra. It was further held by the High Court that there was nothing unusual in Dr. Dube and Dr. Chopra 's knowing and enjoying the hospitality of respondent No. 8. The fact that the appellant had an elec tion contest with Dr. Chopra was also, in the opinion of the High Court, of no significance, as such like contests were very common and ' it could not be said that Dr. Chopra had developed such a degree of ill will and hostility against the appellant for the latter 's standing as a candidate against him so as to render him incapable of acting impar tially when the task of selecting the best candidate was assigned to him and that it was not possible to. presume that Dr. Dube and Dr. Chopra were in a position to influence the decision of the entire Selection Committee by injection bias in the minds of the other members. The High Court finally held that from the facts relied upon by the appel lant, bias could not be spelt out. In arriving at its decision, the High Court relied upon the following observa tions made by Frank, J. of the United States of America in re. Linahan.(1) "If, however, "bias" and "partiality" be defined to mean the total absence of preconceptions in the. mind of the Judge, then no one has ever had a. fair triaL,, and no one ever will. The human mind, even at infancy, is no blank piece of paper. We are born with predispositions and the processes of education, formal and informal, create attitudes which precede: reasoning in particular instances and which, therefore, by definition, are preju dices. " The High Court also held that the appellant having submitted to the jurisdiction of the Selection Committee, he could not be permitted to turn round and denounce the con stitution of the Committee. Counsel for the parties have reiterated before us the contentions raised on behalf of their clients before the High Court. In addition, it has been contended by counsel for respondent No. 8 that the impugned recommendation being in the nature of an interlocutory proceeding,, neither the writ petition nor the appeal arising therefrom could be maintained. It is needless to emphasize that the principles of natural justice which are meant to .prevent miscarriage of justice are also applicable to domestic enquiries and admin istrative proceedings (See A.K. Karipak vs Union of India(2). It cannot also be disputed that one of the funda mental principles of natural justice is that in case of quasi judicial proceedings, the authority empowered to decide the dispute (t) [1943], 138F. 2nd 650 at 652. (2) :[1970] 1 S.C.R. 457 :A.I.R. 1970 S.C. 150. 68 between opposing parties must be one without bias by which is meant an operative prejudice, whether conscious or uncon scious towards one side or the other in the dispute. (See Nageswara Rao vs A.P. State Road Transport Corporation(1) and Gullapalli Nageshwar Rao v State of A.P.(2). It would be advantageous at this stage to refer to the following observations made by this Court in Manak Lal vs Prem Chand(3). "Every member of a tribunal that sits to try issues in judicial or quasi judical proceedings must be able to act. judicially; and the essence of judicial decisions and judicial administration is that judges should be able to act impartially, objectively and without any bias. In such cases the test is not whether in fact a bias has affected the judgment; the test always is and must be wheth er a litigant could reasonably apprehend that a bias attributable 'to a member of the tribunal might have operated against him in the final decision of the tribunal. It is in this sensethat it is often said that justice must not only be done but must also appear to be done." Again as held by this Court in A. K. Karipak 's case (supra), reiterated in section Parthasarthi vs State of Andhra Pradesh(4) and followed by the High Court of Jarainu & Kashmir in Farooq Ahmed Pandey and Ors. vs Principal Regional Engineering College & Anr.(5) the real question is not whether a member of an administrative Board while exercising quasi judicial powers or discharging quasi judicial functions was biased, for it is difficult to prove the mind of a person. What has to be seen is whether there is a reasonable ground for believing that he was likely to have been biased. In decid ing the question of bias, human probabilities and ordinary course of human conduct have to be taken into consideration. In a group deliberation and decision like that of a Selection Board, the mem bers do not function as computers. Each member of the group or board is bound to influence the oth ers, more so if the member concerned is a person with special knowledge. His bias is likely to operate in a subtle manner. At page 156 of "Principles of AdministratiVe Law" by J.A.G. Griffith and H. Street (Fourth Edition), the position with regard to bias is aptly and succinctly stated as follows : "The prohibition of bias strikes against factors which may improperly influence a judge in deciding in favour of one party. The first of the three disabling types of bias is bias on the sub ject matter. Only rarely will this bias invalidate proceedings. "A mere general interest in the general object to be pursued would not disqualify," said Field J., holding that a magistrate who sub scribed to the Royal Society for the Prevention of Cruelty to Animals was not thereby disabed (1) [1959] Supp. 1 S.C.R. 319 :A.I.R. 1959 S.C. 308. (2) ; (3) ; (4) (5) 69 from trying a charge brought by that body of cruel ty to a horse. There must be some direct connec tion with the litigation. If there is such preju dice, on the subject matter that ,the court has reached fixed and unalterable conclusions not founded on reason or understanding, so that there is not a fair hearing, that is bias of which the courts wilt take account, as where a justice an nounced his intention of convicting anyone coming before him on a charge of supplying liquor after the permitted hours . . . Secondly, a pecuniary interest, however, slight will disqualify, even though it is not proved that the decision is in any way affected. The third type of bias is personal bias. A Judge may be a relative, friend or business associ ate of a party, or he may be personally hostile as a result of events happening either before or during the course of a trial. The courts have not been consistent in laying down when bias of this type will. invalidate a hearing. The House of Lords in Frome United Brewering vs Bath Justices(1) approved an earlier test of whether "there is a real likelihood of bias. " the House of Lords has since approved a dictum of Lord Hewart that "justice should not only be done,, but should manifestly and undoubtedly be seen to be done" al though it did not mention another test suggested by him in the same judgment: Nothing is to be done which creates even a suspicion that there has been an improper interference with the course of jus tice. " At page 225 of his Treatise on "Judicial Review of Administrative Action" (Third Edition), Prof. S.A. De Smith, has stated as follows with regard to Reports and Preliminary decisions : "The case law on the point is thin, but on principle it would seem that where a report or determination lacking final effect may nevertheless have a seriously judicial effect on the legally protected interests of individuals (e.g. when it is a necessary prerequisite of a final order) the person making the report or preliminary decision must not be affected by interest or likelihood of bias. " From the above discussion, it clearly follows that what has to be seen in a case where there is an allegation of bias, in respect of a member of an administrative Board or body is whether there is a reasonable ground for believing that he was likely to have been biased. In other words whether there is substantial possibility of bias animating the mind of the member against the aggrieved party. We do not, however, consider it necessary in the present case to go into the question of the.reasonableness of bias or real likelihood or bias as despite the fact that, the appellant knew all the relevant facts, he did not before appearing for the interview or at the time of the (1) 70 interview raise even his little finger against the consti tution. of the Selection Committee. He seems to have voluntarily appeared before the Committee and taken a chance of having a favourable recommendation from it. Having done so, it is not. now open to him to turn round and question the constitution of the Committee. This view gains strength from a decision of this Court in Manak Lal 's case (Supra) where in more or less similar circumstances, it was held that the failure of the appellant to take the identical plea at the earlier stage of the proceedings created an effective bar of waiver against him. The following observations made therein are worth quoting: "It seems dear that the appellant wanted to take a chance to secure a favourable report from the tribunal which was constituted and when he found that he was confronted with an unfavourable report, he adopted the device of raising the present technical point. " It is also difficult to understand how the writ petition or for that matter the present appeal before us is maintain able when the recommenlation of the Selection Committee has still to be scrutinzed by the Excutive Council of the Uni versity and either accepted or rejected by t and other remedies by way of representation to. the Executive Council and an application for reference of the matter under section 68 of the Uttar Pradesh Universities (Reenactment and Amendment) Act, 1974, 0 the Chancellor are still open to the appellant and have not been. exmusted. For the foregoing reasons, we find ourselves unable to allow the appeal. In the result, the appeal fails and is hereby dismissed but in the circumstances of the case with out any order as to costs. M.R. Appeal dismissed.
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The appellant and respondent No. 8 applied for the vacant post of Professor of Anthropology in the Faculty of Arts, in answer to an advertisement put up by the Lucknow University.
A selection committee of five persons including three experts, interviewed them and recommended respondent No. 8 for the post.
The appellant 's writ petition challeng ing the recommendation was dismissed by the High Court.
The appellant contended before this Court that two of the expert members of the selection committee were unduly biased against him and in favour of respondent No. 8.
The appeal was contested on two grounds.
Firstly, that by submitting to the jurisdiction of the selection committee, the appellant had waived his right to denounce its constitution and sec ondly, that the impugned recommendation being an interlocu tory proceeding against which remedies were available, the writ petition was not maintainable.
Dismissing the appeal, the Court, HELD: 1.
Despite the fact that the appellant knew all the relevant facts,he seems to have voluntarily appeared before the committee and taken a chance of having a favourable recommendation from it Having done so it is no now open to him to turn round and question the constitution of the committee.[70 A B] Manak Lal vs Prem Chand ; 1957 S.C. 425, applied.
Linahan 650; A. K. Karipak vs Union of India ; Nageshwar Rao vs State of A.P. ; 1959 SC 1376; section Partha rarathi vs State of Andhra Pradesh ; Farooq Ahmad Bandey and Ors.
vs Principal Regional Engineering College & Anr.
[1975] I&K L.R. 427; Principles of Adminis trative Law by I.A.G. Griffith and H. Street (4th edition) and Judicial Review of Administrative Action ' (3rd Edition) by Prof. S.A. De Smith, referred to. 2.
The recommendation of the selection committee has still to be scrutinised by the Executive Council of the University and either accepted or rejected by and other remedies by way of representation to the executive council and an application for reference of the matter under section 68 of the Uttar Pradesh Universities (Reenactment and Amendment) Act, 1974, to the Chance or are till open to the appellant and have not been exhausted The writ petition or he present appeal before us is not maintainable.
[70 C D]
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The person appealing (the appellant) and respondent No. 8 both applied for the job of Professor of Anthropology at Lucknow University. This was in response to an ad the university put out.
A group of five people, including three experts, interviewed the applicants. They suggested respondent No. 8 for the job.
The appellant then filed a legal challenge (called a writ petition) against this suggestion, but the High Court dismissed it.
The appellant argued in court that two of the expert members on the selection group were unfairly against him and favored respondent No. 8.
The appeal was challenged for two reasons. First, by agreeing to be judged by the selection group, the appellant gave up his right to complain about how it was formed. Second, the suggestion was only a step in the process, and other options were still available, so the writ petition shouldn't have been allowed.
The Court dismissed the appeal and said: 1. Even though the appellant knew all the facts, he chose to appear before the group and hoped they would suggest him. Because he did this, he can't now complain about how the group was formed. [70 A B] (The Court cited several previous cases to support this point.)
2. The Executive Council of the University still has to review the selection group's suggestion. They can either accept it or reject it. The appellant still has other options, like making a case to the executive council or asking the Chancellor to review the matter under Section 68 of the Uttar Pradesh Universities law. He hasn't tried all of these options yet. Therefore, the writ petition and this appeal are not allowed. [70 C D]
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Appeal No. 16 of 1952. Appeal from the Judgment and Order dated February 6, 1951, of the High Court of Judicature at Madras (Rajamannar C. J. and Somasundaram J.) in Civil Miscellaneous Petition No. 11307 of 1950, arising out of Order dated November 10, 1950, made in C. No. 2216 A 3 49 on the file of the Regional Transport Authority, Tanjore. G. R. Jagadisa Iyer for the appellant. V. K. T. Chari, Advocate General of Madras, (V. V. Baghavan, with him) for the respondent. December 5. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal brought by special leave under article 136 (1) of the Constitution is directed against the order dated February 6, 1951, of the High Court of Judicature at Madras, dismissing the petition of the appellant under article 226, praying for the issue of a writ of certiorari to quash the order dated November 10, 1950, passed by the respondent in the following circumstances : The appellant is the lessee of a site in the town of Tanjore in the State of Madras upon which he has a bus stand. The bus stand originally belonged to the Tanjore Municipality and the appellant merely held a licence from that authority. Later on, the title of the Municipality to the site was questioned by a third party and in a civil litigation which ensued the title of the Municipality was negatived. Thereupon the appellant obtained the lease hold right of the site from the true owner and constructed a bus stand conforming to the design approved by the Municipality. Besides sheds for passengers and vehicles it provided other amenities. It was situate near the Railway Station and most of the buses leaving Tanjore for 38 292 out station journeys used this bus stand both as the starting point and as the terminus. It appears that the site was approved as convenient and suitable for the bus stand both by the Municipality and the District authorities for buses plying from and into Tanjore. The appellant held the licence for running the bus stand year after year. In 1939 the Municipality granted him a licence for four months only instead of one year as required by section 270 (c) of the Madras Municipalities Act (V of 1920), and the appellant succeeded in vindicating his right for a whole year 's licence in the Civil Court by obtaining the relief for injunction and an order directing the issue of a licence against the Municipality for 1940 41. The appellant carried on the business without let or hindrance until 1950 when the Municipality refused to renew his licence, whereupon he obtained a mandatory injunction from 'the Civil Court directing the Municipality to grant him a licence for the year 1950 51. This decree was passed on October 7, 1950. On February 21, 1950, however, the Regional Transport Authority, Tanjore, which is the respondent in the present appeal, declared the bus stand as unsuitable with effect from April 1, 1950, and altered the starting and the terminal points from that date. This order resulted in the closing of the appellant 's bus stand. This decision which was given by means of a resolution was confirmed subsequently by another resolution passed on March 31, 1950. The appellant challenged the validity of these resolutions by a petition under article 226 before the Madras High Court on the ground that they were passed without jurisdiction and were contrary to the principles of natural justice as they were passed without notice to the appellant and without giving him an opportunity to defend his right. The resolutions purported to have been passed under section 76 of the , which runs thus: " The Provincial Government or any authority authorized in this behalf by the Provincial GovernMent ' may, in consultation with the local authority 293 having jurisdiction in the area concerned,determine places at which motor vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stand either indefinitely or for a specified period of time, and may determine the places at which public service vehicles may stop for a longer time than is necessary for the taking up and setting down of passengers." The Division Bench of the Madras High Court consisting of the learned Chief Justice and another learned Judge quashed the two orders as prayed for by the appellant on the grounds that the orders were passed ex parte, and that section 76 did not authorize, the respondent to close the bus stand. In the opinion of the Bench, section 76 deals with provision for parking places and halting stations and has no applica tion to a permanent bus stand which is a sort of a radiating centre of all the bus traffic for the town. It was held therefore that the Regional Transport Authority could not under section 76 fix starting and terminus places for motor buses. Reference was made, in the course of the arguments, to rule 268, Madras Vehicles Rules, 1940, and the learned Judges observed that though the rule does empower the Transport Authority to fix starting places and termini between which public service vehicles other than motor cars shall be permitted to be used, but that this could be done only if starting places and termini had not already been fixed in accordance with the provisions of any statute. In the present case as these had already been fixed in accordance with rule 27 D, Motor Vehicles Rules, 1923, the Transport Authority could not fix new starting places and termini under rule 268 of the Rules passed in 1940. The Bench pointed out that the rule was defective and would lead to an impasse if the starting places and termini already fixed become unsuitable and have to be shifted. Accordingly they suggested that the rule should be amended and a provision introduced conferring on the appropriate 294 authority the requisite power to alter from time to time the starting places and termini. See T. E. Ebrahim Saheb vs The Regional Transport Authority Tanjore(1). It appears that within two months of the decision of the High Court rule 268 was amended by the Government. Before the decision of the High Court was given the bus stand was shifted to a place belonging to the Municipality in another area. Rule 268 as it originally stood ran thus: " In the case of public service vehicles (other than motor cabs) if starting places and termini have not been fixed in accordance with the provisions of any statute, the transport authority may, after consultation with such other authority as it may deem desirable, fix starting places and termini between which such vehicles shall be permitted to be used within its jurisdiction. A list of such places shall be supplied by such authority to every holder of a permit for such vehicles. When such places have been fixed, every such vehicle shall start only from such places. " By the amendment the words " if starting places and termini have not been fixed in accordance with the provisions of any statute " were deleted, and the words " and after notice to the parties affected, fix or alter from time to time for good and proper reasons," were added. As amended, the rule runs thus: " 268. In the cage of public service vehicles (other than motor cabs) the transport authority may after consultation with such other authority as it may consider desirable, and after notice to the parties affected, fix or alter from time to time for good and proper reasons, the starting places and termini between which such vehicles shall be permitted to be used within its jurisdiction. A list of such places shall be supplied by such authority to every holder of a permit for such vehicles at the time of grant of or renewal of permits. (1) A.I.R. 951 Mad. 419. 295 When such places have been fixed every such: vehicle shall start only from such places. " The respondent then issued a notice to the appellant on October 25, 1950, to show cause why the bus stand should not be shifted, the grounds given being that it was not satisfactorily maintained and was situated in a limited space which was inadequate to accommodate all the buses using the stand and that it did not permit of any improvements being carried out. The appellant filed a long written statement objecting to the notice and challenging the grounds, whereupon the respondent issued a fresh notice on November 2, 1950, in which the original grounds were dropped and were substituted by the ground "from ' the point of convenience of the travelling public". After hearing the appellant and the Municipality, the Board passed a resolution on November to, 1950, that for good and proper reasons, namely, the convenience of the travelling public, the Transport Authority had resolved to alter the starting places and termini of all public service vehicles (other than motor cabs) arriving, at and proceeding from Tanjore from the existing bus stand owned by the appellant to the Municipal bus stand in another area of the town. This order led to another petition being filed in the High Court at Madras, praying for a writ of certiorari under article 226. The appellant questioned the jurisdiction of the Transport Authority to pass the order in question. It was contended before the High Court that rule 268 as amended was itself ultra vires, firstly, because it was beyond the rulemaking power conferred by section 68, sub section (r), of the , and secondly because it was repugnant to article 19(1)(g) of the Constitution. Both these contentions were rejected by the High Court and the petition was dismissed. The contentions raised before the High Court have been repeated before us. We are satisfied that there is no good ground for differing from the view taken by the High Court. The contains 10 Chapters. Chapter IV of the Act deals with 296 control of transport vehicles. Section 4 7 (1) lays down that the Regional Transport Authority shall, in deciding whether to grant or refuse a stage carriage permit, have regard to the following matters, namely, (a) the interest of the public generally; (b) to (f). . . . . . . . Section 48 says that the Regional Transport Authority after consideration of the matters set forth in section 47, may attach to a stage carriage permit any prescribed condition or any one or more of the following conditions. Various conditions are set out one of which (v) is material for our purposes. It is to the effect " that within Municipal limits and in such other areas and places as may be prescribed, passengers shall not be taken up or set down at or except at specified points. " The material portion of section 68 may be set out here: "(1) A Provincial Government may make rules for the purpose of carrying into effect the provisions of this Chapter. (2) Without prejudice 'to the generality of the foregoing power, rules under this section may be made with respect to all or any of the following matters, namely: (r) prohibiting the picking up or setting down of passengers by stage or contract carriages at specified places or in specified areas or at places other than duly notified stands or halting places. . . ; " It is obvious from a plain reading of sub section (1) that the Government has got full power to make rules for the purpose of carrying into effect the. provisions contained in Chapter IV relating to the control of transport vehicles and according to subsection (2), without prejudice to this power, the Government has the power to frame rules with respect to matters set out in sub sections (2) (a). to (2) (za). It is significant to note that the Act does not follow the ordinary mode of providing at the end of the Act that the Government is empowered to make rules for the 297 purpose of carrying into effect the provisions of the Act but at the end of each of the Chapters, including Chapter IV, the power has been reserved to the Provincial Government to make rules for the purpose of carrying into effect the provisions of the Chapter. The purpose of Chapter IV is described by the compendious expression "control of transport vehicles" and the Provincial Government is invested with plenary powers to make rules for carrying out that purpose. Keeping in view the purpose underlying the Chapter we are not prepared to hold that the fixing or alteration of bus stands is foreign to, that purpose. It was contended that section 68, sub section 2(r), does not confer the power upon the transport authority to direct the fixing or the alteration of a bus stand and that rule 268 of the rules framed under that section was, therefore, ultra vires. We are not prepared to accede to this contention. Sub section 2(r) clearly contemplates three definite situations. It prohibits the picking up or setting down of passengers (i) at specified places (ii) in specified areas, and (iii) at places other than duly notified stands or halting places. If the power to make rules in regard to these, matters is given to the Government, then it follows that a specified place may be prohibited from being used for picking up or setting down passengers. This will inevitably result in the closing of that specified place for the purpose of picking up or setting down of passengers. Similarly a specified area may be excluded for the same purpose. The expression "duly notified stands" is not defined in the Act, but it is reasonable to presume that a duly notified stand must be one which is notified by the Transport Authority and by none other. There is no warrant for the presumption that it must be notified by the Municipality. ' Reference was Made to section 270(b), 270(c) 298 270(e), 1, 2 & 3 of the Madras District Municipalities Act (V of 1920), and it was argued that the authority which is clothed with a power to fix a stand is the Municipality. Section 270(b) empowers the Municipal Council to construct or provide halting places and cart stands, and the latter according to the Explanation appended to the section includes a stand for motor vehicles as well. Section 270(c) merely says that where a Municipal Council has provided a public landing place, halting place or cartstand, the executive authority may prohibit the use for the same purpose by any person within such distance thereof, as maybe determined by the Municipal Council, of any public place or the sides of any public street. Section 270(e) lays down that no person can open a new private cart stand or continue to keep open a private stand unless he obtains from the Council a licence to do so. These provisions do not affect the power of the Transport Authority to regulate traffic control or impose restrictions upon the licence of any such cart stand. If rule 268 is therefore within the power of the rule making authority, it follows that it cannot be challenged as being void because it is not consistent with some general law. Reliance was placed on a passage at page 299 of, Craies on Statute Law as laying down that a by law must not be_repugnant to the statute or the general law. But by laws and rules made under a rule making power conferred by a statute do not stand on the same footing, as such rules are part and parcel of the statute itself. Section 68, subjection 2(r), involves both s general prohibition. that the stand will cease to exist as well as a particular prohibition, namely that passengers shall not be picked up or set down at a specified point. The order passed by the Transport Authority properly construed falls within the ambit of section 68, sub section 2(r). Rule 268 under which the order impeached was passed is rule framed under the plenary rule making 299 power referred to in section 68, sub section (1). Sub section (2) (za) says that a rule may be made with respect to any other matter which is to be or may be prescribed. This shows the existence of residuary power vested in the rule making authority. It follows therefore that rule 268 is within the scope of the powers conferred under section 68 of the Act. The next contention was that the order is repugnant to article 19 (1) (g) of the Constitution, according to which all citizens must have the right to practise any profession or to carry on any occupation, trade or business. It cannot be denied that the appellant has not been prohibited from carrying on the business of running a bus stand. What has been prohibited is that the bus stand existing on the parti cular site being unsuitable from the point of view of public convenience, it cannot be used for picking up or setting down passengers from that stand for outstations journeys. But there is certainly no prohibition for the bus stand being used otherwise for carrying passengers from the stand into the town, and vice versa. The restriction placed upon the use of the bus stand for the purpose of picking up or setting down passengers to outward journeys cannot be con sidered to be an unreasonable restriction. It may be that the appellant by reason of the shifting of the bus stand has been deprived of the income he used to enjoy when the bus stand was used for outward journeys from Tanjore, but that can be no ground for the contention that there has been an infringement of any fundamental right within the meaning of article 19 (1) (g) of the Constitution. There is no fundamental right in a citizen to carry on business wherever he chooses and his right must be subject to any reasonable restriction imposed by the executive authority in the interest of public convenience. The restriction may have the effect of eliminating the use to which the stand has been put hitherto but the restriction cannot be regarded as being unreasonable if the authority imposing such restriction had the power to do so. Whether the abolition of the stand 39 300 was conducive to public convenience or not is a matter entirely for the transport authority to judge, and it is not open to the court to substitute its own opinion for the opinion of the authority, which is in the beat position, having regard to its knowledge of local conditions to appraise the situation. It was next contended that rule 268, if it is held to be intra vires, was not complied with as the Transport Authority could pass such an order only after consultation with such other authority as it may deem desirable. It is admitted that the Transport Authority;consulted the Municipality before passing the order in question. Rule 268 therefore was fully complied with. But then it is urged that the Municipality was not the proper authority in the circumstances as it was a partisan to the dispute and had been endeavouring to oust the appellant from the bus stand in order to set up its own bus stand. The Municipality is a public body interested in public welfare and if it sought the assistance of the Government or the Transport Authority to shift the busstand, it was actuated only by the demands of public interest. It was possible for the Transport Authority to consult the District Board or the Panchayat as suggested for the appellant, but it was not bound to do so. We do not think that in consulting the Municipality the Transport Authority acted otherwise than within the scope of its powers. Further, according to the language employed the consultation is not obligatory but only discretionary. It was suggested that the act of the Municipality was mala fide and reference was made to paragraphs 18 and 19 of the appellant 's affidavit dated November 20, 1950. They refer merely to the vagueness of the ground of public convenience and to he amendment of the rule not being bona fide. There is, however, no material to support this suggestion. The mere fact that in the first notice certain grounds were mentioned which were not adhered to in the second notice and convenience of the travelling public was alone mentioned as the ground cannot lead to the 301 inference that the order was mala fide. The rule was amended in pursuance of the suggestion of the High Court in order to overcome the difficulty which arose in the absence of requisite power to alter the busstands. It is significant that no allegation about mala fides was made before the High Court and the question was never discussed there. In the petition for special leave to appeal though there is reference to the ground of inconvenience being vague, yet there is no suggestion of mala fides. The question about mala fides appears to have been raised for the first time in paragraph 4 (f) and (g) of the statement of the case. We hold that the plea of mala fides has not It was also urged that the resolution is invalid as the District Collector who presided over the meeting of the Transport Authority which passed this resolution had opened the new Municipal bus stand on April I, 1950. The suggestion is that be did not bring to bear upon the question an impartial and unbiased mind. The District Collector was not acting in the exercise of judicial or quasi judicial functions so that his action can be subjected to the scrutiny which is permissible in the case of a judicial officer. He, was acting purely in his executive capacity and his conduct in presiding over the meeting of the Transport Authority in the exercise of his normal functions and also opening the Municipal stand which he was entitled to do as the head of the District, does not affect the validity or fairness of the order complained against. We do not think there is any merit in this contention. Accordingly we dismiss the appeal with costs. Appeal dismissed.
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Rule 268 of the Madras Motor Vehicles Rules, 1940, as it originally stood did not empower the Transport Authority to alter from time to time the starting places and termini for motor vehicles.
The rule was amended in 1950 so as to empower the Transport Authority to do so, and after giving notice to the appellant who was the owner of a bus stand in a municipality, which was being used for several years as the starting place and terminus for motor buses plying to and from the municipality, the Transport Authority passed a resolution changing the starting place and terminus for the convenience of the public.
The appellant applied for a writ of certiorari contending that r. 268 as amended was ultra vires as it went beyond the rule making powers conferred by section 68 (2) (r) of the and was also repugnant to article 19 (1) (g) of the Constitution: Held, (i) that the fixing and alteration of bus stands was not a purpose foreign to the " control of transport vehicles ", the purpose for which rules could be made under section 68 (1), and the power to make rules prohibiting the picking up or setting down of passengers at specified places mentioned in section 68 (2) (r) necessarily included the power to alter the situation of bus stands, and r. 268 as amended did not therefore go beyond section 68 (2) (r) ; (ii) the restriction placed upon the use of the bus stand for the purpose of picking up or getting down passengers to or from outward journeys cannot be considered to be an unreasonable restriction on the right to carry on any profession, trade or business of the appellant, and r. 268 was not in any way repugnant to article 19 (1) (g) of the Constitution.
The expression " duly notified stand " in the Madras means a stand duly notified by the Transport Authority.
There is no warrant for the view that it means a stand 291 notified by the municipality.
The provisions of section 270 (b), (c) and (e) do not affect the power of the Transport Authority to regulate traffic control or impose restrictions upon the licence of cart stands.
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Rule 268 of the Madras Motor Vehicles Rules, created in 1940, originally didn't allow the Transport Authority to change where buses started and stopped.
The rule was changed in 1950 to give the Transport Authority that power. After telling the bus stand owner (the appellant) that they planned to make a change, the Transport Authority decided to move the bus starting and stopping point to better serve the public. The bus stand had been used for years by buses going to and from the town.
The bus stand owner asked for a court order (writ of certiorari) claiming that the changed Rule 268 was beyond the Transport Authority's power. They argued it went against section 68 (2) (r) of the law that gives the Transport Authority its power to make rules. The owner also claimed it violated Article 19 (1) (g) of the Constitution, which protects the right to practice any profession, or to carry on any occupation, trade or business. The Court decided: (i) Deciding where bus stops are located is related to "controlling transport vehicles," which is a valid reason to make rules under section 68 (1). The power to prevent picking up or dropping off passengers at certain places (mentioned in section 68 (2) (r)) includes the power to move bus stops. So, the changed Rule 268 did not go beyond section 68 (2) (r). (ii) Limiting the bus stand's use for picking up or dropping off passengers for outgoing trips is not an unreasonable limit on the owner's right to do business. Therefore, Rule 268 does not violate Article 19 (1) (g) of the Constitution.
The phrase "duly notified stand" in the Madras law means a bus stand properly announced by the Transport Authority.
There's no reason to think it means a bus stand announced by the town government.
The rules in section 270 (b), (c), and (e) do not limit the Transport Authority's power to control traffic or restrict licenses for cart stands (places where animal-drawn carts park).
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minal Appeal No. 150 of 1956. Appeal by special leave from the Judgment and order dated October 18, 1955, of the Allahabad High Court in Government Appeal No. 60 of 1953 arising out of the judgment and order dated July 8, 1952, of the Court of Sessions Judge at Bareilly in Criminal Sessions Trial No. 27 of 1952. Daulat Ram Prem and P. C. Agarwala, for the appellant, 658 Gyan Chand Mathur and C. P. Lal, for the respondent. February 14. The Judgment of the Court was delivered by KAPUR J. The appellant along with one Qudrat Ullah was tried for the murder of one Sabir. The latter was tried under section 302 read with section 114 of the Indian Penal Code for abetment, and the former under section 302 I.P.C. Both the accused were acquitted by the learned Sessions Judge of Bareilly. But the State took an appeal to the Allahabad High Court against the appellant only and the judgment of acquittal in his case was reversed and he was convicted under section 302 I.P.C. and sentenced to 'transportation for life '. Against the judgment of the High Court the appellant has brought this appeal by Special Leave. The facts which have given rise to the appeal are that Sabir was murdered on the 11th May, 195 1, at about 6 30 p.m. The First Information Report was made by Qudrat Ullah the other accused at 6 45 p.m. the same day, i.e., within about 15 minutes of the occurrence. The prosecution case was that there was an exchange of abuses between the deceased and the appellant near the shop of the First Informant, Qudrat Ullah. The cause of the quarrel was that on the evening of the occurrence while Qudrat Ullah was sitting in his shop and the deceased was sitting just below the shop, the appellant came out of his house and on seeing him, the deceased asked him as to why he was in such a " dishevelled condition ", which annoyed the appellant and gave rise to an exchange of abuses. On hearing this noise, the prosecution witnesses arrived at the spot and saw the appellant and the deceased grappling with each other. The appellant is stated to have asked Qudrat Ullah to hand over a knife to him which Qudrat Ullah did; this knife is exhibit I II ', with which the appellant stabbed the deceased and then fled away. As a result of the injuries the deceased fell down infront of Qudrat Ullah 's shop; some witnesses have stated that he fell on the wooden plank in front of the shop. Qudrat Ullah picked up the knife which had been 659 dropped by the appellant, put the deceased in a rickshaw and took him to the hospital from where he went to the Police Station and made the First Information Report. An objection has been taken to the admissibility of this report as it was made by a person who was a co accused. A First Information Report is not a substantivepiece of evidence and can only be used to corroborate the statement of the maker under section 157 of the Evidence Act or to contradict it under section 145 of that Act. It cannot be used as evidence against the maker at the trial if he himself becomes an accused, nor to corroborate or contradict other witnesses. In this case, therefore, it is not evidence. The Sub Inspector went to the spot, started investigation and arrested the appellant the same evening at his house. The postmortem examination of the deceased showed injuries on the person of the deceased and, according to the doctor. , death was due to shock and haemorrhage on account of the punctured wound in the chest, causing injuries to the lungs and these injuries could be caused with a sharp edged weapon. The appellant and the deceased both belong to a sect of Jogis. Evidence discloses that the deceased and the appellant were quite friendly with each other, and so were the deceased and Qudrat Ullah, who is a butcher and had a shop which is a part of his house. Adjacent to the shop is the house of the appellant. Eye witnesses of the occurrence were Yad Ali, P.W. 1, Banne, P.W. 2 and Mohd. Ahmed, P.W. 3. Having been told by the sister of the deceased as to the occurrence, Ashraft, P.W. 4 came to the spot later and found the deceased lying unconscious. Shakir, P.W. 5, younger brother of the deceased, on arriving near the shop of Qudrat Ullah heard the appellant and the deceased exchanging abuses, but was not a witness of the assault ' as just at that time he had gone, at the request of Qudrat Ullah, to fill his Chillum for the hookka and when he came back he found the deceased lying unconscious and the appellant running away towards his house. The evidence of Yad Ali P. W. 1, is that he heard an exchange of abuses between the deceased and the appellant and when he moved about 4 or 5 paces he 660 saw them grappling with each other. The appellant had the deceased ,in his grip", he asked Qudrat Ullah to hand over a knife to him which the latter did and with it the appellant stabbed the deceased and then went away to his house. The statement of Banne is similar and so is the statement of Mohd. Ahmed, P. W. 3. This evidence was not accepted by the learned Sessions Judge and he acquitted both the accused. The State took an appeal only against the appellant which was allowed by the High Court. It held " We may concede that the eye witnesses have falsely implicated Qudrat Ullah by deposing that he handed over his knife to the respondent on his demand. There was no enmity between him and Sabir and he bad no motive to get him killed by the respondent. It does not at all appear probable that after abetting the murder of Sabir he at once took him on a rickshaw to the hospital and from there went at once to the police station and lodged a report against the respondent. This conduct of Qudrat Ullah is so inconsistent with the part said to have been played by him in the occurrence that we have little hesitation in rejecting the evidence about the part played by him. " The High Court, however, accepted the. testimony of the eye witnesses as against the appellant 's guilt and observed: "We are satisfied that the prosecution has fully established the, case against the respondent. There is not the slightest doubt about his guilt. The presumption of innocence has been fully rebutted by the prosecution. The case against him does not become doubtful merely because the learned Sessions Judge said that there was a doubt about his guilt." The learned Judges also came to the conclusion that the view taken by the learned trial Judge was ;one " which no reasonable person could have taken. It was a wholly erroneous view of the evidence which has resulted in gross miscarriage of justice inasmuch as a murderer escapes punishment",. In the circumstances of the case and considering that there was some provocation, the High Court sentenced the appellant to I transportation for life. 661 There is a passage in the Judgment of the High Court which appears to us to be disconsolate and indicative of a wrong approach in deciding the guilt of an accused person. Although the learned Judges recognised the principle that the onus was not on the accused, yet one of the observations is such that it comes perilously near to putting the burden on the accused if it does not actually do so. The High Court has said: The respondent himself did not have the courage to say that he did not find them at the spot. If 'he were innocent, he must have come out of his house immediately on hearing the noise and must have known who was present there and; who was not" This passage is so destructive of the cardinal principle of criminal jurisprudence as to the presumed innocence of an accused person till otherwise proved that it has become necessary to reiterate the rule stated by eminent authorities ". that it is the duty of the prosecution to prove the prisoner 's guilt subject to any statutory exception. " it was next contended that the witnesses had falsely implicated Qudrat Ullah and because of that the Court should have rejected the testimony of these witnesses as against the appellant also. The well known maxim falsus in uno falsus in omnibus was relied upon by the appellant. The argument raised was that because the witnesses who had also deposed against Qudrat Ullah by saying that he had handed over the knife to the appellant had not been believed by the Courts below as against him, the High Court should not have accepted the evidence of these witnesses to convict the appellant. This maxim has not received general acceptance in different jurisdictions in India; nor has this maxim come to occupy the status of a rule of law. It is merely a rule of caution. All that it amounts to is that in such cases the testimony may be disregarded and not that it must be disregarded. One American author has stated: (1) Woolmington vs The Director of Public Prosecutions, ; 662 SUPREME COURT REPORTS [1957] validity. . and secondly, in point of utility because it merely tells the jury what they may do in any, event, not what they must do or must not do, and therefore, it is a superfluous form of words. It is also in practice pernicious. . " (1) The doctrine merely involves the question of weight of evidence which a court may apply in a given set of circumstances but it is not what may be called " a mandatory rule of evidence ". Counsel for the appellant drew our attention to a passage from an unreported judgment of the Privy Council, I Chaubarja Singh vs Bhuneshwari Prasal Pal. " The defendants own evidence and that of several of his witnesses is of no use to, him. He cannot contend that any court of law can place reliance on the oath of people who have admittedly given false evidence upon the other branches of the case. " This passage is a very slender foundation, if at all, for conferring on the doctrine the status of anything higher than a rule of caution and the Privy Council cannot be said to have given their weighty approval to any such controversial rule which has been termed as " worthless", "absolutely false as a maxim of life" and "in practice pernicious" in works of undoubted authority on the law of evidence (2). The High Court was not unmindful of what the witnesses stated as to Qudrat Ullah 's part in the commission of the offence and having taken that into consideration, it said: " While the learned Sessions Judge was right in acquitting Qudrat Ullah, he was completely wrong in acquitting the respondent of whose guilt there was not the slightest doubt. The direct evidence made out a clear case against him and there was no sound reason for disregarding it. " After discussing the evidence of the witnesses and the discrepancies pointed out by the appellant the High Court held " there is not the slightest doubt about his guilt." (1) Wigmore on Evidence Vol. III para 1009. (2j Wigmere Vol. III para 1009. 663 It was because of the above two contentions raised by counsel for the appellant and because it was a case of reversal of a judgment of acquittal that we allowed counsel to go into the evidence which he analysed and drew our attention to its salient features and to the discrepancies in the statements of witnesses and the improbabilities of the case; but we are satisfied that the learned Judges were justified in coming to the conclusion they did and the view of the trial judge was rightly displaced. Upon a review of the evidence of the prosecution witnesses we have come ,to the conclusion that the appellant was rightly convicted. The appeal is, therefore, dismissed and the judgment of the High Court is affirmed. A appeal dismissed.
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A first information report is not a substantive piece of evidence and can only be used to corroborate the statement of the maker under section I57 Of the Evidence Act or to contradict it under section 145 of that Act.
It cannot be used as evidence against the maker at the trial if he himself becomes an accused, nor to corroborate or contradict other witnesses, It is a cardinal principle of criminal jurisprudence that the innocence of an accused person is presumed till otherwise proved.
It is the duty of the prosecution to prove the guilt of the accused subject to any statutory exception.
The maxim falsus in uno, falsus in omnibus has not received general acceptance in different jurisdictions in India, nor has it come to occupy the status of a rule of law.
It is merely a rule of caution.
All that it amounts to is that in such cases the testimony may be disregarded and not that it must be disregarded.
The doctrine merely involves the question of weight of evidence which a court may apply in a given set of circumstances but it is not a mandatory rule of evidence,
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A first information report (FIR) is not strong evidence on its own. It can only be used to back up what the person who made the report says in court, as allowed by law, or to show that their story has changed.
It can't be used as evidence against the person who made the report if they end up being accused of the crime. Also, it can’t be used to support or challenge what other witnesses say. In criminal law, it's a basic rule that someone is presumed innocent until proven guilty.
It's the job of the prosecution (the lawyers trying to prove the crime) to show that the accused person is guilty, unless a law says otherwise.
The idea that "if something is false in one part, it's false in everything" is not a widely accepted rule in India, and it's not a strict law.
It's just a warning to be careful.
It means that the court *can* ignore testimony if they find a lie, but they don't *have* to.
This idea is about how much weight to give evidence. The court can use it if they think it fits the situation, but it's not a required rule.
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Appeal No. 90 of 1953. Appeal under Article 132(1) of the Constitution of India from the Judgment and Order dated the 29th August, 1952, of the High Court of TravancoreCochin at Ernakulam in Original Petition No. 51 of 1952. K.Thomas and M. R. Krishna Pillai, for the appellant. Mathew P. Muricken, Advocate General for the State of Travancore Cochin (T. R. Balakrishna Ayyaiand Sardar Bahadur, with him), for the respondent. November 25. The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C. J. This appeal by leave of the High Court of Judicature of TravancoreCochin at Ernakulam is directed against an order of a Full Bench of that court dismissing an application for the issue of a writ of certiorari quashing the order of the Government of the united State of TravancoreCochin removing the appellant from service of the State and permanently debarring him from reappointment in service. The facts giving rise to the petition and the appeal are these: The petitioner entered the service of the erstwhile Travancore State in the year 1928. By promotion he became the Executive Engineer, Electricity Department in August 1937 and subsequently Electrical Engineer to Government in October 1944. He was the Electrical Engineer to Government on the 1st July 1949 when the States of Travancore and Co chin were integrated by a Covenant entered into between the rulers of the two States. By an order of the Government of the united State of Travancore Cochin dated the 11th August 1949, he was appointed as the officiating Chief Engineer (Electricity) in the State. In or about September 1949 the Government of the 1014 united State received serious complaints about the conduct and dealings of some of their senior officers and allegations of corruption, communalism, etc. were made against them. In December 1949 the Council of Ministers decided to take action against the appellant on a number of charges indicated in the resolution. On the 22nd December 1949, immediately after this resolution was passed, the petitioner was informed that he was suspended from service pending enquiry and he was requested to hand over charge to Sri K. P. Sridharan Nair forthwith. The petitioner complied with this order and handed over charge as directed. On the 21st March 1950 the following notification was issued: "Whereas Government are of opinion that there are sufficient grounds for making a formal and public inquiry into the truth of the imputation of misconduct of the officers mentioned below: Government, under section 3 of the Travancore Public Servants (Inquiries) Act, XI of 1122, hereby commit the said inquiry to Sri K. Sankaran, Judge, High Court, appointed Commissioner for the purpose. Government are further pleased under section 4 of the said Act to nominate Sri T. R. Balakrishna Ayyar, Government Pleader, High Court, to prosecute the inquiries on their behalf. The inquiries shall be conducted as early as possible. The officers referred to in para. 1 supra are: I. . . . . . . 2. Sri P. Joseph John". The petitioner was informed by notice of the 24th April 1950 about this inquiry. The notification was signed by Shri K. G. Menon, Chief Secretary to Government. Mr. Justice Sankaran took charge as Enquiry Commissioner and on the 11th May 1950 forwarded the articles of charges against the petitioner, the list of witnesses and the list of documents placed before him together with the notice regarding the commencement of the enquiry to Shri K. section Raghavan, Secre 1015 tary to Government, for service on the petitioner. A few days before the date fixed for the commencement of the enquiry the petitioner made an application to the Enquiry Commissioner for a direction to the Prosecutor to produce the files and papers relating to the various charges in the office of the Commissioner and for permission to him and his counsel to inspect the same. This application was allowed and he and his advocate were allowed to inspect the relevant files in the presence of the prosecutor or his deputy. On the 20th May 1950 when the enquiry commenced, the petitioner pleaded not guilty to the charges by a written statement. He was defended during the enquiry by Shri K. P. Abraham, a leading member of the Bar. A preliminary objection was taken to the Tribunal 's jurisdiction on the basis of Article 20 of the Covenant entered into between the rulers of Tra vancore and Cochin and it was contended that the proceedings before the Commissioner were criminal in nature and could not be commenced without the sanction of the Rajpramukh and that its absence was fatal to the enquiry. This objection was not immediately decided by the Commissioner but was ultimately overruled. On the 22nd November 1950 the peti tioner submitted detailed answers in writing to the various charges. The enquiry concluded on the 27th December 1950 and the Commissioner submitted his report to Government on the 17th February 1951. Some of the charges were held proved, while others were held not established. On the 5th July 1951 the following communication was sent to the petitioner by the Chief Secretary to Government: "I am to enclose here with a copy of the above report and to point out that the Government agree with the findings of the Inquiring Commissioner on the several charges against you. Government also agree with the Commissioner that the objections raised by you challenging the validity of the en quiry itself are not tenable. As against the 26 charges framed 1016 against you, the nine charges noted in the margin have not been established and they are accordingly dropped. As regards Charge No. IX in view of the extenuating circumstances, the irregularity is condoned. It is evident from the remaining charges, which have been established, that you have misused your official position as Electrical Engineer to Government and shown undue favouritism at the expense of State revenues, to private firms and issued materials from Government stores to private companies and individuals in violation of all rules (vide List A). It is also evident that departmental stores and departmental lorries have been diverted for your personal use in a number of cases. (Vide List B). You are also found guilty of having shown defiance and insubordination towards the authority of the Government by your refusal, in connection with the supply of power to the Nagercoil Electric Supply Corporation, to supply certain particulars which were called for and which it was your duty to furnish and by your refusal to withdraw the objectionable statement in your reply to the Government in spite of the Government order directing you to withdraw the same. The Government therefore propose to remove you from service from the date on which you were placed under suspension with permanent bar against future reappointment in service. You are requested to show cause within 15 days of the date of receipt of this notice with enclosures why action should not be taken against you as proposed in paragraph 4 above". The petitioner on receipt of this notice applied for time till the 10th September 1951 for showing cause. Time as prayed for was allowed. On the 10th September 1951 when the time granted at his own request 1017 was due to expire, he again applied for further time till the 10th November 1951. He was allowed further time till the 24th September 1951. On that date he again asked for further time till the 31 st October 1951 but this request was not granted. In spite of the fact that the petitioner was granted the time which he originally asked for and this was further extended by a fortnight, he furnished no explanation and did not show any cause against the notice issued to him. The petitioner having failed to avail himself of the opportunity to show cause against the action proposed against him, a draft of the proceedings relating to the enquiry was submitted to H. H. the Rajpramukh oil the 30th September 1951 and thereupon an order was issued for his removal from service from the date of suspension and debarring him from reappointment to service. The order was in proper form as having been made by H. H. the Rajpramukh and was authenticated by the Chief Secretary to Government. This order is dated the 1st October 1951. It may be mentioned that before the papers were submitted to H. H. the Rajpramukh, the report of the Commissioner was submitted to the Public Services Commission for their consideration. The Public Services Commission supported the action which the Government proposed to take against the petitioner. On the 9th October 1951 the petitioner was removed from service with effect from the 26th December 1949. Two months after the order of his removal, the petitioner submitted an ap plication for a reconsideration of the order removing him from service. This was rejected by an order dated the 25th January 1952. On these facts and in these circumstances an application was made before the High Court of Travancore Cocliin at Ernakulam on the 2nd June 1952 praying that the court may be pleased to issue a writ in the nature of certiorari or any other writ, directions or orders calling for the records relating to the orders dated the 9th October 1951 and the 25th January 1952 and to quash the same and direct the respondent to restore the petitioner to the office which he was lawfully to hold. It was contended in the application 1018 that the applicant had no reasonable opportunity of showing cause against his removal and that he was entitled to show cause twice, once after he was found guilty and next after the punishment had been decided and that the denial of this right rendered the order of dismissal illegal and void and that it offended against the principles of natural justice. It was further contended that the consultation with the Public Services Commission was not held in terms of the provisions of procedure for disciplinary action against Government servants and prescribed in Article 320, sub section 3(c) of the Constitution of India. A number of other grounds were also taken against the order of dismissal. The High Court negatived all the contentions of the petitioner and dismissed the petition. It however certified that the case involved substantial questions of law as to the interpretation of the Constitution and was a fit one for appeal to this Court. Mr. Thomas who argued the appeal on behalf of the appellant raised a number of points against the validity of the order removing the appellant from service and contended that the enquiry conducted into the charges made against him was wholly illegal and void. In our judgment, none of the points urged by the learned counsel was of a substantial character and all of them concerned matters of mere form and no valid reasons have been shown for disturbing the decision of the High Court. The question of the validity of an order of removal of a person employed in a civil capacity under the Union or a State falls to be determined on the provisions of Article 311 of the Constitution of India. This Article is in these terms: " (1) No person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a State shall be, dismissed or removed by an authority subordinate to that by which he was appointed. (2) No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause 1019 against the action proposed to be taken in regard to him. . . . . . . . . It is not said that the petitioner was removed by an authority subordinate to that by which he was appointed. There was no occasion to raise this issue because the order of removal had been made by the Rajpramukh and was expressed according to the provisions of Article 166 of the Constitution. The requirement therefore of sub clause (1) of Article 311 was fully satisfied. As regards the question whether the petitioner was given reasonable opportunity of showing cause against the action proposed to be taken in regard to him, the legal position in that respect and the nature of opportunity to be granted was stated by the Privy Council in the case of High Commissioner for India vs I. M. Lall(1) and it was held that when a stage is reached when definite conclusions have been come to as to the charges, and the actual punishment to follow is provisionally determined on, that the statute gives the civil servant an opportunity for which subsection (3) of section 240 of the Government of India Act, 1935 (which corresponds to Article 311) makes provision, and that at that stage a reasonable opportunity has to be afforded to the civil servant concerned. It was also held that there was no anomaly in the view that the statute contemplates a reasonable opportunity at more than one stage. In our opinion, in the present case the petitioner had reasonable opportunity at both stages to enter upon his defence. He fully availed himself of the first opportunity and though a reasonable opportunity was also given to him at the second stage, he failed to avail himself of it and it is not open to him now to say that the requirements of clause (2) of Article 311 have not been satisfied. It was not denied that the petitioner was given by the Enquiry Commissioner all facilities for entering on his defence. Before filing his written statement before the Enquiry Commissioner the petitioner and his counsel were afforded facility to inspect the (1) 131 1020 various files concerning the charges which he had to meet. After inspecting those files he filed a full written statement explaining those charges. He was defended in the enquiry by a leading lawyer and was afforded fullest opportunity to examine and cross examine the witnesses examined by the Commissioner. He was able to satisfy the Enquiry Comniissioner that out of the charges levelled against him a number of them were not established; but he failed to satisfy the Commissioner as regards the rest and the Enquiry Commissioner held them proved. After the enquiry was concluded the petitioner was furnished with a copy of the report of the Commissioner and was asked to show cause against the action proposed to be taken against him. He applied for two months ' time to show cause. This was granted. He made a further application for further time. This was also partially granted. He again asked for further time which was refused. It is difficult to say that the time allowed to him was not reasonable in view of the fact that be bad taken part in the enquiry before the Commis sioner and all the evidence had been taken in his presence and he had full opportunity to defend himself. All the material on which the Commissioner had reported against him on the charges found proved, was given in the report of the Commissioner and that was supplied to him with a show cause notice. The time allowed, in our opinion, was more than sufficient for him to enter on his defence and having failed to do so, he cannot be heard to say that he was not given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Mr. Thomas argued that the show cause notice was not in accordance with the provisions of Article 166 of the Constitution inasmuch as it was not expressed to have been made in the name of the Rajpramukh. As above mentioned, this notice was issued on behalf of the Government and was signed by the Chief Secretary of the united State of Travan core Cochin who had under the rules of business framed by the Rajpramukh the charge of the portfolio of "service and appointments" at the Secretariat level 1021 in this State. This was in our opinion substantial compliance with the directory provisions of Article 166 of the Constitution. It was held by this court in Dattatreya Moreshwar Pangarkar vs The State of Bombay(1) that clauses (1) and (2) of Article 166 are directory only and non compliance with them does not result in the order being invalid, and that in order to determine whether there is compliance with these provisions all that is necessary to be seen is whether there has been substantial compliance with those requirements. In the present case there can be no manner of doubt that the notice signed by the Chief Secretary of the State and expressed to be on behalf of the Government and giving opportunity to the petitioner to show cause against the action proposed to be taken against him was in substantial compliance with the provisions of the article. The petitioner accepted this notice and in pursuance of it applied for further time to put in his defence. He was twice granted this time. In these circumstances, the contention of Mr. Thomas that as the notice was not expressed as required under Article 166 it was invalid and therefore the requirements of Article 311 were not satisfied in this case must be held to be devoid of force. We are satisfied that all the requirements of Article 311 have been fully complied with in this case. It may also be mentioned that the High Court held that H. H. the Rajpramukh had intimation of the decision of the Council of Ministers and the action proposed to be taken against the petitioner and that in fact His Highness approved of the proposed action. Mr. Thomas further contended that the enquiry at the first stage also was invalid and irregular. He argued that the order appointing the Enquiry Commissioner was not expressed in proper form and that the Commissioner did not conduct the enquiry in accordance with the provisions of the Act. 'The notification ordering an enquiry set out above was issued after the Council of Ministers had passed a resolution to that effect. It must be presumed that in (1) ; 1022 the normal course. of business that resolution was communicated to the Rajpramukh. The order thus substantially complies with the requirements of law and in any case the effect of its not being expressed as directed by Article 166 does not vitiate the notification. The appellant, as already stated, took part in the enquiry, defended himself and fought every inch of the ground. That being so, it is not possible to hold that he was not given reasonable opportunity at the first stage to defend himself. It was contended that under the Travancore Public Servants (Inquiries) Act, 1122) it was only the Maharaja who could make an order under the provisions of that Act, and that the Ministers could not take any action. Emphasis was lai on the expression "Our Government" in the different provisions of the Act. We are unable to see any force in this contention. The expression "Our Government" means the Maharaja 's Government, in other words, the Government of the State of Travancore. After the integration of the two States of Travancore and Cochin and the formation of the United State of Travancore Cochin the expression "Our Government" has to be construed according to the new set up of Government and when the Council of Ministers had come into being, it is obvious that the expression "our Govern ment" as adapted to fit in with the new Constitution means "The Council of Ministers". It is an elementary principle of democratic Government prevailing in England and adopted in our Constitution that the Rajpramukh or the Governor as head of the State is in such matters merely a constitutional head and he is bound to accept the advice of his Ministers. In this situation it cannot be held that the order of the Government appointing the Enquiry Commissioner *as ultra vires and without jurisdiction. Another point taken by Mr. Thomas was that without the sanction of the Rajpramukh the proceedings could not be started against the petitioner and reliance for this contention was placed on Article 20 of the Covenant of the united State of Travancore and Cochin. This article is in these terms: "Except with the previous sanction of the Raj 1023 pramukh, no proceedings, civil or criminal, shall be instituted against any person in respect of any act done or purporting to be done in the execution of his duty as a servant of either Covenanting State before the appointed day". The High Court negatived this contention with the following observations: "Article 20 refers to the institution of civil and criminal proceedings, two well known expressions which are terms of art and clearly relate to civil and criminal proceedings before civil and criminal courts. The said two kinds of proceedings do not exhaust the totality of matters which can be called proceedings. is only in respect of civil and criminal proceeding that the sanction of the Rajpramukh is required under Article 20 of the Covenant. It is not contended on behalf of the petitioner that the proceedings before the Commissioner are criminal proceedings. The only contention is that they partake of the nature of criminal proceedings. In our judgment, Article 20 of the Covenant does not apply to proceedings which are not criminal but merely partake of that character". In these observations we fully concur. In our view departmental proceedings do not come within the ambit of the Article. Lastly it was urged that there was non compliance with the provisions of Article 320, clause 3(c) of the Constitution which provides that on all disciplinary matters affecting a person serving under the Government of India or the Government of a State in a civil capacity, including memorials or petitions relating to such matters, the Union Public Service Commission. or the State Public Service Commission, as the case may be, shall be consulted. In this case the Public Service Commission was in fact consulted in the matter of the action proposed against the petitioner by removing him. The Public Service Commission agreed to the proposed action. This consultation and the agreement was before the petitioner was asked to show cause why he should not be removed from service. The complaint of the petitioner is that the 1024 consultation with the Public Service Commission sould have been after he was asked to show cause but the petitioner did not show cause and that being so, no question arose of consulting the Public Service Commission over again. It was contended that the Public Service Commission should have been consulted on the review petition. To accede to this argument will mean that the State will have to consult the Public Service Commission as many times as he may choose to file review petitions. In our opinion the consultation envisaged by Article 320 does not extend so, far. In this case the report of the Commissioner was placed before the Public Service Commission and the latter approved of the action proposed to be taken. The appellant was given another opportunity to show cause but he did not avail himself of that opportunity or submit any explanation or show any cause on which the Public Service Commission could be consulted. The order of dismissal having been made there was in the circumstances no further necessity to consult the Public Service Commission. in our opinion therefore there is no force in this contention as well. After having examined all the arguments of Mr. Thomas, we are of the opinion that all the rules of natural justice were fully observed during the enquiry in this case, and the petitioner had the fullest opportunity to put in his defence both before the Enquiry Commissioner and against the action proposed to be taken against him. It was by reason of his own default that he failed to avail himself of the second opportunity. He put in a belated review but such a review is not provided for under the rules and in our opinion, it was not necessary to consult the Public Service Commission at that stage. Such petitions are not within the contemplation of the Constitution. For the reasons given above this appeal fails and is dismissed. In the circumstances of the case we make no order as to costs. Appeal dismissed.
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An enquiry under the provisions of the Travancore Public Servants (Inquiries) Act, (Act XI of 1132) was held against the petitioner in pursuance of a resolution passed by the Council of Ministers.
The petitioner took part in the proceedings, denied the charges and raised legal objection to the competence of the Enquiry Commission to hold the enquiry.
Some of the charges were held proved.
The petitioner was asked by the Chief Secretary to show cause why be should not be removed from service.
The petitioner 's request for extension of time to show cause was granted twice but refused a third time.
On his failure to avail himself of the opportunity to show cause against the action proposed to be taken against him, the report of the Enquiry Commissioner was submitted to the Public Services Commission and the latter approved of the action proposed to be taken against the petitioner.
The proceedings relating to the enquiry were submitted to the Rajpramukh and thereupon an order in proper form for the removal of the petitioner from service was made by the Rajpramukh and authenticated by the Chief Secretary to Government.
Held, (i) that under the provisions of article 311 of the Constitution a civil servant is entitled to have a reasonable opportunity to defend himself and show cause, both at the time of enquiry into the charges brought against him and at the stage when definite conclusions have been come to on the charges and the actual punishment to follow is provisionally determined upon.
The position cannot be characterised as anomalous if the statute contemplates a reasonable opportunity at more than one stage.
In the present case the petitioner had reasonable opportunity to enter upon his defence at both the stages.
He fully availed himself of the first opportunity, but refused to avail himself of the second opportunity which was offered to him.
All the rules of natural justice were observed in the case.
(ii) The provisions of article 166(1) and (2) are directory, not mandatory; and, in order to determine whether there has been compliance with the said provisions, all that is necessary to see is that the requirements of the sub sections are met in substance.
(iii) After the integration of the two States of Travancore and Cochin, the expression " Our Government" means "The Council of Ministers" under the new set up of democratic Government in the United State.
The Rajpramukh as the head of the State is merely at constitutional head and is bound to accept the advice of his Ministers.
(iv) The consultation envisaged by article 320(3) does not extend to review petitions which the petitioner may choose to file as many times as he likes.
(v) The sanction of the Rajpramukli under article 20 of the Covenant of the United State of Travancore Cochin is necessary only before the institution of civil or criminal proceedings.
Departmental proceedings do not fall within the ambit of the said Article.
1013 Dattatreya Moreshwar Pangarkar vs The State of Bombay ([1952] S.C.R. 612), referred to.
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A formal investigation, as allowed by the Travancore Public Servants (Inquiries) Act, was done on the person filing the lawsuit because the government’s group of leaders (Council of Ministers) decided to do it.
The person involved participated in the investigation. He said the accusations were false and argued that the investigation group (Enquiry Commission) didn't have the authority to do the investigation. Some of the accusations were found to be true.
The top government official (Chief Secretary) asked the person why he shouldn't be fired. The person asked for more time to explain himself. He was given more time twice, but not a third time.
Because he didn't use the chance to explain why he shouldn't be punished, the investigation group's report was sent to the Public Services Commission. This group agreed with the proposed punishment. The documents about the investigation were sent to the Rajpramukh (the head of the state). Then, the Rajpramukh officially ordered the person to be fired, and the Chief Secretary confirmed the order.
The court decided: (i) According to article 311 of the Constitution, a government worker has the right to a fair chance to defend himself. This means he can explain himself both during the investigation of the charges and when the specific punishment has been decided. It's not strange if the law allows for a fair chance at more than one point. In this case, the person had a fair chance to defend himself at both points. He used the first chance but refused the second. All the basic rules of fairness were followed.
(ii) The rules in article 166(1) and (2) are guidelines, not strict requirements. To see if they were followed, you just need to check if the main points of those rules were met.
(iii) After Travancore and Cochin joined together to form a new state, the term "Our Government" now means "The Council of Ministers" under the new democratic government. The Rajpramukh, as the head of the state, is only a symbolic head and must follow the advice of his government leaders (Ministers).
(iv) The discussion mentioned in article 320(3) doesn't apply to repeated requests for review that the person might file as many times as he wants.
(v) Getting approval from the Rajpramukh under article 20 of the Covenant of the United State of Travancore Cochin is only required before starting regular court cases (civil or criminal proceedings). Departmental proceedings, which are internal to the government, are not covered by this rule.
1013 Dattatreya Moreshwar Pangarkar vs The State of Bombay ([1952] S.C.R. 612), was mentioned as a related case.
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Civil Appeal No. 98 of 1962. Appeal from the judgment and decree dated March 7, 1957, of the Bombay High Court in First Appeals Nos. 897 of 1951 and 66 of 1952. section section Shukla for the appellant. G. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondents Nos. 1, 3 and 7. A.V. Viswanatha Sastri and Sardar Baliadur, for respondent No. 2. 522 1963. May 2. The judgment of the Court was delivered by WANCHOO J. This is an appeal on a certificate granted by the Bombay High Court and arises out of a suit filed by the appellant as a Hindu reversioner to recover possession of properties alienated by a Hindu widow. The property in suit was the self acquired property of one Ganpatrao jairam who died in 1894 leaving behind two widows, Annapurnabai and Sarswatibai. Ganpatrao had executed a will by which property in village Dahisar was given to Annapurnabai and property in village Nagaon was given to Sarswatibai. The will further provided that a dwelling house together with structures and open land situate at Thana would remain with his two wives who would enjoy the same. There were other dispositions in the will with which we are however not concerned now. Annapurnabai was also authorised to make an adoption on the advice of the executors appointed under the will; but the adopted son was to have no right or connection with the movable and immovable property devised to Annapurnabai during her life time and was to take the property devised to her only after her death. The adopted son was also to take the immovable property bequeathed to Saraswatibai after her death. It may be added that no son was adopted by Annapurnabai and this aspect of the matter therefore need not be considered further. Annapurnabai died on September 17, 1915, and she had executed a will before her death. After Annapurnabai 's death, Saraswatibai began to manage the property. It may be added that Sarswatibai had adopted a son, but this was saidto beagainst the provision in the will of herhusband which specifically directed that she could only adopt if Annapumabai died without making an adoption from amongst the family on the advice of the executors. There was therefore 523 litigation in connection with the adoption between Saraswatibai and Balkrishna Waman, one of the legatees under the will of Ganpatrao, which ended in favour of Balkrishna Waman. Saraswatibai died in 1943. The case of the appellant was that the will of Ganpatrao merely gave widow 's estate to Annapurnabai and Saraswatibai. Consequently Annapurnabai could not dispose of the property given to her by will and the bequests made by her were not binding on the appellant as the next reversioner. It was also alleged that the will made by Annapurnabai was vitiated by the exercise of undue influence brought to bear on her by Balkrishna Waman, who was the husband of her niece. Saraswatibai also made certain alienations and the appellant contended that the sale by Saraswatibai was due to the undue influence exercised on her by Balkrishna Waman, and in any case there was no legal necessity for transfer and therefore the transfer was not binding on the appellant. The main defendant in the suit was Ganesh, a son of Balkrishna Waman. In addition there were twelve other defendants who were alienees in possession of the property and were joined in the suit as the appellant prayed for recovery of possession from them also. The suit was resisted by the main defendant Ganesh for two main reasons. It was first contended that the appellant was an undischarged insolvent at the time succession opened in 1943 and therefore whatever property might come to him as a reversioner vested in the official receiver. Therefore, the appellant had no right to bring a suit to recover possession even after his absolute discharge because the property never vested in him. Secondly, it was contended that by his will Ganpatrao had granted an absolute estate to the two widows and therefore 524 Annapurnabai had full right to make a will with respect to the property given to her and Sarswatibai had the right to make alienations if she thought fit. Besides these two main defences, it was also contended that the appellant was not the nearest reversioner and the alienations made by Sarswatibai were for legal necessity. The same defence was raised by the other defendants. In addition the alienees from Sarswatibai contended that they were bona fide pur chasers for value without notice of the defect in their vendor 's title and therefore the alienations made in their favour could not be set aside. They further pleaded that they had made substantial improvements on the properties purchased by them. On these pleadings as many as eighteen issues were framed by the trial court. Two of these issues covered the two main defences which were raised, namely, (1) Is the plaintiff entitled to maintain the suit due to his insolvency as alleged by the defendants? (3) Had Annapurnabai no authority to will away the properties in her possession? The trial court held that the plaintiff was entitled to maintain the suit. The third issue obviously raised the question whether the bequest to Annapurnabai was that of widow 's estate or an absolute bequest, and the trial court held in that connection that the bequest to Annapurnabai was that of widow 's estate and therefore she had no right to will away the properties in her possession. The trial court also gave findings on the remaining issues and finally declared that the alienations made by Saraswatibai on March 29, 1930 and April 16, 1935 were not for legal necesssity and therefore were not binding on the appellant and the defendants of the suit were directed to deliver 525 possession of the suit properties to the appellant. Inquiry as to mesne profits was also directed and Rd finally the trial court ordered that notice be given to the receiver in the insolvency application No. 48 of 1939 to consider if he wanted the property to be made available for distribution amongst creditors in the aforementioned application. The defendants then went in appeal to the High Court and two separate appeals were filed one by original defendant No. 3 and the other by original defendant No. I and some others. The two appeals were heard together by the High Court and the two principal questions which arose, according to the High Court, were as to (i) the effect of the dispositions made by Ganpatrao under his will, and (ii) the right of the plaintiff to maintain the suit when he was, at the date when the succession opened, an undischarged insolvent, These two questions, it will be seen, correspond to the two issues raised by the trial court, which we have set out above. The High Court first considered the right of the plaintiff to maintain the suit and held that the plaintiff had no right to maintain the suit, as he was an undischarged insolvent at the time the succession opened and he could not maintain the suit even after his absolute discharge. The High Court further held that the disposition in favour of Annapurnabai of the property in Dahisar amounted to conferment of absolute estate on her and further that the disposition in favour of Saraswatibai of the property in Nagaon amounted to conferment of absolute estate on her. On these findings the High Court dismissed the suit. Thereupon the appellant applied for a. certificate which was granted; and that is how the matter has come up before us. 526 The first question that falls for consideration is whether the appellant can maintain the suit. It is necessary in that connection to see what the facts are with respect to the insolvency of the appellant. The appellant had filed an insolvency application in 1939 and was adjudged insolvent on March 11, 1940 and two years time was granted to him to apply for discharge. The appellant applied for discharge on July 6, 1942 and he was granted an absolute discharge in January, 1944. The succession to the estate of Ganpatrao had however opened on May 4, 1943 when the appellant was still an undischarged insolvent. Consequently, the case of the defendants respondents was that under section 28 (4) of the Provincial Insolvency Act, No. 5 of 1920, (hereinafter referred to as the Act), the property which devolved on the insolvent after the date of the order of adjudication and before his discharge forthwith vested in the court or receiver. It is further urged that the property having vested in the court or receiver it must remain so vested even after the absolute discharge of the appellant for the order of absolute discharge merely absolved the insolvent from liability from payment of debts other than those mentioned in section 44 of the Act. Therefore when the suit was brought in 1947 after the discharge the appellant had no title in the property as the title still vested in the court or receiver, and consequently the appellant could not maintain the suit for ejectment against those in possession of the property as he had no title on which he could base his right to sue for ejectment. The question therefore that arises for determination is whether an insolvent on whom property devolves when he is an undischarged insolvent can maintain a suit for the recovery of the property after his absolute discharge. The decision of that depends on what effect the order of absolute discharge has on the insolvent 's title to the property 527 which develoved on him when he was still an undischarged insolvent. It is to this narrow question, (namely, whether a suit brought by an insolvent after his absolute discharge with respect to property which devolved on him when he was an undischarged insolvent can be maintained by him), that we address ourselves hereafter. In view of this narrow question it is in our opinion unnecessary to consider those cases on some of which the High Court has relied which deal with the, right of the insolvent to maintain a suit while he is still an insolvent. What we say hereafter will only apply to a case where the suit is brought by an insolvent after his absolute discharge, though the right to property which is in suit devolved on him when he was an undischarged insolvent. It will be necessary in this connection to consider briefly the scheme of the Act, to decide exactly what the consequences are when an absolute discharge is granted to an insolvent. Section 6 of the Act defines what are acts of insolvency. Section 7 gives power to a debtor or a creditor to make an application for insolvency, if the debtor has committed an act of insolvency. Section 9 deals with applications made by creditors and section 10 by debtors. Section 19 provides for the procedure for hearing an insolvency petition. Sections 20 and 21 provide for interim proceedings against the debtor and appointment of an interim receiver. Section 25 provides for dismissal of the petition on grounds mentioned therein Section 27 gives power to the court to make an order of adjudication and the Court also has to fix a time therein within which the debtor shall apply for his discharge. Section 28 with which we are mainly concerned lays down the effect of an order of adjudication. Sub section (2) thereof provides that on the making of an order of adjudication, the whole of the property 528 of the insolvent shall vest in the court or in a receiver and shall become divisible among the creditors Under sub section (7) this vesting will relate back to and take effect from the date of the presentation of the petition on which the order of adjudication is made. Sub section (4) which is also material lays down that "all property which is acquired by or devolves on the insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the court or receiver, and the provisions of sub section (2) shall apply in respect thereof." This sub section undoubtedly vests in) the court or receiver any property which the insolvent acquires after the order of adjudication and before his discharge or which devolves on him in any manner, and such vesting takes place forthwith Section 33 provides for the making of a schedule of creditors after the order of adjudication and section 34 lays down what debts are provable under the Act. Section 56 provides for the appointment of a receiver and section 59 lays down the duties and powers of the receiver Scction 61 provides for priority of debts and section 62 for calculation of dividends. Section 64 lays down that when the receiver has realised all the property of the insolvent or so much thereof as can, in the opinion of the court, be realised without needlessly protracting the receivership, he shall declare a final dividend. But before doing so, the receiver has to give notice to persons whose claims as creditors have been notified but not proved, that if they do not prove their claims within the time limited by the notice, he will proceed to make a final dividend without regard to their claims. After the expiration of such time, the property of the insolvent shall be divided amongst the creditors entered in the schedule without regard to the claims of any other persons. Then comes section 67 which lays down that " 'the insol vent shall be entitled to any surplus remaining after payment in full of his creditors with interest as 529 provided by this Act, and of the expenses of the proceedings taken thereunder. " It is clear from this scheme of the Act that the entire property of the insolvent belonging to him on the date the petition for insolvency is made vests in the receiver under section 28 (2). Further under section 28 (4) if any property is acquired by the insolvent or devolves on him after the order of adjudication and before he is discharged, that property also vests in the court or receiver forthwith. The receiver has to administer the property so vested in him and he has the power to sell the property and do various other acts provided in section 59 for the purpose of the administration of the property. Generally speaking the receiver sells the property which vests in him and then distributes the money amongst the creditors who have proved their debts. But before the receiver declares the final dividend he has to give one more opportunity under section 64 to creditors who might not have proved their debts at the earlier stage, to come and prove their debts. This will generally happen when all the property of the insolvent has been disposed of by the receiver, though section 64 contemplates that the final dividend may be declared even if some property has not been disposed of when in the opinion of the court it will needlessly protract the receivership. Section 67 then finally provides that if any surplus is left in the hands of the receiver after payment in full to the creditors with interest and of the expenses of the proceedings under the Act, the surplus is to be paid to the insolvent. As we have said already, the final dividend is generally declared after all the property of the insolvent is disposed of but there may be cases when a final dividend may be declared without the disposition of all the property of the insolvent if in the opinion of the court that would result in needlessly protracting the receivership. But it is clear that under section 67 if there is 530 any surplus remaining in the hands of the receiver that surplus has to go to the insolvent. Though this is the general scheme of the Act with reference to administration of property which vests in the receiver after an order of adjudication, there are two exceptions which may be noticed. Section 35 provides that where, in the opinion of the court, a debtor ought not to have been adjudged insolvent, or where it is proved to the satisfaction of the court that the debts of the insolvent have been paid in full, the court shall, on the application of the debtor, or of any other person interested, by order in writing, annul the adjudication. Section 37 then provides that "where an adjudication is annulled, all sales and dispositions of property and payments duly made, and all acts therefore done, by the court or receiver, shall be valid ; but, subject as aforesaid, the property of the debtor who was adjudged insolvent shall vest in such person as the court may appoint, or, in default 'of such appoint ment, shall revert to the debtor to the extent of his right or interest therein on such conditions (if any) as the court may, by order in writing, declare. " Special stress has been laid on behalf of the respondents on the provision in section 37 which specifically lays down that the property of the debtor in case of annulment shall vest in such person as the court may appoint or in default of such appointment shall revert to the debtor, thus divesting the court or the receiver of the property which had vested in them under section 28 (2) or section 28 (4). The second exception is to be found in section 38 which allows compositions and schemes of arrangement. Section 39 then provides that if the court approves the composition or the scheme of arrangement, the terms shall be embodied in the order of the court and the order of adjudication shall be annulled and the provisions of section 37 shall apply to such annulment. 531 Lastly, we come to what happens where the estate of the insolvent has been administered in the usual way which we have set out already. Section 41 authorises the debtor to apply for an order of discharge. On such an application the court has to consider the objection, if any, made by any creditor and also the report of the receiver in case a receiver has been appointed and thereafter the court may (a) grant or refuse an absolute order of discharge ; or (b) suspend the operation of the order for a specified time ; or (c) grant an order of discharge subject.to any conditions with respect to any earnings or income which may afterwards become due to the insolvent, or with respect to his after acquired property. Section 42 then lays down in what circumstances the court, shall refuse to grant an absolute order of discharge ; and we may refer to only cl. (a) of section 42 (1) in that connection which gives power to the court to refuse to grant an absolute order of discharge if it finds that the insolvent 's assets are not of a value equal to eight annas in the rupee on the amount of his unsecured liabilities, unless the in solvent satisfies the court that the fact that the assets are not of a value equal to eight annas in the rupee on the amount of his unsecured liabilities has arisen from circumstances for which he cannot justly be held responsible. Section 43 provides that if the debtor does not apply for discharge within the period fixed by the court, or does not appear on the day fixed for hearing his application for discharge, the court may annul the order of adjudication or make such other order as it may think fit, and if the adjudication is so annulled, the provisions 532 of section 37 shall apply. Section 44 then provides for the effect of the order of discharge. Sub section (1) thereof mentions the debts from which the insolvent will not be released on an order of discharge. Subsection (2) then provides that "save as otherwise provided by sub section (I.), an order of discharge shall release the insolvent from all debts provable under this Act. " Stress is laid on behalf of the respondents on this provision and it is urged that though sub section (2) provides that the insolvent shall be released from all debts provable under the Act, it does not provide for revesting any property in the insolvent on an order of discharge. It is thus clear from the above analysis of the provisions of the Act that if there is no annulment of the adjudication and no sanction of a composition or scheme of arrangement resulting in an order of annulment, insolvency proceedings terminate generally after the administration of the properties is complete and a discharge is granted. The discharge may be absolute in which case the consequences mentioned in section 44 (2) apply. On the other hand discharge may be conditional in which case also the consequences of section 44 (2) apply subject to the conditions attached to the discharge in accordance with sub section 41 (2) (c). Further in considering whether an absolute order of discharge should be granted or not. the court has to consider whether the in solvent 's assets are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities. Further before granting a discharge the court has to consider the report of the receiver if one is appointed. It is therefore reasonable to think that generally speaking an order of discharge will only be made after the court has considered the report of the receiver and has also considered that the assets of the insolvent ; are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities. It is also not unreasonable 533 to think in view of all the provisions that no order of discharge will generally be made till all the assets of the insolvent are realised, (see section 64), though, as we have already pointed out, it is possible to declare a final dividend even though all the property of the insolvent has not been realised if in the opinion of the court such realisation would needlessly protract the receivership. In such a case however the court would generally pass an order protecting the interests of the creditors with respect to the property which has not been realised before the order of discharge. Finally there is section 67, which provides that if there is any surplus remaining after payment in full of his creditors with interest and of the expenses of the proceedings taken under the Act, it shall go to the insolvent. The key to the solution of the narrow question posed before us is in our opinion to be found in section 67. It is true that section 44 when it provides for the consequences of an order of discharge does not lay down that any property of the insolvent remaining undisposed of will revest in him and to that extent it is in contrast to section 37, which provides for the effect of an order of annulment and in effect lays down that all sales and dispositions of property made by the receiver shall be valid, but if any property remains undisposed of it shall vest in such person as the court may appoint or in default of any appointment shall revert to the debtor insolvent. The reason why section 44 has not provided specifically for the reversion of undisposed property to the insolvent obviously is that the scheme of the Act does not contemplate where there is no annulment that any property which vested in the receiver would remain undisposed of. It as section 74 shows the final dividend is generally declared when he receiver has realised all the property of the insolvent there would be no property left unadministered usually when an order of discharge comes to be passed. It is however urged on behalf of the respondents 534 that there is nothing in sections 41 and 42 to suggest that a discharge can only be granted after a final dividend is declared and therefore there may be cases where administration by the receiver may still go on after discharge has been ordered. This argument, in our opinion, is not quite correct, for cl. (a) to section 42 (1) definitely requires the court to consider whether the assets are of a value equal to eight annas in the rupee on the amount of his unsecured liabilities, and this the Court generally speaking can only find out after all the property has been realised and final dividend has been declared. But, as we have pointed out, it is possible to declare a final dividend and thereafter to get an order of discharge even though some property may not have been disposed of where in the opinion of the court the realisation of such property would needlessly protract the receivership. Therefore it may be possible in some cases that all the property of the insolvent may not be disposed of before an order of discharge is made. But in such a case the court will generally pass orders with respect to the property not disposed of when granting ' an order of discharge. It is true that the Act does not contemplate that an insolvent might get an order of discharge and yet retain part of his property free from the liability to pay debts provable under the Act, in case all the debts have not been paid off But it is here that we have to look to the effect of section 67 of the Act. That section lays down that the insolvent shall be entitled to any surplus remaining after payment in full of his creditors with interest as provided ' by the Act and of the expenses of the proceedings taken thereunder. Now, often this surplus would be in the form of money. But take a case where an insolvent has come into property by devolution after he became insolvent and before his discharge; and suppose that the property which was devolved on him is worth a few lacs while his debts are only a few thousands. In such a case the receiver would not proceed to sell all the property; he would only sell so much of the 535 property as would satisfy the debts in full and meet the expenses of the proceedings in insolvency; the rest of the property whether movable or immovable would not be converted into money. It seems to us that it would not be wrong in such a case to call such property whether movable or immovable which remains after payment in full to the creditors with interest and of the expenses of the proceedings in insolvency as "surplus". To this surplus the insolvent is entitled. In such a case therefore it would be proper to hold that if any property remains undisposed of in the shape of surplus that vests back in the insolvent, just as surplus in the shape of money would. It is true that cases may arise where what devolves on the insolvent after the order of adjudication and before his discharge may not be easily realisable or may be a matter of dispute which may lead to litigation lasting for many years. In such a case the receiver would be entitled to declare a final dividend if the court is of opinion that the property which has de ' volved on the insolvent is subject of protracted litigation and it cannot be realised without needlessly protracting the receivership. Such property would also in our opinion be surplus to which the insolvent would be entitled under section 67 subject to his complying in full with the provisions of that section i.e. paying his creditors in full with interest and meeting the expenses of the proceedings taken under the Act. A third class of cases may arise where the court may not come to know of the property which devolves on the insolvent and grants a discharge in ignorance of such devolution, may be because the insolvent did not bring it to the notice of the court. In such a case also in principle we see no difficulty in holding that the property which vested in the receiver under section 28 (4) and which remained undisposed of by him before the discharge of the insolvent would still be surplus to which the insolvent would be entitled, though he may not be permitted to make full use of 536 it until he complies with the conditions in section 67, namely, until payment in full is made to his creditors and the expenses of the proceedings in insolvency are met by him out of the property so remaining undisposed of. Though therefore there is no specific provision in terms in section 44 (2) with respect to property that may remain undisposed of by the receiver or by the court like the provision in section 37 on an order of annulment, it seems to us that section 67 by necessary implication provides the answer to a case like the present. All the property which remains undisposed of at the time of discharge must be treated as surplus to which the insolvent is entitled. The insolvent will thus get title to all such property and the vesting in the receiver whether under section 28 (2) or section 28(4) would come to an end on an order of discharge subject always to the insolvent complying in full with the conditions of section 67 in case they have not been complied with before his discharge, for he is entitled only to the surplus after the creditors have been paid in full and the expenses of all proceedings in insol vency have been met Any other view of the effect of discharge would result in this startling position that though the insolvent is freed from his debts under section 44 (2) and is a freeman for all purposes the property which was his and which vested in the receiver under section 28 (4) will never come back to him and will always remain vested either in the court or the receiver. We have no doubt that the Act did not contemplate such a situation. We have already indicated the reason why section 44 does not provide for revesting of property in the insolvent in contrast to the provision therefor in section 37. Generally speaking it is not expected that there would be any property left to revest in the insolvent after the administration in insolvency is over. We have therefore to look to section 67 which provides that the insolvent is entitled to any surplus remaining after payment in full of his creditors and after meeting the expenses of the proceedings taken under the Act; and it is that 537 section which gives title to the insolvent in the property which remains undisposed of for any reason before his discharge subject to the conditions of that section being fulfilled even after the discharge. just as the Act does not contemplate that an insolvent would get an order of discharge and yet retain part of his property without meeting the debts provable under the Act in full, it is to our mind equally clear that the Act does not contemplate that after an insolvent has been discharged his undisposed of property, if any, should for ever remain in the possession of the court or receiver, even though in a particular case the creditors may have been paid in full out of the property disposed of ' and all the expenses of the proceedings under the Act have been met. In such a case it seems to us that it is section 67 which must come to the aid of the insolvent and the property which remains undisposed of must be treated as surplus and he gets title to it. Where however the insolvent has been discharged without fully meeting the conditions of section 67, he would in our opinion be still entitled to the surplus, even if it be in the shape of undisposed property, subject to his fulfilling the conditions of section 67. It may be added that there is nothing in the Act which takes away the right of the insolvent to sue in courts after he has been granted a discharge, for he then becomes a free man. In such a situation we are of opinion that he would certainly be entitled to sue in court for recovery of his undisposed of property, if it is in the possession of a third party, after his discharge and such property cannot for ever remain vested in the court or receiver. All that justice requires is that in case the conditions of section 67 have not been fulfilled such property should be subject to those conditions, namely, that he should be liable to discharge his creditors in full. with interest and to meet the expenses of all proceedings taken under the Act. Subject to these conditions the insolvent in our opinion would be entitled to undisposed of property on discharge and would be 538 free to deal with it as any other person and, if necessary, to file a suit to recover it. It remains now to consider some of the cases which were cited at the bar. We have already pointed out that it is unnecessary to consider those cases which deal with the right of the insolvent to file a suit while he is still undischarged, though even on this point there seems to be difference of opinion in various High Courts as to the power of the insolvent; nor is it necessary to refer to the rule in Cohen vs Mitchel (1), which has found statutory expression in section 47 of the Bankruptcy Act, 1914, (4 & 5 Geo.5, ch. 59). Section 47 of the English Bank ruptcy Act deals with transactions by a bankrupt with any person dealing with him bona fide and for value, in respect of property, whether real or personal, acquired by the bankrupt after the adjudication, and provides that all such transactions shall be valid if completed before intervention by the trustee (i. e. the receiver). In England, therefore intervention by the trustee (i.e. the receiver) is required before completion of the transaction and if the trustee does not intervene the transactions arc generally speaking good. That position of law however does not apply in India because of section 28 (4), which specifically lays down that all the property which is acquired by or devolves on an insolvent after the date of an order of adjudication and before his discharge shall forthwith vest in the court or receivers Learned counsel for the parties have not been able to cite any case which deals exactly with a case like the one before us. We may however refer to certain observations of learned judges which may be helpful to show how the position has been understood by some High Courts with respect to surplus and also with respect to what happens to undisposed of property after a (1) , 539 discharge, though there is no discussion on the subject in the cases cited. In Sayad Daud Sayad Mohd. vs Mulna Mohd. Sayad (1), the Bombay High Court was dealing with a case where an insolvent had filed a suit to recover property four days after he had been adjudicated insolvent '. Later the official assignee wanted to join as a new plaintiff when he came to know of the suit; but by that time it appears that limitation had expired, and the question arose whether the suit would be said to have been filed afresh on the date the official assignee intervened. It was held that that was so, for the insolvent could not maintain a suit after he had been adjudicated insolvent and so far as the official assignee was concerned the suit must be held to have been filed on the date he asked for intervention and would therefore be barred by time. It will be seen that the case deals with a suit brought by an undischarged insolvent and not with a suit as in the present case brought by a discharged insolvent. But the learned judges observed that the vesting order for the time being was paramount, even though an insolvent might eventually be entitled to what might remain as surplus after satisfying his creditors, thus showing that what remains as surplus becomes the property of the insolvent. Yellavajjhula Surayya vs Tummalapalli Mangayya (2) is a case more directly in point. In that case the plaintiff was declared an insolvent in 1919. He was still an insolvent in 1929 when certain property devolved on him as reversioner. He was granted an absolute discharge in August 1931. No creditors had come to prove their debts or to take steps between 1919 and 1929; nor did the official receiver take any step prior to 1929 or between 1929 to 1931. After his absolute discharge, the plaintiff instituted a suit for recovering the property. , In that (1) (2) A.I.R. (1941) Mad. 345 540 suit, Varadachariar J. observed and, if we may say so with respect, rightly that the construction of cl. (4) of section 28 was not free from difficulty; but went on to add that there was nothing in the policy of the Insolvency Law to suggest that it was intended to benefit strangers, and in the circumstances the plain ' tiff could maintain the suit, though the learned judge added that nothing that was said in the judge ment would prejudice the right, if any, of the official receiver or of the creditors of the plaintiff to assert such rights and remedies as they might have in law in respect of the suit properties. It will be seen that this case was almost similar to the case before us and the court held that in such circumstances the discharged insolvent could maintain the suit, though the reasoning was only in one sentence, namely, that there was nothing in the policy of the Insolvency Law to suggest that it was intended to benefit strangers. In Rup Narain Singh vs Har Gopal Tewari an insolvent acquired some property after the order of adjudication. It was apparently not brought to the notice of the receiver and was mortgaged by the insolvent while he was still undischarged. Later after his discharge the mortgagee brought a suit to enforce the mortgage. The insolvent mortgagor had transferred part of the property to other persons who were also made parties. These persons raised the defence that as the mortgagor was an undischarged insolvent when he executed the mortgage, it was void. The High Court negatived this contention and relying on section 43 of the Transfer of property Act decreed the suit. In the course of the judgment the High Court however observed that after the order of discharge was passed, the property had been divested from the receiver and revested in the insol vent, though no reason was given for this view. In Dewan Chand vs Manak Chand (2) the facts were that a certain property devolved on an insolvent, (1) I.L.R. (1933) 55 All. (2) A.I.R. (1934) Lab. 809 541 who made a mortgage of it, apparently without bringing it to the notice of the receiver. After the insolvent was discharged, a suit was brought to enforce the mortgage and a question arose whether section 43 of the Transfer of property Act would apply. In that connection the High Court observed that after the insolvent was discharged the property in question must be considered to have revested in the mortgagor on his discharge in the absence of any order to the contrary by the court. We may now notice some cases on which reliance is placed to suggest that undisposed of property can never vest in the insolvent, even after he gets a discharge. In Arjun Das Kundu vs Marchhiya Telinee (1), it was held that "an absolute order of discharge of an insolvent does not release any property acquired by him before such order from the liability to meet his debts provable in insolvency. " That case, however, was only dealing with the effect of section 44 (2) of the Act and it was held that if there was any property which vested in the official receiver either under section 28 (2) or under section 28(4) and that property was not disposed of before the order of discharge, the creditors would still have a right to get their debts discharged by the sale of that property even though they might not have proved the debts at an earlier stage. This case does not in our opinion support the proposition contended for by the respon dents. It only lays down that the property which remains undisposed of would still be subject to the debts provable under the Act, and this is what in our opinion is the effect of section 67 where only the surplus revests in the insolvent. The next case is Kanshi Ram vs Hari Ram (2) there the facts were that a discharge was granted on the re port of the official receiver to the effect that the insolvent 's assets had been completely disposed of. Thereafter it was discovered that some property had (1) I.L.R. (2) A.I.R. (1937) Lah. 542 devolved on the insolvent before his discharge and was not within the knowledge of the receiver. The High Court held that such property was liable to meet the debts which had not been paid in full before the discharge. This case also in our opinion only lays down that any surplus in the hands of the insolvent after his discharge is liable to the debts provable under the Act if they have not been paid in full, and this is in accordance with the provisions of section 67, for the insolvent is only entitled to that property or money as surplus which remains after payment of his debts in full and after meeting all expenses of the proceedings under the Act. The last case to which reference may be made is Parsu vs Balaji (1). In that case also the insolvent had been discharged but his debts had not been paid in full. It was held in those circumstances that any undisposed of property would still be liable to meet the debts provable under the Act. This again in our opinion is in accord with section 67 where the insolvent is only entitled to that surplus which remains after his debts have been paid in full and all the expenses of the proceedings taken under the Act have been met. Therefore, on a careful consideration of the scheme of the Act and on a review of the authorities which have been cited at the bar, we are of opinion that an insolvent is entitled to get back any undisposed of property as surplus when an absolute order of discharge is made in his favour, subject always to the condition that if any of the debts provable under the Act have not been discharged before the order of discharge, the property would remain liable to dis charge those debts and also meet the expenses of all proceedings taken under the Act till they arc fully met. The view of the High Court that the suit is not maintainable is therefore not correct. The order of the trial court by which it held that the suit was maintainable and provided that notice should be (1) I.L.R. 543 given to the receiver in insolvency application No. 48 of 1939 to consider if be wanted the property to be made available for distribution amongst creditors, is correct. Now we come to the second point raised before the High Court, namely, the effect of the will of Ganpatrao. By the first clause of the will, Ganpatrao appointed three executors. The bequest in favour of Annapumabai was in these terms : "The entire immovable property situate at the village of Dahisar, Taluka Kalyan, consisting of lands and tenements etc. is given to my senior wife, Annapoorna. During her life time she shall enjoy, as owner, the income therefrom, in any manner she may like. No one shall have (any) right, title or interest therein. " The bequest in favour of Sarswatibai was in these terms : "The entire immovable property situate at the village of Nagaon, Taluka Kalyan, consisting of lands and tenements etc. is given to my junior wife, Sarswati. During her life time, she shall enjoy, as owner, only the income therefrom in any manner she may like." Then there was another clause which gave them some property jointly, which was in these terms : "The property consisting of a dwelling house and other structures and open space etc. situate at Thana shall remain with my two wives. Hence, they should live amicably and enjoy the same. " The High Court has held that the estate given to Annapurnabai in the lands at village Dahisar and 544 to Sarswatibai in the lands at village Nagaon and the estate given to them, in the house at Thana was an absolute estate subject to defeasance of the estate on their deaths in case a son was adopted by Annapurnabai. It is true that the two clauses with respect to the demise of properties in villages Dahisar and Nagaon to the two widows use the word "owner" ; but we have to read the clauses as a whole together with the surrounding circumstances then prevailing as also in contrast to the other clauses in the will to determine the intention of the testator. Now the clause with respect to village Dahisar is that the property in Dahisar was given to Annapurnabai. and then goes on to say that during her life time she would enjoy as owner the income there from in any manner she liked and no one else would have any right, title or interest therein Reading the clause as a whole it seems to us fairly clear that the intention of the testator was that the property given to Annapurnabai was for her life and she was entitled to enjoy the income therefrom in any manner she liked without any interference by any one. If the testator 's intention had been to give an absolute estate to Annapurnabai, there was no reason why he should have gone on to say in that clause, "during her life time she shall enjoy as owner the income therefrom, in any manner she may like", for that would have been unnecessary in the case of a person who was given an absolute estate. Therefore these words appearing in the second clause are clearly words of, limitation and show on the reading of the whole clause that the intention of the testator was to confer a life estate on Annapurnabai. In the case of the property in village Nagaon, the matter is clearer still, for the testator said that Sarswatibai shall enjoy as owner, only the income during her life time. These are clear words of limitation and show on reading the clause as a whole that the 545 intention of the testator was to confer only life estate on Sarswatibai. As to the clause relating to the dwelling house etc. in Thana, it is remarkable that that clause does not even use the word "given" ; it only says that the dwelling house etc. " 'shall remain with my two wives" i.e. that they will be in possession so long as they live. The further sentence that they should live amicably and enjoy the same, makes in our opinion no difference to the intention of the testator, which is clear from the fact that he wanted these properties to remain with his two wives, i.e. he was only giving them the possession of the property for enjoyment for their lives. In this connection it may be well to contrast the language of some other clauses in the will where the bequest was obviously of an absolute estate. Take the bequest relating to Sirdhon village in favour of Balkrishna Waman Kharkar. It is in these terms : "The entire immovable property situate , 'at Sirdhon village, taluka Panvel, consisting of lands and tenements etc. is given to Chiranjiv Balkrishan Waman Kharkar. He shall en 'JOY the same as owner. Neither my two wives nor others whosoever shall have any right, title or interest etc. whatever therein. " This is a clear bequest of an absolute estate. There is no mention of any income in this clause and also no mention of the life time of the legatee. Obviously, therefore, where the testator was intending to bequeath an absolute estate he used entirely different language from that used in the three clauses with respect to his wives. Contrast again the language relating to the bequest of movable property in favour of the two wives. That clause is in these terms : " Movable property such as ornaments and trinkets and clothes and raiments etc. which 546 may have been given to any party shall remain with the said party and my two wives shall be fully entitled thereto. They shall deal with the same in any manner they like. " The use of the words "fully entitled" clearly indicates the bequest of absolute estate so far as movable property is concerned ; but we find no similar words in the clauses relating to bequests of property in villages Dahisar, Nagaon and Thana. This conclusion as to the nature of the interest bequeathed to the two wives is strengthened by another provision in the will. Under that provision Annapurnabai was authorised to adopt a fit boy from amongst the family, on the advice of the executors. It was also provided that the adopted son shall have no right of any kind whatever to the movable and immovable properties so long as Annapumabai remained alive. But on her death he was to be entitled to these. properties. It was further provided that on the death of Sarswatibai the adopted son would become entitled to the immovable property bequeathed of her. Now if the estate bequeathed to Annapurnabai and Sarswatibai was anabsolute estate it is difficult to see how the testator could provide that on the death of Annapurnabai and saraswatibai the properties bequeathed to them would go to the adopted son. The holder of an absolute estate would be entitled to sell it if she so desired, and therefore there could be no provision in the will that on the deaths of Annapumabai and Sarswatibai, the property bequeathed to them would go to the adopted son. This provision therefore read with the provisions in the three clauses relating to the bequests of properties in Dahisar; Nagaon and Thana clearly shows that the bequest of those properties in favour of the two wives was only a life estate. We cannot therefore agree with the 547 High Court that the estate given to Annapumabai and Sarswatibai whether in Dahisar, Nagaon or Thana was an absolute estate. In our opinion it was life estate only. It may also be added that Ganpatrao died,, in 1894 when it was more usual to give life estate to widows and the terms in the various clauses on the will are in our opinion in consonance with the prevailing practice in those times. In the view that we have taken it follows that the judgment of the High Court must be set aside. However as the High Court has only considered these two questions, the case will have to be remanded so that the High Court may go into the other issues raised and decided by the trial court. Lastly we may refer to another contention on behalf of the respondents. It appears that Shamdas Narayandas and jaigopal Narayandas purchased property in village Dhokali Manpada in Taluka and sub division of Thana, described as lot No. 8 in the first schedule to the 'plaint. It appears that there was one sale deed in favour of these two defendants. Of these defendants, jaigopal_Narayandas died on April 19, 1960, after the decree of the High Court which was given on March 7, 1957, and also after the grant of the certificate by the High Court in May, 1958, and the order admitting the appeal by the High Court in April, 1959. The record was despatched to this Court in 1962. No application was however made to the High Court till August 13, 1962, for substitution of the heirs of jaigopal Narayandas. When the application was made in August 1962, for substitution, the High Court dismissed it on Jannary 9. 1963, on the ground of limitation. There was then a review application filed before the High Court, which was also dismissed on February 12, 1963. Thereafter the petition of appeal was filed in this Court on March 13, 1963. Then on April 3, 1963, an application was made to this 548 Court for substitution of the heirs of Jaigopal Nara a as. The respondents contend that as the heirs of jaigopal Narayandas were not brought on the recordwithin the time allowed by law, the entire appeal abates. We are of opinion that the interests of the various defendants who are in possession of various properties are independent and therefore the whole of the appeal cannot abate because the heirs of certain deceased defendants in possession of one property have not been brought on the record. So far as lot. No. 8 is concerned it was the common progerty of Shamdas Narayandas and jaigopal Narayan as, which they apparently acquired by one sale decd. We are not prepared to condone the delay in bringing the heirs of jaigopal Narayandas on the record and therefore dismiss the application dated April 3, 1963. The effect of this will be that the suit will abate in so far as the property in lot No. 8 is concerned. It is not shown that the interest of the two purchasers who are presumably members of an undivided family were separate and distinct and so there cannot be partial abatement only in regard to the share of the deceased purchaser; but that cannot affect the appeal in so far as the property in other lots is concerned. The High Court on remand will therefore go into the other issues with respect to properties in lots other than lot No. 8. We therefore allow the appeal and remand the case to the High Court for decision on other issues so far as lots (other than lot No. 8) in the first schedule to the plaint are concerned. So far as lot No. 8 is concerned, the appeal abates and is dismissed. In the circumstances we pass no order as to the costs of the appeal with respect to lot No. 8, so far as the costs of the appeal with respect to other lots are concerned, the respondents will pay the costs of the appellant including advocate 's fee of this court & the Court fees also. Appeal allowed. Case remanded.
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The appellant, a Hindu reversioner, brought the suit out of which the appeal arose for recovery of certain properties alienated by two widows having widow 's estates under the will of their husband.
The respondents resisted the suit mainly on the grounds that the appellant, who was an undischarged insolvent at the time the succession opened, could not maintain the suit even after his absolute discharge as the properties must be taken to have vested in the official receiver and that under the will of their husband the widows got not a widow 's estate but an absolute estate and had the right to alienate the properties which they did.
The trial court found in favour of the appellant and directed delivery of possession of the properties to him.
On appeal the High Court took the contrary view on both the points and dismissed the suit.
The appellant came up to this Court on the certificate granted by the High Court.
Held that the High Court was in error in holding that the appellant could not maintain the suit.
There is nothing in the Provincial Insolvency Act that takes away the right of the insolvent to sue in courts after he is granted a discharge for he then becomes a free man.
Though there is no specific provision in the Act with respect to the property that may remain undisposed of by the court or by the receiver, the provisions in section 67 by necessary implication read in the light of the general scheme of the Act provides an answer to this and all such property must be treated as surplus to which an insolvent is entitled, after an absolute order of discharge is made in his favour, subject always to the condition that if any debts provable under the Act have not been discharged before such order, 521 the property will remain liable for such discharge as also the expenses of all proceedings under the Act till they are fully met.
Cohen vs Mitchel, (I 890) ; Sayad Daud Sayed Mahomed vs Mulna Mahomed Sayad, (1926) 28 Bom.
L. R. 334; Yellavajjhula Suraya vs Tummalapali Mangayya, A.I.R. , Rup Narain Singh vs Har Gopal Tewari, 'I. L. R. (1933), 53 All. 503; Diwan Chand vs Manak Chand, A.I.R. (1934) Lah.
809; Arjun Das Kundu vs Marchhiya Tolinee, I.L.R. ; Kanshi Ram vs Hari Ram, A. I .R. and Parsu vs Balaji, I.L.R. (I , discussed.
In order to determine the true intention of a testator, the clauses of the will should be read as a whole in the light of the surrounding circumstances as also in contrast to the other clauses and where the testator, as in the instant case, having used the word owner ' in the previous clause, follows up by using the words "during her lifetime enjoy as owner the income in any manner she likes" the latter words clearly limit the bequest and indicate that what is given is no more than a life estate.
Where the interests of the various defendants in possession of various properties are independent, the appeal cannot abate as a whole by reason of the heirs of a deceased defendant in possession of a property not having been brought on the record within the prescribed time.
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The person appealing (called the appellant), who was Hindu, started a lawsuit to get back some property. This property had been sold off by two widows who had limited rights to it, according to their husband’s will.
The people being sued (called the respondents) argued that the appellant couldn't sue because he was bankrupt when he should have inherited the property. They said the property belonged to the official receiver (someone who manages bankrupt people's assets). They also claimed the widows had full ownership according to the will, not just limited rights, so they could sell the property.
The trial court sided with the appellant and said he should get the property back.
But the High Court disagreed and dismissed the lawsuit.
The appellant then took the case to a higher court because the High Court allowed it.
The higher court decided that the High Court was wrong to say the appellant couldn't sue.
The law says that once a bankrupt person is released from their debts, they can sue in court. They are free again.
Even though the law doesn't specifically say what happens to property the court or receiver didn't deal with, the law implies that this property goes back to the person who was bankrupt after they are released from their debts. But, if they still owe money from before they were released, that property can be used to pay those debts and any costs from the bankruptcy process.
The court looked at several previous cases for guidance (Cohen vs Mitchel, etc.).
To figure out what someone meant in their will, you have to read the whole will and consider the situation around it. Also, you must compare different parts of the will. Here, the husband used the word "owner" earlier in the will, but then said the widows could "enjoy as owner the income" during their lives. This means they only had the right to the income from the property, not the property itself. This limits what they can inherit and shows they only had a life estate (the right to use the property for their lives).
If the people being sued each own different properties separately, then the appeal doesn't automatically end just because the heirs of one person who owned a property weren't added to the case in time after that person died.
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Appeals Nos. 499 to 502 of 1958. Appeals from the judgment and decree dated July 13, 1956, of the former Travancore Cochin High Court in A. section Nos. 94, 95, 96 and 156 of 1952. G. section Pathak and G. C. Mathur, for the appellants (in C. As. 499 to 501 of 58). P. George and M. B. Krishna Pillai, for the appellants (in C. A. No. 502 of 58). T. N. Subramania Iyer, B. Ganapathy Iyer and G. Gopalakrishnan, for the respondent. January 27. The Judgment of the Court was delivered by KAPUR, J. These four appeals are brought against the judgments and decrees of the erstwhile High Court of Travancore Cochin. The appellants were the plaintiffs in the respective suits out of which these appeals have arisen and the respondent was the defendant in all the suits. As all the suits involve a common question of law, it will be convenient to dispose of them by one judgment. The facts of the cases are these. On September 9, 1943, the Nagercoil Municipal Council the respondent, passed a resolution under section 78 of the Travancore District Municipalities Act (Act XXIII of the Malayalam year 1116), hereinafter called the Act. By this resolution, it was resolved to levy a profession tax at the rates specified in the schedule. This was notified in the Government Gazette of September 26, 1943, under the name of the Commissioner of the respondent Council. In this notification, it was stated : " Any inhabitant of the local municipal town objecting to the proposal may submit his objection in writing to this office within 30 days of date of publication of this notification in the Government Gazette. This notification was also published in a local newspaper called the Abhimani. It does not appear, nor is there any assertion or allegation that any 611 objection was raised to this tax by the appellants or any one else. On January 12,,1944, a resolution under section 79 of the Act wag passed, by which the profession tax became payable from the beginning of the second half of the Malayalam year 1119. A trust, Kottar Chetty Ninar Desikavinayaga Swamy filed a suit on February 10, 1946, challenging the legality of this tax. C.A. 502 of 1958 has arisen out of that suit. Amongst other allegations, which are common to the other suits, which will be mentioned presently, the trust pleaded that it was not carrying on a profession within the meaning of the word used in the Act and that it was only a religious trust and had no profes sion. That suit was tried by the Munsif and was decreed. An appeal was taken against that decree to the District Judge. Three private limited companies carrying on business brought three suits challenging the legality of the imposition of the tax out of which the other three appeals, i.e., Civil Appeals Nos. 499 to 501, have arisen. In these suits, it was alleged that the publication of the resolution was not in accordance with the provisions of section 78 of the Act in so far as (1) it was not published by the respondent Municipal Council, but by the Commissioner; (2) the newspaper in which the advertisement was published was not selected by the Council; (3) time given in the notification was fixed not by the Council, but by the Commissioner; and (4) the period prescribed in the notification, that is, " within 30 days ", was not fixed by the Council and was not in accordance with the Act. The respondent Municipal Council denied these allegations and several issues were raised and the suits were decreed. The appeal which had been taken in the suit by the Trust was also decided in favour of that plaintiff. The result was that all the suits and the appeal were decided against the respondent Municipal Council. It took four appeals to the High Court. The decrees were reversed and the suits of the various plaintiffs were dismissed. Against those judgments and decrees, these four appeals have been brought by the plaintiffs, in the various suits, who are now the appellants. 612 In Civil Appeals Nos. 499 to 501, Counsel for the appellants has raised two points (1) that the publication was not by the Council and (2) that the time given in the notification, i.e., " within 30 days " was not in accordance with the law and as these were conditions precedent to the legality of the resolution under section 79 the resolution was ultra vires and therefore the imposition of the tax was illegal. It is, therefore, necessary to examine the various provisions of the Act upon which the whole argument has proceeded. Chapter VI of the Act deals with Taxation and Finance. In section 77 are enumerated the various taxes which can be levied by Municipal Councils. Section 78 gives the procedure for the levying of the tax and when quoted it is as follows: "section 78. Resolution of Council determining to levy tax or tolls. Any resolution of a municipal council determining to levy a tax or toll shall specify the rate at which any such tax or toll shall be levied and the date from which it shall be levied: Provided that before passing a resolution imposing a tax or toll for the first time or increasing the rate of an existing tax or toll, the council shall publish a notice in Our Government Gazette and at least in one Malayalam or Tamil newspaper having circula tion in the municipality of its intention, fix a reasonable period not being less than one month for submission of objections, and consider the objections, if any, received within the period specified." (Italics are ours). After the various steps given in section 78 have been taken, a Municipal Council has then to adopt the taxes proposed by means of a resolution under section 79, which provides : "S.79. Notification of new taxes and tolls When a municipal council shall have determined subject to the provisions of Section 78 to levy any tax or toll for the first time or at a new rate the executive authority shall forthwith publish a notification in Our Government Gazette and by beat of drum specifying the rate at which the date from which, 613 and the period of levy, if any, for which such tax or toll shall be levied. " The functions of the executive authority, that is, of the Commissioner of the Council are contained in section 16 of the Act, which is as follows : "section 16. Functions of the Executive Authority. The executive authority of the municipal council shall (a) carry into effect the resolutions of the council; (b) furnish to the council such periodical reports regarding the progress made in carrying out the resolutions of that body in the collection of taxes as the council may direct; and (c) perform all the duties and exercise all the powers specifically imposed or conferred on the executive authority by this Act, and subject, whenever it is hereinafter expressly so provided, to the sanction of the council, and subject to all other restrictions, limitations and conditions hereinafter imposed, exercise the executive power for the purpose of carrying out the provisions of this Act and be directly responsible for the due fulfilment of the purposes of this Act. " Section 16, which contains the power of the executive authority, does not support the contention of the appellants, because it provides that the executive authority has to give effect to the resolutions of the council and has to perform all duties specifically imposed on the executive authority by the Act and can also exercise executive power for the carrying out of the provisions of the Act and can act without sanction, unless the Act otherwise requires. Therefore, when the Commissioner of the respondent council got published a notification of the resolution under section 78 of the Act to impose a tax, he was acting within his powers and the fixing of the time in which objection had to be made was provided under the Act and was not exercise of authority by the executive which it did not possess. The only serious question which arises for decision is whether the period of " within thirty days " given" in the notification was compliance with the provisions of the Act or not. If it was not then is the period of 614 time mentioned a mandatory requirement, a breach of which makes the tax illegal? Counsel for the appellants in the first three appeals argued, and that argument was adopted by counsel for the appellant in the fourth appeal, that the words used in the first proviso to section 78 required that a clear period of one month had to be given for inviting objections and as "within thirty days" was not a clear period of one month, the provisions of the section had not been complied with. In support of his contention that the provision as to time was a mandatory requirement, he particularly stressed three words and phrases used in that proviso: (1) "before passing a resolution " ; (2) " shall publish " ; and (3) " fix a reasonable period not being less than one month for submission of objections. " The argument was that where these words are used, the effect was that the requirements were mandatory and not merely directory. It was submitted that the words "before" and ",shall " provided that what was mentioned in the proviso were conditions precedent for giving power to the Municipal Council to pass a resolution under a. 79 and when those two words were read along with " not being less than one month ", it was a clear indication of the mandatory nature of the requirements of the section. Quite a number of cases were relied upon by Counsel and besides this it was also emphasized that sections 78 and 79 concerned taxing matters and as the liability of the taxpayers arises after the tax is legally imposed, strict compliance with the provisions was necessary. It is not necessary to discuss all the cases on which reliance was placed. The words " not being 'less than one month " do imply that clear one month 's notice was necessary to. be given, that is, both the first day and the last day of the month had to be excluded. To put it in the language used by Maxwell on Interpretation of Statutes, 10th Edition, p. 351 : ". when. . not less than ' so many days are to intervene, both the terminal days are excluded from the computation," 615 That does not seem to have been done in the present case. But in order to decide whether this portion of the proviso is a mandatory provision, it is convenient to see the object for which it has been enacted. Under section 78, the procedure is laid down for the levying of a. new tax, which has to be done by a resolution. But in the proviso, it is stated that before such a resolution can be passed, a notice to that effect has to be published in the official gazette and also in one Malayalam or Tamil newspaper having circulation within the municipality. Then comes the period for inviting objections. The object of notifying in the Gazette and Local Newspaper is both to give notice to the public and particulary to the persons who are likely to be taxed and to invite their objections. For this purpose, the proviso requires a reasonable period of not less than one month to be given. The object of the provision is to give reasonable time and opportunity and it is given as a guidance that reasonable time would be a month. The use of the words "I reasonable period" before the words ,not being less than one month " is significant. If sufficient time has been given for the invitation of the objections which only just falls short of the period mentioned in the proviso, then it would serve the object of the legislature. The provision in regard to time in the context must be held to be directory and not mandatory. The cases under the Income tax Act like the Commissioner of Income tax vs Ekbal and Co. (1) where the notice under section 22(2) of the Income tax Act (which requires the furnishing of a return within such period not being less than thirty days) of 30 days only was held to be bad, because it was not a notice of thirty clear days, were so decided because that notice is the basis of the jurisdiction to tax, and a legal notice is an obligation imposed in order to tax an individual and it is a mandatory provision. Similarly, cases under Rent Act will also not apply. In Thompson vs Stimpson (2) the law required that not less than four (1) [1945]13 I.T.R. 154. (2) , 79 weeks ' notice shall be given for vacation of premises on a weekly tenancy and only one week 's time was given. It was held there that it was a bad notice. It was further held that four weeks ' notice was a condition precedent and the words had been used which had been interpreted in the past as providing for four clear weeks and also it was construed as four clear weeks, so that there might be certainty in the matter. In other cases, that were relied upon and which related to taxing statutes, the Municipal Council, Cuddapah vs The Madras and Southern Mahratta Railway Ltd. (1), The Borough Municipality of Amalner vs The Pratap Spinning, Weaving and Manufacturing Co. Ltd., Amalner (2) and Kalu Karim vs Municipality of Broach (3) ; it was held that taxing statutes have to be strictly construed and requirements which are precedent to the imposition of the tax have to be complied with before tax can be legally imposed. In every case the words have to be construed in the context taking into consideration the language used and the object to be achieved. As we have said above, the use of the words " not being less than one month " implies the giving of a clear month excluding both the first and the last day of the month. There is no dispute as to the meaning of that expression alone which has been so construed and the observations of Lord Parker in Thompson vs Simpson (4) will apply. But the question that arises in the present case is: what is the exact significance of these words when used in the context of the other words used in the proviso. The power of the municipality to levy the tax does not depend upon a period prescribed for notice for objections. The power to tax is derived from the Statute; the provisions relating to the length of notice inviting objections and publication are merely procedural. The object of the notification is to inform the future rate payers and to invite objections from them. The proviso itself uses words " reasonable time" '. Reading " reasonable time " and " not being less than one month" together, it is clear that the (1) Mad. 779. (2) I.L.R. (3) Bom. (4) 617 time given must be reasonable and the legislature has only added a guide so that periods shorter than a month may not be fixed. In the present case the whole of the period except one day has been fixed and in view of the other facts it must be regarded as reasonable and to have complied with the provision which is directory in its later part. Counsel for the appellants in C. A. 499/501/58 wanted to raise a further objection to the legality of the tax levied and that ground was that the appellants were not carrying on a profession as they were only engaged in motor business and trade. This question was never raised at any previous stage and was not taken in the statement of the appellants ' case. Therefore, it cannot be allowed ' to be raised. Besides it is without any substance in view of the definition of profession as given in section 91 of the Act, which includes business. In our opinion, the High Court ,Was right in so holding and the three appeals Nos. 499 to 501 of 1958 are dismissed with costs, one hearing fee. Coming now to Civil Appeal No. 502 of 1958, in the plaint it was alleged that the trust was a religious trust and was following no profession and therefore it did not fall within the definition of the word " profession " as used in section 91 of the Act. The defendant joined issue and the matter was put in issue in the following form: "Is the taxation by defendant of plaintiff illegal and in contravention of the provisions of the District Municipalities Act ?" Although no specific finding was given as regards the operation of section 91, the suit was decreed and the question whether the trust followed a profession or not seems to have got lost at the subsequent stages of the proceedings, that is, in appeal in the court of the District Judge and in the High Court. It is this point which was urged by counsel for the trust; his plea was that his case was not covered by section 91, as being a religious trust it had no profession and was carrying on none. That is a matter which, in our opinion, should have been decided, and as neither the District 618 Judge nor the High Court has given a finding on that point, it is necessary to remit the case to the High Court with the direction that the appeal be reheard and that particular question be decided on the materials on the record. Nothing that has been said in this judgment must be taken to be an expression of opinion on the merits of this plea taken by the appellant Trust. Appeal No. 502 of 1958, is therefore, allowed and the case remitted to the High Court for decision. The costs in this Court and in the High Court will abide the decision of the appeal in the High Court. Appeals nos. 499 to 501 dismissed. Appeal No. 502 allowed. Case remitted.
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The imposition of "profession tax" by the respondent Municipal Council under the Travancore District Municipalities Act (Act XXIII of the Malayalam year 1116) was challenged on the grounds, inter alia (1) that the requisite notification was not published by the Municipal Council but by its commissioner, (2) that the period of thirty days which was given for filing objections to the imposition was insufficient in law which required a period of " not less than a month ", and (3) that this was a mandatory provision under the proviso to section 78 of the Act.
Held, that under section 16 the Commissioner being the executive authority of the Municipal Council was authorised to give effect to the resolutions of the Council and to perform all its executive duties.
The words " not being less than one month " in the proviso to section 78 implied the necessity for one clear month 's notice excluding the first and last day of the month, but the use of the words " reasonable period " before the words " not being less than one month " showed that the time given must be reasonable.
In view of the facts of the case the period allowed must be regarded as reasonable and to have complied with the provision which is directory in its later part.
Commissioner of Income tax vs Ekbal and Co. [1945] 13 I.T.R. 154 and Thompson vs Stimpson, , distinguished.
Municipal Council, Cuddapah vs The Madras and Southern Mahratta Railway Ltd. Mad. 779, The Borough Municipality of Amalner vs The Pratap Spinning, Weaving and Manufacturing Co. Ltd., Amalner, I.L.R. and Kalu Karim vs Municipality of Broach BOM.
764, referred to.
610 The definition of " profession " as given in section 81 includes business.
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The city council's "profession tax," based on the Travancore District Municipalities Act, was questioned. The reasons included: (1) the city council didn't announce the tax; instead, its commissioner did. (2) The 30-day objection period was too short, as the law required "not less than a month." (3) This time frame was required under section 78 of the Act.
The court decided that section 16 allowed the Commissioner, as the city council's leader, to carry out the council's decisions and handle its tasks.
The phrase "not being less than one month" in section 78 means a full month's notice, not counting the first and last days. However, the term "reasonable period" before "not being less than one month" means the time given must be fair.
Considering the details of this case, the time allowed was reasonable and followed the law.
The cases *Commissioner of Income tax vs Ekbal and Co.* and *Thompson vs Stimpson* were different and didn't apply.
The cases *Municipal Council, Cuddapah vs The Madras and Southern Mahratta Railway Ltd.*, *The Borough Municipality of Amalner vs The Pratap Spinning, Weaving and Manufacturing Co. Ltd.*, and *Kalu Karim vs Municipality of Broach* were mentioned.
Section 81 says that "profession" includes business.
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Appeal No. 1805 of 1967. Appeal by special leave from the judgment and order dated the 20th October 1967 of the Allahabad High Court in Special Appeal No. 864 of 1967. R. K. Garg, section C. Agarwala, Anil Kumar, Shiv Punjan Singh N. M. Ghatate, for the appellant. C. B. Agarwala and 0. P. Rana, for the respondents. The Judgment of the Court was delivered by Hidayatullah C.J. This is an appeal against the judgment of a division Bench, October 20, 1967, in a Special Appeal (No. 864 of 1967) of the High Court of Allahabad affirming the dis 435 missal of 61 writ petitions by a learned single Judge of the High Court. This appeal arises from one such petition. The appellant was elected Pramukh of Sarwan Khera Kshettra Samiti and his term of office which was co terminus with the term of the Samiti, extended to five years. He challenges in this appeal, (as he did in the High Court), two Government notifications issued by the Government of Uttar Pradesh under the Uttar Pradesh Kshettra Samities and Zila Parishads Adhiniyam 1961 (Act 33. of 1963). By these notifications the Government of Uttar Pradesh has redivided the rural area In the district to which the matter relates into new Khands specifying the limits and constituents of their areas and as a consequence has abolished a few khands and created new Khands in their Place. The Khand relating to the appellant 's Samiti has been abolished by the first notification and by the second notification ' the term of the Samiti has also been brought to a close,. Both the notifications are of July 1, 1966. The appellant challenges these notifications as also sections 3 and 8 of the Act on various grounds. To understand his contentions we may begin by setting out how the Act is constructed. The Act was passed in 1961 for the establishment of Kshettra Samities and Zila Parishads in Uttar Pradesh. It was intended to make democracy broad based and to give training in the art of administration and running democracy to the rural population. It is a long Act of 274 sections and 8 schedules. It is not possible to give more than a brief idea of the constitution of the Samitis and their functions and Organisation. The preamble of the Act states as follows "Whereas it is expedient to provide for the establishment of Kshettra Samitis and Zila Parishads in the districts of Uttar Pradesh to undertake certain govermental functions at Kshettra and district levels respectively in furtherance of the principle of democratic decentralisation of governmental functions and for ensuring proper municipal government in rural areas, and to correlate the powers and functions of Gaon Sabhas under the United Provinces Panchayat Raj Act, 1947, with Kshettra Samitis and Zila Parishads;" The Act goes on to define a Kshettra Samiti as a Kshettra Samiti established under section 5 of the Act and a Khand as an area of the district specified as such by the State Government under section 3 Chapter II of the Act deals inter alia with the establishment of Kshettra Samitis and section 3 provides as follows "The State Government shall by notification in the Gazette divide the rural area of each district into khands 436 specifying each Khand by a name and the limits or constituents of its area and may likewise change the names or make modifications in the areas and limits of the Khands by including therein or excluding therefrom areas or create new Khands. " This section allows the State Government to divides the rural area of each district into Khands. It also enables the Government to change the name of a Kshettra Samiti and to make modifications in the areas and limits of the Khands and to create new Khands. Section 4 specifies the effect of change in Khands and the temporary and permanent consequences thereof are provided for. Section 5 then deals with the establishment and incorporation of Kshettra Samitis for each Khand bearing the name of the Khand for which it is established. It says inter alia that every Kshettra Samiti is a body corporate having perpetual succession and common seal and subject to any restrictions or qualifications imposed by any other enactments, possesses the power to acquire, hold and dispose of property and to enter into contracts and may by its corporate name sue and be sued. Section 6 details the composition of Kshettra Samitis providing for elections and cooptions. Section 7 lays down the procedure for the election of the Pramukhs and the Up Pramukhs of the Kshettra Samitis and its members and section 9 in the same way deals with the term of the Pramukhs and the UP Pramukhs. Section 10 then enables the Government to arrange for the constitution of the first Kshettra Samiti for every Khand and for the reconstitution thereof on the expiry of the first and each subsequent term or when otherwise required under the Act having regard to the provisions of section 6. Sections 11 16 deal with the resignation of Pramukhs, Up Pramukhs and members, filling of casual vacancies, disqualifications for being, chosen or co opted as members, disputes as to membership or disqualification and motion of non confidence in Pramukh or Up Pramukh and removal of Pramukh or Up Pramukh. In this way complete local self government is established. In 1965 by a Sanshodan Adhiniyam, 1965 certain changes were introduced in the parent Act. In section 8 a second proviso was inserted which read: "Provided further that where the State Govern ment is of opinion that it is necessary or expedient so to do with a view to re organisation of Khands, it may by notification in the Gazette determine the term of all or any Kshettra Samitis. " The Amending Act also added section 8A of which the second sub section is material for our purpose and may be read here. 437 "where on account of changes in the areas of the Khands under section 4, a Khand ceases to exist, or where under the second proviso to sub section (1) of Section 8 the term of the Kshettra Samiti of any Khand is determined, the Pramukh and the member of the Kshettra Samiti of such Khand who are members of the Zila Parishad under clauses (i) and (ii) respectively of sub section (1) of Section 18 shall, notwithstanding anything contained in Sections 1 81 and 20, continue to be members of the Parishad for the residue of the term of the Parishad. " When the Kshettra Samitis were formed Khands were estab lished and the appellant was the Pramukh of Kshettra Samiti relating to a Khand called Sarwan Khera. By the impugned notifications, the Khand and its Kshettra Samiti have been abolished and the appellant loses the office of Pramukh of the Kshettra Samiti concerned. He challenged in the High Court the two notifications as ultra vires and repugnant to the scheme and the purpose of the Act. He challenged also sections 3 and 8 as suffering from excessive delegation of legislative functions and involving a violation of article 14 of the Constitution. These arguments were repelled concurrently in the High Court and his further allegation that the action was mala flde was also discountenanced. He urged the same arguments before us. Mr. R. K. Garg on behalf of the appellant took us through the provisions of the Act pointing out that the Samiti once constituted had a corporate existence with perpetual succession and it was not possible for the State Government to destroy a corporation so set up and which owned property and a fund and whose existence for five years was contemplated under the Act with possibility of further continuance. It is not necessary to refer to these sections because they are to be found in all legislation dealing with the establishment of corporate local self Government bodies. The question is not whether Kshettra Samitis enjoy perpetual succession. The question is whether the Kshettra Samitis once established enjoy perpetual existence. The scheme of the Act clearly indicates that the area of the district is required to be divided into many Khands with a Kshettra Samiti in each Khand. Sections 3, 4, 8 and 8A confer power upon the State Government to alter the area of the Khand , constitute new Khands and re establish old ones. This power is. given by the legislature advisedly so that the working of democracy in the rural areas in the Kshettra Samitis and Zila Parishads may be ' smooth and without difficulty. The reorganisation of the Khands may become necessary because of circumstances too numerous to mention here. Power has, therefore, been reserved to Govern 438 ment to make the alterations as stated above. It will be seen that the latter part of section 3 gives specific power to create new Khands in addition to the change of areas of the existing Khands which means that new Khands may be brought into existence and old Khands abolished. In fact, sections 4 and 8A and the newly added proviso to section 8 bear upon the abolition of existing Khands. In other words, what the State Government did was by, an express grant from the legislature. The other provisions of the Act to which our attention was drawn merely indicate what Kshettra Samiti is required to do as long as the kshettra Samiti exists. Similarly the term of the Kshettra Samitis is to apply to a Kshettra Samiti which is not abolished but continues. The perpetual succession in this context means successions of one Kshettra Samiti to another but in fact it does not entail perpetual existence of any Samiti or any Khand notwithstanding the inadvisability of continuing it for administrative or other valid reason. The power, exercised by the Government in issuing the two notifications flow clearly from the provisions of the law under which Government was acting. It is for this reason that the attack of Mr. Garg was next directed against sections 3 and 8 of the Act. He compared the power to make new Khands and to reorganise the old ones with the other scheme of the Act under which the Kshettra Samitis are required to function with right to hold property, to possess fund and to carry on administration. All this does not show that the power given by the act to reconstitute Khands is ' any way impaired or frustrated. The two powers are quite distinct. The first power exists when the Samitis are established and continue. The second power comes into play when the need for reconstitution of the Khand emerges. The provisions of sections 3 and 8 cannot thus. be said to negative the other _provisions to which our attention was drawn. It was next contended by Mr. Garg that sections 3 and 8 were in valid because they involved excessive delegation of legislative functions to the State Government and being not supported by adequate safeguards or guides, most be struck down. This argument is not valid. The Act speaks for itself and is self contained. Its policy is stated in clear, terms and the power to create Khands must be read with the I power to abolish Khands and create new Khands in their place. The details of how big a Khand should be, what territory it should involve and so on and so forth cannot be the subject of detailed legislation. The Act gives ample indication of what the purpose of making a Khand is and the duties which the Kshettra Samitis must perform. On this subject the legislative will has been sufficiently expressed and must, therefore, guide the State Government in making its notifi 439 cations. This case is analogous to the one reported in State of Bhopal and others vs Champalal and others( '). In that case it was observed that the preamble and long title of the Act made clear that the enactment was "for the reclamation and the Development of the land by the eradication of Kans weed 'in certain areas in the State. " The purpose being specified as the radication of kans in area infested with it, the Act was said to be valid although the selection of the land was left to the Executive. The legislative policy behind the provisions of law were held to be writ large on it, and what remained or was left to the Executive was to carry out the mandate and give effect to the law to achieve the purpose of the Act. In present case also the underlying policy and the objective of the legislation is clearly set out and the details of the duties of the Kshettra Samitis are indicated. It has, however, been left to :he State Government to determine what the Khands should be and how many Kshettra Samitis should be constituted in each district. This is not a subject for detailed legislation because it s eminently a matter which can be left to the determination of 'he Executive which is to act in conformity with the wishes of ,he local people, the political exigency of the situation and the requirements of administrative control. In our opinion, the Act as not erred by conceding unfettered or uncanalised power to he State Government as is contended. On the other hand, it has itself spoken on the relevant subject in full detail so as to outline its own will which alone the Executive is supposed to Implement. It was next contended that sections 3 and 8 violate article 14 because 'hey furnish an indirect method of removal of the Pramukh, the Up Pramukh and the Members of a Kshettra Samiti without having to take recourse to the provisions for their removal as laid down in the Act. Reliance in this connection is placed upon decision of this Court in Ram Dial and others vs State of Punjab(2). That case is easily distinguishable. There the Punjab Municipalties Act contained two Provisions for the removal of a member in the public interest. By one provision he was entitled to a hearing and by 'he other not. This Court held that as it was open to choose. one method rather than the other and that there was room for arbitrary action. Here the provision on the subject of removal of members of the Kshettra Samitis are not congruous with the subject of reorganisation of Khands. The two provisions operate In entirely different fields. One is concerned directly with the removal of the Pramukh, Up Pramukh and the members. The other is directly concerned with the abolition of the Khands and (1) ; (2) ; 440 reconstitution of different Khands These are two different powers and cannot be compared at all. It may be that by abolishing a Khand and its Kshettra Samiti the members also must go, but that is a consequence of the exercise of quite a different power. Of course, if the action in abolishing the Khand could be shown to be directly connected with the removal of the Pramukh, Up Pramukh or a member of the Kshettra Samiti the action of the Executive Government can be struck down as mala fide. It was for this purpose that the appellant pleaded in the, High Court mala fides on the part of the Government. The two judgments now under appeal negative the existence of any mala fide intention. No material was placed before us to establish mala fides nor could the findings be attacked since they were concurrently reached. In this view of the matter we must hold that the State Government in exercising its powers acted honestly and within the four corners of its jurisdiction. , In the result the appeal must be held to be without substance. It will be dismissed with costs. V.P.S. Appeal dismissed.
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The appellant was elected Pramukh of a Kshettra Samiti and his term of office which was co terminus with that of the Samiti, was for five years The Government of Uttar Pradesh issued two notifications under sections i and 8 of the Uttar Pradesh Kshettra Samities and Zila Parishads Adhiniyam, 1961, by which the rural areas in the district were redivided into new Khands, the Khand relating to the appellant 's Samiti was abolished and the term of the Samiti was brought to a close.
As a consequence, the appellant lost the office of Pramukh of the Samiti.
His writ petition in the High Court challenging the notifications was dismissed.
In appeal to this Court it was contended that : (1) The two notifications are repugnant to the scheme of the Act; (2) Sections 3 and 8 are contrary to the other provisions of the Act under which a Samiti once constituted had a corporate existence with perpetual succession owning property and a fund, and whose existence for 5 years was contemplated under the Act with the possibility of further continuance; (3) Sections 3 and 8 were invalid because they involved excessive delegation of legislative functions to the State Government, and (4) The sections violate article 14 of the Constitution because they furnish an indirect method of re moving the Pramukh, Up pramukh and members of a Kshettra Samiti without resorting to the appropriate provisions in the Act.
HELD : (1) The notifications flow from an express grant of power to the Executive by the Legislature.
[438 B] The Act was intended to make democracy broad based and to give training, in the art of administration and running democracy, to the rural population.
Its scheme indicates that the area of the district is required to be divided into many Khands with a Kshettra Samiti in each Khand.
The power to create Khands must be read with the power to abolish Khads and create new Khands in their place.
Sections 3, 4, 8 and 8A confer power upon the State Government to alter the area of the Khand, abolish old Khands, constitute new Khands and re establish old ones; and this power is given by the Legislature advisedly, so that the working of democracy in the rural areas in Kshettra Samities and Zila Parishads may be smooth and without difficulty.
[435 D E; 437 G H; 538 G] (2) The provisions of sections 3 and 8 cannot be said to negative the other provisions of the Act, which merely indicate what a Kshettra Samiti is required to do as long as it exists.
Perpetual 'succession only means succession of one Samiti to another, but does not entail perpetual existence of any Samiti or any Khand notwithstanding the inadvisability of continuing it for administrative or other valid reasons.
Similarly, the fact that the Samities are required to function with right to hold property, to 434 possess fund and to carry on administration, does not show that the power given by the Act to reconstitute Khands is in any way impaired or frustrated.
The first power exists when the Samities are established and continue; and the second comes into play when the need for the reconstitution of a Khand emerges.
[438 B F] (3) The Act has not erred by conceding unfettered or uncanalized power to the State Government.
[439 D E] The underlying policy and the objective of the legislation is set out in the preamble and other provisions of the Act and the Act gives ample indication of what the purpose of making a Khand is and the duties which the Samiti must perform.
The details of how big a Khand should be, what territory it should involve and how many Samities should be constituted in each district, etc.
cannot be the subject of detailed legislation and they are eminently matters which can be left to the determination of the Executive which is to act in conformity with the wishes of the local people, the political exigency of the situation and the requirements of administrative control.
On this subject the legislative will has been expressed in sufficient detail giving guidance to the State Government in making its notifications to implement it [438 G H; 439 C E] State of Bhopal & Ors.
vs Champalal & Ors., [1964] 6 S.C.R. 35, followed.
(4) Sections 3 and 8 do not violate article 14.
The provision in the Act on the subject of removal of members of a Samiti and that dealing with the subject of reorganisation of Khands deal with different powers and cannot be compared at all.
One is concerned directly with the removal of Pramukh, Up Pramukh and other members, while the other is concerned directly with the abolition and reconstitution of Khands.
It may be that by abolishing a Khand and its Kshettra Samiti the members, including the Pramukh, must also go; but, that is the consequence of the exercise of a different power.
If, however the action in abolishing the Khand is for the direct purpose of the removal of a Pramukh, Up Pramukh or member of a Samiti, the action of the Executive Government can be struck down as mala fide.
In the present case, there is no evidence of any mala fides.
[439 G H; 440 A C] Rani Dial and Ors.
vs State of Punjab, ; distinguished.
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The appellant was chosen as the leader (Pramukh) of a local council (Kshettra Samiti). His time in office was the same as the council's, which was five years. The government of Uttar Pradesh made two announcements using sections 3 and 8 of a law called the Uttar Pradesh Kshettra Samities and Zila Parishads Adhiniyam, 1961. These announcements changed the rural areas in the district into new areas (Khands). The Khand where the appellant's council was located was ended, and the council's term was stopped.
Because of this, the appellant lost his position as the leader of the council.
He filed a legal paper (writ petition) in the High Court to challenge the announcements, but it was turned down.
When he appealed to this Court, he argued that: (1) The two announcements went against the plan of the law; (2) Sections 3 and 8 were against other parts of the law. He said the law stated that once a council was created, it was like a company that could keep going, own property, and have money. Its existence for 5 years was expected, with a chance to continue longer; (3) Sections 3 and 8 were not valid because they gave too much power to the State Government; and (4) The sections broke article 14 of the Constitution because they were a hidden way to remove the leader (Pramukh), deputy leader (Up pramukh), and members of a local council without using the correct rules in the law.
HELD: (1) The announcements came from a power that the lawmakers clearly gave to the government.
The law was meant to make democracy wider and teach people in rural areas how to manage and run a democracy.
The plan of the law shows that the district should be split into many Khands, with a local council in each Khand. The power to create Khands must also include the power to end Khands and create new ones.
Sections 3, 4, 8, and 8A give the State Government the power to change the area of the Khand, end old Khands, create new Khands, and re-establish old ones. The lawmakers gave this power on purpose, so that democracy in rural areas through local councils and district councils could work smoothly and easily.
(2) Sections 3 and 8 do not go against the other parts of the law. Those parts only say what a local council should do while it exists.
"Perpetual succession" just means one council following another. It doesn't mean any council or Khand should exist forever, even if it's not good to keep it going for administrative or other good reasons.
Also, the fact that the councils should work with the right to own property, have money, and manage things doesn't mean the power to reorganize Khands is weakened.
The first power exists when the councils are created and continue. The second power is used when there's a need to reorganize a Khand.
(3) The law didn't make a mistake by giving unlimited power to the State Government.
The main idea and goal of the law are explained in the introduction and other parts of the law. The law gives a good idea of why a Khand is created and what the council must do.
The details of how big a Khand should be, what area it should cover, and how many councils should be in each district can't be written into the law in detail. These are things that can be left to the government to decide. The government should act based on the wishes of the local people, the political needs of the situation, and the requirements of managing things.
The lawmakers have expressed their wishes in enough detail, giving guidance to the State Government on how to make announcements to carry out the law.
(4) Sections 3 and 8 do not break article 14 of the Constitution.
The part of the law about removing members of a council and the part about reorganizing Khands deal with different powers and can't be compared.
One is directly about removing the leader, deputy leader, and other members. The other is directly about ending and recreating Khands.
It's possible that by ending a Khand and its local council, the members, including the leader, will also have to leave. But that's just what happens when a different power is used.
However, if the reason for ending the Khand is directly to remove a leader, deputy leader, or member of a council, then the government's action can be seen as unfair.
In this case, there's no proof of any unfairness.
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No. 179 of 1968. Petition under article 32 of the Constitution of India for a writ in the nature of Habeas corpus. R.L. Kohli, for the petitioners. Debabrata Mukherjee and P.K. Chakravarti, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. In this case the petitioners have. obtained a rule calling upon the respondent, viz., The State of West Bengal 637 to show cause why a writ of habeas corpus should not be issued under article 32 of the Constitution directing their release from detention under orders passed under section 3(2) of the (Act IV of 1950), hereinafter called the 'Act '. Cause has been shown by Mr. Debabrata Mukherjee and other Counsel on behalf of the respondent to whom notice of the rule was ordered to be given. The case of the petitioners will be considered in the following three groups: (1) Petitioners nos. 2, 4, 5, 6, 16, 17, 20 and 26, (2) Petitioners nos. 1, 3, 7, 10, 12, 13, 19 and 22, (3) Petitioners nos. 8, 9 and 21. By the order of this Court dated October 18, 1968, the cases as regards petitioners nos. 11, 14, 15, 18, 23, 24, 25, 27 to 30 were dismissed as they were reported to have been released. As regards petitioner No. 5, Subhas Chandra Bose alias Kanta Bose, the order of detention was made on January 20, 1968 by the District Magistrate, Howrah and reads as follows: "No. 202/C Dated, Howrah, the 20th January, 1968 WHEREAS I am satisfied with respect to the person known as Shri Kanta Bose alias Subhas Chandra Bose son of Shri Sishir Kumar Bose of 26, Nilmoni Mallick Lane, P.S. and Distt Howrah, that with a view to preventing him from acting in any manner prejudicial to the maintenance of public order it is necessary so to do , therefore, in exercise of the powers conferred by Section 3(2) of the (Act IV of 1950), I make this order directing that the said Shri Kanta Bose alias Subhas Chandra Bose be detained. Given under my hand and seal of office. Sd/ D.C. Mookherjee District Magistrate Howrah. On the same date ' the following grounds of detention were communicated to the detenu: "You are being detained in pursuance of a detention order made under sub section (2) of section 3 of the ' (Act IV of 1950) on the following grounds: Sup C1/69 8 638 2. You have been acting in a manner prejudicial to the maintenance of public order by commission of offences of riotous conduct, criminal intimidation and assault as detailed below : (a) That on 3 11 65 at about 17/30 hrs. you assaulted Shri Ashutosh Dutta son of Shri Pyari Mohan Dutta of 55, M.C. Ghosh Lane, P.W. Howrah at the crossing of Panchanan Tala Road and M.C. Ghosh Lane, with knife causing bleeding injuries on his hand. (b) That on 8 10 66 at about 16.00 hrs. while Shri Mahesh Prosad Bhagal son of Balgobinda Bhagal of 16, Belilious Road, P.S. Howrah was playing in an open field, you along with your associates demanded money from him and on his refusal you hurled cracker on him causing grievous injury on his right leg (c) That on 8 6 67 at about 11.40 hrs. you accosted one Sushanta Kumar Ghosh son of Manmatha Ghosh of 2/1/1, Danesh Sk. Lane inside a saloon at 255, Panchanantala Road on previous grudge and being intervened by Shri Shyamal Biswas son of Sandhya Biswas of 255, panchanantala Road, P.S. Howrah, you whipped out a dagger and assaulted Shri Biswas with the dagger causing injury on his hand. (d) That on 23 11 67 at about 22.45 hrs. you hurled cracker on A.S.I.B. Kundu of Bantra P.S. while he was coming to Howrah along panchanantala Road in a wireless van and caused injury to the A.S.I. and damage to the wireless van. (e) That on 7 1 68 at about 18.30 hrs. you threatened one Satya Narayan Prosad son of Late purusattam Prosad of 10, Debnath Banerjee Lane, P.S. Howtab with assault at the crossing of M.C. Ghosh Lane and Bellilious Road. You are hereby informed that you may make a representation to the State Government within 30 days of the receipt of the detention order and that such representation should be addressed to the Assistant Secretary to the Government of West Bengal, Home Department, Special Section, Writers ' Buildings, Calcutta and forwarded through the Superintendent of the Jail in which you are detained. You are also informed that under Section 10 of the (Act IV of 1950) the Advisory Board shall if you desire to be heard you in person and that if you desire to be so heard by the 639 Advisory Board you should intimate such desire in your representation to the State Government. Sd/ D.C. Mookerjee District Magistrate Howrah. " On March 19, 1968 the Advisory Board made a report under section 10 of the Act stating that there was sufficient cause for detention of Sri Kanta Bose alias Subhas Ch. On March 30, 1968 the Governor of West Bengal confirmed the detention order under section 11 (1) of the Act. Section 3 of the Act provides: "3. (1) The Central Government or the State Government may (a) If satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to (i) the defence of India, the relation of India with foreign powers or the security of India, or (ii) the security of the State or the maintenance of public order, or (iii) the maintenance or supplies and a services essential to the community, or (b) if satisfied with respect to any person who is a foreigner within the meaning of the (XXXI of 1946), that with a view to regulating his continued presence in India or with a view to making arrangements for his expulsion from India, it is necessary so to do, make an order directing that such persons be detained. (2) Any of the following officers, namely, (a) District Magistrates, (b) Additional District Magistrates specially empowered in this behalf by the State Government, (c) the Commissioner of Police for Bombay, Calcutta, Madras or Hyderabad, (d) Collector in the State of Hyderabad, may satisfied as provided in sub clauses (2) and (3) of clause (a) of sub section (1 ) exercise powers conferred by the said sub section. 640 (3) When any order is made under this section by an officer mentioned in sub section (2) he shall forthwith report the fact to the State Government to which he is subordinate together with grounds on which the order has been made and such other particulars as in his opinion have a bearing on the matter, and no such order made 'after the commencement of the Preventive Detention (Second Amendment) Act, 1952, shall remain in force for more than twelve days after the making thereof unless in the meantime it has 'been approved by State Government. (4) When any order is made or approved by the State Government under this section, the State Government shall, as soon as may be, report the fact to the Central Government together with the grounds on which the order has been made and such other particulars as in the opinion of the State Government have bearing on the necessity for the order. " Section 7 is to the following effect: "7. '(1) When a person is detained in pursuance of a detention order, the authority making the order shall, as soon as may be, but not later than five days from the date of detention, communicate to him the grounds on which order has been made, and shall afford him the earliest opportunity if making a representation against the order to the appropriate Government. (2) Nothing in sub section (1) shall require the authority to disclose facts which it considers to be against the public interest to disclose. " It will be noticed that before an order of detention can be validly made by the detaining authorities specified by section 3(2) of the Act, the authority must be satisfied that the detention of the person is necessary in order to prevent him from acting in any prejudicial manner as indicated in cls. (i) to (iii) of section 3(1) (a). It is well settled that the satisfaction of the detaining authority to which section 3(1 )(a) refers is a subjective satisfaction, and so is not justifiable. Therefore it would not be open to the detenu to ask the Court to consider the question as to whether the said satisfaction of the detaining authority can be justified by the application of objective tests. It would not be open, for instance, to the detenu to contend that the grounds supplied to him do not necessarily or reasonably lead to the conclusion that if he is not detained, he would indulge in prejudicial activities. The reasonableness of the satisfaction of the detaining authority cannot be questioned in a Court of law; the adequacy of the material on 641 which the said satisfaction purports to rest also cannot be examined in a Court of law. That is the effect of the true legal position in regard to the satisfaction contemplated by section 3(1)(a) of the Act (See the decision of this Court in The State of Bombay vs Atma Ram Sridhar Vaidya(1). But there is no doubt that if any of the grounds furnished to the detenu are found to be irrelevant while considering the application of cls. (i) to (iii) of section 3(1)(a) and in that sense arc foreign to the Act, the satisfaction of the detaining authority on which the order of detention is based is open to challenge 'and the detention order liable to be quashed. Similarly, if some of the grounds supplied to the detenu are so vague that they would virtually deprive the detenu of his statutory right of making a representation, that again may make the order of detention invalid. If, however, the grounds on which the order of detention proceeds are relevant and germane to the matters which fall to be considered under section 3 ( 1 ) ( a ) of the Act, it would not be open to the detenu to challenge the order of detention by arguing that the satisfaction of the detaining authority is not reasonably based on any of the said grounds. It is also necessary to emphasise in this connection that though the satisfaction of the detaining authority contemplated by section 3 (1) (a) is the subjective satisfaction of the said ' authority, cases may 'arise where the detenu may challenge the validity of his detention on the ground of mala fides. The detenu may say that the passing of the order of detention was an abuse of the statutory power and was for a collateral purpose. In support of the plea of mala fides the detenu may urge that along with other facts which show mala fides, the grounds served on him cannot rationally support the conclusion drawn against him by the detaining authority. It is only in this incidental manner that this question can become justifiable; otherwise the reasonableness or propriety of the said satisfaction contemplated by section 3(1)(a) cannot be questioned before the Courts. The question to be considered in the present case is whether grounds (a), (b) and (e) served on Subhas Chandra Bose are grounds which are relevant to "the maintenance of public order". All these grounds relate to cases of assault on solitary individuals either by knife or by using crackers and it is difficult to accept the contention of the respondent that these grounds have any relevance or proximate connection with the maintenance of public order. In the present case we are concerned with detention under section 3( 1 ) of the which permits apprehension and detention of a person likely to act in a manner prejudicial to the maintenance of public order. Does the expression "public(1) ; 642 order" take in every kind of infraction of order or only some categories thereof. It is manifest that every act of assault or injury to specific persons does not lead to public disorder. When two people quarrel and fight and assault each other inside a house or in a street, it may be said that there is disorder but not public disorder. Such cases are dealt with under the powers vested in the executive authorities under the provisions of ordinary criminal law but the culprits cannot be detained on the ground that they were disturbing public order. The contravention of any law always affects order but before it can be said to affect public order, it must affect the community or the public at large. In this connection we must draw a line of demarcation between serious and aggravated forms of disorder which directly affect the community or injure the public interest and the relatively minor breaches of peace of a purely local significance which primarily injure specific individuals and only in a secondary sense public interest. A mere disturbance of law and order leading to disorder is thus not necessarily sufficient for action under the but a disturbance which will affect public order comes within the scope of the Act. A District Magistrate is therefore entitled to take action under section 3 (1 ) of the Act to prevent subversion of public order but not in aid of maintenance of law and order under ordinary circumstances. In Dr. Ram Manohar Lohia vs State of Bihar(1), it was held by the majority decision of this Court that the expression "public order" was different and does not mean the same thing as "law and order". The question at issue in that case was whether the order of the District Magistrate, Patna under Rule 30(1)(b) of the Defence of India Rules, 1962 against the petitioner was valid. Rule 30( 1 )(b) provided that a State Government might, if it was satisfied with respect to a person that with a view to preventing him from acting in a manner prejudicial to 'public safety and maintenance of public order ' it is necessary to do so, order him to be detained. The order of the District Magistrate stated that he was satisfied that with a view to prevent the petitioner from acting in any manner prejudicial to the 'public safety and the maintenance of law and order, ' it was necessary to detain him. Prior to the making of the order the District Magistrate had, however, recorded a note stating that having read the report of the Police Superintendent that the petitioner 's being at large was prejudicial to 'public safety ' and 'maintenance of public order ', he was satisfied that the petitioner should be detained under the rule. The petitioner moved this Court under article 32 of the Constitution for a writ of habeas corpus directing his release from detention, contending that though an order of detention to prevent acts prejudicial to public order may be justifiable ,an order to prevent acts prejudicial to law and order would not be justified by the rule. It was held by the majority judgment that what was (1) ; , 643 meant by maintenance of public order was the prevention of disorder of a grave nature, whereas, the expression 'maintenance of law and order ' meant prevention of disorder of comparatively lesser gravity and of local significance. At page 746 of the Report, Hidayatullah, J. as he then was, observed as follows in the course of his judgment: "It will thus appear that just as 'public order ' in the rulings of this Court (earlier cited) was said to comprehend disorders of less gravity than those affecting 'security of State ', 'law and order ' also comprehends disorders of less gravity than those affecting 'public order '. One has to imagine three concentric circles. Law and order represents the largest circle within which is the next circle representing public order and the smallest circle represents security of State. It is then easy to see that an act may affect law and order but not public order just as an 'act may affect public order but not security of the State. By using the expression 'maintenance of law and order ' the District Magistrate was widening his own field of action and was adding a clause to the Defence of India Rules. " The order no doubt mentioned another ground of detention, namely, the prevention of acts prejudicial to public safety, and in so far as 'it did so, it was clearly within the rule. But the order of detention must be held to be illegal, though it mentioned a ground on which a legal order of detention could have been based, because it could not be said in what manner and to what extent the valid and invalid grounds operated on the mind of the authority concerned and contributed to the creation of his subjective satisfaction. It was accordingly held that the order of detention made by the District Magistrate was invalid and the petitioner should be set at liberty. In our opinion, the principle laid down in this case governs the decision in the present case also and the order of the District Magistrate, Howrah dated January 20, 1968 must be held to be ultra vires and illegal. The difference between the concepts of 'public order ' and law and order ' is similar to the distinction between 'public ' and 'private ' crimes in the realm of jurisprudence. In considering the material elements of crime, the historic tests which each community applies are intrinsic wrongfulness and social expediency which are the two most important factors which have led to the designation of certain conduct as criminal. Dr. Allen has distinguished 'public ' and 'private ' crimes in the sense that some offences primarily injure specific persons and only secondarily the public interest, while others directly injure the public interest 'and affect indivi 644 duals only remotely. (see Dr. Allen 's Legal Duties, p. 249). There is a broad distinction along these lines, but differences naturally arise in the application of any such test. The learned author has pointed out that out of 331 indictable English offences 203 are public wrongs and 128 private wrongs. The argument was, however, stressed by Mr. Mukherjee on behalf of the respondent that the other grounds, viz., (c) and (d) mentioned in the order of the District Magistrate dated January 20, 1968 are more serious in character and may be held prejudicial to public order. We shall assume in favour of the respondent that grounds (c) and (d) are matters prejudicial to: public order. But even upon that assumption the order of detention must be held to be illegal. It is now well established that even if any one of the grounds or reasons that led to the satisfaction is irrelevant, the order of detention would be invalid even if there were other relevant grounds, because it can never be certain to what extent the bad reasons operated on the mind of the authority concerned or whether the detention order would have been made at all if only one or two good reasons had been before them. (See the decisions of this Court in Shibban Lal Saksena vs The State of Uttar Pradesh(1) and Dr. Ram Manohar Lohia vs State of Bihar(2). For these reasons we hold that the order of detention made by the District Magistrate, Howrah under section 3(2) of the Act dated January 20, 1968 against petitioner Subhas Chandra Bose alias Kanta Bose and the consequent order made by the Governor dated March 30, 1968 confirming the order of detention under section 11 (1 ) of the Act must be declared to be illegal and accordingly the petitioner. Subhas Chandra Bose alias Kanta Bose is entitled to be released from custody forthwith. In the case of petitioner 2, Sukumar Chaudhury, No. 4, Tarapada Bhowmick, No. 6, Golam Rasul Molliek, No. 16, Sk. Sharafat, No. 17, Hanif Mirza, No. 20, Sk. Mann, and No. 26, Chittaranjan Majhi, the orders of detention suffer from the same defect as that in the case of petitioner No. 5, Subhas Chandra Bose alias Kanta Bose. For the reasons already given we hold that the orders of detention made under section 3(2) of the Act and the orders of confirmation by the State Government under section 11 (1 ) of the Act in the case of all these petitioners are illegal and ultra vires and these petitioners are also entitled to be set at liberty forthwith. We pass on to consider the case of the petitioner mentioned in Group 2. As regards Pushkar Mukherjee, petitioner No. (1) ; (2) ; 645 the order of detention was made by the District Magistrate, 24 Parganas on September 19, 1967 and reads as follows: "Whereas I am satisfied with respect to the person known as Shri Pushkar Mukherjee, son of Late Jaladhar Mukherjee, Madhyamgram (Bireshpally), P.S. Baraset, Dist. 24 Parganas that with a view to preventing him from acting in a manner prejudicial to the maintenance of Public order, it is necessary so to do. And, therefore, in exercise of the power conferred by Section 3(2) of the (Act IV of 1950) I make this oder directing that the said Shri Pushkar Mukherjee, son of Late Jaladhar Mukherjee be detained. B. Majumdar, District Magistrate, 24 Parganas." The grounds of detention were served upon the detenu on the same date and are to the following effect: "Grounds for detention under sub section 2 of section 3 of the (Act IV of 1950). To Shri Pushkar Mukherjee, s/o Late Jaladhar Mukherjee, of Madhyamgram (Bireshpally), P.S. Baraset, District 24 Parganas. In pursuance of the provision of Section 7 of the (Act IV of 1950) as amended by the Preventive Detention (Amendment) Act, 1952 and 1954, you Shri Pushkar Mukherjee, s/o Late Jaladhar Mukherjee of Madhyamgram (Bireshpally), P.S. Baraset, 24 Parganas are hereby informed that you are being detained under section 3(1)(a)(ii) of the on the following grounds : 1. That you have been acting in a manner prejudicial to the maintenance of public order by the commission of offences of riotous conduct, criminal intimidation and assault as detailed below : (i) That on 26 3 1967 at about 11.00 hrs. you along with your associates Harisikesh Samadder 'and others being armed with dagger, spear and iron rods demanded money for drinks from Shri Joy Nath Roy in his Khatal at Katakhal Ganga Nagar, P.S. Baraset and on his refusal to pay the money you along with your associates dragged him out of his room and assaulted ' him and his friend Sudhir Ghose causing injuries on their persons. 646 (ii) That on 19 6 1967 evening you along with your associates threatened Sushil Kumar Chakravorty of Madhyamgram with assault when he was returning home from New Barrackpore Rly Station apprehending that he might inform the police for your arrest in connection with Baraset P.S. Case No. 56 dated 24 3 1967 u/s 302/394 I.P.C. which was pending investigation. (iii) That on 8 7 1967 at about 22.00 hrs. you along with your associates Kalyan Chakraborty and others again threatened Shri Sushil Kumar Chakraborty of Madhyamgram with assault out of previous grudge when he was returning to his house from New Barrackpore Rly Stn. (iv) That you were detained for your rowdy activities u/s 30(1) of the D.I. Rules 1962 from 22 4 1964 under Govt. Order No. 1233 H.S. dated 15 4 1964 and was released from detention on 4 10 1965. (v) That for your rowdy activities you were detained on 19 9 1966 under P.D. Order No. 163/66 which was confirmed under Govt. Order No. 8999 H.S. dated 26 11 1966 and you were released from such detention on 13 3 1967 under Order No. 1095 H.S. dated 13 3 1967 during General release. Thus from your activities subsequent to your release from detention under the P.D. Act on 13 3 1967 it appears that the detention did not produce the sobering effect on you. You have become a menace to the society and there have been disturbances and confusion in the lives o,f peaceful citizens of Baraset and Khardah P.S. areas under 24 Parganas District and the inhabitants thereof are in constant dread of disturbances of public order. For the above reasons, I am satisfied that you are likely to act in a manner prejudicial to the maintenance of public peace and order, and therefore, I have passed an order for your detention to ensure the maintenance of Public Order. You are further informed that you have right to make a representation in writing against this order under which you are detained. If you wish to make such a representation, you should address it to the Assistant Secretary, Govt. of West Bengal (Home Special) Department, Writers ' Buildings, Calcutta through the Superintendent of your Jail as soon as possible. Your case will be submitted to the Advisory Board within 30 days of your detention and your representation if received later, may not be considered by the Board. V. You are also informed that under Section 10 of the (Act IV of 1950), the Advisory Board, shall, if you desire to be heard, hear you in person and that if you desire to be so heard by the Advisory Board you should 647 A intimate such desire in your representation to the State Government. B. MAJUMDAR. District Magistrate, 9 9 67. 24 Pargan as. " On May 23, 1968, the Advisory Board reported that there was sufficient cause for detention of the detenu. On June 12, 1968 the Government of West Bengal confirmed the order of detention under section 11 ( 1 ) of the Act. It appears to us that ground No. 2 is extremely vague. Ground No. 2 states "You have become a menace to the society and there have been disturbances and confusion in the lives of peaceful citizens of Baraset and Khardah P.S. areas under 24 Parganas District and the inhabitants thereof are in constant dread of disturbances of public order. " It is manifest that this ground is extremely vague and gives no particulars to enable the petitioner to make an adequate representation against the order of detention and thus infringes the constitutional safeguard provided under Art 22 ( 5 ) Reference may be made in this connection to the decision of this court in the state of Bombay vs Alma Ram ion of this Court in The State Sridhar Vaidva(1) in which Kania of Bombay vs Atma Ram C.J. observed as follows: "What is meant by vague ? Vague can be considered as the antonym of 'definite '. If the ground which is supplied is incapable of being understood or defined with sufficient certainty it can be called vague. It is not possible to state affirmatively more on the question of what is vague. It must vary according to the circumstances of each case. It is however improper to contend that a ground is necessarily vague if the only answer of the detained person can be to deny it. That is a matter of detail which has to be examined in the light of the circumstances of each case. If on reading the ground furnished it is capable of being intelligently understood and is sufficiently definite to furnish materials to enable the detained person to make a representation against the order of detention it cannot be called vague. The only argument which could be urged is that the language used in specifying the ground is so general that it does not permit the detained ' person to legitimately meet the charge against him because the only answer which he can make is to say that he did not act as generally suggested. In certain cases that argument may support the contention that having regard to the general language used in the ground he has not been given the earliest opportunity to make a representation against the order of detention. It ' cannot be disputed that the represen (1) ; 648 tation mentioned in the second part of article 22(5). must be one which on being considered may give relief ' to the detained person. " It was, however, argued by Mr. Debabrata Mukherjee on behalf of the respondent that even though ground No. 2 may be vague, the other grounds supplied to the detenu are not vague and full and adequate particulars have been furnished. But it is well established that the constitutional requirement that the grounds must not be vague must be satisfied with regard to each of the grounds communicated to the person detained subject to the claim of privilege under cl. (6) of article 22 of the ConstitUtion 'and therefore even though one ground is vague and the other grounds are not vague, the detention is not in accordance with procedure established by law and is therefore illegal. (See the decision of this Court in Dr. Ram Krishan Bhardwaj vs The State of Delhi(1). For these reasons we hold that the order of detention made against the petitioner, Pushkar Mukherjee by the District Magistrate, 24 Parganas on September 19, 1967 and 'the consequent order of the Governor of West Bengal dated June 12, 1968 confirming the order of detention were illegal and ultra vires and the petitioner is entitled to be set at liberty forthwith. In the case of petitioners No. 3, Barun Kumar Hore, No. 7 Karfick Dey, No. 10, Ajit Basak, No. 12, Sk. Idris, No. 13, Shamsuddin Khan, No. 19, Khokan Mitra and No. 22, Ranjit Kumar Ghosal, the orders of detention suffer from the same legal defect as the order of detention in the case of petitioner No. 1, Pushkar Mukherjee. For the reasons already stated, we hold that the orders of detention and the orders of confirmation made by the State Government under section 11 (1 ) of the Act in the case of these seven petitioners also are illegal and ultra vires and these petitioners are also entitled to be set at liberty forthwith. As regards the cases of the remaining petitioners, nos., 8, 9 and 21, Chandan P. Sharma, Sk. Sahajahan and Bind Parmeshwar Prasad, alias Bindeshwari Prosad respectively, we have persued the orders of detention and the grounds supplied to these petitioners. It is not shown by learned Counsel on their behalf that there is any illegality in the orders of detention or in the subsequent procedure followed for confirming these orders. In our opinion, no ground is made out for grant of a writ of habeas corpus so far as these petitioners are concerned. Their applications for grant of a writ of habeas corpus are accordingly rejected. We desire to say that we requested ' Mr. Kohli to assist us on behalf of the petitioners and we are indebted to him for his assistance. Y.P. Petitions dismissed.
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In petitions for the writ of habeas corpus under article 32 of the Constitution for release from detention under orders passed under section 3(2) of the Prevention of Detention Act, HELD: The reasonableness of the satisfaction of the detaining authority cannot be; questioned in a Court of law; the adequacy of the material on which the said satisfaction purports to rest also cannot be examined in a Court of law.
But if any of the grounds furnished to the detent are found to be irrelevant while considering the application of cls.
(i) to (iii) of section 3(1)(a) of the Act and in that sense are foreign to the Act, the satisfaction of the detaining authority on which the order of detention is based is open to challenge and the detention order liable to be quashed.
[640 H 641 C] Even if any one of the grounds or reasons that led to the satisfaction was irrelevant, the order of detention would be invalid even if there were other relevant grounds, because it could never be certain to what extent the bad reasons operated on the mind of the authority concerned or whether the detention order would have been made at all if only one or two good reasons had been before them.
Similarly, if some of the ground supplied to the detent are so vague that they would virtually deprive the detent of his statutory right of making a representation, that again may make the order of detention invalid.
If, however, the grounds on which the order of detention proceeds are relevant and germane, to the matters which fall to be considered under section 3(1)(a) of the Act, it would not be open to the detenu to challenge the order of detention by arguing that the satisfaction of the detaining authority is not reasonably based on any of the said grounds.
Though the satisfaction of the detaining authority contemplated by section 3(1)(a) is the subjective satisfaction of the said authority, cases may arise: where the detenu may challenge the validity of his detention on the ground of mala fides.
[641 B F, 644 C D] In the present case, (1) with respect to some of the petitioners three of the grounds of detention related to cases of assault on solitary individuals either by knife or by using crackers.
It could not be held that these grounds had any relevance or proximate connection with the maintenance of public order.
Therefore the orders of detention of these petitioners were illegal and ultra virex.
The expression "public order" in section 3 (1) of the Act does not take in every kind of infraction of law.
When two people quarrel and fight 'and assault each other inside a house or in a street, it may be said that there is disorder but not public disorder.
Such cases are dealt with under the powers vested in the executive authorities under the provisions of ordinary criminal law but the culprits cannot be detained on the 636 ground that they were, disturbing public order.
The contravention of any law always affects order but before it can be said to affect public order, it must affect the community or the public at large.
A line of demarcation between serious and aggravated forms of disorder which directly affect the community or injure the public interest must be drawn and the, relatively minor breaches of peace of a purely local significance which primarily injure specific individuals and only in a secondary sense public interest.
A mere disturbance of law and order leading to disorder is thus not necessarily sufficient for action under the Preventive Detention Act but a disturbance which will affect public order comes within the scope of the Act.
A District Magistrate is therefore entitled to take action under section 3( 1 ) of the Act to prevent subversion of public order but not in aid of maintenance of law and order under ordinary circumstances.
The difference= between the concepts of 'public order ' and 'law and order ' is similar to the distinction between 'public ' and 'private ' crimes in the realm of jurisprudence.
In considering the material elements of crime, the historic Jests which each community applies are intrinsic wrongfulness and social expediency which are the two most important factors which have led to the designation of certain conduct as criminal. 'Public ' and 'private ' crimes have been distinguished in the sense that some Offences primarily injure specific persons and only secondarily the public interest, while others directly injure the public interest and affect individuals only remotely.
[641 H 642 D; 643 G, H] The State of Bombay vs Atma Ram: Sridhar Vaidya, ; ; Dr. Ram Manohar Lohia vs State of Bihar, ; ; Shibban Lal Saksena vs The State of Uttar Pradesh, ; , followed.
(2) One of the grounds of detention supplied to some of the other petitioners, stated, that they had become a menace to the society and there had been disturbances and confusion in the lives of peaceful citizens of the locality and that the inhabitants thereof were in constant dread of disturbances of public order.
The ground was extremely vague and gave no particulars to enable the petitioners to make an adequate representation against the order of detention and this infringed the Constitutional safeguard provided under article 22(5).
Therefore, the orders of detention of these petitioners were illegal and ultra vires.
The Constitutional requirement that the ground must not be vague must be satisfied with regard to each of the grounds communicated to the person detained subject to the claim of privilege under el.
(6) article 22 of the Constitution and therefore even though one ground was vague and the other grounds were not vague, the detention was not in accordance with procedure established by law and was therefore illegal.
[648 B C] Dr. Ram Krishan Bhardwaj vs The State of Delhi, ; , followed.
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When people ask the court to issue a writ of habeas corpus (a court order demanding someone in custody be brought before the court) under Article 32 of the Constitution, seeking release from detention under Section 3(2) of the Prevention of Detention Act, the court decided: The court can't question if the detaining authority (the person who ordered the detention) was reasonable in their decision. The court also can't examine if the information the authority used to make their decision was good enough.
But, if any of the reasons given to the person being detained are not relevant to clauses (i) to (iii) of Section 3(1)(a) of the Act, and are unrelated to the Act, then the detaining authority's decision can be challenged. If that happens, the detention order can be canceled.
Even if only one reason for the detention was irrelevant, the detention order is invalid. This is true even if there were other good reasons, because it's impossible to know how much the bad reason influenced the authority. It's also impossible to know if the detention would have happened with only the good reasons.
Similarly, if some of the reasons given to the person detained are too vague (unclear), it can prevent them from making a proper defense. This could also make the detention order invalid.
However, if the reasons for the detention are relevant to Section 3(1)(a) of the Act, the person detained can't challenge the order by arguing that the authority's decision wasn't reasonably based on those reasons.
Even though the detaining authority's decision under Section 3(1)(a) is supposed to be their own personal judgment, the person detained can still challenge the detention if they believe it was done in bad faith (with dishonest intentions).
In this specific case: (1) For some of the people detained, three of the reasons for their detention involved assaults on single people using knives or firecrackers.
The court decided these reasons weren't related to maintaining public order. Therefore, the detention orders for these people were illegal. The term "public order" in Section 3(1) of the Act doesn't include every violation of the law.
If two people argue and fight inside a house or on the street, it's considered a disturbance, but not a public disorder. These cases are usually handled by the police under normal criminal law. People can't be detained under this Act just because they were disturbing the peace.
Breaking any law affects order, but to affect public order, it must affect the community or the public in general.
There's a difference between serious disturbances that directly affect the community and minor breaches of peace that mainly affect specific people.
Simply disturbing law and order isn't enough for action under the Preventive Detention Act. However, a disturbance that affects public order is covered by the Act.
A District Magistrate (a local official) can take action under Section 3(1) of the Act to prevent public disorder, but not just to maintain law and order in normal situations.
The difference between "public order" and "law and order" is similar to the difference between "public" and "private" crimes in law.
When deciding if something is a crime, communities consider if it's inherently wrong and if it harms society. These are important factors in deciding what is criminal. "Public" and "private" crimes differ because some crimes mainly hurt specific people, while others directly hurt the public.
(2) One of the reasons given to some other people detained was that they were a threat to society. It stated that they had caused disturbances and confusion in the lives of peaceful citizens, and that people in the area were constantly afraid of public disorder.
This reason was too vague and didn't provide enough details for the people detained to make a proper defense against the detention order. This violated their rights under Article 22(5) of the Constitution.
Therefore, the detention orders for these people were also illegal.
The Constitution requires that the reasons for detention must be clear for each ground, subject to certain exceptions. Even if only one reason was vague and the others were not, the detention wasn't done according to proper legal procedure and was therefore illegal.
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Appeal No. 742 of 1967. Appeal from the judgment and decree dated April 4, 1960 of the Madras High Court in Appeal No. 334 of 1956. M. Natesan, K. section Subramanian and K. Jayaram, for the appellant. A. V. Rangam and A,. Subhashini, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by Certificate from a judgment of the Madras High Court. The appellant 's predecessor in office T. G. Kuppuswamy Iyer filed on April 14, 1950 a suit in the District Court, Madurai, under section 84(2) of the Madras Hindu Religious Endowments Act, 3 L152SupCI./7 586 (Act 11 of 1927) against the respondent and two other persons who are not parties to the appeal for a declaration that the suit Mandapam was a private Mandapam, i.e., family property of Thoguluva Thirumalier and was not a temple covered by the provisions of the aforesaid Act. This suit had to be instituted because the authorities appointed under the Madras Act 11 of 1927 held that the premises No. 29 South Masi Street, Madurai wherein the idol of Sri Srinivasaperumal and certain other idols Were located was a temple within the meaning of the said Act. The District Judge decreed the suit in favour of the appellant but the High Court, on appeal, reversed that judgment and passed a decree holding that the premises constituted a temple. The appellant thereupon filed a petition for leave to appeal to this Court but the High Court refused to grant the certificate. The matter was brought to this Court. By a judgment which is reported in T. D. Gopalan vs Commr. of Hindu Religious & Charitable Endowments, Madras(1) this Court directed that the subject matter of the dispute should be ascertained with reference to the claim made by the plaintiff in his plaint. Consequently the valuation of the property should have been done according to the claim made in the plaint, namely, that the property was private pro perty of the family capable of alienation. Thereafter the High Court granted a certificate on determination of the value of the suit property. The only question which had to be decided by the District Court and the High Court was whether the property in dispute was a private Mandapam and not a public temple. The District Judge appointed a Commissioner to submit a report regarding the physical features of the property. The Commissioner reported that the suit premises was a temple and in front of it there was a Garbha Graha on either side. There were two stone idols called Dwarabalakas. The implements necessary for offering puja were also found by the Commissioner. But there was no Dwejasthamba, Balipeeda or Gopuram. There is no dispute, that the premises where the temple is situ.ate originally belonged to one Kuppiyan. A decree was obtained by Tirumalaiyyan against Kuppiyan and in execution of that decree the property was put to sale by public auction. It was purchased by Tirumalaiyyan in 1885 (vide Ext. B 1 extract from the suit register dated 14 1 1885). The title to the property thus vested in Tirumalaiyyan and the members of the family who later on came to be known as Thoguluva family. The case laid in the plaint was that the Mandapam came to be constructed on the suit property by the members of that (1) 5 87 family which belonged to what is known as the Saurashtra community in Madurai town. It was a private Mandapam which was in the exclusive and absolute control of the said family and worship was performed there for the spiritual benefit of the members of the Thoguluva Tirumalaiyyam family. , It is common ground that at all times the management and control over the Mandapam was with some or other members of the Thoguluva family. In 1932 or 1933 some shops in the eastern and western side of the Mandapam were constructed for which the Municipality levied a tax which had been paid by the members of the Thoguluva family which was in the management of the temple. The learned District Judge 's approach to the appreciation of the evidence, oral as well as documentary, was on the prin ciple that once the private character of the temple was established more strong proof was necessary to hold that the temple was subsequently dedicated to the public; (Babu Bhagwan Dill & Others vs Gir Har Saroop & Others(1). He considered the evidence produced by the parties and, in particular, carefully analysed the evidence led on behalf of the defendants according to whom the Mandapam was a public temple. While discussing the evidence of each of the witnesses the learned judge gave detailed reasons for accepting or rejecting the evidence of a particular witness. Before him the defendant had sought to establish the dedication of the temple to the public by producing evidence on the following points : (1) Subscriptions were collected by G. Rama Ayyangar and his descendants from the public because the members of the Thoguluva family stopped giving any financial help to the temple; (2) Shops in the front Mandapam were constructed with public donations and even for the Kumbabishekan public funds were collected; (3) D.W. 6 who did not belong to the Thoguluva family was doing the Mandagapadi; (4) There used to be a procession on Vaikunta Ekadasi day the expenses of which were met by D.W. 7; (5) There were jewels and other articles used for worship donated by members of public which were in the custody of Srimathigal Sangam; (6) On each of the Navaratri days people who did not belong to the Thoguluva family did the Ubhayam; (7) The worshippers had been making offerings during the daily pooja as of right and were participating in the daily Neivedyams, (8) That there was a Nagara, bell and Hundial in the suit temple; (9) That there was Utsava idol in the suit Mandapam, The learned District Judge found : D.Ws. 3, 4 and 8 who belonged to the Thoguluva family had played into the hands of the opposite camp. (ii) D.W. 3 was disbelieved mainly because 67 I.A.P.I. 588 he claimed that he was the Manager for some time and that he had handed over all the charge papers and account books to the plaintiff at the meeting at which the plaintiff was appointed manager. But in a previous tatement Ext. A 17 he had admitted that there was no record to show that he had handed over the charge to the plaintiff. (iii) The burden of proving that donations were collected from the public was on the defendants as they were seeking to establish dedication of a temple which was once private in character. There was no satisfactory evidence that donations had ever been collected from members of the public. 2 and 6 who claimed to have made such contribution could not produce any account books which contained any such entries although they were running trade and business. (iv) There were clear contradictions in the statements of DWs. 4 and 8 on some material matters and therefore their evidence could not be relied upon. (v) The evidence of P.W. 1 read with the recitals in Ext. B 5 negatived any inference of any public donation having been collected for the building of the shops or for the Kumbabishekam. (vi) The statements of DWs. 7 & 8 when considered in the light of the other evidence did not establish that the deity was taken out in a procession as alleged by the defendants. (vii) It had not been satisfactorily proved that any non Thoguluva performed any of the Mandagapodies on Navaratri day or that any monies were so collected for taking the deity in procession on Vaikunta Ekadasi day. (viii) The evidence of D.Ws. 2 and 6 on the question of the expenses of the Nagara, bell and Hundial was negatived by the absence of their mention in the report of the Commissioner. There was no mention of the Hundial even in some earlier affidavits or petitions. (ix) Even defendants 2 and 3 did not say in their written statements that there had been any user of the temple by the public as of right. They had only asserted that members of the Saurashtra public were worshipping there as of right. It was pointed out by the learned judge that a temple worshipped even by a section of the public would be a public temple but the evidence which had been produced on behalf of the defendants was to the effect that any member of the public whether a Saurashtra or a non Saurashtra had a right to workship there. The case as laid in the pleadings and as developed in the evidence was thus inconsistent. The High Court observed that the origin and history of the shrine could not be traced with any degree of continuity owing to the paucity of the evidence on the record. Reference was, however, made to the auction sale. It was not disputed before the High Court that the property formed the subject matter of the court sale comprised the suit property. Before the High 589 Court the plaintiff relied on Ext. B 1 for two purposes : (1) It showed that the property was private secular property and (2) the title to the property became vested in Thoguluva Tirumalliyan and members of his family. The observation of the High Court on these contentions was, "the document, Ext. B 1 (a) lends considerable support to these contentions of the plaintiff". The High Court, however, proceeded to note that in the description of the property in Ext. B 1 there was a mention of Garbha Graha Prakaram and vacant site etc. These terms were generally associated with only public temples. According to the High Court there was no evidence to show how the worship at the shrine was conducted and who provided the necessary funds and further how the property was treated by the public authorities like the Government or the Municipality. It was common ground, however, that the shrine was a popular one at least among the members of the Saurashtra community and that Nithyapadi pooja was being performed at the shrine just as in public temples. Par ticular reference was made by the High Court to the expenses of stone images which were to be installed in the suit premises in 1947 the offer of the gift having been made by persons who did not belong to the Thoguluva family. In Ext. B 4 the donors offered to make three stone images at their cost and also offered a sum of Rs. 350/ for meeting all expenses in connection with the installation of newly made idols and the various ceremonies which were to be performed in connection with the same. An invitation Ext. B 5 was issued in that connection for a Mahakumbabishakam to be celebrated on January 27, 1947. In this, invitation the plaintiff styled himself as the Honorary Secretary. The donors were described therein as the Udhayadars. On March 17, 1947 the plaintiff wrote to the donors requiring them to pay Rs. 100/ every month towards the pooja at the shrine. This demand was said to have been made on the basis of the alleged agreement on the part of the donors to furnish the necessary expenses for running the institution after the images were duly installed. The High Court felt that it was difficult to conceive of the owner of a private temple receiving gifts of images from strangers and installing them in his temple; and it was impossible to reconcile the demand for contributions with the claim that the temple was a private one. The High Court next proceeded to reproduce a summary of the statement of each of the witnesses produced by the defendants. No attempt whatsoever was made to discuss the reasons which the learned District Judge had given for not accepting their evidence except for a general observation here and there that nothing had been suggested in the cross examination of a particular witness as to why he should have made a false statement. We apprehend that the uniform practice in the matter of appreciation of evidence has been that if the trial court has given cogent and detailed 590 reasons for not accepting the testimony of a witness the appellate court in all fairness to it ought to deal with those reasons before proceeding to form a contrary opinion about accepting the testimony which has been rejected by the trial court. We are, therefore, not in a position to know on what grounds the High Court disagreed with the reasons which prevailed with the learned District Judge for not relying on the evidence of the witnesses produced by the defendants. It seems that the approach of the High Court was also some what influenced by the observations of the Judicial Committee of the Privy Council in Mundancheri Koman vs Achuthan Nair & Others(1) that in the greater part of the Madras Presidency private temples were practically unknown and the presumption was that the temples and their endowments formed public religious trusts. This was, however, not the case in Malabar where large tarwads often established private temples for their own use. Finally the High Court held that the temple was a public temple. After stating some other facts which were found, presumably after believing the evidence produced by the defendant, the High Court made two observations which may be reproduced : (1) "Admittedly the members of the public have been worshipping at the shrine without let or hindrance. The evidence on record shows unmistakably that this temple was being run only by contributions and by benefactions obtained from members of the public." Mr. Natesan who appears for the plaintiff appellant has assailed the whole approach of the High Court to the question of the character of the temple which, according to him, had been proved to be private in origin. It has been contended by him that the usual state of affairs to be found in Madras as per the observations of the Privy Council could not be applied to the case of Saurashtra community which migrated from the territories which now form part of the State of Gujarat centuries ago. This community, has, apart from several other individual characteristics, maintained a tradition of having private temples. Moreover if the origin of the temple had been proved to be private then according to the law I aid down by the Privy Council itself in Babu Bhagwan Din 's case dedication to the public was not to be readily inferred. Such an inference, if made, from the fact of user by the public was hazardous since it should not, in general, be consonent with Hindu sentiment or practice that worshippers should be turned away; and, as worship generally implied offer (1) 61 T.A. 405. 591 ings of some kind, it was not to be expected that the managers of a private temple should in all circumstances desire to discourage popularity. It was further emphasised by their lordships that the value of public user as evidence of dedication depends on the circumstances which give strength to the inference that the user was as of right. In Goswami Shri Mahalaxmi Vahuii vs Rannchboddas Kalidas & Others(1) it was pointed out that the appearance though a relevant circumstance was by no me= decisive. The circumstance that the public or a section thereof had been regularly worshipping in the, temple as a matter of course and they could take part in the festivals and ceremonies conducted in that temple apparently as a matter of right was a strong piece of evidence to establish its public character. if votive offerings were being made by the public and the expenses were being met by public contribution, it would be safe to presume that the temple was public. In short the origin of the temple the manner in which its affairs were managed the nature and extent of the gifts received by it, rights exercised by devotees in regard to worship therein, the consciousness of the manager and the consciousness of the devotees themselves as to the public character of the temple were factors that went to establish whether a temple was public or private. Mr. Natesan says that if the evidence of the witnesses pro duced by the District Judge then there will be hardly any features or circumstances barring some of the physical features of the temple and the fact that people have been allowed to worship and take part in the festivals and ceremonies and even to make some offerings, (though without their having the right to worship in the temple) which would be sufficient to make a temple which was private in origin a public temple. According to Mr. Natesan even the witnesses of the defendants had shown consciousness of the temple beng private. He has laid a great deal of emphasis on the absence of any property attached to the temple which might be endowed. He says that admittedly only two shops were build by the family and out of the rents received from those shops together with other contributions made by the members of the family the expenses of the temple were being met. He has relied a great deal on the decision of a Division Bench, of the Madras High Court in The Madras Hindu Religious En dowments Board vs V. N. D. Ammal(1). There reliance had been placed on the following features : (1) that when the temple was built in 1919 Kumbabishekam was performed on a grand scale; (2) the respondent had made Utsavamurthis and built Chaprams and the deities were also taken in procession on spe (1) [1970]2 S.C.R. 275. (2) [1953] 2 M.I.J. 688. 592 cial occasions; (3) a Gurukkal had been, engaged to perform the pooja regularly and (4) the temple has got a Gopuram and other features which are usually found in a public temple. This is what Venkatarama Ayyar J., as he then was, observed : "It is true that the facts that there is an utsava idol and there are processions are generally indicative of the fact that it is a public temple. But then no property has been dedicated for the upkeep of the temple. The worship is maintained and the expenses are met from out of the private funds of the respondent. In the absence of any property being dedicated for the maintenance of worship in the temple, it is difficult to hold that, the temple has been dedicated to the public". At this stage the provisions of section 9 (12) of the Madras Act 2 of 1927 which defines a temple may be noticed. According to that definition it is a place by whatever designation known used as a place of public religious worship and dedicated or used as of right by the Hindu community or any section thereof as a place of public religious worship. In the Madras Hindu Religious and Charitable Endowments Act (Act 22 of 1959) the definition of "temple" is given in sub clause (20) of section 6. It is practically in the same terms as in the earlier Act. In our judgment the, High Court was in error in holding that members of the public had been worshipping at the Mandapam in dispute without let or hindrance. In arriving at that conclusion it appears to have believed the witnesses produced by the defendants. It has also relied on the principle that in the absence of any evidence to show that such user was permissive it could be presumed that, it was as of right. We have already pointed out that the High Court, while appraising the evidence of the witnesses, has not discussed the reasons and grounds given by the learned District Judge for not relying on the defendant 's witnesses. Mr. A. V. Rangam who appears for the contesting respondent has endeavoured to take us through the evidence of the witnesses for demonstrating that the reasons given by the card the testimony of the defendants witnesses. But we are learned District Judge were neither cogent nor sufficient to disunable to agree with him that the appreciation of evidence by the learned Judge was open to criticism as suggested by him. Apart from this the High Court did not consider the evidence produced by the plaintiff without which many matters could not be properly appreciated or explained. The other finding of the ' High Court that the temple was being run by contributions and benefactions obtained from members of the public was also based mainly on the evidence produced by the defendants. In our 593 opinion the conclusion of the learned District Judge on that point receives more support from the entire material on the record It is significant that the High Court did not attach sufficient importance to three matters which, in the present case, were of material consequence. The first was that the origin of the Mandapam had been proved to be private. The second was that its management had remained throughout in the members of the Thoguluva family. The third was the absence of any endowed property. There was no Gopuram or Dwajasthamba nor a Nagara bell nor Hundial in the suit temple. The learned District Judge adverted to the evidence, on all these and other relevant matters and we concur with him in his conclusions. It is true that the suit temple had some physical characteristics and features which are generally to be found in a public temple. It was also established that persons who were outsiders in the sense that they did not belong to the Thoguluva family used to come and worship at the temple and made offerings there. There were also some jewels and other articles in the temple. But the determination of the question whether the temple was public or private did not depend on some facts or set of facts alone. The entire evidence, both documentary and oral, had to be, considered as a whole keeping in view the principles already noticed by us. We are satisfied that the learned District Judge came to the correct conclusion that the suit temple was private in character. For all the above reasons the appeal is allowed, the judg ment of the High Court is set aside and that of the District Judge restored. The appellant will be entitled to costs in this Court. Appeal allowed.
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The members of the family of the plaintiff who belonged to the Saurashtra community had constructed a Mandapam on land of which they were the owners.
There were a Garbha Griha in front of the mandapam, stone idols called Dwarabalakas on either side and implements necessary for offering puja in the mandapam.
But there were no Dwajasthamba, Balipeeda or Gopuram.
The authorities under the Madras Hindu Religious Endowments Act, 1927, held that the mandapam was a public temple within the meaning of the Act.
A suit filed for a declaration that it was a private temple was decreed by the trial court, but in appeal, the High Court held that it was a public temple, on the grounds that, the members of the public had been worshipping at the shrine without let or hindrance, and that the temple was being run only by contributions and by benefactions obtained from members of the public.
Allowing the appeal to this Court, HELD : (1) According to the definition in the Act a public temple is a place by whatever designation known used as a place of public religious worship and dedicated or used as of right by the Hindu community or a section thereof as a place religious worship.
[592C] The Saurashtra community maintained a tradition of having private temples.
in the present case, the management and control over the mandapam was at all times with some or other members of the plaintiff 's family.
The trial court rightly approached the evidence, oral as well as documentary on the principle that once the private character of the temple was established stronger proof was necessary to hold that the temple was subsequently dedicated to the public.
The evidence produced by the parties was carefully considered and analysed, and, in discussing the evidence, the trial court gave detailed reasons for accepting or rejecting the evidence of a particular witness.
[587C E; 590F] The trial court held that thee was no satisfactory evidence that any donations had ever been collected from members of the public; that there was no evidence to establish that the deity was ever taken out in procession or that any person who was not a member of the 'family had ever performed any religious festival in the temple; and that the case set out by the defendant in the pleadings that there had been user of the temple by members of the Saurashtra community was inconsistent with the evidence produced on their behalf to the effect that any member of public, whether a Saurashtra or non Saurashtra, had a right to worship therein.
[587H; 588A C] (2)The High Court was in error in reversing the findings of the trial Court.
No attempt whatsoever was made by the High Court to discuss the reasons which the trial court had given for not accepting the evidence of the defence witnesses.
In the matter of appreciation of evidence if the 585 trial court had given cogent and detailed reasons for not accepting the testimony of a witness, the appellate court, in all fairness to it, ought to deal with those reasons before proceeding to form a contrary opinion.
Apart from this, the High Court did not consider the evidence produced by the plaintiff (appellant) without which matters could not be properly appreciated or explained.
The conclusions of the trial court receive support from the entire material on record, and this Court is not in a position to know on what grounds the High Court disagreed with the reasons which prevailed with the trial court for not relying on the evidence of the witnesses produced by the respondents.
[589F H; 590A] (3) The High Court also erred in not attaching importance to the following matters : (a) the origin of the temple had been proved to be private, (b) the management had remained throughout in the members of the appellant 's family, (c) the absence of any endowed property and (d) the absence of Dwajauthamba or Nagara bell or Hundial in the temple.
[592H; 593A B] (4) The origin of the temple, the manner in which its affairs were managed, the nature and extent of the gifts received by it, the rights exercised by devotees in regard to worship therein, the consciousness of the manager and the consciousness of the devotees themselves as to the public character of the temple are factors which go to establish whether a temple is public or private.
In the present case,the mandapam had somephysical characteristics and persons which are generally found in a public temple.
It was also published that persons who did not belong to appellant 's family used to worship at the temple and make offerings therein.
There were also some jewels and other articles in the temple.
But the determination of the question whether the temple was public or private did not depend on some facts or set of facts alone.
The entire evidence, both documentary and oral, had to be considered as a whole.
[573B E] Babu Bhagwan Din & Others vs Gir Har Saroop & Ors.
67 I.A. 1, applied.
Goswami Shri Mahalaxmi Vahuji vs Rannchboddas Kalidas & ors.
; , , followed.
Mundancheri Koman vs Achuthan Nai & Ors., 61 I.A. 405 and Mad.
ras Hindu Religious Endowments Board vs V. N. D. Ammal, , referred to.
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The plaintiff's family, who were from the Saurashtra community, built a Mandapam (a type of hall) on their own land.
In front of the Mandapam was a Garbha Griha (inner shrine). There were also stone statues called Dwarabalakas (guardian figures) on each side, and items needed for worship.
However, there was no Dwajasthamba (flagpole), Balipeeda (offering table), or Gopuram (tower).
The government officials in charge of Hindu religious groups in Madras (now Chennai), under a 1927 law, said the Mandapam was a public temple according to that law.
The family filed a lawsuit saying it was a private temple. The first court agreed, but the High Court (appeals court) said it was a public temple. They said that the public had been freely worshipping there and the temple was supported by donations from the public.
The family appealed to a higher court, and the court agreed with the family. Here's why:
(1) The law said a public temple is a place used for public religious worship that is dedicated to or used by the Hindu community as a place to worship.
The Saurashtra community had a history of having private temples. In this case, the family always managed and controlled the Mandapam. The first court was right to say that because the temple started as private, strong proof was needed to show it later became public. The first court carefully looked at all the evidence and gave good reasons for believing or disbelieving each witness.
The first court found no good evidence that donations were collected from the public. It also found no evidence that the religious figure was ever taken out in processions, or that anyone outside the family performed religious festivals there. The court also noted that the defense's claim that the Saurashtra community used the temple was not consistent with their evidence that anyone, Saurashtra or not, could worship there.
(2) The High Court was wrong to disagree with the first court. The High Court didn't explain why it disagreed with the first court's reasons for not believing the defense witnesses. When a trial court gives clear reasons for not believing a witness, an appeals court should explain why it disagrees with those reasons before making a different decision. Also, the High Court didn't consider the evidence presented by the family (the ones appealing the decision), which was needed to understand the situation properly. The first court's conclusions were supported by all the evidence, so the higher court didn't know why the High Court disagreed with the first court's reasons.
(3) The High Court also made a mistake by not considering: (a) that the temple started as private, (b) that the family always managed it, (c) that it had no property given to it, and (d) that it didn't have a flagpole, bell, or donation box.
(4) To decide if a temple is public or private, you need to consider: how it started, how it's managed, what kind of gifts it receives, how people worship there, and what the managers and worshippers think about whether it's public. In this case, the Mandapam had some things that are common in public temples. It was also said that people outside the family worshipped there and made offerings. But deciding if the temple was public or private couldn't be based on just a few facts. All the evidence had to be considered as a whole.
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ON: Civil Appeals Nos. 1319 and 1320 of 1966. Appeals by special leave from the judgments and orders dated February 16, 1966 and February 1, 1966 of the Andhra Pradesh High Court in Writ Appeals Nos. 143 of 1966 and 166 of 1965 respectively and Writ Petition No. 103 of 1966. C1/68 13 692 Petition under article 32 of the Constitution of India for the enforcement of fundamental rights. B.C. Misra, Om Prakash Gupta and M.V. Goswami, for the appellant/petitioner (in all the matters). B. Sen and R.N. Sachthey, for the respondent (in all the matters ). The Judgment of the Court was delivered by Shah, J. Kapurchand Shrimal a Hindu undivided family committed default in payment of income tax due by it for the assessment years 1955 56 to 1959 60. The Income tax Officer, Special Investigation Circle, Hyderabad, issued certificate on ,June 16, 1959, under section 46 of the Income tax Act, 1922, fox ' recovery of tax due by the family. Pursuant to the certificate, properties of the Hindu undivided family movable and immovable and outstandings were attached for realizing the tax dues. In exercise of the powers conferred by r. 76 of Sch. II of the Income tax Act, 1961, the Tax Recovery Officer directed on August 10, 1965, that Kapurchand Shrimal manager of the family be detained in civil prison for fifteen days. The manager then moved a petition in the High Court of Andhra Pradesh against the order of detention. The petition was rejected by a single Judge of the High Court holding that the manager had, in contravention of r. 16(2) of Sch. II of the Income tax Act, 1961, dealt with the properties of the family after receiving notice of the issue of the tax recovery certificate. In appeal against that order, the manager applied for leave to raise the contention that where a Hindu undivided family had committed default in payment of the tax, its Karta not being the assessee against whom the certificate is issued,. is not liable to be detained for recovery of tax due by the Hindu undivided family. The High Court declined to allow the contention to be raised and held that the manager having acted in contravention of r. 16(2) of Sch. II of the Income tax Act, 1961, the ingredients of r. 73 were attracted and he was liable to be detained in civil prison. A, day before this order was passed the appellant filed another petition under article 226 of the Constitution challenging the validity of the proceedings against him on the ground that he was not a "defaulter". That petition was dismissed by the High Court holding that the earlier judgment of the High Court operated to bar investigation into the plea raised. Appeals Nos. 1319 & 1320 of 1966 arise out of the orders made by the High Court in the two petitions under article 226 of the Constitution. The manager was, after the order of the High 693 Court, arrested and sent to prison for six months. The manager then filed petition under article 32 of the Constitution praying for a writ in the nature of habeas corpus for an order for his release from the custody of Superintendent District Prison, Hyderabad. In our judgment the claim of the manager that he is not liable to be arrested and detained in prison for failure to satisfy the tax due by the Hindu undivided family in enforcement of the certificate issued under section 222 of the Income tax Act, 1961,, must be upheld. By virtue of section 297(2)(j), notwithstanding the repeal of the Indian Income tax Act, 1922, any stun payable by way of income tax, super tax, interest, penalty or otherwise under the Income tax Act, 1922, may be recovered under the Act of 1961, but without prejudice to any action already taken for the recovery of such sum under the repealed Act. Proceedings could therefore be taken for recovery of the tax due for the assessment years 1955 56 to 1959 60 by the Hindu undivided family under the Income tax Act of 1961. Section 220 of Act 1961 deals with payment of tax and the conditions in which an assessee may be deemed to ' be in default. Under the Act tax assessed has to be paid within thirty five days of the service of a notice of demand: if the amount is not paid within the time limited at the place and to the person mentioned in the said notice, the assessee shall be deemed to be in default. Section 222 provides for the issue of certificate to the Tax Recovery Officer. It provides, in so far as it is material: "( 1 ) When an assessee is in default or is deemed to be in default in making a payment of tax, the Income tax Officer may forward to the Tax Recovery Officer a certificate under his signature specifying the amount of arrears due from the assessee, and the Tax Recovery Officer on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule (a) attachment and sale of the assessee 's movable property; (b) attachment and sale of the assessee 's immovable property; (c) arrest of the assessee and his detention in prison; (d) appointing a receiver for the management of the assessee 's movable and immovable properties". By r. 1 (b) of Sch. II of the Income tax Act, 1961, "defaulter"" means the assessee mentioned in the certificate. Rule 2 provides 694 that when a certificate has been received by the Tax Recovery Officer from the Income tax Officer for recovery of arrears under Sch. II, the Tax Recovery Officer shah cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that in default steps would b.e taken to realise the amount under the Schedule. Rule 16 provides that where a notice has been served on a defaulter under r. 2, the defaulter shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer. Rule 73 provides that no order for the arrest and detention in civil prison of a defaulter shah be made unless the Tax Recovery Officer has, issued and served a notice upon the defaulter calling upon him to appear on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Tax Recovery Officer, for reasons to be recorded in writing, is satisfied and that the defaulter with the object or effect of obstructing the execution of the certificate, has, after the receipt of the certificate in the office of the Tax Recovery Officer, dishonestly transferred, concealed, or removed any part of his property; and (b) that the defaulter has, or has had since the receipt of the certificate in the office of the Tax Recovery Officer, the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. Rule 76 provides for the issue of an order of detention of the defaulter by the Tax Recovery Officer. The scheme of the Income tax Act, 1961, is to treat the assessee failing to pay the tax due within the period prescribed a defaulter. The Income tax Officer may, where the assessee is found to be in default, issue a certificate for recovery and forward it to the Tax Recovery Officer specifying the amount of arrears due from the assessee. The amount due may be recovered by resort to any one or more of the four modes prescribed by section 222 of the Act. If the defaulter fails to comply with a notice issued by the Tax Recovery Officer requiring the defaulter to pay the amount within fifteen days from the date of the service of the notice, proceedings for recovery may be taken against the assessee for recovery of 'the tax. But under the scheme of the Act and the Rules, the assessee alone may be treated in default. The Act and the Rules contemplate that the notice for payment of the tax arrears may be issued against the assessee, and proceedings for recovery of the tax may be taken against the assessee alone. Under the Income tax Act, 1961, a Hindu undivided family is a distinct taxable entity. apart from the individual members who constitute that family. Section 4 of the Income tax Act charges tax for any assessment year, the total income of the previous 695 year of every person and 'person ' is defined in section 2 (31 ) as including (i) an individual, (u) a Hindu undivided family, (iii) a company, (iv ) a firm, (v ) an association of persons or a body of individuals, whether Incorporated or not, (vi) a local authority and (vii) every artificial juridical person, not falling within any of the preceding sub clauses. The Legislature having treated a Hindu undivided family as a taxable entity distinct from the individual members constituting it, and proceedings for assessment and recovery of tax having been taken against the Hindu undivided family, it was not open to the Tax Recovery Officer to initiate proceedings against the manager of the Hindu undivided family for his arrest and detention. It is true that if properties of the family movable and immovable are to be attached, proceedings may be started against the Hindu undivided family and the manager represents the family in proceedings before the Tax Recovery Officer. But by the clearest implication of the statute the assessee alone may be deemed to be in default for non payment of tax, and liability to arrest and detention on failure to pay the tax due is also incurred by the assessee alone. The manager by virtue of his status is competent to represent the Hindu undivided family, but on that account he cannot for the purpose of section 222 of the Act of 1961 be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family. Counsel for the Revenue invited our attention to section 140(b) and section 282(2) of the Income tax Act, 1961, in support of his contention that when tax is assessed against the Hindu undivided family there is no distinction between the representative status of the manager of the family and his personal status. Section 140(b) authorises the manager in the case of a Hindu undivided farofly to sign and verify the return of income, and section 282(2) provides for the mode of service of notice or requisition issued under the Act, amongst others, against a Hindu undivided family. But because the manager of a Hindu undivided family is authorised to sign and verify the return of income and a notice under the Act could be served upon him when it is addressed to a Hindu undivided family and such service is treated as service upon the Hindu undivided family for the purpose of the Act, the manager cannot be deemed to be the assessee where the income assessed is of the Hindu undivided family. The expression 'assessee ' under section 2(7) means a person by whom any tax or any other sum of money is payable under the Act, and includes (a) every person in respect of whom any proceeding under the Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed 696 to be an assessee under any provisions of the Act; (c) every person who is deemed to be an assessee in default under any provisions of the Act. For purposes of cl. (a) the person against whom any proceeding under the Act has been taken is deemed an assessee: but that necessarily postulates that the proceeding should be lawfully taken against the person before he could be deemed to be an assessee for the purpose of section 222.or r. 2 and r.73. There is no provision in the Act which deems the manager to be the assessee, for the purpose of assessment and recovery of tax, when the income of the Hindu undivided family of which he is the manager is assessed to tax. Nor is there any provision enabling the Income tax Officer or the Tax Recovery Officer to treat the manager of the Hindu undivided family as an assessee in default under the provisions of the Act. Section 160 provides for treating a person as a representative assessee and section 161 prescribes the liability of a representative assessee. Section 179 makes a special provision for rendering the Directors of private company in liquidation to be jointly and severally liable for the payment of tax which cannot be recovered from the assets of the private company in liquidation. The Legislature has made no such provision for recovery of tax by resort to the personal property of the manager of the Hindu undivided family, or by his arrest and detention for default by the family in paying the tax due. Sections 276, 276A, 277 and 278 on which reliance was placed by counsel for the Revenue in support of his argument also do not assist him. These sections occur in a chapter relating to penalties, and they seek to penalise failure to carry out specific provisions mentioned therein. We are unable to hold that the expression "person" in sections 276, 276A and 277 is used m the sense in which it is defined in section 2 (31 ) of the Act. For each specific act which is deemed to be an offence under those provisions, an individual who without reasonable cause or excuse fails to do the acts prescribed by statute or acts in a manner contrary to the statute or makes a declaration on oath which he believed to be false or does not believe to be true, is made liable to be punished. Section 278 penalises the abetment or inducing any person to make and deliver an account, statement of declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to. be true. In the context in which the expression "person" occurs in sections 276, 276A, 277 and 278, there can be no doubt that it seeks to penalise only those individuals who fail to carry out the duty case by the specific provisions of the statute. or are otherwise responsible for the acts done. For the default of the Hindu undivided family, therefore. in payment of tax. the Karta cannot be arrested and detained in prison. 697 The High Court, we think, took a somewhat technical view in declining to allow the contention raised by the appellant in the first writ petition presented before the High Court that he was not liable to be arrested and imprisoned for non payment of the tax arrears, since he was not an assessee. and then in treating the judgment of the High Court in the first writ petition operating constructively as res judicata in the second petition. The appeals are allowed and the order of detention passed by the Tax Recovery Officer against the appellant is declared unauthorized. No order in Petition No. 103 of 1966. The appellant will be entitled to his costs in Appeal No. 1320 of 1966 in all the three Courts. There will be no order as to costs in Appeal No. 1319 of 1966 and Writ Petition No. 103 of 1966. Y.P. Appeals allowed.
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A Hindu undivided family committed default in payment of income tax, and a certificate for recovery of tax due to the family was issued by the Income Tax Office in exercise of the power conferred by rule 76 of Sch.
II of the Income Tax Act, 1961.
The Tax Recovery Officer directed the arrest and detention in prison of the karta of the family for non payment of tax.
The Karta then moved a petition in the High Court of Andhra Pradesh challenging his detention on the ground that he was not a defaulter.
The petition was rejected.
The Karta appealed.
He also moved a petition under article 32 of the Constitution in the Supreme Court for an order for his release from custody.
HELD : The Legislature having treated a Hindu undivided family as a taxable entity distinct from the individual members constituting it,.
and proceedings,for assessment and recovery of tax having been taken! against the Hindu undivided family, it was not open to the Tax Recovery Officer to initiate proceedings against the manager of the Hindu undivided family for his arrest and detention.
The manager by virtue of his status is competent to represent the Hindu undivided family, but on that account he cannot for the purpose of section 222 of the Act of 1961 be deemed to be.
the assessee when assessment is made against the Hindu undivided family and certificate for recovery is also issued against the family.
[695 B D] For the purposes of cl.
(a) of section 2(7) the person against whom, any proceeding under the Act has been taken is deemed an assessee: but that postulates that the proceeding should be lawfully taken against the person before he may be deemed to be an assessee for the purpose of section 222 or r. 2 and r. 73.
There is no provision in the Act which deems the manager to be the assessee for the purpose of assessment and recovery of tax, when the income of the Hindu undivided family of which he is the Manager is assessed to tax.
Nor is there any provision in the Act enabling the Income tax Officer or the Tax Recovery Officer to treat the manager of the Hindu undivided family as an assessee in default in respect of tax due by the Hindu undivided family.
The Legislature has again made no provision for recovery of tax by resort to the personal property of the manager of the Hindu undivided family assessed to tax or by his arrest and detention for default by the family in paying the tax due.
[695 H696D]
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A Hindu family that hadn't divided its property failed to pay their income tax. Because of this, the Income Tax Office issued a notice to collect the unpaid taxes, following the rules of the Income Tax Act of 1961.
The Tax Recovery Officer then ordered the family's manager (called the "karta") to be arrested and put in jail for not paying the tax.
The karta went to the High Court of Andhra Pradesh and asked them to stop his imprisonment, arguing that he wasn't the one who failed to pay the tax.
The High Court said no.
The karta then appealed this decision.
He also asked the Supreme Court to release him from jail, using his rights under Article 32 of the Constitution.
The Supreme Court HELD: Since the law treats a Hindu undivided family as a separate unit for taxes, different from its individual members, and the tax bills and collection efforts were aimed at the family as a whole, the Tax Recovery Officer couldn't start actions against the manager personally by arresting him.
The manager can represent the family because of his position, but that doesn't make him personally responsible for the family's tax debt under Section 222 of the 1961 Act when the tax bill is in the family's name.
For legal purposes, someone is considered a "taxpayer" if actions have been lawfully taken against them under the Income Tax Act. But this means the actions must be correctly taken against that person before they can be held responsible for the tax debt under Section 222.
The law doesn't say that the manager is automatically considered the taxpayer for the purposes of figuring out and collecting taxes, when the family's income is being taxed.
The law also doesn't allow the Income Tax Officer or the Tax Recovery Officer to treat the family's manager as a taxpayer who has failed to pay, when the tax is owed by the family.
The law doesn't include any rules about collecting taxes by taking the manager's personal belongings, or by arresting him, if the family doesn't pay their taxes.
| 477
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N: Criminal Appeal No. 483 of 1979. Appeal by Special Leave from the Judgment and Order dated 22 3 1979 of the Patna High Court in Crl. A. No. 356 and 407/73. B. P. Singh and L. R. Singh for the Appellants. section N. Jha and U. P. Singh for the Respondent. The Order of the Court was delivered by KRISHNA IYER, J. We have heard the arguments of appellants ' counsel with specific reference to Munni Marandi and Babua Marandi the appellants herein. We have also read through the evidence relating to these accused persons aided by counsel for the State. The role attributed to Munni Marandi is that he was a member of the crowd which chased the deceased and in that sense was liable under Section 149 read with 326 I.P.C. We cannot fault the High Court for the conviction rendered, but having due regard to the age of the accused and to the absence of any overt act on his part, we consider that a sentence of two years ' R.I. will, in the circumstances of this case, meet the ends of justice. 588 Babua Marandi, a boy aged 15, was also in the crowd. In the excited chase of the deceased, this boy also followed and when the actual sword thrust was made by Ranjit Chaudhry, this boy held the deceased. In this sense, his part is different from that of Munni Marandi. We are not, therefore, disposed to interfere with his conviction or the sentence. Nevertheless, it is important to remember that Babua Marandi was aged 15 years at time of the offence. It is regrettable and this Court has pointed this out more than once that there is no Children Act in Bihar, and in this International Year of the Child we have to emphasize that the Legislature is expected to do its duty by the children of Bihar by considering the passing of a measure like the Children Act which long ago had been circulated by the Central Government and which exists in some other states in the country. Be that as it may, we are unable to deal with Babua Marandi as a child for the simple reason that absence of legislation cannot be made up for by Judicial legislation. All that we can do, in the hapless circumstances of the case and in the helpless situation of legislative vacuum, is to direct that Babua Marandi be placed either in an open prison or in a model prison or any other prison available in the State where young offenders are kept apart from the adult offenders. The special reason which induces us to make this direction is that, as is well known, adolescents should be separated from adults in prison campuses. The vices are obvious and we, therefore, direct accordingly. V.D.K. Appeal dismissed.
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Dismissing the appeal by special leave, the Court ^ HELD: 1.
Having due regard to the age of the accused Munni Marandi and to the absence of any overt act, a sentence of two years R.I. would, in the circumstances of his case meet the ends of justice for the offence u/s 149 read with Section 326 I.P.C. [587 G H] 2.
Absence of legislation cannot be made up for by judicial legislation, Babua Marandi was aged 15 years at the time of the offence and there is no Children Act in Bihar.
Though the conviction or sentence cannot be interfered with, in the hapless circumstances of the case and in the helpless situation of legislative vacuum all that this Court can do is to direct that Babua Marandi be placed either in an open prison or in a model prison or any other prison available in the State where young offenders are kept apart from the adult offenders.
The special directions for doing so is that adolescents should be separated from adults in prison campuses for obvious reasons.
[588C E]
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The Court said the appeal was denied.
1. Considering Munni Marandi's age and that he didn't do anything directly, a two-year prison sentence is fair for the crime he committed under Section 149 along with Section 326 of the Indian Penal Code (I.P.C.). Section 149 deals with being part of a group committing a crime, and Section 326 I.P.C. deals with voluntarily causing hurt by dangerous weapons or means.
2. Judges can't create laws if there are none. Babua Marandi was 15 when he committed the crime, and there's no Children Act in Bihar to help him.
Even though the court can't change his conviction or sentence, because there is no law to help and because of the unfortunate situation, all the Court can do is order that Babua Marandi be put in a special type of prison. This could be an open prison, a model prison, or another prison in the state where young criminals are kept away from adult criminals.
The reason for this special order is that young people should be kept away from adults in prison for obvious reasons.
| 849
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ivil Appeal No. 4159 of 1984. From the Judgment and Order dated 20.1. 1984 of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. ED(SB)(T) 644/81 A (Order No. A29/84). P.P. Rao, Rameshwar Nath, D.N. Mehta and Ravinder Nath for the Appellants. V.C. Mahajan, Arun Madan and P. Parmeshwaran for the Respondent. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an appeal under section 35 L(b) of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ') from the judgment and order of the Customs, Excise & Gold (Control) Appellate Tribunal (herein after referred to as 'the Tribunal ') dated the 20th January, 1984. The appellants are the manufacturers of 'Supercem Water proof Cement Paint ', hereinafter called as the 'Product ', and other allied products in their factory at Madras. They manufacture and market this product throughout India. It is stated that the appellants are a small manufacturing firm with no branches and/or sales offices in any other State, city or town. In these circumstances, an agreement for sale described as an 'agreement of sale ' dated 1st May, 1962 was entered into with Gillanders Arbuthnot & Co. Ltd., of Cal cutta, hereinafter called 'Gillanders '. The said company has a very big sales organisation having its offices located at all important places in the territory of Union of India and they market goods of all types, not only of the appellants herein, but also of several other reputed manufacturers through their well staffed offices in all the States of India. The appellants vide their letters dated 23rd April, 1979 and 15th May, 1980 to the Excise authorities, had claimed a refund of Rs.2,39,153.63 on account of excess excise duty paid on the assessable value on the basis of price at which the Gillanders had sold the products to its customers, during the period July, 1977 to March, 1979. Both the Assistant Collector by his order dated 29th May, 1980 and the Collector by his order dated 24th March, 1981 re jected the contention of the appellants and held that the assessable value is the price at which Gillanders sold the goods. 786 The Tribunal in its order dated 20th January, 1984 referred to relevant clauses in the said agreement dated 1st May, 1962 and came to the conclusion that it was abundantly clear from the conditions that the title to and the owner ship in the goods consigned to Gillanders was not to pass to them. According to the Tribunal a sine qua non of a sale is that the title should pass from the seller to the purchaser. When once that were not so, according to the Tribunal, then it was futile to contend that it was an agreement for sale. The Tribunal on an analysis of conditions of agreement, came to the conclusion that the true character of the agreement was that it was an agreement for sole selling agency and not an agreement for sale. The Tribunal also referred to the expression 'a related person ' in the definition given by Sec. 4(4)(c) of the Act and held that Gillanders was a related person and, therefore, the assessable value of the goods for levy of excise duty must be on the basis of the price at which Gillanders ordinarily sold these in the course of wholesale trade less the transportation cost and other permissible deductions such as duty of excise and sales tax, if any, subject to proof. Aggrieved thereby, the appellants have come up in this appeal to this Court. The first question that was canvassed and which requires to be determined is whether the agreement dated 1st May, 1962 is an agreement for sale or is one for sole selling agency. In the said agreement, the appellants have been de scribed as a partnership firm carrying on business at Madras and referred to as 'The Manufacturer ' and Gillanders of Calcutta described as 'The Selling Agents '. The agreement, inter alia, stated that the selling agents had agreed to stock adequate quantities of the product for the purpose of sale thereafter. The manufacturer however agreed to accept return of all stocks held by the selling agents for a period of more than two years and replace such stocks free of all charges, provided the lids of the containers were intact and sealed. The agreement further stated that all consignments would be despatched by the manufacturer at Railway risk. In case there was any damage or shortage in transit the selling agents would lodge a claim on the Railways, provided, howev er, that the manufacturer should take all suitable actions for recovery of the damages from the Railway authorities and should reimburse the selling agents all losses and damages that they might suffer in the premises. It was further agreed that in consideration of the premises, the manufac turer should pay the selling agents a discount, namely, 17 1/2 % on the transfer prices of all materials supplied against the orders received from the selling agents 787 from its offices at Calcutta, Kanpur, Delhi and Bombay; 18% on the transfer prices of all materials supplied against the orders received from the selling agents from its Madras Office. It also provided for an additional cash discount of 1 1/2 % on the net transfer price, that is to say, transfer price less the discount specified above provided the selling agents paid the price of the goods supplied by the manufac turer within 30 days from the date of the bills by the manufacturer in respect of orders placed by the selling agents from its offices at Calcutta, Bombay, Madras and Delhi and within 45 days from the date of the bill by the manufacturer in respect of orders placed by the selling agents from its Kanpur Office. It also provided for an additional turnover discount of 1% on the transfer prices over and above the discount specified above provided the total sales calculated at the selling prices exceeded Rs. 4 lakhs per annum and 1 1/2% on the transfer prices on such amount exceeding Rs. 4 lakhs per annum. In calculation of the turnover figure of Rs. 4 lakhs, the orders received by the manufacturer directly from the Government would not be taken into consideration. The manufacturer would normally, the agreement provided, expect the selling agents to pay all bills within 60 days from the date of such bills to the selling agents. The selling agents agreed to send to manu facturer the necessary 'C ' Declaration Forms under the Central Sales Tax Act as quickly as possible in respect of sales made directly to the selling agents. The manufacturer further agreed to supply the selling agents with all neces sary publicity materials and to advertise at their own cost at regular intervals through the media of the daily press, trade journals, Government publications and cinema slides and in all such advertisements should mention that the selling agents were the sole selling agents of the products. The manufacturer also agreed to supply the selling agents reasonable quantities of sample free of charge. All expenses such as godown rent, transport charges, postal and telegram charges, bank commission, etc., connected with the sales of the products, it was stipulated, would be borne by the selling agents. It was, inter alia, provided that the sell ing prices and transfer prices of the product would be mutually agreed to from time to time between the manufactur er and the selling agents. Current selling prices and trans fer prices were set out in the schedule to the agreement. It was stipulated also that the selling agents might allow any discount to any dealer at their discretion. The manufacturer agreed to execute and despatch orders to all dealers outside the State of Madras, provided firm instructions were re ceived to that effect from the selling agents, to eliminate unnecessary handling charges. The agreement provided that in such cases, the manufacturer would credit the selling agents with their usual commission after deducting therefrom any discounts which 788 might be allowed to the dealer on the specific instructions of the selling agents. The manufacturer further agreed to execute such orders against the guarantee of the selling agents. In the case of direct orders to dealers outside the State of Madras, the selling agents might quote either F.C).R. station of despatch or destination terms. If the goods supplied by the manufacturer were found to be sub standard goods or inferior in quality the manufacturer should at his own cost take back the goods and replace the goods of satisfactory marketable quality at its own cost. The manufacturer should not be responsible for failure to deliver or for any delay in delivery if such failure or delay was due to act of God or enemies of the State, wars, revolution, embargo, riots, civil or political disturbances, strikes, lockouts declared due to circumstances beyond the control of the manufacturer, shortage of labour, cut or failure of power supply or service, force majeure or any other cause beyond their control. The agreement, it was stipulated by clause 19 thereof, would remain in force for one year from the date of the agreement. But the parties had the fight to terminate the agreement by giving three months notice in writing to either side. It was further stipulated that if the agreement was terminated whether by the manufac turer or by the selling agents, the manufacturer should accept return of all unsold stocks lying with the selling agents at their various branches and to reimburse the sell ing agents with the net value of such stocks at the transfer prices in force on the date of the termination of the agree ment. There was arbitration clause and other clauses which are not material for the present purpose. The Tribunal analysed the agreement and emphasised that Gillanders were described as sole selling agent of the product of the appellants throughout India. It also noticed that the appellants were to supply to the Gillanders with advertisement material. The Tribunal also noted the clause which provided that the stocks left over unsold beyond two years from their receipt with Gillanders could be returned to the appellants who were bound to replace these. The Tribunal noticed that it was not the appellant who was to prefer claims for recovery of damages from the carriers. The Tribunal referred to the clause which stipulated that Gil landers were to promote sales of the product throughout India and were not to handle sales of any other material likely to conflict with the sales of the appellants ' product. It noted that any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with Gillanders. Although, the appellants retained the right of sale directly to large Government consumers, Gillanders were to follow up such . transactions and were to be paid an over riding commission of 2 1/2%. 789 Where, however, Gillanders tendered for Government supplies and followed it up, they were to be paid a commission of 5%. In all other cases, they were to earn a commission, de scribed, however, as a discount and additional cash discount apart from total sales discount in case where total sales exceeded Rs. 4 lakhs, on the orders received from Gilland ers. The Tribunal also referred to the clause which provided that on termination of the agreement by either party, unsold stocks lying with the Gillanders were to be returned to the appellants. On an analysis of the aforesaid aspects of the clauses, the Tribunal came to the conclusion that the title to and ownership of goods, continued with the appellants and did not pass to the Gillanders. In order to be sale, the title should pass from the seller to the purchaser for a price. If it is not so, the Tribunal noted, then it was not sale. The Tribunal came to the conclusion that it was an agreement for sole selling agency and not an agreement for sale. The question is whether the Tribunal was right on this aspect. On behalf of the appellants, Shri P.P. Rao contended that it has to be emphasised that there was no flow back of the profit to the manufacturer and that was absent in the instant case. He also referred to the fact that there were two prices transfer price and selling price and there was good deal of difference between these prices. He submitted that read in the proper perspective, there was no agency. He emphasised that there was stipulation for payment of sales tax and these were separately specified one was described as selling agent and the second one the real purchaser. It is well settled that in a situation like this, wheth er there was an agreement for sale or an agreement of agen cy, must depend upon the facts and the circumstances and the terms of each case. Such facts and terms must be judged in the background of the totality of the circumstances. All the terms and conditions should be properly appreciated. It is also correct that though the appellants described the Gil landers as selling agent, but that is not conclusive. And it is also correct to state that the difference of the prices between the transfer and the selling prices is suggestive of an outright sale. In W.T. Lamb and Sons vs Goring Brick Company Ltd., , by an agreement in writing certain manufacturers of bricks and other building materials appointed a firm of builders ' merchants "sole selling agents of all bricks and other materials manufactured at their works". The agreement was expressed to be for three years and afterwards continuous subject to twelve months ' notice by either party. While the agreement was in force, the manufacturers informed the merchants that they 790 intended in the future to sell their goods themselves with out the intervention of any agent, and thereafter they effected sales to customers directly. In an action by the merchants against the manufacturers for breach of the agree ment, it was held both by Justice Wright in the Trial Court and on appeal by the Court of Appeal, that the effect of the agreement was to confer on the plaintiffs the sole right of selling the goods manufactured by the defendants at their works, so that neither the defendants themselves nor any agent appointed by them, other than the plaintiffs, should have the right of selling such goods. In those circum stances, it was held that the agreement was one of vendor and purchaser and not of principal and agent. Lord Justice Scrutton was of the view that in certain trades the word "agent" is often used without any reference to the law of principal and agent. Lord Justice Scrutton was of the view that the words "sole selling agent" in the contract had a distinct meaning implying that the manufacturers were to sell to no one but the merchants who paid them the fixed price, and the merchants sold, and they were the only per sons to sell, to various builders and contractors. Lord Justice Slesser was of the view that the agreement in the present case was somewhat difficult to understand, because in one and the same document the same parties were described as "merchants" and as "sole selling agents," the first being a correct, but the second one an incorrect description, according to the Lord Justice. It was held that the agree ment was one of vendor and purchaser. Referring to some of the contract terms in the instant case, Shri Rao submitted that in this case also, the terms referred to by the Tribu nal and emphasised before us by Shri Mahajan, learned coun sel for the respondent, were merely indicative of the fact that the parties described a 'purchase upon terms ' as "sole selling agent". It was an agreement whereby the purchaser upon terms was described as "sole selling agent," submitted Shri Rao. This Court had occasion to consider this aspect in Gordon Woodroffe & Co. vs Sheikh M.A. Majid & Co., In that case, the respondent was a trader in hides and skins and the appellant was an exporter. During the period January to August, 1949, there were several contracts between them. The contracts mentioned that the appellant was buying the goods for resale in U.K. The price quoted was C.I.F. less 2 1/2%. The contracts also provided that time should be the essence of the contract, that the sales tax was on respondent 's account, that the respondent was answerable for weight as well as quality, that there should be a lien on the goods for moneys advanced by the appellant, and that any dispute regarding quality should be settled by arbitration according to the customs of the trade 791 in the U.K. The course of dealing between them showed that before the goods were shipped these were subjected to a process of trimming and reassortment in the godowns of the appellant with a view to make these conforming to London standards, that the goods were marked with the respondent 's mark and that premiums were paid to the respondent in case the goods supplied were of special quality. The respondent filed a suit on the original side of the High Court praying that an account should be taken of the dealings between himself and the appellant on the ground that the appellant was his agent. The appellant 's case was that there was an outright purchase of the respondent 's goods and that the appellant was not an agent of the respondent. The trial Judge dismissed the suit. On appeal, the High Court held that the appellant acted as a del credere agent of the respondent and directed the taking of accounts. In appeal to this Court, it was contended by the appellant that the terms of the contracts and the course of dealing between the parties showed that the appellant was not the agent of the respondent but was an outright purchaser of the goods and that there was a settled account between the parties which the respondent could not reopen. This Court held that the appellant was the purchaser of the respondent 's goods under the several contracts and not his agent for sale, and there fore, the view taken by the High Court was not correct. It was reiterated that the essence of sale is the transfer of the title to the goods for price paid, or to be paid, where as the essence of the agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods, and the agent would be liable to account for the proceeds. On the terms of the contract and the course of dealing between the parties, the contract was not one of agency for sale but was an agreement of sale. The appellant purchased the goods from the respondent at 2 1/2 % less and sold them to the London purchasers at the full price so that the 2 iii % was its margin of profit and not its agency commission. This point was emphasised by Shri Rao as a point similar to the instant case. This Court held therein that the fact that the goods were sent with the respondent 's mark, that the premium was paid outside the terms of the contract, that the appellant considered it fair and just to pay the whole of the premium to the respondent or to share it with him, and that additional burden with respect to weight and quality was thrown on the respondent, had no significance in deciding the nature of the contract. This Court was also of the opinion that the clause with regard to lien was consistent with the transaction being an outright sale, because the appellant was acting as creditor of the respondent and charged interest on advances only till the date of shipment of the goods when it became 792 the purchaser of the goods from the respondent. It was held that an agent could become a purchaser when the agent paid the price to the principal on his own responsibility. This was another aspect which was emphasised in the facts of the present case by Shri Rao. In that case, however, before the goods were shipped to London, these were subjected to a process of trimming and reassortment in the godown of the appellant with a view to make them conform to London stand ards. In that process, the defendants often called upon the plaintiff to replace the pieces found defective. If the defendants were merely acting as agents, this Court ob served, the process of trimming and reassorting in the godowns to make the goods conform to London standards and specifications would be unnecessary, for in that case the defendants were merely bound to ship the goods as these were delivered to them. Another important feature of the transac tion was that in several contracts, time was fixed for delivery of the goods. This Court found that the defendants were acting only as the agents for the sale, there was no reason why there should be a stipulation that time should be the essence of the contract. On behalf of the plaintiff, reference was also made to the fact that the contract pro vided for a lien on all the goods covered by the contracts for all moneys advanced by the defendants, including ex penses incurred and interest thereon. But it was emphasised that in making such advances, the defendants were only acting as creditors of the plaintiff and were therefore entitled to charge interest on such advances till they actually purchased the goods from the plaintiffs. The Court found that the primary object of the contract was that there was a purchase by the defendants from the plaintiff of the goods for resale in the U.K. and in keeping with that ob ject, the buyer stipulated with the seller for delivery of the goods abroad and for that purpose adopted a c.i.f. form of sale. This Court referred to the principle that an agent could become a purchaser when an agent paid the price to the principal on his own responsibility. Reference was made to the passage from Blackwood Wright, 'Principal and Agent ', Second Edn., page 5, at page 10 of the Report, where it was stated that in commercial matters, where the real relation ship was that of vendor and purchaser, persons were some times called agents when, as a matter of fact, their rela tions were not those of principal and agent at all, but those of vendor and purchaser. If the person called an 'agent ' was entitled to alter the goods, manipulate them, to sell them at any price that he thought fit after these had been so manipulated, and was still only liable to pay them at a price fixed beforehand, without any reference to the price at which he sold them, it was impossible to say that the produce of the goods so sold was the money of the con signors, or that the relation of principal and agent 793 existed, according to this Court in that case. Reliance was also placed on Tirumala Venkateswara Timber and Bamboo Firm vs Commercial Tax Officer, Rajahmundry, ; , where the concept of 'sale ' in the back ground of the Andhra Pradesh General Sales Tax Act, 1957 was considered. At page 480 of the report, this Court observed that as a matter of law, there is a distinction between a contract of sale and a contract of agency by which the agent is authorised to sell or buy on behalf of the principal and make over either the sale proceeds or the goods to the principal. The essence of a contract of sale is the transfer of title to the goods for a price paid or promised to be paid. The transferee in such a case is liable to the trans feror as a debtor for the price to be paid and not as agent for the proceeds of the sale. The essence of agency to sell is the delivery of the goods to a person who is to sell these, not as his own property but as the property of the principal who continues to be the owner of the goods and will therefore be liable to account for the sale proceeds. The true relationship of the parties in each case has to be gathered from the nature of the contract, its terms and conditions, and the terminology used by the parties is not decisive of the legal relationship. Shri Mahajan, learned counsel appearing for the respondent, drew our attention to Section 182 of the , and submitted and in the circumstances of this case, the clauses emphasised by the Tribunal clearly established that this was an agreement of agency and not a sale. As mentioned hereinbefore, it depends on the facts and circumstances of each case to determine the true nature of the dealings between the parties. In the instant case the most important fact suggesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these. Shri Rao, however, suggested that the appellants were manufacturing paint which was liable to loose its efficacy and quality after lapse of time and as the appellants were keen for its reputation, such a clause was inserted to ensure that the bad quality goods or stale goods did not, through Gillanders, go to the market and damage the reputation of the appellants. This should be considered with the fact that the appellants were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with Gillanders and the obligation that on the termination of the contract by either the appellant or Gillanders, unsold stocks lying with the latter were to be returned to the former. In 794 the aforesaid light we are of the opinion that the Tribunal was right in considering this agreement as the agreement for sole selling agency and not as an outright sale. If that is the position then the first ground, in our opinion, taken by the Tribunal cannot be assailed. Shri Rao had contended that the Tribunal was wrong in holding that Gillanders were related persons in terms of Section 4(4)(c) of the Act. He submitted that the concept of 'having interest directly or indirectly in the business of each other ' has to be judged independently of the transac tion in question. He drew our attention to the various authorities for the proposition that the purpose of intro duction of definition of 'a related person by the Central Excises and Salt (Amendment) Act, 1973 to contend that the distributors have to be related and that such relationship ought to be found out independently of the transaction in question. Our attention was drawn to the observations of this Court in A.K. Roy vs Voltas Ltd., ; , where at page 1093 of the report, this Court noted that the appellants had contended that the agreements with the whole sale dealers conferred certain extra commercial advantages upon them, and so, the sales to them were not sales to independent purchasers. Our attention was also drawn to the observations of this Court that decisions cited before this Court in the above case were correct in so far as these held that the price of sales to wholesale dealers would not represent the 'wholesale cash price ' for the purpose of section 4(a) of the Act merely because the manufacturer had entered into agreement with them stipulating for commercial advan tages. It was laid down that if a manufacturer were to enter into agreements with dealers for wholesale sales of the articles manufactured on certain terms and conditions, it would not follow from that alone that the price for those sales would not be the 'wholesale cash price ' for the pur pose of section 4(a) of the Act if. the agreements were made at arms length and in the usual course of business. This, however, Mr. Rao related only in explaining the state of law before the Amendment Act 22 of 1973. Our attention was also drawn to the observations of this Court in Union of India & Ors. vs Bombay Tyre International Ltd., ; where this Court explained the pur pose of the introduction of 'related person ' in the new 'section 4(4)(c) and the transactions of related person covered under section 4(4)(c) of the Act after amendment. In that context, it was contended that where there was such rela tionship independent of the transaction in question which conferred certain additional or extra commercial advantages only on the persons involved in such relationship could be considered to be related persons. It 795 was submitted that in the instant case that was not so. Our attention was drawn to the observations of this Court in Union of India and others vs Atic Industries Limited, ; , at page 937 of the report, where this Court held that on a proper interpretation of the definition of 'relat ed person ' in section 4(4)(c), the words "relative and a distributor of the assessee" did not refer to any distribu tor but they were limited only to a distributor who was a relative of the assessee within the meaning of the . So read, the definition of "related person" was not unduly wide and did not suffer from any constitutional infirmity. This Court explained the nature of relationship required by the persons to have 'interest directly or indi rectly in the business of each other ' under section 4(4)(c) of the Act. Our attention was also drawn to the observations of this Court in Collector of Central Excise, Madras vs T.I. Millers Ltd. Madras & T.I Diamond Chain, Madras, ; Having regard however to the fact that we have come to the conclusion that the Tribunal was right in holding that the transaction with the Gillanders was not a transaction of sale but an agreement for agency, there was, therefore, no sale in favour of Gillanders as contended for the appel lants. If that is the position, then the first sale was by the Gillanders to the customers of the market. Then the price of that sale would be the assessable value under section 4 in this case. The decision of the Tribunal is, therefore, right in any view of the matter, and this other aspect of the matter referred to by the Tribunal is not necessary for us to determine to dispose of this appeal. In that view of the matter, the decision of the Tribunal must be upheld. Shri Rao, however, further submitted that there were certain other claims like cost of transportation and other permissible deductions such as duty of excise and sales tax, which should have been deducted from the value subject to proof by the appellants. Shri Rao submitted that apart from this, there were other permissible deductions as envisaged by this Court in Asstt. Collector of Central Excise & Oth ers, etc. vs Madras Rubber Factory Ltd.; , It may be observed that apart from cost of transportation, excise duty and sales tax, other charges were not sought to be deducted by the appellants in the appeal and were not canvassed before the Tribunal too nor in the grounds of appeal, there was any such claim. Shri Rao, however, submit ted that in view of the decision of this Court in Madras Rubber Factory 's case (supra), the appellants should not be denied the benefit of these deductions, if they are other wise entitled to. Though, strictly speaking that is beyond the scope of the appeal in view of the conten 796 tions raised in the appeal before the Tribunal and in view of the grounds of appeal taken by the appellants before us, but in the interest of justice, we permit the appellants to have these benefits as finally settled by this Court in Madras Rubber Factory 's case (supra). We are informed that the said decision of Madras Rubber Factory is under review in this Court. Therefore, we are of the opinion that subject to the order passed in that review matter, such deductions, as may ultimately be held to be deductible be permitted to the appellants upon proof. With these observations, the appeal fails and is accordingly dismissed with no order as to costs. P.S.S. Appeal dismissed.
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The assessee appellants, a partnership firm carrying on manufacturing business in Madras entered into an agreement with a company based in Calcutta for sale of their product through the latter 's sales organisation in all the States of India.
In the said agreement the assessee was referred to as the 'manufacturer ' and the company as the 'sole selling agents ' of the product.
The agreement itself was described as an 'agreement of sale '.
It provided inter alia that the stocks left over unsold beyond two years from their receipt with the selling agents could be returned to the appellants who were bound to replace them, that the appellants should take all suitable action for recovery of damages from the carriers, that they would supply the selling agents with all the necessary publicity material and also advertise at their cost through the media, that the selling prices and transfer prices of the product would be mutually agreed from time to time between them and the selling agents, that any reduction in price during the currency of the agreement was to be duly reflected in the price of stock lying unsold with the sell ing agents, and that on termination of the contract either by the assessee or by the selling agents, the unused stock lying with the latter was to be returned to the former.
The appellants were assessed to excise duty under the for the period July, 1977 to March, 1979 on the basis of the price at which the sell ing agents had sold the goods to their customers in the course of the wholesale trade.
They however, claimed that the assessable value should be the price at which the ex cisable goods were sold by them to the selling agents and sought refund of 783 the excess excise duty thus paid.
The Assistant Collector of Excise and the Collector rejected the said claim.
The TribUnal took the view that a sine qua non of a sale was that the title to the goods should pass from the seller to the purchaser.
When once that were not so, then it could not be said that it was an agreement for sale.
On an analy sis of the conditions of the agreement in the instant case it found that the title to and the ownership in the goods consigned to the selling agents continued with the appel lants.
It, therefore, concluded that the true character of the agreement was that it was an agreement for sole selling agency and not an agreement for sale.
It further held that the selling agents were 'a related person ' as understood under section 4(4)(c) of the Act and, therefore, the assessable value of the goods for levy of excise duty must be on the basis of price at which the selling agents ordinarily sold these in the course of wholesale trade less the transporta tion cost and other permissible deductions such as duty of excise and sales tax, if any, subject to proof.
In this appeal under section 35 L(b) of the Act it was con tended for the appellants, that there were two prices 'transfer price ' and 'selling price ' and there was good deal of difference between these prices which was suggestive of an outright sale, that the terms referred to by the Tribunal were merely indicative of the fact that it was an agreement whereby the purchaser upon terms was de scribed as 'sole selling agents ', that the appellants were manufacturing a product which was liable to lose its effica cy and quality after lapse of time and as such a replacement clause was inserted to ensure that the bad quality goods did not go to the market and damage their reputation, that the selling agents were not 'related persons ' in terms of section 4(4)(c) of the Act, as there was nothing in common between them and the appellants, and that claims like cost of trans portation and other permissible deductions such as duty of excise and sales tax to which they were otherwise entitled to should have been deducted from the 'value ' subject to proof by the appellants.
Dismissing the appeal, HELD: 1.1 Whether there was an agreement for sale or an agreement of agency to sell must depend upon the facts and the circumstances and the terms of each case.
Such facts and terms must be judged in the background of the totality of the circumstances.
All the terms and conditions should be properly appreciated.
The terminology used by the parties is not decisive of the legal relationship.
[789F, 793D] 784 1.2 The essence of a contract of sale is the transfer of the title to the goods for a price paid or promised to be paid.
The transferee in such a case is liable to the trans feror as a debtor for the price to be paid.
The essence of the agency to sell is the delivery of the goods to a person who is to sell these not as his own property but as the property of the principal, who continues to be the owner of the goods, and make over the sale proceeds to the principal.
An agent.
however, could become a purchaser when he paid the price to the principal on his own responsibility.
[793C, 792A] 1.3 In the instant case, the most important fact sug gesting agency was the clause which enjoined that the stocks left over unsold beyond two years from their receipt could be returned to the appellants who were bound to replace these.
Added to it was the fact that the appellants were to prefer all claims for recovery of damages from the carriers and any reduction in price during the currency of the agree ment was to be duly reflected in the price of stock lying unsold with the selling agents, and the obligation that on the termination of the contract by either the appellants or the selling agents, unsold stocks lying with the latter were to be returned to the former.
[793F, GH] 1.4 The Tribunal was, therefore, right in holding that the transaction with the selling agents was not a transac tion of sale but an agreement for agency.
If that be so, then the first sale was by the selling agents to the custom ers of the market.
The price of that sale would thus be the assessable value under section 4 of the Act.
In that view of the matter it was not necessary to determine the question wheth er the selling agents were 'related persons ' in terms of section 4(4)(c) of the Act.
[795DE] W.T. Lamb & Sons vs Goring Brick Company Ltd., ; Gordon Woodroffe & Co. vs Sheikh M.A. Majid & Co., and Tirumala Venkateswara Timber & Bamboo Firm vs Commercial Tax Officer, Rajahmundry., ; referred to.
Though apart from cost of transportation, excise duty and sales tax.
other charges were not sought to be deducted by the appellants in the appeal and were not canvassed before the Tribunal too, nor in the grounds of appeal there was any such claim, in the interest of justice they are permitted to have the benefit of other deductions envisaged in Assistant Collector of Central Excise & Ors.
vs Madras Rubber Factory Ltd.; , subject to the order passed in the review matter.
[795G, 796AB] 785
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A business in Madras, called the assessee appellants, made an agreement with a company in Calcutta to sell their products. The Calcutta company would use its sales team in all Indian states.
In the agreement, the Madras business was called the "manufacturer." The Calcutta company was called the "sole selling agents."
The agreement was called an "agreement of sale." It said that any products the selling agents didn't sell after two years could be sent back to the Madras business. The business had to replace those products. Also, the Madras business would handle claims for damages from shipping companies. They would also pay for advertising and give the selling agents publicity materials. The prices for selling and moving the products would be decided together by both businesses. If the price went down, the price of any unsold products with the selling agents would also go down. If either business ended the agreement, any unsold products would go back to the Madras business.
The Madras business had to pay excise duty (a tax on goods made in India) from July 1977 to March 1979. This was based on the price the selling agents charged their customers for the products.
However, the Madras business said the excise duty should be based on the price they charged the selling agents. They wanted a refund for the extra excise duty they paid.
The Assistant Collector of Excise and the Collector said no to the refund.
The TribUnal (a court-like body) said that for a sale to happen, the ownership of the products had to move from the seller to the buyer. If that didn't happen, it wasn't really an agreement for sale.
Looking at the details of the agreement, the TribUnal found that the Madras business kept ownership of the products sent to the selling agents.
So, they decided the agreement was really for a sole selling agency, not a sale.
They also said the selling agents were "related persons" under section 4(4)(c) of the Act (a law). So, the excise duty should be based on the price the selling agents usually charged for the products, minus transportation costs and other allowed deductions like excise duty and sales tax, if proven.
In this appeal (a request for a higher court to review the decision) under section 35 L(b) of the Act, the Madras business argued that there were two prices: a "transfer price" and a "selling price." The big difference between these prices showed it was a real sale. The terms the TribUnal mentioned only showed it was an agreement where the buyer was called "sole selling agents." The Madras business also said their products could spoil over time, so they had a replacement clause to make sure bad products didn't hurt their reputation. They also said the selling agents weren't "related persons" under section 4(4)(c) of the Act, because they had nothing in common. Finally, they said they should be able to deduct transportation costs and other things like excise duty and sales tax from the "value," if they could prove it.
The appeal was denied. The court HELD:
1.1 Whether an agreement is for sale or for agency depends on the specific facts, circumstances, and terms of each case. These must be considered in the whole picture. All the terms and conditions should be understood. The words used by the businesses don't decide the legal relationship.
1.2 The main thing about a sale is that the ownership of the products moves to someone else for a price that's paid or promised. The person who gets the products owes the seller money for the price. The main thing about an agency to sell is that the products are given to someone who will sell them, but they don't own them. The original owner still owns the products, and the seller gives the money from the sales to the original owner. However, an agent can become a buyer if they pay the owner the price themselves.
1.3 In this case, the most important thing suggesting agency was the clause that said unsold products could be returned after two years and the Madras business had to replace them. Also, the Madras business had to handle claims for damages, any price drops had to be reflected in the price of unsold products, and unsold products had to be returned if the agreement ended.
1.4 So, the TribUnal was right to say the agreement with the selling agents wasn't a sale, but an agency. If that's true, then the first sale was when the selling agents sold to customers. The price of that sale would be the assessable value under section 4 of the Act. Because of that, it wasn't necessary to decide if the selling agents were "related persons" under section 4(4)(c) of the Act.
W.T. Lamb & Sons vs Goring Brick Company Ltd.; Gordon Woodroffe & Co. vs Sheikh M.A. Majid & Co.; and Tirumala Venkateswara Timber & Bamboo Firm vs Commercial Tax Officer, Rajahmundry.; were referred to.
Even though the Madras business didn't ask to deduct other charges besides transportation, excise duty, and sales tax in the appeal, and didn't bring it up before the TribUnal, they are allowed to have the benefit of other deductions mentioned in Assistant Collector of Central Excise & Ors. vs Madras Rubber Factory Ltd.; if it's fair, and depending on the order passed in the review matter.
| 3,530
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ivil Appeal No. 1 278 of 1978. Appeal by special leave from the Judgment and Order 15 11 1976 of the Delhi High Court in Civil Writ No. 96 of 1971. B. Dutta for the Appellant. Soli J. Sorabjee, Addl. General and R. N. Sachthey for Respondents 1 and 2. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. We granted special leave and heard arguments on the limited question whether "brick earth" is a 'minor mineral ' within the meaning of that expression as defined in Section 3 (e) of the . The definition is as follows: "Minor mineral ' means building stones, gravel? ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by Notification in the official Gazette declare to be minor mineral ;" In exercise of the power conferred by Section 3(e) of the Act, the Central Government declared the following minerals to be minor minerals "Boulder, Shingle, Chalcedony pebbles used for ball mill purposes only, limeshell kanker and limestone used for lime burning, murrum, brick earth, fuller 's earth, bentonite road metal, reh matti, slate and shale when used for building material;" The submission of the learned Counsel for the appellant was that a substance had to be a mineral before it could be notified as a minor mineral pursuant to the power under Section 3(e) of the . He urged that brick earth was not a mineral and, therefore, it could not be notified a minor mineral. We agree with the learned Counsel that a substance must first be a mineral before it can be notified as a minor mineral pursuant to the power vested in the Central Government under Section 3(e) of the Act. The question, therefore, is whether brick earth is a mineral. The expression "Minor Mineral" as defined in Section 3(e) includes 'ordinary clay ' and 'ordinary sand '. If the expression "minor mineral" as defined in Section 3(e) of the Act includes 'ordinary clay ' and 273 `ordinary sand ', there is no reason why earth used for the purpose A of making bricks should not be comprehended within the meaning of the word "any other mineral" which may be declared as a "minor mineral" by the Government. The word "mineral" is not a term of article It is a word of common parlance, capable of a multiplicity of meaning depending upon the context. For example the word is occasionally used in a very wide sense to denote any substance that is neither animal nor vegetable. Sometimes it is used in a narrow sense to mean no more than precious metalls like gold and silver. Again, the word "minerals" is often used to indicate substances obtain . ed from underneath the surface of the earth by digging or quarrying. But this is not always so as pointed out by Chandrachud, J (as he then was) in Bhagwan Dass vs State of Uttar Pradesh,(1) where the learned judge said (at p. 874): 'It was urged that the sand and gravel are deposited on the surface of the land and not under the surface of the soil and therefore they cannot be called minerals and equally so, any operation by which they are collected or gathered cannot properly be called a minerals operation. It is in the first place wrong to assume that mines and minerals must always be sub soil and that there can be no minerals on the surface of the earth. Such an assumption is contrary to informed experience. In any case, the definition of mining operations and minor minerals in section 3(d) and (e) of the Act of 1957 and Rule 2(S) and (7) of the Rules of 1963 shows that minerals need not be subterranean and that mining operations cover every operation undertaken for the purpose of "Winning" any minor mineral. "Winning" does not imply a hazardous or perilous activity. The word simply means extracting a mineral" and is used generally to indicate, any activity by which a mineral is secured. "Extracting" in turn means drawing out or obtaining. A tooth is 'extracted ' as much as the fruit juice and as much as a mineral. Only that the effort varies from tooth to tooth, from fruit to fruit and from mineral to mineral". We may also refer to Northern Pacific Railway Company vs John A. Sodrberg(2) where the Supreme Court of United States observed as follows (at page 581): "The word 'mineral ' is used in so many senses, dependant upon the context, that the ordinary definitions of the dictionary throw but little light upon its significance in a (1) ; (2) 47 L. Fd.575 274 given case. Thus, the scientific division of all matter into the animal, vegetable, or mineral kingdom would be absurd as applied to a grant of lands, since all lands belong to the mineral kingdom, and therefore, could not be excepted from the grant without being destructive of it. Upon the other hand, a definition which would confine it to the precious metals gold and silver would so limit its application as to destroy at once half the value of the exception. Equally subversive of the grant would be the definition of minerals found in the Century Dictionary: as "any constituent of the earth 's crust" ; and that of Beinbridge on Mines: "All the Sub stances stances that now form, or which once formed, a part of the solid body of the earth". Nor do we approximate much more closely to the meaning of the word by treating minerals as substances which are ""mined"" as distinguished from those are "quarried", since many valuable deposits of gold, copper, iron, and coal lie upon or near the surface of the earth, and some of the most valuable building stone, such for instance, as the Caen stone in France, is excavated from mines running far beneath the surface. This distinction between under ground mines and open workings was expressly repudiated in Midland C. vs Haunchwood Brick & Tile Co. (L.R 20 Ch. 552) and in Hext vs Gill (L.R. 7 Ch. 699)" The Supreme Court of United States also referred to several English cases where stone for road making or paving was held to be 'minerals ' as also granite, sandstone, flint stone, gravel, marble, fire clay, brick clay, and the like. It is clear that the word 'mineral ' has no fixed but a contextual connotation. The learned Counsel for the appellant invited our attention to the decision of the Court of Appeal in Todd Birleston and Co. vs The North Eastern Railway Co.(l) and to Stoud 's Judicial Dictionary to urge that clay, brick earth and the like have sometimes been held not to be minerals by English Courts. As we said earlier the word mineral is an elastic word whose meaning depends upon the setting in which it is used. For instance, in the case cited, the question was whether clay forming the surface or subsoil, and constituting the "land" compulsorily taken for the purposes of a railway, was not a mineral WITH the meaning of Sections 77, 78 or 79 of the Railway Clauses Consolidation Act. The answer was that 'clay ' was not a mineral for the purposes of the Railway Clauses Consolidation Act. Any other conclusion, in the context of the Act, would have led to the absurd (1) [1903] I K.B. 603 . 275 result that the original owner whose land had been taken would be entitled to dig and take away the clay from the land on which the Railway was constructed, thus defeating the very object of the compulsory taking. On the other hand, as noticed by the Supreme Court of the United States, in several English cases clay, gravel, sand, stone etc. has been held to be minerals. That is why we say the word mineral has no definite meaning but has a variety of meanings, depending on the context of its use. In the context of the Mines and Minerals (Regulation & Development) Act, we have no` doubt that the word 'mineral ' is of sufficient amplitude to include 'brick earth '. As already observed y us, if the expression 'minor mineral ' as defined in the Act includes 'ordinary clay ' and 'ordinary sand '. there is no earthly reason why 'brick earth ' should not be held to be 'any other mineral ' which may be declared as 'minor mineral. We do not think it necessary to pursue the matter further except to say that this was The view taken in Laddu Mal vs State of Bihar(l) Amar Singh Modilal vs State of Haryana(2) and Sharma & Co. vs State of U.P.(3). We do not agree with the view of the Calcutta High Court in State of West Bengal vs Jagadamba Prasad (4) that because speaks of 'ordinary earth ' as a mineral it is not a minor mineral as defined in the Mines and Minerals (Regulation & Development) Act. The appeal is accordingly dismissed with costs. S.R. Appeal dismissed (1) A.I.R 1965 Patna 491 (2) A.I.R 1972 Punj. & Har. 356 (3) A.I.R. 1975 All. 86. (4) A.I.R. 1969 Cal.
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section 3(e) of the Mines and Mineral (Regulation and Development) Act, 1957 defines " 'Minor Mineral ' as meaning building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by Notification in the official Gazette declare to be a minor mineral".
In exercise of the power conferred by section 3(e) of the Act the Central Government declared inter alia brick earth as a 'minor mineral '.
Dismissing the appeal by special leave the Court ^ HELD: ( I ) The word 'mineral ' has no fixed but a contextual connotation.
If 'mineral ' is not a term of art it is a word of common parlance, capable of multiplicity of meanings depending upon the context.
The word is occasionally used in a very wide sense to denote any substance that neither animal nor vegetable Sometimes it is used in a narrow sense to mean no more than precious metals like gold and silver.
Again the word 'minerals ' is often used to indicate substances obtained from underneath the surface of the earth by digging or quarrying.
though it is not always so.
[273 A C, 274 F] In the context of the ', the word Mineral is of sufficient amplitude to include brick earth.
If the expression 'minor mineral ' as defined in the Act, includes 'ordinary clay` and 'ordinary sand '.
there is no earthly reason why brick earth should not be held to be 'any other mineral ' which may, be declared as a 'minor mineral '.
[1275 B C] Bhagwan Das vs State.
Of U.P., ; , applied Laddu Mal vs State of Bihar, AIR 1965 Pat. 491; Amar Modilal Singh vs State of Haryana, AIR 1972 Punjab and Haryana 356; Sharma & Co. vs State of U.P., AIR 1975 All. 386 approved.
State of West Bengal vs Jagdamba Prasad, AIR 1969 Cal.
281; overruled.
Todd Birleston & Co. vs The North Eastern Railway Co., [1903] I K.B. 603; quoted with approval.
(2) A substance must first be a mineral before it can be notified as a minor mineral pursuant to the power vested in the Central Government under section 3(e) of the Act.
Brick earth being a mineral.
the Central Government has correctly notified it as a 'minor mineral '.
[272 G H] 272
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Section 3(e) of the Mines and Mineral (Regulation and Development) Act, 1957 says that "Minor Mineral" means things like building stones, gravel, regular clay, and regular sand (unless that sand is used for a specific purpose). It also includes any other mineral that the Central Government says is a minor mineral by announcing it in the official government record.
Using the power given to it by section 3(e) of the Act, the Central Government said that brick earth is a "minor mineral."
The Court said that the meaning of the word "mineral" can change depending on the situation. If "mineral" isn't a technical term, it's a common word that can have different meanings. Sometimes, it's used very broadly to mean anything that's not an animal or plant. Other times, it's used narrowly to mean only valuable metals like gold and silver. Also, "minerals" can mean things taken from underground by digging or quarrying, but not always.
When considering the Act, the word "mineral" is broad enough to include brick earth. If the term "minor mineral" in the Act includes "regular clay" and "regular sand," then there's no reason why brick earth shouldn't be considered "any other mineral" that can be declared a "minor mineral."
Bhagwan Das vs State of U.P. and other cases were used. State of West Bengal vs Jagdamba Prasad was disagreed with. Todd Birleston & Co. vs The North Eastern Railway Co. was supported.
A substance must be a mineral before it can be named as a minor mineral by the Central Government under section 3(e) of the Act. Because brick earth is a mineral, the Central Government was right to name it as a "minor mineral."
| 2,677
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ivil Appeal No. 265 of 1978. From the Judgment and Order dated 12.9.1977 of the Allahabad High Court in C.M.W. No. 144 1 of 1976. S.N. Kacker and B.R. Agarwala for the Appellants. U.R. Lalit, R.B. Mehrotra and D.N. Misra for the Respond ents. Mr. Prithvi Raj and Mrs. Shobha Dikshit for the Respondents. 500 The Judgment of the Court was delivered by NATARAJAN, J. The only question for consideration in this appeal by special leave is whether the order of release passed by the Prescribed Authority under the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (for short the Act hereinafter) is a null and void order because the Prescribed Authority had no jurisdiction to pass the order as he did not possess the requisite quali fication for being appointed as such Authority. Premises No. 58/3 Birhana Road, Kanpur is a three sto reyed building and in addition it has a mezzanine floor as well. As early as in 1947, when the respondents who are brothers were minors, a portion of the ground floor and the entire first floor was leased out to the predecessor concern of the appellant by the father of the respondents. While the first floor was leased out for residential purposes, a portion of the ground floor was leased out for non residen tial purposes. The respondents sought recovery of possession from the appellant of the leased portions for their residen tial needs and business purposes. It may be mentioned here that the respondents were already having their residence in the second floor and their business establishments in anoth er portion of the ground floor. As the appellant refused to comply, the respondents preferred an application under Section 21 of the Act for an order of release in their favour to recover possession of the leased portions. Various defences were raised by the appellant to oppose the applica tion but all the objections were found untenable by the Prescribed Authority and he, therefore, passed an order of release on 19.8. 1975 holding that the requirement of the leased portions by the respondents for their residential and non residential purposes was a bona fide one and furthermore the comparative hardship factor was more in their favour than in favour of the appellant. The findings of the Pre scribed Authority were confirmed by the Appellate Authority (Additional District Judge, Kanpur) and thereafter the appellant filed a petition under Article 226 of the Consti tution before the High Court. For the first time the appel lant raised a contention, by means of an amendment petition, that the order of the Prescribed Authority had been passed without jurisdiction and was therefore a nullity and in such circumstances its affirmation by the Appellate Authority could not also validate it. The High Court, though it al lowed the amendment petition and permitted the additional question to be raised, did not see any merit in it on ac count of two factors. The first was that even if the order of the Prescribed Authority was a defective one, it had become merged with the order of the Appellate Authority when it was con 501 firmed and as such there was no room for the appellant to assail the order on the question of jurisdictional incompe tence of the Prescribed Authority. Besides, the High Court was of opinion that the question of jurisdictional compe tence of the Prescribed Authority to pass the order of release involved adjudication upon disputed questions of fact and such an exercise was beyond the scope of proceed ings under Article 226 of the Constitution. The High Court thereafter went into the correctness of the findings concur rently rendered by the Prescribed Authority and the Appel late Authority and found the findings to be fully in accord ance with law and facts. The High Court, therefore, dis missed the writ petition filed by the appellant and hence the present appeal by special leave. For a proper comprehension of the attack made on the competence of the Prescribed Authority to pass the impugned order of release, it is necessary to set out the terms of Clause (e) of Section 3 which defines the 'Prescribed Au thority ' under the Act as it stood before and after the amendment in 1974, and also the qualifications of Shri Senger who was the Prescribed Authority who had passed the order of release in this case. Clause (e) of Section 3 of the Act was originally in the following terms: "Prescribed Authority" means a Magistrate of the First Class having experience as such of not less than three years, authorised by the District Magistrate to exercise, perform and discharge all or any of the powers, functions and duties of the prescribed authority under this Act, and different Magistrates may be so authorised in respect of different areas or cases or classes of cases, and the District Magistrate may recall any case from any such Magistrate and may either dispose of it himself or transfer it for disposal to any other such Magistrate. " The definition of a Prescribed Authority had, however, to be changed with the coming into effect of the Code of Criminal Procedure 1973 with effect from 1.4.1974 because the Executive Magistrates ceased to be Magistrates of the First Class under the Code. Hence by means of an Amendment Act viz. U.P. Act No. 19 of 1974, Section 3(e) came to be amended as under: "(e) 'Prescribed Authority ' means an officer having not less 502 than 3 years experience as Munsif or as Magistrate of the First Class or as Executive Magistrate authorised by general or special order of the State Government to exercise, perform and discharge all or any of the powers. functions and duties of the Prescribed Authority under this Act, and different officers may be so authorised in respect of different areas or cases, or classes of cases." Thus by reason of the amendment the State Government became the authority to authorise a person to act as a Prescribed Authority and three classes of officers viz. Munsifs, Magis trates of the First Class and Executive Magistrates, each having not less than three years experience as such were designated the officers on whom the powers of a Prescribed Authority under the Act could be conferred. Coming now to the qualifications of Shri Senger, the Prescribed Authority, he had served as Tehsildar from 29.9.2962 to 6.11.1964 and again from November 1965 to 15.2.1974 and he was promoted as Deputy Collector with effect from 16.2. 1974 and posted as Additional City Magis trate II, Kanpur. He worked as Additional City Magistrate II, Kanpur from 16.2.1974 to 14.8.1974 and again from May 1975 to 26.8.1975. It was during this period i.e. on 19.8.1975 he had passed the impugned order of release. While Shri Senger was serving as a Tehsildar the Government in exercise of its powers under Sections 12 and 39(1) of the Code of Criminal Procedure 1898, issued a general Notifica tion dated 6.2.1968 conferring on all Tehsildars the powers of a First Class Magistrate and on all Naib Tehsildars the powers of a Second Class Magistrate. The Notification of the Government was duly published in the Gazette on 17.2. By means of a Notification dated 9.9.1974 the Government had designated the Additional City Magistrate II, Kanpur, to be the Prescribed Authority under the Act for certain areas including the limits of Collector Ganj Police Station where the leased property is situate. By reason of this notifica tion when Shri Senger succeeded one Shri Jagdish Sharma as the Additional City Magistrate II, Kanpur, on May 19, 1975, he became the Prescribed Authority for those areas including the Collector Ganj area. It was in such circumstances Shri Senger dealt with the application filed under Section 21 of the Act by the respondents before his predecessor and passed the order of release on 19.8.1975. Having set out these factual matters we will now refer to the grounds on which the competence of Shri Senger to have passed the order of release are questioned. They are as follows: 503 1. There is no proof that the General Notification of the Government dated 6.2.68 was given effect to in the case of Shri Senger, and in the absence of such proof he cannot be deemed to have been conferred 'the powers of a First Class Magistrate because Clause (2) of Section 39 of the Criminal Procedure Code 1898 lays down that any conferment of magis terial powers on an officer under Section 39(1) "shall take effect from the date on which it is communicated to the person so empowered. Even if there had been a communication to Shri Senger as envisaged under Section 39(2) of the Code, the conferment of powers was only for ensuring the maintenance of law and order and not for the trial of cases. This position has been set out by the Deputy Secretary, Government of U.P. in his note while forwarding a copy of the General Notification of the Government to all District Magistrates (vide page 260 of the Printed Paper Book). Therefore, Shri Senger cannot be treated as a Tehsildar on whom the powers of a First Class Magistrate had been conferred upon for trial of cases. For an Executive Magistrate to be lawfully empowered to act as a Prescribed Authority under Section 3(e), he must have had not less than three years experience in the trial of cases as a First Class Magistrate. The terms of Section 3(e) are clear on this aspect and they have been reiterated by the Government through a communication sent by the Com missioner and Secretary, Government of Uttar Pradesh to all District Magistrates on 9.9. 1974 (vide page 228 of Printed Paper Book). It has been stated therein that "in the case of Executive Magistrates, it shall be deemed sufficient if they have gained three years ' experience of working as Magis trates of First Class before the 1st April, 1974". These grounds were controverted by Mr. Lalit appearing for the respondents and he contended that Shri Senger had been conferred the powers of a First Class Magistrate in terms of the Government Notification and the Gazette publi cation is proof thereof. that this position has been con firmed by the District Magistrate in his reply to the Sixth Additional Judge, Kanpur (vide pages 224/225 of the Printed Paper Book), that Shri Senget was empowered to exercise all the powers of a First Class Magistrate and that the note issued by the Deputy Secretary that the conferment of powers was confined to the maintenance of law and order and would not extend to the trial of cases is an 504 administrative note which cannot override the Gazette Noti fication and it must therefore be held that Shri Senger had been an Executive Magistrate exercising the powers of a First Class Magistrate from February 1968 itself and as such he fully satisfied the terms of Section 3(e) for being conferred the,powers of a Prescribed Authority under the Act. We will now examine the contentions of the counsel in greater detail. It is not in dispute that the Government issued a Gener al Notification on 6.2. 1968 conferring the powers of a First Class Magistrate on all Tehsildars and the powers of a Second Class Magistrate on all Naib Tehsildars and this Notification was duly published in the Official Gazette on 17.2.68. The argument of Mr. Kacker that in spite of the Government Notification there is no proof that Shri Senger had been individually communicated an order conferring upon him the powers of a First Class Magistrate cannot be accept ed because the Additional District Magistrate has categori cally stated in his reply to the letter of the Sixth Addi tional Judge dated 3.5.76 that by virtue of the General Notification of the Government and the Gazette Notification, "all the Tehsildars had been appointed Magistrates, First Class" and by way of enclosure he had sent the relevant Gazette Notification as well. In the face of such materials, it must be taken that the Government Notification should have been fully acted upon and all Tehsildars including Shri Senger must have been conferred the powers of a First Class Magistrate in the year 1968 itself. In so far as the second criticism is concerned, there is nothing in the Government Notification dated 6.2.68 or in the Gazette publication dated 17.2.68 to indicate that the powers of a First Class Magistrate and a Second Class Magistrate conferred on Teh sildars and Naib Tehsildars respectively was only for the limited purpose of ensuring the maintenance of law and order and not for exercise of those powers in the trial of crimi nal cases. The note of the Deputy Secretary (page 260 of the Printed Paper Book) relied on by Mr. Kacker appears to be only an administrative instruction and not an order passed by the Government itself in exercise of its powers under Sections 12 and 39 of the Criminal Procedure Code 1898. In such circumstances, the instruction cannot whitle down the Government Notification conferring higher magisterial powers on Tehsildars and Naib Tehsildars. Incidentally, we may point out that the copy of the Government Notification dated 6.2.68 together with the administrative instruction of the Deputy Secretary had been communicated to all the Tehsildars of the District by the District Magistrate. The endorsement made by the Collector will, therefore, disprove the conten tion of Mr. Kacker that there had been no individual commu nica 505 tion of the Government 's Order to all the Tehsildars and hence the requirement of Section 39(2) of the Criminal Procedure Code 1898 had not been complied with. Even assuming for argument 's sake that the conferment of the powers of a First Class Magistrate on all Tehsildars was for the limited purpose of enforcement of law and order and not for the trial of cases, the question will be whether the experience gained by Shri Senger as a Second Class Magis trate while concurrently having the powers of a First Class Magistrate would not satisfy the requirements of Section 3(e) of the Act. All that the Section says is that for being conferred the powers of a Prescribed Authority an Executive Magistrate should have had experience as such Magistrate for a period of not less than three years. Having regard to the terms of the stipulation, it would suffice if Shri Senger had acquired experience in the trial of criminal cases, albeit cases triable by a Second Class Magistrate, for more than three years, while at the same time having the right to exercise the powers of a First Class Magistrate. This is because of the fact that as per Schedule III of the Code of Criminal Procedure 1898 a Magistrate of the First Class is also entitled to exercise all the powers of a Magistrate of the Second Class. It would, therefore follow that a First Class Magistrate can also gain experience by the trial of cases triable by a Second Class Magistrate. What is of relevance is the gaining of experience in trial of criminal cases for a period of three years and more and at the same time having the powers of a First Class Magistrate and not necessarily the experience of trying cases triable by a First Class Magistrate alone. In the light of the aforesaid reasons we do not see any merit in the contention of the appellant that Shri Senger did not have the requisite qualification to be appointed a Prescribed Authority under Clause (e) of Section 3 of the Act and hence the release order passed by him is a nullity. There is also another angle from which the matter needs to be considered. Shri Senget was not ' appointed a Pre scribed Authority as persona designata. On the other hand he exercised the powers of a Prescribed Authority by reason of his posting as Additional City Magistrate II, Kanpur, in the place of one Shri S.D. Sharma and by virtue of an earlier Notification of the Government dated 9.9.1974 constituting the Additional City Magistrate II, Kanpur, as the Prescribed Authority for certain areas in Kanpur city including the area falling within the limits of the Collector Ganj Police Station. The 506 abovesaid Notification of the Government was a General Notification and, therefore, whoever came to be posted as Additional City Magistrate II, Kanpur, automatically became a Prescribed Authority for the areas indicated in the Gov ernment Notification. Such being the case, as long as the Government Notification dated 9.9.1974 is not challenged, the exercise of powers by Shri Senger as a Prescribed Au thority cannot also be challenged. This position would then call for the application of the 'de facto doctrine ' to the facts of the case. The principle of the 'de facto doctrine ' has been considered in several cases. This Court had occa sion in G. Rangarajan v Andhra Pradesh, [1981] 3 S.C.R.474, to which one of us (Sen, J.) was a party to refer to those decisions and enunciate the law relating to the 'de facto doctrine '. In that case a criminal appeal filed by one Gokaraju Rangaraju under Section 6(c) of the Essential Commodities Act was dismissed by Shri G. Anjappa, Additional Sessions Judge and a revision was preferred to the High Court. One Shri Raman Raj Saxena, another Additional Ses sions Judge, had tried a Sessions case and awarded convic tion to two of the accused persons and they had filed ap peals to the High Court against their conviction and sen tence. By the time the Criminal Revision and the Criminal Appeal filed by the accused came to be heard by the High Court, this Court had quashed the appointments of the above said two Additional Sessions Judges and two others as Dis trict Judges Grade II on the ground that their appointment was in violation of Article 233 of the Constitution. There fore, the accused who had preferred the Criminal Revision and the Criminal Appeals respectively raised a contention before the High Court that the judgments rendered against them by the concerned Additional Sessions Judges were void and should therefore, be set aside. The High Court rejected the contention on the ground that the Additional Sessions Judges had held their offices under lawful authority and not as usurpers and therefore, the judgments rendered by them were valid and could not be questioned in collateral pro ceedings. Against the judgments of the High Court the ac cused preferred appeals by special Leave to this Court and those appeals were dismissed by this Court on the ground the 'de facto doctrine ' was clearly attracted. After referring to severaL decisions rendered by the Courts in India and England, Chinnappa Reddy, J. speaking for the Bench enunci ated the law relating to the 'de facto doctrine ' as under: "A judge, de facto, therefore, is one who is not a mere intruder or usurper but one who holds office under colour of lawful authority, though his appointment is defective and may later be found to be defective. Whatever be the 507 defect of his title to the office, judgments pronounced by him and acts done by him when he was clothed with the powers and functions of the office, albeit unlawfully, have the same efficacy as judgments pronounced and acts done by a Judge de jure. Such is the de facto doctrine, born of necessity and public policy to prevent needless confusion and endless mischief. There is yet another rule also based on public policy. The defective appointment of a de facto judge may be questioned directly in a proceeding to which he be a party but it cannot be permitted to be questioned in a litigation between two private litigants, a litigation which is of no concern or consequence to the judge except as a judge. Two litigants litigating their private titles cannot be permitted to bring in issue and litigate upon the title of a judge to his office. Otherwise as soon as a judge pronounces a judgment a litigation may be commenced for a declaration that the judgment is void because the judge is no judge. A judge 's title to his office cannot be brought into jeopardy in that fashion. Hence the rule against collateral attack on validity of judicial appointments. To question a judge 's appointment in an appeal against the judgment is, of course, such a collateral attack. " The ensuing position therefore is that even if we are to countenance the argument of the appellant 's counsel that Shri Senger had not gained experience as an Executive Magis trate exercising First Class powers for a period of not less than three years and could not therefore be appointed as a Prescribed Authority under the Act, the validity and legali ty of the order of release passed by him cannot be impugned because Shri Senger had not held the office as an usurper but only under colour of lawful authority. There is, there fore, no escape for the appellant from being governed by the 'de facto doctrine ' and thereby being disentitled to impugn the validity of the release order on the ground of want of jurisdictional competence for Shri Senger to pass the order. Furthermore, the appellant is also not entitled to question the validity of the appointment of Shri Senger as a Pre scribed Authority in a collateral proceeding. These addi tional factors also militate against the contentions of the appellant. In view of our conclusion that Shri Senger 's experience as an Executive Magistrate satisfied the requirements of Section 3(e) of the Act and as such he was not incompetent to act as a Prescribed Authority and pass the impugned order of release, that secondly even if he 508 was not fully qualified to act as a Prescribed Authority and pass the order of release the validity of the order cannot be impugned because of the 'de facto doctrine ' and thirdly, the appellant is not entitled to question the competence of Shri Senger to act as a Prescribed Authority in a collateral proceeding, it is really not necessary for us to examine the correctness of the view taken by the High Court that by reason of the merger of the order of Shri Senger with the order of the Appellate Authority, there is no room for the appellant to contend that the release order is a nullity because Shri Senger did not have jurisdiction to pass the order. Even so we may make a brief reference to the argu ments of the counsel on that aspect of the matter and the case law cited by them to be fair to the counsel and to their arduous preparation of the case. Mr. Kacker 's argument was that the High Court was not right in its view because the rule of merger would not be attracted where there is a total lack of jurisdiction in the Tribunal or Court of first instance to pass an order. Mr. Kacker submitted that there is a clear distinction between the manner of exercise of jurisdiction and the existence of jurisdiction and whenever an order was passed without jurisdiction by a Tribunal or Court, the rule of merger will have no application. In support of his contention the learned counsel referred us to the following decisions. Hriday Nath Roy vs Ram Chandra Barna Sarma, (ILR 48 Calcutta 138); Collector of Customs vs A.H.A. Rahima, AIR 1957 Madras 496; The State of Uttar Pradesh vs Mohammad Noon, ; ; Kumaran vs Kothan daraman, AIR 1963 Gujarat Page 6; Toronto Railway vs Toronto Corporation, [1904] Appeal Cases 809 and Barnard vs National Dock Labour Board, ; Refuting the contentions of Mr. Kacker, Mr. Lalit argued that in several later judgments the view taken in Mohammad Noon 's case (supra) has been explained as being confined to the peculiar facts of that case and that the rule of merger has not undergone any change and the consistent view that has been taken is that even an order passed by a Tribunal or Court without jurisdiction can be challenged before the Appellate Authority or Court, that in such an appeal the question of the initial Court 's jurisdiction can also be gone into and that once the Appellate Authority or Court found jurisdic tional competence in the Tribunal or Court of first instance and confirmed the order in appeal, then the rule of merger of the order of the original authority with the order of the Appellate Authority would be clearly attracted and thence forth the order of the original authority cannot be assailed on the ground of jurisdictional error or incompetence. The learned counsel further submitted that besides the rule of merger the rule of finality of judgments would also be attracted and on that score too the order of the original authority will attain immunity 509 from attack. Mr. Lalit cited several decisions in support of his arguments but we need refer only to the decisions of this Court. The decisions cited are: U.J.S. Chopra vs State of Bombay, ; ; Madan Gopal Rungta vs Secretary to the Govt. of Orissa, [1962] Suppl. 3 SCR 906 and Collector of Customs, Calcutta vs East India Commercial Co. Ltd., As we have already indicated we do not find any necessi ty to go into the merits of the contentions of the counsel regarding the applicability of the rule of merger and the rule of finality for rendering our decision in this appeal. We, therefore, leave the rival contentions to rest there. We have only to consider the grievance of the appellant that the respondents had committed a breach of their under taking to the court and illegally dispossessed them from the leased portions in their occupation and, therefore, the respondents should be directed to restore possession to them in the interests of justice. It appears to us that the recovery of possession of the leased portions had taken place due to a misunderstanding about the period of force of the undertaking given by the respondents. From the records we see that the High Court preferred to act on the undertak ing given by the respondents counsel not to disturb the possession of the appellant rather than pass an order of stay of the release order as the High Court was of the view that the appeal itself can be heard and disposed of expedi tiously on merits. However, for one reason or other, the appeal could not be heard expeditiously. In the meanwhile since the undertaking had been given only for a limited period i.e. 25.10.76, the respondents seem to have been under the impression that the undertaking had come to an end and hence they were entitled to recover possession. It is of relevance to note that the respondents had not taken posses sion immediately after 25.10.76 but only on 23.12.76, i.e. nearly two months later. In such circumstances it is diffi cult to sustain the charge levelled by the appellant that the respondents had committed a breach of their undertaking to the Court and had recovered possession illegally and should therefore be called upon to restore possession. In the light of our conclusion the appeal fails and will accordingly stand dismissed. We, however, direct the parties to bear their respective costs. P.S.S. Appeal dis missed.
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Clause (e) of section 3 of the U.P. Urban Buildings (Regula tion of Letting, Rent & Eviction) Act, 1972 defined 'Pre scribed Authority ' to mean a Magistrate of the First Class having experience as such of not less than three years, authorised by the District Magistrate to exercise the powers of such authority.
When the Code of Criminal Procedure, 1973 came into effect in 1974 this definition was amended to mean an officer having not less than three years experience as Munsif or as Magistrate of the First Class or as Executive Magistrate authorised by the State Government to exercise the power of the Prescribed Authority.
The respondents having their residence in the second floor of the premises and their business establishments in a portion of the ground floor, sought recovery of possession under section 21 of the Act of the first floor and another por tion of the ground floor leased out by their father to the predecessor concern of the appellant for residential and nonresidential purposes respectively.
The Prescribed Author ity passed an order of release holding that the requirement of the leased portions by the respondents for their residen tial and non residential purposes was a bona fide one and that the comparative hardship factor was more in their favour than in favour of the appellant.
These findings were confirmed by the Appellate Authority.
497 In the writ petition filed before the High Court it was contended for the first time that the order of the Pre scribed Authority had been passed without jurisdiction and was, therefore, a nullity and its affirmation by the Appel late Authority could not validate it.
That contention was repelled by the High Court holding that even if the order of the Prescribed Authority was a defective one, it had got merged with the order of the Appellate Authority when it was confirmed and that the question of jurisdictional competence of the Prescribed Authority to pass the order of release involved adjudication upon disputed questions of fact and such an enquiry was beyond the scope of proceedings under Article 226 of the Constitution.
The Government had in exercise of its powers under sections 12 and 39(1), Cr. P.C., 1898 by a general notification dated 6.2.1968 conferred on all Tehsildars the powers of a First Class Magistrate, and on all Naib Tehsildars the powers of a Second Class Magistrate.
The Deputy Secretary, Government of U.P. had, however, in his note forwarding the General Noti fication to all the District Magistrates stated that the conferment of powers was confined to the maintenance of law and order.
By means of a notification dated 9.9.1974 the Government had designated the Additional City Magistrate II, Kanpur to be the Prescribed Authority under the Act for certain areas.
The Prescribed Authority, whose order is impugned had served as Tehsildar from 29.9.1962 to 6.11.1964 and again from November, 1965 to 15.2.1974, when he was promoted to Deputy Collector and posted as Additional City Magistrate, Kanpur, which post he held when he dealt with the applica tion in the instant case.
In the special leave petition it was contended that the powers of a First Class Magistrate under section 39(1) Cr.
P.C. 1898 cannot be deemed to have been conferred on the incum bent in the instant case in the absence of requisite proof under section 39(2) of the Code, that even if the general notifi cation dated 6.2.1968 empowered him to act as such, the conferment of power was only for ensuring the maintenance of law and order and not for trial of cases, and that section 3(e) requires that an Executive Magistrate to be lawfully empow ered to act as Prescribed Authority must have had not less than three years experience in the trial of cases as a First Class Magistrate.
Dismissing the appeal, HELD: 1.
The Prescribed Authority 's experience as an Execu 498 tive Magistrate in the instant case satisfied the require ments of section 3(e) of the U.P. Urban Buildings (Regulation of Letting, Rent & Eviction) Act, 1972.
He was not, therefore, incompetent 10 act as such and pass the impugned order of release.
[507] 2.
The General Notification dated February 6, 1968, conferring the powers of a First Class Magistrate on all Tehsildars and the powers of a Second Class Magistrate on all Naib Tehsildars, which was published in the Official Gazette on February 17, 1968, had been communicated to all the Tehsildars of the District by the District Magistrate.
It must, therefore, be taken that the Government Notifica tion should have been fully acted upon and all Tehsildars, including the official whose order is impugned, must have been conferred powers of a First Class Magistrate in the year 1968 when he was serving as Tehsildar.
The requirement of section 39(2) of the Code of Criminal Procedure, 1898 had thus been complied with.[504B D,G; 505A] 3.
There is nothing in the Government Notification dated February 6, 1968 or in the Gazette publication dated Febru ary 17, 1968 to indicate that the powers of a First Class Magistrate and a Second Class Magistrate conferred on Teh sildars and Naib Tehsildars respectively was only for the limited purpose of ensuring the maintenance of law and order and not for exercise of those powers in the trial of crimi nal cases.
The note of the Deputy Secretary appears to be only an administrative instruction and not an order passed by the Government itself in exercise of its powers under sections 12 and 39 of the Criminal Procedure Code, 1898.
The adminis trative instruction cannot whitle down the Government Noti fication conferring higher magisterial powers on Tehsildars and Naib Tehsildars.
[504E F] 4.
All that section 3(e) of the Act says is that for being conferred the powers of a Prescribed Authority an Executive Magistrate should have had experience as such magistrate for a period of not less than three years.
Having regard to the terms of the stipulation, it would suffice if he had ac quired experience in the trial of criminal cases, albeit cases triable by a Second Class Magistrate, for more than three years, while at the same time having the right to exercise the powers of a First Class Magistrate.
This is because of the fact that as per Schedule III of the Code of Criminal Procedure, 1898 a Magistrate Of the First Class is also entitled to exercise all the powers of a Magistrate of the Second Class.
A First Class Magistrate, therefore, can also gain experience by the trial of cases triable by a Second Class Magistrate.
What is of relevance is the gaining of experience in trial of criminal cases for a period of three 499 years and more and at the same time.having the powers of a First Class Magistrate and not necessarily the experience of trying cases triable by a First Class Magistrate alone.
It cannot, therefore, be said that the Prescribed Authority did not have requisite qualification in the instant case to be so appointed under el.
(e) of section 3 of the Act and hence the release order passed by him was a nullity.
[505C F] 5.
The appointment of Prescribed Authority in the in stant case was not made as persona designata.
He exercised the powers of a Prescribed Authority by reason of his post ing as Additional City Magistrate II, Kanpur, by virtue of an earlier Notification of the Government dated September 9, 1974 constituting the Additional City Magistrate II, Kanpur, as the Prescribed Authority, for certain specific areas in the city.
The said Notification of the Government was a General Notification and therefore whoever came to be posted as Additional City Magistrate II, automatically became a Prescribed Authority for the areas indicated in the Govern ment Notification.
Therefore, as long as the Government Notification dated September 9, 1974 was not challenged, the exercise of powers by him as a Prescribed Authority could not also be challenged.
The appellant was also not entitled to question the validity of the appointment of Prescribed Authority in a collateral proceedings.
[505G 506A; 507G] 6.
Even if the person appointed as Prescribed Authority was not fully qualified to act as such and pass the order of release, the validity and legality of the order of release passed by him cannot be impugned because of the de facto doctrine in as much as he did not hold the office as an usurper but only under colour of lawful authority.
[507E F] G. Rangarajan vs Andhra Pradesh, ; , referred to.
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Clause (e) of section 3 of the U.P. Urban Buildings Act of 1972 said that a "Prescribed Authority" was a First Class Magistrate with at least three years of experience. This person had to be approved by the District Magistrate to have the powers of that authority.
In 1974, the Code of Criminal Procedure of 1973 changed this definition. Now, it meant an officer with at least three years of experience as a Munsif (a type of judge), a First Class Magistrate, or an Executive Magistrate. This person also needed approval from the state government to have the powers of the Prescribed Authority.
The people involved in this case lived on the second floor of a building and had their businesses on part of the ground floor. They wanted to take back the first floor and another part of the ground floor. Their father had leased these spaces to the company that the appellant (the person appealing the case) now owns. The lease was for both residential and business purposes.
The Prescribed Authority agreed that the respondents (the people who wanted their property back) needed the leased areas for their own use. It also decided that the respondents would face more hardship if they didn't get the property back than the appellant would if they had to leave.
The Appellate Authority agreed with these findings.
In a petition to the High Court, the appellant argued for the first time that the Prescribed Authority didn't have the power to make the order. They claimed the order was invalid and the Appellate Authority's approval couldn't fix it.
The High Court rejected this argument. It said that even if the Prescribed Authority's order was flawed, it became part of the Appellate Authority's order when it was confirmed. The High Court also said that deciding if the Prescribed Authority had the power to make the order would require looking at disputed facts, which was beyond the scope of their review.
The government had given all Tehsildars (local revenue officers) the powers of a First Class Magistrate and all Naib Tehsildars (assistant revenue officers) the powers of a Second Class Magistrate through a notification in 1968. This was done using sections 12 and 39(1) of the Criminal Procedure Code of 1898.
However, a Deputy Secretary of the U.P. government said in a note that these powers were only for maintaining law and order.
In 1974, the government designated the Additional City Magistrate II, Kanpur, as the Prescribed Authority for certain areas.
The Prescribed Authority in this case had worked as a Tehsildar from 1962 to 1964 and again from 1965 to 1974. Then, he was promoted to Deputy Collector and became the Additional City Magistrate, Kanpur. He held this position when he made the decision in this case.
In the special leave petition (request to appeal), the appellant argued that the Prescribed Authority didn't have the powers of a First Class Magistrate because there wasn't proof as required by section 39(2) of the Criminal Procedure Code of 1898. They also argued that even if the 1968 notification gave him those powers, it was only for maintaining law and order, not for trying cases. Finally, they said that section 3(e) requires an Executive Magistrate to have at least three years of experience trying cases as a First Class Magistrate to be a Prescribed Authority.
The appeal was dismissed.
HELD: 1. The Prescribed Authority's experience as an Executive Magistrate met the requirements of section 3(e) of the U.P. Urban Buildings Act of 1972. Therefore, he was qualified to act as such and make the order.
2. The 1968 notification giving Tehsildars the powers of a First Class Magistrate and Naib Tehsildars the powers of a Second Class Magistrate was published in the Official Gazette and communicated to all Tehsildars by the District Magistrate. It should be assumed that the notification was followed and all Tehsildars, including the official in this case, were given the powers of a First Class Magistrate in 1968 when he was a Tehsildar. This means that the requirement of section 39(2) of the Criminal Procedure Code of 1898 was met.
3. There's nothing in the 1968 notification or the Gazette publication to suggest that the powers given to Tehsildars and Naib Tehsildars were only for maintaining law and order and not for trying criminal cases. The Deputy Secretary's note seems to be just an administrative instruction, not an official order from the government. This instruction cannot reduce the higher powers given to Tehsildars and Naib Tehsildars by the government.
4. Section 3(e) of the Act only says that an Executive Magistrate needs at least three years of experience as a magistrate to be a Prescribed Authority. It's enough if he gained experience trying criminal cases, even cases tried by a Second Class Magistrate, for more than three years, while also having the power of a First Class Magistrate. This is because a First Class Magistrate can also exercise the powers of a Second Class Magistrate. What matters is gaining experience in trying criminal cases for at least three years while having the powers of a First Class Magistrate, not necessarily trying cases that only a First Class Magistrate can try. Therefore, the Prescribed Authority had the necessary qualifications to be appointed under section 3(e) of the Act, and the order he made was not invalid.
5. The appointment of the Prescribed Authority in this case was based on his position as Additional City Magistrate II, Kanpur. The government had previously issued a notification in 1974 designating the Additional City Magistrate II, Kanpur, as the Prescribed Authority for certain areas. This was a general notification, so whoever held that position automatically became the Prescribed Authority for those areas. As long as the 1974 notification wasn't challenged, his exercise of powers as a Prescribed Authority couldn't be challenged either. The appellant also couldn't question the validity of the Prescribed Authority's appointment in this type of legal proceeding.
6. Even if the person appointed as Prescribed Authority wasn't fully qualified, the order he made is still valid because of the de facto doctrine. This means that he held the office under the appearance of lawful authority, not as an illegal usurper.
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Appeal No. 661 of 1966. Appeal by special leave from the judgment and order dated December 8, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Revision No. 92 D of 1962. S.C. Manchanda, section K. Mehta, and K. L. Mehta, for the appellant. Bishan Narain, I. section Sawhney and M. R. Chhabra, for the respondents. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judgment of the Punjab High Court (Circuit Bench at New Delhi) dismissing a petition for revision directed against the concurrent judgments of the courts below dismissing the action for eviction filed by the appellant against the respondents from a premises on Ajmal Khan Road, Karol Bagh, New Delhi. The facts may be succinctly stated. By means of a rent deed dated February 13, 1950 the appellant, who is the owner of the suit premises inducted as a tenant Labha Mal Arora, now deceased, who was a practising Advocate. Clauses (2) and (6) of the rent deed were in the following terms "2. That the tenant agrees to use the property for his residence. 6.That the tenant shall not assign or sublet the above said property or any part thereof without the written consent of the landlord, or utilise the Property for any purpose other than that mentioned above. " On the same date a letter exhibit D 2 was written by the appellant to the late Labha Mal Arora saying: "As per our oral talk regarding your tenancy for my house No. 6/64, I have no objection your having your professional office "alongwith residence" there provided it is not inconsistent with the provisions of Delhi Im provement Trust Act. " It appears and it has been so found, that Labha Mal Arora who had his office at a different place shifted the same to the suit premises where he was residing with his family. He died in the year 1952. Till 1952 the premises were being used only for residence by his sons and widow. in August 1957 Chamanlal respondent No. 1, who qualified himself as a legal practioner, started having an office in the premises. It would appear that the other 11 son respondent No. 3 also started practising as a lawyer in the same premises some time later. On 21 11 1957 the appellant served a notice on the sons and widow of the deceased Labha Mal Arora that it has been learnt that they had constructed a double storeyed building in Naiwala Karol Bagh and that since the suit premises were required bona fide for the personal residence of the appellant they should shift to their house and vacate the rented premises. This was followed by a second notice to the same effect. As the possession of the premises was not delivered the appellant instituted a suit for ejectment against the respondents under the Delhi & Ajmer Rent Control Act, 1952 (hereinafter called the old Act). Two grounds were taken for seeking eviction. One was that the respondents had built a large residential house and were liable to be ejected under section 13(1)(h) of the old Act. The second was that the premises were required bona fide for personal use. It may be mentioned that the second ground was abandoned in the trial court. The suit was contested by the respondents on the ground that the late Labha Mal Arora had taken the premises on rent for residence as well as for an office for professional purposes and the premises had been used as residence cum office. For this reason it was asserted that the construction of a residential house by the respondents did not furnish a ground for eviction. During the pendency of the suit the Delhi Rent Control Act, 1958 (hereafter called the new Act) came into force. Section 14(1)(h) which was equivalent to section 13(1)(h) of the old Act contained the word 'suitable ' which was omitted as it appeared before the word "residence" in section 13(1)(h); the relevance and significance of that omission will be noticed presently. The trial court relied inter alia on the letter Ext. D 2 and the statement of Chaman Lal respondent according to whom two rooms were used by the late Labha Mal Arora as his office and another one room was being used by his clerk and held that the premises had been let for "residence cum business purposes". The argument that the late Labha Mal Arora had only been granted a licence to use the premises for professional purposes and that the licence came to an end on his death, was repelled. It was found that the respondents had built a residential house, and since the premises in suit had been let out to their predecessor in interest not for residential purpose alone but also for business purposes no eviciton could be ordered under the provisions of section 13(1)(h) of the old Act or section 14(1) (h) of the new Act. The Additional Senior Sub Judge dismissed the appeal preferred by the appellant in agreement with the decision of the trial court. The following portion from his judgment relating to the finding with regard to the purpose for 12 which the premises had been let out to the late Labha Mal Arora may be reproduced: "It is in evidence that prior to taking the premises in suit on rent from the appellant, Labha Mal deceased, was having his professional office as an advocate in Sadar Bazar, Delhi, and on taking the premises in suit on rent he had shifted his office in the suit premises. This fact is fully supported by the statement of Shri Chaman Lal, respondent No. 1, and the notices, exhibit D.W. 9/1, and D.W. 9/2 issued by Shri Labha Mal from the suit premises. Shri Chaman Lal has stated that out of the five rooms of the suit premises, two rooms were ' used by his deceased father as office. From the above also 'it is proved that the suit premises were let by the appellant to Shri Labha Mal deceased for residence cum business purposes. " On the question of the ambit and scope of section 13(1)(4) _of the old Act the learned Judge expressed the opinion that it would be unreasonable to hold that a tenancy which had been created both for purposes of residence and carrying on a profession could be successfully terminated merely by showing that the tenants had acquired a suitable residence. The appellant approached the High Court on the revisional side. J. section Bedi, J. considered the rent deed Ext. P 3 and the letter exhibit D 2 as also the other evidence and came to the same conclusion at which the courts below had arrived. Reliance was placed on the additional fact that when the suit was instituted the premises were being used by Chamal Lal both for purposes of residence and office. Before dealing with the contentions raised on behalf of the appellant it is necessary to refer to section 13(1)(h) of the old Act and section 14 (1) (h) and section 57 of the new Act. Section 13 (1) (h) of the old Act contained a provision that if the Court was satisfied inter alia that the tenant had whether before or after the commencement of the Act built, acquired vacant possession of or been allotted a suitable residence it could order ejectment. In section 14(1)(h) of the new Act the only change that was made was that the word "suitable" before the word "residence" was omitted. Under section 57 of the new Act notwithstanding the repeal of the old Act all suits and other proceedings pending under that Act were to be continued and disposed of in accordance with provisions of the old Act. According to the first proviso to subsection (2) the court or other authority "shall have regard to the provisions of this Act. ,, In Karam Singh Sobhi & Anr. vs Shri Pratap Chand 13 & Anr. (1) this Court had to consider the effect of what was contained in section 57 of the new Act. It was held that the effect of the first proviso to section 57(2) was that pending proceedings would continue under the old Act with this addition that where the new Act had slightly modified or clarified the previous provisions, those modifications and clarifications would govern the case. Similarly in Brij Kishore & Others vs Vishww Mitter Kapur & Others(1) it was laid down that the first proviso to section 57(2) of the new Act must be read harmoniously with the substantive provisions of subs. (2) and the only way of harmonising the two was to read the expression "shall have regard to the provisions of this ' Act" as merely meaning that where 1 the new Act had slightly modified or clarified the previous provisions those modifications and clarifications should be applied. These words did not take way what was provided by sub section (2) and ordinarily the old Act would apply to pending proceedings. It has been contended by Mr. section C. Manchanda for the appel lant that the new section would be applicable as no radical departure has been made in section 14(1) (h) by omission d the word "suitable" and that there was only slight modification or clarification of the previous provision, namely, section 13(1) (h). In our opinion whether section 1 3 (1 ) (h) of the old Act or section 14 ( 1 ) (h) of the new Act is applied the result, as will be presently seen, will be the same in the instant case. Coming to the question whether the suit premises were taken by the late Labha Mal Arora for residence only or for residence as well as for use as office for carrying on his professional work of a legal practitioner, it may be observed that the concurrent finding of the court below is that the premises had been taken for residential cum business or professional purposes. That finding being one of the fact must be accepted as final. It would, therefore, seem that the decision of this Court in Dr, Gopal Das Verma vs Dr. section K. Bhardwaj and Another(") can be appositely applied. In that case it was held that a tenant could not be ejected under section 13(1)(h) because the tenancy of premises let out or used for residence and carrying on of profession could not be terminated merely by showing that the tenant had acquired a suitable residence. There the premises had been let out to a doctor who was an ear, nose and throat specialist. It was found that the premises had been used by the tenant for professional as well as residential purposes with the consent of the landlord. The case, therefore fell outside section 13 (1) (e) but even under section 1 3 ( 1 ) (h) eviction could not be ordered. This is what was said in that connection. (1) (2) A. I. R. (52) (3) ; at p. 685. 14 "If the premises from which ejectment is sought are used not only for residence but also for profession how could section 13(1)(h) come into operation? One of the, purposes for which the tenancy is acquired is professional use, and that cannot be satisfied by the acquisition of premises which are suitable for residence alone, and it is the suitability for residence alone which is postulated by section 13(1)(h). Therefore, in our opinion, it would be unreasonable to hold that the tenancy which has been created or used both for residence and profession can be successfully terminated merely by showing that the tenant has acquired a suitable residence. " In the above case this Court further held that section 2(g) of the old Act which defined the word "Premises" referred to three kinds of user to which the premises can be put to i.e. residence, commerce and any other purpose. This necessarily included residence and commerce combined. Since it was shown that the premises had been let both for residence and for commercial purposes it did not follow that the premises ceased to be premises under section 2(g); they continued to be premises under the last clause ' of that provision. The definition of 'premises ' in the new Act is contained in section 2(1) and it is the same as in section 2(g) of the old Act. The word 'tenant ' is defined by section 2 (1 ) of the, new Act to mean "any person by whom or on whose account or behalf the rent of any premises is or but for a ' special contract would be, payable . . Having regard to section 14(1)(h) of the new Act the original tenantin the present case was one who was in occupation of premises which were used for a composite purpose, namely, residence and profession. There could, therefore, be no eviction merely by acquisition of vacant possession of a residence by such a tenant and the position would be the same with regard to his heirs and legal representatives, the present respondents. It is quite clear that section 14(1)(h) can apply only where a tenant is in occupation of a premises which are only residential; then alone he would have to go if he acquires or has residential accommodation of his own. Mr. Manchanda has next contended that the decision of this Court in Dr. Gopal Das Verma 's case(1) is distinguishable because it appeared from various facts that the dominant intention was to use the premises as a nursing home. He submits that in the present case the dominant intention was to use the premises as residence and the late Labha Mal Arora was merely given permission or licence which was of a personal nature to have his (1) [1962] 2 S.C.R.678 at p.685. 15 office as well there. We are unable to find that any test of dominant intention was applied 'in Dr. Gopal Das Verma 's case(1). The position in England is different where premises are let partly for business purposes and partly for residence. There the statutory provisions lay down that where a dwelling is let partly for business purposes and partly for residence, the Rent Act applies to the whole(1). Moreover where there is no covenant as to user and the question is what user was contemplated, the Court will infer what use was contemplated by the tenancy agreement; the test was "the main purpose" or "predominant intention" or "the prevailing contemplation" or "a preponderating contemplation" for the letting. (2 ) (ibid, p. 69). We are unable to derive any assistance from the English cases on the point. ' Lastly Mr. Manchanda sought to raise the question of the permission contained in the letter Ext. D 2 being a licence which was personal to late Labha Mal Arora and which should be deemed to have come to an end on his death. It is further pointed out that after his death for a number of, years the respondents used the premises purely for residence. In view of the finding of the courts below that the premises had been let to the predecessorin interest of the respondents for residence cum business or profession, this submission cannot be entertained. For all the above reasons this appeal fails and it is dismissed with costs. , Y.P. Appeal dismissed, (1) ; at p. 685.
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The predecessor in interest of the respondents who was a practising advocate, took on rent certain premises for residence.
He could with the written consent of the appellant landlord set up his professional office also there.
After the death of their predecessor in interest the respondents lived in the premises and sometimes later two of the respondents qualified a.% lawyers and started having an office in the premises.
The appellant filed a suit for the respondents ' eviction on the ground that the respondents had acquired a "suitable residence" by building a large residential house and were liable to be ejected under section 13 (1) (h) of the Delhi & Ajmer Rent Control Act, 1952.
During the pendency of the suit the Delhi Rent Control Act, 1958 came into force and under section 14(1) (h) of the Act, the word "suitable" was omitted.
The trial Court dismissed the suit holding that since the premises had been let out to their predecessor in interest not for residential purpose alone but also for business purposes, no eviction could be ordered under the provisions of section 13 (1) (h) of the old Act or section 14(1) (h) of the new Act.
The first appellate Court, and the High Court in revision affirmed the order of the trial Court.
Dismissing the appeal this Court, HELD:Assuming, that section 14(1)(h) of the new Act, applied, having regard to its language, the original tenant in the present case was one who was in occupation of premises which were used for a composite purpose, namely, residence and profession.
There could, therefore, be no eviction merely by acquisition of vacant possession of a residence by such a tenant and the position would be the same with regard to his heirs and legal representatives, the present respondents.
Section 14(1) (h) can apply only where a tenant is in occupation of premises which are only residential; then alone he would have to go if he acquires or has residential accommodation of his own.
[14 F] The decision of this Court in Dr. Gopal Das Verma vs Dr. section K. Bhardwaj ; applied apprositely to this case.
The test of dominant intention with regard to the use of the premises was not applied in Dr. Gopal Das Vermals case.
[13 F G; 15A] In view of the finding of the courts below that the premises had been let to the predecessor in interest of the respondents for residence cum profession, the submission that the permission was personal to the predecessor in interest of the respondent, which came to an end on his death could not be entertained.
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The person who lived in the place before the current renters was a lawyer who rented the place to live in.
He could also use it as his office if the landlord agreed in writing.
After the lawyer died, his family lived there. Later, two family members became lawyers and started using part of the place as an office.
The landlord sued to kick the family out. He said they had built a big house and didn't need to live there anymore, according to a law called the Delhi & Ajmer Rent Control Act of 1952, section 13 (1) (h). This law said people could be evicted if they had a "suitable residence" elsewhere.
While the case was going on, a new law, the Delhi Rent Control Act of 1958, took effect. This law, in section 14(1) (h), removed the word "suitable."
The first court said no eviction could happen. It said the place was rented to the original lawyer not just to live in, but also for his business. So, the old law (section 13 (1) (h)) and the new law (section 14(1) (h)) didn't allow eviction.
The next higher court and the High Court agreed with the first court.
This Court agreed, stating that the new law (section 14(1)(h)) applied. The original renter used the place for both living and working.
So, just because the family now has a house somewhere else doesn't mean they can be evicted. This rule applies to the original renter's family, too.
Section 14(1) (h) only applies when someone rents a place just to live in. Only then can they be forced to leave if they get another place to live.
The decision in the case of Dr. Gopal Das Verma vs Dr. section K. Bhardwaj applies to this case.
The court in Dr. Gopal Das Verma's case did not consider the main reason for using the place.
The courts found that the place was rented for living and working. So, the landlord's argument that the permission to use it for work only applied to the original lawyer and ended when he died is not valid.
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Appeal No. 1104 of 1970. Appeal by special leave from the judgment and order dated April 9, 1970, of the Rajasthan High Court in D. B. Civil Special Appeal No. 126 of 1970. M. C. Chagla, F. section Nariman, P. N. Tiwari and O. C. Malther, for the appellant. M. C. Setalvad and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal from a judgment of the Rajasthan High Court holding that the appellant was not entitled to file an appeal against the order of the Company Judge directing sale of lease hold rights of the Golcha Properties (P) Ltd. (in liquidation) in the land belonging to the appellant. The facts briefly are that on November 5, 1960 an agreement was entered into between the appellant and the respondent company allowing Golcha Properties (P) Ltd. to construct a cinema threatre within three years from the issue of the 'No Objection Certificate ' on land measuring 42,900 sq. feet at Bhagwandas Road, Jaipur belonging to the appellant. The Company deposited a sum of Rs. 5 lakhs by way of security. In October 1963 No Objection Certificate is stated to have been issued for construction of a cinema theatre. In 1966 a petition for winding up of the company was filed in the Rajasthan High Court. On May 10, 1968 an order for winding up of the company was made and a liquidator was appointed ' On July 11, 1969 the Official Liquidator made a report to the Company Judge for sale of the lease hold rights of the company in the land belonging to the appellant and the structures standing on it. It appears that the Official, Liquidator made a report under section 457 of the Indian to obtain the necessary orders for sale. On July 21, 1969 the Company Judge without hearing any one or issuing notice to the appellant ordered that the lease hold rights and the structures be auctioned as proposed by the Official Liquidator On October 3,1969 the appellant 's attorney sent a letter to the Official Liquidator stating that the licence granted to the company under, an. agreement dated November 5, 1960 stood revoked and called upon him to deliver possession of the land and also pay compensation amounting to Rs. 10, lakhs. On February 9, 1970 the Official Liquidator sent a reply claiming that the company was entitled to a lease for 20 years under the agreement. On March 14, 1970 a notice was issued in a newspaper (Times of India) in respect of the proposed auction sale ,of lease hold rights which was to take place on April 14, 1970. 249 According to the appellant she enquired from the Official Liquidator under whose authority the, property was being sold to which no reply was sent by the Official Liquidator. On April 3, 1970 the appellant applied for a certified copy of the order dated July 21,1969 after taking inspection of the record in the High Court. The certified copy was sent on April 24, 1970. On the same date the appellant filed an appeal before the High Court. The High Court rejected that application summarily but recorded short order. In the order of the High Court reference has been made to Rule 139 of the Companies (Court) Rules 1959 and it has been pointed out that since the appellant had not appeared before the Company Judge she was not entitled to maintain the appeal. It was conceded that no notice had ever been sent to her either by the Official Liquidator or the Company Judge before the order appealed against relating to appellant 's property was made. The High Court was of the view that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under section 446 of the Act. Now an appeal lies under section 483 of the Act from any order made or decision given in the matter of finding up of a company by the court and it lies to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or deci sion of the Court in cases within its ordinary jurisdiction. There can be no manner of doubt that an appeal was competent against the order made by the Company Judge on July 21, 1969 in view of the terms of section 483. The only question is whether because the Official Liquidator failed to discharge his duties properly by having a notice issued to the appellant, whose rights were directly affected by the order proposed to be made, the appellant was debarred from filing the appeal. In our opinion apart from Rule 139 to which reference has been made by the High Court the Official Liquidator as well as the learned Company Judge were bound by the rules of natural justice to issue a notice to the appellant and hear her before making the order appealed against. If there was default on their part in not following the correct procedure it is wholly incomprehensible how the appellant could be deprived of her right to get her grievance redressed by filing an appeal against the order which had been made in her absence and without her knowledge. It would be a travesty of justice if a party is driven to file a suit which would involve long and cumbersome procedure when an order has been made directly affecting that party and redress can be had by filing an appeal which is permitted by law. It is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the appellate court and such leave should be granted if he would be prejudicially affected by the judgment. 250 Rule 103 of the Companies (Court) Rules provide for taking out summons for directions not only with reference to the settlement of the list of contributories and the list of creditors but also the axercise by the Official Liquidator of all or any of the powers under section 457(1) and any other matter requiting directions of the court. The exercise of the power under section 457 (1) (c) of the Act to sell the immovable and movable property of the Company by public auction or private contract would certainly fall Within the ambit of the Rule. That Rule expressly provides for issuing of a notice of the summons to the petitioner on whose petition the order for winding up was made. It is implicit that if the directions which have to be given by the court would affect any person prejudicially he: must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case. The High Court was thus clearly in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which lease hold rights said to have been created by her in favour of the Company in liquidation were sought to be sold. The appeal is allowed and the order of the High Court is set aside. The case is remanded to the High Court for disposing of the appeal in accordance with law. Costs shall abide the event. Y.P. Appeal allowed.
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The respondent company holding leasehold rights in the appellant land went into liquidation.
Accepting the.
official liquidator 's report the company Judge (Rajasthan High Court) without hearing anyone or issuing notice to the appellant ordered auction of the lease hold right of the respondent company.
The appellant sent a letter to the Official Liquidator revoking the licence granted to the company and calling upon him to, deliver possession of the land.
The Official Liquidator claimed that the company was entitled to a further period of lease under the agreement.
Notice was issued in respect of the proposed auction sale.
The appellant filed an appeal before the High Court.
The High Court held that since the appellant had not appeared before the company Judge, she was not entitled to maintain the appeal, and further that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under section 446 of the Indian Companies Act.
In appeal to this Court, HELD : The High Court was in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which lease hold rights said to have been created by her in favour of the company in liquidation were sought to be sold.
An appeal lies under section 483 of the Act from any order made or decision given in the matter of winding up of a company by the Court and it lies to the same, court to which, in the same manner in which, and subject to the same conditions under which appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction.
Therefore an appeal was corn tent against the order of the company Judge.
[249 D] It is implicit in Rule 103 of the Company Court Rules that if the directions which have to be given by the Court would affect any person prejudicially he must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case.
A] Further, the Official Liquidator as well as the, learned company Judge were bound by the rules of natural justice to issue a notice to the appellant and hear her before making the order appealed against.
If there was default on their part in not following the correct procedure the appellant could not be deprived of her right to get her grievance redressed by filing an appeal.
[250 C] 248
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The company that rented the land from the person making the appeal went out of business.
The judge in charge of the company case (at the Rajasthan High Court) accepted the report from the person in charge of closing the company. The judge ordered an auction of the company's rental rights for the land, without asking anyone or telling the person who owned the land.
The landowner sent a letter to the person closing the company, saying the company's permission to use the land was canceled. The letter also told them to return the land.
The person closing the company said the company had the right to rent the land for a longer time based on their agreement.
A notice was sent about the planned auction sale.
The landowner filed an appeal with the High Court.
The High Court said that because the landowner didn't speak to the judge in charge of the company case, she couldn't appeal. They also said her only option was to sue after getting permission from the judge under section 446 of the Indian Companies Act (a law about companies).
When this case was appealed to the higher court, it was DECIDED: The High Court was wrong to refuse to hear the appeal from the landowner. She owned the land that the failing company was renting and trying to sell those rental rights.
Under section 483 of the Act, you can appeal any decision made when a company is being closed by the Court. The appeal goes to the same court, in the same way, and under the same rules as appeals for other regular court cases.
So, an appeal was acceptable against the company judge's order.
[249 D] Rule 103 of the Company Court Rules implies that if the Court's instructions will negatively affect someone, that person must be notified. This follows the basic rule of fairness, meaning that no order should harm someone's rights without giving them a fair chance to explain their side.
[250 A] Also, the person closing the company and the judge in charge were required by the rules of fairness to notify the landowner and hear her side before making the order that was appealed.
If they didn't follow the correct process, the landowner shouldn't lose her right to fix the problem by filing an appeal.
[250 C] 248
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Appeal No. 1174 of 1974. (From the Judgment and Order dated the 4 4 1974 of the Delhi High Court in Wealth Tax Ref. No. 5 of 1972). R.M. Mehta and, P.L. Juneja, for the appellant. G.C. Sharma, M.L. Khanna, Anup Sharma, Miss Jaswal K.K. and K.R. Jagaraja and D.K. Jain, for the respondent. The Judgment of the, Court was delivered by BHAGWATI, J. This appeal raises a rather difficult but interesting question of law relating to valuation for the purpose of the Wealth Tax Act, 1957 of leasehold interest in land, when, there is, a covenant in the lease that the lessee shall not be entitled to assign the leasehold inter est without obtaining the prior approval in writing of the lesson and the lessor shall be entitled to, claim and recov er from the, lessee a certain specified proportion of the unearned increase in the value of the land at the time of the assignment. 13 436SCI/77 420 The controversy in this appeal, relates to the assess ment year 1968 69, the relevant valuation date being 31st December, 1967. The assessee is assessed to wealth tax as an individual. His net wealth on the valuation date included a property situate on plot No. 12, Block 39, Kauti lya Marg, Chanakyapuri. the property consisted of leasehold interest in the land together with a house built upon it. The land belonged to the President of India and it was leased by the President of India to one Vashesharan Devi on the terms and conditions set out in an agreement of lease dated 30th December, 1954 and the leasehold interest was acquired from Vashesharan Devi by the assessee. The premium for the grant of the lease was Rs. 24,400/ and the annual rent was fixed at Rs. 610/ , subject to certain variations. The terms and conditions of the lease are a little important and, so far material, they may be reproduced as follows: "13.the lessee shall before any assign ment or transfer of the said premises hereby demised or any part thereof obtain from the lessor or such officer or body as the lessor may authorise in this behalf approval in writing of the said assignment or transfer and all such assignees and transferees and the heirs of the lessee shall be bound by all the covenants and conditions herein contained and the answerable in all respect therefore. Provided also that the lessor be enti tled to claim and recover a portion of the unearned increase (i.e. the difference between the premium already paid and current market value) in the value of land at the time of transfer (whether such transfer is an entire site or only a part thereof), the amount to be recovered being 50 per cent of the unearned increase. The Lessor shall have a pre emptive right to the property after deducting 50 per cent of the unearned (torn) said. " The assessee constructed a large building on the land and the question arose as to how the leasehold interest of the assessee in the land together with the building should be valued. This property had been valued in the past assess ment years at Rs. 6,00,000/ and the assessee had accepted this valuation and not challenged it. But in the assessment for the assessment year. 1968 69 the assessee valued this property in its return of net wealth at Rs. 4,52,000/ on the. basis of a certificate obtained from M/s Anand Apte and Jhabvala, Architects who, are approved valuers recog nised by the Department. The Architects estimated the value of the property at Rs. 5,82,268/and from this figure, they deducted a sum of Rs. 1,30,000/ representing 50 per cent of the: unearned increase in the value of the land, which under the terms and conditions of the lease. belonged to the lessor and arrived at the value of Rs. 4,52,000/ . The Wealth Tax Officer did not accept the estimate of the valua tion made by the Architects and taking the annual rent of Rs. 30,000/ fetched by the property as the basis, computed the net annual rent at Rs. 82,956/ 421 and arrived at the figure of Rs. 8,29,560/ as the value of the property by applying the multiple of ten. to the annual rental value of Rs. 82,956/ . The Wealth Tax Officer rejected the claim of the assessee to deduct from the value of the property 50 per cent of the unearned increase in the value of the land on the ground that this claim was based "merely on hypothetical presumptions" but reduced the value off the property from Rs. 8,29,560/ to Rs. 6,00,000/ , since that was the figure accepted by the Revenue in the past assessment years. The assessee challenged the valua tion made by the Wealth Tax Officer in an appeal preferred before the Appellate Assistant Commissioner, but the appeal was unsuccessful as the Appellate Assistant Commis sioner took the same view as the Wealth Tax Officer. The Tribunal also, in further appeal, affirmed the same view holding that "the fact that the assessee might have to Pay 50 per cent of the unearned increase to the lessor does not affect the valuation of the property under section 7 of the Wealth 'Tax Act" and the words used in that section "make it clear that the estimate which should be made by the Wealth Tax Officer is of the gross price" and hence no, part of the unearned increase was deductible in computing the value of the property for the purpose of the Wealth 'fax Act. The Tribunal also upheld the rental method of valuation of the property and finding that the valuation of Rs. 6,00,000/ adopted by the Wealth Tax Officer was even less than eight times the annual rental value of Rs. 82,956/ , the Tribunal declined to interfere with the valuation made by the Wealth Tax Officer. The assessee thereupon applied to the Tribunal for making a reference to the High Court and on the application of the assessee, the following question of law was referred by the Tribunal for the opinion of the High Court: "Whether on the facts and in the circum stances of the case, the Tribunal was justi fied in law in taking the view that 50% of the unearned increase payable to the lessor of the land formed part of, and was not deducti ble out of, the valuation of the property for the purposes of Wealth tax Act ?" The High Court took the view that the liability to pay 50 per cent of the unearned increase in the value Of the land to the lessor at the time of the assignment was a disadvan tage attached to the leasehold interest in the land and hence its value was liable to be deducted from the value of the property in arriving at the net wealth of the assessee and on this view, it answered the question in the negative in favour of the assessee. This led to the filing of the present appeal by the 'Revenue after obtaining a certificate of fitness from the High Court. It would be convenient ' at the outset to refer to the relevant provisions of the Wealth Tax Act, 1957 before we .address ourselves to the question which arises for determination in the appeal, The Wealth Tax Act, 1957 was passed by the Parliament in exercise of the legislative power conferred under Entry 86 of List I of, the Seventh Schedule to the ' Constitution and, as pointed out by Shah, J., ih Sudhir 422 Chandra Nawa vs Wealth Tax Officer, Calcutta,(1) wealth tax "is a tax imposed ' on the capital value of the assets of individuals and companies on the valuation date . it is imposed on the total assets which the assessee owns" and it is levied on the value of those assets. Section 3 is the charging section and it provides that, subject to the other provisions contained in the Act, there shah be charged for every assessment year commencing on and from the 1st day of April, 1957 a tax_in respect of the net wealth on the corre sponding valuation date of every individual, Hindu Undivided Family and company at the rate or rates specified in the Schedule. Thus, wealth tax is a tax on the net wealth of the assessee on the valuation date. Net wealth is de fined in section 2(m) to mean "the amount by which the aggregate value, computed in accordance with the provisions of this Act, of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included ' in his net wealth as on that date under this Act, is in excess of the aggregate value of all the, debts owed by the assessee on the valuation date" other than debts failing within certain specified categories. The word 'asset ' used in section 2(m) is of the widest Signifi cation and under section 2(e), it includes property of every description, movable or immovable, barring certain excep tions which are not material for our purpose. What is, therefore, necessary for the purpose of determining the net wealth of the assessee is., first to compute the aggregate value of all assets belonging to the assessee in accordance with the provisions of the Act and then to deduct from it the aggregate value of all the debts, and the resultant which is obtained would be the net wealth assessable to tax. section 7, sub section (1) lays down the mode of determination of the value of an asset for the purposes of the Act and it says that, subject to any rules made in this behalf, the value of any asset other than cash "shall be estimated to be the price which, in the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date". Now, plainly one of the assets belonging to the assessee in the present case was the lease hold ' interest in the land together with the building upon it and for the purpose of computing the net wealth of the assessee, it was necessary to determine the value of this asset. The question which must, therefore, be asked in terms of section 7( 1 ) is: what would be the price which this asset would fetch if sold in the open market on the valuation date ? This question cannot be satisfactorily answered, unless we first determine what is the nature of this asset: what is the interest in property, qualitative as well as quantitative, which this asset represents ? The asset consists of leasehold interest of the asses see in the land together with the building constructed upon it. The building, of ' course, belongs to the assessee having been constructed by him and the determination of its value should not present any difficulty, because there are recognised methods of valuation of buildings. The diffi culty, however, arises in regard to valuation of the leasehold interest in the land. The leasehold interest is held by the assessee under a lease deed executed by the President of India and apart from (1) 423 clause (13), which we have reproduced above, it is an ordi nary leasedeed of the usual kind. Clause (13 ) of the lease deed provides that the assessee shall not be entitled to assign the leasehold interest in the land without obtain ing the prior approval in writing of the lessor and 50 per cent of the unearned in.crease in the value of the land at the time of the assignment shall be claimable by the lessor, and moreover, if the lessor so desires, he shall have pre emptive right to purchase the property after deducting 50 per cent of the unearned increase in the value of the land. Does this covenant merely impose a personal obligation on the lessee which ,arises on assignment of the leasehold interest or it is a covenant running with the land ? That is a question which has a direct bearing on the valuation of the leasehold, interest. Now, the last portion of the first paragraph of clause (13) provides that "all such assignees and transferees . shall be bound by all the covenants and conditions herein contained and be answerable in respect therefore". This means that whenever an assign ment of the leasehold interest is made by the lessee, the assignee would be bound by all the covenants contained in the lease deed and these would indisputably include the covenant in clause (13 ). Clause (13 ) would equally bind the assignee and if the assignee in his turn wants to assign his leasehold interest in the land, he would have to obtain the prior approval in writing of the lessor to such assignment and the lessor would be entitled to claim 50 per cent of the unearned increase in the Value of the land. This indeed was not disputed on behalf of the Revenue. The covenant in clause (13) is, therefore, clearly a cove nant running with the land and it would bind whosoever is the holder of the leasehold interest for the time being. It is a Constituent part of the rights and liabilities and advantages and disadvantages which go to make up the lease hold interest and it is an incident which is in the nature of burden on the leasehold interest. Plainly and indis putably it has the effect of depressing the value which the leasehold interest would fetch if were free from this burden or disadvantage. Therefore, when the leasehold inter est in the land has to be valued, this burden or disadvan tage attaching to the leasehold interest must be duly dis counted in estimating the price which the leasehold interest would fetch. To value the leasehold interest on the basis that this burden or disadvantage were to be ignored would be to value an asset different in content and quality from that actually owned by the assessee. This was the principle applied by the Judicial Committee in Corrie vs MacDemott,(1) an appeal from Australia, where the question arose as to how certain land granted by the Government of Queensland to the trustees of the Acclimatisation Society of Queensland to be used only for the purpose of the Society should be valued on resumption by the Government. The trustees had no general power of sale but they were by statute authorised to sell any part of the land to the local authority and to the National Agricultural and Industrial Association. It was held by the judicial Committe that in view of this restric tion on the nature of the interest of the trustees in the land, the trustees were not entitled, upon resumption of the land by the Government, to be paid unrestricted. free hold value of (1) 424 the land but only the value of the land to the trustees under the conditions upon which they held it. The Judicial Committee pointed out that if the owner holds the property subject to restrictions, "it is a necessary point of enquiry how far these restrictions affect the value" and the proper ty cannot be valued as if it were "unrestricted in any way". The burden or limitation attaching to the leasehold interest in the present case must, therefore, be taken into account in arriving at the value of the leasehold interest and it cannot be valued ignoring the burden or limitation. This problem can also be looked at from a slightly different angle and this approach too would throw some light on the true nature of the leasehold interest required to be valued. Let us approach the question from the point of view of the lessor. What is the nature of the lessor 's interest in the land ? The lessor has undoubtedly the reversion, but coupled with it is also the right to 50 per cent .of the unearned increase in the value of the land at the time of assignment of the leasehold interest by the lessee as also the pre emptive right to the land after deducting 50 per cent of the unearned increase from the price obtainable by the lessee. This is the asset of the lessor which would have to be valued when the lessor is sought to be assessed to wealth tax. The right to 50 per cent of the unearned 'increase on assignment of the leasehold interest would certainly add to the value which the reversion would other wise fetch in the open market. Now, once it is granted that under the lease deed the lessor has a bundle of rights, which includes 'something ' more than the reversion, that 'something ' would necessarily be subtracted from the inter est of the lessee and to that extent, the interest of the 'lessee would stand reduced. The interest of the lessee would be the leasehold interest minus that 'something '. What goes to augment the interest of the lessor would corre spondingly reduce the interest of the lessee and it Cannot be taxed as the wealth of both the lessor and the lessee. It would be includable in the net wealth of the lessor and hence it cannot at the same time form part of the wealth of the lessee and must be subtracted in determining the nature and extent of the interest of the lessee. That takes us to the question as to how the leasehold interest of the assessee with the burden or limitation attaching under clause (13) of the lease deed should be valued. It is clear from the language of section 7, sub sectiOn (1 ) that what the Revenue is required to do for the purpose of determining the value of an asset is to assume that the asset which is to be valued is being sold in the open market and to fix its value for the purpose of wealth tax upon that hypothesis. Now, whenever the value of an asset has to be determined on the basis of a hypothetical_ sale, the court has necessarily to embark upon speculations which may be quite difficult and in 'some cases, even arti ficial. Here the asset to be valued is the leasehold inter est in the land with the burden or restriction contained in clause (13) of the lease deed and the inquiry has, there fore, to be directed to the question as to what is the price which this asset would fetch if sold in the open market. What would be the realisable value of this asset ? It would indeed be difficult to speculate as to what 425 the leasehold interest in the land would fetch in the open marker when it is affected by the burden or restriction contained in clause (13) of the lease deed. If the lease hold interest were free from this burden or restriction, it ' would be comparatively easy to determine its market value, for there are recognised methods of valuation of leasehold interest, but where the leasehold interest is cut down by this burden or restriction and some right of interest is abstracted from it, the problem of valuation becomes a difficult one and some method has to be evolved for resolv ing it. The only way it can be done in a case of this kind is by taking the market value of the leasehold interest as if it were unencumbered or unaffected by the burden or restriction of clause (13) and deducting from it, 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale, as representing the value of such 'burden or restriction. There is also one other consideration which reinforces the adoption of this method of valuation. When, for the purpose of valuation of the leasehold interest, it is as sumed that the leasehold interest is sold in the open market, the price received does not in its entirety belong to the assessee. Fifty per cent of the unearned increase in the value of the land is diverted to the lessor by virtue of the paramount title contained in clause (13) and when re ceived by the assessee, it belongs to the lessor. It is in truth and substance collected by the assessee on behalf of the lessor. What is received by the assessee on his own account is only the price less 50 per cent of the unearned increase in the value of the land and that represents the net realisable worth of the asset in the hands of the asses see. The Revenue contended that payment of 50 per cent of the unearned increase in the value of the land to the lessor is really an instance of application of the price received by the assessee and not diversion of a part of the price by paramount title and hence the whole of the price must be taken as the measure of the wealth of the assessee. But this contention is, in our opinion, not well founded and cannot be sustained. The true test for determining whether a payment made by an assessee out of an amount received by him is an application of part of the amount which belongs to him or it is payment of an amount which is diverted before it reaches the assessee so that at the time of receipt, it belongs to the payee and not to the assessee, has been explained by Hidayatullah, J., in C. 1. Sitadas Tirath das(1) in the following words: "In our opinion, the true test is wheth er the amount sought to be deducted, in truth, never reached the assessee as hi 's income. Obligations, no doubt, there are in every case but it is the nature of the. obli gation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is re quired to be applied to discharge an obliga tion after such income reaches the 426 assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an.obligation to pay another a portion of one 's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who, even if he were to collect it, does so, not as part of his in come, but for and on ,behalf of the person to whom it is payable. In our opinion, the present case is one in which the wife and children of the assessee who continued to be members of the family received a portion of the income of the assessee, after the assessee had received the income as his own. The case is one of application of a portion of the income to discharge an obligation and not a case in which by an overriding charge the assessee became only a collector ' of another 's income." It is clear on the application of this test that in the present case, 50 per cent of the unearned increase iii the value of the land would be diverted to the lessor before it reaches the hands of the assessee as part of the price. The assessee holds the leasehold interest on condition that if he assigns it, 50 per cent of the unearned increase in the value of the land will be payable to the lessor. That is the condition on which he has acquired the leasehold inter est arid hence 50 per cent of the unearned increase in the value of the land must be held to belong to the lessor at the time when it is received by the assessee and it would not be part of the net realisable worth of the leasehold interest in the hands of the assessee. If a question is asked as to what is the real wealth of the assessee in terms of money so far as the leasehold interest is concerned, the answer would inevitably be that it is the price less 50 per cent of the unearned increase in the value of the land. It is difficult to see how 50 per cent of the unearned increase in the value of the land which belongs to the lessor can be regarded as part of the wealth of the asses.see. The posi tion would undoubtedly be different where a payment is made by an assessee which is an application of a part of the price received by him. Where such is the case, the whole of the price would represent the net realisable worth of the asset in the hands of the assessee and what is paid out by the assessee would be merely a disbursement made after the price reaches the assessee as his own property. That was the position in Pardit Lakshi Kant Jha vs Commissioner of Wealth Tax, Bihar(1) where the question arose whether the expenditure in connection with brokerage, commission or other expenses which would be liable to be incurred by the assessee in effectuating a sale would be deductible from the market value of the shares in determining their value for the purpose of assessment to wealth tax. This Court held that in computing the value of the shares, the assessee is not entitled to deduction of brokerage and commission from the valuation of the shares as given in,the Stock Exchange quotations or quotations furnished by well known brokers. It was pointed out by this Court that: (1) 427 "It is not the amount which the vendor would receive after deduction of this expense, but the price which the asset would fetch when sold in the open market which would constitute the value of the asset for the purpose of section 7(1) of the Act". Obviously, this view 'was taken because the entire price, when received, would belong to the asses see and payment of brokerage and commission would be merely application of part of the price in meeting expenditure necessary for effectuating the sale and hence it would not be deductible in ascertaining the net realisable worth of the shares in the bands of the assessee. We are, therefore, of the view that the question re ferred by the Tribunal must be answered in the negative and it must be held that in determining the value of the lease hold interest of the assessee in the land for the purpose of assessment to wealth tax, the price which the leasehold interest would fetch in the open market were it not encum bered or affected by the burden or restriction contained in clause (13) of the lease deed, would have to be reduced by 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale on the valuation date. The appeal accordingly Fails and must be dismissed with costs. section R. Appeal dismissed.
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The respondent an assessee to wealth tax as an individual, in the assessment for the assessment year 1968 69, valued his property situate on plot No. 12, Block 39 Kautilya Marg, Chanakyapuri in his return of net wealth @ Rs. 4,52,000 as against the value of Rs. 6,00,000 shown by him in the previ ous years.
The property consisted of leasehold interest in the land together with a house built on it.
The land be longed to the President of India and it was leased by the President of India to one Vashesharan Devi on the terms and conditions set out in an agreement of lease dated 30th December, 1954 and the leasehold interest was acquired from Vashesharan Devi by the assessee.
Clause (13) of the lease deed provided that the assessee shall not be entitled to assign the leasehold interest in the land without obtain ing the prior approval in writing of the lessor and 50 per cent of the unearned increase in the value of the land at the time of assignment shall be claimable by the lessor and moreover, if the lessor so desires, he shall have pre emp tive right to purchase the property after deducting 50% of the unearned increase in the value of the land.
It further provided that "all such assignees and transferees . . shall be bound by all the covenants and conditions herein contained and be answerable in respect therefor".
In accordance with this clause, the Architects who are approved valuers estimated the value of the property @ Rs. 5,82,268 and from this ' figure, they deducted a sum of Rs. 1,30,000 representing 50 per cent of the unearned in crease in the value of the land, which belonged to the lessor and arrived at the value of Rs. 4,52,268/ .
The Wealth Tax Officer did not accept the estimate of the valuation and taking the annual rental value of Rs. 1,32,000/ fetched by the property as the basis, computed the net annual rent at Rs. 82,956/ and arrived at the figure of Rs. 8,29,560/ as the value of the property by applying the multiple of ten to the net annual rental value of Rs. 82,956/ .
The claim of the assessee to deduct from the value of the property 50 per cent of the unearned in crease in the value of the land was rejected on the ground that this claim was based "merely on hypothetical presump tions".
The value of the property was, however, reduced from Rs. 8,29,560/ to Rs. 6,00,000/ since that was the figure accepted by the Revenue in the past assessment years.
The appeals before the Appellate Assistant Commissioner and the Tribunal failed.
On a reference, the High Court took the view that the liability to pay 50 per cent of the un earned increase in the value of the land to the lessor at the time of the assignment was a disadvantage attached to the leasehold interest in the land and hence its value was liable to be deducted from the value of the property in arriving at the net wealth.
Dismissing the appeals, the Court, HELD: (1) In determining the value of the leasehold interest of the assessee in the land for the purpose of assessment to wealth tax the price which the leasehold interest would fetch in the open market, were it not encumbered or affected by the burden of the restriction contained in clause (13) of the leasedeed, would have to be reduced by 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale on the valuation date.
[427 C D] (2) The only way in which in a. case of this kind the valuation section 7(1) of the Wealth Tax Act can be done is by taking the market value of the leasehold interest as if it were unencumbered or unaffected by the burden or restriction contained in clause (13) and deducting from it, 50 per cent of the unearned 419 increase in the value of the land on the basis of the hypo thetical sale as representing the value of such burden or restriction.
[425 A C] (3) The true test for determining the matter of payment made by an assessee out of an amount received by him wheth er it is an application of part of the amount which belongs to him or it is payment of an amount which is diverted before it reaches the assessee so that at the time of re ceipt, it belongs to the 'payee and not to the assessee.
In the present case 50 per cent of the unearned increase in the value of the land would be diverted to the lessor before it reaches the hands of the assessee as part of the price.
[425 E F] C.I.T.v.
Sitaldas Tirathdas SC; applied.
Pandit Lakshmi Kant Jha vs Commissioner of Wealth Tax, Bihar , explained.
(4) The burden or limitation attaching to the leasehold interest must be taken into account in arriving at the value of the leasehold interest and it can not be value ignoring the burden or limitation The covnaent in clause (13) is clearly a covenant running with the land and it would bind whosoever is the holder of the leasehold interest for the time being.
It is a constituent part of the rights and liabilities and advantages and disadvantages which go to make up the leasehold interest and it is an incident which is in the nature of burden, on the leasehold interest.
Plainly and indisputably, it has the affect of depressing the value which the leasehold interest would fetch if it were free from this burden or disadvantage.
When the lease hold interest in the land has to be valued this burden or disadvantage attaching to the leasehold interest must be duly discounted in estimated the price which the leasehold interest would fetch.
To value the leasehold interest on the basis that this burden or disadvantage were to be ignored would be to value an asset different in content and quality from that actually owned by the assessee.
[424 B, 423 D H] Corrie vs MecDermott , quoted with approval.
(5) When under the lease deed the lessor has a bundle of rights which includes "something" more than the reversion, that "something" would necessarily be subtracted from the interest of the lessee and to that extent, the interest of the lessee would be the leasehold interest minus that "something".
What goes to augment the interest of the lessor would correspondingly reduce the interest of the lessee and it cannot be taxed as the wealth of both the lessor and the lessee.
It would be includible in the net wealth of the lessor and hence it cannot at the same time form part of the wealth of the lessee and must be subtracted in determining the nature and extent of the interest of the lessee.
[424 E F]
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For the tax year 1968-69, a tax officer looked at the wealth of a person (called the assessee). The assessee had reported that the value of their property was about 452,000 rupees. This property was located on a specific plot of land. However, in previous years, the assessee had said the property was worth 600,000 rupees.
The property included the right to lease the land and a house built on it.
The land belonged to the President of India. The President had leased the land to someone else, who then transferred the lease to the assessee. The lease agreement had certain rules.
One rule said that the assessee couldn't sell or transfer the lease without the President's permission. Also, if the land's value increased, the President could claim 50% of that increase. The President also had the first right to buy back the property, after subtracting 50% of the increased value.
The lease also stated that anyone who received the lease in the future had to follow all the same rules.
Architects, who were approved to estimate property values, said the property was worth about 582,000 rupees. They then subtracted 130,000 rupees, which was 50% of the land's increased value. This left a final value of about 452,000 rupees.
The tax officer didn't agree with this estimate. They looked at how much rent the property earned each year (132,000 rupees). After subtracting some costs, the net rent was about 83,000 rupees. The tax officer then multiplied this number by ten, arriving at a property value of about 830,000 rupees.
The assessee's claim to deduct 50% of the land's increased value was rejected. The tax officer said this claim was based on "hypothetical presumptions."
However, the property value was lowered from about 830,000 rupees to 600,000 rupees. This was because that value had been accepted in previous tax years.
The assessee appealed, but the appeals were unsuccessful.
The High Court disagreed. It said that the requirement to pay 50% of the land's increased value to the President was a disadvantage of holding the lease. Therefore, that amount should be subtracted from the property's value when calculating the assessee's wealth.
The Court made the following rulings: (1) To determine the value of the lease, you need to figure out what the lease would be worth on the open market, if it weren't for the rule about the President getting 50% of the increased value. Then, you subtract that 50%.
(2) The best way to value the lease is to start with the market value as if there were no restrictions. Then, subtract 50% of the increased value. This subtraction represents the value of the restriction.
(3) The key question is whether the payment made by the assessee is simply a part of the assessee's money being used, or if the money is diverted *before* it even reaches the assessee. In this case, 50% of the increased value goes to the President *before* it becomes part of the price the assessee receives.
(4) The restrictions on the lease must be considered when figuring out the lease's value. You can't ignore them. The rule in the lease is connected to the land and applies to whoever holds the lease. It's a part of the rights, responsibilities, advantages, and disadvantages of the lease. It lowers the value of the lease.
(5) If the President has rights beyond just owning the land, those rights reduce the value of the lease for the assessee. What benefits the President reduces the benefit to the assessee. The same value can't be taxed as wealth for both the President and the assessee. It's included in the President's wealth, so it can't also be part of the assessee's wealth. It must be subtracted when figuring out the value of the assessee's lease.
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ecial Leave Petition (C) No. 8566 of 1988. From the Judgment and Order dated 9.10.1987 of the Andhra Pradesh High Court in W.P. No. 306 of 1983. R. Mohan for the Petitioner. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This petition is for leave to appeal under Article 136 of the Constitution from the judgment and order of the High Court of Andhra Pradesh dated 9th October, 1987. The question that was urged before the High Court and the question which is sought to be raised in this petition is whether the respondent Pradesh Rayons Ltd. which is manufacturing Rayon Grade Pulp, a base material for manufacturing of synthetics or manmade fabrics is an industry as mentioned in Schedule I of the Water (Prevention and Control of Pollution) cess Act, 1977 for the purposes of levy of Water Cess under the Act. The water (Prevention and Control Of Pollution) Act, 1974 was passed by the Parliament to "provide for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of water, for the establishment, with a view to carrying out the purposes aforesaid, of Boards for the prevention and control of water pollution, for conferring on and assigning to such Boards powers and functions relating thereto and for matters connected therewith". For the aforesaid purposes, the Act contemplated creation of State Boards at State level and the Central Board at the national level. Thereafter, the being Act 36 of 1977 was passed (hereinafter called 'the Act '). The preamble to the said Act states that the said Act was "to provide for the levy and collection of a cess on water consumed by persons carrying on certain industries and by local authorities, with a view to augment the resources of the Central Board and the State PG NO 383 Boards for the prevention and control of water pollution constituted under the ". Therefore, the said Act was passed only for the purpose of providing for levy and collection of cess on water consumed by persons carrying on certain industries with a view to augment the resources of the Central Board and the State Boards. Section 2(c) stipulates A `specified industry ' means any industry specified in Schedule T. Section 3 provides as follows: "3. Levy and collection of cess. (1) There shall be levied and collected a cess for the purposes of the and utilisation thereunder. (2) The cess under sub section ( I) shall be payable by (a) every person carrying on any specified industry; and (b) every local authority, and shall be calculated on the basis of the water consumed by such person or local authority, as the case may be, for any of the purposes specified in column (1) of Schedule II, at such rate, not exceeding the rate specified in the corresponding entry in column (2) thereof, as the Central Government may, by notification in the Official Gazette, from time to time, specify. " Therefore, this section provides for levy and collection of cess from the specified industries. Specified industry is one which is mentioned in Schedule I which is as follows: "1. Ferrous metallurgical industry. Non ferrous metallurgical industry. Mining industry. Ore processing industry. Petroleum industry. Petro chemical industry. Chemical industry. Ceramic industry. PG NO 384 9. Cement industry. Textile industry 11. Paper industry. Fertilizer industry. Coal (including coke) industry. Power (thermal and diesel) generating industry. Processing of animal or vegetable products industry. " Therefore, the short question, is, whether the industry run by the respondent herein for manufacturing Rayon Grade Pulp, a base material for manufacture of synthetics or man made fabrics is one of the industries mentioned in Schedule I hereinbefore. In this case, the respondent company was registered as company in 1975. The supply of energy to the company commenced on August 22, 1981 and the production began from September 1, 1981. The company manufactures rayon grade pulp of 26250 tonnes per annum. The Company was served with a notice on 12th August, 1981 to furnish the quantum of water consumed for assessment under the Act. Based on the returns filed by the respondent as required under section S of the Act, assessment of water cess was made by an order dated 31st December 1981. Aggrieved by the said order the respondent filed an appeal before the Appellate Committee constituted under the Act. The Appellate committee by its order dated 30th November, 1982 conformed the orders of the assessment passed by the petitioner. Before the Appellate Committee various contentions were urged and only one of such contention survives now and is agitated before us, namely, that the Rayon Industry is nOt included in Schedule I of the said Act. The Appellate Committee by its order said as follows: "We are unable to agree with the arguments advanced by the learned counsel. The appellant industry is manufacturing Rayon Grade Pulp which comes under the category of textile industry as it involves the production of Rayon Grade Pulp. a base material for manufacture of synthetic of man made fibres. ' ' PG NO 385 From the aforesaid, it appears that the Appellate Committee was of the view that the respondent herein was manufacturing Rayon Grade Pulp which comes under the category of Textile mentioned in Schedule I of the Act. Textile industry is item No. 10 in the aforesaid Schedule. Aggrieved by the decision of the Appellate Committee, the respondent herein filed writ petition challenging the constitutional validity of the Act as well as the levy of cess on water on the ground that it was not one of the industries mentioned in the Schedule. The High Court by its order dated 9th October, 1987 rejected the contention relating to the constitutional validity but upheld the contention that the respondent 's industry was not an industry which is mentioned in Schedule I and as such was not liable to pay cess. It is the propriety or the correctness of that decision which is sought to be canvassed before us by this petition. It must, therefore, be made clear that we are not concerned with the correctness or otherwise of the decision of the High Court about the constitutional validity of the Act in question. That is not at issue before us since the petitioner, Andhra Pradesh State Board for Prevention and Control of Water Pollution has not challenged that finding. The only question is whether the respondent is an industry as mentioned in the aforesaid schedule. The High Court in the impugned judgment has held that Rayon Grade Pulp is not covered by any of the items specified in the said Schedule. We are of the opinion that the High Court was right. Before us it was sought to be canvassed that Rayon Grade Pulp is covered either by Item No. 7 which is chemical industry or 13y item No. 10 which is textile industry or item No. I1 which is paper industry. We are unable to accept the contention. It has to be borne in mind that this Act with which we are concerned is an Act imposing liability for cess. The Act is fiscal in nature. The Act must, therefore, be strictly construed in order to find out whether a liability is fastened on a particular industry. The subject is not to be taxed without clear words for that purpose; and also that every Act of Parliament must be read according to its natural construction of words. See the observations in Re Micklethwait, ; , 456. Also see the observations in Tenant vs Smith, ; and Lord Halsbury 's observations at page 154. See also the observations of Lord Simonds in St. Aubyn vs AG, ; at 485. Justice Rowlatt of England said a long time ago, that in a taxing ACt one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption at to tax. Nothing is to be read in, nothing is to be implied. One has to look fairly at the language used. See the observations in Cape Brandy Syndicate vs IRC, [1921]J 1 KB PG NO 386 64 at 71. This Court has also reiterated the same view in Gursahai Saigal vs C.I.T. Punjab, ; ; S.L. T. Madras vs V. MR. P. Firm, Muar, [1965] I SCR 815. and Controller of Estate Duty Gujarat vs Kantilal Trikamlal, ; The question as to what is covered must be found out from the language according to its natural meaning fairly and squarely read. See the observations in IRC vs Duke of Westminster, [1936] AC I at 24, and of this Court in A V Fernandez vs The State of Kerala, ; Justice Krishna Iyer of this Court in Martand Dairy & Farm vs Union of India, has observed that taxing consideration may stem from administrative experience and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian, interpretation must prevail. In this case where the question is whether a particular industry is an industry as covered in Schedule I of the Act, it has to be judged normally by what that industry produces mainly. Every industry carries out multifarious activities to reach its goal through various multifarious methods. Whether a particular industry falls within the realm of taxation, must be judged by the predominant purpose and process and not by any ancillary or incidental process carried on by a particular industry in running its business. Chemical process would be involved to a certain extent, more or less in all industries, but an industry would be known as a chemical industry if it carries out predominantly chemical activities and is involved in chemical endeavours. We fail to see that Rayon Grade Pulp could be considered even remotely connected as such with chemical industry or textile industry or paper industry. In all preparations, there is certain chemical process but that does not make all industries chemical industries. The expression "chemical" means, according to Collins English Dictionary. any substance used in or resulting from a reaction involving changes to atoms or molecules or used in chemistry. The Concise Oxford Dictionary, 8th Edition page 170 defines "chemical ' ' as made by or relating to, chemistry. Broadly and literally, in our opinion, it can be said that the Rayon Grade Pulp is neither chemical industry nor textile industry nor paper industry. We find it difficult on a broad and literal construction to bring the industry of the respondent into any of these categories. In other words, to find out the intention of the legislation, if possible it should be PG NO 387 found out from the language used in case of doubt. The purpose of legislation should be sought for to clarify the ambiguity only, if any. The fairest and most rational method, says Blackstone, to interpret the will of the legislator is by exploring his intentions at the time when the law was made, by signs the most natural and probable. And these signs are either the words, the context, the subject matter, the effects and consequence, or the spirit and reason of the law. See Commentaries on the Laws of England by Blackstone (facsimile of 1st edition of 1765, University of Chicago Press, 1979 Vol. 1 p. 59.). The words are generally to be understood `in their usual and most known signification ', although terms of art `must be taken according to the acceptation of the learning in each art, trade and science. If words happen still to be dubious, we may establish their meaning from the context, which includes the preamble to the statute and laws made by the same legislator on the same subject. Words are always to be understood as having regard to the subject matter of the legislation. See Cross Statutory Interpretation, 2nd Edition page 21. This Court in Lt Col. Prithi Pal Singh Bedi etc. vs Union of India & Ors., [1983] I S.C.R. 393 at page 404 of the report reiterated that the dominant purpose in construing a statute is to ascertain the intention of the Parliament. One of the well recognised canons of construction is that the legislature speaks its mind by use of correct expression and unless there is any ambiguity in the language of the provision the Court should adopt literal construction if it does not lead to an absurdity. Therefore, the first question to be posed is whether there is any ambiguity in the language used. If there is none, it would mean the language used, speaks the mind of Parliament and there is no need to look somewhere else to discover the intention or meaning. If the literal construction leads to an absurdity, external aids to construction can be resorted to. To ascertain the literal meaning it is equally necessary first to ascertain the juxtaposition in which the rule is placed, the purpose for which it is enacted and the object which it is required to subserve and the authority by which the rule is framed. Bearing the aforesaid principle in mind, we find that there is no absurdity in the literal meaning. The purpose of the Act is to realise money from those whose activities lead to pollution and who must bear the expenses of the maintenance and running of the State Board. It is a fiscal provision and must, therefore, not only be literally construed but also be strictly construed. Having regard to the literal expression used and bearing in mind the purpose for the legislation, we arrive at a result that certain PG NO 388 industries have to pay the expenses of the maintenance and functioning of the State Boards. Considering the principle broadly and from commonsense point of view, we find nothing to warrant the conclusion that Rayon Grade Pulp is included in either of the industries as canvassed on behalf of the petitioner here and as held by the High Court in the judgment under appeal. In this case, we must also note that neither the water Pollution Board nor any authorities under the Act nor the High Court proceeded on any evidence how these expressions are used in the particular industry or understood in the trade generally. In other words, no principle of understanding in "common parlance" is involved in the instance case. In that view of the matter, we are of the opinion that the contention sought for by the petitioner is of no substance. Our attention, however, was drawn to the decision of a learned single Judge of the High Court of Kerala in M/s. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., Mavoor vs The Appellate Committee for Water Cess, Trivandrum and others, A.I.R. 1983 Kerala 110. There, the learned single Judge of the Kerala High Court held that industry manufacturing rayon grade pulp is chemical industry. The High Court has observed that the product of the Pulp Division of a rayon silk manufacturing company is rayon grade pulp, extracted from bamboo or wood. The High Court noted that the pulp produced in the Pulp Division of the company is the raw material for the Staple Fibre Division. The High Court further observed that the pulp in question is a chemical used as chemical raw material, in the form known as chemical cellulose, for preparation of fibres. The High Court noted that for the scientist cellulose is a carbohydrate an organic compound, a saccharide and for the layman also it is a chemical like salt and sugar. Manufacture of pulp from wood or bamboo involves consumption of large quantities of water which get polluted in the process; and "chemical industry ' ' in the context in which it is used in Schedule I of the Act, can therefore, include an industry manufacturing rayon grade pulp. We are unable, with respect, to accept the circuitous process of reasoning of the Kerala High Court. As mentioned hereinbefore, looked at from this circuitous method every industry would be chemical industry. It could not have been the intention to include all industries because every industry has to go to certain chemical process more or less and, therefore, it could not be so construed. Such expression should, therefore, be construed reasonably, strictly and from a commonsense point of view. The High PG NO 389 Court of Kerala has set out in the said judgment the company 's case in that case which also produced Rayon Grade Pulp and the manufacturing process consisted only of isolating cellulose present in bamboo and wood by removal of "lignin" and other contents, and that the resultant product is not chemical cellulose. It explained the process as under: "The actual process of manufacture of Rayon grade pulp is by feeding the raw materials on the conveyors leading to the chippers, where they are chipped into small pieces in uniform sizes. The raw materials are washed by a continuous stream of water before they are fed into chippers for removal of their adhering mud and dirt. The chips are then conveyed into Digesters, where they are subjected to acid pre hydrolysis, using dilute sulphuric acid solution. The spent liquor is then drained out, and the chips washed to remove the acid. The chips are again cooked using a solution containing cooking chemicals at high temperature of above 160C. After the chips are thus cooked the pressure is released, and the material is collected in a blow tank, from where the chipped pulp is sent to "Knotter Screen" for removal of uncooked particles. The pulp is washed in a series of washers in a counter current manner. The washed pulp is bleached in a multi staged Bleaching Plant, and converted into sheets in a continuous machine. The pulp sheets so obtained are sent to other factories for their conversion into Staple Fibre. " The said High Court also relied on a passage from the "Book of Popular Science" Grolier, 1969, Vol. 7, p. 55 which reads as follows: "Just what is a chemical, after all? Presumably it is a pure chemical substance (an element or compound) and not a mixture. Thus sulphuric acid is a chemical . But common salt and sugar, with which all of us are familiar, are also pure chemical substances . The truly chemical industries, which manufacture chemicals, are seldom well known to the public. This is because we, as consumers, do not ordinarily make use of chemicals in their pure form. Instead they are converted into products that reach the consumer only after a number of operations . " (Emphasis supplied) PG NO 390 As mentioned hereinbefore, the expression should be understood not in technical sense but from broad commonsense point of view to find out what it truly means by those who deal with them. Bearing the aforesaid perspective in mind, we are unable to agree with the view of the Kerala High Court expressed in the aforesaid judgment. In that conspectus of the Kerala High Court everything would be included in the process of chemical. In the aforesaid view of the matter we are of the opinion that the High Court of Andhra Pradesh in the impugned judgment was right and the High Court of Kerala in the judgment referred to hereinbefore was not right. In the aforesaid view of the matter this petition fails and is accordingly dismissed.
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The respondent, Andhra Pradesh Rayons Ltd., manufacturing Rayon Grade Pulp, a base material for the manufacture of synthetics or man made fabrics, was assessed by the petitioner under the provisions of which provided for levy and collection of Water cess from the specified industries enumerated in Schedule I of the Act.
On appeal, the Appellate late Committee confirmed the order of assessment on the ground that the respondent was manufacturing Rayon Grade Pulp which came under the category of Textile industry.
The respondent filed a writ in the High Court challenging the levy Inter alia on the ground that it was not one of the industries mentioned in the Schedule.
The High Court upheld this contention.
Before this Court, it was sought to be canvessed by the petitioner that Rayon Grade Pulp was covered either by Item No. 7 of the Schedule, which was chemical industry, or item No. 10 which was textile industry, or item No.11 which was paper industry.
Dismissing the petition, it was, PG NO 380 PG NO 381 HELD: (I) The Act being fiscal in nature must be strictly construed.
The question as to what is covered must be found out from the language according to its natural meaning, fairly and squarely read.
[385F; 386B] (2) In a taxing Act one has to look merely at what is clearly said.
There is no room for any intendment.
There is no equity about a tax, there is no presumption as to tax.
Nothing is to be read in, nothing is to be implied.
[385H] (3) Whether a particular industry is an industry covered in Schedule I has to be judged normally by what that industry produces mainly, its predominant purpose and process, and not by any ancillary or incidental process carried on by it.
[386D] (4) Chemical process would be involved to a certain extent, more or less in all industries, but an industry would be known as a chemical industry if it carries out predominantly chemical activities and is involved in chemical endeavours.
[386E] (5) Taxing consideration may stem from administrative experience and other factors of life and not artistic visualisation or neat logic and so the literal, though pedestrian, interpretation must prevail.
[386C] (6) One of the well recognised canons of construction is that the legislature speaks its mind by use of correct expression and unless there is any ambiguity in the language of the provision the Court should accept literal construction if it does not lead to an absurdity.
[387E] (7) There is no absurdity in the literal meaning.
Broadly and literally it can be said that the Rayon Grade Pulp is neither chemical industry nor textile industry nor paper industry.
[387G;386H] In Re Micklethwait., [1885] II EX 452. 456; Tenant vs Smith; , ; St. Aubyan vs AG., [1951] 2 All E.R. 473; Cape Brandy Syndicate vs IRC.
, at 71; Gursahai Saigal vs C.I.T. Punjab, ; ; C.I.T. Madras vs MR.
P. Firm, Muar, ; ; Controller of Estate Duty, Gujarat vs Kantilal Trikamlal, ; ; IRC vs Duke of Westminster, at 24; AV Fernandez vs The State of Kerala, ; ; Martand Dairy & Farm vs Union of India, [1975] Supp.
SCR 265; Lt Col. Prithi Pal Singh Bedi vs Union of India, , referred to.
PG NO 382 M/s. Gwalior Rayon Silk Mfg.
(Wvg.) Co. Ltd. Mavoor vs The Appellate Committee for Water Cess, Trivandrum, A.I.R. 1983 Kerala 110.
overruled.
|
Andhra Pradesh Rayons Ltd. makes Rayon Grade Pulp, which is used to make synthetic fabrics. The government tried to charge them a water tax, based on rules about collecting this tax from certain industries listed in a schedule.
The company appealed, but the appeals committee said they still had to pay. The committee thought Rayon Grade Pulp fell under the category of the textile industry.
The company then filed a lawsuit in the High Court, arguing that they weren't one of the industries listed in the schedule. The High Court agreed with them.
The government then argued that Rayon Grade Pulp should be included as a chemical, textile, or paper industry.
The Court said that the law about taxes must be interpreted strictly. You have to understand it based on the plain meaning of the words used.
When looking at a tax law, you have to focus on what it clearly says. You can't guess or assume anything.
To decide if an industry is covered by the schedule, you should look at what the industry mainly produces, its main purpose, and its main processes. Smaller, related processes don't determine the category.
Most industries use some chemical processes. But an industry is only a "chemical industry" if its main activities and efforts involve chemicals.
Tax laws can be based on experience and other real-world factors, not just perfect logic. So, the most basic, literal interpretation is best.
One important rule of interpretation is that lawmakers choose their words carefully. Unless the wording is unclear, courts should use the most obvious meaning, as long as it's not ridiculous.
The literal meaning here is not ridiculous. Rayon Grade Pulp is not clearly a chemical, textile, or paper industry.
Several previous cases were referenced.
A previous court case, M/s. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. Mavoor vs The Appellate Committee for Water Cess, Trivandrum, was overruled (meaning the court disagreed with the decision of that case).
| 2,390
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minal Appeals No. 76 82 of 1965. Appeals from the judgment and order dated September 9, 1963 of the Punjab High Court, Circuit Bench at Delhi in Criminal Writs Nos. 3 D, 4 D, 5 D, 6 D, 7 D, 10 D and 12 D of 1962. B. R. L. Iyengar and R. N, Sachthey, for the appellants (in all the appeals). G. section Bawa and Harbans Singh, for the respondents (in Cr. 76, 81 of, 1965). 206 The Judgment of the Court was delivered by Hegde, J. These are companion appeals. They were brought to this Court on the strength of the certificates issued, by the High Court of Punjab. The only question that falls for decision in these appeals is whether s.18 of the Suppression of Immoral Traffic in Women and Girls Act, 1956 (hereinafter referred to as the Act) is ultra vires article 14 of the Constitution. The attack on the validity of that section on the basis of Art 19(d), (e) and (f) was not pressed at the time of the hearing. Hence there is no need to examine the said plea. The first appellant in these appeals, Shri A. C. Aggarwal. Sub Divisional Magistrate, Delhi, issued notices to the respondents in these appeals except that in criminal appeal No. 82 of 1965 to show cause why the premises occupied by them should not be attached under . (1) of the Act. Those notices were issued on the basis of police reports that those premises were being used as brothers. In reply amongst other pleas those respondents challenged the validity of s.18. They moved the learned magistrate to refer the question as to the validity of section 18 to the High Court under s.432 of the Criminal Procedure Code of 1898. As the learned magistrate rejected .that prayer, they moved the High Court under article 226 of the Constitution in criminal writs 'Nos. 3D to 7D and 10D of 1962, challenging the vires of s.18. Respondent in criminal appeal No. 82 of 1962 claims to be the tenant in flat No. 54 on the first floor of Japan Building, which premises had been attached in the proceedings against one Mst. Ambar under section 18(1). His case was that be 'had permitted the said Mst. Ambar to use those premise 's temporarily but she lad vacated the same and therefor he was entitled to their possession as according to him he was unaware of the fact that Mst. Ambar was using the premises in question for an improper purpose. But the learned magistrate rejected his application holding that(a) there was no satisfactory proof of the 'fact that lie was a tenant in those promises and (b) he was aware of the unlawful use to which the premises in question were being put. Aggrieved 'by that decision, 'he moved the High 'Court of Punjab in Ur. Writ No,. 12 0/62 to quash :the order of the learned Magistrate on the around that section 18 was ultra vires of Article 14. The aforementioned writ petitions were heard by Mahajan and Shamsher Bahadur, JJ. and by a common order dated September 9, 1963, they Allowed those petition and quashed the notices issued to the respondents in criminal appeals Nos. 76 to 81 of 1965 . They also quashed the order refusing to raise the attachment in respect of flat No. 154 of which Siri Chand the respondent in Criminal appeal No. 82 / 65 claimed to be the tenant. The learned Judges held that "whenever action is taken under s.18 independently of s.7, 'it would offend Art.14 of the Constitution and to that extent section 18 would be ultra vires of the Constitution. " 207 In the course of their order dated 23rd July, 1963, the learned Judges observed: "The requirements for taking action under Section 18 or under Section 7 of the Act are identical. The Act leaves the choice of the action under one or the other provision to the executive in the case of persons similarly situate and thus can lead to discrimination without there being any rational basis for the same. The consequences of an action in one case are of an extremely penal nature whereas in the other case, that is, under Section 18, of comparatively inconsequential nature. The discrimination can come about where in the case of a number of prostitutes, who carry on their profession within two hundred yards of a public place, as defined in Section 7, the authorities may take action against some of ' them under Section 18 and against the others under Section 7. The fact that this can happen is not controverted by the learned cou nsel for the Delhi State. We also find. no rationable behind this type of discrimination. The, scheme of the Act also does not provide any key for such, sort of discrimination between persons of the same class. and similarly situate". The inhibition of article 14 that the State shall not deny to any person equality before the law or the equal protection of the laws. was resigned to protect all persons against discrimination by the State amongst equals and to prevent any person or class of persons from being singled out as a special subject for discrimination and hostile treatment. If law deals equally with all of a certain well defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons, for the class for whom the law has been made is different from other persons and, therefore, there is no discrimination against equals. Every classification is in some degree likely to produce some inequality but mere production of inequality is not all by itself enough. The inequality pruduced in order to encounter the challenge of the of the Constitution must be the result of some arbitrary step taken by the State. Reasonable classification is permitted but suchclassification must be based upon some real and substantial distinction bearing a reasonable and just relation to the thing in respect of which such classification is made. The presumption is always in favour of the constitutionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, and its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds. The contention advanced on behalf of the respondents and accepted by the High Court, is that section 18 discriminates against the , 208 person who is proceeded against under that section, without first being prosecuted under s.3 or s.7 as the case be, though the information laid against him discloses an offence either under s.3 or s.7. Section 18 covers two classes of cases, namely, persons who have been prosecuted and found guilty of an offence either under s.3 or s.7 as well, as persons not dealt with under those provisions. In the case of the former, they have the benefit of regular trial, they can crossexamine the prosecution witnesses, adduce defence evidence and also go up in appeal if convicted. In those, cases the result of the proceedings under s.18 largely though not entirely depends on the result of the connected prosecution. But in the case of the latter, i.e., those who are only proceeded against under s.18 they have only a right of 'hearing '. It is further urged on their behalf that under s.3 or s.7 action is taken before a court, whereas the proceeding under section 1 8 is taken before a magistrate. In the latter case the Act does not lay down the scope of the hearing provided for. It was lastly urged that the facts to be proved both in prosecutions under ss.3 and 7 and in proceedings under s.18 are identical; hence, there is no justification for adopting two widely different procedures. In support of their contention that the difference in the two procedures prescribed amounts to a discrimination under article 14, reliance was placed on the decision of this Court in the State of West Bengal vs Anwar Ali Sarkar(1). We shall now proceed to examine the correctness of these contentions. The Act was enacted in pursuance of an international convention signed at New York on the 9th day of May, 1950. It provides for the suppression of immoral traffic in women and girls. The sections that are material for our present purpose are 3, 7 and 18. Section 3 provides for punishment for keeping a brothel or allowing premises to be used as a brothel. Section 3(1) provides for the conviction and punishment of a person who keeps or manages ,or acts or assists in the keeping or management of, a brothel. Sub s.(2) of that section provides for the conviction and punishment of a person who being (a) tenant lessee or occupier or person incharge of any premises, uses or knowingly allows any other person to use, such premises or any part thereof as a brothel,(b) the owner lessor or landlord of any premises or the agent of such owner,lessor or landlord, lets the premises or any part thereof with the knowledge that the same or any part thereof is intended to be used as a brothel or is wilfully a party to the use of such premises or any part thereof, as a brothel. "Brothel" is defined in s.2(a) as including a house, room, or place or any portion of any house, room or place, which is used for the purpose of prostitution for the gain of another person or for the mutual gain of two or more prostitutes. "Prostitute" is defined in s.2(e) as meaning a female who offers her body for promiscuous sexual intercourse for hire whether in money or in kind. (1) ; 209 Section 7 provides for the Punishment of prostitution in or in the vicinity of public places. That section reads: "(1) Any woman or girl who carries on prostitution, and the person with whom such prostitution is carried on, 'in any premises which are within a distance of two hundred yards of any place of public religious worship, educational institution, hostel, hospital, nursing home or such other public place of any kind as may be notified in this behalf by the Commissioner of Police or District Magistrate in the manner prescribed, shall be punishable with imprisonment for a term which may extend to three months. (2) Any person who (a) being the keeper of any public place knowingly permits prostitutes for purposes of their trade to resort to or remain in such place; or (b) being the tenant, lessee, occupier or person in charge of any premises referred to in sub section (1) knowingly permits the same or any part thereof to be. used for prostitution; or (c) being the owner, lessor or landlord of any premises referred to in sub section (1), or the agent of such owner, lessor or landlord, lets the same or any part thereof with the knowledge that the same or any part thereof may be used for prostitution, or is wilfully a party to such use, shall be punishable on first conviction with imprisonment for a term which may extend to three months, or with fine which may extend to two hundred rupees, or with both, and in the event of a second or subsequent conviction with imprisonment for a term which may extend to six months and also with fine which may extend to two hundred rupees.". Public place is defined in section 2(h) as meaning any place intended for use by or accessible to the public and includes and public conveyance. Now we may refer to section 18. It reads: " (1) A Magistrate, may, on receipt of information from the police or otherwise, that any house, room, place or any portion thereof within a distance of two hundred yards of any public place referred to in sub section (1) of section 7, is being run or used as a brothel by any person, or is being used by prostitutes for carrying on their trade, issue notice on the owner, lessor 210 or landlord of such house, room, place or por tion or the agent of the owner, lessor or landlord or on the tenant, lessee, occupier of, or any other person in charge of such house, room, place, or portion, to show cause within seven days of the receipt of the notice why the same should not be attached for improper user thereof; and if, after hearing the person concerned, the Magistrate is satisfied that the house, room, place, or portion is being, used as a brothel or for carrying on prostitution, then the Magistrate may pass orders (a) directing eviction of the occupier within seven days of the passing of the order from the house, room, place, or portion; (b) directing that before letting it out during the period of one year immediately after the passing of the order, the owner, lessor or landlord or the agent of the owner, lessor or landlord shall obtain the previous approval of the Magistrate: Provided that, if the Magistrate finds that the owner, lessor or landlord as well as the agent of the owner, lessor or landlord, was innocent of the improper user of the house, room, place or portion, he may cause the same to be restored to the owner, lessor or landlord, or the agent of the owner, lessor or landlord, with a direction that the house, room, place or portion shall not be leased out, or otherwise given possession of, to or for the benefit of the person who was allowing the improper user therein. (2) A Court convicting a person of any offence under section 3 or section 7 may pass orders under sub section (1), without further notice to such person to show cause as required in that sub section. (3) Orders passed by the Magistrate or court under sub section (1) or sub section (2) shall not be subject to appeal and shall not be stayed or set aside by the order of any court, civil or criminal, and the said orders shall cease to have validity after the expiry of one year: Provided that where a conviction under section 3 or section 7 is set aside on appeal on the ground that such house, room, place or any portion thereof is not being run or used as a brothel or is not being used by prostitutes for carrying on their trade, any order passed by the trial court under sub section (1) shall also be set aside. 211 (4) Notwithstanding anything contained in any other law for the time being in force, when a Magistrate passes an order under sub section (1), or a court passes an order under sub section (2), any lease or agreement under which the house, room, place or portion is occupied at the time shall become void and inoperative. (5) When an owner, lessor or landlord, or the agent of such owner, lessor or landlord fails to comply with a direction given under clause (b) of sub section (1) he shall be punishable with fine which may extend to five hundred rupees or when he fails to comply with a direction under the proviso to that sub section, he shall be deemed to have committed an offence under clause (b) of sub section (2) of section 3 or clause (c) of sub section (2) of section 7, as the case may be, and, punished accordingly." Sections 3 and 7 provide for the punishment of persons guilty of the offences mentioned therein. Any contravention of the provisions mentioned therein amounts to a cognizable offence in view of section 14, whereas a proceeding under s.18 is in no sense a prosecution. It is a preventive measure. It is intended to minimise the chance of a brothel being run or prostitution being carried on in premises near about public places. Naturally, in the case of prosecutions, a regular trial with a right of appeal is provided for. The enquiry contemplated by s.18 is summary in character. The attachment contemplated by that section can enure only for a period of one year. Under these circumstances evidently the Legislature thought that a regular trial and an appeal against the order of the magistrate is not called for. In these cases it is unnecessary for us to spell out the scope of the expression "hearing" found in s.18. It is necessary to remember that ss.3 and 7 deal with persons guilty of offences whereas s.18 deals with the premises mentioned therein. It is not correct to say that the set of facts to be proved in prosecutions under ss.3 or 7 and in proceedings under s.18 are identical. In the former the prosecution to succeed has to establish either the intention or knowledge referred to therein but in the latter they are not necessary ingredients. Section 18 provides for two classes of cases namely, (1) those coming either under section 3 or 7 as well as under section 18 and (2) those coming only under section 18. They are two distinct classes of cases a classification which has reasonable relationship with the object sought to be achieved and therefore falls outside the rule laid down by this Court in Anwar Ali Sarkar 's(1) case. (1) (N)1SCI 15(a) 212 From the copies of the reports made in these cases to the magistrate by the police made available to us at the hearing of these appeals it is clear that they disclose offences under s.3 against the respondents. Therefore, the question is whether the magistrate can choose to ignore the cognizable offence complained of and merely have recourse to s.18 and thus deprive the parties proceeded against of the benefit of a regular trial as well as the right of appeal in the event of their conviction. Bearing in mind the purpose of these provisions as well as the scheme of the Act and on a harmonious construction of the various provisions in the Act, we are of the opinion that in cases like those before us the magistrate who is also a court as provided in s.22 must at the first instance proceed against the persons complained against under the penal provisions in ss.3 or 7 as the case may be, and only after the disposal of those cases take action under s.18 if there is occasion for it. Under s.190(1)(b) of the Code of Criminal Procedure, the magistrate is bound to take cognizance of any cognizable offence brought to his notice. The words "may. take cogni zance" in the context means "must take, cognizance". He has no discretion in the matter, otherwise that section will be violative of article 14. But as laid down in Delhi Administration vs Ram Singh(1) only an officer mentioned in s.13 can validly investigate an offence under the Act. Hence if the cases before us had been investigated by such an officer, there is no difficulty for the magistrate to take cognizance of those cases. Otherwise it is open to him to direct fresh investigations by competent police officers before deciding whether the facts placed before him disclose any cognizable offence. In the result, we hold, for the reasons mentioned above, that the proceedings taken by the learned magistrate against the respondents are not in accordance with law as he has proceeded against them under s.18 without first taking action under s.3. For that reason we uphold the conclusions reached by the learned Judges of the Punjab High Court but on grounds other than those relied on by them. But this conclusion of ours does not debar the learned magistrate from taking fresh proceedings against the respondents in accordance with law as explained by us earlier. In the result, these appeals fail and are dismissed. Appeals dismissed.
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Section 18 of the Suppression of Immoral Traffic in Women and Girls Act, 1956, provides for two classes of cases namely, (1) those coming under sections 3 or 7 as well as under section 18, and (2) those coming only under section 18.
Sections 3 and 7 provide for the punishment of persons guilty of the offences mentioned therein after a regular trial, with a right of appeal.
Section 18 is a preventive measure, dealing with premises, and is intended to minimise the chance of a brothel being run near a public place, and provides for a summary enquiry.
[211 D E; G H].
In the present case, on the strength of reports submitted by the police to him, the Sub Divisional Magistrate passed orders under section 18 (1) with respect to certain premises in the occupation of the respondents.
They challenged the validity of the section, and the High Court held that the section violated article 14 of the Constitution.
In appeal to this Court, Held,: Section 18 provides for two distinct classes of cases and the classification being reasonable is not violative of article 14 of the Constitution.
But the proceedings taken by the Magistrate not being in accordance with law should be set aside.
The reports disclosed a cognizable offence under section 3 of the Act and in such a case, the Magistrate cannot ignore the cognizable offence and merely have recourse to section 18, thus depriving parties of the benefit of a trial and appeal.
The, Magistrate should have taken action under section 190 (1) (b) of the Criminal Procedure Code after investigation by such police officer as is mentioned in section 13 of the Act, and it was only after the disposal of the cases against the parties that action could be taken under section 18 if there was occasion for it.
[212 A D].
State of West Bengal vs Anwar AU Sarkar.
; and Delhi Administration vs Ram.
Singh.
[1962] 2 S.C.R. 694, referred to.
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Section 18 of the law against trafficking women and girls in 1956 covers two kinds of situations. First, cases that fall under sections 3 or 7 as well as section 18. Second, cases that only fall under section 18.
Sections 3 and 7 explain how people who commit certain crimes will be punished after a normal trial. They also have the right to appeal the decision.
Section 18 is meant to prevent problems with buildings. It tries to stop brothels from operating near public places. It allows for a quick investigation.
The local magistrate made orders about some buildings where the people involved lived, based on police reports. He used section 18 (1) to do this.
The people involved argued that this section of the law was unfair. The High Court agreed, saying it broke Article 14 of the Constitution, which guarantees equal protection under the law.
On appeal, this Court decided that Section 18 does cover two different kinds of cases. This difference is reasonable, so it does not violate Article 14 of the Constitution.
However, the steps taken by the magistrate were not legal, so they must be canceled.
The police reports showed a crime that could be prosecuted under section 3 of the Act. In that case, the magistrate cannot ignore that crime and only use section 18. This would deny people the right to a trial and appeal.
The magistrate should have followed section 190 (1) (b) of the Criminal Procedure Code. This means investigating the crime through a police officer listed in section 13 of the Act. Only after the cases against the people involved were decided, could action be taken under section 18, if needed.
State of West Bengal vs Anwar AU Sarkar.
; and Delhi Administration vs Ram.
Singh.
[1962] 2 S.C.R. 694, were mentioned.
| 1,341
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Appeals Nos. 565 566 of 1963. Appeals by special leave from the judgment and order dated January 31, 1962 of the Mysore High Court in Writ Petitions Nos. 940 and 1056 of 1961. G.S. Pathak and M/s. Rajinder Narain and Co. for the appellants. R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. These appeals raise the question whether the Academic Council of the Mysore University was competent in exercise 230 of the powers conferred by sections 22, 23 and 43 of the Mysore University Act 23 of 1956 to frame cl. 3(c) of the Regulations relating to the grant of the degree for Bachelor of Veterinary Science (B.V.Sc.). The Mysore University Act 23 of 1956 hereinafter referred to as 'the Act ' was enacted to provide for the reorganisation of the University of Mysore and other incidental matters. The powers of the University are described in section 4. Section 21 provides for the constitution of the Academic Council which is one of the authorities of the University designated under section 13 and section 22 sets out the powers of the Academic Council. It provides: "The Academic Council shall, subject to the provisions of this Act, have the control and general regulation of teaching, courses of studies to be pursued, and maintenance of the standards thereof and shall exercise such other powers and perform such other duties as may be prescribed." By section 23 other powers of the Academic Council are prescribed. Insofar as it is material, the section provides: "In particular and without prejudice to the generality of the powers specified in section 22, the Academic Council shall have, subject to the provisions of this Act, the following powers, namely: (a) x x x x (b) x x x x (c) to make Regulations relating to courses, schemes of examinations and conditions on which students shall be admitted to the examinations, degrees, diplomas, certificates and other academic distinctions;" Section 43 of the Act sets out the scope of the Regulations. enacts: "Subject to the provisions of this Act, the Regulations may provide for the exercise of all or any of the powers, enumerated in "sections 22 and 23 of this Act and for the following matters, namely: (i) the admission of students to the University; (ii) the recognition of the examinations and degrees of other Universities as equivalent to the examinations and degrees of the University; (iii) the University courses and examinations and the conditions on which students of the University and affiliated colleges and other University institutions shall be admitted to examinations for the degrees, diplomas and certificates of the University; and 231 (iv) the granting of exemptions. " In exercise of the powers conferred by sections 22, 23 and 43, Academic Council made Regulations relating to the grant of a degree for Bachelor of Veterinary Science. Clause 3(c) of the Regulations is as follows: "No candidate who fails four times shall be permitted to continue the course. " The Mysore Veterinary College, Hebbal, Bangalore, is one of the colleges affiliated to the University of Mysore for training students for the degree course in Bachelor of Veterinary Science (B.V.Sc.). These two appeals arise on facts which are closely parallel. Gopala Gowda respondent in C.A. No. 565 of 1963 was admitted in the year 1958 as a student in the First Year Course in the Mysore Veterinary College. Gopala Gowda was declared unsuccessful in four successive First Year Course examinations. The Controller of Examinations, Mysore University, then informed Gopala Gowda by letter dated August 2, 1961 that he "had lost" his right to continue studies for the Bachelor of Veterinary Science (B.V.Sc.) course under Regulation 3(c) of the Regulations governing the course of study framed by the University leading to the degree of the Bachelor of Veterinary Science (B.V.Sc.). Gopala Gowda then presented a petition in the High Court of Mysore praying that, for reasons set out in his affidavit, the High Court do issue a writ quashing the order communicated by the Controller of Examinations in his letter dated August 2, 1961 and do further direct the University of Mysore and the Controller of Examinations to permit him to appear for the subsequent examinations and to prosecute his training for the Bachelor of Veterinary Science Course. The other respondent Bheemappa Reddy had also failed to satisfy the examiners in four successive First Year Course examinations commencing from April 1959, and on being intimated by the Controller of Examinations that he will not be permitted to continue his training for the Bachelor of Veterinary Science (B.V. Sc.) course under Regulation 3(c), he flied a similar writ petition in the High Court. The High Court of Mysore held that Regulation 3(c) of the Regulations governing the course of study leading to conferment of the degree of Bachelor of Veterinary Science of the Mysore University could not be said "to subserve the purpose of maintaining the standards mentioned in section 22 of the Mysore University Act" and on that account was beyond the competence of the Academic Council or the University and those bodies had no power to prevent Gopala Gowda and Bheemappa from prosecuting their studies and from appearing at the subsequent examinations. With special leave. the University of Mysore, the Controller of Examinations and the Principal of the Mysore Veterinary College, have appealed. In the view of the High Court, under section 22 of the Act the Academic Council could prescribe minimum qualifications for 232 admission to a degree course in an affiliated college, and also could prescribe standards which qualify a candidate .for admission to the degree or academic distinction, but the Council had not the power to prescribe a condition on the 'satisfaction of which a student:admitted to the Course could prosecute his study in the course to which he had been admitted. Power to frame Regulations for "maintenance of standards" within the meaning of section 22 and prescribing conditions on which a student shall be admitted to an examination within the meaning of section 23(3) (c)did not. in the opinion. of the High Court, import power to make Regulation preventing a student admitted to a course from prosecuting his study, for the only consequence of failure in an examination is that the student does not qualify himself for admission to the degree sought by him. and the University would be entitled to withhold conferment of the degree. but not to obstruct the prosecution of the course of study. The expression "maintenance of standards" in the view of the High Court could only take in considerations such as undergoing a course of study and keeping a prescribed minimum attendance to an institution maintained or recognised by the University, but it does not and "cannot be taken to mean that by reason only of the fact that a student has not attained the standard of knowledge or proficiency required for passing the examination within that period, he can be said to be for all times incapable of attaining that standard. " The High Court proceeded to observe "The power to maintain certain standards before a degree or other academic distinction is conferred upon a person involves the power to withhold the conferment of that degree unless a person attains the necessary standard, but it cannot either in logic or in justice involve the power to refuse to permit a person to attain that standard. That power can and should be exercised at the time of admission into the course of study if the University is of the opinion that the applicant for .admission into the course does not even possess the minimum suitability for taking that course of study. Once it admits him into the course of study, it must be held to have entertained the opinion that he does have the minimum suitability to take that course which means that he has the capacity by undergoing the course of study to attain the standard necessary for receiving the degree. " We are unable to agree with the view expressed by the high Court. The Academic Council is invested with the power of controlling and generally regulating teaching,. courses of studies to be pursued. and maintenance of the standards thereof. and for those purposes the Academic Council is competent to make regulations. amongst others, relating to the courses, schemes of examination and conditions on which students shall be admitted to the examinations. degrees. diplomas. certificates and other academic distinctions. The Academic Council is thereby invested with power to control the entire academic life of the student from the stage of 233 admission. to a course of study to the. ultimate conferment of a degree or academic distinction. Admission to a course or branch of study depending upon possession of the minimum qualifications prescribed does not divest the Academic. Council of its control over the ' academic career of the student, for the Council has for maintaining standards the power to prescribe schemes of examinations, arid also to prescribe conditions on which students. Shall be admitted to the examinations. "Power to prescribe conditions, On which, a student may be admitted to the examinations, in our opinion, necessarily implies the power to refuse to admit a student in certain contingencies, for the power to admit to an examination implies the power to weed out students who have on the application of a reasonable test proved themselves to be unfit to continue the course or persecute training in that course. If on account of general inaptitude for being trained in a course or on account of supervening disability to prosecute a course of study, a student admitted to that course is found by the Academic Council to be unfit to prosecute his training, it would, in our judgment, be within the power of the Academic Council, in exercise of its authority to control and maintain standards, and also of its authority to prescribe conditions on which students may be admitted to examinations, to direct that the student shall discontinue training in that course. And failure by a student to qualify for promotion or degree in four examinations, is certainly a reasonable Lest of such inaptitude or supervening disability. If after securing admission to an institution imparting training for professional courses, a student may be held entitled to continue indefinitely to attend the institution without adequate application and to continue to offer himself for successive examinations, a lowering of academic standards would inevitably result. Power to maintain standards in the course of studies. in our judgment, confers authority not merely to prescribe minimum qualifications for admission, courses of study, and minimum attendance at an institution which may qualify the student for admission to the examination, but also authority to refuse to grant a degree, diploma, certificate or other academic distinction to students who fail to satisfy the examiners at the final examination, and to direct that a student who is proved not to have the ability or the aptitude to complete the course within a reasonable time to discontinue the course. There is no warrant for restricting the expression "maintenance of the standards" only to matters such as minimum attendance, length of the course and prescription of minimum academic attainments. The High Court was therefore in error in holding that the Academic Council had no power to prescribe Regulation 3(c). We are informed at the Bar, however, that since the High Court decided. the case on January 31, 1962, the two respondents were permitted to continue their courses of study and they have appeared for the subsequent examinations and they were declared to have duly 234 passed their second and third year examination and have been permitted to keep terms for the degree examination. Even though, the view taken by the High Court was erroneous, we do not think. having regard to the fact that the respondents were permitted to continue their course of study, the University not having applied for any interim orders pending disposal of these appeals, that any order should be passed in these appeals so as to deprive the respondents of the training they have received. These appeals are filed with special leave, and in the exceptional circumstances of the case, we do not think we would be justified, merely because we disagree with the interpretation of the High Court of the relevant regulation, in making an effective order against the respondents so as to nullify the results declared by the University concerning them in respect of the second and third year examinations. The appeals are therefore dismissed. There will be no order as to costs. Appeals dismissed.
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Under Sections 22, 23, and 43 of the Mysore University Act, the Academic Council of the University was empowered, inter alia, to control and operate the teaching, courses of study, to secure maintenance of standards, etc., and to make necessary regulations including those relating to examinations and conditions on which students may be admitted to examinations, degrees, diplomas, etc.
In exercise of these powers, the Academic Council made certain Regulations relating to the grant of a degree of Bachelor of Veterinary Science and by clause 3(c of these Regulations, it was provided that no candidate who failed an examination four times, would permitted to continue the course.
The respondents were declared unsuccessful in four successive First Year Course examinations and the Controller of Examinations informed each respondent that he had lost their right to continue studying for the degree.
The respondents thereupon filed petitions in the High Court, praying for the issue of writs quashing the orders communicated to them and directing the University to permit them to appear for the subsequent examinations and to continue their studies.
The High Court held that Regulation 3(c) was beyond the competence of the Academic Council and the University.
On appeal to this Court: HELD: that power to maintain standards in the course of studies confers authority not merely to prescribe minimum qualifications for admission, courses of study, minimum attendance at an institution which may qualify the student for admission to the examination, etc.,but also authority to refuse to grant a degree, diploma, or other academic distinction to students who fail at the final examination and to direct that a student, who is proved not to have the ability or the aptitude to complete the course within a reasonable time,discontinue the course.
There is no warrant for restricting the expression "maintenance of standards" only to matters such as minimum attendance, length of the course and prescription of minimum academic attainments.
[233F H]
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According to Sections 22, 23, and 43 of the Mysore University Act (a law about the university), the Academic Council (a group within the university) had the power to manage teaching and courses, keep up good standards, and create rules. These rules included those for exams and the requirements for students to take exams and receive degrees or diplomas.
Using these powers, the Academic Council made rules about getting a Bachelor of Veterinary Science degree. Rule 3(c) said that if a student failed an exam four times, they couldn't continue the course.
The students in this case failed the First Year Course exams four times in a row. The person in charge of exams told them they could no longer study for the degree.
The students then asked the High Court (a state-level court) to cancel the orders that told them they couldn't continue. They wanted the University to let them take future exams and keep studying.
The High Court decided that Rule 3(c) was not something the Academic Council or the University had the authority to create.
The University appealed to this Court (the Supreme Court). The Supreme Court HELD: The power to keep up standards in the courses gives the University the authority to set rules for admission, courses, and attendance needed to take exams. It also allows them to refuse a degree or diploma to students who fail the final exam. The University can also tell a student to stop the course if they don't seem able to finish it in a reasonable time.
The term "maintenance of standards" doesn't just mean things like minimum attendance, course length, or minimum grades. It also includes the power to decide who is allowed to continue in a program.
[233F H]
| 712
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Civil Appeal Nos. 1353 & 1354 of 1973. Appeals from the Judgment and Order dated the 6th December, 1972 of the Mysore High Court in Writ Petitions Nos. 3964 & 3996/1970. S.T: Desai, D.N. Mishra and Mrs. Verma for the Appellants. M. Veerappa for the Respondents. The Judgment of the Court was delivered by AMARENDRA NATH SEN, J. The question of constitutional validity of the Mysore Sales Tax (Amendment) Act, 1969 (Mysore Act of 1969), (hereinafter referred to as the Act) falls for determination in these two appeals preferred by the appellants with certificate granted by the High Court under article 133(1) of the Constitution. The question arises under the following circumstances: The appellants are Excise Contractors who had secured excise privilege of retail sale of Toddy, Arrack or Special Liquor. The State Government has the monopoly of the first sale of Arrack which is country liquor other than Toddy. The manufacture of Arrack by distillation is done in the State under State control and the entire quantity manufactured by distillation in the State is sold to the State Government which in its turn supplies Arrack to bonded depots in Taluks. Under the Mysore Excise Act Arrack is liable 829 to excise duty at the rates prescribed by the Government. The State does not collect excise duty from the distillers. From the distillery arrack is transferred to Bonded Depots and excise duty together with cesses thereon is collected from the contractors who are given the privilege or right to effect retail sales of Arrack. The exclusive privilege of retail vending of Arrack for each excise year which commences on the first day of July and ends on 30th June of the following year, is sold by the State by auction. The successful bidders whose bids are accepted are granted licences for the exclusive privilege of retail vending. The retail selling price of Arrack by the licensees is fixed by the State Government at or before the time of notifying sales of the exclusive privilege in respect of each year. The excise duty of arrack together with cesses there on is collected from the licensees before the date of delivery. Under the terms and conditions governing the licensees, granted to the contractors whose bid is accepted and to whom the license for exclusive privilege of vending arrack is granted, the licensees were required to deposit in the State Treasury under separate heads of account the sales tax payable to the State Government and the excise duty with cesses. There was no dispute as to the amount of sales tax payable by the licensees upto 1.4.1966. However, with effect from 1.4.1966, the State Government started collecting sales tax computed on the sale price of Arrack together with excise duty and cesses payable thereon. So computed sales tax came to about 24 paise a litre which was collected alongwith the price of Arrack sold to the licensees. Challenging the validity of the collection of the sales tax on the aforesaid basis the appellant filed a writ petition in the High Court of Mysore at Bangalore being writ petition No. 644 of 1966. As this writ petition No. 644 of 1966. related to the excise year 1966 67 only, the appellant filed two other writ petitions being writ petitions nos. 1012 and 1013 both of 1966 for subsequent excise years. These three writ petitions of the appellant along with similar writ petitions filed by other contractors were disposed of by a common judgment by a division Bench of the Mysore High Court on 12th July, 1968. The Mysore High Court for reasons recorded in the judgment held: "We allow the rest of the petitioners only to the extent of holding that the State Government is not entitled 830 to collect from the petitioners any amount by way of Sales Tax on the following, viz., Excise Duty, Health Cess and Education Cess imposed on arrack or special liquor. In the said petitions, we hereby issue writs directing the State Government to forbear from collecting from the petitioners any amount representing Sales Tax on the following viz. Excise Duty, Health Cess and Education Cess imposed on arrack or special liquor, and to refund to the petitioners any amount that might have been collected from them, by way of Sales Tax on items of Excise Duty, Health Cess and Education Cess on arrack or special Liquor. " The Division Bench in the course of the Judgment in D. Cawasji & Co. Mysore vs State of Mysore(1), observed at p. 483: "It is difficult to see how Excise Duty paid, not by the seller but by the purchaser, to the State Government, can become a part of the price at which the goods are sold by that seller to that purchaser. If that is the true position, we think the State Government cannot, under S.19 or the Sales Tax Act, collect Sales Tax on Excise Duty which is not a part of its selling price. " Against the judgment of the Mysore Court the State preferred an appeal to the Supreme Court; but the appeal was subsequently withdrawn. It appears that during the pendency of the appeal the privileges of vending liquor in the excise year 1968 69 were sold without any variation in the price of Arrack fixed by the Government during the previous year at 55 paise a litre. During the year 1968 69 the State Government collected Sales Tax computing the same @61/2% of the actual sale price without including therein excise duty and cess. It may be noticed that although the appellants had obtained an order of stay of payment of the disputed sales tax amounts from 27.4.1966 from the High Court, there were various other contractors who had paid the same computed on the sale price of Arrack together with excise duty and the cess. When the decision of the 831 High Court pronouncing the illegality of the levy and collection of sales tax on the price of Arrack, including in the price the excise duty and cess, became final and conclusive in consequence of the withdrawal of the appeal filed by the State in this Court against the said judgment and decision of the High Court, the State Government became liable to refund the excess amount of sales tax collected to the licensees and contractors. It appears that the liability of the State to refund the amount collected as sales tax in excess amounted to lacs of Rupees. Faced with this situation and with the object of avoiding the liability of refund by the State Government of the excess amount so collected, the Governor of the State passed Ordinance No. 3 of 1969 on 17th July, 1969. The Ordinance was replaced by the impugned Act which came into force on 19th July, 1969. It will be convenient at this stage to set out the provisions of the Act, which is a short one consisting of four sections, in its entirety. The Act provides as follows: S.1 (1). This Act may be called the Mysore Sales Tax (Amendment) Act, 1969. It shall be deemed to have come into force on the nineteenth day of July, 1969. In the Second Schedule to the Mysore Sales Tax Act, 1957 (Mysore Act 25 of 1957) in Column 3 of Sl. No. 39, for the words "Six and a half per cent", the words "Forty five per cent", shall be and shall be deemed to have been substituted with effect from the first day of April, 1966. Notwithstanding anything contained in any judgment, decree or order of any court or other authority, the sales tax on country liquor other than toddy levied or collected or purported to have been levied or collected shall, for all purposes, be deemed to be and to have always been validly levied or collected in accordance with law, as if this Act had been in force at all material times when such tax was levied or collected and accordingly (a) all acts, proceedings or things done or taken by any 832 authority or officer or person in connection with the levy or collection of such tax, shall, for all purposes, be deemed to be and to have always been done or taken in accordance with law; (b) no suit or proceeding shall be entertained, maintained or continued in any court for the refund of any tax as paid; and (c) no court shall enforce any decree or order directing the refund of any tax so paid. S.4 The Mysore Sales Tax (Amendment) Ordinance, 1969 (Mysore Ordinance No. 3 of 1969) is hereby repealed. The Statement of objects and Reasons for the passing of the amendment may appropriately be set out at this stage. The Statement of Objects and Reasons runs as follows: "Clause (j) of sub rule (4) of Rule 6 of the Mysore Sales Tax Rules, 1957, provided for the exclusion of excise duty paid by a dealer from the computation of his taxable turnover. By Government Notification No. GSR 882, dated 16th March, 1966, this clause was deleted from the rules with the object of recovering sales tax even on the excise duty portion of the turnover of dealers. In respect of arrack which falls under entry relating to Sl. No. 39 of the Schedule, sales are made by Government to licensed contractors and sales tax was recovered from them at 6 1/2% on the total amount payable by them including the excise duty from 1st April, 1966. The Mysore High Court in W.P. No. 644 of 1966 D. Cawasji & Co. and Others vs The State of Mysore,(1) held that on the sales of arrack, the sales tax cannot be collected on the total amount but has to be collected only on the basic price excluding excise duty on the ground that the duty in such a case does not form part of the sale price but is a separate "levy" made by the Government at the time of releasing the stocks from the Government Bonded warehouses. Consequently, a considerable amount already recovered may become refundable. In order to get over the effects of the High Court 833 decision and retain the money already recovered by the Government, it is proposed to enhance the rate of tax on arrak to 45% with retrospective effect from 1st April, 1966. The enhanced rate of tax on the basic price would be absorbed in the price already recovered, and no additional tax is expected to be realised from this Bill. Since the Legislature was not in session and in view of the urgency, an ordinance was promulgated. The Bill is to replace the ordinance. " The validity of this Amending Act has been challenged on the ground that the Amending Act is unreasonable and arbitrary. The principal contention raised on behalf of the appellant is that the Amending Act does not seek to rectify or remove the defect or lacuna on the basis of which the collection of the excess sales tax had been set aside by the High Court. It is argued by the learned counsel for the appellant that the High Court had held that the sales tax could not be levied on collected on Excise duty Health cess and Education cess imposed on Arrack or special liquor and had directed the refund of the amount collected on excise duty and cess which were included in the selling price of arrack. The learned counsel has submitted that by the amendment the said lacuna or defect of including the excise duty and cess in the price of Arrack on which the sales tax has been charged has not been sought to be removed, as this defect or difficulty could not possibly have been removed, because sales tax could not be levied on excise duty by virtue of the judgment of the High Court. The learned counsel points out that the appeal which was filed by the State Government against the judgment of the High Court had been withdrawn by the State and as such the judgment of the High Court has become final and conclusive and on the basis of the judgment, a large amount has become refundable by the State to the appellants. It is the submission of the learned counsel that the amendment has been brought about only for the purpose of circumventing the judgment of the High Court with the object of avoiding the liability to refund the amount wrongfully and illegally collected as sales tax from the appellant by raising the amount of tax from 6 1/2% to 45%. The learned counsel contends that the increase in the rate of sales tax from 6 1/2% to 45% with retrospective effect is clearly arbitrary and unreasonable. It is the contention of the learned counsel that if any particular provision of the statute is for some lacuna or defect in the statute declared unconsti 834 tutional or invalid, it is open to the legislature to pass a Validating Act with retrospective effect so that the State may not be saddled with liability of refund or other consequences which may arise as a result of the particular provision being declared invalid. The learned counsel argues that such a Validating Act with retrospective operation can be passed if the lacuna or the defect, because of which the provision is declared to be unconstitutional and invalid, be properly rectified by the Amending Act which seeks to validate the statutory provision which has been struck down as unconstitutional and invalid. It is his argument that without seeking to remove or rectify the defect or lacuna, no Validation can be made to defeat the judgment of the Court striking down any particular statutory provision. The learned counsel contends that enhancing the rate of tax from 6 1/2% to 45% with retrospective effect must necessarily be held to be arbitrary. It is his contention that mere enhancement of the rate without seeking to validate the provision by removing or rectifying the defector lacuna clearly results in retrospective imposition of tax and any such imposition of tax with retrospective effect must be held to be unreasonable and arbitrary. In support of the submissions made, particular reliance has been placed on the two decisions of this Court in the case of Janapada Subha, Chindwara etc. vs The Central Provinces Syndicate Ltd(1), and Municipal Corporation of the City of Ahemdabad vs New Shorock Spg. & Wvg. Co. Ltd. etc.(2) The material facts in the case of Janapada Sabha, Chindwara (supra) may briefly be indicated. In 1935, the Independent Mining Local Board, Chindwara, constituted under C.P. Local Self Government Act, 1920, resolved to levy a cess on coal extracted within the area at 3 pies per ton. The sanction of the Local Government, as required by S.51 (2) of Act, was obtained for the levy. In 1943, the levy was enhanced to 4 pies, in 1946 to 7 pies and in 1947 to 9 pies. The validity of the enhanced levy was challenged and this Court, in appeal, held that the increased levy would also require the previous sanction of the Local Government and such sanction not having been obtained, the levy at a rate higher than 3 pies was illegal. The State Legislature thereafter enacted the Madhya Pradesh Koyala Upkar (Manyata 835 karan) Adhinayam, 1964. Section 3(1) provides that 'notwithstanding a judgment of any Court, cesses imposed, assessed or collected by the Board in pursuance of the notifications and notices specified in the Schedule shall, for all purposes, he deemed to be, and to have always been validly imposed, assessed or collected as if the enactment under which they were issued stood amended at material times so as to empower the Board to issue the said notifications. In the Schedule were specified the three notifications enhancing the rate of cess. On the question whether the enhanced levy was validated by the 1964 Act, a five Judge Bench of this Court held that it did not give legal effect to the imposition of cess at the enhanced rate. This Court observed at p. 751: "The nature of the amendment made in Act 4 of 1920 has not been indicated. Nor is there anything which enacts that the notifications issued without the sanction of the State Government must be deemed to have been issued validly under S.51 (2) without the sanction of the Local Government. On the words used in the Act, it is plain that the Legislature attempted to overrule or set aside the decision of this Court. That, in our judgment is not open to the Legislature to do under our constitutional scheme. It is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a Court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the Court. " In the Municipal Corporation of the City of Ahmedabad etc. vs New Shorock Spg. & Wvg. Co. Ltd. etc. (supra) the appellant corporation assessed the immovable properties of the respondents to property tax for the year 1964 65 and 1965 66 on the basis of the 'flat rate ' method under the Bombay Provincial Municipal Act. The assessments were challenged in the High Court but the petitions were dismissed. While appeals were pending in this Court, the Municipal Corporation, initiated proceedings for the recovery of the taxes and attached the properties of the assessees. The assessees challenged the attachment proceedings but their petitions were 836 again dismissed. In appeal against these orders in this Court the assessees prayed for interim stay, but this Court did not grant stay because the Municipal Corporation had undertaken to return the amounts if the respondents succeeded. This Court thereafter allowed the appeals by the assessees. Meanwhile an Amending 8 Act called the Bombay Provincial Municipal Corporation (Gujarat Amendment) Act, 1969 had been passed introducing section 152 A into the 1949 Act, but that provision was not brought to the notice of this Court. However, when the assessees demanded refund of the amounts illegally collected from the Municipal Corporation did not comply and hence the assessees moved the High Court again. These petitions were allowed and the Municipal Corporation appealed to this Court. While the appeals were pending the Bombay Provincial Municipal Corporation (Gujarat Amendment and Validity Provision) Ordinance, 1969, was passed and sub section (3) was introduced in section 152A. Sub section (3) which was introduced by the ordinance was in the following terms: "Not withstanding anything contained in any judgment, decree or order of any Court, it shall be lawful, and shall be deemed always to have been lawful, for the Municipal Corporation of the City of Ahmedabad to withhold refund of the amount already collected of recovered in respect of any of the property taxes to which sub section (1) applies till assessment or reassessment of such property taxes is made and the amount of tax to be levied and collected is determined under sub section (1): Provided that the Corporation shall pay simple interest at the rate of six per cent per annum on the amount of excess liable to be refunded under subsection (2), from the date of decree or order of the Court referred to in subsection (1) to the date on which excess is refunded," This Court held that under. section 152 A of the Act before the Corporation could detain any amount collected as property tax there must be an assessment according to law; but in the present case there were no assessment orders in accordance with the provisions of 1949 Act and the rules as amended by the Amending and, therefore, the appellant corporation was not entitled to retain the amount collected as the Section did not authorise the Corporation to retain the amounts illegally collected. This Court has further held that sub section (3) of section 152 A which commands the Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court. makes a direct inroad into the judicial powers of the State; and the Legislatures which under the Constitution have, within prescribed limits powers to make laws prospectively and retrospectively are competent in exercise of these powers to remove the basis of a decision passed by a competent Court thereby rendering the decision ineffective, but no legislature in this country has power to ask the instrumentalities of the State to disobey or disregard the decision given by Court and section 152 A (3) was repugnant to the Constitution. This Court at p. 295 has referred to the following observations made in Shri Prithi Cotton Mills Ltd. and Anr. vs The Broach Borough Municipality and Ors: "Before we examine section 3 to find out whether it is effective in its purpose or not we may say a few words about validating statutes in general. When a legislature sets out to validate a tax declared by a Court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A Court 's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a Court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be 838 done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometime this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the reenacted law. " This Court at p. 296 and 297 relied on the earlier decision of this Court in the case of Janapada Sabha, Chindwara vs The Central Provinces Syndicate Ltd. (supra). This Court finally observed at page 297: "We are clearly of the opinion that sub section (3) of section 152A introduced by the ordinance is repugnant to our Constitution. That apart, the said provision authorises the Corporation to retain the amounts illegally collected and treat them as loans. That is an authority to collect forced loans. Such conferment of power is impermissible under our Constitution." The learned counsel appearing on behalf of the State has submitted that this very contention that the State has sought to enhance the rate of tax without seeking to remove or rectify the lacuna which was there in the earlier Act and for which the earlier provision has been struck down by the High Court, was raised in the writ petition filed in the High Court by the appellant. It is the submission of the learned counsel that this contention has been rejected by the High Court for reasons indicated in the judgment. The learned counsel has referred to the following observation made by the High Court: "This Court has not held that the State is not at all entitled to collect any amount by way of tax on the sale of arrack. The sale price of arrack during the years 1966 to 1969 was fixed at 55 paisa a litre. The amount which the State was authorised to collect was six and a half per cent of 55 paise on the sale of a litre of arrack which comes to about three and a half paise; instead, the State collected 24 paise and the excess collection was 20.5 paise a litre. The 839 decision of this Court is that the State without authority of law was collecting excess amounts by way of tax on the sale of arrack. It is relevant to state that under the Act where the State is deemed to be a dealer entitled to collect tax under Section 19, there is no provision for making an assessment of tax by the assessing authorities as in the case of ordinary dealers Without making an assessment, the State Government is entitled to collect amounts by way of tax in the same manner as any other registered dealer authorised to do so under Section 1B. By enhancing the rate of tax from six and half to 45 per cent with retrospective effect by enacting Section 2 in the impugned Act, it has to be deemed that the rate of tax under the Act has always been 45 per cent of the taxable turnover ever since 1. 4. If the rate of tax was 45 per cent on the sale price of arrack which was 55 paise a litre, then the amount the State was authorised to collect comes to about 25 paise. Thus it will be seen that by the enactment of Section 2 of the impugned Act the very basis of the complaint made by the petitioners before this Court in the earlier writ petitions as also the basis of the decision of this Court in Cawasji 's case that the State is collecting amounts by way of tax in excess of what was authorised under the Act has been removed. Thus the decision of this Court has been rendered ineffective." The learned counsel seeks to adopt the aforesaid observations of the High Court as his submissions and contends that in view of the aforesaid reasoning which are cogent and sound it cannot be said that the impugned amendment is unconstitutional. He submits that there are no valid grounds for interfering with the judgment of the High Court. In the earlier case between the parties to which reference has already been made, the High Court issued writs directing the State Government to fore bear from collecting from the appellant any amount representing the sales tax on the following, namely, excise duty, health cess and education cess imposed on Arrack or special liquor and to refund to the appellant what might have been collected from them by way of sales tax on items of excise, health cess and education cess on Arrack or special liquor. The High Court had 840 passed the aforesaid order issuing appropriate writ in view of the High Court 's finding that sales tax is not payable on excise duty, health cess and education cess. In view of the aforesaid judgment and order passed by the High Court amounts collected by the States by way of Sales Tax on items of excise, health cess and education cess on Arrack or special liquor from the appellant became refundable to the appellant. The impugned amendment has been passed, as the Statement of objects which we have earlier set out clearly indicates to over ride the judgment of the High Court and to enable the State to hold on to the amount collected as sales tax on excise duty, health cess and education cess, if any, on Arrack or special liquor. It has to be noted that the said judgment of the High Court in the earlier case had become final and conclusive inasmuch as the special leave petition filed against the judgment by the State was withdrawn. The State instead of seeking to test the correctness and effect of the judgment and order of the High Court thought it fit to have the judgment and order nullified by introducing the impugned amendment. The amendment does not proceed to cure the defect or the lacuna by bringing in an amendment providing for exigibility of sales tax on excise duty, health cess and education cess. The impugned Amending Act may not, therefore, be considered to be a Validating Act. A Validating Act seeks to validate the earlier Acts declared illegal and unconstitutional by Courts by removing the defect or lacuna which led to invalidation of the law. With the removal of the defect or lacuna resulting in the validation of any Act held invalid by a competent Court, the Act may become valid, if the Validating Act is lawfully enacted. But the question may still arise as to what will be the fate of acts done before the Validating Act curing the defect has been passed. To meet such a situation and to provide that no liability may be imposed on the State in respect of such acts done before the passing of the Validating Act making such act valid, a Validating Act is usually passed with retrospective effect. The retrospective operation relieves the State of the consequences of acts done prior to the passing of the Validating Act. The retrospective operation of a Validating Act properly passed curing the defects and lacuna which might have led to the invalidity of any act done may be upheld, if considered reasonable and legitimate. 841 In the instant case, the State instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6.1/2% to 45% with retrospective effect from the Ist April 1966 to avoid the liability of refunding the excess amount collected and has further purported to nullify the judgment and order passed by the High Court directing the refund of the excess amount illegally collected by providing that the levy at the Higher rate of 45% will have retrospective effect from Ist of April, 1966. The judgment of the High Court declaring the levy of sales tax on excise duty, education cess and health cess to be bad has become conclusive and is binding on the parties. It may or may not have been competent for the State Legislature to validly remove the lacuna and remedy the defect in the earlier levy by seeking to impose sales tax through any amendment on excise duty, education cess and health cess; but in any event, the State Government has not purported to do so through the Amending Act. As a result of the judgment of the High Court declaring such levy illegal, the State became obliged to refund the excess amount wrongfully and illegally collected by virtue of the specific direction to that effect in the earlier judgment. It appears that the only object of enacting the amended provision is to nullify the effect of the judgment which became conclusive and binding on the parties to enable the State Government to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lacuna but merely raises the rate of duty from 6.1/2% to 45% and further proceeds to nullify the judgment and order of the High Court. In our opinion, the enhancement of the rate of duty from 6.1/2% to 45% with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable. The defect or lacuna is not even sought to be remedied and the only justification for the steep rise in the rate of duty by the amended provision is to nullify the effect of the binding judgment. The vice of illegal collection in the absence of the removal of the illegality which led to the invalidation of the earlier assessments on the basis of illegal levy, continues to taint the earlier levy. In our opinion, this is not a proper ground for imposing the levy at the higher rate with retrospective effect. It may be open to the Legislature to impose the levy at the higher rate with prospective operation but levy of taxation at higher rate which really amounts to imposition of tax with retrospective operation has 842 to be justified on proper and cogent grounds. This aspect of the matter does not appear to have been properly considered by the High Court and the High Court in our view was not right in holding that by the enactment of section 2 of the impugned Act the very basis of the complaint made by the petitioner before this Court in the earlier writ petition as also the basis of the decision of this Court in Cawasji 's case that the State is collecting amounts by way of tax in excess of what was authorised under the Act has been removed". We, accordingly, set aside the judgment and order of the High Court to the extent it upholds the validity of the impugned amendment with retrospective effect from Ist of April, 1966 and to the extent it seeks to nullify the earlier judgment of the High Court. We declare that section 2 of the impugned amendment to the extent that it imposes the higher levy of 45% with retrospective effect from the Ist day of April, 1966 and section 3 of the impugned Act seeking to nullify the judgment and order of the High Court are invalid and unconstitutional. We accordingly allow the appeals to this extent. The appellants shall be entitled to costs of these appeals with one set of hearing fee. N.V.K. Appeals allowed.
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The appellants were Excise Contractors who had secured the excise privilege of retail sale of Toddy, Arrack or Special Liquor.
The State Government had the monopoly of the first sale of Arrack which is country liquor other than Toddy.
The manufacture of Arrack by distillation is done in the State under State control and the entire quantity manufactured in the State is sold to the State Government which in its turn supplies it to the bonded depots in Taluks.
Under the Mysore Excise Act, Arrack is liable to excise duty at rates prescribed by the Government.
The State does not collect excise duty from the distillers.
From the distillery arrack is transferred to Bonded Depots and excise duty together with cesses thereon is collected from the contractors who are given the privilege or right to effect retail sales of Arrack.
The exclusive privilege of retail vending of Arrack for each excise year which commences on the first day of July and ends on 30th June of the following year is sold by the State by auction.
Under the terms and conditions governing the licenses, granted to the contractor whose bid is accepted and to whom the licenses for vending arrack is granted, the licensees were required to deposit in the State Treasury under separate heads of account the sales tax payable to the State Government and the excise duty with cesses.
826 However, with effect from 1.4.1966 the State Government started collecting sales tax computed on the sale price of Arrack together with excise duty and cesses payable thereon.
So computed sales tax came to about 24 Paise a litre which was collected alongwith the price of Arrack sold to the licensees.
The validity of the collection of the sales tax on the aforesaid basis was challenged by the appellants.
A Division Bench of the High Court allowed the writ petition, D. Cawasji and Co. Mysore vs State of Mysore 1969 (1) Mys.
L.J. 461, holding that the State Government could not under S.19 of the Sales Tax Act, collect sales tax on excise duty which is not a part of the selling price of Arrack.
The appeal preferred by the State Government to this Court was withdrawn.
During the pendency of the appeal the privileges of vending liquor in the excise year 1968 69 were sold without any variation in the price of Arrack fixed by the Government during the previous year at 55 paise a litre.
During the year 1968 69 the State Government collected sales tax computing the same @ 6.1/2% of the actual sale price without including therein excise duty and cess.
As the liability of the States to refund the amount collected as sales tax in excess amounted to lacs of Rupees, and with the object of avoiding the liability of refund by the State Government of the excess amount so collected, the State passed Ordinance No. 3 of 1969 on 17th July, 1969 which was replaced by the Mysore Sales Tax (Amendment) Act, 1969 on 19th July, 1969.
The validity of this Amending Act was challenged by the appellants on the ground that the Amending Act was unreasonable and arbitrary but the High Court dismissed the writ petition.
In the appeal to this Court, it was contended on behalf of the appellant that the Amending Act does not seek to rectify or remove the defect or lacuna on the basis of which the collection of the excess sales tax had been set aside by the High Court, and that the increase in the rate of sales tax from 61/2% to 45% with retrospective effect is clearly arbitrary and unreasonable for if, any particular provision of the statute is for some lacuna or defect in the statute declared unconstitutional or invalid, it is open to the Legislature to pass a Validating Act with retrospective effect so that the State may not be saddled with liability of refund or other consequences which may arise as a result of the particular provision being declared invalid.
On behalf of the respondent State it was contended that by the enactment of S.2 of the impugned Act the very basis of the complaint made by the appellants in the earlier writ petitions that the State was collecting amounts by way of tax in excess of what was authorised under the Act had been removed.
Allowing the Appeals, 827 ^ HELD: 1.
The only object of enacting the amended provision it appears is to nullify the effect of the judgment which became conclusive and binding on the parties to enable the State Government to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lacuna but merely raises the rate of duty from 6.1/2% to 45% and further proceeds to nullify the judgment and order of the High Court.
[841E F] 2.
The enhancement of the rate of duty from 6.1/2% to 45% with retrospective effect is in the facts and circumstances of the case clearly arbitrary and unreasonable.
The defect or lacuna is not even sought to be remedied and the only justification for the steep rise in the rate of duty by the amended provision is to nullify the effect of the binding judgment.
[841 F] 3.
The vice of illegal collection in the absence of the removal of the illegality which led to the invalidation of the earlier assessments on the basis of illegal levy.
continues to taint the earlier levy.
This is not a proper ground for imposing the levy at the higher rate with retrospective effect.
[841G] 4.
It may be open to the Legislature to impose the levy at the higher rate with prospective operation but levy of taxation at higher rate which really amounts to imposition of tax with retrospective effect has to be justified on proper and cogent grounds.
[841H] 5.
The amendment does not proceed to cure the defect or the lacuna by bringing in an amendment providing for exigibility of sales tax on excise duty, health cess and education cess.
The impugned Amending Act cannot therefore be considered to be a Validating Act.
A Validating Act seeks to validate the earlier Acts declared illegal and unconstitutional by Courts by removing the defect or lacuna which led to invalidation of the law.
With the removal of the defect or lacuna resulting in the validation of any Act held invalid by a competent Court, the Act may become valid if the Validating Act is lawfully enacted.
To provide that no liability may be imposed on the State in respect of acts done before the passing of the Validating Act making such act valid, a Validating Act is usually passed with retrospective effect.
The retrospective operation relieves the State of the consequences of acts done prior to the passing of the Validating Act.
The retrospective operation of a Validating Act properly passed curing the defects and lacuna which might have led to the invalidity of any act done may be upheld, if considered reasonable and legitimate.
[840E A] In the instant case, the State instead of remedying the defect or removing the lacuna has by the impugned amendment sought to raise the rate of tax from 6.1/2% to 45% with retrospective effect from the 1st April 1966 to avoid the liability of refunding the excess amount collected and has further purported to nullify the judgment and order passed by the High Court directing the refund of the excess amount illegally collected by providing that the levy at the higher 828 rate of 45% will have retrospective effect from 1st of April 1966.
The judgment of the High Court declaring the levy of sales tax on excise duty, education cess and health cess to be bad became conclusive and was binding on the parties.
It may or may not have been competent for the State Legislature to validly remove the lacuna and remedy the defect in the earlier levy by seeking to impose sales tax through any amendment on excise duty, education cess and health cess but in any event, the State Government has not purported to do so through the Amending Act.
[841A D] D. Cawasji & Co. Mysore vs State of Mysore, , D. Cawasji & Co. and Others vs The State of Mysore 1968 (16) L.R. 641, Janapada Sabha, Chindwara etc.
vs The Central Provinces Syndicate Ltd.; , , Municipal Corporation of the City of Ahmedabad vs New Shorock Spq.
and Wvg. & Co. Ltd. etc ; and Shri Prithi Cotton Mills Ltd. and Anr.
vs The Broach Borough Municipality and Ors., , referred to.
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Some business owners had the right to sell certain types of alcohol, like Toddy, Arrack, or Special Liquor.
The state government was the only seller of Arrack, which is a type of local alcohol that is not Toddy.
Arrack is made by a process called distillation, which the state controls. All the Arrack made in the state is sold to the state government, which then sends it to storage places in different areas.
According to the Mysore Excise Act, Arrack is taxed at rates set by the government. This tax is called excise duty.
The state does not collect this excise duty directly from the companies that make the Arrack.
Instead, the Arrack is moved from the distillery (where it's made) to storage places. Then, the excise duty and other related taxes are collected from the business owners who have the right to sell Arrack.
The right to sell Arrack is sold by the state at an auction each year. The year for these licenses starts on July 1st and ends on June 30th of the next year.
The business owners who win the auction and get the licenses have to deposit sales tax and excise duty (plus other taxes) into the state's bank accounts.
However, starting April 1, 1966, the state government began collecting sales tax based on the price of Arrack, including the excise duty and other taxes.
This new way of calculating sales tax added about 24 Paise (a small unit of money) per liter of Arrack, which was collected along with the price of the Arrack.
The business owners challenged this way of collecting sales tax, saying it was not legal.
A court agreed with the business owners, saying that the state government could not collect sales tax on excise duty because excise duty is not part of the selling price of Arrack.
The state government appealed this decision, but later withdrew the appeal.
While the appeal was ongoing, the state sold the rights to sell liquor for the year 1968-69 without changing the price of Arrack, which was 55 paise per liter.
During 1968-69, the state government collected sales tax at a rate of 6.5% of the actual sale price, but did not include excise duty and other taxes in the calculation.
Because the state might have had to refund a lot of money that was wrongly collected as sales tax, the state passed a new law in 1969. This law was meant to avoid having to refund the extra money.
The business owners challenged this new law, saying it was unfair, but the court rejected their challenge.
The business owners then appealed to a higher court, arguing that the new law did not fix the problem that caused the court to rule against the state's collection of sales tax. They also argued that raising the sales tax rate from 6.5% to 45% was unfair. They said that if a law is found to be unconstitutional because of a problem, the government can pass a new law to fix the problem, so the state doesn't have to refund money.
The state argued that the new law fixed the problem that the business owners had complained about, which was that the state was collecting too much tax.
The higher court agreed with the business owners.
The court said that the purpose of the new law seemed to be to cancel out the court's earlier decision and allow the state government to keep the sales tax that it had wrongly collected. The new law didn't fix the original problem, but simply raised the tax rate from 6.5% to 45% and tried to cancel out the court's decision.
The court also said that raising the tax rate from 6.5% to 45% was unfair. The new law didn't fix the problem, and the only reason for raising the tax rate was to cancel out the court's decision.
The court said that the illegal collection of taxes was still a problem because the original reason for the court's decision (the illegal tax) had not been fixed. Therefore, it was not right to impose a higher tax rate.
The court said that the government could impose a higher tax rate in the future, but raising the tax rate to collect taxes from the past had to be justified with good reasons.
The court said that the new law did not fix the problem by making sales tax apply to excise duty and other related taxes. Therefore, the new law was not a valid law. A valid law fixes the problems that caused a court to rule against an earlier law. If the problem is fixed, then the law can become valid. To make sure the state doesn't have to pay back money because of the earlier law, a valid law is usually made to apply to the past. The law can be applied to the past to protect the state from having to deal with the consequences of the earlier law. Applying a valid law to the past can be acceptable if it's reasonable.
In this case, the state didn't fix the problem but instead raised the tax rate to avoid having to refund the money. The state also tried to cancel out the court's decision. The court's decision that the sales tax on excise duty and other related taxes was illegal was final. The state could have tried to fix the problem, but it didn't do so with the new law.
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72 of 1950. Petition under article 32 of the Constitution of India for a writ of mandamus. V.K.T. Chari, J.S. Dawdo, Alladi Kuppuswami, and C.R. Pattabhi Raman, for the petitioner. M.C. Setalvad, Attorney General for India (G. N. Joshi with him) for opposite party Nos. 1 and 2. G.N. Joshi, for opposite party Nos. 3 to 5 and 7 to 10. 1950. December 4. The Court delivered Judgment as follows. KANIA C.J. This is an application by the holder of one ordinary share of the Sholapur Spinning and Weaving Company Ltd. for a writ of mandamus and certain other reliefs under article 32 of the Constitution of India. The authorized capital of the company is Rs. 48 lakhs and the paid up capital is Rs. 32 lakhs, half of which is made up of fully paid ordinary shares of Rs. 1,000 each. 875 I have read the judgment prepared by Mr. Justice Mukher jea. In respect of the arguments advanced to challenge the validity of the impugned Act under articles 31 and 19 of the Constitution of India, I agree with his line of reasoning and conclusion and have nothing more to add. On the question whether the impugned Act infringes article 14, two points have to be considered. The first is whether one individual shareholder can, under the circum stances of the case and particularly when one of the re spondents is the company which opposes the petition, chal lenge the validity of the Act on the ground that it is a piece of discriminatory legislation, creates inequality before the law and violates the principle of equal protec tion of the laws under article 14 of the Constitution of India. The second is whether in fact the petitioner has shown that the Act runs contrary to article 14 of the Con stitution. In this case having regard to my conclusion on the second point, I do not think it is necessary to pro nounce a definite opinion on the first point. I agree with the line of reasoning and the conclusion of Mr. Justice Mukherjea as regards the second point relating to the inva lidity of the Act on the ground that it infringes article 14 of the Constitution and have nothing more to add. In my opinion therefore this petition fails and is dismissed with costs. FAZL ALI J. I am strongly of the opinion that this peti tion should be dismissed with costs. The facts urged in the petition and the points raised on behalf of the petitioner before us are fully set forth in the judgments of my brethren, Sastri, Mukherjea and Das JJ., and I do not wish to repeat them here. It is sufficient to say that the main grounds on which the Sholapur Spinning and Weaving Company (Emergency Provisions) Act, 1950 (Act No. XXVIII of 1950), which will hereinafter be referred to as "the Act", has been assailed, is that it infringes three fundamental rights, these being: 876 (1) the right to property secured by article 31 of the Constitution; (2) the right to acquire, hold and dispose of property, guaranteed to every citizen by article 19 (1) (f); and (3) the right to equal protection of the laws, guaran teed by article 14. It has been held in a number of cases in the United States of America that no one except those whose rights are directly affected by a law can raise the question of the constitutionality of that law. This principle has been very clearly stated by Hughes J. in McCabe vs Atchison(1), in these words : "It is an elementary principle that in order to justify the granting of this extraordinary relief, the complainant 's need of it and the absence of an adequate remedy at law must clearly appear. The complainant cannot succeed because someone else may be hurt. Nor does it make any difference that other persons who may be injured are persons of the same race or occupation. It is the fact, clearly established, of injury to the complainant not to others which justifies judicial interference. " On this statement of the law, with which I entirely agree, the scope of the discussion on this petition is greatly restricted at least in regard to the first two fundamental rights. The company and the shareholders are in law separate entities, and if the allegation is made that any property belonging to the company has been taken possession of without compensa tion or the right enjoyed by the company under article 19 (1) (f) has been infringed, it would be for the company to come forward to assert or vindicate its own rights and not for any individual shareholder to do so. In this view, the only question which has to be answered is whether the peti tioner has succeeded in showing that there has been an infringement of his rights as a shareholder under articles 31 and 19 (1) (f) of the Constitution. This question has been so elaborately dealt with by Mukherjea J., that I do not wish to add anything to what he has said in his judg ment, and all that is necessary for me to say is that I adopt his conclusions, (1) 235 u.s. 151. 877 without committing myself to the acceptance of all his reasonings. The only serious point, which in my opinion, arises in the case is whether article 14 of the Constitution is in any way infringed by the impugned Act. This article corresponds to the equal protection clause of the Fourteenth Amendment of the Constitution of the United States of America, which declares that "no State shall deny to any person within its jurisdiction the equal protection of the laws". Professor Willis dealing with this clause sums up the law as prevail ing in the United States in regard to it in these words: "Meaning and effect of the guaranty The guaranty of the equal protection of the laws means the protection of equal laws. It forbids class legislation, but does not forbid classification which rests upon reasonable grounds of distinction. It does not prohibit legislation, which is limited either in the objects to which it is directed or by the territory within which it is to operate. 'It merely requires that all persons subjected to such legislation shall be treated alike under like circumstances and condi tions both in the privileges conferred and in the liabili ties imposed. ' 'The inhibition of the amendment . was designed to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation '. It does not take from the states the power to classify either in the adoption of police laws, or tax laws, or eminent domain laws, but permits to them the exercise of a wide scope of discretion, and nullifies what they do only when it is without any reasonable basis. Mathematical nicety and perfect equality are not required. Similarity, not identity of treatment, is enough. If any state of facts can reasonably be conceived to sustain a classification, the existence of that state of facts must be assumed. One who assails a classification must carry the burden of showing that it does not rest upon any reasonable basis."( ') Having summed up the law in this way, the same learned author adds : "Many different classifications (1) Constitutional Law by Prof. Willis, (1st Edition). p.579. 878 of persons have been upheld as constitutional. A law apply ing to one person or one class of persons is constitutional if there is sufficient basis or reason for it. " There can be no doubt that article 14 provides one of the most valuable and important guarantees in the Constitution which should not be allowed to be whittled down, and, while ac cepting the statement of Professor Willis as a correct exposition of the principles underlying this guarantee, 1 wish to lay particular emphasis on the principle enunciated by him that any classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must bear a reasonable and just relation to the things in respect of which it is proposed. The petitioner 's case is that the shareholders of the Sholapur company have been subjected to discrimination visa vis the shareholders of other companies, inasmuch as section 13 of the Act subjects them to the following disabilities which the shareholders of other companies governed by the Indian Companies Act are not subject to: : "(a) It shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company. (b) No resolution passed at any meeting of the share holders of the company shall be given effect to unless approved by the Central Government. (c) No proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any court unless by or with the sanction of the Central Government. " Primafacie, the argument appears to be a plausible one, but it requires a careful examination, and, while examining it, two principles have to be borne in mind : (1) that a law may be constitutional even though it relates to a single individual, in those cases where on account of some special circumstances or reasons applicable to him and not applica ble to others, 879 that single individual may be treated as a class by himself; (2) that it is the accepted doctrine of the American courts, which I consider to be well founded on principle, that the presumption is always in favour of the constitutionality of an enactment, and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles. A clear enunciation of this latter doctrine is to be found in Middleton vs Texas Power and Light Company(1), in which the relevant passage runs as follows : "It must be presumed that a legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds. " The onus is therefore on the petitioner to show that the legislation which is impugned is arbitrary and unreasonable and there are other companies in the country which should have been subjected to the same disabilities, because the reasons which led the Legislature to impose State control upon the Sholapur company are equally applicable to them. So far as article 14 is concerned, the case of the share holders is dependent upon the case of the company and if it could be held that the company has been legitimately sub jected to such control as the Act provides without violation of the article, that would be a complete answer to the petitioner 's complaint. Now, the petitioner has made no attempt to discharge the burden of proof to which I have referred, and we are merely asked to presume that there must necessarily be other compa nies also which would be open to the charge of mismanagement and negligence. The question cannot in my opinion be treated so lightly. On the other hand, how important the doctrine of burden of proof is and how much harm can be caused by ignor ing it or tinkering with it, will be fully illustrated, by referring to the proceedings in the Parliament in connec tion with the enactment of the (1) ,157. 880 Act, where the circumstances which necessitated it are clearly set out. I am aware that legislative proceedings cannot be referred to for the purpose of construing an Act or any of its provisions, but I believe that they are relevant for the proper understanding of the circumstances under which it was passed and the reasons which necessitat ed it. A reference to the Parliamentary proceedings shows that some time ago, a representation was made on behalf of a section of the shareholders of the Sholapur company to the Registrar of Joint Stock Companies in Bombay, against the conduct of the managing agents, and the Government of Bombay was moved to order a special inquiry into the affairs of the company. For the purpose of this inquiry, two special inspectors were appointed by the Bombay Government and their report revealed "certain astounding facts" and showed that the mill had been grossly mismanaged by the Board of Direc tors and the managing agents. It also revealed that the persons who were responsible for the mismanagement were guilty of certain acts and omissions which brought them under the purview of the law. The Bombay Government accept ed the report of the inspectors and instructed the Advocate General of Bombay to take legal proceedings against certain persons connected with the management of the company. Thereafter, the Government of India was approached by the Provincial Government and requiested to take special action in order to secure the early opening of the mill. The Government of India found that they had no power to take over the management of a particular mill, unless its working could be ensured through the existing management acting under the direction of a Controller appointed under the Essential Supplies Act, but they also found that a peculiar situation had been created in this case by the managing agents themselves being unable or unwilling to conduct the affairs of the company in a satisfactory and efficient manner. The Government of India, as a matter of precaution and lest it should be said that they were going to interfere unnecessarily in the affairs 881 of the company and were not allowing the existing provisions of the law to take their own course, consulted other inter ests and placed the matter before the Standing Committee of the Industrial Advisory Council where a large number of leading industrialists of the country were present, and ultimately it was realized that this was a case where the Government could rightly and properly intervene and there would be no occasion for any criticism coming from any quarter. It appears from the discussion on the floor of the House that the total number of weaving and spinning mills which were closed down for one reason or other was about 35 in number. Some of them are said to have closed for want of cotton, some due to overstocks, some for want o[ capital and some on account of mismanagement. The Minister for Indus try, who sponsored the Bill, in explaining what distin guished the case of the Sholapur mill from the other mills against whom there might be charges of mismanagement, made it clear in the course of the debate that "certain condi tions had to be fulfilled before the Government can and should intervene", and he set out these conditions as fol lows : "(1) The undertaking must relate to an industry which is of national importance. Not each and every undertaking which may have to close down can be taken charge of tempo rarily by Government. (2) The undertaking must be an economic unit. If it appears that it is completely uneconomic and cannot be managed at all, there is no sense in Government taking charge of it. If anything, it will mean the Government will have to waste money which belongs to the taxpayer on an uneconomic unit. (3) There must be a technical report as regards the condition of the plants, machinery, etc. which either as they stand, or after necessary repairs and reconditioning can be properly utilised. (4) Lastly, and this is of considerable importance there must be a proper enquiry held before Government take any action. The enquiry should show that 113 882 managing agents have so misbehaved that they are no longer fit and proper persons to remain in charge of such an impor tant undertaking. "(1) It appears from the same proceedings that the Sholapur mill is one of the largest mills in Asia and employs 13,000 workers. Per shift, it is capable of producing 25 to 30 thousand pounds of yarn, and also one lakh yards of cloth. It was working two shifts when it was closed down on the 29th August, 1949. The closure of the mill meant a loss of 25 lakhs yards of cloth and one and a half lakhs pounds of yarn per month. Prior to 1947, the highest dividend paid by the company was Rs. 525 per share and the lowest Rs. 100, and, in 1948, when the management was taken over by the managing agents who have been removed by the impugned Act, the accounts showed a loss of Rs. 30 lakhs, while other textile companies had been able to show very substantial profits during the same period. Another fact which is brought out in the proceedings is that the. managing agents had acquired control over the majority of the shares of the company and a large number of shareholders who were dissatisfied with the management had been rendered powerless and they could not make their voice heard. By reason of the preponderance of their strength, the managing agents made it impossible for a controller under the Essential Supplies Act to function and they also made it difficult for the company to run smoothly under the normal law. It was against this background that the Act was passed, and it is evident that the facts which were placed before the Legislature with regard to the Sholaput mill were of an extraordinary character. and fully justified the company being treated as a class by itself. There were undoubtedly other mills which were open to the charge of mismanagement, but the criteria adopted by the Government which, in my opinion, cannot be said to be arbitrary or unreasonable, is not applicable (1) parliamentary Debates, Volume III, No. 14; 31st March 1950, pp.2394 5 883 to any of them. As we have seen, one of the criteria was that a mere allegation of mismanagement should not be enough and no drastic step such as is envisaged in the Act should be taken without there being a complete enquiry. In the case of the Sholapur mill, a complete enquiry had been made and the revelations which were made as a result of such enquiry were startling. We are familiar with the expression "police power" which is in vogue in the United States of America. This expression simply denotes that in special cases the State can step in where its intervention seems necessary and impose special burdens for general benefit. As one of the judges has pointed out, "the regulations may press with more or less weight upon one than upon another, but they are designed not to impose unequal or unnecessary restrictions upon anyone, but to promote, with as little individual inconvenience as possible, the general good. "(1) It need not be emphasized that the principles underlying what is known as police power in the United States of America are not peculiar to that country, but are recognized in every modern civilized State. Professor Willis dealing with the question of classification in exercise of police power makes the following observa tions: "There is no rule for determining when classification for the police power is reasonable. It is a matter for judicial determination, but in determining the question of reasonableness the Courts must find some economic, political or other social interest to be secured, and some relation of the classification to the objects sought to be accomplished. In doing this the Courts may consider matters of common knowledge, matters o[ common report, tile history of the times, and to sustain it they will assume every state of facts which can be conceived of as existing at the time Of legislation. The fact that only one person or one object or one business or one locality is affected is not proof of denial of the equal protection of the laws. For such (1) Per Field J. in Barbier vs Connally. ; 884 proof it must be shown that there is no reasonable basis for the classification. " In this particular case, the Government initially took control of the Sholapur Company by means of an Ordinance (Ordinance No. II of 1950), of which the preamble runs as follows : "Whereas on account of mismanagement and neglect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudicially af fected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community; And whereas an emergency has arisen which renders it necessary to make special provision for the proper manage ment and administration of the aforesaid Company; Now, therefore,. . . . " In the course of the Parliamentary debate, reference was made to the fact that the country was facing an acute cloth shortage, and one of the reasons which apparently influenced the promulgation of the Ordinance and the passing of the Act was that the mismanagement of the company had gravely affected the production of an essential commodity. The facts relating to the mismanagement of this mill were care fully collected and the mischief caused by the sudden clos ing of the mill to the shareholders as well as to the gener al public were fully taken into consideration. Therefore, it seems to me that to say that one particular mill has been arbitrarily and unreasonably selected and subjected to discriminatory treatment, would be an entirely wrong propo sition. Article 14 of the Constitution, as already stated, lays down an important fundamental right, which should be closely and vigilantly guarded, but, in construing it, we should not adopt a doctrinaire approach which might choke all benefi cial legislation. The facts to which I have referred are to be found in a public document, and, though some of them may (1) Constitutional Law by Prof. Willis (1st Edition) p. 580. 885 require further investigation forming as they do part of a one sided version, yet they furnish good prima, facie grounds for the exercise of the utmost caution in deciding this case and for not departing from the ordinary rule as to the burden of proof. In the last resort, this petition can be disposed of on the simple ground that the petitioner has not discharged the onus which lies upon him, and I am quite prepared to rest my judgment on this ground alone. I think that the petitioner has failed to make out any case for granting the writs or directions asked for, and the petition should therefore be dismissed with costs. PATANJALI SASTRI J. This is an application under article 32 of the Constitution seeking relief against alleged infringe ment of certain fundamental rights of the petitioner. The petitioner is a shareholder of the Sholapur Spinning and Weaving Company, Limited, Sholapur, in tim State of Bombay, (hereinafter referred to as "the Company "). The authorised share capital of the Company consisted of 1590 fully paid up ordinary shares of Rs. 1,000 each, 20 fully paid up ordinary shares of Rs. 500 each and :32,000 partly paid up redeemable cumulative preference shares of Rs. 100 each, of which Rs. 50 only was paid up. Of these, the petitioner held one ordinary share in his own name and 80 preference shares which, however, having been pledged with the Bank of Baroda Ltd., now stand registered in the Bank 's name. The company was doing flourishing business till disputes arose recently between the management and the employees, and in or about August, 1949, the mills were temporarily closed and the company, which was one of the largest producers of cotton textiles, ceased production. Thereupon, the Gover nor General intervened by promulgating on the 9th January, 1950, an Ordinance called the Sholapur Spinning and Weaving Company (Emergency Provisions) Ordinance (No. II ' of 1950), which empowered tim Government of India to 886 take over the control and management of the company and its properties and effects by appointing their own Directors and to delegate all or any of their powers to the Provincial Government. In exercise of the powers thus delegated, the Government of Bombay appointed respondents 3 to 9 as Direc tors to take charge of the management and administration of the properties and affairs of the company. Subsequently, on 10th April, '1950, the Ordinance was repealed and was re placed by an Act of Parliament containing similar provisons, namely the Sholapur Spinning and Weaving Company (Emergency Provisions) Act (No. XXVIII of 1950) (hereinafter referred to as the "impugned Act"). The petitioner complains that the impugned Act and the action of the Government of Bombay pursuant thereto have infringed the fundamental rights conferred on him by arti cles 11, 19 and 31 of the Constitution with the result that the enactment is unconstitutional and void, and the inter ference by the Government in the affairs of the company is unauthorised and illegal. He accordingly seeks relief by way of injunction and mandamus against the Union of India and the State of Bombay impfended as respondents 1 and 2 respec tively in these proceedings and against respondents a to 9 who are now in management as already stated. The company is irapleaded proforma as the 10th respondent. Before discussing the issues involved, it is necessary to examine the relevant provisions of the impugned Act in order to see in what manner and to what extent the petition er 's rights have been affected thereby. The preamble to the repealed Ordinance stated that "on account of mis management and neglect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudicially affected the production of an essen tial commodity and has caused serious unemployment amongst a certain section of the community and that an emergency has arisen which renders it necessary to make special provi sion for the proper management and administration of the aforesaid 887 Company." This preamble was not reproduced in the impugned Act. Section a empowers the Central Government to appoint as many persons as it thinks fit to be directors of the company "for the purpose of taking over its management and administration. " Section 4 states the effect of the order appointing directors to be that (1) the old directors shall be deemed to have vacated their office, (2) the contract with the managing agents shall be deemed to have been termi nated, (3) that the properties and effects of the company shall be deemed to be in the custody of the new directors who are to be "for all purposes" the directors of the compa ny and "shall alone be entitled to exercise all the powers of the directors of the company whether such powers are derived from the Companies Act or from the memorandum or articles of association or otherwise. " Section 5 defines the powers of the new directors. They are to manage the busi ness of the company "subject to the control of the Central Government" and shall have the power to raise funds offering such security as they think fit, to carry out necessary repairs to the machinery or other property in their custody and to employ the necessary persons and define the necessary conditions of their service. Section 12 provides for the restoration of the management to directors nominated by the shareholders when the purpose of the Government 's interven tion has been fulfilled. Section 13 is important and reads thus: "13. Application of the Companies Act. (1) Notwith standing anything contained in the Companies Act or in the memorandum or articles of association of the company (a) it shall not be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company; (b) no resolution passed at any meeting of the shareholders of the company shall 'be given effect to unless approved by the Central Government; (c) no proceeding for the winding up of the company or for the appointment of a receiver in respect, thereof shall lie in any Court unless by or with the sanction of the Central Government. (2) Subject. 888 to the provisions contained in sub section (1) and to the other provisions of this Act. and subject to such excep tions, restrictions and limitations as the Central Govern ment may, by notified order, specify, the Companies Act shall continue to apply to the company in the same manner as it applied thereto before the issue of the notified order under section 3. " By section 14 the provisions of the Act are to have effect "notwithstanding anything inconsistent therewith contained in any other law or in any instrument having effect by virtue of any law other than this Act. " Section 16 provides for delegation of powers to the Govern ment of Bombay to be exercised subject to the directions of the Central Government, and section 17 bars suits or other proceedings against the Central Government or the Government of Bombay or any director "for any damage caused or likely to be caused by anything which is in good faith done or intended to be done in pursuance of this Act. " As a result of these provisions all the properties and effects of the company passed into the absolute power and control of the Central Government or its delegate the Gov ernment of Bombay, and the normal functioning of the company as a corporate body came to an end. The shareholders have been reduced to the position of interested, if helpless, onlookers while the business is carried on against their will and, may be, to their disadvantage by the Government 's nominees. The declared purpose of this arrangement was, according to the Preamble of the repeated Ordinance to keep up the production of an essential commodity and to avert serious unemployment amongst a certain section of the commu nity. The question accordingly arises whether the impugned Act. which thus affects the petitioner and his co sharehold ers, while leaving untouched the shareholders of all other companies, including those engaged in the production of essential commodities, denies to the petitioner the equal protection of the laws under article 14 of the Constitution. The correct approach to 889 this question is first to see what rights have been con ferred or protection extended to persons similarly situated. The relevant protection is to be found in the provisions of the Indian Companies Act which regulates the rights and obligations of the shareholders of incorporated companies in India. Section 21 of the Act assures to the shareholders the protection of the stipulations contained in the memoran dum and articles of association by constituting. them a binding contract, so that neither the company nor the share holders have the power of doing anything inconsistent there with. The basic right of the shareholders to have their undertaking managed and conducted by the directors of their own choice is ensured by section 83B. Their right to exer cise control and supervision over the management by the directors by passing resolutions at their general meeting is regulated by various provisions of the Act. The important safeguard of winding up the company in certain unfavourable circumstances either through court or by the shareholders thems elves voluntarily is provided for in sections 162 and 203. All these rights and safeguards, on the faith of which the shareholders embark their money in their undertaking, are abrogated by the impugned Act in the case of the share holders of this company alone. In fact, the Central Govern ment is empowered to exclude, restrict or limit the opera tion of any of the provisions of the Companies Act in rela tion to this company. It is thus plain that the impugned Act denies to the shareholders of this particular company the protection of the law relating to incorporated joint stock companies in this country is embodied in the Companies Act and is primafacie within the inhibition of article 14. It is argued, however, that article 14 does not make it incumbent on the Legislature always to make laws applicable to all persons generally, and that it is open to the Legis lature 'to classify persons and things and subject them to the operation of a particular law according to the aims and objects which that law is designed to secure. In the present case, Parliament, 114 890 it was said, came to the conclusion, on the materials placed before them, that the affairs of the company were being grossly mismanaged so as to result in the cessation of production of an essential commodity and serious unemploy ment amongst a section of the community. In view if the detriment thus caused to public economy, it was competent for Parliament to enact a measure applicable to this company and its shareholders alone, and Parliament must be the judge as to whether the evil which the impugned Act was designed to remedy prevailed to such an extent in this company as to call for special legislation. Reliance was placed in support of this argument on certain American decisions dealing with the equal protection clause of the Fourteenth Amendment of the Federal Constitution. It is, however, unnecessary to discuss those decisions here, for it is undeniable that equal protection of the laws cannot mean that all laws must be quite general in their character and application. ' A legislature empowered to make laws on a wide range of sub jects must of necessity have the power of making special laws to attain particular objects and must, for that pur pose, possess large powers of distinguishing and classifying the persons or things to be brought under the operation of such laws, provided the basis of such classification has a just and reasonable relation to the object which the legis lature has in view. While, for instance, a classification in a law regulating labour in mines or factories may be based on age or sex, it may not b`e based on the colour of one 's skin. It is also true that the class of persons to whom a law is made applicable may be large or small, and the degree of harm which has prompted the enactment of a particular law is a matter within the discretion of the law makers. It is not the province of the court to canvass the legislative judgment in such matters. But the issue here is not whether the impugned Act was ill advised or not justified by the facts on which it was based, but whether it transgresses the explicit constitutional restriction on legislative power imposed by article 14. 891 It is obvious that the legislation is directed solely against a particular company and shareholders and not against any class or category of companies and no question, therefore, of reasonable legislative classification arises. If a law is made applicable to a class of persons or things and the classification is based upon differentia having a rational relation to the object sought to be attained, it can be no objection to its constitutional validity that its application is found to affect only one person or thing. For instance, a law may be passed imposing certain restric tions and burdens on joint stock companies with a share capital of, say, Rs. 10 crores and upwards, and it may be found that there is only one such company for the time being to which the law could be applied. If other such companies are brought into existence in future the law would apply to them also, and no discrimination would thus be involved. But the impugned Act, which selects this particular company and imposes upon it and its shareholders burdens and disa bilities on the ground of mismanagement and neglect of duty on the part of those charged with the conduct of its under taking, is plainly discriminatory in character and is, in my judgment, within the constitutional inhibition of article 14. Legislation based upon mismanagement or other miscon duct as the differentia and made applicable to a specified individual or corporate body is not far removed from the notorious parliamentary procedure formerly employed in Britain of punishing individual delinquents by passing bills of attainder, and should not, I think, receive judi cial encouragement. It was next urged that the burden of proving that the impugned Act is unconstitutional lay on the petitioner, and that, inasmuch as he has failed to adduce any evidence to show that the selection of this company and its shareholders for special treatment under the impugned Act was arbitrary, the application must fail. Whilst all reasonable pre sumption must undoubtedly be made in support of the consti tutional validity of a law made by a competent legislature, the circumstances of the present case would seem, to my 892 mind to exclude such presumption. Hostile discrimination is writ large over the face of the impugned Act and it dis closes no grounds for such legislative intcrvcntion. For all that appears no compelling public intercsts were involved. Even the preamble to the original Ordinance was omitted. Nor did respondents 1 and 2 file any counter statement in this proceeding explaining the circumstances which led to the enactment of such an extraordinary measure. There is thus nothing in the record even by way of allegation which the petitioner need take steps to rebut. Supposing, howev er, that the impugned Act was passed on the same grounds as were mentioned in the preamble to the repealed Ordinance, namely, mismanagement and neglect prejudicially affecting the production of an essential commodity and causing seri ous unemployment amongst a section of the community, the petitioner could hardly be expected to assume the burden of showing, not that the company 's affairs were properly man aged, for that is not his case, but that there were also other companies similarly mismanaged, for that is what, according to the respondents, he should prove in order to rebut the presumption of constitutionality. In other words, he should be called upon to establish that this company and its shareholders were arbitrarily singled out for the impo sition of the statutory disabilities. How could the peti tioner discharge such a burden ? Was he to ask for an inves tigation by the Court of the affairs of other industrial concerns in India where also there were strikes and lock outs resulting in unemployment and cessation of production of essential commodities? Would these companies be willing to submit to such an investigation ? And even so, how is it possible to prove that the mismanagement and neglect which is said to have prompted the legislation in regard to this company was prevalent in the same degree in other companies ? In such circumstances, to cast upon the petitioner a burden of proof which it is as needless for him to assume as it is impracticable to discharge is to lose sight of the realities of the case. 893 Lastly, it was argued that the constitutionality of a statute could not be impugned under article 32 except by a person whose rights were infringed by the enactment. and that, inasmuch as there was no infringement of the individ ual right of a shareholder, even assuming that there was an injury to the company as a corporate body, the petitioner was not entitled to apply for relief under that article. Whatever validity the argument may have in relation to the petitioner 's claim based on the alleged invasion of his right of property under article 31, there can be little doubt that, so far as his claim based on the contravention of article 14 is concerned, the petitioner is entitled to relief in his own right As has been pointed out already, the impugned Act deprives the shareholders of the company of important rights and safeguards which are enjoyed by the shareholders of other joint stock companies in Indian under the Indian Companies Act. The petitioner is thus denied the equal protection of the laws in his capacity as a sharehold er, and none the less so because the other shareholders of the company are also similarly affected. The petitioner is thereled to seek relief under article 32 of the Constitu tion. In this view it becomes unnecessary to consider the questions raised under articles 19 and 31 of the Constitu tion. In the result]t, I would allow the application. MUKHERJEA J. This is an application presented by one Chiranjitlal Chowdhuri, a shareholder of the Sholapur Spinning and Weaving Company Limited (hereinafter referred to as the company), praying for a writ of mandamus and certain other reliefs under article 32 of the Constitution. The company, which has its registered office within the State of Bombay and is governed by the provisions of the Indian Companies Act, was incorporated with an authorised capital of Rs. 48 lakhs divided into 1590, fully paid up ordinary shares of Rs. 100 each, 20 fully paid up ordinary shares of Rs. 500 each and 32,000 partly paid up cumulative preference shares of Rs. 100 each. The 894 present paid up capital of the company is Rs. 32 lakhs half of which is represented by the fully paid up ordinary shares and the other half by the partly paid up cumulative prefer ence shares. The petitioner states in his petition that he holds in his own right three ordinary shares and eighty prefercnce shares in the company, though according to his own admission the ,preference shares do not stand in his name but have been registered in the name of the Baroda Bank Limited with which the shares are pledged. According to the respondents, the petitioner is the registered holder of one single ordinary share in the company. It appears that on July 27, 1949, the directors of the company gave a notice to the workers that the mills would be closed, and pursuant to that notice, the mills were in fact closed on the 27th of August following. On January 9, 1950, the Governor General of India promulgated an Ordinance which purported to make special provisions for the proper man agement and administration of the company. It was stated in the preamble to the Ordinance that "on account of mis management and neglect, a situation has arisen in the af fairs of the Sholapur Spinning and Weaving Company Limited which has prejudicially affected the production of an essen tial commodity and has caused serious unemployment amongst a certain section of the community ", and it was on account of the emergency arising from this situation that the promulga tion of the Ordinance was necessary. The provisions of the Ordinance, so far as they are material for our present purpose, may be summarised as follows: Under section 3 of the Ordinance, the Central Government may, at any time, by notified order, appoint as many persons as it thinks fit, to be directors of the company for the purpose of taking over its management and administration and may appoint one of such directors to be the Chairman. Section 4 provides that on the issue of a notified order under section 3 all the directors of the company holding office as such immediately before the issue of the order shall be deemed to have vacated their offices. and any existing 895 contract of management between the company and any managing agent thereof shall be deemed to have terminated. The directors thus appointed shall be for all purposes the directors of the company duly constituted under the Compa nies Act and shall alone be entitled to exercise all the powers of the directors of the company. The powers and the duties of the directors are specified in section 5 and this section inter alia empowers the directors to vary or cancel, with the previous sanction of the Central Government, any contract or agreement entered into between the company and any other person if they are satisfied that such contract or agreement is detrimental to the interests of the company. Section 10 lays down that no compensation for premature termination of any contract could be claimed by the managing agent or any other contracting party. It is provided by section 12 that so long as the management by the statutory directors continues, the shareholders would be precluded from nominating or appointing any person to be a director of the company and any resolution passed by them will not be effective unless it is approved by the Central Government. This section lays down further that during this period no proceeding for winding up of the company, or for appointment of a receiver in respect thereof could be instituted in any court, unless it is sanctioned by the Central Government, and the Central Government would be competent to impose any restrictions or limitations as regards application of the provisions of the Indian Companies Act to, be affairs of the company. The only other material provision is that contained in section 15, under which the Central Government may, by notified order, direct that all or any of the powers exercisable by it under this Ordinance may be exercised by the Government of Bombay. In accordance with the provisions of section 15 men tioned above, the Central Government, by notification issued on the same day that the Ordinance was promulgated, delegat ed all its powers exercisable under the Ordinance to the Government of Bombay, 896 On the next day, the Government of Bombay appointed respond ents 3 to 7 as directors of the company in terms of section 3 of the Ordinance. On the 2nd of March, 1950, the re spondent No. 9 was appointed a director and respondent No. 5 having resigned his office in the meantime, the re spondent No. 8 was appointed in his place. On the 7th of April, 1950, the Ordinance was repealed and an Act was passed by the Parliament of India, known as the Sholapur Spinning and Weaving Company (Emergency Provisions)Act which re enacted almost in identical terms all the provisions of the Ordinance and provided further that all actions taken and orders made under the Ordinance shall be deemed to have been taken or made under the corresponding provisions of the Act. The preamble to the Ordinance was not however repro duced in the Act. The petitioner in his petition has challenged the con stitutional validity of both the Ordinance and the Act. As the Ordinance is no longer in force and all its provisions have been incorporated in the Act, it will not be necessary to deal with or refer to the enactments separately. Both the Ordinance and the Act have been attacked on identical grounds and it is only necessary to enumerate briefly what these grounds are. The main ground put forward by the petitioner is that the pith and substance of the enactments is to take posses sion of and control over the mills of the company which are its valuable assets and such taking of possession of proper ty is entirely beyond the powers of the Legislature. 'The provisions of the Act, it is said, amount to deprivation of property of the shareholders as well as of the company within the meaning of article 31 of the Constitution and the restrictions imposed on the rights of the shareholders in respect to the shares held by them constitute an unjustifia ble interference with their rights to hold property and as such are void under article 19 (1) (f). It is urged that there was no public purpose for which the Legislature could authorise the taking possession or acquisition of 897 property and such acquisition or taking of possession with out payment of compensation is in violation of the funda mental rights guaranteed by article 31 (2) of the Constitu tion. It is said further that the enactment denies to the company and its shareholders equality before the law. and equal protection of laws and thus offends against the provi sions of article 14 of the Constitution. The only other material point raised is that the legislation is beyond the legislative competency of the Parliament and is not covered by any of the items in the legislative lists. On these allegations, the petitioner prays, in the first instance. that it may be declared that both the Act and the Ordinance are ultra vires and void and an injunction may be issued restraining the respondents from exercising any of the powers conferred upon them by the enactments. The third and the material prayer is for issuing a writ of mandamus, "restraining the respondents 1 to 9 from exercising or purporting to exercise any powers under the said Ordinance or Act and from in any manner interfering with the manage ment or affairs of the company under colour of or any pur ported exercise of any powers under the Ordinance or the Act," The other prayers are not material for our purpose. Before I address myself to the merits of this applica tion it will be necessary to clear up two preliminary matters in respect to which arguments were advanced at some length from the Bar. The first point relates to the scope of our enquiry in the present case and raises the question as to what precisely are the matters that have to be inves tigated and determined on this application of the petition er. The second point relates to the form of relief that can be prayed for and granted in a case of this description. Article 32 (1) of the Constitution guarantees to every body the right to move this court, by appropriate proceed ing, for enforcement of the fundamental rights which are enumerated in Part 1II of the Constitution. Clause (2) of the article lays down that the 115 898 Supreme Court shall have the power to issue directions or orders or writs including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari whichever may be appropriate for the enforcement of any of the rights conferred by this part. Thus anybody who complains of infraction of any of the fundamental rights guaranteed by the Constitution is at liberty to move the Supreme Court for the enforcement of such rights and this court has been given the power to make orders and issuue directions or writs similar in nature to the prerogative writs of English law as might be considered appropriate in particular cases. The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right compels the inference that they are applicable only to natural persons. An incorporated company, there fore, can come up to this court for enforcement of its fundamental rights and so may the individual shareholders to enforce their own; but it would not be open to an individual shareholder to complain of an Act which affects the funda mental rights of the company except to the extent that it constitutes an infraction of his own rights as well. This follows logically from the rule of law that a corporation has a distinct legal personality of its own with rights and capacities, duties and obligations separate from those of its individual members. As the rights are different and inhere in different legal entities, it is not competent to one person to seek to enforce the rights of another except where the law permits him to do so. A well known illustra tion of such exception is furnished by the procedure that is sanctioned in an application for a writ of habeas corpus. Not only the man who is imprisoned or detained in confine ment but any person, provided he is not an absolute stranger, can institute proceedings to obtain a writ of habeas corpus for the purpose of liberating another from an illegal imprisonment. 899 The application before us under article 32 of the Con stitution is on behalf of an individual shareholder of the company. Article 32, as its provisions show,. is not di rectly concerned with the determination of constitutional validity of particular legislative enactments. What it aims at is the enforcing of fundamental rights guaranteed by the Constitution, no matter whether the necessity for such enforcement arises out of an action of the executive or of the legislature. To make out a case under this article, it is incumbent upon the petitioner to establish not merely that the law complained of is beyond the competence of the particular legislature as not being covered by any of the items in the legislative lists, but that it affects or invades his fundamental rights guaranteed by the Constitu tion, of which he could seek enforcement by an appropriate writ or order. The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains I of infraction of such rights and approaches the court for relief. This being the position, the proper subject of our investigation would be what rights, if any, of the petitioner as a shareholder of the company have been violated by the impugned legislation. A discussion of the fundamental rights of the company as such would be outside the purview of our enquiry. It is settled law that in order to redress a wrong done to the company, the action should prima facie be brought by the company itself. It cannot be said that this course is not possible in the circumstances of the present case. As the law is alleged to be unconstitutional, it is open to the old directors of the company who have been ousted from their position by reason of the enactment to maintain that they are directors still in the eye of law, and on that footing the majority of shareholders can also assert 'the rights of the company as such. None of them, however, have come forward to institute any proceeding on behalf of the compa ny. Neither in form nor in substance does the present application purport to be one made by the company itself. Indeed, the company 900 is one of the respondents, and opposes the petition. As regards the other point, it would appear from the language of article 32 of the Constitution that. the sole object of the article is the enforcement of fundamental rights guaranteed by the Constitution. A proceeding under this article cannot really have any affinity to what is known as a declaratory suit. The first prayer made in the petition, n seeks relief in the shape of a declaration that the Act is invalid and is apparently inappropriate to an application under article 32; while the second purports to be framed for a relief by way of injunc tion consequent upon the first. As regards the third pray er, it has been contended by Mr. Joshi, who appears for one of the respondents, that having regard to the nature of the case and the allegations made by the petitioner himself, the prayer for a writ of mandamus, in the form in which it has been made, is not tenable. What is argued is that a writ of mandamus can be prayed for, for enforcement of statutory duties or to compel a person holding a public office to do or forbear from doing something which is incumbent upon him to do or forbear from doing under the provisions of any law. Assuming that the respondents in the present case are public servants, it is said that the statutory duties which it is incumbent upon them to discharge are precisely the duties which are laid down in the impugned Act itself. There is no legal obligation on their part to abstain from exercising the powers conferred upon them by the impeached enact ment which the court can be called upon to enforce. These is really not much substance in this argument, for according to the petitioner the impugned Act is not valid at all and consequently the respondents cannot take their stand on this very Act to defeat the application for a writ in the nature of a mandamus. Any way, article 32 of the Constitution gives us very wide discretion in the matter of framing our writs to suit the exigencies of particular cases, and the application of the petitioner cannot be thrown out simply on the 901 ground that 'the proper writ or direction has not been prayed for. Proceeding now to the merits of the case, the first contention that has been pressed before us by the learned Counsel for the petitioner is that the effect of the Shola pur Spinning and Weaving Company Limited (Emergency Provi sions) Act, has been to take away from the company and its shareholders, possession of property and other interests in commercial undertaking and vest the same in certain persons who are appointed by the State, and the exercise of whose powers cannot be directed or controlled in any way by the shareholders. As the taking of possession is not for any public purpose and no provision for compensation has been made by the law which authorises it, such law, it is said, violates the fundamental rights guaranteed under article 31 of the Constitution. To appreciate the contention, it would be convenient first of all to advert to the provisions of the first two clauses of article 31 of the Constitution. The first clause of article 31 lays down that "no person shall be deprived of his property save by authority of law" The second clause provides: "No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken posse sion of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given. " It is a right inherent in every sovereign to take and appropriate private property belonging to individual citi zens for public use. 'this right, which is described as eminent domain in American law, is like the power of taxation, an offspring of political necessity, and it is supposed to be based upon an implied reservation by Govern ment that private property acquired by its 902 citizens under its protection may be taken or its use con trolled for public benefit irrespective of the wishes of the owner. Article 31 (2) of the Constitution prescribes a two fold limit within which such superior right of the State should be exercised. One limitation imposed upon acquisition or taking possession of private property which is implied in the clause is that such taking must be for public purpose. The other condition is that no property can be taken, unless the law which authorises such appropriation contains a provision for payment of compensation in the manner laid down in the clause. So far as article S1 (2) is concerned, the substantial question for our consideration is whether the impugned legislation authorises any act amounting to acquisition or taking possession of private property within the meaning of the clause. It cannot be disputed that acquisition means and implies the acquiring of the entire title of the expropriated owner, whatever the nature or extent of that title might be. The entire bundle of rights which were vested in the original holder would pass on acquisition to the acquirer leaving nothing in the former. In taking possession on the other hand, the title to the property admittedly remains in the original holder, though he is excluded from possession or enjoyment of the property. Article 31 (,?) of the Constitu tion itself makes a clear distinction between acquisition of property and taking possession of it for a public purpose, though it places both of them on the same footing in the sense that a legislation authorising either of these acts must make provision for payment of compensation to the displaced or expropriated holder of the property. In the context in which the word "acquisition" appears in article 31 (2), it can only mean and refer to acquisition of the entire interest of the previous holder by transfer of title and I have no hesitation in holding that there is no such acquisition either as regards the property of the company or of the shareholders in the present case. The question, therefore, narrows down to this as to whether the legisla tion in 903 question has authorised the taking of possession of any property or interest belonging to the petitioner. It is argued by the learned Attorney General that the taking of possession as contemplated by article 31 (2) means the taking of possession of the entire bundle of rights which the previous holder had, by excluding him from every part or item thereof. If the original holder is still left to exercise his possession with regard to some of the rights which were within the folds of his title, it would not amount to taking possession of the property for purposes of article 31 (2) of the Constitution. Having laid down this proposition of law, the learned Attorney General has taken us through the various provisions of the impugned Act and the contention advanced by him substantially is that nei ther the company nor the shareholders have been dispossessed from their property by reason of the enactment. As regards the properties of the company, the directors, who have been given the custody of the property, effects and actionable claims of the company, are, it is said, to exercise their powers not in their own right but as agents of the company, whose beneficial interest in all its assets has not been touched or taken away at all. No doubt the affairs of the company are to be managed by a body of directors appointed by the State and not by the company, but this, it is argued, would not amount to taking possession of any property or interest within the meaning of article 31 (2). Mr. Chari on the other hand, has contended on behalf of the petitioner that after the management is taken over by the statutory directors, it cannot be said that the company still retains possession or control over its property and assets. Assuming that this State management was imposed in the interests of the shareholders themselves and that the statutory directors are acting as the agents of the company, the possession of the statutory directors could not, it is argued, be regarded in law as possession of the company so long as they are bound to act in obedience to the dictates of the Central Government and not of the company itself in the administra tion of its affairs. Possession of an 904 agent, it is said, cannot juridically be the possession of the principal, if the agent is to act not according to the commands or dictates of the principal, but under the direc tion of an exterior authority. There can be no doubt that there is force in this con tention, but as I have indicated at the outset, we are not concerned in this case with the larger question as to how far the inter position of this statutory management and control amounts to taking possession of the property and assets belonging to the company. The point for our consider ation is a short one and that is whether by virtue of the impugned legislation any property or interest of the peti tioner himself, as a shareholder of the company, has been taken possession of by the State or an authority appointed under it, as contemplated by article 31 (2) of the Constitu tion. The petitioner as a shareholder has undoubtedly an interest in the company. His interest is represented by the share he holds and the share is movable property according to the Indian Companies Act with all the incidence of such property attached to it. Ordinarily, he is entitled to enjoy the income arising from the shares in the shape of divi dends; the share like any 'other marketable commodity can be sold or transferred by way of mortgage or pledge. The hold ing of the share in his name gives him the right to vote at the election of directors and thereby take a part, though indirectly, in the management of the company 's affairs. If the majority of shareholders sides with him, he can have a resolution passed which would be binding on the company, and lastly, he can institute proceedings for winding up of the company which may result in a distribution of the net assets among the shareholders. It cannot be disputed that the petitioner has not been dispossessed in any sense of the term of the shares he holds. Nobody has taken the shares away from him. His legal and beneficial interest in respect to the shares he holds is left intact. If the company declares dividend, he would be entitled to the same. He can sell or otherwise dispose of the shares at any 905 time at his option. The impugned Act has affected him in this way that his right of voting at the election of direc tors has been kept in abeyance so long as the management by the statutory director continues; and as a result of that, his right to participate in the management of the company has been abridged to that extent. His rights to pass resolutions or to institute winding up proceedings have also been restricted though they are not wholly gone; these rights can be exercised only with the consent or sanction of the Central Government. In my opinion, from the facts stated above, it cannot be held that the petitioner has been dispossessed from the property owned by him. I may apply the test which Mr. Chari himself formulated. If somebody had taken possession of the petitioner 's shares and was clothed with the authority to exercise all the powers which could be exercised by the holder of the shares under law, then even if he purported to act as the petitioner 's agent and exer cise these powers for his benefit, the possession of such person would not have been the petitioner 's possession if he was bound to act not under the directions of the petitioner or in obedience to his commands but under the directions of some other person or authority. There is no doubt whatsoever that is not the position in the present case. The State has not usurped the shareholders ' right to vote or vested it in any other authority. The State appoints directors of its own choice but that it does, not in exercise of the share holders ' right to vote but in exercise of the powers vested in it by the impugned Act. Thus there has been no dispos session of the shareholders from their right of voting at all. The same reasoning applies to the other rights of the shareholders spoken of above, namely, their right of passing resolutions and of presenting winding up petition. These rights have been restricted undoubtedly and may not be capable of being exercised to the fullest extent as long as the management by the State continues. Whether the restric tions are such as would bring the case within 116 906 the mischief of article 19 (1) (f) of the Constitution, 1 will examine presently; but 1 have no hesitation in holding that they do not amount to dispossession of the shareholders from these rights in the sense that the rights have been usurped by other people who are exercising them in place of the displaced shareholders. In the view that I have taken it is not necessary to discuss whether we can accept as sound the contention put forward by the learned Attorney General that the word "property" as used in article 31 of the Constitution con notes the entire property, that is to say the totality of the rights which the ownership of the object connotes. According to Mr. Setalvad, if a shareholder is not deprived of the entirety of his rights which he is entitled to exer cise by reason of his being the owner or holder of the share and some rights, however insignificant they might be, still remain in him, there cannot be any dispossession as contem plated by article 31(2). It is difficult, in my opinion, to accept the contention formulated in such broad terms. The test would certainly be as to whether the owner has been dispossessed substantially from the rights held by him or the loss is only with regard to some minor ingredients of the proprietory right. It is relevant to refer in this connection to an observation made by Rich J. in a Full Bench decision of the High Court of Australia,(1) where the ques tion arose as to whether the taking of exclusive possession of a property for an indefinite period of time by the Com monwealth of Australia under Reg. 54 of the National Securi ty Regulation amounted to acquisition of property within the meaning of placitum 31, section 51, of the Commonwealth Constitution. The majority of the Full Bench answered the question in the affirmative and the main reason upon which the majority decision was based is thus expressed in the language of Rich J. "Property, in relation to land, is a bundle of rights exercisable with respect to the land. The tenant of an unencumbered estate in fee simple in possession has the largest possible bundle. But there is nothing in (1) See Minister of Stain for the Army vs Dalziel, 68 C L.R. p. 261, 907 the placitum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it was expropriat ing. " It is not, however, necessary for my purpose to pursue the matter any further, as in my opinion there has been no dispossession of the rights of a shareholder in the present case. Mr. Chari in course of his opening relied exclusively on clause (2) of article 31 of the Constitution. During his reply, however, he laid some stress on clause (1) of the article as well, and his contention seems to be that there was deprivation of property in the present case in contra vention of the terms of this clause. It is difficult to see what exactly is the contention of the learned Counsel and in which way it assists him for purposes of the present case. It has been argued by the learned Attorney General that clause (1) of article 31 relates to a power different from that dealt with under clause (2). According to him, what clause (1) contemplates is confiscation or destruction of property in exercise of what are known as 'police powers ' in American law, for which no payment of compensation is neces sary. I do not think it proper for purposes of the present case to enter into a discussion on this somewhat debatable point which has been raised by the learned Attorney General. In interpreting the provisions of our Constitution, we should go by the plain words used by the Constitution makers and the importing of expressions like 'police power ; which is a term of variable and indefinite connotation in American law can only make the task of interpretation more difficult. It is also not necessary to express any opinion as to wheth er clauses (1) and (2) of article 31 relate to exercise of different kinds of powers or they are to be taken as cumula tive provisions in relation to the same subjectmatter, namely, compulsory acquisition of property. If the word "deprived" as used in clause (1) connotes the idea of de struction or confiscation of property, obviously no such thing has happened in the present 908 case. Again if clauses (1) and (2) of article 31 have to be read together and "deprivation" in clause (1) is given the same meaning as compulsory acquisition in clause (2), clause (1), which speaks neither of compensation nor of public purpose, would not by itself, and apart from clause (2), assist the petitioner in any way. If the two clauses are read disjunctively, the only question that may arise in connection with clause (1) is whether or not the depriva tion of property is authorised by law. Mr. Chari has raised a question relating to the validity of the legislation on the ground of its not being covered by any of the items in the legislative list and to this question I would advert later on; but apart from this, clause (1) of article 31 of the Constitution seems to me to be altogether irrelevant for purposes of the petitioner 's case. This leads me to the consideration of the next point raised by Mr. Chari, namely, whether these restrictions offend against the provision of article 19(1)(f) of the Constitution. Article 19(1) of the Constitution enumerates the dif ferent forms of individual liberty, the protection of which is guaranteed by the Constitution. The remaining clauses of the article prescribe the limits that may be placed upon these liberties by law, so that they may not conflict with public welfare or general morality. Article 19(1)(f) guarantees to all citizens ' the right to acquire, hold or dispose of property. ' Any infringement of this provision would amount to a violation of the fundamental rights, unless it comes within the exceptions provided for in clause (5) of the article. That clause permits the imposition of reasonable restrictions upon the exercise of such righ teither in the interests of the general public or for the protection of the interests of any Scheduled Tribe. Two questions, therefore, arise in this connection: first, whether the restrictions that have been imposed upon the rights of the petitioner as a shareholder in the company under the Sholapur Act amount to infringement of his.right to acquire, hold or dispose of property within the meaning of article 19(1)(f) of the Constitution and 909 secondly, if they do interefere with such rights, whether they are covered by the exceptions 1aid down in clause (5) of the article. So far as the first point is concerned, it is quite clear that there is no restriction whatsoever upon the petitioner 's right to acquire and dispose of any property. The shares which he holds do remain his property and his right to dispose of them is not lettered in any way. If to 'hold ' a property means to possess it, there is no infringe ment of this right either, for, as I have stated already, the acts complained of by the petitioner do not amount to dispossession of him from any property in the eye of law. It is argued that 'holding ' includes enjoyment of all benefits that are ordinarily attached to the ownership of a property. The enjoyment of the fruits of a property is undoubtedly an incident of ownership. The pecuniary benefit, which a share. holder derives from the shares he holds, is the dividend and there is no limitation on the petitioner 's right in this respect. The petitioner undoubtedly has been precluded from exercising his right of voting at the elec tion of directors so long as the statutory directors contin ue to manage the affairs of the company. He cannot pass an effective resolution in concurrence with the majority of shareholders without the consent or sanction of the Central Government and without such sanction, there is also a disa bility on him to institute any winding up proceedings in a court of law. In my opinion, these are rights or privileges which are appurtenant to or flow from the ownership of property, but by themselves and taken independently, they cannot be reck oned as property capable of being acquired, held or disposed of as is contemplated by article 19 (1) (f) of the Constitu tion. I do not think that there has been any restriction on the rights of a shareholder to hold, acquire or dispose of his share by reason of the impugned enactment and conse quently article 19 (1) (f) of the Constitution is of no assistance to the petitioner. In this view, the other point does not arise for consideration, but I may state here that even if it is conceded for argument 's sake that the 910 disabilities imposed by the impugned legislation amount to restrictions on proprietory right, they may very well be supported as reasonable restraints imposed in the interests of the general public, viz., to secure the supply of a commodity essential to the community and to prevent a seri ous unemployment amongst a section of the people. They are, therefore, protected completely by clause (5)of article 19. This disposes of the second point raised by Mr. Chari. The next point urged on behalf of the petitioner raises an important question of constitutional law which turns upon the construction of article 14 of the Constitution. It is urged by the learned Counsel for the petitioner that the Sholapur Act is a piece of discriminatory legislation which offends against the provision of article 14 of the Constitu tion. Article 14 guarantees to all persons in the territo ry of India equality before the law and equal protection of the laws and its entire object, it is said, is to prevent any person or class of persons from being singled out as a special subject of discriminatory legislation. It is pointed out that the law in this case has selected one particular company and its shareholders and has taken away from them the right to manage their own affairs, but the same treatment has not been meted out to all other companies or shareholders situated in an identical manner. Article 14 of the Constitution, it may be noted, corre sponds to the equal protection clause in the Fourteenth Amendment of the American Constitution which declares that "no State shall deny to any person within its jurisdiction the equal protection of the laws. " We have been referred in course of the arguments on this point by the learned Counsel on both sides to quite a number of cases decided by the American Supreme Court, where questions turning upon the construction of the 'equal protection ' clause in the Ameri can Constitution came up for consideration. A detailed examination of these reports is neither necessary nor prof itable for our present purpose but we think we can cull a few general principles from some of the pronouncements of 911 the American Judges which might appear to us to be consonant with reason and help us in determining the true meaning and scope of article 14 of our Constitution. I may state here that so far as the violation of the equality clause in the Constitution is concerned, the peti tioner, as a shareholder of the company, has as much right to complain as the company itself, for his complaint is that apart from the discrimination made against the company, the impugned legislation has discriminated against him and the other shareholders of the company as a group vis a vis the shareholders of all other companies governed by the Indian Companies Act who have not been treated in a similar way. As the discriminatory treat ment has been in respect to the shareholders of this company alone, any one of the shareholders, whose interests are thus vitally affected, has a right to complain and it is immate rial that there has been nodiscrimination inter se amongst the shareholders themselves. It must be admitted that the guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions. As has been said by the Supreme Court of America, "equal protection of laws is a pledge of the protection of equal laws( ')," and this means "subjection to equal laws applying alike to all in the same situation("). " In other words, there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is the same. I am unable to accept the argument of Mr. Chari that a legislation relating to one individual or one family or one body corporate would per se violate the guarantee of the equal protection rule. There can certainly be a law applying to one person or to one group of persons and it cannot be held to be (1) Yick Wo vs Hopkins, 118 U.S. at 369 (2) Southern Raliway Company vs Greene, ; ,412. 912 unconstitutional if it is not discriminatory in its charac ter (1). It would be bad law "if it arbitrarily selects one individual or a class of individuals, one corporation or a class of corporations and visits a penalty upon them, which is not imposed upon others guilty of like delinquency(2). " The legislature undoubtedly has a wide field of choice in determining and classifying the subject of its laws, and if the law deals alike with all of a cer tain class, it is normally not obnoxious to the charge of denial of equal protection; but the classification should never be arbitrary. It must always rest upon some real and substantial distinction bearing a reasonable and just rela tion to the things in respect to which the classification is made; and classification made without any ' substantial basis should be regarded as invalid(3). The question is whether judged by this test the im pugned Act can be said to have contravened the provision embodiedin article 14 of the Constitution. Obviously the Act purports to make provisions which are of a drastic character and against the general law of the land as laid down in the Indian Companies Act, in regard to the admin istration and management of the affairs of one company in indian territory. The Act itself gives no reason for the legislation but the Ordinance, which was a precursor of the Act expressly stated why the legislation was necessary. It said that owing to mismanagement and neglect, a situation had arisen in the affairs of the company which prejudicially affected the production of an essential commodity and caused serious unemployment amongst a certain section of the community. Mr. Chari 's contention in substance is that there are various textile companies in India situated in a simi lar manner as the Sholapur company, against which the same charges could be brought and for the control and regulation of which all the reasons that are mentioned in the preamble to the Ordinance (1) Willis Constitutional Law, p. 580. (2) Gulf C. & section F.R. Co. vs Ellis. , at 159. (3) Southern Railway Co. vs Greene, ; , at 412 913 could be applied. Yet, it is said, the legislation has been passed with regard to this one company alone. The argument seems plausible at first sight, but on a closer examination I do not think that I can accept it as sound. It must be conceded that the Legislature has a wide discretion in determining the subject matter of its laws. It is an accepted doctrine of the American Courts and which seems to me to be well founded on principle, that the presumption is favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a transgression of constitutional principles. As was said by the Supreme Court of America in Middleton vs Texas Power and Light Company(1), 'It must be presumed that a Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based upon adequate grounds. " This being the position, it is for the petitioner to establish facts which would prove that the selection of this particular subject by the Legislature is unreasona ble and based upon arbitrary grounds. No allegations were made in the petition and no materials were placed before us to show as to whether there are other companies in India which come precisely under the same category as the Sholapur Spinning and Weaving Company and the reasons for imposing control upon the latter as mentioned in the preamble to the Ordinance are applicable to them as well. Mr. Chari argues that these are matters of common knowledge of which we should take judicial notice. I do not think that this is the correct line of approach. It is quite true that the Legislature has, in this instance, proceeded against one company only and its shareholders; but even one corporation or a group of persons can be taken as a class by itself for the purpose of legislation, provided it exhibits some excep tional features which are not possessed by others. The courts should prima facie (1) 219 u.s. 152 at p. 157. 117 914 lean in favour of constitutionality and should support the legislation if it is possible to do so on any reasonable ground, and it is for the party who attacks the validity of the legislation to place all materials before the court which would go to show that the selection is arbitrary and unsupportable. Throwing out of vague hints that there may be other instances of similar nature is not enough for this purpose. We have not even before us any statement on oath by the petitioner that what has been alleged against this particular company may be said against other companies as well. If there was any such statement, the respondents could have placed before us the whole string of events that led up to the passing of this legislation. If we are to take judi cial notice of the existence of similar other badly managed companies, we must take notice also of the facts which appear in the parliamentary proceedings in connection with this legislation which leave been referred to by my learned brother, Fazl Ali J. in his judgment and which would go to establish that the facts connected with this corporation are indeed exceptional and the discrimination that has been made can be supported on just and reasonable grounds. I purpose ly refrain from alluding to these facts or basing my deci sion thereon as we had no opportunity of investigating them properly during the course of the hearing. As matters stand, no proper materials have been placed before us by either side and as I am unable to say that the legislature cannot be supported on any reasonable ground, I think it to be extremely risky to overthrow it on mere suspicion or vague conjectures. If it is possible to imagine or think of cases of other companies where similar or identical condi tions might prevail, it is also not impossible to conceive of something" peculiar" or "unusual" to this corporation which led the legislature to intervene in its affairs. As has been laid down by the Supreme Court of America, "The Legislature is free to recognise degrees of harm and it may confine its restrictions to those cases where the need is deemed to be the clearest"(1). We should (1) Radics, vs New York, 264 U.S. 915 bear in mind that a corporation, which is engaged in produc tion of a commodity vitally essential to the community, has a social character of its own, and it must not be regarded as the concern primarily or only of those who invest their money in it. If its possibilities are large and it had a prosperous and useful career for a long period of time and is about to collapse not for any economic reason but through sheer perversity of the controlling authority, one cannot say that the legislature has no authority to treat it as a class by itself and make special legislation applicable to it alone in the interests of the community at large. The combination of circumstances which are present here may be of such unique character as could not be existing in any other institution. But all these, I must say, are matters which require investigation on proper materials which we have not got before us in the present case. In these circum stances I am constrained to hold that the present applica tion must fail on the simple ground that the petitioner made no attempt to discharge the primafacie burden that lay upon him and did not place before us the materials upon which a proper decision on the point could be arrived at. In my opinion , therefore, the attack on the legislation on the ground of the denial of equal protection of law cannot succeed. The only other thing that requires to be considered is the argument of Mr. Chari that the law in question is in valid as it is not covered by any of the items in the legis lative list. In my opinion, this argument has no substance. What the law has attempted to do is to regulate the affairs of this company by laying down certain special rules for its management and administration. It is fully covered by item No. 43 of the Union List which speaks inter alia of "incor poration, regulation and winding up of trading corporations. " The result is that the application fails and is dis missed with costs. DAS J. As I have arrived at a conclusion different from that reached by the majority of this Court, I 916 consider it proper, out of my respect for the opinion of my learned colleagues, to state the reasons for my conclusions in some detail. On January 9, 1950, the Governor General of India, acting under section 42 of the Government of India Act, 1935, promulgated an Ordinance, being Ordinance No. II of 1950, concenrning the Sholapur Spinning and Weaving Company, Limited, (hereafter referred to as the said company). The preambles and the provisions of the Ordinance have been referred to in the judgment just delivered by Mukherjea J. and need not be recapitulated by me in detail. Suffice it to say that the net result of the Ordinance was that the managing agents of the said company were dismissed, the directors holding office at the time automatically vacated their office, the Government was authorised to nominate directors, the rights of the shareholders of this company were curtailed in that it was made unlawful for them to nominate or appoint any director, no resolution passed by them could be given effect to without the sanction of the Government and no proceeding for winding up could be taken by them without such sanction, and power was given to the Government to further modify the provisions of the Indian Companies Act in its application to the said company. On the very day that the Ordinance was promulgated the Central Government acting under section 15 delegated all its powers to the Government of Bombay. On January 10, 1950, the Government of Bombay appointed Respondents Nos. 3 to 7 as the new directors. On March 2, 1950, Respondent No. 5 having resigned, Respondent No. 8 was appointed a director in his place and on the same day Respondent No. 9 was also appointed as a director. In the meantime the new Constitu tion had come into force on January 26, 1950. On February 7, 1950, the new directors passed a resolution sanctioning a call for Rs. 50 on the preference shares. Thereupon a suit being Suit No. 438 of 1950 was filed in the High Court of 917 Bombay by one Dwarkadas Shrinivas against the new directors challenging the validity of the Ordinance and the right of the new directors to make the call. Bhagwati J. who tried the suit held that the Ordinance was valid and dismissed the suit. An appeal (Appeal No. 48 of 1950) was taken from that decision which was dismissed by a Division Bench (Chagla C.J. and Gajendragadkar J.) on August 29, 1950. In the meantime, on April 7, 1950, the Ordinance was replaced by Act No. XXVIII of 1950. The Act substantially reproduced the provisions of the Ordinance except that the preambles to the Ordinance were omitted. On May 29, 1950, the present petition was filed by one Chiranjitlal Chowdhuri. The petitioner claims to be a shareholder of the said company holding 80 preference shares and 3 ordinary shares. The preference shares, according to him, stand in the name of the Bank of Baroda to whom they are said to have been pledged. As those preference shares are not registered in the name of the petitioner he cannot assert any right as holder of those shares. According to the respondents, the petitioner appears on the register as holder of only one fully paid up ordinary share. For the purposes of this application, then, the petitioner 's interest in the said company must be taken as limited to only one fully paid up ordinary share. The respondents are the Union of India, the State of Bombay and the new directors besides the company itself. The respondent No. 5 having resigned, he is no longer a director and has been wrongly impleaded as respond ent. The reliefs prayed for are that the Ordinance and the Act are ultra vires and void, that the Central Government and the State Government and the directors be restrained from exercising any powers under the Ordinance or the Act, that a writ of mandamus be issued restraining the new direc tors from exercising any powers under the Ordinance or the Act or from in any manner interfering with the management of the affairs of the company under colour of or in purported exercise of any powers under the said Ordinance or Act. 918 The validity of the Ordinance and the Act has been challenged before us on the following grounds: (i) that it was not within the legislative competence (a) of the Gover nor General to promulgate the Ordinance, or (b) of the Parliament to enact the Act, and (ii) that the Ordinance and the Act infringe the fundamental rights of the shareholders as well as those of the said company and are, therefore, void and inoperative under article 13. Re (i) . The present application has been made by the petitioner under article 52 of the Constitution. Sub section (1) of that article guarantees the right to move this Court by appropriate proceedings for the enforcement of the rights conferred by Part [1] of the Constitution. Sub section (2) empowers this Court to issue directions or orders or writs, including certain specified writs, whichever may be appro priate, for the enforcement of any of the rights conferred by that Part. It is clear, therefore, that article 32 can only be invoked for the purpose of the enforcement of the fundamental rights. Article 32 does not permit an applica tion merely for the purpose of agitating the competence of the appropriate legislature in passing any particular enact ment unless the enactment also infringes any of the funda mental rights. In this case the claim is that the fundamen tal rights have been infringed and, therefore, the question of legislative competence may also be incidentally raised on this application. It does not appear to me, however, that there is any substance in this point for, in my opinion, entry 33 of List I of the Seventh Schedule to the Government of India Act, 1935, and the corresponding entry 43 of the Union List set out in the Seventh Schedule to the Constitu tion clearly support these pieces of legislation as far as the question of legislative competency is concerned. Sec tions 83A and 83 B of the Indian Companies Act can only be supported as valid on the ground that they regulate the management of companies and are, therefore, within the said entry. Likewise, the provisions of the Ordinance and the Act relating to the appointment of directors by the 919 Government and the curtailment of the shareholders ' rights as regards the election of directors, passing of resolutions giving directions with respect to the management of the company and to present a winding up petition are matters touching the management of the company and, as such, within the legislative competence of the appropriate legislative authority. In my judgment, the Ordinance and the Act cannot be held to be invalid on the ground of legislative incompe tency of the authority promulgating or passing the same. Re (ii) The fundamental rights said to have been in fringed are the right to acquire, hold and dispose of property guaranteed to every citizen by Article 19(1)(f) and the right to property secured by article 31, In Gapalan 's case (1) 1 pointed out that the rights conferred by article 19 (1) (a) to (e) and (g) would be available to the citizen until he was, under article 21, deprived of his life or personal liberty according to procedure established by law and that the right to property guaranteed by article 19 (1)(f) would likewise continue until the owner was, under article 31, deprived of such property by authority of law. Therefore, it will be necessary to consider first whether the shareholder or the company has been deprived of his or its property by authority of law under Article 31 for, if he or it has been so deprived, then the question of his or its fundamental right under article 19 (1) (f) will not arise. The relevant clauses of article 31 run as follows "31. (1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorisingthe taking of such possession or such acquisition, unless the law provides for compensation for the property taken posses sion of or acquired (1) ; 920 and either fixes the amount of the compensation, or speci fies the principles on which, and the manner in which, the compensation is to be determined and given. " Article 31 protects every person, whether such ' person is a citizen or not. and it is wide enough to cover a natu ral person as well as an artificial person. Whether or not, having regard to the language used in article 5, a corpora tion can be called a citizen and as such entitled to the rights guaranteed under article 19, it is quite clear that the corporation is protected by article 31, for that article protects every "person" which expression certainly includes an artificial person. The contention of the peitioner is that the Ordinance and the Act have infringed his fundamental right to property as a shareholder in the said company. Article 31, like article 19(1) (f), is concerned with "property ". Both the articles are in the same chapter and deal with fundamental rights. Therefore, it is reasonable to say that the word "property" must be given the same meaning in construing those two articles. What, then, is the meaning of the word "property"? It may mean either the bundle of rights which the owner has over or in respect of a thing, tangible or intangible, or it may mean the thing itself over or in respect of which the owner may exercise these rights. It is quite clear that the Ordinance or the Act has not deprived the shareholder of his share itself. The share still be longs to the shareholder. He is still entitled to the dividend that may be declared. He can deal with or dispose of the share as he pleases. The learned Attorney General contends that even if the other meaning of the word "proper ty" is adopted, the shareholder has not been deprived of his" property" understood in that sense, that is to say he has not been deprived of the entire bundle of rights which put together constitute his "property ". According to him the" property" of the shareholder, besides and apart from his right to elect directors, to pass resolutions giving directions to the directors and to present a winding up petition, consists in his right to participate 921 in the dividends declared on the profits made by the working of the company and, in case of winding up, to participate in the surplus that may be left after meeting the winding up expenses and paying the creditors. Those last mentioned rights, he points out, have not been touched at all and the shareholder can yet deal with or dispose of his shares as he pleases and is still entitled to dividends if and when declared. Therefore, concludes the learned Attorney General, the shareholder cannot complain that he has been deprived of his "property", for the totality of his rights have not been taken away. The argument thus formulated appears to me to be somewhat too wide, for it will then permit the legisla ture to authorise the State to acquire or take possession, without any compensation, of almost the entire rights of the owner leaving to him only a few subsidiary rights. This result could not, in my opinion, have been intended by our Constitution. As said by Rich J. in the Minister for State for the Army vs Datziel (i) while dealing with section 31 (XXXI) of the Australian Constitution "Property, in relation to land, is a bundle of rights exercisable with respect to the land. The tenant of an unencurnbered estate in fee simple in possession has the largest possible bundle. But there is nothing in the placi tum to suggest that the legislature was intended to be at liberty to free itself from the restrictive provisions of the placitum by taking care to seize something short of the whole bundle owned by the person whom it is expropriating. " The learned Judge then concluded as follows at p. 286 : "It would in my opinion, be wholly inconsistent with the language of the placitum to hold that whilst preventing the legislature from authorising the acquisition of a citi zen 's full title except upon just terms, it leaves it open to the legislature to seize possession and enjoy the full fruits of possession indefinitely, on any terms it chooses or upon no terms at all." (1) ; 118 922 In my judgment the question whether the Ordinance or the Act has deprived the shareholder of his "property" must depend, for its answer, on whether it has taken away the substantial bulk of the rights constituting his "property". In other words, if the rights taken away by the Ordinance or the Act are such as would render the rights left un touched illusory and practically valueless, then there can be no question that in effect and substance the "property" of the shareholder has been taken away by the Ordinance or the Act. Judged by this test can it be said that the right to dispose of the share and the right to receive dividend, if any, or to participate in the surplus in the case of winding up that have been left to the shareholder are illu sory or practically valueless, because the right to control the management by directors elected by him, the right to pass resolutions giving directions to the directors and the right to present a winding up petition have, for the time being, been suspended ? I think not. The right still pos sessed by the shareholder are the most important of the rights constituting his "property", although certain privi leges incidental to the ownership have been put in abeyance for the time being. It is, in my opinion, impossible to say that the Ordinance or the Act has deprived the shareholder of his "property" in the sense in which that word is used in article 19 (1) (f) and article 31. The curtailment of the incidental privileges, namely, the right to elect directors, to pass resolutions and to apply for winding up may well be supported as a reasonable restraint on the exercise and enjoyment of the shareholder 's right of property imposed in the interests of the general public under article 19 (5), namely, to secure the supply of an essential commodity and to prevent unemployment. Learned counsel for the petitioner, however, urges that the Ordinance and the Act have infringed the sharehold er 's right to property in that he has been deprived of his valuable right to elect directors, to give directions by passing resolutions and, in case of apprehension of loss, to present a petition for the winding 923 up of the company. These rights, it is urged, are by them selves "property" and it is of this "property" that the shareholder is said to have been deprived bythe State under a law which does not provide for payment of compensation and which is, as such, an infraction of the shareholder 's funda mental right to property under article 31 (2). Two ques tions arise on this argument. Are these rights "property" within the meaning of the two articles I have mentioned ? These rights, as already stated, are, no doubt, privileges incidental to the ownership of the share which itself is property, but it cannot, in my opinion, be said that these rights, by themselves, and apart from the share are "proper ty" within the meaning of those articles, for those articles only regard that as "property" which can by itself be ac quired, disposed of or taken possession of. The right to vote for the election of directors, the right to pass reso lutions and the right to present a petition for winding up are personal rights flowing from the ownership of the share and cannot by themselves and apart from the share be ac quired or disposed of or taken possession of as contemplated by those articles. The second question is assuming that these rights are by themselves "property ", what is the effect of the Ordinance and the Act on such "property". It is nobody 's case that the Ordinance or the Act has autho rised any acquisition by the State of this "property" of the shareholder or that there has in fact been any such acquisi tion. The only question then is whether this "property" of the shareholder, meaning thereby only the rights mentioned above, has been taken possession of by the State. It will be noticed that by the Ordinance or the Act these particular rights of the shareholder have not been entirely taken away, for he can still exercise these rights subject 0 course, to the sanction of the Government. Assuming, however, that the fetters placed on these rights are tantamount to the taking away of the rights altogether, there is nothing to indicate that the Ordinance or the Act has, after taking away the rights from the shareholder, 924 vested them in the State or in any other person named by it so as to enable the State or any other person to exercise those rights of the shareholder. The Government undoubtedly appoints directors under the Act, but such appointment is made in exercise of the the powers vested in the Government by the Ordinance or the Act and not in exercise of the shareholder 's right. As already indicated, entry 43 in the Union List authorises Parliament to make laws with respect, amongst other things, to the regulation of trading corpora tions. There was, therefore, nothing to prevent Parliament from amending the Companies Act or from passing a new law regulating the management of the company by providing that the directors, instead of being elected by the shareholders, should be appointed by the Government. The new law has undoubtedly cut down the existing rights of the shareholder and thereby deprived the shareholder of his unfettered right to appoint directors or to pass resolutions giving direc tions or to present a winding up petition. Such depriva tion, however, has not vested the rights in the Government or its nominee. What has happened to the rights of the shareholder is that such rights have been temporarily de stroyed or kept in abeyance. The result, therefore, has been that although the shareholder has been for the time being deprived of his "property", assuming these rights to be "property", such "property" has not been acquired or taken possession of by the Government. If this be the result brought about by the Ordinance and the Act, do they offend against the fundamental rights guaranteed by article 31 ? Article 31 (1) formulates the fundamental right in a nega tive form prohibiting the deprivation of property except by authority of law. It implies that a person may be deprived of his property by authority of law. Article 31 (2) prohib its the acquisition or taking possession of property for a public purpose under any law, unless such law provides for payment of compensation. It is suggested that clauses (1) and (2)o[ article 31 deal with the same topic, namely, compulsory acquisition or taking possession 925 of property, clause (2) being only an elaboration of clause (1). There appear to me to be two objections to this sug gestion. If that were the correct view, then clause (1).must be held to be wholly redundant and clause (2), by itself, would have been sufficient. In the next place, such a view would exclude deprivation of property otherwise than by acquisition or taking of possession. One can conceive of circumstances where the State may have to deprive a person of his property without acquiring or taking possession of the same. For example, in any emergency, in order to prevent a fire spreading, the authorities may have to demolish an intervening building. This deprivation of property is sup ported in the United States of America as an exercise of "police power ".This deprivation of property is different from acquisition or taking of possession of property which goes by the name of "eminent domain" in the American Law. The construction suggested implies that our Constitution has dealt with only the law of "eminent domain ", but has not provided for deprivation of property in exercise of police powers ' '. I am not prepared to adopt such construction, for I do not feel pressed to do so by the language used in article 31. On the contrary, the language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may well be brought about otherwise than by acquiring or taking possession of it. I think clause (1) enunciates the general principle that no person shall be deprived of his property except by authority of law, which, put in a positive form, implies that a person may be de prived of his property, provided he is so deprived by au thority of law. No question of compensation arises under clause (1). The effect of clause (2) is that only certain kinds of deprivation of property, namely those brought about by acquisition or taking possession of it, will not be permissible under any law, unless such law provides for payment of compensation. If the deprivation of property is brought about by means other than acquisition or taking possession of it, no compensation is required, provided that such deprivation is by 926 authority of law. In this case, as already stated, although the shareholder has been deprived of certain rights, such deprivation has been by authority of law passed by a compe tent legislative authority. This deprivation having been brought about otherwise than by acquisition or taking pos session of such rights, no question of compensation can arise and, therefore, there can be no question of the infraction of fundamental rights under article 31 (2). It is clear, therefore, that so far as the shareholder is concerned there has been no infringement of his fundamental rights under article 19 (1) (f) or article 31, and the shareholder cannot question the constitutionality of the Ordinance or the Act on this ground. As regards the company it is contended that the Ordi nance and the Act by empowering the State to dismiss the managing agent, to discharge the directors elected by the shareholders and to appoint new directors have in effect authorised the State to take possession of the undertaking and assets of the company through the new directors appoint ed by it without paying any compensation and, therefore, such law is repugnant to article 31 (2) of our Constitution. It is, however, urged by the learned Attorney General that the mills and all other assets now in the possession and custody of the new directors who are only servants or agents of the said company are, in the eye of the law, in the possession and custody of the company and have not really been taken possession of by the State. This argument, however, overlooks the fact that in order that the posses sion of the servant or agent may be juridically regarded as the possession of the master or principal, the servant or agent must be obedient to, and amenable to the directions of, the master or principal. If the master or principal has no hand in the appointment of the servant or agent or has no control over him or has no power to dismiss or discharge him, as in this case, the possession of such servant or agent can hardly, in law, be regarded as the possession of the company(1). In this view of the (1) See Elements of Law by Markby. 6th Edition. Para 371. p. 192. 927 matter there is great force in the argument that the proper ty of the company has been taken possession of by the State through directors who have been appointed by the State in exercise of the powers conferred by the Ordinance and the Act and who are under the direction and control of the State and this has been done without payment of any compen sation. The appropriate legislative authority was no doubt induced to enact this law, because, as the preamble to the Ordinance stated, on account of mismanagement and neglect, a situation had arisen in the affairs of the company which had prejudicially affected the production of an essential com modity and had caused serious unemployment amongst a certain section of the community, but, as stated by Holmes J. in Pennsylvania Coal Company vs Mahon(1), "A strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional. way of paying for the change. " Here, there fore, it may well be argued that the property of the company having been taken possession of by the State in exercise of powers conferred by a law which does not provide for payment of any compensation, the fundamental right of the company has, in the eye of the law, been infringed. If the fundamental right of the company has been in fringed, at all, who can complain about such infringement ? Primafacie the company would be the proper person to come forward in vindication of its own rights. It is said that the directors having been dismissed, the company cannot act. This, however, is a misapprehension, for if the Act be void on account of its being unconstitutional, the directors appointed by the shareholders have never in law been dis charged and are still in the eye of the law the directors of the company, and there was nothing to prevent them from taking proceedings in the name of the company at their own risk as to costs. Seeing that the directors have not come forward to make the application on behalf of the company and in its name the question arises whether (1) ; 928 an individual shareholder can complain. It is well settled in the United States that no one but those whose rights are directly affected by a law can raise the question of the constitutionality of that law. Thus in McCabe vs Atchison(1) which arose out of a suit filed by five Negros against five Railway Companies to restrain them from making any distinction in service on account of race pursuant to an Oklahoma Act known as ' 'The Separate Coach Law," in uphold ing the dismissal of the suit Hughes J. observed : "It is an elementary principle that in order to justify the granting of this extraordinary relief, the complainants ' need of it and the absence of an adequate remedy at law must clearly appear. The complaint cannot succeed because some one else may be hurt. Nor does it make any difference that other persons who may be injured are persons of the same race or occupation. It is the fact, clearly established, of injury to the complainant not to others which justi fies judicial interference. " In that case there was no allegation that anyone of the plaintiffs had ever travelled on anyone of the rail roans or had requested any accommodation in any of the sleeping cars or that such request was refused. The same principle was laid down in Jeffrey Manufacturing Company vs Blagg(2), Hendrick vs MaCyland(3) and Newark Natural Gas and Fuel Company vs The City of Newark(1). In each of these cases the Court declined to permit the person raising the question of constitutionality to do so on the ground that his rights were not directly affected by the law or Ordinance in ques tion. On the other hand, in Truax vs Raich(5) and in Bu chanan vs Warley(5) the Court allowed the plea because in both the cases the person raising it was directly affected. In the first of the two last mentioned cases an Arizona Act of 1914 requiring employers employing more than five workers to employ not less than eighty per cent. native born citi zens was (1) 235 u.s. 151. (4) 242 u.s. 403. (2) 235 u.s. 571. (5) 239 u.s. 33. (3) ; (6) 245 u.s. 60. 929 challenged by an alien who had been employed as a cook in a restaurant. That statute made a violation of the Act by an employer punishable. The fact that the employment was at will or that the employer and not the employee was subject to prosecution did not prevent the employee from raising the question of constitutionality because the statute, if en forced, would compel the employer to discharge the employee and, therefore, the employee was directly affected by the statute. In the second of the two last mentioned cases a city Ordinance prevented the occupation of a plot by a colored person in a block where a majority of the residences were occupied by white persons. A white man sold his property in such a block to a Negro under a contract which provided that the purchaser should not be required to accept a deed unless he would have a right, under the laws of the city, to occupy the same as a residence. The vendor sued for specific performance and contended that the Ordinance was unconstitutional. Although the alleged denial of con stitutional rights involved only the rights of coloured persons and the vendor was a white person yet it was held that the vendor was directly affected, because the Courts below, in view of the Ordinance, declined to enforce his contract and thereby directly affected his right to sell his property. It is, therefore, clear that the constitutional validity of a law can be challenged only by a person whose interest is directly affected by the law. The question then arises whether the infringement of the company 's rights so directly affects its shareholders as to entitle any of its shareholders to question the constitutional validity of the law infringing the company 's rights. The question has been answered in the negative by the Supreme Court of the United States in Darnell vs The State of Indi ana(1). In that case the owner of a share in a Tennessee corporation was not allowed to complain that an Indiana law discriminated against Tennessee corporations in that it did not make any allowance, as it did in the case of Indiana corporations, where the corporation (1) 119 930 had property taxed within the State. This is in accord with the well established legal principle that a corporation is a legal 'entity capable of holding pro perty and of suing or being sued and the corporators are not, in con templation of law, the owners of the assets of the corpora tion. In all the cases referred to above the question of constitutionality was raised in connection with the equal protection clause in the Fourteenth Amendment of the American Federal Constitution. If such be the require ments of law in connection with the equal protection clause which corresponds to our article 14, it appears to me to follow that only a person who is the owner of the property can raise the question of constitutionality under article 31 of a law by which he is so deprived of his property. If direct interest is necessary to permit a person to raise the question of constitutionality under article 14, a direct interest in the property will, I apprehend, be necessary to entitle a person to challenge a law which is said to infringe the right to that property under article 31. In my opinion, although a shareholder may, in a sense be interested to see that the company of which he is a shareholder is not deprived of its property he cannot, as held in Darnell vs Indiana(1), be heard to complain, in his own name and on his own behalf, of the infringement of the fundamental right to property of the company, for, in law, his own right to property has not been infringed as he is not the owner of the company 's properties. An interest in the company owning an undertak ing is not an interest in the undertaking itself. The interest in the company which owns an undertaking is the "property" of the shareholder under article 31 (2), but the undertaking is the property of the company and not that of the shareholder and the latter cannot be said to have a direct interest in the property of the company. This is the inevitable result of attributing a legal personality to a corporation. The proceedings for a writ in the nature of a writ of habeas corpus appear to be somewhat different for the (1) 226 u. section 338 931 rules governing those proceedings permit, besides the person imprisoned, any person, provided he is not an utter strang er, but is at least a friend or relation of the imprisoned person, to apply for that particular writ. But that special rule does not appear to be applicable to the other writs which require a direct and tangible interest in the appli cant to support his application. This must also be the case where the applicant seeks to raise the question of the constitutionality of a under articles 14, 19 and 31. For the reasons set out above the present petitioner cannot raise the question of constitutionality of the impugned law under article 31. He cannot complain of any infringement of his own rights as a shareholder, because his "property" has not been acquired or taken possession of by the State although he has been deprived of his right to vote and to present a winding up petition by authority of law. Nor can he complain of an infringement of the compa ny 's right to property because he is not, in the eye of law, the owner of the property in question and accordingly not directly interested in it. In certain exceptional cases where the company 's property is injured by outsiders, a shareholder may, under the English law, alter making all endeavours to induce the persons in charge of the affairs of the company to take steps, file a suit on behalf of himself and other shareholders for redressing the wrong done to the company, but that principle does not apply here for this is not a suit, nor has it been shown that any attempt was made by the petitioner to induce the old directors to take steps nor do these proceedings purport to have been taken by the petitioner on behalf of himself and the other shareholders of the.company. The only other ground on which the Ordinance and the Act have been challenged is that they infringe the the fundamen tal rights guaranteed by article 14 of the Constitution. "Equal protection of the laws", as observed by Day 3. in Southern Railway Company vs Greene (1), "means subjection to equal laws, applying (1) ; 932 alike to all in the same situation". The inhibition of the article that the State shall not deny to any person equality before the law or the equal protection of the laws was designed to protect all persons against legislative discrim ination amongst equals and to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation. It does not, howev er, mean that every law must have universal application, for all persons are not, by nature, attainment or circumstances, in the same position. The varying needs of different class es of persons often require separate treatment and it is, therefore, established by judicial decisions that the equal protection clause of the Fourteenth Amendment of the Ameri can Constitution does not take away from the State the power to classify persons for legislative purposes. This classi fication may be on different bases. It may be geographical or according to objects or occupations or the like. If law deals equally with all of a certain well defined class it is not obnoxious and it is not open to the charge of a denial of equal protection on the ground that it has no applica tion to other persons, for the class for whom the law has been made is different from other persons and, there fore, there is no discrimination amongst equals. It is plain that every classification is in some degree likely ' to produce some inequality, but mere production of inequality is not by itself enough. The inequality produced, in order to encounter the challenge of the Constitution, must be "actually and palpably unreasonable and arbitrary. " Said Day J. in Southern Railway Company vs Greene(1) : " While reasonable classification is permitted, without doing vio lence to the equal protection of the laws, such classifica tion must be based upon some real and substantial distinc tion, bearing a reasonable and just relation to the things in respect to which such classification is imposed; and the classification cannot be arbitrarily made without any substantial basis. Arbitrary selection, it has been said, cannot be justified by calling it classification". Quite conceivably there may be a law 933 relating to a single individual if it is made apparent that, on account of some special reasons applicable only to him and inapplicable to anyone else, that single individual is a class by himself. In Middieton vs Texas Power and Light Company(1) it was pointed out that there was a strong presumption that a legislature understood and correctly appreciated the needs of its own people, that its laws were directed to problems made manifest by experience and that the discriminations were based upon adequate grounds. It was also pointed out in that case that the burden was upon him who attacked a law for unconstitutionality. In Lindsley vs Natural Carbonic Gas Company(2) It was also said that one who assailed the classification made in a law must carry the burden of showing that it did not rest upon any reasonable basis but was essentially arbitrary. If there is a classi fication, the Court will not hold it invalid merely because the law might have been extended to other persons who in some respects might resemble the class for which the law was made, for the legislature is the best judge of the needs of the particular classes and to estimate the degree of evil so as to adjust its legislation according to the exigency found to exist. If, however, there is, on the face of the stat ute, no classification at all or none on the basis of any apparent difference specially peculiar to any particular individual or class and not applicable to any other person or class of persons and yet the law hits only the particular individual or class it is nothing but an attempt to arbi trarily single out an individual or class for discriminating and hostile legislation. The presumption in favour of the legislature cannot in such a case be legitimately stretched so as to throw the impossible onus on the complainant to prove affirmatively that there are other individuals or class of individuals who also possess the precise amount of the identical qualities which are attributed to him so as to form a class with him. As pointed out by Brewer J. in the Gulf, Colorado and Santa Fe 'Railway vs W.H. Ellis (3), while good faith (1} ; (2) ; (3) 165 U.S. 150. 934 and a knowledge of existing conditions on the part of a legislature was to be presumed, yet to carry that presump tion to the extent of always holding that there must be some undisclosed and unknown reason for subjecting certain indi viduals or corporations to hostile and discriminating legis lation was to make the protecting clause a mere rope of sand, in no manner restraining State action. The complaint of the petitioner on this head is formu lated in paragraph 8 (iii) of the petition as follows : "The Ordinance denied to the company and its sharehold ers equality before the law and equal protection of the laws and was thus a violation of article 14 of the Constitution. The power to make regulations relating to trading corpo rations or the control or production of industries was a power which consistently with article 14 could be exercised only generally or with reference to a class and not with reference to a single company or to shareholders of a single company. " The Act is also challenged on the same ground in paragraph 9 of the petition. The learned Attorney General contends that the petitioner as an individual shareholder cannot complain of discrimination against the company. It will be noticed that it is not a case of a shareholder complaining only about discrimination against the company or fighting the battle of the company but it is a case of a shareholder complaining of discrimination against himself and other shareholders of this company. It is true that there is no complaint of discrimination inter se the share holders of this company but the complaint is that the share holders of this company, taken as a unit, have been discrim inated vis a vis the shareholders of other companies. Therefore, the question as to the right of the shareholder to question the validity of a law infringing the right of the company does not arise. Here the shareholder is com plaining of the infringement of his own rights and if such infringement can be established I see no reason why the shareholder cannot come within article 32 to vindicate his own rights. The fact that these proceedings have been taken by 935 one single shareholder holding only one single fully paid up share does not appear to me to make any the least difference in principle. If this petitioner has, by the Ordinance or the Act, been discriminated against and denied equal protec tion of the law, his fundamental right has been infringed and his right to approach this Court for redress cannot be made dependent on the readiness or willingness of other shareholders whose rights have also been infringed to join him in these proceedings or of the company to take substan tive proceedings. To take an example, if any law discrimi nates against a class, say the Punjabis, any Punjabi may question the constitutionality of the law, without joining the whole Punjabi community or without acting on behalf of all the Punjabis. To insist on his doing so will be to put a fetter on his fundamental right under article 32 which the Constitution has not imposed on him. Similarly, if any law deprives a particular shareholder or the shareholders of a particular company of the ordinary rights of sharehold ers under the general law for reasons not particularly and specially applicable to him or them but also applicable to other shareholders of other companies, such law surely offends against article 14 and any one so denied the equal protection of law may legitimately complain of the infringe ment of his fundamental right and is entitled as of right to approach this Court under article 32 to enforce his own fundamental right under article 14, irrespective of whether any other person joins him or not. To the charge of denial of equal protection of the laws the respondents in the affidavit of Sri Vithal N. Chandavar kar filed in opposition to the petition make the following reply: "With reference to paragraph 6 of the petition, I deny the soundness of the submissions that on or from the 26th January, 1950, when the Constitution of India came into force the said Ordinance became void under article 13(1) of the Constitution or that the provisions thereof were inconsistent with the provisions of Part III of the said Constitution or for any of the other grounds mentioned in paragraph 8 936 of the said petition. " In the whole of the affidavit in opposition there is no suggestion as to why the promulgation of the Ordinance or the passing of the Act was considered necessary at all or on what principle or basis either of them was founded. No attempt has been made in the affidavit to show that the Ordinance or the Act was based upon any principle of classification at all or even that the particu lar company and its shareholders possess any special quali ties which are not to be found in other companies and their shareholders and which, therefore, render this particular company and its shareholders a class by themselves. Neither the affidavit in opposition nor the learned Attorney General in course of his arguments referred to the statement of the objects and reasons for introducing the bill which was eventually enacted or the Parliamentary debates as showing the reason why and under what circumstances this law was made and, therefore, apart from the question of their admis sibility in evidence, the petitioner has had no opportunity to deal with or rebut them and the same cannot be used against him. The learned Attorney General takes his stand on the presumption that the law was founded on a valid basis of classification, that its discriminations were based upon adequate grounds and that the law was passed for safeguard ing the needs of the people and that, therefore, the onus was upon the petitioner to allege and prove that the classi fication which he challenged did not rest upon any reasona ble basis but was essentially arbitrary. I have already said that if on the face of the law there is no classification at all or, at any rate, none on the basis of any apparent difference specially peculiar to the individual or class affected by the law, it is only an instance of an arbitrary selection of an individual or class for discriminating and hostile legislation and, therefore, no presumption can, in such circumstances, arise at all. Assuming, however, that even in such a case the onus is thrown on the complainant, there can be nothing to prevent him from proving, if he can, from the text of. the law itself, that 937 it is "actually and palpably unreasonable and arbitrary" and thereby discharging the initial onus. The Act is intituled an Act to make special provision for the proper management and administration of the Sholapur Spinning and Weaving Company, Limited. " There is not even a single preamble alleging that the company was being misman aged at all or that any special reason existed which made it expedient to enact this law. The Act, on its face, does not purport to make any classification at all or to specify any special ' vice to which this particular company and its shareholders are subject and which is not to be found in other companies and their shareholders so as to justify any special treatment. Therefore., this Act, ex facie, is nothing but an arbitrary selection of this particular compa ny and its shareholders for discriminating and hostile treatment and read by itself.is palpably an infringement of Article 14 of the Constitution. The learned Attorney General promptly takes us to the preambles to the Ordinance which has been replaced by the Act and suggests that the Act is based on the same consider ations on which the Ordinance was promulgated. Assuming that it is right and permissible to refer to and utilise the preambles, do they alter the situation ? The preambles were as follows : "Whereas on account of mismanagement and ne glect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudi cially affected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community;And whereas an emergency has arisen which renders it necessary to make special provision for the proper management and administration of the aforesaid compa ny; " The above preambles quite clearly indicate that the justification of the Ordinance rested on mismanagement and neglect producing certain results therein specified. It will be noticed that apart from these preambles there is no material whatever before us establishing or even suggesting that this company and its shareholders have in fact been guilty of any 938 mismanagement or neglect. Be that as it may, the only reason put forward for the promulgation of the Ordinance was mismanagement resulting in falling off of production and in producing unemployment. I do not find it necessary to say that mismanagement and neglect in conducting the affairs of companies can never be a criterion or basis of classifica tion for legislative purposes. I shall assume that it is permissible to make a law whereby all delinquent companies and 'their shareholders may be brought to book and all companies mismanaging their affairs and the shareholders of such companies may, in the interest of the general public, be deprived of their right to manage the affairs of their companies. Such a classification made by a law would bear a reasonable relation to the conduct of all delinquent compa nies and shareholders and may, therefore, create no inequal ity, for the delinquent companies and their shareholders from a separate class and cannot claim equality of treatment with good companies and their shareholders who are their betters. But a distinction cannot be made between the delinquent companies inter se or between shareholders of equally delinquent companies and one set cannot be punished for its delinquency while another set is permitted to continue, or become, in like manner, delinquent without any punishment unless there be some other apparent difference in their respective obligations and unless there be some cogent reason why prevention of mismanagement is more imperative in one instance than in the other. To do so will be nothing but an arbitrary selection which can never be justified as a permissible classiffication. I am not saying that this particular company and its shareholders may not be guilty of mismanagement and negligence which has brought about seri ous fall in production of an essential commodity and also considerable unemployment. But if mismanagement affect ing production and resulting in unemployment is to be the basis of a classification for making a law for preventing mismanagement and securing production and employment, the law must embrace within its 939 ambit all companies which now are or may hereafter become subject to the vice. This basis of classification, by its very nature, cannot be exclusively applicable to any partic ular company and its shareholders but is capable of wider application and, therefore, the law founded on that basis must also be wide enough so as to be capable of being ap plicable to whoever may happen at any time to fall within that classification. Mismanagement affecting production can never be reserved as a special attribute peculiar to a particular company or the shareholders of a particular company. It it were permissible for the legislature to single out an individual or class and to punish him or it for some delinquency which may equally be found in other individuals or classes and to leave out the other individu als or classes from the ambit of the law the prohibition of the denial of equal protection of the laws would only be a meaningless and barren form of words. The argument that the presumption being in favour of the legislature, the onus is on the petitioner to show there are other individuals or companies equally guilty of mismanagement prejudicially affecting the production of an essential commodity and causing serious unemployment amongst a certain section of the community does not, in such. circumstances, arise, for the simple reason that here there has been no classification at all and, in any case, the basis of classification by its very nature is much wider and cannot, in it application, be limited only to this company and its shareholders and, that being so, there is no reason to throw on the petitioner the almost impossible burden of proving that there are other companies which are in fact precisely and in all particu lars similarly situated In any event, the petitioner, in my opinion, may well claim to have discharged the onus of showing that this company and its shareholders have been singled out for discriminating treatment by showing that the Act, on the face of it, has adopted a basis of classifica tion which, by its very nature, cannot be exclusively ap plicable to this company and its shareholders but Which may be equally appplicable to other companies 940 and their shareholders and has penalised this particular company and its shareholders, leaving out other companms and their shareholders who may be equally guilty of the alleged vice of mismanagement and neglect of the type referred to in the preambles. In my opinion the legislation in question infringes the fundamental rights of the petitioner and offends against article 14 of our Constitution. The result, therefore, is that this petition ought to succeed and the petitioner should have an order in terms of prayer (3) of the petition with costs. Petition dismissed. Agent for the petitioner: M.S.K. Aiyengar. Agent for opposite party Nos. 1 & 2:P.A. Mehta. Agent for opposite party Nos. 3 to 5 and 7 to 10: Rajinder Narain.
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The Governor General of India, finding that on account of mismanagement and neglect a situation had arisen in the affairs of the Sholapur Spinning and Weaving Company Ltd. which had prejudicially affected the production of an essen tial commodity and had caused serious unemployment amongst a certain section of the community, and that an emergency had thereby arisen which rendered it necessary to make special provision for the proper management and administration of the said company, promulgated an Ordinance, which was subse quently reenacted in the form of an Act of the Legislature called the sholpur Spinning and Weaving Company (Emergency Provisions)Act, 1950, the net result of which was that the Managing Agents of the said company were dismissed, the directors holding office at the time automatically vacated their office, the Government was authorised to appoint new directors, the rights of the shareholders of the company were curtailed in the matters of voting, appointment of directors, passing of resolutions and applying for winding up, and power was also given to the Government to further modify the Indian Companies Act in its application to the company; and in accordance with the provisions of the Ordi nance new directors were appointed by the Government.
A shareholder of the company made an application under article 32 of the Constitution for a declaration that the Act was void and for enforcement of his fundamental rights by a writ of mandamus against the Central Government, the Government of Bombay and the directors, restraining them from exercising any powers under the Act and from interfering with the management of the company, on the ground that the Act was not within the Legislative competence 870 of the Parliament and infringed his fundamental rights guaranteed by articles 19 (1) (f), 31 and 14 of the Constitu tion and was consequently void under article 13.
The company was made a respondent and opposed the petition.
Held per KANIA C.J., FAZL ALI, MUKHERJEA and DAS JJ. (i) that the impugned Act did not infringe any fundamental right of the petitioner under article 31 (1), as if did not deprive the company or the petitioner of any property save under authority of law; (ii) that the impugned Act did not infringe any fundamen tal right guaranteed by article 31 (2.) inasmuch as it did not authorise the "acquisition" of any property of the company or of the shareholders or "the taking possession" of the property of the petitioner, namely, the shares which he held in the company, though he was disabled from exercising some of the rights which an ordinary shareholder in a company could exercise in respect of his shares, such as the right to vote, to appoint directors, and to apply for winding up; and, if the Act had authorised the "taking possession" of the property of the company, the petitioner was not entitled to any relief on that score under article 32; (iii) that, as the Act did not impose any restrictions on the petitioner 's right "to acquire, hold and dispose of" his shares, there was no infringement of article 19 (1) (f); and assuming that the restrictions imposed on the right of voting etc.
were restrictions on the right to acquire, hold or dispose of property within article 19 (1) (f), such restric tions were reasonable restrictions imposed in the interests of the public, namely, to secure the supply of a commodity essential to the community and to prevent serious unemploy ment amongst a section of the people, and were therefore completely protected by cl.
(5) of article 19.
Held also per KANIA C.J., FAZL ALI, and MUKHERJEA JJ.
(PATANJALI SASTRI AND DAS JJ.
dissenting). that though the Legislature had proceeded against one company only and its shareholders, inasmuch as even one corporation or a group of persons can be taken to be class by itself for the purposes of legislation, provided there is sufficient basis or reason for it and there is a strong presumption in favour of the constitutionality/of an enactment, the burden was on the petitioner to prove that there were also other companies similarly situated and this company alone had been discrimi nated against, and as he had failed to discharge this burden the impugned Act cannot be held to have denied to the peti tioner the right to equal protection of the laws referred to in article He and the petitioner was not therefore entitled to any relief under article 32.
Per PATANJALI SASTRI J.
As the impugned Act plainly denied to the shareholders of this particular company the protections of the law relating to incorporated Joint Stock Companies as embodied in the Indian Companies Act.
it was Prima facie within 871 the inhibition of article 14; and, even though when a law is made applicable to a class of persons or things and the classification is based on differentia having a rational relation to the object sought to be attained, it can be no objection to its constitutional validity that its applica tion is found to affect only one person or thing.
since the impugned Act selected a particular company and imposed upon it and its shareholders burdens and disabilities on the ground of mismanagement and neglect of duty on the part of those charged with the conduct of its undertaking no ques tion of reasonable classification arose and the Act was plainly discriminatory in character and within the constitu tional inhibition of article 14.
Whilst all reasonable pre sumptions must undoubtedly be made in favour of the consti tutional validity of a law made competent legislature, no such presumption could be raised in this case as on the face of it the Act was discriminatory and the petitioner could not be called upon to prove that similar mismanagement existed in other companies.
The issue was not whether the impugned Act was ill advised or not justified by the facts on which it was based but whether it transgressed the ex plicit constitutional restriction on legislative power imposed by article 14.
Per DAs J. The impugned Act, ex facie, is nothing but an arbitrary selection of a particular company and its shareholders for discriminating and hostile treatment, and, read by itself, is palpably an infringement of article 14 of the Constitution.
Assuming that mismanagement and neglect in conducting the affairs of a company can be a basis of classification and that such a classification would bear a reasonable relation to the conduct of all delinquent compa nies and shareholders and may therefore create no inequali ty, a distinction cannot be made between the delinquent companies inter se or between shareholders of equally delin quent companies, and one set cannot he punished for its delinquency while another set is permitted to.
continue, or become, in like manner, delinquent without any punishment unless there be some other apparent difference in their respective obligations and unless there be some cogent reason why prevention of mismanagement is more imperative in one instance than in the other.
The argument that the pre sumption being in favour of the Legislature, the onus is on the petitioner to show that there are other individuals or companies equally guilty of mismanagement prejudicially affecting the production of an essential commodity and causing serious unemployment amongst, certain section of the community does not, in such circumstances, arise, for the simple reason that here there has been no classification at all and, in any case, the basis of classification by its very nature is much wider and cannot, in its application, be limited only to this company and its shareholders; and that being so, there is no reason to throw on the petitioner the almost impossible burden of proving that there are other companies which are in fact precisely and in all particulars similarly situated.
In any event the petitioner, 872 may well claim to have discharged the onus of showing that this company and its shareholders have been singled out for discriminating treatment by showing that the Act, on the face of it, has adopted a basis of classification which, by its very nature, cannot be exclusively applicable to this company and its shareholders but which may be equally ap plicable to other companies and their shareholders and has penalised this particular company and its shareholders, leaving out other companies and their shareholders who may be equally guilty of the alleged vice of mismanagement and neglect of the type referred to in the preamble in the Ordinance.
Per PATANJALI SASTRI, MUKHERJEA and DAS JJ.
(KANIA, C.J,, dubitante).
In so far as the petitioner 's rights as a shareholder were curtailed he was entitled to apply for relief under article 30, in his own right on the ground that the Act denied to him the equal protection of the laws and therefore contravened article 14 even though the other share holders did not join him in the application.
Per MUKHERJEA J.
The fundamental rights guaranteed by the Constitution are available not merely to individual citizens but to corporate bodies as well except where the language of the provision or the nature of the right, com pels the inference that they are applicable only to natural persons.
An incorporated company, therefore, can come up to the Supreme Court for enforcement of its fundamental rights and so may the individual shareholders to enforce their own; but as the company and its shareholders are in law separate entities, it would not be open to an individual shareholder to complain of a law which affects the fundamental right of the company except to the extent that it constitutes an infraction of his own rights as well.
In order to redress a wrong to the company the action should prima facie be brought by the company itself.
Article 32 of the Constitution is not directly concerned with the determination of the constitutional validity of particular enactments, what it aims at is the enforcement of fundamental rights guaranteed by the Constitution and to make out a case under the Article it is incumbent on the petitioner to establish not merely that the law complained of is beyond the competence of the Legislature but that it affects or invades his fundamental rights guaranteed by the Constitution, of which he could seek enforcement by an appropriate writ or order.
Under article 32 the Supreme Court has a very wide discre tion in the matter of framing writs to suit the exigencies of particular cases and an application under the article cannot be thrown out simply on the ground that the proper writ or direction has not been prayed for.
In the context in which the word "acquisition" is used in article 31 i2) it means and implies the acquiring of the entire title of the expropriated owner whatever the nature or extent of that right might be, 873 The guarantee against the denial of equal protection of the laws does not mean that identically the same rules of law should be made applicable to all persons within the territory of India in spite of differences of circumstances and conditions.
It means only that there should be no discrimination between one person and another if as regards the subject matter of the legislation their position is the same.
Quaere : Whether the word "property" in article 31 means the totality of the rights which the ownership of the property connotes, and whether clause (1) of article 31 contem plates only confiscation or destruction of property in exercise of what are known as police powers in American law for which no compensation is necessary.
DAS J.
The question whether an Act has deprived a person of his "property" must depend on whether it has taken away the substantial bulk of the rights constituting his property.
Where the most important rights possessed by the shareholders of a company are still preserved by an Act even though certain privileges incidental to the ownership of the shares have been put in abeyance, the shareholders cannot be said to have been deprived of their "property" in the sense in which that word is used in article 19(1) (f) and article 31.
If on the face of the law there is no classification at all, or at any rate none on the basis of any apparent dif ference specially peculiar to the individual or class af fected by the law, it is only an instance of an arbitrary selection of an individual or class for discriminating and hostile legislation and, therefore, no presumption can, in such circumstances, arise at all Assuming, however, that even in such a case the onus is thrown on the complainant, there can be nothing to prevent him from proving, if he can, from the text of the law itself, that it is actually and palpably unreasonable and arbitrary and thereby discharging the initial onus.
The right to vote, to elect directors, to pass resolu tions and to present an application for winding up, are privileges incidental to the ownership of a share, but they are not by themselves apart from the share, "property" within the meaning of article 19 (1) (f) and article 31; and even assuming that they are "property" such rights cannot be said to have been acquired or taken possession of by the Govern ment in this case within article 31 (2).
The language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may well be brought about otherwise than by acquiring or taking possession of it and in such a case no question payment of compensation arises.
FAZAL ALI MUKHERJEA and DAS JJ.
Except in the matter writs in the nature of habsas corpus no one but those whose rights are directly affected by a law can raise the question of the constitutionality of a law and claim relief under article 39.
A corporation being a different entity from the shareholders, a 112 874 share holder cannot complain on the ground that the rights of the company under articles 19 (1) (f) or 31 are infringed.
FAZL ALl J.
A classification which is arbitrary and which is made without any basis is no classification and a proper classification must always rest upon some difference and must hear a reasonable and lust relation to the things in respect of which it is proposed.
But the presumption is always in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of constitutional principles.
Though article 14 lays down an important fundamental 'right, which should be closely and vigilantly guarded, a doctri naire approach which might choke all beneficial legislation should not be adopted, in construing it.
i A.K. Gapalan vs The State ([1950] S.C.R. 87), Minister of State for the Army vs Dalziel ; , Yick Wo vs Hopkins , Southern Railway Co. vs Greene ; , Gulf C. & S.F. Co. Ellis ; , Middle ton vs Texas Power and Light & Co. ; , Badice vs New York (264 U.S. Pennsylvania Coal Co. vs Mahon (960 U.S. 3931, McCabe vs Archison ; , Jeffrey Manufactur ing Co. vs Blang , Newark Natural Gas and Fuel Co. vs City of Nework U.S 403), Truax vs Raich (939 U.S. 33), Buchanan vs W 'arley ; Darnell vs The State of Indiana , Lindely vs Natural Carbonic Gas Co. , and Barbier vs Connolly ; referred to.
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The Governor General of India thought that the Sholapur Spinning and Weaving Company Ltd. was not being managed well. This caused problems, like less of an important product being made and people losing their jobs. Because of this, the Governor General made a rule called an Ordinance. This was later made into a law called the Sholapur Spinning and Weaving Company (Emergency Provisions) Act, 1950. This law did a few things. It fired the people in charge of the company, and the current directors lost their jobs. The government could then choose new directors. The law also limited what the company's shareholders could do, like voting, choosing directors, making decisions, and closing down the company. The government could also change the rules of the Indian Companies Act for this company. According to the new law, the government appointed new directors.
One of the shareholders asked the court to say that the Act was not valid. He said it violated his basic rights under the Constitution. He wanted the court to order the government and the new directors to stop using the Act and interfering with the company's management. He argued that the government didn't have the power to make this law. He also said it violated his rights under articles 19 (1) (f), 31, and 14 of the Constitution, so it should be considered void under article 13.
The company was also involved in the case and disagreed with the shareholder.
The court, led by Chief Justice KANIA, and Justices FAZL ALI, MUKHERJEA, and DAS, decided: (i) The Act did not violate the shareholder's right under article 31 (1). It didn't take away any property from the company or the shareholder without legal authority. (ii) The Act didn't violate article 31 (2) because it didn't "acquire" any property from the company or shareholders. It also didn't "take possession" of the shareholder's shares, even though he couldn't do certain things with them, like voting or choosing directors. Even if the Act had taken possession of the company's property, the shareholder couldn't get relief under article 32. (iii) The Act didn't stop the shareholder from buying, owning, or selling his shares, so it didn't violate article 19 (1) (f). Even if the limits on voting were seen as limits on owning or selling property, they were reasonable because they were for the good of the public. They helped make sure an important product was available and prevented people from losing their jobs. So, these limits were allowed under article 19, clause (5).
The court, led by Chief Justice KANIA, and Justices FAZL ALI, and MUKHERJEA also said (Justices PATANJALI SASTRI and DAS disagreed): Even though the law only affected one company and its shareholders, a single company or group of people can be treated as a separate class for legal purposes. There just needs to be a good reason for it. It's assumed that laws are constitutional, so the shareholder had to prove that other companies were in the same situation but were not treated the same way. Since he didn't prove this, the Act didn't deny him equal protection under the law, as stated in article 14. So, he couldn't get any help under article 32.
Justice PATANJALI SASTRI said: The Act clearly took away the protections that shareholders of other companies have under the Indian Companies Act. This goes against article 14. Even if a law applies to a specific group and is based on reasonable differences related to the law's purpose, it's still a problem if it only affects one person or thing. This Act singled out a specific company and put burdens on it and its shareholders because of mismanagement. This wasn't a reasonable classification; it was discriminatory and violated article 14. While laws made by the government are usually presumed to be valid, that wasn't the case here because the Act was discriminatory. The shareholder didn't need to prove that other companies were mismanaged. The question was not whether the Act was a good idea, but whether it violated the Constitution's limits on the government's power under article 14.
Justice DAS said: The Act unfairly targeted a specific company and its shareholders for unequal treatment. It clearly violated article 14 of the Constitution. Even if mismanagement could be a basis for classifying companies, you can't treat some poorly managed companies or shareholders differently from others unless there's a good reason. You can't punish one group for mismanagement while letting others continue to mismanage their companies. The government can't argue that it's the shareholder's job to prove that other companies are equally guilty of mismanagement. The Act didn't classify companies at all, and its basis for doing so was too broad. The shareholder shouldn't have to prove that other companies are exactly the same as this one. The shareholder showed that the Act unfairly singled out this company by proving that the Act's classification could apply to other companies, but only punished this one.
Justices PATANJALI SASTRI, MUKHERJEA, and DAS said (Chief Justice KANIA was unsure): Because the shareholder's rights were limited, he could ask for help under article 30. He could argue that the Act denied him equal protection under the law and violated article 14, even if the other shareholders didn't join him.
Justice MUKHERJEA said: The Constitution protects the basic rights of both individuals and companies, unless the wording or nature of the right suggests it only applies to individuals. A company can ask the Supreme Court to enforce its rights, and so can individual shareholders. But since the company and its shareholders are separate, a shareholder can't complain about a law that affects the company's rights unless it also violates their own rights. To fix a wrong done to the company, the company itself should usually be the one to take action. Article 32 of the Constitution is about enforcing basic rights, not deciding if laws are valid. To win a case under this article, the person must prove that the law violates their basic rights. The Supreme Court has a lot of freedom in deciding what orders to issue in these cases. A case shouldn't be thrown out just because the person didn't ask for the right order.
In article 31 (2), "acquisition" means getting complete ownership of something, no matter what the right is. Equal protection under the law doesn't mean everyone in India has to follow the exact same laws, even if their situations are different. It just means there shouldn't be discrimination if people are in the same situation.
It's unclear whether "property" in article 31 means all the rights that come with owning something. It's also unclear whether article 31 (1) only covers the government taking or destroying property, like in cases where the government uses its police powers, which don't require compensation.
Justice DAS said: Whether a law takes away someone's "property" depends on whether it takes away most of the rights that make up that property. If shareholders still have most of their important rights, even if some minor rights are temporarily suspended, they haven't lost their "property" as the word is used in articles 19(1) (f) and 31. If a law doesn't classify people at all, or doesn't do so based on real differences, it's just unfairly targeting a specific group. In that case, it's assumed that the law is invalid. However, even in that case, the person can still try to prove that the law is unreasonable.
The right to vote, elect directors, make decisions, and ask for a company to be closed down are all related to owning shares. But they aren't "property" on their own under articles 19 (1) (f) and 31. Even if they were, the government didn't acquire or take possession of them in this case under article 31 (2). Article 31 (1) is broader than article 31 (2). It covers situations where property is taken away in ways other than acquiring or taking possession of it. In those cases, there's no need to pay compensation.
Justices FAZL ALI, MUKHERJEA, and DAS said: Except for cases involving habeas corpus (wrongful imprisonment), only people whose rights are directly affected by a law can challenge its validity and ask for help under article 39. A company is separate from its shareholders, so a shareholder can't complain that the company's rights under articles 19 (1) (f) or 31 are violated.
Justice FAZL ALI said: A classification that is unfair and has no basis isn't a classification at all. A good classification must be based on real differences and be related to the things it's trying to address. It's always assumed that laws are constitutional, and the person challenging a law has to prove that it clearly violates the Constitution. While article 14 protects an important right, it shouldn't be interpreted in a way that stops the government from making good laws.
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iminal Appeal No. 95 of 1961. Appeal by special leave from the judgment and order dated February 15, 1961, of the Allahabad High Court in Criminal Appeal No. 1597 of 1960. D. section Tewatia and K. B. Mehta, for the appellants. O. P. Rana and C. P. Lal, for the respondents. August 29, 1963. The judgment of the Court was delivered by HIDAYATULLAH J. This is an appeal by special leave against the judgment of the High Court of Allahabad in Criminal Appeal No. 1597 of 1960 decided on February 15, 1961. The appellants are eight in number and they have been convicted under section 325 read with section 149 of the Indian Penal Code and sentenced to three years rigorous imprisonment. They have also been convicted variously under sections 147 & 148, Indian Penal Code and sentenced to smaller terms of imprisonment which need not be mentioned as those sentences are made to run concurrently with the above sentence. They were originally charged under section 302 read with section 149, Indian Penal Code for the murder of one Tikam on January 24, 1960 at about noon in village Nandgaon Police Station Barsana District Mathura. The Session Judge, Mathura, did not think that a case of murder was made out and convicted them of the lesser offence. Their appeal to the High Court was dismis sed and the conviction and sentences were maintained. There was yet another trial at which these eight persons and four others were tried under section 307/149, Indian Penal Code for causing hurt to one Puran with such intention and under such circumstances that if by that act they had caused his death they would have been guilty of murder and also under sections 147 & 148 of the Penal Code for being members of an unlawful assembly, the common object of which was an attempt on Puran 's life. The learned Sessions judge, Mathura held in the second case that the injuries sustained by Puran warranted an 675 offence under section 323, Indian Penal Code. The accused and Puran compounded that offence and all the accused were acquitted. The Sessions judge, however, convicted 11 out of 12 accused under sections 147 & 148, Indian Penal Code and awarded different sentences, according to the weapons possessed by them. One Koka was acquitted because his plea that he was blind from birth was accepted. The 11 accused in the second case appealed to the High Court and were acquitted of the charge of being members of an unlawful assembly. That Judgment of the High Court was delivered on January 31, 1961, in Criminal Appeal No. 1598 of 1960, fifteen days before the confirmation of the conviction and sentences of the eight appellants in this appeal. The facts of the case may now be given. There was enmity between Tikam (deceased) and the appellants and on January 24, 1960, just about noon time Tikam was sitting at the shop of a blacksmith in village Nandgaon. Dulli and Nathi who were examined as P. Ws. 2 & 3 were sitting near him. The appellants who were armed with Ballams, a Pharsa and Lathis arrived on the spot and on seeing Tikam started to assault him. Tikam was severely injured and fell in a ditch adjacent to the road but even after he fell in it the assault was continued by the appellants. He died the same day about five hours later. After assaulting Tikam, these appellants decided to ransack his house and started towards it. On the way they were met by the other four accused and this brought their number to twelve. While they were going to the house of Tikam they saw Puran and decided to beat him. Puran was assaulted and the second case arose out of the assault on him. The learned magistrate who committed the accused to stand their trial before the Court of Sessions framed a common charge in respect of the two incidents but the Sessions judge amended the charge and divided it into two charges namely one connected with the attack on Tikam and the other connected with the attack on Puran. , He also separated the two trials on the two charges. As stated already lie convicted the eight appellants in respect of their assault on Tikam and the same appellants with three others in respect of their assault on Puran. 676 The appeal in the second case was heard first and was allowed by the High Court and the 11 appellants in that appeal including the eight before us were ordered to be acquitted. It was contended before us by Mr. Tewatia that Mr. Justice Sharma who delivered the judgment impugned before us did not allow the appellants a chance to reply to the arguments on behalf of the State and thus denied them a fair hearing. This fact was mentioned in the petition for certificate in the High Court and has been repeated in the petition for special leave. Mr. Justice Sharma had proceeded to deliver judgment as soon as the arguments were over and the judgment was delivered by him on two consecutive days in the presence of the appellants and their counsel. If any such right had been denied to the appellants they should have brought the matter immediately to the notice of the learned Judge and he would have rectified it. It appears that the appellants were hoping for an acquittal in view of the prior acquittal by the learned judge in the companion case and realised too late that their appeal was not accepted. It is for this reason that they do not appear to have raised this issue before the learned Judge when they asked him to certify the appeal and his Order does not show that they made a grievance that the hearing was not fair. In our opinion this point cannot be considered because though. it was mentioned in the petition for certificate it was apparently not pressed before Mr. Justice Sharma. The next contention of the appellants is that the prior acquittal in the second case operates as a bar to the conviction in the present case and the High Court ought to have given the appellants the benefit of the prior ac quittal. Reliance in this connection is placed upon a de cision of the Privy Council in a case from Malaya State reported in Sambasivam vs Public Prosecutor/Federation of Malaya(1) and particularly the following passage from the judgment of Lord Mac Dermott: "The effect of a verdict of acquittal pronounced by a competent court on a lawful charge and after a lawful trial is not completely stated by saying that the person acquitted cannot be tried again for the same offence. at p. 479. 677 To that is must be added that the verdict is binding and conclusive in all subsequent proceedings between the parties to the adjudication. The maximum "Res judicata pro veritate accipitur" is no less applicable to criminal than to civil proceedings. Here, the appellant having been acquitted at the first trial on the charge of having ammunition in his possession, the prosecution was bound to accept the correctness of that verdict and wasprecluded from taking anystep to challenge it at the second trial. And the ap pellant was no less entitled to rely on his acquittal in so far as it might be relevant in his defence. That it was not conclusive of his innocence on the firearm charge is plain, but it undoubtedly reduced in some degree the weight of the case against him, for at the first trial the facts proved in support of one charge were clearly relevant to the other having regard to the circumstances in which the ammunition and revolver were found and the fact that they fitted each other. " The above passage was cited with approval by this Court in Pritam Singh vs State of Punjab(1). The two cited cases were considered and distinguished by this Court in Mohinder Singh vs State of Punjab(2) and Pritam Singh 's case was again distinguished in Gurcharen Singh & anr. vs State of Punjab(1). As pointed out in Mohinder Singh vs State of Punjab(2), the case of the Privy Council involved a confession by an accused in which he admited possession of a firearm and some ammunition which were both offences under the relative law of Malaya State. He was convicted on the basis of that statement on two counts but on appeal was acquitted in respect of the count relating to the possession of ammunition and a fresh trial was ordered in respect of the count relating to the possession of the firearm. In the second trial the confession was again relied upon and he was convicted. The Privy Council set aside the conviction because the confession was incapable of being divided into two parts so as to make separate confessions about the (1) A.I.R. 1956 S.C. 415. (2) Cr. A. No. 140 of 1961, decided on 31 7 63 (Unreported). (3) 678 possession of firearm and about the possession of am munition. Their Lordships held that the confession which was indivisible could not be used at all, in view of the acquittal recorded earlier on the other count. In Pritam Singh 's case(1) the accused made a statement leading to the recovery of a firearm with which he was alleged to have shot one of the victims. He was prosecuted for possession of the firearm and was acquitted but the evidence of the possession of the firearm was used in the murder charge. This was held to be not permissible. As explained in Mohinder Singh 's case(2), the acquittal in respect of the possession of firearm affected the admissibility of the same evidence in connection with the murder case, because the firearm could not at the same time be possessed as well as not possessed by the accussed. The acquittal under the Arms Act,, being proper, affected the evidence of possession in the murder case. In Mohinder Singh 's case(2) as well as in Gurcharan 's(3) case Pritam 's(1) case was distinguished because in those cases, the acquittal under the Arms Act was later than the conviction on the substantive charge. There is nothing in common between the present appeal and the two cases relied upon by the appellants. In this case there is no doubt a prior acquittal but on a charge which was quite different from and independent of the charge in the present case. The assault on Tikam was over when the unlawful assembly formed its now common object namely the assault on Puran. The acquittal proceeded mainly because Puran compounded the offence under section 323 and the High Court did not feel impressed by the evidence about the remaining charges, The charges on which that acquittal took place had nothing whatever to do with the charges on which there is conviction in the present appeal. A plea of autrefois acquit which is statutorily recognised in India under section 403 of the Code of Criminal Procedure arises when a person is tried again for the same offence or on the same facts for any other offence for which a different charge from the one made against him might have been made un (1) A.I.R. 1956 section C. 415. (2) Cr. A. No. 140 of 1961, decided on 31 7 63 (unreported). (3) 679 der section 236 or for which he might have been convicted under section 237. Section 236 provides for a situation where it is doubtful what offence has been committed. When a single act or series of acts is of such a nature that it is doubtful which of several offences the facts which can be proved will constitute, that section permits that the accused may be charged with having committed all or any of such offences and any number of such charges may be tried at once or he may be charged in the alternative with having committed some one of such offences. Section 237 enables the Court to convict an accused charged with one offence for a different offence where the facts show that a different offence has been committed. Neither of these provisions is applicable to the present facts because the two offences were distinct and spaced slightly by time and place. The trials were separate as the two incidents were viewed as distinct transactions. Even if the two incidents could be viewed as connected so as to form parts of one transaction it is obvious that the offences were distinct and required different charges. The assault on Tikam in fulfilment of the common object of the unlawful assembly was over when the unlawful assembly proceeded to the house of Tikam to loot it. The new common object to beat Puran was formed at a time when the common object in respect of Tikam had been fully worked out and even if the two incidents could be taken to be connected by unity of time and place (which they were not), the offences were dis tinct and required separate charges. The learned Sessions judge was right in breaking up the single charge framed by the magistrate and ordering separate trials. In this view the prior acquittal cannot create a bar in respect of the conviction herein reached. It was contended by Mr. Tewatia that the earlier judgment involved almost the same evidence and the reasoning of the learned judge in Puran 's case destroys the prosecution case in the present appeal. He attempted to use the earlier judgment to establish this point. In our opinion he cannot be allowed to rely upon the reasoning in the earlier judgment proceeding as it did upon evidence which was separately recorded and separately 680 considered. The eye witnesses in this case are five in number, while in the other case there were only two, but that apart, the earlier judgment can only be relevant if it fulfils the conditions laid down by the Indian Evidence Act in sections 40 43. The earlier judgment is no doubt admissible to show the parties and the decision but it is not admissible for the purpose of relying upon the appreciation of evidence. Since the bar under section 403 Criminal Procedure Code did not operate, the earlier judgment is not relevant for the interpretation of evidence in the present case. Mr. Tewatia attempted to argue on the facts of this case but we did not permit him to do so because this Court, in the absence of special circumstances, does not review for the third time, evidence, which has been accepted in the High Court and the Court below. No such circumstance has been pointed out to us to make us depart from the settled practice. The appeal therefore fails and is dismissed. Appeal dismissed.
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The eight appellants variously armed attacked one 'T ' and as a result of the assault 'T ' died.
These appellants then proceeded to loot the house of 'T ' and on the way met four others who joined them.
They then came across one 'P ' and assaulted him.
There was a small gap of time and 'the places of assault were different.
The magistrate framed a single charge but the Session Judge framed two charges namely one connected with the attack on 'T ' and the other connected with the attack on 'P '.
He also separated the trials on the two charges.
The Sessions judge convicted the appellants in both cases.
The appeal in the second case i.e. the case relating to assault on 'P ' was heard first by the High Court and the appellants were acquitted of the charges of being members of an unlawful assembly.
Later the appeal connected with the assault on 'T ' was heard by the High Court and in that appeal their convictions and sentences were confirmed.
The present appeal arises out of the convictions and sentences passed by the High Court.
The appellants contended that the prior acquittal in the second case operated as a bar to the conviction in the present case.
The appellants relied on a decision of the Privy Council namely Sarnbasivam vs Public Prosecutor Federation of Malaya and of this Court in Pritam Singh vs State of Punjab.
Held: (i) There was nothing in common between the present appeal and the aforesaid two cases relied upon by the appellants.
In this case the assault on 'T ' was over when the unlawful assembly formed its new common object namely the assault on 'P '.
(ii) A plea of autrefois acquit which is statutorily recognised in India under section 403 of the Code of Criminal Procedure arose when a person is tried again for the same offence or on the same facts for any other offence for which a different charge from the one made against him might have been made under section 236 or for which he might have been convicted under section 237.
The prior acquittal in the other case did not operate as a bar to the conviction in the present case as the charge in the other case was quite different from and independent of the charge in the present case, and sections 236 and 237 of Code of Criminal Procedure were not applicable to the present facts because the two offences were distinct.
Sambasivam vs Public Prosecutor Federation of Malaya, [ , Pritam Singh vs State of Punjab, A.I.R. 1956 S.C. 415, Gurcharan Singh vs State of Punjab, and 674 Mohinder Singh vs State of Punjab, Cr.
A. No. 140 of 1961 decided on 31 7 63, explained.
(iii) This court, in the absence of special circumstances, does not review for the third time evidence which has been accepted in the High Court and the trial court.
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Eight people, called appellants, used weapons to attack someone named 'T.' 'T' died because of this attack.
Afterward, the attackers stole things from 'T's' house. On their way, they met four more people who joined them.
Then, they found someone named 'P' and attacked him too.
The attack on 'T' and the attack on 'P' happened at different places and with a small amount of time in between.
At first, the judge charged the attackers with one crime. But the higher court judge, called the Session Judge, made two charges. One charge was about the attack on 'T,' and the other was about the attack on 'P.'
The Session Judge decided to have separate trials for each charge.
The Session Judge found the attackers guilty in both trials.
The attackers appealed the second case, which was about the attack on 'P.' The High Court heard this appeal first and said the attackers were not guilty of being part of an illegal group.
Later, the High Court heard the appeal about the attack on 'T.' In this appeal, the High Court agreed with the Session Judge and said the attackers were still guilty.
This appeal is about the High Court's decision to find the attackers guilty for the attack on 'T.'
The attackers argued that because they were found not guilty in the second case (the attack on 'P'), they should not be found guilty in this case (the attack on 'T').
The attackers used two previous court decisions to support their argument: *Sarnbasivam vs Public Prosecutor Federation of Malaya* and *Pritam Singh vs State of Punjab.*
The court decided: (i) This appeal is different from the two cases the attackers mentioned.
In this case, the attack on 'T' was finished when the group made a new plan to attack 'P.'
(ii) A legal defense called "autrefois acquit" (meaning "previously acquitted") is used in India under section 403 of the Code of Criminal Procedure. This defense means someone cannot be tried again for the same crime if they were already found not guilty. It also applies if they could have been charged with a different crime based on the same facts, as described in sections 236 and 237 of the Code.
The attackers' previous acquittal in the other case (attack on 'P') does not stop them from being found guilty in this case (attack on 'T'). This is because the charges in the two cases are different and separate. Sections 236 and 237 of the Code of Criminal Procedure do not apply here because the two attacks were separate crimes.
The court explained the following cases: *Sambasivam vs Public Prosecutor Federation of Malaya*, *Pritam Singh vs State of Punjab*, *Gurcharan Singh vs State of Punjab*, and *Mohinder Singh vs State of Punjab*.
(iii) Unless there are special reasons, this court will not review the evidence again after the High Court and the trial court have already accepted it.
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Civil Appeal No. 785 of 1975. Appeal by Special Leave from the Judgment and order dated 7 1 1973 of the Punjab and Haryana High Court in Civil Writ No. 6677/74. A. K. Sen, section K. Gambhir, A. K. Panda and Miss Ramrakhiani for the Appellant. Yogeshwar Prasad, A. K. Srivastava and Miss Rani Chhabra for the Respondent No. 2. The Judgment of the Court was delivered by PATHAK, J. This appeal by special leave is directed against a judgment of the High Court of Punjab and Haryana summarily dismissing a writ petition filed by the appellant. The appellant is a private limited company which manufactures machine tools as its factory in Faridabad. It employs 250 workmen. The second respondent, Sadhu Singh, is one of them. Demands by the workmen for an improvement in the conditions of their service led to conciliation proceedings under the , ("the Act"), and on June 20, 1969, a settlement under section 12 of the 770 Act in satisfaction of those demands was recorded by the Conciliation officer. The settlement included a provision that the workmen would not raise any demand involving further financial burden on the appellant for a period of two years. Before the expiry of that period, however, a fresh demand was raised on August 17, 1970 by the General Labour Union asking for dearness allowance at 25 per cent. The management demurred, and explained that having regard to the structure of wages and allowances now payable under the settlement, there was no justification for the demand. On August 26, 1970 the workmen resorted to a "sit down" strike, which continued the next day. According to the appellant, on August 27, 1970, Sadhu Singh instigated the workmen to "down" tools and go on a "sit down strike. Successive notices by the management the same day failed to dissolve the strike. Charges were framed against Sadhu Singh alleging serious misconduct and a domestic enquiry was ordered. The workman, it is said, declined to accept the charge sheet and, although he was directed to appear before the Inquiry Officer, Sadhu Singh did not participate in the inquiry. On September 13, 1970, the Inquiry officer submitted his report to the management. According to him, the strike was illegal, and Sadhu Singh was guilty of instigating the workmen to go on strike, and besides he was guilty of loitering in the factory. The findings being accepted by the management an order followed on September 14, 1970 dismissing Sadhu Singh from service with immediate effect. The President of the General Labour Union then pressed the management to reinstate Sadhu Singh. Meanwhile the management had taken action dismissing other workmen also. The dismissal of all the workmen formed the subject of a settlement under s.12 of the Act on November 21, 1970, and it was agreed that the dismissed workmen, including Sadhu Singh, should be regarded as retrenched from service. The remaining workmen agreed to resume work unconditionally. The memorandum of settlement was signed by the management on the one hand and the individual workmen on the other. A few days after, Sadhu Singh wrote to the Labour Commissioner claiming that he was not a signatory to the settlement and that he would settle his dispute himself with the management. The State Government referred the dispute in regard to the termination of Sadhu Singh 's service for adjudication to the Labour Court, Rohtak. While the management took its stand on the facts found in the domestic inquiry report and relied on the circumstance that the settlement dated November 21, 1970 was binding on Sadhu Singh, Sadhu Singh asserted that he was not guilty of any misconduct on August 27, 1970. He also contended that the charge sheet had never been served on him and therefore the exparte domestic inquiry was vitiated. The 771 Labour Court by its order dated September 20, 1972 found that Sadhu Singh was not a signatory to the settlement of November 21, 1970, and was, therefore, not bound by it. The Labour Court made its award on September 30, 1972. It found that the domestic inquiry was not proper inasmuch as notice of the inquiry had failed to reach Sadhu Singh because it had been sent to a wrong address, thereby preventing him from participating in the domestic inquiry. On the merits of the dispute the Labour Court found that Sadhu Singh had been ill from August 24 to September 9, 1970, and that was established by a medical certificate which, on inquiry from the Employees State Insurance Department, was found to be in order, and consequently it could not be believed that the workman had instigated or participated in the "tool down" and "sit down" strike. In support of its case that Sadhu Singh was present within the factory premises on August 27, 1970, the management placed reliance on a document purporting to have been signed by the workmen and setting forth the assurance that he would conduct himself properly and be of good behaviour. The Labour Court said that if the document be accepted as genuine there was sufficient reason for accepting the assurance and refraining from taking any action against the workman. The Labour Court held that the dismissal was not justified and that Sadhu Singh was entitled to reinstatement with continuity of previous service and full back wages. The appellant filed a writ petition in the High Court against the award, but the writ petition was dismissed. And now this appeal. The appellant challenges the findings of the Labour Court. It is contended that the settlement dated November 21, 1970 was binding on Sadhu Singh and it was not open to him resile from it. Now Section 36 of the Act provides for representation of the parties to a dispute. The workmen are entitled by virtue of sub section (1) to be represented in a proceeding under the Act by a member of the executive or other office bearer of a registered trade union of which they are members or of a federation of trade unions to which that trade union is affiliated, and where the workman is not a member of any trade union, he can be represented by a member of the executive or other office bearer of a trade union connected with, or by any other workman employed in, the industry in which the workman is employed. It is not obligatory, however, that a workman who is a Party to dispute must be represented by another. He may participate in the proceeding himself. Where conciliation proceedings are taken and a settlement is reached, it is a valid settlement and binding on the parties even if the workmen who are party to the dispute participate in the 772 proceedings personally and are not represented by any of the persons mentioned in section 36(1). That is what happened here. The evidence shows that the individual workmen negotiated the settlement themselves and individually signed the memorandum off settlement. By executing a memorandum they bound themselves by the terms of the settlement. In the present case, however, while several workmen signed the memorandum of settlement on 21st November, 1970, Sadhu Singh did not. It is also established that Sadhu Singh did not authorise any of the other workmen to sign the memorandum on his behalf. And what is of importance is that, as found by the Labour Court, the demand that the dismissal of Sadhu Singh be set aside and that he should be reinstated was never included in the charter of demands of the workmen which led to the conciliation proceedings, and those proceedings did not involve the consideration of such a demand. According to the Labour Court, that was the admitted position, Consequently, the settlement of 21st November, 1970 can on no account be understood as covering and concluding the demand for recalling the order dismissing Sadhu Singh. In the circumstances, it was open to Sadhu Singh to assail his dismissal from service and to contend that the settlement of 21st November, 1970 did not bind him. The Labour Court was right in adjudicating on the propriety of his dismissal and, having found that the dismissal was not justified, in granting relief. It is submitted that notice of the domestic inquiry was duly effected on Sadhu Singh and the finding of the Labour Court to the contrary is erroneous. Plainly, the question turns on the evidence on the record and we see no reason why the finding of the Labour Court should not be accepted. Having reached the conclusion that the domestic inquiry, in the circumstances, was improper it was open to the Labour Court to enter into the dispute on its merits and pronounce its award. The finding that Sadhu Singh was ill and could not be said to have instigated or participated in the strike on August 27, 1970 is a finding of fact which proceeds from the material on the record. We are not satisfied that the finding should be disturbed. Considerable reliance was placed by the appellant on the document said to have been executed by the workman containing the assurance that he would be of good behaviour and, it is submitted. 773 that after executing the document Sadhu Singh went back on the assurance and set the strike in motion. We see no force in the submission. The evidence led by the management attempts to show specifically that Sadhu Singh instigated the strike at 10 O 'clock in the morning on August 27, 1970. It would not be unreasonable to hold that the declaration of assurance was executed subsequently. It was an assurance accepted by the management, and, therefore, there is no reason why the management should have insisted on initiating disciplinary proceedings thereafter against the workman. In the result, the appeal is dismissed with costs to the second respondent, which we assess at Rs. 2,000. The appellant has deposited that sum pursuant to the order of this Court dated April 30, 1974, and it is open to the second respondent to withdraw the money. V. D. K. Appeal dismissed.
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The appellant company manufactures machine tools at its factory in Faridabad employing 250 workmen including the second respondent, Sadhu Singh.
Demands of the workmen for an improvement in the conditions of the service led to conciliation proceedings and a settlement under section 12 was recorded on June 20, 1969 by the Conciliation officer.
The settlement included a provision that the workmen would not raise any demand involving further financial burden on the appellant for a period of two years.
Before the expiry of that period, however, a fresh demand was raised on August 17, 1970 by the General Labour Union asking for dearness allowance at 25 per cent.
The management having refused this demand the workmen resorted to a "sit down" strike on August 26 and 27, 1970.
The second respondent Sadhu Singh was charged with alleging serious misconduct.
Sadhu Singh did not participate in the inquiry.
Accepting the report submitted by the Inquiry officer that Sadhu Singh was guilty of instigating the workmen to go on strike the services of Sadhu Singh were terminated by the management with immediate effect by an order dated September 14, 1970.
The management dismissed some other workmen also.
The dismissal of all workmen formed the subject of another settlement under section 12 of the Act dated November 21, 1970 and it was agreed that the dismissed workmen including Sadhu Singh should be regarded as retrenched from service.
The remaining workmen agreed to resume work unconditionally.
Sadhu Singh, took up the matter before the Labour Court stating that not being a signatory to the settlement of November 21, 1970 he was not bound by it.
The Labour court accepted his plea and made its ward on September 30, 1972.
It found that the domestic inquiry was not proper inasmuch as notice of the inquiry had failed to reach Sadhu Singh, thereby preventing him from participating in the domestic inquiry.
Further it held that since Sadhu Singh had been ill from August 24, to September 9, 1970 he could not be said to have instigated the strike.
The appellant having failed before the High Court has come in appeal after obtaining special leave from this Court.
Dismissing the appeal, the Court, ^ HELD: Section 36 of the provides for representation of the parties to a dispute.
The workmen are entitled by virtue of sub section (1) to be represented in a proceeding under the Act by a member of the executive or other office bearer of a registered trade union of which 769 they are members or of a federation of trade unions to which that trade union is affiliated, and where the workmen is not a member of any trade union, he can be represented by a member of the executive or other office bearer of a trade union connected with, or by any other workman employed in the industry in which the workmen is employed.
It is not obligatory, however, that a workman who is a party to a dispute must be represented by another.
He may participate in the proceeding himself.
Where conciliation proceedings are taken and a settlement is reached, it is a valid settlement and binding on the parties even if the workmen who are party to the dispute participate in the proceedings personally and are not represented by any of the persons mentioned in section 36(1) of the Act.
In the present case; (1) by executing a memorandum the several workmen who individually signed it on 21st August, 1970 bound themselves by the terms of the settlement, but as Sadhu Singh had not signed the memorandum nor had he authorised any of the workman to sign the memorandum on his behalf he was not bound by the settlement.
(2) The settlement of 21st November, 1970 can on no account be understood as covering and concluding the demand for recalling the order dismissing Sadhu Singh, as his reinstatement was never included in the charter of demands of the workmen which led to the conciliation proceedings and those proceedings did not involve the consideration of such a demand.
In the circumstances, it was open to Sadhu Singh to assail his dismissal from service and to contend that the settlement of 21st November 1970 did not bind him.
(3) The Labour Court was right in adjudicating on the propriety of his dismissal and, having found that the dismissal was not justified, in granting relief.
[771 F 772E]
|
The company made machine tools in Faridabad and employed 250 workers, including Sadhu Singh.
The workers wanted better working conditions, so they started a negotiation process. On June 20, 1969, they reached an agreement with the company, which was written down by a government official. This is called a settlement.
The settlement said that the workers wouldn't ask for anything that would cost the company more money for two years.
But before those two years were up, the workers asked for a 25% increase in their dearness allowance (cost of living adjustment) on August 17, 1970.
The company said no, so the workers went on a "sit-down" strike on August 26 and 27, 1970. This means they stayed at work but refused to do their jobs.
Sadhu Singh was accused of serious bad behavior.
Sadhu Singh didn't take part in the investigation into the accusations.
The person in charge of the investigation said Sadhu Singh was guilty of encouraging the workers to strike. Because of this, the company fired Sadhu Singh on September 14, 1970.
The company also fired some other workers.
The firing of all these workers was part of another settlement on November 21, 1970. It was decided that the fired workers, including Sadhu Singh, would be considered laid off (retrenched) instead of fired.
The remaining workers agreed to go back to work without any conditions.
Sadhu Singh went to the Labour Court (a special court for worker issues). He argued that he didn't sign the settlement of November 21, 1970, so it shouldn't apply to him.
The Labour Court agreed with him and made a ruling on September 30, 1972.
The court said that the investigation wasn't fair because Sadhu Singh didn't get the notice about it. This stopped him from being able to defend himself.
The court also said that because Sadhu Singh was sick from August 24 to September 9, 1970, he couldn't have encouraged the strike.
The company lost the case in the High Court (a higher court), so they appealed to a higher court after getting special permission.
The Court dismissed the appeal and HELD: Section 36 explains how people in a dispute can be represented.
The workers can have a member of their union's leadership represent them in a case. This can be a member of the union itself or a larger organization the union belongs to. If a worker doesn't belong to a union, they can be represented by someone from a union connected to their industry, or by another worker in their industry.
However, a worker doesn't have to be represented by someone else.
They can participate in the case themselves.
When a negotiation happens and a settlement is reached, it's a valid settlement. It applies to everyone involved, even if the workers participated personally and weren't represented by someone else as described in Section 36(1).
In this specific case: (1) The workers who signed a paper on August 21, 1970, agreed to the terms of the settlement. But Sadhu Singh didn't sign the paper, and he didn't allow anyone else to sign for him. So, he's not bound by the settlement.
(2) The settlement of November 21, 1970, doesn't cover the demand to bring Sadhu Singh back to work. His job was never included in the things the workers wanted when they started negotiating. So, the negotiations didn't include the question of his job.
Because of this, Sadhu Singh could challenge his firing and argue that the settlement of November 21, 1970, didn't apply to him.
(3) The Labour Court was right to decide whether his firing was fair. And because the court decided the firing wasn't justified, they were right to provide a solution.
| 6,458
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Appeal No. 197 of 1954. Appeal from the Judgment and Order dated the 25th March, 1953, of the Calcutta High Court in Appeal from Original Order No. 54 of 1953. Sachin Chaudhury, Sukumar Mitter, section N. Mukherjee and D. N. Ghosh, for the appellant. 244 K. N. Rajagopal Sastri and D. Gupta, for the respondents. November 1. The Judgment of section K. Das, K. C. Das Gupta and N. Rajagopala Ayyangar, JJ., was delivered by K. C. Das Gupta, J. M. Hidayatullah, J. and J. C. Shah, J., delivered separate Judgments. DAS GUPTA J. This appeal is against an appellate decision of a Bench of the Calcutta High Court by which in reversal of the order made by the Trial Judge the Bench rejected the present appellant 's application under article 226 of the Constitution. The appellant is a private limited company incorporated under the Indian Company 's Act and has its registered office in Calcutta. It was assessed to income tax for the assessment years, 1942 43, 1943 44 and 1944 45 by three separate orders dated January 26, 1944, February 12, 1944, and February 15, 1945, respectively. These assessments were,made under section 23(3) of the Indian Income tax Act upon returns filed by it accompanied by statements of account. The first two assessments were made by Mr. L. D. Rozario the then Income tax Officer and the last one by Mr. K. D. Banerjee. The taxes assessed were duly paid up. On March 28, 1951, three notices purporting to be under section 34 of the Indian Income tax Act, 1922, were issued by the income tax Officer calling upon the company to submit fresh returns of its total income and the total world income assessable for the three accounting years relating to the three assessment years, 1942 43 1943 44 and 1944 45. The appellant company furnished re. turns in compliance with the notices but on September 18, 1951, applied to the High Court of Calcutta for issue under article 226 of the Constitution of appropriate writs or orders directing the Income tax Officer not to proceed to assess it on the basis of these notices. The first ground on which this prayer was based was mentioned in the petition in these terms: " The said pretended notice was issued without the existence of the necessary conditions precedent which confers jurisdiction under section 34 aforementioned, whether 245 before or after the amendment in 1948 ". The other ground urged was that the amendment to section 34 of the Income tax Act in 1948 was not retrospective and that the assessment for the years 1942 43, 1943 44 and 1944 45 became barred long before March 1951. The Trial Judge held that the first ground was not made out but being of opinion that the amending Act of 1948 was not retrospective, he held that the notices issued were without jurisdiction. Accordingly he made an order prohibiting the Income tax Officer from continuing the assessment proceedings on the basis of the impugned notices. The learned Judges who heard the appeal agreed with the Trial Judge that the first ground had not been made out. They held however that in consequence of the amendment of section 34 in 1948 the objection on the ground of limitation must also fail. A point of constitutional law which appears to have been raised before the appeal court was also rejected. The appeal was allowed and the company 's application under article 226 was dismissed with costs. The Company has preferred the present appeal on the strength of a certificate issued by the High Court under article 133(1)(a) of the Constitution. The only point raised before us is that the courts below were wrong in holding that the first ground that the notices were issued without the existence of the necessary conditions precedent which confers jurisdiction under section 34 had not been made out. As it is no longer disputed that section 34 as amended in 1948 applies to the present case we have to consider the section as it stood after the amendment in 1948, in deciding this question of jurisdiction. The relevant portion of the section was in these words : " 34. Income escaping assessment. (1) If (a) the Income tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gain chargeable to income tax have escaped assessment for that year, or have been 246 under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year, or have been under assessed, or assessed at too low a rate or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed. He may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that (i) the Income tax Officer shall not issue a notice under this subsection, unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such notice; (ii) the tax shall be chargeable at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be; and (iii) where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of a non resident person under section 43, this sub section shall have effect as if for the periods of eight years and four years a period of one year was substituted. 247 Explanation Production before the Income tax Officer of account books or other evidence from which material facts could with due diligence have been ' discovered by the Income tax Officer will not necessarily amount to disclosure within the meaning of, this section. " To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year two conditions have therefore to be satisfied. The first is that the Income tax Officer must have reason to believe that income, profits or gains chargeable to income tax have been under assessed. The second is that he must have also reason to believe that such " under assessment " has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income tax Officer could have jurisdiction to issue a notice for the assessment or re assessment beyond the period of four years but within the period of eight years, from the end of the year in question. No dispute appears to have been raised at any stage in this case as regards the first condition not having been satisfied and we proceed on the basis that the Income tax Officer had in fact reason to believe that there had been an under assessment in each of the assessment years, 1942 43, 1943 44 and 1944 45. The appellant 's case has all along been that the second condition was not satisfied. As admittedly the appellant had filed its return of income under section 22, the Income tax Officer could have no reason to believe that under assessment had resulted from the failure to make a return of income. The only question is whether the Income tax Officer had reason to believe that " there had been some omission or failure to disclose fully and truly all material facts necessary 248 for the assessment " for any of these years in consequence of which the under assessment took place. Before we proceed to consider the materials on record to see whether the appellant has succeeded ,in showing that the Income tax Officer could have no reason, on the materials before him, to believe that there had been any omission to disclose material facts, as mentioned in the section, it is necessary to examine the precise scope of disclosure which the section demands. The words used are " omission or failure to disclose fully and truly all material facts necessary for his assessment for that year ". It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his Possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. Thus, when a question arises whether certain income received by an assessee is capital receipt, or revenue receipt, the assessing authority has to find out what primary facts have been proved, what other facts can be inferred from them, and taking all these together, to decide what the legal inference should be. There can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee. To meet a possible contention that when some account books or other evidence has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the Income tax 249 Officer might have discovered, the Legislature has put in the Explanation, which has been set out above. , In view of the Explanation, it will not be open to the assessee to say, for example " I have produced the account books and the documents: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account books and the documents". His omission to bring to the assessing authority 's attention these particular items in the account books, or the particular portions of the documents, which are relevant, amount to " omission to disclose fully and truly all material facts necessary for his assessment. " Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee 's duty to disclose all of them including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed. Does the duty however extend beyond the full and truthful disclosure of all primary facts ? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else far less the assessee to tell the assessing authority what inferences whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose 32 250 what inferences whether of facts or law he would draw from the primary facts. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn ? It may be pointed out that the Explanation to the sub section has nothing to do with " inferences " and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Income tax Officer could have discovered them from the facts actually disclosed. The Explanation has not the effect of enlarging the section, by casting a duty on the assessee to disclose " inferences " to draw the proper inferences being the duty imposed on the Income fax Officer. We have therefore come to the Conclusion that while the duty of the assessee is to disclose fully and truly all primary relevant facts, it does not extend beyond this. The position therefore is that if there were in fact some reasonable grounds for thinking that there had been any non disclosure as regards any primary fact, which could have a material bearing on the question of "under assessments that would be sufficient to give jurisdiction to the Income tax Officer to issue the notice,% under section 34. Whether these grounds were adequate or not for arriving at the conclusion that there was a non disclosure of material facts would not be open for the court 's investigation. In other words, all that is necessary to give this special jurisdiction is that the Income tax officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some non disclosure of material facts. Clearly it is the duty of the assessee who wants the court to hold that jurisdiction was lacking, to establish that the Income tax Officer had no material at all before him for believing that there had been such 251 non disclosure. To establish this the company has relied on the statements in the assessment orders for the three years in question and on the statement of Kanakendra Narayan Banerjee in the report made by him to the Commissioner of Income tax for the purpose of obtaining sanction to initiate proceedings tinder section 34 and also on his statement in the affidavit on oath in reply to the writ petition. The report is in these words: " Profit of Rs. 5,48,002 on sale of shares and securities escaped assessment altogether. At the time of the original assessment the then I.T.O. merely accepted the company 's version that the sale of shares were casual transactions and were in the nature of mere change of investments. Now the results of the company 's trading from year to year show that the company has really been systematically carrying out a trade in the sale of investments. As such the company had failed to disclose the true intention behind the sale of the shares and as such section 34(1)(a) may be attracted. " The only nondisclosure mentioned in the report is that the company had failed to disclose " the true intention behind the sale of the shares ". Mr. Choudhury contends that this is not an omission to disclose a material fact within the meaning of section 34. The question whether sales of certain shares were by way of changing the investments or by way of trading in shares has to be decided on a consideration of different circumstances, including the frequency of the sales, the nature of the shares sold, the price received as compared with the cost price, and several other relevant facts. It is the duty of the assessee to disclose all the facts which have a bearing on the question; but whether the assessee had the intention to make a business profit as distinguished from the intention to change the form of the investments is really an inference to be drawn by the assessing authority from the material facts taken in conjunction with the surrounding circumstances. The law does not require the assessee to state the conclusion that could reasonable drawn from the primary facts. The 252 question of the assessee 's intention is an inferential fact and so the assessee 's omission to state his " true intentions behind the sale of shares " cannot by itself be considered to be a failure or omission to disclose any material fact within the meaning of section 34. Indeed, an assessee whose contention is that the shares were sold to change the form of investment and not with the intention of making a business profit cannot be expected to say that his true intention was other than what he contended it to be. Dealing with this question the learned Chief Justice has said: " The expression that the Respondent had failed to disclose " the true intention behind the sale of shares " may lack directness, but that deficiency of language is not sufficient to enable the Respondent to contend, in view of the circumstances alleged, that no failure to disclose facts was being complained of. On the facts as stated by the Income tax Officer, it is clear that there had been a failure to disclose the fact that the Respondent was a dealer in shares and what the Income tax Officer meant by the language used by him was that the Respondent had not disclosed that the sale of shares had been of the nature of a trading sale, made in pursuance of an intention to make a business profit, and not of the nature of a change of investment, made in pursuance of an intention to put certain capital assets into another form. If that be so, it is equally clear that the Income tax Officer who, by the way, was a successor to the officers who had made the original assessments, was not merely changing his opinion as to facts previously known, but was taking notice of a new fact. " The learned Chief Justice seems to have proceeded on the basis that when from certain facts inferences are to be drawn there is a duty on the assessee to state what the correct inference should be and if he has made a wrong statement as regards the inferences to be drawn that also is an " omission or failure to disclose a material fact ". For the reasons given earlier we do not think that this is the correct position in law. It is clear therefore that if one looked at this report 253 only it would not be possible to say that the Income. tax Officer had any non disclosure of material facts by the assessee in mind when he assumed jurisdiction. It has to be remembered however that in sending a report to the Commissioner the Income tax Officer might not fully set out what he thought amounted to a non disclosure, because it is conceivable that the report may not be drawn up carefully and may not contain a reference to all the non disclosures that operated on his mind. We have however on the record an affidavit sworn by the same Income tax Officer who started the section 34 proceedings. It is reasonable to expect that in this affidavit which was his opportunity to tell the court what non disclosure he took into consideration he would state as clearly as possible the material facts in respect of which there had not been in his view a full and true disclosure. Mr. Banerjee 's statements in this matter are contained in paras. 5, 6 and 7 of his affidavit. They are in these words: It 5. With reference to paragraphs 2 and 3 of the said petition, I crave reference to the assessment orders therein mentioned. The assessment order dated the 15th February, 1945, was made by Sri Kali Das Banerjee now Income tax Officer Companies District II and the other two assessment orders were made by L. D. Rozario who is now in the employment of M/s Lovelock & Lewes. I find from the notes made by me in the order sheet of the assessment year 1944 45 and my order dated the 7th July, 1944 that Mr. Smith of M/s. Lovelock & Lewes attended before me and stated that the profits of the company arising out of dealings in shares were not taxable as the company was not a dealer in shares and securities. Subsequently on the 18th August 1944, M/s. Lovelock & Lewes wrote a letter to me setting out the contentions of their clients and inter alia stated that throughout the whole history the company bought no shares what so. Sri K. D. Banerjee was accordingly led to believe that the dealings in shares were casual transactions and were in the nature of mere change in investments and the profits resulting therefrom were 254 not taxable. The assessment orders were made on the basis that the petitioner did not carry on any business dealings in shares. A copy of the said letter dated the 18th August, 1944, as also the relevant portion of the note sheet are included in the schedule hereto annexed and marked " 6. In the assessments for 1945 46 and 1946 47, which were completed in April 1950, the profits on sale of shares were included in the total assessable income of the company it having been then discovered that the petitioner was in fact carrying on business in shares contrary to its representation that it was not. The company filed appeals before the Appellate Assistant Commissioner, which were rejected in September 1950, and the assessments were confirmed. The company thereafter filed a second appeal before the In. come tax Tribunal which appeals are now pending. With reference to para. 5 of the said petition, I deny that I pretended to act under section 34 of the Income tax Act as alleged. I have reasons to believe that by reason of the omission or failure of the company to disclose fully and truly all material facts necessary for its assessments, the income, pro. fits and gains chargeable to income tax had been under assessed. I recorded my reasons and made three reports (one for each year) in the prescribed form and submitted them before the Commissioner of Income tax and the latter was satisfied that it was a fit case for issue of a notice under section 34 of the Income tax Act. Thereafter I issued the prescribed notices under section 34 of the Income tax Act. The said reports were made and notices issued in respect of all the three years mentioned in the petition and copies of the report and notice for one of such years are included in the schedule hereto annexed and marked " A ". The report and notices for the two other years are exactly similar. " It appears from this that the statements made by or on behalf of the company which the assessing authority considered to amount to non disclosure of material facts were these: (i) the company was not 255 whole of its history the company bought no shares whatsoever. It has not been suggested before us that, in fact at any time up to the conclusion of the assessment proceedings for the years 1942 43, 1943 44 and 1944 45 the company did in fact make a single purchase of shares. Clearly therefore the Income tax Officer had no reasonable ground for thinking that anything as regards the purchase of shares had not been disclosed. The company does not dispute that the statement was made on its behalf that it was not a "I dealer " in shares and securities. It appears clear that the Income tax Officers who made the assessments for the years 1942 43, 1943 44 and 1944 45 proceeded on the basis that this was an investment company and considered the question whether in spite of its being an investment company certain sales of shares wherefrom the company made a profit were by way of trading in shares and not by way of changing the form of investment. Whether these sales by an investment company should in law be treated as trading transactions, and the profits made from the sales trading profits liable to tax, was the matter which it was the Income tax Officer 's task to decide. No duty lay on the company to admit that these transactions were by way of trade. The fact that on behalf of the company Mr. Smith of Lovelock & Lewes stated that the company was not a dealer in shares and securities does not therefore amount to an omission to disclose fully and truly any material fact. To ascertain whether the Income tax Officer could have had in mind any non disclosure as a ground for thinking that by reason of such non disclosure an under assessment had occurred apart from what was mentioned in the affidavit we enquired from respondent 's counsel whether he could suggest any other non disclosure that might have taken place. Mr. Sastri suggested two. One is that the sales had not been disclosed; the other that the memorandum and articles of association of the company had not been shown. This suggestion is against the record and we have no hesitation in repelling it. Not only is it not the ground set out by the Income tax Officer at any 256 stage not even in the affidavit in court, but the ,matters mentioned by the officer that the assessee had claimed that the profits realised were of a casual nature obviously indicate that the assessee disclosed ,that a surplus resulted from the sales which were also disclosed. The assessment orders it is true do not mention the details of the sales. They state however that the audited accounts of the company were furnished. The sales of shares were expressly mentioned in the report. In these circumstances it is reasonable to believe that as regards sale of shares full details were in fact disclosed. Nor can we believe that the two Income tax Officers L. D. Rozario and K. D. Banerjee concluded the proceedings without referring to the memorandum and articles of association of the company. These officers known well that the company was claiming to be an investment company only. They had to consider the question whether sales were of the nature of trade or of the nature of change of investment. It is unthinkable that they would not examine the memorandum of association. Besides, it is pertinent to note that in para. 4 of his affidavit Kanakendra Narayan Banerjee refers to the Memorandum and articles of Association and states that " by its memorandum of association the company has been authorised to carry. on the various kinds of business which have been specified in sub section (1) and (2) of cl. 3 of the said memorandum of associations He does not say that the articles or the memorandum of association were not shown during the assessment proceedings for the years 1942 43, 1943 44 and 1944 45. If he had any reason to believe that these were not shown he would have certainly mentioned that fact. For that would undoubtedly to non disclosure of a material fact. It must therefore be held that the Income tax Officer who issued the notices had not before him any non disclosure of a material fact and so he could have no material before him for believing that there had been any material non disclosure by reason of which an under assessment had taken place. 257 We are therefore bound to hold that the conditions precedent to the exercise of jurisdiction under section 34 of the Income tax Act did not exist and the Income tax Officer had therefore no jurisdiction to issue the impugned notices under section 34 in respect of the years 1942 43, 1943 44 and 1944 45 after the expiry of four years. Mr. Sastri argued that the question whether the Income tax Officer had reason to believe that under assessment had occurred " by reason of nondisclosure of material facts " should not be investigated by the courts in an application under article 226. Learned Counsel seems to suggest that as soon as the Income tax Officer has reason to believe that there has been under assessment in any year he has jurisdiction to start proceedings under section 34 by issuing a notice provided 8 years have not elapsed from the end of the year in question, but whether the notices should have been issued within a period of 4 years or not is only a question of limitation which could and should properly be raised in assessment proceedings. It is wholly incorrect however to suppose that this is a question of limitation only not touching the question of jurisdiction. The scheme of the law clearly is that where the Income tax Officer has reason to believe that an under assessment has resulted from non disclosure he shall have jurisdiction to start proceedings for re. assessment within a period of 8 years; and where he has reason to believe that an under assessment has resulted from other causes he shall have jurisdiction to start pro ceedings for re assessment within 4 years. Both the conditions, (i) the Income tax Officer having reason to believe that there has been under assessment and (ii) his having reason to believe that such under assessment has resulted from nondisclosure of material facts, must co exist before the Income tax Officer has jurisdiction to start proceedings after the expiry of 4 years. The argument that the Court ought not to investigate the existence of one of these conditions, viz., that the Income tax Officer has reason to believe that under assessment has resulted from 33 258 non disclosure of material facts cannot therefore be ,accepted. Mr. Sastri next pointed out that at the stage when the Income tax Officer issued the notices he was not acting judicially or quasi judicially and so a writ of certiorari or prohibition cannot issue. It is well settled however that though the writ of prohibition or certiorary will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequences. Mr. Sastri mentioned more than once the fact that the company would have sufficient opportunity to raise this question, viz., whether the Income tax Officer had reason to believe that under assessment had resulted from non disclosure of material facts, before the Income tax Officer himself in the assessment proceedings and, if unsuccessful there, before the appellate officer or the appellate tribunal or in the High Court under section 66(2) of the Indian Income tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. In the present case the company contends that the conditions precedent for the assumption of jurisdiction under section 34 were not satisfied and come to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case we can find no reason for which relief should be refused. 259 We have therefore come to the conclusion that the company was entitled to an order directing the Income tax Officer not to take any action on the basis of the three impugned notices. We are informed that assessment orders were in fact made on March 25, 1952, by the Income tax Officer in the proceedings started on the basis of these impugned notices. This was done with the permission of the learned Judge before whom the petition under article 226 was pending, on the distinct understanding that these orders would be without prejudice to the contentions of the parties on the several questions raised in the petition and without prejudice to the orders that may ultimately be passed by the Court. The fact that the assessment orders have already been made does not therefore affect the company 's right to obtain relief under article 226. In view however of the fact that the assessment orders have already been made we think it proper that in addition to an order directing the Income tax Officer not to take any action on the basis of the impugned notices a further order .quashing the assessment made be also issued. In the result, we allow the appeal, set aside the order made by the appellate Bench of the Calcutta High Court and restore the order made by the Trial Judge, Bose, J. The assessment orders made in the proceedings started under section 34 of the Income Tax Act are also quashed. The appellant will get its costs here and below. HIDAYATULLAH J. I have had the advantage of reading the judgments prepared by my brethren, Das Gupta and Shah, JJ. The point involved in the case is a very short one, and the answer, as it appears to me, equally so. The appellant Company 's income, profits and gains for the assessment years, 1942 43, 1943 44 and 1944 45, were duly assessed and taxed. The orders were respectively passed on January 26, 1944, February 12, 1944, and February 15, 1945. On March 28, 1951, three notices under section 34 of the Indian Income tax Act were issued calling upon the appellant Company to submit fresh returns in respect 260 of the previous years relative to each of the assessment years above mentioned. Since this action was taken after more than four years, the matter fell to be governed by section 34(1)(a) of the Indian Income tax Act, as amended in 1948. The clause provided an extended period for sending a notice calling for a return for the purpose of assessing or reassessing income, profits and gains which had escaped assessment or had been under assessed for any year within eight years, if the Income tax Officer " has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year ", the income, profits or gains chargeable to income tax have escaped assessment etc. In the present case, the appellant Company, which is an investment Company, had produced in the back years a list of the shares sold by it, the statements of profit and loss account, and, I am prepared to assume, also the Memorandum and Articles of Association. But the appellant Company gave out that the sales of shares were casual transactions of change of investments. This statement was accepted, though it was found that in later years the Company was dealing in stocks and shares as a business venture, and its statement which was accepted, was not perhaps true. The Income tax Officer reported the matter to the Commissioner, and stated as follows: "Profits of Rs. 5,48,002/ on sale of shares and securities escaped assessment altogether. At the time of the original assessment the then I.T.O. merely accepted the company 's version that the sales of shares were casual transactions and were in the nature of mere change of investments. Now the results of the company 's trading from year to year show that the company has really been systematically carrying out a trade in the sale of investments. As such, the company has failed to disclose the true intention behind the sale of the shares and as such section 34(1)(a) may be attracted. " The appellant Company applied to the Calcutta 261 High Court for a writ Under article 226 which was granted by a learned single Judge; but the order was, reversed on appeal in the High Court. The appellant Company has now appealed on a certificate under article 133(1)(c) of the Constitution. The contention of the appellant Company is that all the facts necessary to be disclosed were, in fact, disclosed, that it was not required further to concede that it was trading in shares, which was a matter of inference, from ' the proved facts, for the Income tax Officer to draw, and that there was thus no question of any non disclosure. This argument overlooks the addition of the Explanation to the section, which explains cl. (a) of the first sub section. It reads: " Explanation. Production before the Income tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income tax Officer will not necessarily amount to disclosure within the meaning of this section." This means quite clearly that the mere production of evidence is not enough, and that there may be an omission or failure to make a full and true disclosure if some material fact necessary for the assessment lies embedded in that evidence which the assessee can uncover but does not. If there is such a fact, it is the duty of the assessee to disclose it. The evidence which is produced by the assessee discloses only primary facts, but to interpret the evidence, certain other facts may be necessary. Thus, questions of status, agency, benami nature of transactions, the nature of trading and like matters may not appear from the evidence produced, unless disclosed. If it be merely a question of interpretation of evidence by an Income tax Officer from whom nothing has been hidden and to whom everything has been fully disclosed, then the assessee cannot be subjected to section 34, merely because the Income tax Officer miscarried in his interpretation of evidence. But it is otherwise, if a contention which is contrary to fact, is raised and the Income tax Officer is set to discover the hidden truth for himself In the latter case, there is suppression of material fact, or, in 262 other words, that lack of full and true disclosure which would entitle action under section 34 of the Act. The following example explains the meaning. Taking the present case, I set below two statements, one .,involving full disclosure and a contention, and the other, only a contention with a material fact suppressed : " (1). We are a trading company and our business is according to our memorandum of association 'to acquire, hold, exchange, sell and 'deal in shares, stocks, etc. '. These sales, however, were not business sales but only change of investments into trustee securities as decided by the trustees. (2) We changed industrial shares into trustee securities because I in or about 1934, the trustees decided to convert the Indian Industrial Shares held by the appellant into trustee securities '. " If the first is decided in favour of the assessee, there is an inference or decision by the Income tax Officer from a full and true disclosure. If the second is decided in favour of the assessee, the question would arise if there was full and true disclosure. In the present case, the question whether the transactions were casual transactions of changing investments or regular trading in stocks and shares involves not merely an inference, because the inference depends upon the fact that the appellant Company was formed to trade in stocks and shares. It was open to the appellant Company to contend that in spite of its business, a particular transaction was this and not that. But, if the appellant Company was an investment Company dealing in stocks and shares ' and knowing this for a fact, did not disclose the fact, the statement was neither full nor true, as it involved a suppression of a material fact necessary for the assessment. The Explanation is quite obviously meant to reach an identical situation. The appellant Company might have placed the evidence before the income tax Officer, but the Income tax Officer had reason to believe that the disclosure was neither full nor true, because the fact that the Company was and shares 263 was not disclosed. The Income tax Officer in his report meant no more than this. He, therefore, felt that, prima facie, there was not only concealment of a fact but, on the contrary, maintaining of a falsehood, and this was sufficient to bring this matter within the extended period. Every contention contrary to the Income tax Officer 's opinion is not necessarily concealment of a material fact, but some contentions made with a mental reservation as to the true state of affairs may amount to such concealment, if they involve non disclosure of facts related to other facts and known to the assessee. The Company still persists that the sales of shares were casual transactions, and this contention will, no doubt, be decided hereafter. But the question will be decided after taking into consideration the nature of the business of the Company, and till that is done, the Income tax Officer believes that the contention raise before and persisted in is not a mere contention but maintenance of a falsehood about the nature of the transactions and the business of the Company. The existence of such a belief is sufficiently established by the report of the Income tax Officer and the satisfaction of the Commissioner, and this has not been gainsaid. In my opinion, the Divisional Bench of the High Court rightly refused a writ in the circumstances, and I would dismiss this appeal with costs. SHAH J. I regret inability to agree with the judgment delivered by my learned brother Mr. Justice Das Gupta. The facts which give rise to this appeal have been fully set out by my learned brother and it is not necessary to reiterate the same. Sub section (1) of section 34 of the Indian Income Tax Act, 1922 (in so far it is material) stood at the relevant date when the proceedings were commenced, as follows: section 34: (1) If (a) the Income tax Officer has reason to believe that by reason of the omission or failure on the part of an 264 for any year or to disclose fully and truly all material ,facts necessary for his assessment for that year, income, profits or gains chargeable to income tax have escaped assessment for that year, or have been under assessed or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in cl. (a) on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under cl. (a) at any time within eight years and in cases falling under cl. (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or re assess such income, profits or gains or re compute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that (i) the Income tax Officer shall not issue a notice under this sub section, unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such notice; (ii) the tax shall be chargeable at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be; and (iii) where the assessment made or to be made is 265 an assessment made or to be made on a person deemed to be the agent of a non resident person under section 43, this sub section shall have effect as if for the periods of eight years and four years a period of one year was substituted. Explanation: Production before the Income tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income tax Officer will not necessarily amount to disclosure within the meaning of this section. This section provides machinery for assessment or reassessment if it be found that income, profits or gains " have escaped assessment or have been under assessed or assessed at too low a rate or have been made subject to excessive relief under the Act or excessive loss or depreciation allowance has been computed ", which expression may for convenience of reference be compendiously referred to as are or have been under assessed. Notice under section 34(1)(a) may be issued if the Income Tax Officer has reason to believe that income in any year has been under assessed by reason of the failure on the part of the assessee to make a return of his income, or to disclose fully and truly all material facts necessary for assessment for the year in question. The authority of the Income Tax Officer is manifestly circumscribed by certain conditions, and may be exercised only if those conditions exist and not otherwise. In the case in hand, we are concerned with the operation of cl. (1)(a) of section 34. If that clause does not apply, notices of reassessment having been served more than four years after the end of the relevant year of assessment, must fail. On an analysis of the relevant provisions, the material conditions proscribed for the exercise of the power to commence proceedings for reassessment under section 34(1)(a) are these: ' (1) The Income Tax Officer has reason to believe, (a) that income, profits or gains have been underassessed, (b) that this under assessment is by reason of 266 omission or failure to make a return under section 22 or by reason of failure to disclose fully and truly all material facts necessary for assessment for any year; (2) that a notice containing all or any of the requirements of section 22(2) is served on the assessee within eight years from the end of the year of assessment; (3) that the Income Tax Officer has recorded his reasons for issuing the notice and the Commissioner is satisfied on such reasons recorded that it is a fit case for issue of such notice. The notices issued by the Income Tax Officer in the case before us undoubtedly fulfil conditions (2) and (3). Notices of reassessment were served before the expiry of eight years of the end of the relevant years of assessment. The Income Tax Officer also recorded his reasons in the reports submitted by him to the Commissioner and the Commissioner was satisfied that they were fit cases for the issue of such notices. The dispute in the appeal relates merely to the fulfilment of the two branches of the first condition and that immediately raises the question about the true import of the expression "has reason to believe" in section 34(1)(a). The expression " reason to believe " postulates belief and the existence of reasons for that belief. The belief must be held in good faith: it cannot be merely a pretence. The expression does not mean a purely subjective satisfaction of the Income Tax Officer: the forum of decision as to the existence of reasons and the belief is not in the mind of the Income Tax Officer. If it be asserted that the Income Tax Officer had reason to believe that income had been underassessed by reason of failure to disclose fully and truly the facts material for assessment, the existence of the belief and the reasons for the belief, but not the sufficiency of the reasons, will be justiciable. The expression therefore predicates that the Income Tax Officer holds the belief induced by the existence of reasons for holding such belief. It contemplates existence of reasons on which the belief is founded, and not merely a belief in the existence of reasons inducing the belief; in other words, the Income Tax Officer must on information at his disposal believe that 267 income has been underassessed by reason of failure fully and truly to disclose all material facts necessary for assessment. Such a belief, be it said, may not be based on mere suspicion: it must be founded upon information. That the Income Tax Officer has reason to believe that there was under assessment in the material years was not challenged by the appellant and in our opinion rightly. There are on the record the reports of the Income Tax Officer in which the belief is expressly set out. It also appears from the assessment orders for the years 1945 46 and 1946 47 that tax has been assessed on the profits made by sale of shares by the company in those years. Had the Income Tax Officer reason to believe that by reason of failure to disclose fully and truly all material facts necessary for assessment for the three years in question, there had resulted underassessment ? The learned Trial judge, after setting out the evidence, held that the Income Tax Officer had materials before him showing that the company 's trading from year to year disclosed that it had been systematically carrying on a trade in the sale of shares and securities. He observed: " Whether the materials were sufficient or not or whether the belief or opinion is erroneous or not, cannot. . be enquired into by the court. If the Income Tax Officer has made a wrong decision as to the existence of the conditions precedent, the remedy is by way of appeals as provided by the Income Tax Act and by stating a case under section 66 of the Act." In appeal, the High Court confirmed the order. The High Court observed that " the use of the expression " the true intention behind the sale of shares " used in the report made by the Income Tax Officer under section 34 to the Commissioner may lack directness, but that deficiency of language was not sufficient to enable the company to contend in view of the circumstances alleged that there was no failure to disclose facts being complained of ". The High Court also observed: "On the facts as stated by the Income Tax Officer, it is clear that there had been a failure to 268 disclose the fact that the respondent was a dealer in ,shares and what the Income Tax Officer meant by the language used by him was that the respondent had not disclosed that the sale of shares had been of the ,nature of a trading sale, made in pursuance of an intention to put certain capital assets into another form. If that be so, it is equally clear that the Income Tax Officer who, by the way, was a successor to the officers who had made the original assessments, was not merely changing his opinion as to facts previously known, but was taking notice of a new fact. " Prima facie, the finding recorded by the Court of First Instance and confirmed by the Court of Appeal is one on a question of fact and this court would not be justified in entering upon a reappraisal of the evidence. But it is contended on behalf of the company that the finding is based on no materials, and to that plea I may advert. By section 22 of the Income Tax Act, a duty is imposed upon every tax payer whose total income exceeds the maximum which is not chargeable to income tax to make a return in the prescribed form and verified in the prescribed manner, setting forth his total income during that year. If the tax payer making the return fails to disclose fully and truly all material facts necessary for the assessment of the year in question, the jurisdiction of the Income Tax Officer to reassess is invited. The company in its petition for the issue of a writ contended by paragraph 7 that the notices were ultra vires and illegal and that the Income Tax Officer was not invested with jurisdiction to proceed thereunder, inter alia, for the reason that the " pretended notice was issued without the existence of the necessary conditions precedent which confers jurisdiction under section 34 aforementioned, whether before or after amendment in 1948. " The Income Tax Officer, by his affidavit, submitted: Para 4: " The statements made in paragraph 1 of the said petition are substantially correct. By its Memorandum of Association, the company has been authorised to carry on the various kinds of business which have been specified in sub cls. (1) to (32) of cl. (3) of the said Memorandum of Association. 269 Para 5: " With reference to paragraphs 2 and 3 of the said petition, I crave reference to the assessment orders therein mentioned. The assessment order dated the 15th February, 1945, was made by Shri Kali Das Banerjee now Income Tax Officer Companies District in II and the other two assessment orders were made by Mr. L. D. Razario who is now in the employment of M/s. Lovelock & Lewis. I find from the notes made by me in the order sheet of the assessment year 1944 45 and my order dated the 7th July, 1944, that Mr. Smith of Messrs. Lovelock & Lewis attended before me and stated that the profits of the company arising out of dealings in shares were not taxable as the company was not a dealer in shares and securities. Subsequently on the 18th August, 1944, Messrs. Lovelock & Lewis wrote a letter to me setting out the contentions of their clients and inter alia stated that throughout the whole of its history the company bought no shares whatsoever. Shri K. D. Banerjee was accordingly led to believe that the dealings in shares were casual transactions and were in the nature of mere change in investments and the profits resulting therefrom were not taxable. The assessment orders were made on the basis that the petitioner did not carry on any business dealing in shares. A copy of the said letter dated the 18th August, 1944, as also the relevant portion of the note sheet are included in the schedule hereto annexed and marked " A ". " Para 6: " In the assessments for 1945 46, and 1946 47 which were completed in April, 1950, the profits on sale of shares were included in the total assessable income of the company it having been then discovered that the petitioner was in fact carrying on business in shares contrary to its representation that it was not. The company filed appeals before the Appellate Assistant Commissioner which were rejected in September, 1950, and the assessments were confirmed. The company thereafter filed a second appeal before this Income tax Tribunal which appeals are now pending. " Para 7: " With reference to paragraph 5 of the said petition, I deny that I pretended to act under 270 section 34 of the Income Tax Act as alleged. I have reasons to believe that by reason of the omission or failure of the company to disclose fully and truly all material facts necessary for its assessments, the income, profits or, and gains chargeable to income tax had been underassessed. I recorded my reasons and made 3 reports (one for each year) in the prescribed form and submitted them before the Commissioner of Income Tax and the latter was satisfied that it was a fit case for issue of a notice under section 34 of the Income Tax Act. Thereafter issued prescribed notices under section 34 of the Income Tax Act. The said reports were made and notices issued in respect of all the three years mentioned in the petition and copies of the report and notice for one of such years are included in the schedule hereto annexed and marked " A ". The report and notices for the two other years are exactly similar. By these averments, the Income Tax Officer asserted (a) that he had reasons to believe that by reason of the omission or failure of the company to disclose fully and truly all material facts necessary for the assessment, income chargeable to income tax has been underassessed and that he had recorded his reasons in that behalf in the three reports submitted by him to the Commissioner; (b) that in the course of the assessment proceeding for the year 1944 45, it was represented on behalf of the company that the sales of shares in that year were casual transactions and were in the nature of " mere change in investments " ; (c) that in the orders of assessment for the years 1945 46 and 1946 47 passed in April, 1950, profits earned by sale of shares held by the company were included in the total assessable income of the company, it having been discovered that the company was in fact carrying on the business of selling shares contrary to its earlier representations; and (d) that by its Memorandum and Articles of Association, the company was authorised to carry on the business of diverse kinds specified in sub cls. (1) to (32) of cl. (3) thereof. Whereas by a mere bald assertion made by the company in its petition it was averred that the conditions precedent to the exercise of jurisdiction to 271 re assess did not exist, the Income Tax Officer stated in his rejoinder that he had reasons to believe that income bad been underassessed and he also set out the grounds on which that belief was founded. The existence of the reasons to believe that income was underassessed has, as already observed, not been challenged; nor is the court concerned with the question whether the materials may be regarded by a court before which a dispute is raised, sufficient to sustain the belief entertained by the Income Tax Officer. It is clear that the Income Tax Officer asserted on oath that when he issued the notice for reassessment, he had reasons to believe that income of the company had been underassessed and he set out the reasons in support of the belief. Counsel for the company submitted that all the material facts necessary for the assessment were fully and truly disclosed in the course of the assessment for the years in question, and if the Income Tax Officer did not draw the correct inference, the jurisdiction to reassess could not be invoked. He urged that it was for the Income Tax Officer, on the preliminary facts disclosed to him, to raise his inference of fact and to base his conclusions on the preliminary as well as the inferential facts, and if, in arriving at his conclusion on the preliminary and the inferential facts. , the Income Tax Officer committed an error, he could not seek to commence proceedings for reassessment on being apprised of the error. It was said that the Income Tax Officer knew that the company was an investment corporation, that the shares held by the company were sold from time to time, and that profits were earned by the sale of those shares, and that on these materials the Income Tax Officer might have held that the company was a dealer in shares, but if he did not draw that inference, the under assessment, if any, was not by reason of failure to disclose fully and truly all material facts. Counsel submitted that the condition of the exercise of jurisdiction under section 34 is failure to disclose fully and truly all material facts necessary for assessment and not failure to 272 instruct the Income Tax Officer about the legal inference to be drawn from the facts disclosed. The duty imposed by the Act upon the tax payer is to make a full and true disclosure of all material facts necessary for the assessment; he is not required to inform the Income Tax Officer as to what legal inference should be drawn from the facts disclosed by him nor to advise him on questions of law. Whether on the facts found or disclosed, the company was a dealer in shares, may be regarded as a conclusion on a mixed question of law and fact and from the failure on the part of the company to disclose to the Income Tax Officer this legal inference no fault may be found with the company. But on the evidence in the case, the plea raised by the company that all material facts were disclosed cannot be accepted. The Income Tax Officer has in para. 6 of his affidavit referred to the assessment of the years 1945 46 and 1946 47: he has also referred to the Memorandum and Articles of Association of the company therein. In the assessment order for the year 1945 46, the Income Tax Officer has set out cls. (1) and (2) of the Memorandum and Articles of Association of the company. They are: (1) " To acquire, hold, exchange, sell and deal in shares, stocks, debenture stock, bonds, obligations and securities issued or guaranteed by any company, Government or public body constituted or carrying on business in British India or elsewhere; " (2) " Generally to carry on business as financiers and to undertake and carry out all such operations and transactions (except the issuing of policies of assurances on human life) as an individual capitalist may lawfully undertake or carry out; ". The Income Tax Officer in his order of assessment for that year observed that those clauses indicated the purposes for which the company was formed, and also that " whenever the shares were first acquired, these became the commodities which could either be held or sold according to the best interests of the company, that whenever such a commodity is sold, it comes within the activities or properly speaking the profit making scheme as enumerated in the object 273 clauses stated above. These shares sold in course of ten or twelve years whenever opportunities occurred for earning profits on making the sales. . . This company was not an ordinary trader investing its surplus funds in shares and securities quite unconnected with its regular course of business so that the profit or loss also on sale of such shares or securities may be treated as not arising out of its regular business carried on. On the other hand, it is an Investment company of which the very first object clause is to hold and deal in shares. Profit on sale of such shares therefore arises out of its regular course of business and it must be taxable. " From that order of assessment, it is manifest that the Assessing Officer held that the company was formed with the object of acquiring, holding, exchanging, selling and dealing in shares, that the shares acquired became the trading assets of the company to be disposed of when opportunities occurred for earning profits; and that the activities of selling shares in which surplus assets of the company were invested were a part of the regular business carried on by the company. There is no evidence that the Memorandum and Articles of Association referred to in para 4 of the affidavit were produced in the course of the assessment of the relevant years; nor is there evidence to show that it was disclosed that the acquisition of shares was incidental to the business activities and out of the surplus assets of the company and that the same were sold at profit as opportunities arose. There is also no ground for assuming that these facts must have been known to the Income Tax Officer. Counsel for the company suggested somewhat casually that under the Income Tax Rules and the practice prevailing with the Income Tax Officer, the Memorandum and Articles of Association of every company which was being assessed to tax are to be filed with the Income Tax Officer. But our attention has not been invited to any rule or any material to support the existence of a practice requiring a private limited company to file with the Income Tax Officer the Memorandum and Articles of Association. 274 The plea raised by counsel for the company must be examined in the light of the Explanation to sub section (1) of section 34. The Explanation provides that " Production before the Income Tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income Tax Officer will not necessarily amount to disclosure within the meaning of the section. " If pro duction of documents or other evidence from which material facts could with due diligence have been discovered does not necessarily amount to disclosure, it would be difficult to hold that a presumption about the production of a document at sometime in the past and its possible existence in the files of the Income Tax Officer relating to earlier years may be regarded as sufficient disclosure. Disclosure of some facts, but not all, though the facts not disclosed may have come to the knowledge of the Income Tax Officer, if he had carefully prosecuted an enquiry on the facts and materials disclosed, will not amount to a full and true disclosure of all material facts necessary for the purpose of assessment. A tax payer cannot resist reassessment on the plea that non disclosure of the true state of affairs was due to the negligence or inadvertence on the part of the Income Tax Officer, and but for such negligence or inadvertence, a full and true disclosure of all material facts necessary, for the assessment would have been resulted. There is no evidence on the record that the Memorandum and Articles of Association were ever produced before the Income Tax Officer in the course of proceedings for assessment. Again, the report of the Income 'tax Officer discloses that his predecessor in office was told that the sales of shares effected by the company were casual transactions and were in the nature of a mere " change of investments". This was not strictly accurate. The record therefore clearly shows that the company bad failed to disclose fully and truly all material facts in relation to assessment in two respects, (1) that it failed to produce the Memorandum and Articles of Association showing the purposes for which the company was incorporated, and 275 (2)that the shares were acquired as part of the business of financiers. The company also made a statement which is partially untrue when it stated that sales were mere casual transactions. There were materials before the Income Tax Officer on which he had reason to believe that by reason of the failure of the company to fully and truly disclose material facts, its income was underassessed. Whether on these facts, a conclusion that in fact the company was carrying on the business of trading in shares could be founded, is at this stage entirely immaterial. If there was reason to believe, the alleged inadequacy of the materials on which the belief could be founded is of no moment. The Income Tax Officer has commenced proceedings for reassessment by issuing notices against the company and he has placed all the materials before the court on which it could be said that he had reason to believe that income of the company had been underassessed by reason of failure on the part of the company to disclose fully and truly all material facts relating to the assessment and if, on those materials, the Income Tax Officer could hold the belief which he says he did, the court in seeking to hold an enquiry into the question whether the Income Tax Officer, notwithstanding his affidavit and materials placed in support thereof, had reason to hold the requisite belief, would be arrogating to itself jurisdiction which it does not possess. If the conditions precedent do not exist, the jurisdiction of the High Court to issue high prerogative, writs under article 226 of the Constitution to prohibit action under the notice may be exercised. But if the existence of the conditions is asserted by the authority entrusted with the power and the materials on the record prima facie Support the existence of such conditions, an enquiry whether the authority could not have reasonably held the belief which he says he had reason to hold and he did hold, is, in my judgment, barred. In that view, the proper order to pass in this appeal would be one of dismissal with costs. BY COURT. In view of the majority opinion, the appeal is allowed with costs here and below.
|
The appellant, a private limited company, was assessed to income tax for the assessment years 1942 43, 1943 44 and 1944 45 by three separate orders dated January 26, 1944, February 12, 1944, and February 15, 1945, under section 23(3) of the Indian Income Tax Act on returns filed by it with statements of account.
On March 28, 1951, three notices under section 34 of the Act were issued calling upon it to submit fresh returns for the said assessment years.
The appellant filed the returns but thereafter applied to the High Court under article 226 of the Constitution for writs restraining the Income tax Officer from initiating assessment proceedings on the basis of the said notices on the ground, inter alia, that he had no jurisdiction to issue the said notices.
In his report to the Commissioner of Income tax for obtaining sanction to initiate the said proceedings the Income tax Officer had stated as follows : " Profit of Rs. 5,46,002 on sale of shares and securities escaped assessment altogether.
At the time of the original assessment the then I. T. O. merely accepted the company 's version that the sale of shares were casual transactions and were in the nature of mere change of investments.
Now the results of the company 's trading from year to year show that the company has really been systematically carrying out a trade in the sale of investments.
As such the company had failed to disclose the true intention behind the sale of the shares as such section 34(1)(a) may be attracted".
The question for determination was whether in the circum stance the Income tax Officer was right in issuing notices on the assessee under section 34(1)(a) of the Act.
Held, (per section K. Das, K. C. Das Gupta and N. R. Ayyangar, jj.), that before the Income tax Officer could issue a notice under $ '.
34(1)(a) of the Indian Income tax Act, two conditions precedent must co exist, namely, that he must have reason to believe (i) that income, profits or gains had been under assessed and (2) that such under assessment was due to non disclosure of material facts by the assessee.
242 Although what facts would be necessary and material for the assessment in a particular case must depend on the facts of that case, there could be no doubt that the burden of disclosing all the primary facts must invariably be on the assessee.
The Explanation to section 34(1) made it clear that that burden could not be fully discharged by simply producing the account books and other documents, but the assessee must also disclose such specific items or portions thereof as are relevant to the assessment.
But once he has done so, it is for the Income tax Officer to draw the proper inferences of fact and law therefrom and the assessee cannot further be called upon to do so for him.
The Explanation does not enlarge the scope of the section so as to include " the disclosure " of such inferences.
The question whether by the sale of shares the assessee in the instant case intended to change the form of investment or to make a business profit was one of an inferential fact and the failure to disclose such intention could not by itself amount to a failure or omission to disclose a material fact within the meaning of section 34(1)(a) of the Act.
Where, however, the Income tax Officer has prima facie reasonable grounds for believing that there has been a non disclosure of a primary material fact, that by itself gives him the jurisdiction to issue a notice under section 34 of the Act, and the adequacy or otherwise of the grounds of such belief is not open to investigation by the Court.
It is for the assessee who wants to challenge such jurisdiction to establish that the Income tax Officer had no material for such belief.
Since, in the instant case, there was no non disclosure of a primary material fact which the assessee was bound to disclose under section 34(1)(a) of the Act, the Income tax Officer had no jurisdiction to issue the notices in question.
It is incorrect to say that the question of under assessment by reason of non disclosure of a material fact was relevant only for the purpose of applying either the longer or the shorter period of limitation prescribed by the section and not for jurisdiction and, therefore, not a proper matter for investigation under article 226 of the Constitution.
The High Courts have ample powers under article 226 of the Constitution, and are in duty bound thereunder, to issue such appropriate orders or directions as are necessary in order to prevent persons from being subjected to lengthy proceedings and unnecessary harassments by an executive authority acting without jurisdiction.
Alternative remedies such as are provided by the Income tax Act cannot always be a sufficient reason for refusing quick relief in a fit and proper case.
Per Hidayatullah, J. The Explanation to section 34(1) of the Indian Income tax Act clearly indicates that the duty of the assessee thereunder does not end by merely producing evidence or disclosing the primary facts, but also extends to the disclosure 243 of such other facts relating to status, agency, benami nature of the transaction, the nature of the trading and the like, which he knows but do not appear from the evidence, and which may be necessary for interpreting the evidence.
If the evidence produced hides nothing and discloses everything, the assessee cannot be subjected to section 34 merely because the Income tax Officer misinterprets such evidence.
But it is otherwise if the assessee raises a contention that is contrary to fact and requires the Income tax Officer to discover the truth for himself for that would be to suppress a material fact that would attract the section.
Since, in the present case, an investment company dealing in stocks and shares, not only knowingly suppressed that fact but contended otherwise, there was non disclosure of a material fact necessary for its assessment, and sufficient to attract section 34(1) (a) of the Act.
Per Shah, J.
The expression " has reason to believe " in section 34(1)(a) of the Indian Income tax Act does not mean a purely subjective satisfaction of the Income tax Officer but predicates the existence of reasons on which such belief has to be founded.
That belief, therefore, cannot be founded on mere suspicion and must be based on evidence and any question as to the adequacy of such evidence is wholly immaterial at that stage.
Whether all the material facts necessary for the assessment had or had not been fully and truly disclosed in a particular case has to be examined, in the fight of the Explanation to section 34(1)(a).
If there is disclosure of some facts but not all, a tax payer cannot resist reassessment on the plea that such non disclosure was due to the negligence or inadvertence on the part of the Income tax Officer to scrutinise the materials before him.
Where the existence of reasonable belief that there bad been under assessment due to non disclosure by the assessee, which is a condition precedent to exercise of the power under section 34(1)(a) is asserted by the assessing authority and the record prima facie supports its existence, any enquiry as to whether the authority could reasonably hold the belief that the under assessment was due to non disclosure by the assessee of material facts necessary for the assessment must, be barred.
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A private company was told to pay income tax for the years 1942-43, 1943-44, and 1944-45. This was based on tax forms they had filed, along with their financial records. The orders for these payments were issued on January 26, 1944, February 12, 1944, and February 15, 1945. These orders were made under a specific part of the Indian Income Tax Act, called section 23(3).
Later, on March 28, 1951, the company received three new notices. These notices, under section 34 of the same Act, asked the company to file new tax forms for those same years.
The company did file the new forms. However, they then went to the High Court and asked for legal orders. They wanted to stop the Income Tax Officer (a tax official) from starting any tax investigations based on the new notices. They argued that the tax officer didn't have the authority, or "jurisdiction," to issue those notices. They made this request under a specific article of the Constitution, article 226.
To get permission to start these investigations, the tax officer had to write a report to the Commissioner of Income Tax. In that report, the tax officer said: "The company made a profit of about Rs. 546,002 from selling stocks and bonds, and this profit wasn't taxed at all. When we originally calculated the company's taxes, the tax officer at the time just accepted the company's explanation that these sales were just one-time events and were simply changes in their investments. But now, looking at the company's business year after year, it's clear that the company has been regularly trading investments. Because of this, the company didn't tell us their real reason for selling the stocks, so section 34(1)(a) [of the Income Tax Act] might apply."
The main question was: Did the Income Tax Officer have the right to send those notices to the company under section 34(1)(a) of the Act?
The court decided that, before a tax officer can send a notice under section 34(1)(a) of the Indian Income Tax Act, two things must be true: (1) the tax officer must have a reason to believe that income or profits were under-taxed, and (2) this under-taxation must be because the company didn't reveal important facts.
What counts as "necessary and important" facts depends on each specific case. However, the company always has the responsibility to reveal all the basic facts. According to the Explanation of section 34(1), just showing the company's account books and other papers isn't enough. The company also has to point out any specific details or parts of those documents that are important for calculating taxes. Once the company has done that, it's up to the tax officer to make the right conclusions about the facts and the law. The company doesn't have to do that for the tax officer. The Explanation doesn't mean that the company has to explain those conclusions.
In this case, whether the company sold the stocks to change their investments or to make a profit was a matter of interpretation. Not explaining their intention wasn't the same as not revealing a basic fact, according to section 34(1)(a) of the Act.
However, if the tax officer has a reasonable basis to think that a basic fact wasn't revealed, that gives them the right to send a notice under section 34 of the Act. The court won't investigate whether those reasons were good enough. It's up to the company to prove that the tax officer had no reason to believe that a fact was being hidden.
In this particular case, the company didn't fail to reveal a basic fact that they were required to reveal under section 34(1)(a) of the Act. Therefore, the Income Tax Officer didn't have the right to send the notices.
It's wrong to say that whether a fact was hidden only matters for deciding how long the tax office has to take action. It also affects whether the tax office has the authority to take action in the first place. So, it's a proper thing to investigate under article 226 of the Constitution.
The High Courts have the power under article 226 of the Constitution to issue orders to stop people from being subjected to long legal processes and unnecessary trouble by a government official who is acting without the proper authority. Just because there are other options for resolving the issue, like those provided by the Income Tax Act, doesn't mean the court shouldn't provide quick relief in a suitable case.
One of the judges, Hidayatullah, J., said that the Explanation to section 34(1) of the Indian Income Tax Act makes it clear that the company's responsibility isn't just to show evidence or reveal basic facts. It also includes revealing other facts that might not be obvious from the evidence, but which the company knows and which are important for understanding the evidence. These facts could include the company's status, who was acting on their behalf, the true nature of a transaction, or the nature of their trading.
If the evidence is clear and reveals everything, the company shouldn't be penalized under section 34 just because the tax officer misunderstands the evidence. But if the company makes an argument that's not true and expects the tax officer to find out the truth for themselves, then they are hiding a material fact, which can trigger section 34.
In this case, the company was an investment company dealing in stocks and shares. They not only knowingly hid this fact but argued the opposite. This was a failure to reveal a material fact that was necessary for calculating their taxes, and it was enough to trigger section 34(1)(a) of the Act.
Another judge, Shah, J., said that when section 34(1)(a) of the Indian Income Tax Act says that the tax officer "has reason to believe," it doesn't just mean that the tax officer personally feels that way. There have to be actual reasons for that belief.
The belief can't be based on just suspicion. It has to be based on evidence. At that point, it doesn't matter whether the evidence is strong enough or not.
Whether all the necessary facts were revealed has to be examined based on the Explanation to section 34(1)(a).
If some facts are revealed but not all, the company can't argue against being reassessed just because the tax officer was careless or didn't properly examine the information.
If the tax authority claims that there was a reasonable belief that taxes were underpaid because the company didn't reveal something, and the records seem to support that claim, then it's not up for debate whether the authority could reasonably hold that belief.
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ew policy which is in vogue. The licensing period is for two years commencing from 1.4.1991 to 31.3.1993. Admittedly, the petitioner had not submitted any tender in terms of the new policy for manufac ture of rectified spirit or liquor for grant of D 2 and D 1 licences, the licences have already been granted to the third parties and they are not before this court. Any direc tion in this regard would not only interfere with the li cences granted to them, but also create a hiatus in opera tional system. This Court cannot direct the State Government to create a new policy of receiving private applications or to direct the Commissioner of Excise to carve out a new policy area and to grant licence to the petitioner. It is not possible to give such a direction for the reasons that the petitioner, admittedly, did not offer himself as a candidate for consideration when tenders were called for licensing period commencing from 1.4.1991. As regards the Government Distilleries at Ratlam is concerned for grant of D 1(s) licence, as requested for, we have no sufficient material whether any arrangements have 494 been made to any other parties for supply area in that regard. Under these circumstances, it is extremely difficult to accede to the request made by the counsel for the peti tioner. [498E 499A] & ORIGINAL JURISDICTION: Writ Petition No. 729 of 1988. (Under Article 32 of the Constitution of India). R.F. Nariman and P.H. Parekh for the Petitioners. V.N. Ganpule. V.M. Tarkunde, S.K. Agnihotri, S.K. Sinha, Rajinder Narain. R.S. Singh and Rameshwar Nath for the Respondents. The Judgment of the Court was delivered by K. RAMASWAMY, J. In this writ petition under article 32 of the Constitution, the petitioner, a partnership firm seeks reliefs of mandamus to direct the State Government and the Commissioner of Excise of M.P. to allow the petitioner to set up a distillery pursuant to the cabinet policy dated December 30, 1984 and to grant D 2 licence; to declare the letter dated February 8, 1982 as unconstitutional, illegal and of no effect in law and to direct the respondent Nos. 1 and 2 to grant a licence to manufacture potable Alcohol within the state of Madhya Pradesh and to grant D 1 licence to supply country made liquor, etc. This case has behind it chequered history which is necessary to adumbrate. In the State of M.P. vs NandlaI Jaiswal & Ors., ; this court considered the legality of the policy, the subject matter in the writ petition. It was held therein that nine distilleries in the State of Madhya Pradesh in cluding the one at U j jain were set up on the lands and buildings belonging to the Government. The plants and ma chinery therein initially were of the Government, but in course of time the licensees installed or replaced the plants and machinery and became the owners. The petitioner and its predecessors had licence for the distillery at Ujjain for well over 40 years to manufacture rectified spirit. The last of the licences held by the petitioner was for the years April 1, 1976 to March 31, 198 1. The period of licence was at that time for five years. The practice as per the provisions of the M.P. Excise Act 1915 for short 'the Act ' and M.P. Distilleries, Breweries and Warehouses Rules for short 'the rules ' issued in exercise of the powers under section 62 was to call for the tenders to manufacture and supply the rectified spirit or denatured spirit, spirit (country made) to the retail vendors 495 within the area attached to the distillery. Rajdahani Dis tillers Corporation, for short 'RDC ' became the successful tenderer for the licensing period starting from April 1, 1981 to March 31, 1986. The petitioner challenged in Misc. Petition No. 701/81 in the M.P. High Court under article 226. Initially stay was granted, but later it was vacated on August 20, 1981 Licence was granted for the period starting from August 25,1981 to March 31, 1986 to RDC and the dis tillery, plant and machinery at Ujjain was handed over to RDC on August 28. 198 1. Thereafter the petitioner filed another writ petition No. 169/82 on March 16, 1982 for redelivery Of the plant and machinery and the warehouses and other consequential reliefs. That writ petition was dis missed by the High Court against which Civil Appeal No. 5483/83 was filed, which is just now disposed of. The peti tioner had applied for grant of licence on February 19, 1982 and he reiterated his request in number of reminders includ ing one oh November 3, 1986. In the interregnum the Govt. changed the policy by a Cabinet Sub Committee policy deci sion dated December 30, 1984 under which they decided to grant licence to the existing licensees of the distilleries and that they should construct the factories at their ex penses on the land allotted by the State Govt. or acquired and allotted by the State Govt. and that they shift the business to new factories and the licence would be for a period of five years. Calling in question of that policy several writ petitions including the one by the petitioner were filed in the M.P. High Court. The Division Bench partly allowed the writ petition and quashed part of the policy decision. Against it appeals and special leave petitions were filed by the State and the unsuccessful petitioners including the petitioner. It was disposed of by this court reported in Jaiswal 's case. During the hearing of the writ petition, the Attorney General of India conceded that if the petitioner makes any application for grant of licence it would be considered by the State Govt. and be disposed of quickly. That concession was noted and the argument was founded thereon to hold that the Govt. did not intend to create any monopoly in favour of the existing licensees. This court upheld the policy of the Govt. and allowed the appeals and dismissed the special leave petitions of the petitioner and other. Pursuant thereto the petitioner made an application on December 25, 1987 followed by several reminders. Ultimately the State Govt. rejected the petition by letter dated February 8, 1988, which is impugned in this writ petition. Under section 13 of the Act, the State Govt. is empowered to grant licence to manufacture, possession and sale of recti fied spirit and the liquor in the distilleries or the brew eries. Under section 14 and Rule XXII the licensee should also have licence to establish distillery to distil 496 rectified spirit or denatured spirit or liquor and a ware house wherein any intoxicant be deposited and kept without payment of duty, but subject to payment of the fee to the State Govt. as it may direct. No intoxicant shall be sold by operation of section 17, except under the authority and subject to the terms and conditions of the licence granted in that behalf. Rule XXII provides the method of disposal of the licence which reads thus: "XXII. Disposal of licences (1) Licence for the manufacture or sale of intoxicants shall be disposed of by tender. auction. fixed licence fee or in such other manner as the State Govt. may, by general or special order, direct. Except where otherwise prescribed, licence shall be granted by the Collector or by an Officer authorised by him in that be half." Rule III to V of the Distillery and Warehouse Rules also made inter alia under sub section 2(h) of section 62 deal with the subject of grant of ' licence and provide, in the follow ing terms, for different kinds of licences which may be issued, viz., licences in Forms D 1, D 1(s) and D 2: "III. Subject to the sanction of the State Government, the Excise Commissioner may grant a licence in Form D 1 and Form D 1(s) for the wholesale supply of country spirit to retail vendors. The Collector may issue, on payment of a fee of Rs. 1000 a licence in Form D 2 for the construction and working of a distillery to any person to whom a wholesale supply licence has been issued. V. Subject to sanction of the State Government the Excise Commissioner may issue a licence in Form D 2 for the construction and working of a distillery on payment of a fee of Rs. 1000. " The State Govt. rejected application of the petitioner on three grounds. namely, (1) that the petitioner requested to issue a licence at the old place at Ujjain Distillery which is no longer available; (2) present policy of the State and the Central Govt. was to discourage manufacture of liquor for drinking purpose, except for molasses. (3) 497 However, if it is manufactured from other raw materials other than the Mahua, his application would be considered. If the petitioner makes an application for establishment or manufacturing denatured spirit at other places and if they produce a No Objection Certificate from Central Government and Environmental Department, his application would be considered. The contention of Sri Nariman, the learned counsel for the petitioner, is that the State Govt. having made solemn undertaking before this court and the arguments were heard in Nandlal Jaiswal 's case on the basis that the application of the petitioner would be considered and disposed of it was with an intention to grant licence to the petitioner, but rejection is contrary to the undertaking given to this court. It was also contended that the petitioner have a long, clean and commendable history of 40 years in manufac turing country made liquor in the distillery and supply thereof within the area attached to U j jain Distillery. The State Government 's non grant of licence thereto is only a rouse to defeat the fundamental rights of the petitioner to establish and trade in the manufacture and distribution of the liquor in terms of the provisions of the Act and the rules and the instructions of the Govt. in that regard. Having given the licence to the other distilleries, the petitioner being similarly placed, non grant thereto is arbitrary, discriminatory and violating article 14 of the Constitution. It was also further contended that the peti tioner if for any reason cannot be granted D 2 licence at U j jain, D 2 licence may be granted on Government distillery at Ratlam and supply area attached to it under D 1(s) so as to do complete justice to the petitioner. It was resisted by Sri Ganpule, learned senior counsel for the State contending that pursuant to the undertaking given to this court, the application was considered and found not feasible to grant the licence to the petitioner due to grounds stated in the impugned order which are relevant and existant being in conformity with the change of the policy, and so this Court cannot interfere and may not issue the writ as prayed for. Though rule nisi was ordered on March 17, 1989, despite notice of the Registry dated April 24, 1989, neither copies of the writ petition, nor the requisite process fee for service of the rule nisi on the respondents were deposited in the court. As a result the rule nisi was not issued to the contesting respondents Nos. 3 to 10. Along with the connected appeal which is just disposed, Sri Tarkunde, the learned senior counsel appearing for RDC which was impleaded as 5th respondent to whom licence was given for Ujjain Distillery, contended that unless there is cut in the supply area of the operation of the existing 498 licences and a separate supply area is carved out, no D 2 licence could be issued to the petitioner. The licensing period of 1986 to 1991 had expired by efflux of time. New policy is in vogue for the succeeding licensing period of 199 1 to 1993. The licences having been granted to the respective persons, who are not represented in this court, the relief asked for cannot be granted in their absence. In our view there is force in the contentions of the respondents. The only question for consideration is whether it is a fit case for interference by this court due to the aforestated sequence of events. Undoubtedly the learned Attorney General assured this court that the application, if filed by the petitioner, would be considered. Obviously in accordance with the provisions of the Act and the rules. The policy of 1984 was upheld by this court under which nine distilleries were granted D 2 licences to manufacture recti fied spirit and liquor and to supply to the retailers under D 1 licence within the area attached to each of the distill eries. The petitioner admittedly made application to grant licence to manufacture country made liquor, obviously with Mahua flowers or molasses at Ujjain. The RDC established new distillery at Ujjain in terms of the new policy, at its expense, and is manufacturing and supplying the liquor. It vacated the old distillery at Ujjain which we are informed that the building is still existing. RDC had manufactured the spirit and country made liquor in terms of D 2 licence and supplied in terms of D 1 licence. The period of the licence also expired by efflux of time. Again there is change in the new policy which is in vogue. The licensing period is for two years commencing from April 1, 199 1 to March 31, 1993. Admittedly, the petitioner had not submitted any tender in terms of the new policy for manufacture of rectified spirit or liquor for grant of D 2 and D 1 licences, the licences have already been granted to the third parties and they are not before this court. Any direction in this regard would not only interfere with the licences granted to them, but also create a hiatus in operational system. This court cannot direct the State Govt. to create a new policy of receiving private applications or to direct the Commissioner of Excise to carve out a new supply area and to grant licence to the petitioner. It is not possible to give such a direction for the reasons that the petitioner, admittedly, did not offer himself as a candidate for consideration when tenders were called for licensing period commencing from April 1, 1991. As regards the Govt. Distilleries at Ratlam is concerned for grant of D 1 (S) licence as requested for, we have no sufficient material whether any arrangements have been made to any other parties for supply area in that regard. Under these circumstances, it is extremely difficult to accede to the request made by the 499 counsel for the petitioner, Though the petitioner had estab lished long career in the field to manufacture, supply and distribution of intoxicants in the State of Madhya Pradesh for about 40 years, we cannot issue any direction as asked for. Under these circumstances we are constrained to dismiss the writ petition, but without costs. Y.L. Petition allowed.
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The petitioner and its predecessors had licence for distillery at Ujjain to manufacture rectified spirit and the last of such licence held by the petitioner was for the period 1.4.1976 to 31.3.1981.
For the licensing period commencing from 1.4.1981 to 31.3.1986, the petitioner was unsuccessful and the licence was granted in favour of Rajd hani Distillery Corporation.
The petitioner impugned the same but failed both before the High Court as also before the Court.
Thereafter, the petitioner filed a writ petition in the High Court claiming restitution of the distillery but failed and an appeal against the High Court 's order was preferred before this Court, which has been disposed of whereby this Court has declined to grant restitution but directed that the petitioner should move an application before the State Government to have the value of the plants licence on February 19,1982 and reiterated his request by number of reminders including the one in November 3, 1986.
In the interregnum, the Government policy was changed by a cabinet sub committe policy decision dated 30.12.1984, whereby they decided to grant licence to the existing licen sees of the distilleries and that they should construct the factories at their expenses on the land allotted by the State Government or acquired and allotted by the State Government and that they shift the business to new factories and the licence would be for a period of five years.
Several writ petitions including the one by the petitioner were filed in the High Court challenging the policy.
The High Court quashed part of the policy decision.
Against that order, petitions were filed by the State and the unsuccess ful petitioners including the petitioner in this Court.
Those petitions were disposed of by this Court by its judg ment in the case of State of M.P.v.
Nandlal Jaiswal and Ors.
, ; The court upheld the validity of the Government policy.
During the course of the arguments, the Attorney General of India conceded that if the petitioner makes an application for grant of licence, it would be considered by the Govern 493 ment and disposed of quickly.
Pursuant thereto the petition er made an application on December 25, 1987.
The State Government rejected the application by letter dated February 8, 1988, which among other things is impugned in this peti tion under Article 32 of the Constitution.
It is contended on behalf of the petitioner that the intention behind the solemn undertaking given by the State in Nandlal Jaiswal 's case clearly showed that the intention was to grant the licence to the petitioner rejection is contrary to the undertaking and violating the fundamental right of the petitioner to establish and trade in the manu facture and distribution of the liquor; further it is dis criminatory is as much as licences have been issued to others similarly placed.
Alternatively, it is contended that if it is not found feasible to grant licence for Ujjain, the same be granted for Ratlam Distillery.
Counsel for the State urged that it has not been found feasible to grant licence to the petitioner due to grounds stated in the order which are in confermity with the change in policy and the court should not interfere.
On behalf of Rajdhani Distillery Corpn.
it was urged that unless there is cut in the supply area of the operation of the existing licences and a sepa rate supply area is carved out, no licence could be issued to the petitioner; that new policy is in vogue for the succeeding licensing period of 1991 to 1993, and the li cences having been issued to persons, who are not represent ed in this court, the court should not grant the relief asked 1or in the writ petition.
Dismissing the writ petition, this Court,
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The company asking for the license (called the petitioner) used to have a license to make alcohol at a distillery in Ujjain. The last license they had was from April 1, 1976, to March 31, 1981.
For the time period from April 1, 1981, to March 31, 1986, the petitioner didn't get the license. Instead, it was given to Rajdhani Distillery Corporation.
The petitioner challenged this decision in court, but they lost in both the High Court and the Supreme Court.
After that, the petitioner asked the High Court to give them back the distillery, but they lost again. They appealed to the Supreme Court. The Supreme Court didn't give them the distillery back, but told them to ask the State Government to figure out how much the distillery plants were worth on February 19, 1982. The petitioner kept asking about this, including a reminder on November 3, 1986.
In the meantime, the government changed its rules. A cabinet committee decided on December 30, 1984, to give licenses to the companies that already had them. These companies would have to build new factories on land given or approved by the State Government, and move their business there. The licenses would be for five years.
Many companies, including the petitioner, filed lawsuits in the High Court to challenge these new rules.
The High Court cancelled part of the new rules.
Both the State and the companies that lost (including the petitioner) appealed to the Supreme Court. The Supreme Court made a decision in the case of *State of M.P. v. Nandlal Jaiswal and Ors.*, and said that the government's new rules were valid.
During the court arguments, the Attorney General of India (the government's lawyer) said that if the petitioner applied for a license, the government would consider it and make a decision quickly.
So, the petitioner applied for a license on December 25, 1987. The State Government rejected the application on February 8, 1988. The petitioner is now challenging this rejection in court, saying it violates their rights under Article 32 of the Constitution (the right to constitutional remedies).
The petitioner argues that the State promised in the *Nandlal Jaiswal* case to give them a license. They say that rejecting their application goes against that promise and violates their right to do business making and selling alcohol. They also say that it's unfair because other similar companies have been given licenses.
Alternatively, the petitioner says that if they can't get a license for Ujjain, they should get one for the Ratlam Distillery.
The State's lawyer argues that the petitioner was denied a license for reasons that follow the new government rules, and that the court should not interfere with the decision.
The lawyer for Rajdhani Distillery Corp. argues that the petitioner can't get a license unless the existing companies' supply areas are reduced or a separate supply area is created for the petitioner. They also say that there are new rules for the 1991 to 1993 licensing period, and since licenses have already been issued to companies that are not involved in this case, the court should not grant the petitioner's request.
The Supreme Court dismissed the petitioner's request.
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ivil Appeal No. 2659 of 1986. From the Judgment and Order dated 14.6.1985 of the Appellate Authority Delhi in Appeal No. 2 of 1985. Anil Kumar Gupta and B.N. Singhvi for the Appellant. Raja Ram Agarwal, Parveen Kumar and Vivek Gambhir for the Respondents. The Judgment of the Court was delivered by RANGANATH MISRA, J. The short question in this appeal by special leave is whether the appellant workman was entitled to interest on the gratuity due to him under the provisions of the (39 of 1972). Appellant joined service under Respondent No. 1 in April 1944 and was relieved from service on his resignation with,effect from 24.5.2983. The employer did not determine the amount ,of gratuity payable to the appellant as required under Section 7(2) of the Act. On 7.6. 1983, the appellant furnished an application in Form l for payment of gratuity but no action was taken by the employer; then appellant approached the statutory controlling authority for determination of the amount of gratuity and requested that on the sum due interest may be paid. The employer contested the claim both in regard to gratuity as also interest. On 3. 12. , the controlling authority determined the amount of gratuity at Rs. 16,380 and directed the Respondent No. 1 to pay along with compound interest of 9 per cent. Thereupon PG NO 744 Respondent No., 1 challenged the order before he appellate Authority. The appellate Authority affirmed the determination of gratuity but set aside the order for payment of interest. We have beard learned counsel for both parties in regard to payability of interest. Relevant portions of section 7 of the Act, as it stood in 1983, when the cause of action arose, may now be extracted: "7: Determination of the amount of gratuity: (1) A person who is eligible for payment of gratuity under this Act or any person authorised, in writing, to act on his behalf shall send a written application to the employer, within such time and in such form, as may be prescribed, for payment of such gratuity. (2) As soon as gratuity becomes payable, the employer shall, whether an application referred to in sub section (1) has been made or not, determine the amount of gratuity and give notice in writing to the person to whom the gratuity is payable and also to the controlling authority specifying the amount of gratuity so determined ; (3)The employer shall arrange to pay the amount of gratuity, within such time as may be prescribed, to the person to whom the gratuity is payable ; (4) (a) If there is any dispute as to the amount of gratuity payable to an employee under this Act or as to the admissibility of any claim of, in relation to, an employee for payment of gratuity, or as to the person entitled to receive the gratuity, the employer shall deposit with the controlling authority such amount as he admits to be payable by him as gratuity. Explanation ' Where there is a dispute with regard to any matter specified in this clause the employee may make an application to the controlling authority for taking such action as is specified in clause (b). (b) . . . . . . . . . . (c) . . . . . . . . . . PG NO 745 (5) . . . . . . . . . ,, (6) . . . . . . . . (7) . . . . . . . . Sec. 8: Recovery of gratuity: If the amount of gratuity payable under this Act is not paid by the employer, within the prescribed time, to the person entitled thereto, the controlling authority shall, on an application made to it in this behalf by the aggrieved person, issue a certificate for that amount to the Collector, who shall recover the same, together with compound interest thereon at the rate of nine per cent per annum, from the date of expiry of the prescribed time, as arrears of land revenue and pay the same to the person entitled thereto. " The provisions of Section 7 have been amended twice, first by Act 25 of 1984 with effect from 1.7.1984 and again by Act 22 of 1987. The 1987 Amendment has substituted sub section (3) and added sub section (3A) in Section 7 to the following effect: "(3) The employer shall arrange to pay the amount of gratuity within thirty days from the date it becomes payable to the person to whom the gratuity is payable. If the amount of gratuity payable under sub section (3) is not paid by the employer within the period specified in sub section (3), the employer shall pay, from the date on which the gratuity becomes payable to the date on which it is paid, simple interest at such rate, not exceeding the rate notified by the Central Government from time to time, repayment of long term deposits, as that Government may,by notification specify . . " The controlling authority had directed interest as provided in Section 8 to be paid which the Appellate Authority had vacated. From facts of the case, it is clear that the stage for action under section 8 had not been reached inasmuch the appellant had not applied for recovery of gratuity to the Collector. It is only when the Collector issues a certificate for recovery of the dues as a public demand that interest as provided under Section 8 is admissible. PG NO 746 There was no provision in the Act for payment of interest when the same was quantified by the controlling authority and before the Collector was approached for its realisation. In fact, it is on the acceptance of the position that there was a lacuna in the law that Act 22 of 1987 brought about the incorporation of sub section (3A) in Section 7. That provision has prospective application. Learned counsel for the appellant tried to rely upon the provisions of the Interest Act and the provisions of Section 34 of the Code of Civil Procedure. We do not find any support for the appellant 's stand from either of the provisions. Admittedly, no notice was given demanding interest and the controlling authority is not a court for falling back on Section 34 of the Code. We are satisfied in the facts of the case that the appellant was not entitled to interest on the amount of gratuity found due to him. Since that was the only matter agitated in the appeal with the conclusion indicated, this appeal has to fail and is dismissed. There would be no order for costs. G.N. Appeal dismissed.
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The appellant was in the service of Respondent firm from April,1944 till he resigned on 24.5.83.
The employer did not determine the amount of gratuity payable to the appellant.
Appellant furnished the necessary application for payment of gratuity and since no action was taken by the employer, the appellant approached the statutory controlling authority for gratuity and interest thereon.
The employer contested.
The controlling authority determined the amount of gratuity at Rs.16,380 and directed the employer to pay the same along with compound interest at 9%.
On appeal by the employer, the appellate authority confirmed the determination of gratuity but set aside the order for payment of interest.
This appeal by special leave is in regard to payability of interest on gratuity.
The appellant relied on the provisions of the Interest Act and section 34 of the Code of Civil Procedure, also.
Dismissing the appeal, HELD: If It is only when the Collector issue a certificate for recovery of the dues as a public demand that interest as provided under Section 8 is admissible.
[745Hl 1.2 In the instant case the appellant is not entitled to interest on the amount of gratuity found due to him.
The controlling authority had directed interest as provided in Section 8 to be paid, which the Appellate Authority had vacated.
From the facts of this case, it is clear that the stage for action under section 8 had not been reached in as much the appellant had not applied for recovery of gratuity to the Collector.
[745G H] PG NO 742 PG NO 743 2.
There was no provision in the Act for payment of interest when the same was quantified by the controlling authority and before the Collector was approached for its realisation.
In fact, it is on the acceptance of the lacuna in the law that Act 22 of 1987 brought about the incorporation of sub section (3A) in Section 7.
But that provision has prospective, and not retrospective application.
[746A B] 3.
The provisions of the Interest Act and the provisions of Section 34 of the Code of Civil Procedure would be of no avail to the appellant since no notice was given demanding interest and the controlling authority is not a court for falling back on section 34 of the Code.
[746C]
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The worker quit their job at the company on May 24, 1983, after working there since April 1944.
The company didn't figure out how much gratuity (a type of payment after leaving a job) the worker should get.
The worker asked for the gratuity payment. Because the company didn't do anything, the worker asked the government official in charge to help get the gratuity and interest on it.
The company disagreed with this.
The official decided the gratuity amount was about $16,380 and told the company to pay it with 9% interest.
The company appealed, and the next level of authority agreed on the gratuity amount. However, they removed the order to pay interest.
This appeal is about whether the company needs to pay interest on the gratuity.
The worker pointed to the Interest Act (a law about interest) and section 34 of the Code of Civil Procedure (rules for court cases).
The court said no to the appeal. It stated that interest is only required if the government official issues a certificate to collect the money owed. This is like treating it as a public debt.
The worker in this case doesn't get interest on the gratuity they were owed.
The official had ordered interest, but the appeals court canceled that order.
The worker hadn't yet asked the government to collect the gratuity. So, it wasn't time to take action under section 8 (a specific part of a law).
The law didn't say anything about interest when the official decided how much gratuity was owed. It only applied when the government was asked to collect the money.
Because of this gap in the law, Act 22 of 1987 added a new part, called sub section (3A), to Section 7.
However, this new rule only applies to cases going forward, not to past cases.
The Interest Act and Section 34 of the Code of Civil Procedure don't help the worker. They didn't ask for interest in a notice, and the official in charge isn't a court, so Section 34 doesn't apply.
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Civil Appeal Nos. 840 to 860 of 1975. From the Judgments and orders dated 7 5 74, 27 8 74, 2 9 74 and 10 9 74 of the Punjab and Haryana High Court in Civil Writ Nos. 1133, 1118, 1180, 1208, 1225, 1226, 1231, 1238, 1277, 1251,1352/74 and 1188, 1198, 1221/74 and L.P.As. Nos. 395 and 399 of 1974 respectively and Writ Petitions 1309 1318 and 1371 1373/75 (Under Article 32 of the Constitution of India) M. C. Bhandare, (In Case 844 860/75) and L. N. Singhvi (In all Writ Petitions) and R. N. Sachthey for the Appellant and Respondents. 691 section Gopal Singh and P. Keshwa Pillai for the Petitioners in W.P. 1371 73/75. Harbans Singh Marwah for the Petitioners in W.P. 1371 73/75. A. K. Sen, Kapil Sibbal, section K. Jain and section section Khanduja for the Respondents excepting C.As. 852, 853 and 855/75. Naunit Lal for the Intervener in C.A. 845/75 Ch. Dhyan Singh etc. The Judgment of the Court was delivered by BEG, J. The seventeen appeals before us by the State and by the Director of Industries of Haryana, after certification under Article 133 (1) (a) (b) of the constitution, are directed against a Judgment of the High Court of Punjab and Haryana on Writ Petition of owners of lands and lessees of mineral rights in land seeking reliefs in the nature of Mandamus to enforce fundamental rights conferred by Article 31 (2) and to restrain the Government of Haryana from taking any action to implement two notifications void: (i) No. 1217 2 1 B II 74/7622 dated the 20th February, 1974, and, (ii) No. GIG/SP/Auc/ 1173/3075 C, dated the 22nd February, 1974, after declaring the Haryana Minerals (Vesting of Rights) Act, 1973 (hereinafter referred to as 'the Haryana Act '). Under the notification of 20th February, 1974, the State Government purported to acquire rights to Saltpetre, a minor mineral in the land described in a schedule appended to the notification issued in exercise of power conferred by Section 3, sub. section (i) of the Haryana Act. By the notification of 22nd February, 1974, the State Government announced to the general public that certain saltpetre bearing areas in the State of Haryana, mentioned therein, would be auctioned on the dates given there. The notifications have not been placed before us. But, from the averments in the statements on behalf of the State and on behalf of some of the respondents in the affidavits supporting their respective cases in proceedings for a stay of the operation of the High Court 's judgment, it appears that the intention of the State was to acquire Saltpetre deposits in lands whose owners had granted mining leases claimed by petitioners in the High Court to be subsisting. The auctions advertised were probably of fresh lessee rights. Whether the auctions were to be of ownership or lessee rights in lands, the result was that one owner or one lessee was to be substituted by another in each case as a result of acquisition and sale. The State was to get the difference between the price of acquisition and amount realised on sale of each part sold. The apparent effect of mere change of owners or lessees was that the State of Haryana would benefit financially from the acquisitions and sales, although the object of the Haryana Act was said to include conservation as well as "scientific exploitation" of mineral resources. The case of the appellant State also seemed to be that the owners of lands had "haphazardly" created lessee rights in contravention of the Punjab Minor Minerals Concession Rules, 1954, made under the provisions of the Mines and Minerals (Regulation of Development) Act 67 of 1957 (hereinafter 692 referred to as the Central Act '). Learned Counsel for the appellant State contended that the Haryana Act was only meant to supplement and not supplant the Central Act. The State claimed to be dealing with lessee rights under the Central Act and not under the Haryana Act at all. The case of the petitioners in the High Court was: Firstly, that the Haryana Act was beyond the competence of the State Legislature inasmuch as the field in which this Act operated was necessarily occupied already by the provisions of the Central Act enacted under entry No. 54 of the Union List (List I) of the Seventh Schedule to the Constitution which reads as follows: "54, Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest". Secondly, that the purported acquisition under the Haryana Act offended the provisions of Article 31(2) inasmuch as it was neither for a public purpose nor for adequate compensation, the provision for compensation in the Act being, according to the petitioners, illusory. A Division Bench of the High Court allowed the Writ Petitions and quashed the impugned notifications after declaring the Act to be ultra vires. It also held that the Haryana Act violated Article 31(2). It found the compensation provided by the Haryana Act to be grossly low and illusory, although its view was that, judging from the statement of reasons and objects of the Haryana Act, a public purpose was made out. The stated reasons and objects of the Haryana Act showed that the acquisition was to be made to protect the mineral potentialities of the land and to ensure their proper development and exploitation on scientific lines. If this was the actual purpose behind the Haryana Act it did not materially differ from that which could be said to lie behind the Central Act. The real question, however, was not whether any of the purposes of the two Acts were common but whether the provisions of the Central Act so operated as necessarily to exclude, in carrying out their objects, the operation of the State Act. The High Court had held that, in view of the declaration contained in Section 2 of the Central Act, and decisions of this Court in the Hingir Rampur Coal Co. Ltd. & Ors. vs The State of Orissa & Ors., State of West Bengal vs Union of India, State of Orissa vs M. A. Tulloch & Co., and Baijnath Kedia vs The State of Bihar, the field covered by the impugned Act was already fully occupied by the Central Legislation so that the State Act had to be held to be inoperative and void for repugnancy. Section 2 of the Central Act lays down: "It is hereby declared that it is expedient in the public interest that the Union should take under its control the 693 regulation of mines and the development of minerals to the extent hereinafter provided". Section 3(a) of this Act says: " 'minerals ' includes all minerals except mineral oils;" Section 3(c) reads: " 'mining lease ' means a lease granted for the purpose of undertaking mining operations, and includes a sub lease granted for such purpose"; Section 3(d) enacts: " 'mining operations ' means any operations undertaken for the purpose of mining any mineral;" Section 3(e) elucidates: " 'Minor minerals ' means building stones, gravel ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the Central Government may, by notification in the official Gazette, declare to be a minor mineral"; Section 3 (g) indicates: " 'prospecting licence ' means a licence granted for the purpose of undertaking prospecting operations;" Section 3(h) enacts: " 'prospecting operations ' means any operations under taken for the purpose of exploring locating or proving mineral deposits;" Section 3(i) lays down: "the expressions, 'mine ' and 'owner ', have the meanings assigned to them in the ". Sections 4 to 9 of the Central Act deal with General Restrictions on Prospecting and Mining operations. Section 4 indicates that all prospecting and mining operations will be governed by the Central Act. But, Section 4A, introduced by Section 2 of the Central Act 56 of 1972, lays down: "4A(1) Where the Central Government after consultation with the State Government, is of opinion that it is expedient in the interest of regulation of mines and mineral development so to do, it may request the State Government to make a premature termination of a mining lease in respect of any mineral, other than a minor mineral, and, on receipt of such request, the State Government shall make an order making a premature termination of such mining lease and granting a fresh mining lease in favour of such Government company or corporation owned or controlled by Government as it may think fit". 694 Section 5 concerns restrictions on the grant of prospecting licences or mining leases. It shows that these will be granted by the State Government and the Central Government was to give its approval in certain specified cases only. Section 6 indicates areas for which a prospecting licence or mining lease or more than one licence or lease may be granted in any one State. The Central Government could make exceptions to this rule. Section 7 limits duration of a prospecting licence, which is evidently to be granted by the State Government, to one year for mica and two years for other minerals, subject to renewal, and, in the case of scheduled minerals, subject to approval by Central Government for each grant or renewal. Similarly, Section 8 provides periods of grant and renewal of leases by the State Government. Section 9 deals with Royalties in respect of mining leases. Section 9A is concerned with the Dead rent to be paid by the lessee to the State Government subject to the regulation of it by the Central Government. Sections 10 to 12 of the Central Act contain procedure for obtaining prospecting licences or mining leases in land in which mineral rights vest in the Government. It is true that it is not specified here in which Government rights to minerals in any land vest. But, the machinery provided for applications and for maintaining the registers of applications for prospecting licences and mining leases shows that it is the State Government which will be concerned with this matter subject to the provisions of Sections 10 to 12 of the Act. Rules for regulating the grant of prospecting licences and mining leases are to be made by the Central Government according to the detailed provisions of Section 13 and Section 13A. Section 14, however, lays down: "14. The provisions of Sections 4 to 13 (inclusive) shall not apply to quarry leases, mining leases, or other mineral concessions in respect of minor minerals". Section 15 makes it clear that it is the State Government which has the power to make rules for regulating the grant of quarry leases, mining leases, or other mineral concessions in respect of "minor minerals" and for purposes connected therewith. Section 16(1) of the Central Act enacts: "16(1)(a) All mining leases granted before the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972, if in force at such commencement, shall be brought into conformity with the provisions of this Act, and the rules made thereunder, within six months from such commencement, or such further time as the Central Government may, by general or special order, specify in this behalf (b) Where the rights under any mining lease, granted by the proprietor of an estate or tenure before the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972, have vested, on or 695 after the 25th day of October, 1949, in the State Government in pursuance of the provisions of any Act of any Provincial or State Legislature which provides for the acquisition of estates or tenures or provides for agrarian reform, such mining lease shall be brought into conformity with the provisions of this Act and the rules made thereunder within six months from the commencement of the Mines and Minerals (Regulation and Development) Amendment Act, 1972, or within such further time as the Central Government may, by general or special order, specify in this behalf". Section 16(2) provides for rules to be made by the Central Government to carry out the purposes of Section 16(1). Special powers of Central Government in respect of mining operations in certain lands are provided for in Section 17. Clause (1) of this Section reads: "17(1) The provisions of this Section shall apply in respect of land in which the minerals vest in the Government of a State or any other person". Clause (2) of Section 17 provides for undertakings by the Central Government, in consultation with the State Government, of prospecting or mining operations "in any area not already held under any prospecting licence or mining lease. ". Section 17(3) makes the Central Government liable in such cases to pay the State Government prospecting fee, royalty, surface rent, or dead rent, as the case may be, at the same rate at which it would have been payable under this Act, if such prospecting or mining operations had been undertaken by a private person under a prospecting licence or mining lease. Section 17(4) contains powers of the Central Government, in consultation with the State Government, to prohibit grant of prospecting or mining leases in any area specified in a notification. Section 18, dealing with the development of minerals enacts: "18(1) It shall be the duty of the Central Government to take all such steps as may be necessary for the conservation and development of minerals in India, and for that purpose the Central Government may, by notification in the Official Gazette, make such rules as it thinks fit. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: (a) the opening of new mines and the regulation of mining operations in any area; (b) the regulation of the excavation or collection of minerals from any mine; (c) the measures to be taken by owners of mines for the purpose of beneficiation of ores, including the provision of suitable contrivances for such purpose; 696 (d) the development of mineral resources in any area; (e) the notification of all new borings and shaft sinkings and the preservation of bore hole records, and specimens of cores of all new bore holes; (f) the regulation of the arrangements for the storage of minerals and the stocks thereof that may be kept by any person; (g) the submission of samples of minerals from any mine by the owner thereof and the manner in which and the authority to which such samples shall be submitted; and the taking of samples of any minerals from any mine by the State Government or any authority specified by it in that behalf; and (h) the submission by owners of mines of such special or periodical returns and reports as may be specified, and the form in which and the authority to which such returns and reports shall be submitted. (3) All rules made under this section shall be binding on the Government". It should be noted that Section 18 set out above empowers the Central Government to make rules for the "conservation and development of minerals in any part of India". The State Government is not even entitled under Central Act to be consulted about this subject, but it is bound by the rules made on it by the Central Government. The term "Government", according to Section 3(23) of the General Clauses Act, includes both the Central Government and a State Government. Section 18A, sub section (1) inserted by Section 11 of the Act of 56 of 1972, does, however, require consultation with the State Government on one matter. It says: "18.A(1) Where the Central Government is of opinion that for the conservation and development of minerals in India, it is necessary to collect as precise information as possible with regard to any mineral available in or under any land in relation to which any prospecting licence or mining lease has been granted, whether by the State Government or by any other person, the Central Government may authority or the Geological Survey of India, or such other authority or agency as it may specify in this behalf, to carry out such detailed investigations for the purpose of obtaining such information as may be necessary: Provided that in the cases of prospecting licences or mining leases granted by a State Government, no such authorisation shall be made except after consultation with the State Government". 697 The remaining clauses (2) to (6) of Section 18A deal with the consequences of the authorisation of investigation by the Central Government and matters connected therewith. The proviso to clause (6) dealing with the costs of investigation enacts: "Provided that where the State Government or other person in whom the minerals are vested or the holder of any prospecting licence or mining lease applies to the Central Government to furnish to it or him a copy of the report submitted under sub section (5), that State Government or other person or the holder of a prospecting licence or mining lease, as the case may be, shall bear such reasonable part of the costs of investigation as the Central Government may specify in this behalf and shall, on payment of such part of the costs of investigation, be entitled to receive from the Central Government a true copy of the report submitted to it under sub section (5)". Miscellaneous provisions are contained in Sections 19 to 33 of the Central Act. Here, Section 19 lays down: "19. Any prospecting licence or mining lease granted renewed or acquired in contravention of the provisions of this Act or any rules or orders made thereunder shall be void and of no effect". Section 20 enacts: "20. The provisions of this Act and the rules made thereunder shall apply in relation to the renewal after the commencement of this Act of any prospecting licence or mining lease granted before such commencement as they apply in relation to the renewal of a prospecting licence or mining lease granted after such commencement". Section 21 provides for penalties for anyone who contravenes the provisions of Section 4(1) of the Act. Among these miscellaneous provisions is Section 25 recast by Section 14 of Act 56 of 1972. It lays down that: "Any rent, royalty, tax, fee or other sum due to the Government under this Act or the rules made thereunder or under the terms and conditions of any prospecting licence or mining lease may, on a certificate of such officer as may be specified by the State Government in this behalf by general or special order, be recovered in the same manner as an arrear of land revenue". Section 25, sub section (2) shows that these dues are to be specified either by the Act or by the Rules made thereunder or under the terms and conditions of any prospective licence or mining lease. The control however, is of officers appointed by the State Government. Section 26 provides for delegation of the powers of the Central Government by notification in the official Gazette to either the State Government or any officer or authority either subordinate to the 698 Central Government or the State Government. Section 30 shows that the orders made by the State Government or other authority in exercise of powers by or under the Central Act are revisable by the Central Government. Hence, the provisions of the Central Act show that, subject to the overall supervision of the Central Government, the State Government has a sphere of its own powers and can take legally specified actions under the Central Act and rules made thereunder. Thus, the whole field of control and regulation under the provisions of the Central Act 67 of 1957 cannot be said to be reserved for the Central Government. As indicated above, there have been some very significant changes by the Central Act 56 of 1972. These seem to us to make it necessary to reconsider the effect of the declaration contained in Section 2 of the Central Act as interpreted by the decisions of this Court so far. Before outlining the provisions of Haryana Act, we may indicate the position resulting from the four decisions mentioned above relied upon by Punjab & Haryana High Court. In Hingir Rampur Coal Co 's case (supra), the validity of the Orissa Mining Areas Development Fund Act, 1952, was questioned on the ground that it authorised the State of Orissa to impose a cess on the valuation of the minerals. The State of Orissa had relied upon entries 23 and 66 of the State List (List II) of the Seventh Schedule. Entry 23 of List II is: "Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union". And entry 66 of List II is: "Fees in respect of any of the matters in this list, but not including fees taken in any court". The petitioning Coal Co. had relied on entry 84 of List I of the Seventh Schedule empowering the Parliament alone to impose excise duty on tobacco and other manufactured goods with the exception of Alcoholic liquor, opium, Indian hemp, and other narcotics. It had also cited, in support of its case, entry 52 of List I of "Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest". Furthermore, the Coal Company relied on entry 54 of List I relating to Mines and mineral development, already set out above. This Court held that the imposition of the cess under the State enactment was really a fee falling within entries 23 and 66 of List II of the Seventh Schedule. It held that the State Act was neither hit by entry 54, read with Mines and Minerals Development Act 3 of 1948, nor by entry 52 of List I. The decision in that case turned on an interpretation of Article 372 of the Constitution. It was held that a declaration in the Act of 1948 could not be equated with a declaration made by the Parliament in a post Constitution enactment in terms of entry 54 of List I. It was, therefore, not really a decision on the effect of Section 2 of the Central Act 67 of 1957. 699 The State of West Bengal vs Union of India (supra) was the case of a suit filed by the State of West Bengal against the Union. It was contended, on behalf of West Bengal State, that the Coal Bearing Areas (Acquisition and Development) Act, 1957, enacted by Parliament, proposing to acquire certain coal bearing areas in the State, did not apply to areas owned by the State itself, and, in the alternative, that, even if it did so apply to areas owned by the State of West Bengal, it was beyond the legislative competence of Parliament because entry 42 in the Concurrent List (List III) did not authorise an acquisition of property already vested in the State although this entry in the Concurrent List merely reads: "acquisition and requisitioning of property". It was urged there that, without a constitutional amendment, Parliament could not acquire the property of the State of West Bengal under the provisions of the impugned Act. It was held there (at p. 417): ". the power of the Union to legislate in respect of property situate in the States even if the States are regarded qua the union as Sovereign, remains unrestricted, and the State property is not immune from its operation. Exercising powers under the diverse entries which have been referred to earlier, the Union Parliament could legislate so as to trench upon the rights of the State in the property vested in them. If exclusion of State property from the purview of Union legislation is regarded as implicit in those entries in List I, it would be difficult if not impossible for the Union Government to carry out its obligations in respect of matters of national importance". Learned Counsel for the appellant State before us has relied upon the case of State of West Bengal (supra) for contending that the powers of the State of Haryana to acquire land are not impaired by the declaration contained in the Central Act. He cited the rule of construction stated there as follows (at p. 393): "Unless a law expressly or by necessary implication so provides, a State is not bound thereby. This well recognised rule applies to the interpretation of the Constitution. There fore, in the absence of any provision express or necessarily implying that the property of the State could be acquired by the Union, the rights claimed by the Union to legislate for acquisition of State property must be negatived. " Applying this rule, he contends that the powers of the State Government to acquire land are left intact by the Central Act 67 of 1957. Learned Counsel for the respondent, however, relied on another passage in the State of West Bengal 's case (supra) to submit that legislative power for acquisition of minerals for their development and conservation must be deemed to be vested in Parliament now even if the mineral resources are situated in the State. He quoted (at p. 436): "By making the requisite declarations under Entries 54 of List I, the Union Parliament assumed power to regulate 700 mines and minerals and thereby to deny to all agencies not under the control of the Union, authority to work the mines. It could scarcely be imagined that the Constitution makers while intending to confer an exclusive power to work mines and minerals under the control of the Union, still prevented effective exercise of that power by making it impossible compulsorily to acquire the land vested in the States containing minerals. The effective exercise of the power would depend if such an argument is accepted not upon the exercise of the power to undertake regulation and control by issuing a notification under Entry 54, but upon the will of the State in the territory of which mineral bearing land is situate. Power to legislate for regulation and development of mines and minerals under the control of the Union, would by necessary implication include the power to acquire mines and minerals. Power to legislate for acquisition of property vested in the States cannot therefore be denied to the Parliament if it be exercised consistently with the protection afforded by article 31. " In the two cases discussed above no provision of the Central Act 67 of 1957 was under consideration by this Court. Moreover, power to acquire for purposes of development and regulation has not been exercised by Act 67 of 1957. The existence of power of Parliament to legislate on this topic as an incident of exercise of legislative power on another subject is one thing. Its actual exercise is another. It is difficult to see how the field of acquisition could become occupied by a Central Act in the same way as it had been in the West Bengal 's case (supra) even before Parliament legislates to acquire land in a State. Atleast until Parliament has so legislated as it was shewn to have done by the statute considered by this Court in the case from West Bengal, the field is free foe State legislation falling under the express provisions of entry 42 of List III. In State of Orissa vs M. A. Tulloch & Co. (supra) the provisions of the Central Act 67 of 1957 were considered by this Court directly. In this case, the legality of certain demands as fee under the Orissa Act 27 of 1952, the validity of which had been upheld by this Court in Hingir Rampur Coal Co. 's case (supra), came up for consideration again in the light of the provisions of the Central Act 67 of 1957. It was contended on behalf of the State of Orissa that the objects and purposes of the Orissa Act and of the Central Act were entirely distinct and different so that they could validly co exist since neither trespassed into the field of the other. It was pointed out there that this Court had indicated, in the Hingir Rampur Coal Co. 's case (supra) that, if the declaration in the 1948 Act relied upon by the petitioner in that case had been made after our Constitution became operative, the position would have been different. Reliance was placed upon the provisions of Section 18 of the Central Act to hold (at p. 477): "Repugnancy arises when two enactments both within the competence of the two Legislatures collide and when the 701 Constitution expressly or by necessary implication provides that the enactment of one Legislature has superiority over the other than to the extent of the repugnancy the one supersedes the other. But two enactments may be repugnant to each other even though obedience to each of them is possible without disobeying the other. The test of two legislations containing contradictory provisions is not, however, the only criterion of repugnancy, for if a competent legislature with a superior efficacy expressly or impliedly evinces by its legislation an intention to cover the whole field, the enactments of the other legislature whether passed before or after would be overborne on the ground of repugnance. Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions of the two statutes but by the mere existence of the two pieces of legislation. In the present case, having regard to the terms of section 18(1) it appears clear to us that the intention of Parliament was to cover the entire field and thus to leave no scope for the argument that until rules were framed, there was no inconsistency and no supersession of the State Act". It was also held there (at p. 478): "If by reason of the declaration by Parliament the entire subject matter of conservation and development of minerals ' has been taken over for being dealt with by Parliament, thus depriving the State of the power which it therefore possessed, it would follow that the 'matter ' in the State List is to the extent of the declaration, subtracted from the scope and ambit of Entry 23 of the State List. There would, therefore, after the Central Act of 1957 be 'no matter in the List ' to which the fee could be related in order to render it valid". In Baijnath Kedia 's case (supra), the proviso (2) to Section 10(2) of the Bihar Land Reforms (Amendment) Act, 1964 (Bihar Act 4 of 1965) and a sub rule of Rule 20, added on December 10, 1964, by a notification of the Governor to the Bihar Minor Mineral Rules, 1961, came up for consideration. Under the Bihar Land Reforms Act, 1950, the former landlords had ceased to have any interest from the date of vesting so that their rights as lessors under the mining leases granted by them in their "estates" became vested in the State of Bihar under Section 19(1) of the Land Reforms Act; and, by Section 10(2) of that Act, the terms on which the lands were held on leases between the original lessors and lessees became binding on the State Government under the impugned proviso to Section 10(2), amounting to alteration of the terms of the leases executed by the original lessors, the former landlords, additional demands were made upon lessees. The State Government had also relied upon a sub rule added to Rule 20 framed under Section 15 of the Central Act 67 of 1957. This Court, after examining the relevant provisions of the 702 Central Act, held, relying on Hingir Rampur Coal Co. 's case (supra) and M. A. Tulloch Co. 's case (supra), as follows (at p. 113): "The declaration is contained in section 2 of Act 67 of 1957 and speaks of the taking and the control of the Central Government the regulation of mines and development of minerals to the extent provided in the Act itself. We have thus not to look outside Act 67 of 1957, to determine what is left within the competence of the State Legislature but have to work it out from the terms of that Act". After referring to what was decided in the earlier cases, this Court said (at p. 114): "These two cases bind us and apply here. Since the Bihar State Legislature amended the Land Reforms Act after the coming into force of Act 67 of 1957, the declaration in the latter Act would carve out a field to the extent provided in that Act and to that extent entry 23 would stand cut down. To sustain the amendment the State must show that the matter is not covered by the Central Act. The other side must, of course, show that the matter is already covered and there is no room for legislation". It added (at p. 114 115): "We have already analysed Act 67 of 1957. The Act takes over the control of regulation of mines and development of minerals to the Union; of course, to the extent provided. It deals with minor minerals separately from the other minerals. In respect of minor minerals it provides in section 14 that sections 4 13 of the Act do not apply to prospecting licences and mining leases. It goes on to state in section 15 that the State Government may, by notification in the official Gazette, make rules for regulating the grant of prospecting licences and mining leases in respect of minor minerals and for purposes connected therewith, and that until rules are made, any rules made by the State Government regulating the grant of prospecting licences and mining leases in respect of minor minerals which were in force immediately before the commencement of the Act would continue in force. It is admitted that no such rules were made by the State Government. It follows that the subject of legislation is covered in respect of minor minerals by the express words of section 15(1). Parliament has undertaken legislation and laid down that regulation of the grant of prospecting licences and mining leases in respect of minor minerals and for purposes connected therewith must be by rules made by the State Government. Whether the rules are made or not the topic is covered by Parliamentary legislation and to that extent the powers of State Legislature are wanting. Therefore, there is no room for State Legislation". 703 In Baijnath Kedia 's case (supra), this Court also said (at p. 116): "We have already held that the whole of the legislative field was covered by the Parliamentary declaration read with provisions of Act 67 of 1957, particularly section 15 We have also held that entry 23 of List II was to that extent cut down by entry 54 of List I. The whole of the topic of minor minerals became a Union subject. The Union Parliament allowed rules to be made but that did not recreate a scope for legislation at the State level. Therefore, if the old leases were to be modified a legislative enactment by Parliament on the lines of section 16 of Act 67 of 1957 was necessary. The place of such a law could not be taken by legislation by the State Legislature as it purported to do by enacting the second Proviso to section 10 of the Land Reforms Act. It will further be seen that Parliament in section 4 of the Act 67 of 1957 created an express bar although section 4 was not applicable to minor minerals. Whether section 4 was intended to apply to minor minerals as well or any part of it applies to minor minerals are questions we cannot consider in view of the clear declaration in section 14 of Act 67 of 1957 that the provisions of sections 4 13 (inclusive) do not apply. Therefore, there does not exist any prohibition such as is to be found in section 4(1) Proviso in respect of minor minerals. Although section 16 applies to minor minerals it only permits modification of mining leases granted before October 25, 1949. In regard to leases of minor minerals executed between this date and December 1964 when Rule 20(1) was enacted, there is no provision of law which enables the terms of existing leases to be altered. A mere rule is not sufficient". Again, referring to the earlier decisions it said (at p. 117): "On the basis of those rulings we have held that the entire legislative field in relation to minor minerals had been withdrawn from the State Legislature. We have also held that vested rights could only be taken away by law made by a competent legislature. Mere rule making power of the State Government was not able to reach them. The authority to do so must, therefore, have emanated from Parliament. The existing provision related to regulation of leases and matters connected therewith to be granted in future and not for alteration of the terms of leases which were in existence before Act 67 of 1957. For that special legislative provision was necessary. As no such parliamentary law had been passed by the second sub rule to Rule 20 was ineffective. It could not derive sustenance from the second Proviso to section 10(2) of the Land Reforms Act since that proviso was not validly enacted. " The question which arises before us now is whether, possibly as a result of the decision of this Court in Baijnath Kedia 's case (supra), the Parliament had not amended the law, as we find it in the present 704 Section 16 of the Act 67 of 1957, as amended by Act 56 of 1972, so as to undo its effect. If that amendment is in response to the need pointed out in Baijnath Kedia 's case (supra) would it not cover the provisions of the Haryana Act now before us ? The preamble to the Haryana Act states that it is: "An Act to vest the mineral rights in the State Govt. and to provide for payment of amount to the owners of minerals and for other matters connected therewith. " The crucial section is section 3 of the Haryana Act which runs as follows: "section 3 Vesting of minerals in State Government. (1) The State Government may, from time to time, by notification, acquire the right to any minerals in any land and the right to the minerals specified in the notification shall, from the date of its publication, vest in the State Government. (2) Notwithstanding anything contained in any law for the time being in force, on the publication of the notification under sub section (1), the right to the minerals in the land specified in the notification shall vest absolutely in the State Government and the State Government shall, subject to the provisions of the , have all the powers necessary for the proper enjoyment or disposal of such right. (3) The right to the minerals in the land includes the right of access to land for the purpose of prospecting and working mines and for the purposes subsidiary thereto including the sinking of pits and shafts, erection of plants and machinery, construction of roads, stacking of minerals and deposits of refuse, quarrying and obtaining building and road materials, using water and taking timber and any other purpose which the State Government may declare to be subsidiary to mining. (4) If the State Government has assigned to any person its right over any minerals, and if for the proper enjoyment of such right, it is necessary that all or any of the powers specified in subsection (2) and (3) should be exercised, the Collector may, by an order in writing subject to such conditions and reservations as he may specify, delegate such powers to the person to whom the right has been assigned". Other provisions of the Haryana Act are not material. Section 1 merely gives the Act its title and Section 2 deals with definitions. Section 4 relates to compensation. Section 5 provides for references or disputes about compensation to Civil Courts. Section 6 applies Civil procedure to compensation proceedings. Section 7 provides for appeals. Section 8 contains the necessary powers of the State Government to frame rules. These provisions exhaust the Act. 705 Saltpetre was declared a minor mineral by notification No. 1(31) 65 MII on 21st January, 1967. Its deposits are said to have been found in 638 villages of Haryana. It appears that the State of Haryana considered itself to be the owner of these deposits on the strength of entries in the records of rights (Wajib ul arz) of these villages and used to auction them in accordance with the Punjab Minor Minerals Concession Rules, 1964. But, on 25th May, 1971, the Punjab & Haryana High Court held on a Writ Petition (C.W. No. 1221 of 1971), that unless the mineral deposits are specifically mentioned in the Wajib ul arz of a village as having vested in the State, their ownership would still remain vested in the former proprietors mentioned as owners of their lands in a Wajib ul arz. As a result of this decision, the right to Saltpetre deposits was found to be vested in individual proprietors of their estates and Gram Panchayats in about 600 out of 638 villages. It is stated that, in order to meet this situation, the Haryana Act No. 48 of 1973 was framed and passed. The President of India gave his assent to it on 6th December, 1973. It was thus a logical corollary of land reforms. Apparently, there was no conflict between the State and the Union Government on the policy underlying the Act. The arguments advanced on behalf of the appellant State were: Firstly, that the Central Act does not purport to cover or operate upon the power to acquire ownership in minerals which are part of "land". The relevant entry for exercise of legislative power to acquire property is entry 42 in the Concurrent List (List III) of the Seventh Schedule. The Central Act purports to have been made in exercise of the power under entry 54 of List I for regulation and development of mines, whereas the Haryana Act operates in the distinct and separate field of acquisition of property. Secondly, minerals being part of "land" in the State, within the competence of the State Legislature to legislate upon, under entry 18 of the State List (List II), legislation falling substantially under this head, read with entry 23 of the State List and entry 42 of the Concurrent List (List III), should not be invalidated unless we are compelled to do so. Thirdly, entry 54 of List I, set out above would naturally cover only those parts of the field of acquisition, in accordance with rules of interpretation indicated in State of West Bengal 's case (supra), which are expressly excluded from this special field by the Central Act. Particularly, as acquisition belongs to a different head in the concurrent field, on which there is neither a Central Act for acquiring ownership of mineral deposits nor any express provision for it in Act 67 of 1957, there could be no question of the exclusion of the power of the State Legislature to pass the impugned Act. There was thus no unavoidable conflict between it and the State Act. Fourthly, the impugned Act is protected from any challenge on the ground of inadequacy of compensation or the unreasonableness of the principles contained in Section 4(1) of the Haryana Act, as the 706 acquisition of parts of estates of former proprietors of land falls under Article 31A. On the other hand, the learned Counsel for the respondents has urged that the cases before us are covered completely by the decisions of this Court discussed above, and, in particular by those in Tulloch Co 'section, case (supra) and Baijnath Kedia 's case (supra). It is urged that, when acquisition is only a means of conservation or development of mineral resources, even this field must be held to be necessarily excluded by the declaration in Section 2 and other provisions of Central Act 67 of 1957 which will become unworkable if the provisions of the Haryana Act were permitted to operate. It seems difficult to sustain the case that the provisions of the Central Act would be really unworkable by mere change of ownership of land in which mineral deposits are found. We have to judge the character of the Haryana Act by the substance and effect of its provisions and not merely by the purpose given in the statement of reasons and objects behind it. Such statements of reasons are relevant when the object or purpose of an enactment is in dispute or uncertain. They can never override the effect which follows logically from the explicit and unmistakable language of its substantive provisions. Such effect is the best evidence of intention. A statement of objects and reasons is not a part of the statute, and, therefore, not even relevant in a case in which the language of the operative parts of the Act leaves no room whatsoever, as it does not in the Haryana Act, to doubt what was meant by the legislators. It is not disputed here that the object and effect of the Haryana Act was to acquire proprietary right to mineral deposits ' in "land". Its provisions, however, do not mention leasehold or licensee rights. Obviously, this is so because these rights are governed by the Central Act 67 of 1957. As we found nothing in the judgment under appeal or in the arguments advanced by either side to indicate that the effect of Act 56 of 1972 which had amended Act 67 of 1957 had been specifically noticed, we considered it necessary to hear further arguments with a view to giving parties an opportunity of showing us how earlier decisions, when the provisions introduced by Act 56 of 1972 were not there, could be at all helpful in deciding the question now before us. One of the objections taken before us, at the further hearing given to the parties, was that we should not allow a new point to be argued. We do not think that any new question was allowed by us to be raised simply because we have permitted parties to place their points of view on the same question after taking into account some changes in the Central Act. Indeed, we are bound to take judicial notice of the law as it exists after its amendment. We can only apply the law as it exists and not the law as it once was. No party could justifiably complain that it was given an additional opportunity to meet what follows from the amended law even if the effect of the amendment was not noticed earlier. We are particularly impressed by the provisions of Sections 16 and 17 as they now stand. A glance at section 16(1)(b) shows that the 707 Central Act 67 of 1957 itself contemplates vesting of lands, which had belonged to any proprietor of an estate or tenure holder either on or after 25th October, 1949, in a State Government under a State enactment providing for the acquisition of estates or tenures in land or for agrarian reforms. The provisions lay down that mining leases granted in such land must be brought into conformity with the amended law introduced by Act 56 of 1972. It seems to us that this clearly means that Parliament itself contemplated State legislation for vesting of lands containing mineral deposits in the State Govt. It only required that rights to mining granted in such land should be regulated by the provisions of Act 67 of 1957 as amended. This feature could only be explained on the assumption that Parliament did not intend to trench upon powers of State Legislatures under entry 18 of List II, read with entry 42 of List III. Again, Section 17 of the Central Act 67 of 1957 shows that there was no intention to interfere with vesting of lands in the States by the provisions of the Central Act. The only answer given on behalf of the respondents to this contention is that such vesting as it contemplated by Section 16(1)(b) of the Central Act, as it now stands, must be of "estates" of proprietors or lands of tenure holders under some legislation for agrarian reform. We are unable to find any force in this contention. Article 31 A of the Constitution is not confined to legislation for agrarian reform. Agrarian reform is only one of the possible or alternative objects of such acquisition. It need not be the exclusive or only purpose of State legislation contemplated by Section 16(1) (b) of the Central Act. And, power to legislate for the acquisition of the whole of an estate or "tenure" would include the power to legislate for any part of it. Writ Petition Nos. 1309 to 1318 and 1371 to 1373 of 1975, directed against the provisions of this Act, have also been placed before us for arguments and appropriate orders. The petitioners in these cases assert rights as holders of mining leases granted by persons who had been entered as proprietors of estates in the records of rights in various villages. The rights of persons so entered (in a "Wajib ul arz") to mineral deposits in their former lands have been acquired by the State under the Haryana Act. According to the Haryana State, the Act was passed so as to, inter alia, change the law as declared by the Punjab & Haryana High Court in the case reported in AIR 1972 P&H p. 50. According to the view of the High Court, rights in such lands had continued to vest in former owners of estates despite acquisitions of other parts of their "estate". The effect of the Haryana Act was, it was urged, only to change the ownership without interfering with the regulation of leasehold or licensee rights in minerals under the provisions of the Central Act 67 of 1957. The Haryana Act expressly states that it operates subject to the overriding provisions of Act 67 of 1957. Dr. L. M. Singhvi, appearing on behalf of the State of Haryana, in the Writ Petitions under Article 32, submits: Firstly, that the legislative competence of the State Legislature, under entry 23 of List II is subjected to entry No. 54 of List I only "to the extent to which" 708 Parliament chooses to take upon itself the regulation of mines and minerals and no more. Secondly, in arriving at a decision on the extent to which Parliament has removed regulation and development of mines from State control, strict construction ought to be adopted so that, without a specific and clear declaration by Parliament, ousting the power of State Legislature to deal with vesting of land in the State Government, it should not be assumed that the legislative power of the State to acquire what is "land" had been taken away. Thirdly, Parliament having legislated specifically only in order to regulate the grant of mining leases and concessions, irrespective of the ownership of the lands in which mining leases and concessions are granted, the clear legislative intent of Parliament, gathered from the Central Act 67 of 1957 itself, also was to exclude the topic of acquisition of ownership and other rights in land, apart from those of holders of mining leases and licences, from its purview. Fourthly, the majority view in the State of West Bengal 's case (supra) should be read in the context of the particular Act considered there under which the Union Govt. had been given powers of acquiring lands belonging to the State of West Bengal. No such Central Act is before us for interpretation. Even if the power was vested in the Parliament to acquire land as an incident of regulation and development of minerals, that power not having been exercised at all by Act is of 1957, it was not permissible to assume any conflict between the Central Act 67 of 1957 and the Haryana Act. Fifthly, D. M. Collieries & Industries Ltd. vs Commissioner Burdwan Division, following 66 C.W.N. p. 304=AIR , could be relied upon to urge that States had not lost their legislative competence altogether to acquire lands in which mineral rights could be granted. Examples of such acquisitions were: section 10 of the Bihar Land Reforms Act, 1950, Section 5(2) of the West Bengal Estate Acquisition Act, 1953 (as amended by Act 22 of 1964) Coal Bearing Areas (Acquisition and Development) Act, 1957: , and . In any case, until Parliament legislates to acquire ownership of mineral deposits in a State, this field cannot be said to be occupied merely because of the declaration in Act 67 of 1957 which contains nothing whatsoever about the ownership of minerals. Sixthly, the provisions of Act 67 of 1957 also show that the power of granting leases and concessions in respect of mineral deposits is left largely to State Government. There is, however, one argument advanced on behalf of holders of leases or licences of mining rights which must be upheld. It is that lessee and licensee rights, governed by the provisions of Act 67 of 1957 or rules made thereunder, are not covered by the Haryana Act. It is clear from Section 3(2) of the Haryana Act itself that the provisions of this Act are to be read subject to the provisions made by or under the Central Act. Moreover, the Haryana Act does not and cannot ipso facto terminate either lessee or licensee rights which were subsisting on the date when the Haryana Act came into force. On the other hand, section 9 of the Central Act 709 56 of 1972, which amended section 16 of the Principal Act (Central Act 67 of 1957), made it imperative for such lessee rights as existed in estates, (which had vested in a State Government) to be brought into conformity with the Central Act. Obviously, therefore, if there are any lessee or licensee rights of mining in minor minerals on land which were actually regulated by the provisions of the Central Act 67 of 1957, they will continue. Although, this is a legally correct contention, it was not shewn to us how the notification of auctions of mining rights affected any subsisting rights of any alleged lessee or licensee. The facts of no individual case were placed before us. We do not know which respondent in the appeal or which petitioner in Writ Petitions before us has any subsisting rights governed by any of the provisions of the Central Act or rules made thereunder. It has also not been shewn to us that any lessee or licensee asked the State Government to carry out any statutory or contractual obligation before he invoked the Writ jurisdiction of the High Court or of this Court. Thus, essential averments to disclose subsisting rights or the locus standi of the petitioners are wanting here. In Writ Petitions No. 1309 1318 and 1371 1373 of 1975, the petitioners only assert that they are lessees of minor minerals holding rights under registered leases executed by the owners of minor minerals. But, they do not state whether their leases are governed by or have been brought into conformity with the provisions of the Central Act. Annexure 'A ' is the notification, dated 10th April, 1974, assailed by petitioner in this Court. Its purpose is stated in the following terms: "In exercise of powers conferred by sub section (1) of Section 3 of the Haryana Mineral (Vesting of Rights) Act, 1973, the Governor of Haryana hereby acquires the right to the minerals, mentioned in column 6 of the schedule given below in the land specified in column 5 thereof". The schedule contains a large number of khasra numbers of plots in various villages covered by the notification Another notification of 11th September, 1975, challenged by the petitioners in this Court says: 'It is hereby notified for the general public that Minor Mineral quarries of Gurgaon District, as per particulars given below, will be put to auction on 1 10 1975 in the office of Senior District Industries Officer, Faridabad, at 10 A.M.". Thereafter, follows the names of 139 villages in Tehsil Gurgaon under the heading "Name of Quarry". Under the next heading. "Name of the Minor Mineral", occur the words "Road metal and stone. " 710 The notification then proceeds to say: "The terms and conditions of the auction are given below : (i) Each bidder shall be required to deposit a sum of Rs. 200 in cash as earnest money, with the Presiding Officer before participating in the auction. (ii) The period of contract shall commence from the date of execution of the agreement to the 21st March, 1977. (iii)Other terms and conditions of auction shall be the same as contained in the Punjab Minor Mineral Concession Rules, 1964, as adopted by Haryana Government. (iv) The highest bidder shall be entitled to obtain short term permits from the date of auction till the date of acceptance of his bid by the competent authority. Therefore, he will not have any right to revoke his officer. Any other information he had from the Senior District Industries Officer. Faridabad. (B. L. MITTAL) Director of Industries, Haryana". Some of the numbers given in the first notification correspond with the number of plots in respect of which the petitioners allege to be lease holders. A perusal of the petitions and the counter affidavits filed in reply on behalf of the State of Haryana shows that the only dispute between the parties relates to the vesting of ownership rights in a minor mineral in these plots. But, the petitioners have come before us as lessees and not as owners. Rights of former owners have been validity terminated by the Haryana Act. We are unable to make out, from these petitions how any lessee rights acquired by the petitioners themselves, under any law subsist or are affected by the notifications mentioned above. We proceed to record our conclusions as follows: 1. The Haryana Minerals (Vesting of Rights) Act, 1973, is valid, as it is not, in any way, repugnant to the provisions of the Mines and Minerals (Regulation of Development) Act 67 of 1957, made by Parliament. Ownership rights could be and have been validity acquired by the Haryana Govt. under the Haryana Act. No rights are shewn by any petitioner before us to have been conferred upon him under any lease or licence executed or brought in accordance with the provision of the Central Act 67 of 1957, but, any petitioner, either before the High Court or in this Court, now before us, who can establish any such right governed by the provisions of the Central Act 67 of 1957 may take such proceedings before an appropriate Court, if so advised, as may still be open to him under the law, against any such action or Govt. notification as 711 is alleged to infringe that right. We are unable to find any such right in any writ petition, as framed, now before us. Any petitioner who applies for a writ or order in the nature of a mandamus should, in compliance with a well known rule of practice, ordinarily, first call upon the authority concerned to discharge its legal obligation and show that it has refused or neglected to carry it out within a reasonable time before applying to a Court for such an order even where the alleged obligation is established. Accordingly, subject to the observations made above, we allow Civil Appeals Nos. 844 860 of 1975, and set aside the judgment and orders of the High Court of Punjab and Haryana and dismiss the Writ petitions. We also dismiss the Writ Petitions Nos. 1309 1318 and 1371 1373 of 1975, subject to the observations made above, filed in this Court. Parties will bear their own costs. P.B.R. Appeal allowed & Petitions dismissed.
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On the strength of entries in the (wajib ul arz) (village administration papers) of some villages the State Government considered itself to be the owner of saltpetre deposits.
By a notification it declared saltpetre as a minor mineral and auctioned the mines in accordance with the Punjab Minor Minerals Con Cessions Rules, 1964 made under the provisions of the Mines and Minerals (Regulation and Development) Act 67 of 1957.
In a writ petition the High Court held that, unless the mineral deposits were specifically mentioned in the Wajib ul arz of a village, as having vested in the State, their ownership would still remain vested in the former proprietors according to the record of rights.
To meet this situation, the State legislature passed the Haryana Minerals (Vesting of Rights) Act, 1973.
Since the owners of the lands had haphazardly created lessee rights in contravention of the Punjab Rules, 1964, two notifications were issued with the object of the conservation as well as of scientific exploitation of mineral resources.
By one notification the State Government purported to acquire rights to saltpetre in the lands and by the second it announced that certain saltpetre bearing areas would be auctioned.
In a writ petition under article 226, the High Court held (i) that in view of the declaration contained in section 2 of the Central Act the field covered by the impugned Act was already fully occupied by the Central legislation so that the State Act was inoperative and void for repugnancy and quashed the two notifications; and (ii) that rights in such lands had continued to vest in the former owners of estates despite acquisitions of other parts of their estates.
The respondents in the appeals containded that the declaration in section 2 of the Central Act that it was expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals would become unworkable if the provisions of the State Act were permitted to operate.
While the appeals were pending writ petitions were filed in this Court under Article 32.
The petitioners in the first batch of writ petitions have asserted rights as holders of mining lesses granted by persons who had been entered as proprietors of estates in the record of rights and that the State under the State Act had wrongly acquired the right to mineral deposits in their former lands.
It was contended that the effect of the State Act was only to change the ownership without interfering with the regulation of leasehold or licensee rights in minerals under the Central Act.
Allowing the appeals of the State and dismissing the writ petitions, ^ HELD: (i) The Haryana Minerals (Vesting of Rights) Act.
1973, is valid, as it is not, in any way, repugnant to the provisions of the Mines and 689 Minerals (Regulation of Development) Act 67 of 1957, made by Parliament.
Ownership rights could be and have been validly acquired by the State Government under the State Act.
[710G] (ii) No rights are shown by any petitioner to have been conferred upon him under any lease or licence executed in accordance with the provisions of the Central Act, but, any petitioner, either before the High Court or in this Court, who can establish any such right governed by the provisions of the Central Act 67 of 1957 may take such proceedings before an appropriate court, as may still be open to him under the law, against any such action or Government notification as is alleged to infringe that right.
[710H] (iii) Any petitioner who applied for a writ or order in the nature of a mandamus should, in compliance with a well known rule of practice, ordinarily, first call upon the authority concerned to discharge its legal obligation and show that it had refused or neglected to carry it out within a reasonable time before applying to a court for such an order even where the alleged obligation is established.
[711B] 1.
(a) It is difficult to sustain the respondents ' contention that the provisions of the Central Act would be really unworkable by mere change of ownership of land in which mineral deposits were found.
The character of the State Act has to be judged by the substance and effect of its provisions and not merely by the purpose given in the Statement of Objects and Reasons.
[706C] (b) The provisions of the Central Act show that subject to the overall supervision of the Central Government the State Government has a sphere of its own powers and can take legally specified actions under the Central Act and rules.
Thus, the whole field of control and regulation under the provisions of the Central Act cannot be said to be reserved for the Central Government.
[698B] (c) The stated objects and reasons of the State Act showed that the acquisition was to be made to protect the mineral potentialities of the land and to ensure their proper development and exploitation on scientific lines.
If this was the actual purpose behind the Act it did not materially differ from that which could be said to lie behind the Central Act.
[692E] (d) The provisions contained in section 16(1)(b) show that Parliament itself contemplated state legislation for vesting of lands containing mineral deposits in the State Government.
It only required that rights to mining granted in such land should be regulated by the provisions of Act 67 of 1957 as amended in 1972.
This feature could only be explained on the assumption that Parliament did not intend to trench upon powers of State legislatures under entry 18 of List II read with entry 42 of List III.
Again, section 17 of the Central Act shows that there was no intention to interfere with vesting of lands in the States by the provisions of the Central Act.
[707B C] (e) There is no force in the contention of the respondents that the vesting contemplated by section 16(1)(b) as it now stands must be of "estates" of proprietors or lands of tenureholders under some legislation for agrarian reform.
Agrarian 31A of the Constitution is not confined to legislation for agrarian reform.
Agrarian reform is only one of the possible or alternative objects of such acquisition.
It need not be the exclusive or only purpose of State legislation contemplated by section 16(1)(b) of the Central Act.
Power to legislate for the acquisition of the whole of an estate or 'tenure ' would include the power to legislate for any part of it.
[707 D E] Hingir Rampur Coal Co. Ltd. & Ors.
vs The State of Orissa & Ors.,[1961] 2 S.C.R. 537; State of West Bengal vs Union of India,[1964] 1 S.C.R. 371; State of Orissa vs M. A. Tulloch & Co.; , & Baijnath Kedia vs The State of Bihar,[1970] 2 S.C.R. 100, held inapplicable.
(2) The lessee and licensee rights governed by the Central Act or rules are not covered by the State Act.
It is clear from section 3(2) of the State Act that the provisions of this Act were to be read subject to the provisions made by or under the Central Act.
The State Act did not and could not upso facto 690 terminate either lessee or licensee rights which were subsisting on the date when the State Act came into force.
On the other hand.
section 9 of the Central Act 56 of 1972, which amended section 16 of the principal Act, made it imperative for such lessee rights as existed in estates (which had vested in a State Government) to be brought into conformity with the Central Act.
Therefore, if there were no lessee or licensee rights of mining in minor minerals on land which were actually regulated by the provisions of the Central Act they would continue.
[708H] In the instant case, however.
it was not shown how the notification of auctions of mining rights affected any subsisting rights of any alleged lessee or licensee.
It has not been shown that any lessee or licensee asked the State Government to carry out any statutory or contractual obligation before he invoked the writ jurisdiction of the High Court or this Court.
The essential averments to disclose subsisting rights or the locus standi of the petitioners were wanting in these petitions.
[709A] (3) In the second batch of petitions, the only dispute between the parties related to the vesting of ownership rights in minor minerals in those plots.
The petitioners have come to this Court as lessees and not as owners.
Rights of former owners have been validly terminated by the State Act.
It is difficult to make out from these petitions how any lessee rights acquired by the petitioners themselves under any law subsisted or were affected by the notifications.
[710E F] (4) The statement of objects and reasons is relevant when the object or purpose of an enactment is in dispute or uncertain.
It can never override the effect which follows logically from the explicit and unmistakable language of its substantive provisions.
Such effect is the best evidence of intention.
A statement of objects and reasons is not a part of the statute, and, therefore, it is not even relevant in a case in which the language of the operative parts of the Act leaves no room whatsoever, to doubt what was meant by the legislators.
[706D E] In the instant case it is not disputed that the object and effect of the State Act was to acquire proprietary rights to mineral deposits in "land".
Its provisions however, do not mention leasehold or licensee rights.
This is so because these rights were governed by the Central Act 67 of 1957.
(5) It is not correct to say that any new question was allowed to be raised simply because the parties were permitted to place their points of view on the same question after taking into account the changes brought about in Act 67 of 1957 by Act 56 of 1972 and how earlier decisions of this Court, which were given before the amendments came into force, could be at all helpful in deciding the questions.
The Court is bound to take judicial notice of the law as it exists and not the law as it once was.
[706G]
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Based on records from villages, the State Government believed it owned saltpetre (a mineral used in fertilizer and explosives) deposits.
The government then announced that saltpetre was a "minor mineral." They auctioned off the rights to mine it, following rules from 1964. These rules were created under a 1957 law about managing mines and minerals.
The High Court (a state-level court) said that unless the village records specifically said the state owned the mineral deposits, the original landowners still owned them.
To fix this, the state government passed a new law in 1973, called the Haryana Minerals (Vesting of Rights) Act. "Vesting of Rights" here means giving ownership of something to someone.
Because landowners had made some mining deals that didn't follow the 1964 rules, the government issued two announcements. These were meant to protect and carefully use the mineral resources.
One announcement said the government now owned the saltpetre in the lands. The other said the government would auction off areas with saltpetre.
The High Court decided that: (1) Because the central (federal) government already had a law about mines and minerals, the state law was invalid. The state law clashed with the federal law. Therefore, the announcements were canceled. (2) The original landowners still owned the land, even if the government had taken other parts of their property.
Those appealing the case said that if the state law was allowed, the federal government's control over mines and minerals would be impossible to manage.
While the appeals were happening, new petitions were filed in the Supreme Court (the highest court).
The people filing the first set of petitions said they had mining leases (agreements) from the original landowners. They claimed the state wrongly took the mineral rights under the state law.
It was argued that the state law only changed who owned the minerals. It didn't interfere with the rules about leases or licenses for mining, which were covered by the federal law.
The Supreme Court allowed the state's appeals and rejected the petitions. It decided: (i) The Haryana Minerals (Vesting of Rights) Act of 1973 is valid. It doesn't conflict with the federal law about mines and minerals from 1957. The state government could legally take ownership of the mineral rights under the state law.
(ii) None of the petitioners (those filing the petitions) showed that they had any rights under a lease or license that followed the federal law. However, any petitioner who can prove they have rights under the federal law can take legal action against any government action that violates those rights.
(iii) Anyone asking the court for an order telling someone to do something (mandamus) should first ask the person or group to do what they're legally required to do. They should show that the person or group refused before going to court.
1. (a) It's hard to believe that simply changing the ownership of land with minerals would make the federal law impossible to manage. The law's effect is judged by what it actually does, not just by what it says it's trying to do.
(b) The federal law shows that the state government still has some power to act under the law, as long as the federal government is overseeing things. So, the federal government doesn't have complete control over everything.
(c) The state law's stated goal was to protect the mineral resources and make sure they're developed and used properly. This goal is similar to the goal of the federal law.
(d) The federal law itself says that states can pass laws to take ownership of land with mineral deposits. It only requires that any mining rights on that land must follow the federal law. This means that the federal government didn't want to take away the state's power to make laws about land ownership. Also, another section of the federal law shows that it wasn't meant to interfere with states taking ownership of land.
(e) It's not true that the federal law only allows states to take "estates" (large properties) from landowners as part of land reform. Land reform is just one possible reason for taking land. It doesn't have to be the only reason the state is taking the land. The power to take an entire estate includes the power to take part of it.
Several previous court cases were not relevant to this case.
(2) The state law doesn't cover lease and license rights that are controlled by the federal law. The state law says that it must be followed alongside the federal law. The state law didn't automatically end any lease or license rights that existed when the state law took effect. Also, a change to the federal law in 1972 said that any lease rights in estates that the state government now owned had to be brought into agreement with the federal law. So, if there were any mining leases or licenses that followed the federal law, they would continue to be valid.
However, in this case, it wasn't shown how the announcements about auctions affected any existing rights of any lease or license holder. No lease or license holder asked the state government to fulfill its legal duties before going to court. The petitions didn't have the necessary information to show that the petitioners had existing rights or the right to bring the case to court.
(3) In the second set of petitions, the only issue was who owned the mineral rights in certain plots of land. The petitioners were acting as leaseholders, not owners. The state law had legally ended the rights of the former owners. It's hard to see how any lease rights that the petitioners had under any law were affected by the announcements.
(4) The stated goals of a law are important when the law's purpose is unclear. However, they can't override the clear meaning of the law's actual text. The law's effect is the best evidence of what it's trying to do. The statement of goals isn't part of the law itself, so it's not relevant if the law's wording is clear.
In this case, it's clear that the state law's purpose was to take ownership of mineral deposits in land. However, the law doesn't mention lease or license rights. That's because those rights are covered by the federal law from 1957.
(5) It's not wrong to allow parties to present their arguments on the same issue after considering changes made to the federal law in 1972. The court must consider the law as it currently exists, not as it once was.
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Appeal No. 1103 of 1955. Appeal from the order dated August 9, 1963 of the Andhra Pradesh High Court in Writ Petition No. 431 of 1961. D. Natsaralu, A. Subba Rao and K. Javaram, for the appellant. B. Parthasarathy, for respondent No. 1. 625 T. Satyanarayana, for respondent No. 2. The Judgment of the Court was delivered by Hegde, J. A short, none the less interesting question of law arises for decision in this appeal by certificate, and that question is whether a tank can be considered as a charitable institution within the meaning of those words in section 2(E) of the Andhra Inams (Abolition & Conversion into Ryotwari Act) 1956 (Act No. 36 of 1956) (to be hereinafter referred to as the Act). The Inam with which we are concerned in this case stands abolished under the Act. The appellant wants the property comprised in that Inam to be registered in his name. His contention is that prior to its abolition he was the/namdar of that Inam though he had the liability to repair the tank in his village from out of the income of that/nam. The Authorities under the Act have rejected 'Iris claim that he was the Inamdar of the Inam in question. They have come to the conclusion that the Inam was in favour of the tank and that he was in possession of the Inam property only as the Manager of the tank which according to them was a charitable institution. This conclusion has been upheld by the High Court. It is not known as to who granted the Inam in question. The grant is lost in antiquity. The only evidence we have relating to this/nam are the entries in the Inam register. A copy of that register has been produced in this case. Therein the Inam is shown to have been granted to the tank "uracheruvu". Under column 8 it is mentioned that it was given for repairs of the pond called uracheruvu situated close to the village. Under column 10 it is mentioned that it is to be in force so long as the repairs of the tank are performed. The ancestor of the appellant was shown to be the Manager of the charitable institution viz., the tank. Under the remarks column it is mentioned "The pond is of great use for the cattle and people of the village. The Inam can be confirmed permanently so long as the repairs are performed. The pond for which the Inam was originally granted was situated north to the village and is now out of use. At the request of the villagers the late Collector Mr. Fraser issued an order in 1819 that the proceeds of this Inam can be applied to the present existing Kunta which is south to the village and so of use. " From these entries it is clear that the Inam was granted in favour of the tank known as "uracheruvu". It has been so considered at least ever since 1819. Therefore we are unable to uphold the contention of the appellant that it was a grant in favour of his family subject to the liability to. repair the tank. It appears that the ancestors of the appellant and at present the appellant is looking after the management of the tank. 626 Mr. Narsaraju, learned Counsel for the appellant contended that even if we come to the conclusion that the Inam was granted for a charitable purpose, the object of the charity being a tank, the same cannot be considered as a charitable institution. According to him a tank cannot be considered as an institution. In support of that contention of his he relied on the dictionary meaning of the term 'institution '. According to the dictionary meaning the term 'institution ' means "a body or organization of an association brought into being for the purpose of achieving some object". Oxford Dictionary defines an 'institution ' as "an establishment organisation or association, instituted for the promotion of some object especially one of public or general utility, religions, charitable, educational, etc. " Other Dictionaries define the same word as 'organised society established either by law or the authority of individuals, for promoting any object, public or social '. In Minister of National Revenue V. Trusts a.nd Guarantee Co. Ltd. (1) the Privy Council observed: "It is by no means easy to give a definition of the _ word "institution" that will cover every use of it. Its meaning must always depend upon the context in which it is found. " In Masjid Shahid Ganj and Ors. V. Shiromani Gurdwara Prabandhak Committee, Amritsar and Anr.(2) the Privy Council considered a Madrasah as institution though it doubted whether the same can be considered as a "juristic personality". This is what the Privy Council observed: "A gift can be made to a madrasah in like manner as to a masjid. The right of suit by the mutwali or other manager or by any person entitled to a benefit (whether individually or as a member of the public or merely in common with certain other persons ) seems hitherto to have been found sufficient for the purpose of maintaining Mohomedan endowments. At best the institution is but a caput mortuum, and some human agency is always required to take delivery of property and to apply it to the intended purposes. Their Lordships, with all respect to the High Court of Lahore, must not be 'taken as deciding that a "juristic personality" may be extended for any purpose to Muslim institutions generally or to mosques in particular. On this general question they reserve their opinion. " We may at this stage state that the Act has not defined either the expression "charitable institution" or even "institution". Therefore we have to find out the meaning of that term with reference to the context in which it is found. We must remember that the (1) (2) 627 expression "charitable institution" is used in a statute which abolishes Inams. The Inam in question must undoubtedly have been granted by a Hindu. Most of the Inams abolished by the Act were those granted by Hindu Kings in the past. According to Hindu conceptions a tank has always been considered as an object of charity. In the Tagore Law Lectures delivered in 1892 by late Parelit Prannath Saraswati on "The Hindu Law of Endowments", "From very ancient times the sacred writings of the Hindus divided works productive of religions merit into two divisions named ishta and purta a classification which has come down to our times. So much so that the entire objects of Hindu endowments will be found included within the enumeration of ishta and purta works. In the Rig Veda ishtapurttam (sacrifices and charities ) are described as the means of going to heaven. In commenting on the same passage Sayana explains ishtapurtta to denote "the gifts bestowed in srauta and smarka rites. " In the Taittiriya Aranyaka, ishtapurtta occur in much the same sense and Sayana in commenting on the same explains ishta to denote "Vedic rites like Darsa, Purnamasa etc. and purta "to denote Smarkta works like tanks, wells etc. At page 26 he again quotes Vyasa in these words: "Tanks, wells with flights of steps, temples, the bestowing of food, and groves these are called purttam. " At page 27, the learned lecturer enumerates the purtta works. Amongst them is included the construction of works for the storage of water, as wells, baolis, tanks etc. The learned lecturer devotes his tenth lecture to "purtta". In the course of that lecture he again states that the construction of reservoirs of water is. classed by Hindu sages amongst the "purtta" and charitable works. In this connection he quotes from various treatises such as: (i) Ashwalayana Grihya Parishishta; (ii) Vishnu Dharmottara; (iii) Skanda Purana; (iv) Nandi Purana; (v) Aditya Purana; (vi) Yama; (vii) Mahabharata etc. In Jamnabai vs Khimji Vullubdass and Ors.(1) Sir Charles Sargent Kt. , C.J. while interpreting a will observed thus: (1) I.L.R. at p. 9. 13 Sup. C1/68 9 628 "We come to the latter part of clause 6, which directs the building of a well and "avada", (cistern for animals to drink water from), out of the surplus of his fund after providing for the outley of the two sadavarats and repairing his property. Mr. Justice Jardine considered he could not presume a charitable object in a well and "avada". Such an object is so frequently the result of charitable intention in Oriental countries, and i.s so entirely in accordance with the notions of the people of this country that we think that, in the absence of anything to show that the testator intended the well and "avada" to be built for the benefit of the property and there is nothing in the presen 't will to show such intention they should be presumed to have intended by the testator for the use of the public." In V. Mariyappa and Ors. B.K. Puttaramayya and Ors(x) a Division Bench of the Mysore High Court observed thus: "The maintenance of Sadavartas, tanks, seats of learning and homes for the disabled or the destitute and similar institutions is recognised by and well known to Hindu law, and when maintained as public institutions they must be taken to have a legal personality as a Matha or the diety in a temple has, and the persons in charge of the Management would occupy a position of trust. " That decision proceeds on the basis that a tank can be a charitable institution under Hindu law. That decision was quoted with approval by late Bijan Kumar Mukherjea who later became the Chief Justice of this Court, in his Tagore Law Lectures delivered in August 1951. Therein he observed: "It has been held that though Mutts and temples are the most common forms of Hindu religious institutions, dedication for religious or charitable purposes need not necessarily take one of these forms and that the maintenance of sadabartas, tanks, seats of learning and homes for the disabled or the destitute and similar institutions are recognised by and well known to Hindu law and when maintained as public institutions, they must be taken to have a legal personality as a Matha or the deity in a temple has, and the persons in charge of the management would occupy a position of trust. " From the above discussion it is seen ' that under Hindu law a tank can be an object of charity and when a dedication is made in (1) I.L.R. [1957] Mys. 629 favour of a tank, the same is considered as a charitable institution. It is not necessary for our present purpose to decide whether that institution can also be considered as a juristic person. Once we come to the conclusion that the Inam with which we are concerned in this case was an Inam in favour of the "uracheruvu" (tank) that tank must be considered as a charitable institution under the Act. Consequently after the abolition of the Inam, the Inam property gets itself converted into Royatwari property, of the "uracheruvu", to be managed by its Manager. Admittedly the appellant is its present Manager. Hence the property in question has to be registered in the name of the tank but it will" continue to be managed by the appellant so long as he continues to be its Manager. In the result subject to our observations as regards the management of the property, the appeal is dismissed. No costs. R.K.P.S. Appeal dismissed.
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The appellant claimed that certain property comprised in an Inam which was abolished by virtue of the Andhra Inams (Abolition & Conversion into Ryotwari) Act 36 of 1956 should be registered in his name.
His contention was that prior to its abolition he was the Inamdar of that Inam though he had the liability to repair a tank in his village from out of the income of Inam was granted for a charitable purpose, the object of assuming the Inam was granted for a charitable purpose, the.
object of the charity being a tank, the same could not be considered a charitable institution.
HELD: (i) It was clear from the evidence that the Inam was granted in favour of the tank and was not a grant in favour of the appellant 's family subject to the liability to 'repair the tank; and furthermore that the ancestors of the appellant and subsequently the appellant were looking after the management of the tank.
(ii) Under Hindu law a tank can be an object of charity and when a dedication is made in favour of a tank, it is considered as a charitable institution.
Once it was held that the Inam in the present case was in favour of the tank, the tank in question must be considered a charitable institution within the meaning of section 2(E) of the Act.
Consequently, after the abolition 'of the Inam, the Inam property is converted into Ryotwari property of the tank, to be managed by its manager.
Admittedly the appellant was the present manager and hence the property in question must be registered in the name of the tank but would ' continue to be managed by the appellant so long as he continued to be its manager.
[628 H 629 C] Minister of National Revenue V. Trusts and Guarantee Co. Ltd., ; Masjid Shahid Ganj and Ors.
V. Shiromani Gurdwara Parbandhak Committee, Amritsar and Anr, ; Jamnabai V. Khimji Vallubdass & Ors., I.L.R. at p. 9; and V. Mariyappa and Ors.
B.K. Puttaramayya and Ors.
I.L.R. [1957] Mys.
291: referred to.
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The person appealing the case said that land that was part of an "Inam" (a type of land grant) should be registered in his name. This Inam was ended by a law called the Andhra Inams Act of 1956.
He argued that before the Inam was ended, he was the Inamdar (the person who controlled the Inam). He had to repair a water tank in his village using money from the Inam. He claimed that even though the Inam was used for a charitable purpose (the tank), the tank itself shouldn't be considered a charity.
The court decided: (i) The evidence showed that the Inam was given to benefit the tank, not the person's family. The person's family, and later the person himself, were just in charge of taking care of the tank.
(ii) According to Hindu law, a water tank can be considered a charity. When land or money is given to a tank, it's seen as giving to a charitable institution. Because the Inam was given to the tank, the tank is considered a charitable institution under the law (section 2(E) of the Act).
So, after the Inam was ended, the land became the property of the tank. The tank's manager would be in charge of the property. The person appealing the case was the current manager. Therefore, the property must be registered in the name of the tank, but the person will continue to manage it as long as he is the manager.
[628 H 629 C] Minister of National Revenue V. Trusts and Guarantee Co. Ltd., ; Masjid Shahid Ganj and Ors.
V. Shiromani Gurdwara Parbandhak Committee, Amritsar and Anr, ; Jamnabai V. Khimji Vallubdass & Ors., I.L.R. at p. 9; and V. Mariyappa and Ors.
B.K. Puttaramayya and Ors.
I.L.R. [1957] Mys.
291: referred to.
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Civil Appeals Nos. 848 850 of 1977. From the Judgment and Order dated 16 7 1976 of the Kerala High Court in W.A. Nos. 910, 194 and 253/75. AND CIVIL APPEAL Nos. 666 669 of 1978. From the Judgment and decree dated 8 6 1977 of the Kerala High Court in W.A. Nos. 364 365, 472 and 473 of 1975. P. Govindan Nair and K. R. Nambiar for the Appellants in CAs. 848/77 and 666 667/78 and for Respondents 2 to 4 in CA 849/77 and 2 3 in CA 850/77. M. M. Abdul Khader and N. Sudhakaran for the Appellant in CAs. 849 850/77 and Respondent 2 in CA 848/77 and RR1 in CA 666/78, 667/78 and RR 2 in CA 668 669/78. T. section Krishnamoorthy Iyer, T.P. Sundara Rajan and P. K. Pillai for Respondent No. 1 in 848/77. T. L. Vishwanath Iyer, and section Balakrishnan for the Respondent No. 1 in CAs. 668 669/78 and RR 2 in CAs. 666 667/78. The Judgment of the Court was delivered by 292 KRISHNA IYER, J. Law and development, as yet a Cinderella of our corpus juris, is a burgeoning branch of creative jurisprudence which needs to be nourished with judicious care, by courts in developing countries. The Town Planning Act, a developmental legislation amended and updated by the Kerala Legislature, was designed to draw up plans and to execute projects for the improvement of the towns and cities of that over crowded State with its populous multitudes uncontrollably spiralling, defying social hygiene and economic engineering. Although the Act is of 1932 and originally confined to the Travancore portion of the Kerala State, it has received amendatory attention and now applies to the whole of Kerala with beneficial impact upon explosive cities like Cochin. This legislation, naturally, has made some deviation from the Kerala Land Acquisition Act, 1961, but having received insufficient attention from the draftsman on constitutional provisions, has landed the Act in litigation through a challenge in the High Court where it met with its judicial Waterloo when a Division Bench invalidated Section 31(1) and 34(2A) which were the strategic provisions whose exit from the statute would virtually scotch the whole measure. The State of Kerala has come up in appeal, although the immediate victim is the Cochin Town Planning Trust. The schematic projection of the Town Planning Act (the Act, for short) may be a good starting point for the discussion of the sub missions made at the Bar. The Act, with a prophetic touch, envisions explosive urban developments leading to terrific stresses and strains, human, industrial and societal. Land is at the base of all development, and demand for the limited space available in the cities may so defile and distort planned progress as to give future shock unless scientific social engineering takes hold of the situation. The State of its specialized agencies must take preemptive action and regulate the process of growth. The Act fills this need and contemplates the creation of a Town Planning Trust, preparation of town planning schemes, acquisition of lands in this behalf, compensation for betterment by citizens and other miscellaneous provisions, apart from creation of development authorities. While this is the sweep of the statute, our concern is limited to schemes sanctioned by Section 12, acquisition of lands for such schemes under Section 32, compensation for such compulsory taking under Section 34 and the modifications in the manner of acquisition and the mode of compensation wrought into the Land Acquisition Act by the above provisions of the Town Planning Act. It is indisputable that the compensation payable and certain other matters connected therewith, differ as between the provisions in this Act and the Land Acquisition Act. The latter is more beneficial 293 to the owner and the challenge, naturally, has stemmed from this allegedly invidious discrimination. In two separate cases, two judges upheld the challenge and, on appeal, the High Court affirmed the holdings that the provisions of Sub section 34(1) and 34(2A) were unconstitutional, being violative of Article 14. Hence these appeals. We will now proceed to scan the substance of the submissions and the reasoning in the High Court 's judgment. Counsel for the State, Shri P. Govindan Nair, supported by counsel for the Trust, Shri Abdul Khader, have canvassed the correctness of the reasons which have appealed to the High Court, and some decisions of this Court have been brought to our notice in this connection. The owners of the lands acquired have been represented before us by Sri T. C. Raghavan who has, in his short submission, supported the judgment under appeal. One of the appeals has become infructious, because the State, after the High Court invalidated Section 34 of the Act, proceeded under the Land Acquisition Act, acquired the land, paid compensation and took possession thereof, thus completely satisfying the land owner. Shri T. section Krishnamurthi Iyer, appearing for the owner, pointed out this circumstance and so we dismissed that appeal but mention it here because Shri T. C. Raghavan has relied on this fact in support of one of his arguments, as we will presently disclose. Before entering into the merits, we may recall the submissions of Shri T. L. Viswanathan, a young lawyer from Kerala, who made us feel that orality, marked by pointed brevity and suasive precision, is more telling than advocacy with counter productive prolixity. Although the responsible scrutiny that a bench decision of the High Court deserves has been bestowed, we are unable to support the judgment under appeal or the arguments of counsel in support. The controversy regarding the vires of Sec. 34 revolved round a few points. Before us, article 14 has loomed large and a submission has been made that by use of the provisions for making schemes under Sec. 8 or Sec. 10 the authority may indefinitely immobilize the owner 's ability to deal with his land since Sec. 15 clamps restrictions, and this is unreasonable. We agree that it is a hardship for the owner of the land if his ability to deal with his property is either restricted or prevented by a notification, and nothing happens, thereafter, leaving him guessing as to what the State may eventually do. Indeed, if such a state of suspense continues for unlimited periods, it may be unreasonable restriction on the right to property, although currently the right to pro 294 perty itself has been taken away from Part III. That apart, we must see whether there is any justifiable classification between common cases of compulsory acquisition under the Land Acquisition Act and the special class of acquisitions covered by the Town Planning Act which may furnish a differentia sufficient to repel the attack of Article 14. Section 15 of the Act forbids dealings by the owner in many ways, once the publication of a notification is made. The grievance particularised by Shri Raghavan is that after a draft scheme has been prepared by the municipal council and published, it becomes operational only on the sanction by Government but there is no time limit fixed in Sec. 12 within which Government shall sanction. Supposing it takes several years for Government to express its approval or disapproval, the owner may suffer. We regard this grievance as mythical, not real, for more than one reason. The scheme is for improvement of a town and, therefore, has a sense of urgency implicit in it. Government is aware of this import and it is fanciful apprehension to imagine that lazy insouciance will make Government slumber over the draft scheme for long years. Expeditious despatch is writ large on the process and that is an in built guideline in the statute. At the same time, taking a pragmatic view, no precise time scale can be fixed in the Act because of the myriad factors which are to be considered by Government before granting sanction to a scheme in its original form or after modification. Section 12 and the other provisions give us some idea of the difficulty of a rigid time frame being written into the statute especially when schemes may be small or big, simple or complex, demanding enquiries or provoking discontent. The many exercises, the differences of scale, the diverse consequences, the overall implications of developmental schemes and projects and the plurality of considerations, expert techniques and frequent consultations, hearings and other factors, precedent to according sanction are such that the many sided dimension of the sanctioning process makes fixation of rigid time limits by the statute an impractical prescription. As pointed out earlier, city improvement schemes have facets which mark them out from other land acquisition proposals. To miss the massive import and specialised nature of improvement schemes is to expose one 's innocence of the dynamics of urban development. Shri Raghavan fairly pointed out that, in other stages, the Act provides for limitation in time (for example, sec. 33 which fixes a period of three years between the date of notification and the actual acquisition). Only in one minimal area where time limit may not be workable, it has not been specified. The statute has left it to Government to deal expeditiously with the scheme and we see sufficient guideline in the Act not to make the gap between the 295 draft scheme and governmental sanction too procrastinatory to be arbitrary. We need hardly say, that the court is not powerless to quash and grant relief where, arbitrary protraction or mala fide inaction of authorities injures an owner. An aside: We are surprised at the obsolescent and obscurantist vocabulary surviving in the Town Planning Act because there are many B feudal and incongruous expressions such as 'our Governments and references to a Land Acquisition Act which has already been repealed by the Kerala Land Acquisition Act, 1961. Modernisation is a process necessary even for the statute book and yet it has not been done, despite opportunity for the legislature, while amending later, to carry out such simple, verbal and yet necessary changes. Be it remembered that the Town Planning Act did undergo an extensive amendment as late as 1976 when, surely, some of the verbal replacements could easily have been made. Medievalism lingering in legislations is hardly a tribute to the awareness of our legislators. Section 12 of the Act provides for publishing the draft schemes so that objections or suggestions may be put forward by affected persons. The scheme is then passed by the Municipal Council, of course, after considering objections and suggestions. Thereupon, it is submitted to the Government for sanction and the fact of such submission is also published so that the public may still raise objections or make suggestions to Govt. which will consider them, make further inquiries, if necessary, and ultimately sanction the scheme with or without modifications or may even refuse sanction or return the scheme to the Council for fresh consideration. Once the scheme is sanctioned by the Government, it is again published. Section 12(6) imparts finality to the scheme and this virtually corresponds to the declaration under sec. 6 of the Land Acquisition Act. Chapter III of the Act is comprehensive and complex because the subject of scheme making demands expert attention and affects community interest. A Director of Town Planning is appointed who shall be consulted by Municipal Councils in matters of town planning. Developmental schemes are not sudden creations. On the other hand, the Municipal Council first decides to prepare a scheme, adopts a draft scheme, if any, made by the owners of the lands, prepares the necessary plan of the lands which is proposed to be included in the scheme and notify its resolution for public information. A copy of the plan is kept for the inspection of the public. Since all improvement schemes are matters of public concern, on the passing of a resolution and its notification under sec. 8, a time bound obligation is cast on the Municipal Council by section 9, which reads thus : 296 "section 9: Publication of draft scheme: (1) If the resolution is to make a scheme, municipal council shall, within twelve months from the date of the notification under s.8 or within such further period not exceeding twelve months, as our Government may allow, and after consulting, in the prescribed manner, the owners of lands and buildings in the area affected, prepare and publish a draft scheme. " It is apparent that improvement schemes cannot hang on indefinitely and an outside limit of 2 years is given for the preparation and publication of draft schemes from the initial resolution to make or adopt the scheme is passed by the Municipal Council. Government itself may step in and direct the Municipal Council to prepare schemes and sec. 10 empowers it in this behalf. 11 contains detailed provisions regarding the material to be included in the draft scheme. These are preparatory exercises, and then comes the sanction of the scheme by the Government under Sec. 12. We indicate the elaborate character of the strategy, stages, contents and character of schemes for improvement and the opportunities for objections and suggestions to the public and the consultation with technical experts and Government, time and again, only to emphasise the complex nature of modern urban development schemes which makes it a different category altogether from the common run of 'public purposes ' for which compulsory acquisition is undertaken by the State. Conceptwise and strategywise, development schemes stand on a separate footing and classification of town planning schemes differently from the routine projects demanding compulsory acquisition may certainly be justified as based on a rational differentia which has a reasonable relation to the end in view viz., improvement of towns and disciplining their development. Once this basic factor is recognised, the raison detre of a separate legislation for and separate treatment of town planning as a special subject becomes clear. It was pointed out that under the Kerala Land Acquisition Act, there is a time limit of 2 years written into Section 6 by engrafting a proviso thereto through an amendment of 1968 Act (Act 29 of 1968). Section 6 deals with a declaration that land is required for a public purpose and the relevant proviso thereto reads: "S.6(i) Proviso : Provided that no declaration in respect of any particular land covered by a notification under sub section (1) of shall be made after the expiry of two years from the date of publication of such notification." An argument was put forward that under the Land Acquisition Act there is thus a protection against unlimited uncertainty for the owners once lands are frozen in the matter of dealing with them by an initial notification. This protection against protraction and inaction on the part of the State and immobilisation of ownership is absent in the Town Planning Act. According to Mr. T. C. Raghavan, appearing for some respondents, this makes for arbitrariness and discrimination invalidatory of the relevant provisions of the Town Planning Act. In our view there is no substance in this submission, having regard to the specialised nature of improvement schemes and the democratic a participation in the process required in such cases. We repel the submission. Much argument was addressed on the 'either or ' arbitrariness implicit in section 33 of the Act. The precise contention is that it is open to the Trust to acquire either under the Kerala Land Acquisition Act or under Chapter VII of the Town Planning Act. In the latter event, no solatium is payable while under the former statute it is a statutory obligation of the acquiring Govt. Thus, if an Authority has an option to proceed under one statute or the other and the consequences upon the owner are more onerous or less, such a facultative provision bears the lethal vice of arbitrariness in its bosom and is violative of article 14 and is therefore, void. Section 32 of the Act is the foundation for this argument and reads thus: 32. Modification of Land Acquisition Act: Immovable property required for the purpose of town planning scheme shall be deemed to be land needed for a purpose within the meaning of the Land Acquisition Act, XI of 1089, and may be acquired under the said (Act) modified in the manner provided in this chapter. What is spun out of the words used is that for the purposes of town planning schemes an immovable property "may be acquired under the said Act (The Land Acquisition Act) modified in the manner provided in this Chapter". Of course, Chapter VII, particularly sub sec. (1) of section 34 thereof, relates to compensation and does not provide for payment of solatium. Moreover, it is mentioned that the provisions of sections 14, 22 and 23 (both sides agree, this should be read as Sec. 25) of the Land Acquisition Act shall have no application in the acquisition of property for the purpose of the Town Planning Act. 298 We do not accept the argument that there is a legal option for the authority to acquire either under the Land Acquisition Act or under the Town Planning Act when land is needed for a scheme. Theoretically, yes, but practically, No. Which sensible statutory functionary, responsible to the Treasury and to the community, will resort to the more expensive process under the Land Acquisition Act as against the specially designed and less costly provision under section 34? Fanciful possibilities, freak exercise and speculative aberrations are not realistic enough for constitutional invalidation on the score of actual alter. natives or alive options, one more onerous than the other. In Magan lal 's case, the Court pointed out : "The statute itself is the two classes of cases before us clearly lays down the purpose behind them, that is premises belonging to the Corporation and the Government should be subject to speedy procedure in the matter of evicting unauthorised persons occupying them. This is a sufficient guidance for the authorities on whom the power has been conferred. With such an indication clearly given in the statutes one expects the officers concerned to abail themselves of the procedures prescribed by the Acts and not resort to the dilatory procedure of the ordinary Civil Court. Even normally one cannot imagine an officer having the choice of two procedures, one which enables him to get possession of the property quickly and the other which would be a prolonged one, to resort to the latter. Administrative officers, no less than the courts, do not function in a vacuum. It would be extremely unreal to hold that an administrative officer would in taking proceedings for eviction of unauthorised occupants of Govt. property or Municipal property resort to the procedure prescribed by the two Acts in one case and to the ordinary Civil Court in the other. The provisions of these two Acts cannot be struck down on the fanciful theory that power would be exercised in such an unrealistic fashion. In considering whether the officers would be discriminating between one set of persons and another, one has got to take into account normal human behaviour and not behaviour which is abnormal. It is not every fancied possibility of discrimination but the real risk of discrimination that we must take into account. This is not one of those cases where discrimination is writ large on the face of the statute. Discrimi 299 nation may be possible but is very improbable. And if there is discrimination in actual practice this Court is not powerless. Furthermore, the fact that the Legis lature considered that the ordinary procedure is insufficient or ineffective in evicting unauthorized occupants or Govt. and Corporation property and provided a special speedy procedure therefor is a clear guidance for the authorities charged with the duty of evicting unauthorised occupants. We therefore, find ourselves unable to agree with the majority in the Northern India Caterers ' case. " The same reasoning applies to the present situation. The Town Planning Act is a special statute where lands have to be acquired on a large scale and as early and quickly as possible so that schemes may be implemented with promptitude. What is more, there is a specific and purposeful provision excluding some sections of the Kerala Land Acquisition Act. In such circumstances, it is incredible that the authority acting under the Act will sabotage Chapter VII, in particular section 34, by resorting to the Kerala Land Acquisition Act in derogation of the express provision facilitating acquisition of lands on less onerous terms. He functions under the Town Planning Act, needs Lands for the schemes under that Act, has provisions for acquisition under that Act. Then would be, by reckless action, travel beyond that Act and with a view to oblige the private owner betray the public interest and resort to the power under the Land Acquisition Act, disregarding the non obstante provision in Sec. of the Act? Presumption of perversity cannot be the foundation of unconstitutionality. Moreover, the expression, used in the context of section 32, clearly (does not bear the meaning attributed to it by the counsel for the respondents. All that it means is that when immovable property is found necessary for the purpose of a 'scheme ' it may be acquired by the compulsory process written into section 32. It is, as if there were only one option, not two. If the scheme is to be implemented, the mode of acquisition shall be under section 32 and the manner of such acquisition is the same under the Land Acquisition Act minus sections 14, 22 and 25 thereof. A slight reflection makes it clear that the mode prescribed is only one, and so the theory of alternatives one of which being mere onerous than the other, and the consequent inference of arbitrariness, cannot arise. We overrule that argument. We must notice, before we part with this point, the argument of Sri Raghavan for the respondents that the existence of alternatives is not theoretical nor chimerical but real, and proof of the pudding is in the eating. He pointed to one of the appeals in this batch where the proceedings under sec. 34 of the Act were given up, the provision 300 of the Land Acquisition Act used, and full compensation and solatium paid to the owner. This instance gave flesh and blood to the submission about discrimination. Shri Khader, for the trust countered this argument by stating that because the High Court struck clown the Act and the land was needed. the only statute then available to the State was the Land Acquisition Act. So, the authority was reluctantly constrained to notify and acquire under the Land Acquisition Act. Had Sec. 34 of the Act been available, this step would not have been taken and absent Sec. 34 the argument of alternatives has no basis. We agree with this reasoning and repel the submission of arbitrary power to pick and choose. At worst, a swallow does not make a summer but we must warn that prodigal state action to favour some owner when sec. 34 has been resuscitated will be betrayal of public interest and invalidated as mala fide even at the instance of a concerned citizen. The legislature cannot be stultified by the suspicious improvidence, or worse, of the Executive. The more serious submission pressed tersely but clearly, backed by a catena of cases, by Shri Viswanathan merits our consideration. The argument is shortly this. As between two owners of property. the presence of public purpose empowers the State to take the lands of either or both. But the differential nature of the public purpose does not furnish a rational ground to pay more compensation for one owner and less for another and that impertinence vitiates the present measure. The purpose may be slum clearance, flood control or housing for workers, but how does the diversity of purposes warrant payment of differential scales or quantum of compensation where no constitutional immunity as in article 31A, or applies? Public purpose sanctions compulsory acquisition, not discriminatory compensation, whether you take A 's land for improvement scheme or irrigation scheme, how can you pay more or less, guided by an irrelevance viz. the particular public purpose? The State must act equally when it takes property unless there is an intelligent and intelligible differentia between two categories of owners having a nexus with the object, namely the scale of compensation. It is intellectual confusion of constitutional principle to regard classification good for one purpose, as obliteration of differences for unrelated aspects. This logic is neatly applied in a series af cases of this Court. It is trite that the test to rebuff article 14 turns of the differentia vis a vis the object of the classification. In Vajarveu Mudaiar 's case, the Court took the view, (on this aspect the decision is not shown to have been overruled) that where there is no rational relation in the 301 matter of quantum of compensation between one public purpose and another you cannot differentiate between owners. Whether you acquire for a hospital or university, for slum clearance or housing scheme, compensation cannot vary in the rate or scale or otherwise. "Out of adjacent lands of the same quality and value, one may be acquired for a housing scheme under the Amending Act and the other for a hospital under the Principal Act, out of two adjacent plots belonging to the same individual and of the same quality ' and value, one may be acquired under the Principal and the other under the Amending Act. From whatever aspect the matter is looked at, the alleged differences have no reasonable relation to the object sought to be achieved. In Durganath Sharma 's case, a special legislation for acquisition of land for flood control came up for constitutional examination. We confine ourselves to the differentiation in the rate of compensation based on the accident of the nature of the purpose where the Court struck a similar note. In the Nagpur Improvement Trust case and in the Om Prakash case, this Court voided the legislation which provided differential compensation based upon the purpose. In the latter case the Court observed : "There can be no dispute that the Govt. can acquire land for a public purpose including that of the Mahapalika or other local body, either under the unmodified Land Acquisition Act, 1894, or under that Act as modified by the Adhiniyam. If it chooses the first course, then the land owners concerned will be entitled to better compensation including 15% solatium, the potential value of the land etc. nor will there be any impediment or hurdle such as that enacted by section 372(a) of the Adhiniyam in the way of such land owners, dissatisfied by the Collector 's award, to approach the Court under section 18 of that Act. It is not necessary to dilate further on this point at this matter stands concluded by this Court 's decision in Nagpur Improvement Trust 's case by the ratio of which we bound. It will be sufficient to close the discussion by extracting here what Sikri C.J., speaking for the Court in Nagpur Improvement Trust 's case said: "Can the Legislature say that for a hospital land will be acquired at 50% of the market value, for a school at 60 % of the value and for a Govt. building at 70 % of the 302 market value? All three objects are public purposes and as far as the owner is concerned it does not matter to him whether it is one public purpose or the other. article 14 confers an individual right and in order to justify a classification there should be something which justifies a different treatment to this individual right. It seems to us that ordinarily a classification based on the public purpose is not permissible under article 14 for the purpose of determining compensation. The position is different when the owner of the land himself is the recipient of benefits from an improvement scheme, and the benefit to him is taken into consideration in fixing compensation. Can classifications be made on the basis of authority acquiring the land? In other words can different principles of compensation be laid if the land is acquired for or by an Improvement Trust or Municipal Corporation or the Government? It seems to us that the answer is in the negative because as far as the owner is concerned it does not matter to him whether the land is acquired by one authority or the other. It is equally immaterial whether it is one Acquisition Act or another Acquisition Act under which the land is acquired. If the existence of two Acts could enable the State to give one owner different treatment from another equally situated the owner who is discriminated against, can claim the protection of Article 14. " The principle that may be distilled from these rulings and the basics of 'equality ' jurisprudence is that classification is not permissible for compensation purposes so long as the differentia relied on has no rational relation to the object in view viz. reduction in recompense. Is it rational to pay different scales of compensation, as pointed out by Sikri, C.J. in the Nagpur Improvement Trust case, depending on whether you acquire for housing or hospital, irrigation scheme or town improvement, school building or police station? The amount of compensation payable has no bearing on this distinction, although it is conceivable that classification for purposes of compensation may exist and in such cases the statute may be good. We are unable to discern any valid discremen in the Town Planning Act vis a vis the Land Acquisition Act warranting a classification in the matter of denial of solatium. We uphold the Act in other respects but not when it deals invidiously between two owners based on an irrelevant criterion viz. the acquisition being for an improvement scheme. We are not to be 303 understood to mean that the rate of compensation may not vary or must be uniform in all cases. We need not investigate this question further as it does not arise here although we are clear in our mind that under given circumstances differentiation even in the scale of compensation may comfortably comport with article 14. No such circumstances are present here nor pressed. Indeed, the State, realising the force of this facet of discrimination offered, expilatory fashion, both before the High Court and before us, to pay 15% solatium to obliterate the hostile distinction. The core question now arises. What is the effect even if we read a discriminatory design in Sec. 34? Is plastic surgery permissible or demolition of the section inevitable? Assuming that there is an untenable discrimination in the matter of compensation does the whole of section 34 have to be liquidated or severable portions voided? In our opinion, scuttling the section, the course the High Court has chosen, should be the last step. The Court uses its writ power with a constructive design, an affirmative slant and a sustaining bent. Even when by compulsions of inseverability, a destructive stroke becomes necessary the court minimises the injury by an intelligent containment. Law keeps alive and "operation pull down" is de mode. Viewed from this perspective, so far as we are able to see, the only discriminatory factor as between section 34 of the Act and section 25 of the Land Acquisition Act vis a vis quantification of compensation is the non payment of solatium in the former case because of the provision in section 34(1) that section 25 of the Land Acquisition Act shall have no application. Thus, to achieve the virtue of equality and to eliminate the vice of inequality what is needed is the obliteration of section 25 of the Land Acquisition Act from section 34(1) of the Town Planning Act. The whole of section 34(1) does not have to be struck down. Once we excise the discriminatory and, therefore, void part in Sec. 34(1) of the Act, equality is restored. The owner will then be entitled to the same compensation, including solatium, that he may be eligible for under the Land Acquisition Act. What is rendered void by article 13 is only to the extent of the contravention of article 14. The lancet of the Court may remove the offending words and restore to constitutional health the rest of the provision. We hold that the exclusion of Sec. 25 of the Land Acquisition Act from sec. 34 of the Act is unconstitutional but it is severable and we sever it. The necessary consequence is that section 34(1) will be read omitting the words 'and section 25 ' . What follows then? Section 32 obligates the state to act under the Land Acquisition Act but we have struck down that part which excludes sec. 25 of the Land Acquisition Act 304 and so, the 'modification ' no longer covers section 25. It continues to apply to the acquisition of property under the Town Planning Act. Section 34(2) provides for compensation exactly like section 25(1) of the Land Acquisition Act and, in the light of what we have just decided, section 25(2) will also apply and "in addition to the market value of the land as above provided, the court shall in every case award a sum of fifteen per cen tum on such market value in consideration of the compulsory nature of the acquisition. " The upshot of this litigation thus is that the appeal must be allowed except to the extent that solatium shall be payable as under the Land Acquisition Act. Since the State has always been willing to pay that component and has repeated that offer even before us right from the beginning, we direct the parties to bear their respective costs. P.B.R. Appeal allowed.
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The Cochin Town Planning Act in particular contemplates the creation of a town planning trust, the preparation of town planning schemes (section 12) acquisition of lands in this behalf (section 32) compensation for such compulsory taking (section 34) and modifications in the manner of acquisition and the mode of compensation in the Kerala Land Acquisition Act.
The petitioners ' writ petitions challenging the validity of the Town Planning Act were allowed by the High Court on the ground that the provisions of Section 34(1) and 34(2A) were unconstitutional being violative of article 14 of the Constitution.
In appeal to this Court it was contended that by the use of the provisions for making schemes under section 8 or section 10, the authority may indefinitely immobilize the owner 's ability to deal with his land since section 15 clamps restrictions and this is unreasonable. ^ HELD: 1.
City improvement schemes have facets which mark them out from other land acquisition proposals.
To miss the massive import of the 15 specialised nature of important schemes is to expose one 's innocence of the dynamics of urban development.
The statute has left it to the government to deal expeditiously with the scheme and there are sufficient guidelines in the Act not to make the gap between the draft scheme and governmental sanction too procrastinatory to be arbitrary.
[294 G H] 2.
Section 12(6) imparts finality to The scheme and this corresponds to the declaration under section 6 of the Land Acquisition Act.
A conspectus of the relevant provisions of the Act makes it clear that improvement scheme cannot hang on indefinitely and an outside limit of two years is given for the preparation and publication of draft schemes from the time the initial resolution to make or adopt the scheme is passed by the Municipal Council.
Conceptwise and strategy wise development schemes stand on a separate footing and classification of town planning schemes differently from the routine projects demanding compulsory acquisition may certainly be justified as based on rational differentia which has a reasonable relation to the end in view namely improvement of towns and disciplining their development.
[295 F G] 3.
There is no substance in the argument that if the land is acquired under the Town Planning Act no solatium is payable while if the land is acquired under the Land Acquisition Act it is a statutory obligation of the acquiring government to pay solatium.
The Town Planning Act is a special statute where lands have to be acquired on large scale and as early and as quickly as possible so that schemes may be implemented with promptitude.
There is in addition a specific and purposeful provision excluding some sections of the 291 Kerala Land Acquisition Act.
In such circumstances it is incredible that the authority acting under the Act will sabotage chapter VII, in particular section 34, by resorting to the Kerala Land Acquisition Act in derogation of the express provision facilitating acquisition of lands on less onerous terms.
[299C D] Maganlal vs Municipal Corporation, [1975] 1 S.C.R. p. 23, referred to.
The amount of compensation payable has no bearing on the distinction whether the lands are acquired for housing or hospital, irrigation schemes or town improvement, school building or police station.
5(a) The exclusion of section 25 of the Land Acquisition Act from section 34 of the Act is unconstitutional.
But it is severable.
[302G] (b) The only discriminatory factor as between section 34 of the Act and section 25 of the Land Acquisition Act vis a vis quantification of compensation is the non payment of solatium in the former case because of the provisions of section 34(1) and that section 25 of the Land Acquisition Act shall have no application.
To achieve the virtue of equality and eliminate the vice of inequality what is needed is the obliteration of section 25 of the Land Acquisition Act from section 34(1) of the Town Planning Act.
The whole of section 34(1) does not have to be struck down.
Once the discriminatory and void part in section 34(1) of the Act is excised equality is restored.
The owner will then be entitled to the same compensation including solatium that he may be eligible under the Land Acquisition Act.
[303E F]
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The Cochin Town Planning Act is about creating a town planning group, making town plans (section 12), getting land for these plans (section 32), and paying people for that land (section 34). It also talks about changing how land is taken and how people are paid under the Kerala Land Acquisition Act.
Some people filed lawsuits against the Town Planning Act. The High Court agreed with them, saying that sections 34(1) and 34(2A) of the Act were against the Constitution (article 14). This is because those sections were seen as unfair.
In an appeal to the Supreme Court, it was argued that the rules for making plans under sections 8 or 10 could unfairly stop owners from using their land. This is because section 15 puts limits on what owners can do with their land, and this was seen as unreasonable. The Court *held* that:
1. City improvement plans are different from other plans to take land. They are special and important for how cities grow. The government is supposed to handle these plans quickly. The Town Planning Act gives enough guidance to make sure the time between the first plan and the government's approval is not too long and unfair.
2. Section 12(6) says that the final plan is official. This is like the declaration under section 6 of the Land Acquisition Act. The Town Planning Act says that improvement plans can't last forever. There is a two-year limit for creating and publishing draft plans, starting from when the city council decides to make a plan. Development plans are unique. It's fair to treat them differently from regular projects that need land to be taken, because they help improve towns and control how they grow.
3. It's not right to say that if land is taken under the Town Planning Act, no extra payment ("solatium") is given. But if land is taken under the Land Acquisition Act, the government must pay it. The Town Planning Act is for taking large amounts of land quickly to put plans into action fast. It also specifically excludes some parts of the Kerala Land Acquisition Act. So, it's unlikely that the government would use the Kerala Land Acquisition Act to avoid paying fairly under the Town Planning Act.
The amount of money paid should not depend on whether the land is for housing, a hospital, a farm project, a town improvement, a school, or a police station.
5(a) Excluding section 25 of the Land Acquisition Act from section 34 of the Town Planning Act is unconstitutional (against the Constitution). However, this part can be removed without invalidating the entire section.
(b) The only unfair difference between section 34 of the Town Planning Act and section 25 of the Land Acquisition Act is that the Town Planning Act doesn't pay solatium because of section 34(1), which says section 25 of the Land Acquisition Act doesn't apply. To be fair, section 25 of the Land Acquisition Act must be removed from section 34(1) of the Town Planning Act. We don't need to cancel out all of section 34(1). Once the unfair part of section 34(1) is removed, everyone will be treated equally. The owner will then get the same payment, including solatium, that they would get under the Land Acquisition Act.
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Appeal No. 298 of 1955. Appeal from the judgment and order dated April 28, 1953, of the Patna High Court in Appeal from Original Order No. 90 of 1949, arising out of the judgment and order dated January 25, 1949, of the Sub Judge, Purnea, in Misc. Case No. 54 of 1947. Sir lqbal Ahmad, section N. Andley, J. B. Dadachanji and Rameshwar Nath, for the appellant. 366 M.C. Setalvad, Attorney General for India and R. C. Prasad, for the respondent. March 16. The Judgment of the Court was delivered by SARKAR, J. This appeal arises out of a proceeding in execution of an adjudication made under the provisions of the United Provinces Encumbered Estates Act, 1934 (U. P. XXV of 1934), an Act passed by the legislature of the United Provinces, now called the Uttar Pradesh. The questions that arise in this appeal largely turn on the provisions of that Act and they have therefore to be referred to. The Act was intended to give relief to the proprietors of certain landed properties in the United Provinces. Section 4 of the Act enabled a proprietor of such landed properties to make an application in writing to the Collector of the District in which any of his lands is situate, stating the amount of his debts and asking for the application of the Act to him. Upon such an application being made, the Collector is to make an order under section 6 forwarding it to a Special Judge appointed under the Act who, under section 3 is any civil judicial officer appointed for a local area, to exercise the powers conferred and to perform the duties imposed, by the Act. Section 7 of the Act provides that upon the making of an order by the Collector under section 6, subject to certain exceptions which it is not necessary to enumerate, all proceedings pending in the courts in the United Provinces in respect of a debt due by the applicant shall be stayed and all execution processes issued against him by such courts shall become null and void and no fresh process in execution shall be issued against him, nor any fresh suit or other proceeding instituted. The Special Judge after he has received the application sent to him by the Collector is required by section 8 to call upon the applicant to submit a written statement verified in the manner of a plaint, setting out full particulars of his debts, the names and addresses of his creditors and the nature and extent of his proprietary rights in land as also of all his properties which are liable to attachment under section 60 of 367 the Code of Civil Procedure. Under section 9 the Special Judge has then to publish a notice calling upon persons having claims against the applicant to submit the same within a time specified. Section 10 states that the claimant shall give full particulars of his claim and of the applicant 's properties. Section 11 provides that the Special Judge will publish a further notice specifying the properties mentioned by the applicant as belonging to him and any person wishing to make a claim to any such property has to do so within a certain period. The same section gives power to the Special Judge to decide the claims made to the properties and provides that the decision made by him is to be deemed to be a decree of a civil court of competent jurisdiction. Section 14 lays down that the Special Judge will inquire into the claims submitted by the creditors against the applicant and decide the questions in issue on the same principles as those on which a court of law would have decided them, but he has the power to reduce the interest due and to give relief to the applicant in respect of such claims under certain specified United Provinces Acts. Sub section (7) of section 14 provides that if upon enquiry the Special Judge finds that any amount is due to any claimant he shall pass a simple money decree for such amount together with costs and interest and " such decree shall be deemed to be a decree of a civil court of competent jurisdiction " but it shall not be executable within the United Provinces except under the provisions of the Act. The next section to be referred to is section 19 which requires the Special Judge to send the decrees granted under section 14(7) to the Collector for execution in accordance with the provisions of Chapter V of the Act and to inform him of the nature and extent of the property which he has found to be liable to satisfy the debts of the applicant. Then come the provisions as to execution contained in Chapter V. The sections in this Chapter provide that the Collector will himself and without being required to be moved for the purpose by any person, proceed to execute the decree against the properties of the applicant within the United Provinces by the various methods indicated, and for 368 realising the value of the applicant 's properties the Col lector shall have all the powers of a civil court for the execution of a decree. With regard to the properties of the applicant outside the United Provinces, the Act could not provide for execution. To cover such cases it was enacted by section 24(3) that for the purpose of execution against property outside the United Provinces the decrees passed by the Special Judge would be deemed to be decrees in favour of the Collector. These are all the provisions of the Act that need be referred to for the purposes of this case. The facts may now be stated. The respondent was the proprietor of landed properties in the United Provinces and was entitled to claim relief under the Act. He became heavily encumbered in debts. It is not necessary to go into his financial embarrassment in great detail and it will be enough to say that in 1926 and 1927 he had created several mortgages on his properties in favour of the Allahabad Bank, the Banaras Bank and a person called Kalia, for very large sums. In 1929, the Banaras Bank filed a suit against the respondent in the Court of the Additional Sub Judge, Banaras, in the United Provinces for enforcement of its mortgage making the other creditors of the respondent named above parties to the suit. A decree was passed in that suit giving the creditors priority in a certain order. The Allahabad Bank not being satisfied with that order of priority, filed an appeal in the High Court at Allahabad which was decided in its favour. While the appeal was pending, the respondent applied to the Collector of Banares for relief under the Act. The procedure laid down in the Act as earlier summarised was duly followed and on March 21, 1940, the Special fudge of Banares to whom the application had been forwarded by the Collector, passed three money decrees in favour of the three creditors of the respondent mentioned above in a certain order of priority with which we shall not be concerned in this case. The total amount of such decrees came nearly to rupees nine lacs. He then sent the decrees to the Collector of Banaras for execution as required by the Act. The execution of the decrees 369 was thereafter commenced by the Additional Collector, Banaras under the provisions of the Act against the properties in the United Provinces. The respondent owns an estate in the district of Purnea in Bihar, called the Semapur estate. Under section 24(3) of the Act earlier mentioned, the decrees passed by the Special Judge are to be deemed to be decrees in favour of the Collector for the purpose of execution against the Semapur estate. The Additional Collector, Banaras, applied to the Additional Civil Judge, Banaras, for transmission of the said decrees to the Court of the Subordinate Judge, Purnea for execution and an order for transmission of the decrees to the Court at Purnea was accordingly made by that Judge on January 4, 1947. Thereafter on March 17, 1947, the Additional Collector, Banaras, applied to the Subordinate Judge, Purnea, as the transferee Court to execute the decrees by attachment and sale of the Semapur estate. The Subordinate Judge thereupon made an order directing execution to issue as sought. The respondent preferred an appeal to the High Court at Patna from this order of the Subordinate Judge, Purnea and his appeal was allowed with the result that the execution of the decrees against the Semapur estate failed. The present appeal is by the Additional Collector, Banaras against the order of the High Court. The first question that arises in this appeal is whether the Subordinate Judge, Purnea, bad jurisdiction to order execution of the decree transferred to him. The High Court held that he did not have that jurisdiction. The matter was put in this way. The decree was not a decree under the Code of Civil Procedure. It was only to be deemed as such because of section 14(7) of the Act. The Act was an Act of the United Provinces legislature which could not pass a legislation having effect outside the United Provinces. The operation of section 14(7) of the Act had therefore to be confined within the borders of the United Provinces. The Subordinate Judge, Purnea could not apply that section in Bihar and treat the decree as a decree 47 370 under the Code. If he could not do so he could not order execution of the decree. If he were permitted so to apply the Act, then an Act of the legislature of the United Provinces would be indirectly affecting property outside the United Provinces which it could not directly do. The Act could be applied in Bihar only by giving it an extra territorial operation. This the law did not allow. So the decree could not be executed in Purnea. We think that this argument is fallacious. No question of any extra territorial application of the United Provinces Act either directly or indirectly, arises in this case. It is clear that by virtue of section 14(7) of the Act, a decree of the Special Judge under the Act is within the United Provinces, a decree for all purposes of the Code. It could therefore be transferred decree under section 39 of the Code of Civil Procedure to a court outside the United Provinces, for execution. Now when a decree is transferred, it is the duty of the transferee court to execute it by all methods provided by the Code of Civil Procedure. But it is said that the transferee court must be satisfied that it is a decree under the Code of Civil Procedure before it can order execution under that Code. How then is the transferee court to decide that ? It has before it a decree passed not by itself but by another ,court. It has therefore to satisfy itself that the decree was one which, for that court, was a decree passed under the Code. In order to do that it is asked to apply the United Provinces Act to the decree passed within the United Provinces. How can it be said that if it so applies the United Provinces Act it is giving it an extra territorial operation ? It is doing nothing of the kind. It is applying an Act of the United Provinces to something which happened within the territories of those Provinces; it is applying an United Provinces Act to a matter within the competence of the legislature of the United Provinces to legislate upon. No doubt a court outside the United Provinces is applying a statute of those Provinces, but that does not amount to giving extra territorial operation to that statute. If the statute is being so applied 371 to one of its legitimate objects, it is not being given any extra territorial operation at all. We further find it difficult to appreciate how the application by the Subordinate Judge of Purnea of the United Provinces Act to the decree of the Special Judge, Banaras, sent to him for execution, results in the United Provinces Act affecting property outside the United Provinces. The only result of such application is to remove the objection that that decree is not a decree of a court in the United Provinces passed under the Code; the Act is not thereby made to affect property outside the United Provinces. Of course, if that decree is a decree under the Code it can be executed against any property outside the United Provinces. That however is not the result of the United Provinces Act but of the Code of Civil Procedure which is a central legislation and applies to Bihar also. The High Court was therefore wrong in thinking that the Subordinate Judge, Purnea, had no jurisdiction to execute the decree passed under the Act within the United Provinces and sent to him for execution. It was then contended that the order of transfer of the decree was invalid because under section 39 of the Code such an order could be made only on the application of the decree holder and in the present case it had not been made on his application. His point was this. Under section 24(3) of the Act, a decree of the Special Judge is to be deemed to be a decree in favour of the Collector for the purpose of execution against property outside the United Provinces. Therefore, in the present case it was the Collector, Banaras, who was the decree holder and he alone could apply for the transfer of the decree. Actually however the order for the transfer had been made in this case on the application of the Additional Collector, Banaras. So it was said the order was invalid. Now this argument depends upon the Collector and the Additional Collector being different persons. It is clear however that they are not. That appears from sections 14 and 14A of the United Provinces Land Revenue Act, 1901, to which our attention was drawn. Section 14 gives power to the Government to appoint a Collector for discharging the 372 duties mentioned in the Act or any other law for the time being in force. Section 14A(1) gives power to the Government to appoint an Additional Collector. Sub section (3) of section 14A provides that the " Additional Collector shall exercise such powers and perform such duties of a Collector" as the Government may direct. The Additional Collector therefore exercises such of the powers and discharges such of the functions of the Collector, as the Government directs him to do. We have before us a document containing such an order by which the work of sale and execution which under the Encumbered Estates Act had to be done by a Collector, had been entrusted to the Additional Collector. It follows that for the purposes of execution and sale under the Act, the Additional Collector is to be deemed to be the Collector as he exercises the latter 's powers in this regard. The Additional Collection was hence quite competent to apply for the transfer of the decree. The third point against the validity of the order of the learned Subordinate Judge was that under section 39 of the Code the decree could be transferred only by the Court which passed it. It was said that in the present case it is only by virtue of section 14 of the Act that the decision of the Special Judge is deemed to be a decree ; that since it was his decision, he must be deemed to have passed it. It was then pointed out that the order for the transfer of the decree had in fact been made by the Additional Civil Judge, Banaras, and not by the Special Judge, Banaras, and hence that order was of no effect. This is an argument with which we are not much impressed. It has been pointed out to us that the powers of a special Judge under the Act were conferred on the Court of the Additional Subordinate Judge, Banaras, by the United Provinces Government 's Revenue Department notification No. 767 Rev. published in the United Provinces Gazette of the 12th October, 1935. The Additional Subordinate Judge later came to be called the Additional Civil Judge. It is therefore the same court which exercises the powers of an Additional Civil Judge as also those of a Special Judge under the Act. We find 373 no difficulty in treating the order of transfer as having been made by the Special Judge. The fact that the order purported to be made by the Additional Civil Judge was a matter of mere irregularity and cannot make it invalid. Nor do we find any lack of power in the Special Judge to order a transfer of the I decrees. The Act provides that his adjudication would be treated as a decree of a civil court of competent jurisdiction. The execution of such a decree outside the United Provinces is also clearly contemplated by section 24(3). We have earlier held that such execution is permissible in law. That being so, in order to give effect to the provisions of the Act it has to be held that the Special Judge must be deemed to be a court which passed the decree within the meaning of section 39 of the Code of Civil Procedure. Nor does there seem to be any objection to think that the Special Judge is a civil court. From the provisions of the Act earlier set out there is no doubt that he adjudicates upon rights of the parties and acts in the same way as any other civil court would do. Indeed, apart from the fact that the proceedings before him do not commence by the filing of a plaint, we find no distinction between him and a court as ordinarily understood. The order of transfer of the decree is hence, in our view, clearly a good order. Lastly, it was said that the decree was barred by limitation long before the order for its transfer was made. It was contended that article 182 of the Limitation Act governed the case, and the application for its execution had been made beyond the time limited. The question is, does the article apply ? The High Court held that that article had no application to the present case and that no question of limitation arose " for the execution proceeding in Purnea Court is merely a continuation of the execution proceeding pending before the Collector of Banares ". In our opinion, the High Court was right in the view that it took. It is quite clear that if the application for execution with which we are concerned was made in a pending execution proceeding, notion of the application of article 182 arises. It = long been 374 recognised by the courts in our country that a right to continue a proceeding which is pending is a right which arises from day to day and no question of any bar of limitation with regard to the enforcement of such a right arises: See Kedar Nath Dutt vs Harra Chand Dutt (1) Subba Chariar vs Muthuveeran Pillai (2). The question then is, was the application for execution which has resulted in the order under appeal, one for continuing a pending execution proceeding ? It is not disputed that all along since the decree was sent by the Special Judge to the Collector for execution and before that date the decree was not executable it has continuously been in execution under the provisions of the Act by the Additional Collector, Banaras, and that such execution proceeding was pending on the date of the present application for execution. The question thus is, whether the execution proceeding started in the Court of the Subordinate Judge, Purnea, was a continuation of the execution proceeding by the Additional Collector, Banaras. We think it was. We have to remember that section 14(7) of the Act which said that an adjudication of the special Judge was to be deemed to be a decree also provided that that decree would not be executable within the United Provinces except under the provisions of the Act. We have also to remember that the Act provided that as against the properties within the United Provinces the decree could only be executed by the Collector on his own by the various methods provided. We may also point out that section 24(4) provides that for the purpose of such execution the Collector is to have all the powers of a civil court for the execution of a decree. It is therefore clear that the only mode of execution of the decree within the United Provinces contemplated by the Act is the execution by the Collector. Within the United Provinces the execution of the decree by the Collector would be deemed to be an execution under the Civil Procedure Code. The execution by the Collector is execution of what is a decree within the Code. When the decree is executed outside the United Provinces, where, as already stated, it can be legally (1) Cal, 420. (2) Mad. 375 executed, the amount realised by the execution by the Collector has to be taken into account. When the Subordinate Judge, Purnea, has to decide the question , whether the application for execution made to him is in continuance of an existing execution proceeding, he has to recognise the proceeding before the Additional Collector, Banares, as a proceeding in execution under the Code for it is so under the Act. In doing this, for the reasons earlier mentioned, he would not be giving any extra territorial operation to the Act. It seems to us therefore that the execution of the decree by the Collector must be deemed to be execution of a decree for all purposes and therefore an application made to the Subordinate Judge, Purnea, for execution of the same decree while an execution proceeding was pending before the Collector, must be a continuation of the execution last mentioned. No question of limitation can arise in regard to such an application. We think therefore that this appeal must succeed. We set aside the order of the High Court and restore the order of the Subordinate Judge, Purnea. The respondent will pay the costs of the appellant in this Court and in the High Court. Appeal allowed.
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The respondent, who owned landed properties at Banaras in Uttar Pradesh and at Purnea in Bihar, was heavily indebted and applied to the Collector, Banaras under section 4 of the U. P. Encumbered Estates Act, 1934, for, liquidation of his debts.
The Collector, acting under section 6, forwarded the application to the Special judge, appointed under the Act who on March 21, 1940, passed after the enquiry directed by the Act three money decrees in favour of three creditors of the respondent and forwarded them to the Collector for execution.
Section 14(7) of the Act provided that such decrees were to be deemed to be decrees of a civil Court 365 of competent jurisdiction.
Section 24(3) of the Act provided that for purposes of execution against property outside U. P. such decrees were to be deemed to be in favour of the Collector.
The execution of the decrees was commenced by the Additional ' Collector, Banaras against the respondent 's properties in U. P. Thereafter, the Additional Collector applied to the Additional Civil judge, Banaras, and on January 4, 1947, got the said decrees transferred to the Subordinate judge, Purnea and on March 17, 1947, he applied to the Subordinate Judge for execution of the decrees by attachment and sale of the respondents properties at Purnea.
The Subordinate judge made an order directing execution to issue, but, on appeal, the High Court set aside the order on the ground that the Subordinate Judge had no jurisdiction to entertain the execution application.
Held, that the Subordinate judge Purnea had jurisdiction to execute the decrees.
By virtue of section 14(7) of the Act a decree of the Special judge was, within U. P., a decree for all purposes of the Code of Civil Procedure and could properly be transferred under section 39 Of the Code for execution to a Court outside U. P.
No question of extra territorial operation of the Act arose in the application of section 14(7) to the decrees as the Purnea Court was merely applying the U. P. Act to decrees passed in U. P.
For the purposes of execution and sale the Additional Collector was to be deemed to be the Collector as he exercised the Collector 's powers in this regard.
As such the applications for transfer and execution of the decree were properly made by the Additional Collector.
It was the same Court which exercised the powers of the Additional Civil Judge as also those of the Special judge.
The order of transfer of the decree made by the Additional Civil judge could be treated as having been made by the Special judge.
As such it was made by the same Court which passed the decrees and was a good order under section 39 of the Code.
The application for execution before the Subordinate judge, Purnea was made while execution proceedings in respect of the same decrees were pending before the Additional Collector, Banaras and was a continuation of the same.
No question of limitation could arise in respect of such an application.
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A person who owned land in Uttar Pradesh and Bihar owed a lot of money. He asked the Collector (a government official) in Banaras to help him pay off his debts, as allowed by a law called the U. P. Encumbered Estates Act of 1934.
The Collector then sent the request to a Special Judge, as the law required. On March 21, 1940, the Special Judge decided how much money the person owed to three different lenders. The judge then sent these decisions, called "money decrees," to the Collector to be carried out.
According to the law, these decrees were considered the same as orders from a regular court. Also, to carry out these decrees against property outside of Uttar Pradesh, they were treated as if they were in favor of the Collector.
First, the Additional Collector (another government official) started carrying out the decrees against the person's property in Uttar Pradesh. Later, the Additional Collector asked the Additional Civil Judge (another judge) in Banaras to move the decrees to the Subordinate Judge (another judge) in Purnea. On March 17, 1947, the Additional Collector asked the Subordinate Judge to seize and sell the person's property in Purnea to pay off the debts.
The Subordinate Judge agreed to do this. But, the High Court (a higher court) overturned this decision. They said the Subordinate Judge didn't have the authority to handle the request.
The court decided that the Subordinate Judge in Purnea *did* have the authority to carry out the decrees.
Because of the law, the Special Judge’s decree was the same as a regular court decree in Uttar Pradesh. This meant it could be moved to a court outside Uttar Pradesh to be carried out, according to another law.
Applying the U. P. law to decrees made in U. P. doesn't mean the law was being used outside of its territory. The Purnea court was simply carrying out decrees that had been made in U. P.
The Additional Collector had the same power as the Collector to carry out the sale. So, the Additional Collector was right to ask for the transfer and carrying out of the decree.
The Additional Civil Judge and the Special Judge were part of the same court.
The order to transfer the decree made by the Additional Civil Judge could be seen as made by the Special Judge. So, it was made by the same court that made the decrees. This made it a valid order to transfer the decrees.
The request to the Subordinate Judge in Purnea was made while the Additional Collector in Banaras was still working on the same decrees. This means it was a continuation of the same process.
So, there was no issue with the request being made too late.
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o. 189 of 1971. Appeal under Section 116 A of the Representation of the People Act, 1951 from the judgment and order dated January 8, 1971 of the Madras High Court in Election Petition No. 1 of 1970. V. P. Raman and Vineet Kumar, for the appellant. Jagdish Swarup, Socilitor General of India, B. D. Sharma and section P. Nayar, for the Election Commission of India. B. Sen and Sobhag Mal Jain, for the Supreme Court Bar Association. The Judgment of the Court was delivered by Beg, J. This is an appeal under Section 116 A of the Repre sentation of People Act, 1951. The appellant 's election, held on 11 4 1970, to the Madras Legislative Council from the Madras District Graduates ' Constituency was set aside by a learned Judge of the Madras High Court who decided all the issues except one in favour of the appellant. The only issue decided against the appellant, which is now before us, was framed as follows : "Whether the first Respondent was not qualified to stand for election to the Graduates Constituency on all or any of the grounds set out by the petitioner in paragraph 7 to 9 of the election Petition" ? Paragraphs 7 to 9 of the election petition against the appellant are lengthy, prolix, and argumentative. The case and the contentions of the Respondent G. Panneerselvam, the petitioner before the High Court, which were accepted by the High Court, may be summarised as follows Firstly, the whole purpose of Article 171 of the Constitution was to confer a right of "functional representation" upon persons possessing certain educational or other qualifications so that the Appellant Narayanaswami, who had only passed the High School Leaving Examination and was not a Graduate, could not be elected 175 at all to the Legislative Council from the Graduates ' Constituency; secondly, it would be absurd and destructive of the very concept of representation of especially qualified persons that an individual who does not possess the essential or basic qualification of the electors should be a representative of those who are to be represented because of this special qualification of theirs; and, thirdly, the Constitution, being an organic instrument for the governance of the land, must be interpreted in a particularly broad and liberal manner so as to give effect to the underlying principles and purposes of the system of representation sought to be set up by it and not in such a way as to defeat them. Hence, the educational qualification of the electors should be read into the system of represen tation set up by the Constitution for Legislative, Councils as a necessary qualification of candidates in such constituencies. Authorities are certainly not wanting which indicate that Courts should interpret in a broad and generous spirit the document which contains the fundamental law of the land or the basic principles of its Government. Nevertheless, the rule of "plain meaning or "literal" interpretation, described in Maxwell 's Interpretation of Statutes as "the primary rule", could not be altogether abandoned today in interpreting any document. Indeed, we find Lord Evershed, M.R., saying: "The length and detail of modern legislation, has undoubtedly reinforced the claim of literal construction as the only safe rule". (See : Maxwell on "Interpretation of Statutes" 12th Edition p. 28). It may be that the great mass of modem legislation, a large part of which consists of statutory rules, makes some departure from the literal rule of interpretation more easily justifiable today than it was in the past, But, the object of interpretation and of "construction" (which may be broader than "interpretation") is to discover the intention of the law makers in every case (See: Crawford on "Statutory Construction" 1940 Ed. para 157, p. 240 242). This object can, obviously, be best achieved by first looking at the language used in the relevant provisions. Other methods of extracting the meaning can be resorted to only if the language used is contradictory, ambiguous, or leads really to absurd results. This is an elementary and basic rule of interpretation as well as of construction processes which, from the point of view of principles applied, coalesce and converge towards the common purpose of both which is to get at the real sense and meaning, so far as it may be reasonably possible to do this, of what is found laid down. The provisions whose meaning is under consideration have, therefore, to he examined before applying any method of construction at all. To these provisions we may now turn. Article 168 of our Constitution shows that the State Legis latures in nine States in India, including Madras, were to consist of two Houses : the Legislative Assembly and the Legislative, Coun 176 cil. Article 170 lays down that the Legislative Assembly of each State "shall consist of members chosen by direct election from territorial constituencies in the State, in such a manner as the Parliament may by law determine". After that, comes Article 171 which may be reproduced in toto here: "1.71(1) The total number of members in the Legislative Council of a State having such a Council shall not exceed one third of the total number of members in the Legislative Assembly of that State,: Provided that the total number of members in the Legislative Council of a State shall in no case be less than forty. (2) Until Parliament by law otherwise provides, the composition of the Legislative Council of a State shall be as provided in clause (3). (3) of the total number of members of the Legislative Council of a State (a) as nearly as may be, one third shall be elected by electorates consisting of members of municipalities, district boards and such other local authorities in the State as Parliament may by law specify; (b) as nearly as may be, one twelfth shalt be elected by electorates consisting of persons residing in the State who have been for at least three years graduates of any university in the territory of India or have been for at least three years in possession of qualifications prescribed by or under any law made by Parliament as equivalent to that of a graduate of any such university; (c) as nearly as may be. one twelfth shall be, elected by electorates consisting of persons who have been for at least three years engaged in teaching in such educational institutions within the State, not lower in standard than that of a secondary school, as may be prescribed by or under any law made by Parliament; (d) as nearly as may be, one third shall be elected by the members of the Legislative Assembly of the State from amongst persons who are not members of the Assembly. (e) the remainder shall be nominated by the Governor in accordance with the provisions of clause (5). (4) The members to be elected under sub clauses(a), (b) and (c) of clause (3) shall be chosen in such territorial constituencies as may be prescribed by or under any law made by Parliament,, and the elections under 177 the said sub clauses and under sub clause (d) of the said clause shall be held in accordance with the system of pro portional representation by means of the single transferable vote. (5) The members to be nominated by the Governor under sub clause (2) of clause (3) shall consist of persons having special knowledge or practical experience in respect of such matters as the following namely: Literature, Science, article cooperative movement and social service. " The term "electorate", used in Article 171(3) (a)(b) & (c) has neither been defined by the Constitution nor in any enactment by Parliament. 2(1)(e) of the Representation of People Act 43 of 1951, however, says : " 'elector, ' in relation to a constituency means a person whose name is entered in the electoral roll of that constituency for the time being in force and who is not subject to any of the disqualifications mentioned in Sec. 16 of the Representation of the People Act, 1950". The plain and ordinary meaning of the term " electorate" is confined to the body of persons who elect. It does not contain, within its ambit, the extended notion of a body of persons electing representatives "from amongst themselves". Thus, the use of the term "electorale" in Article 171(3) of our Constitution, could not, by itself, impose a limit upon the field of choice of members of the electorate by requiring that the person to be chosen must also be a member of the electorate. The qualifications of the electors constituting the "electorate" and of those who can represent each " electorate", contemplated by the constitution and then supplemented by Parliament, are separately set out for each house. We may glance at the provisions relating to Legislative Assemblies first. Section 16 of the Representation of People Act 43 of 1950 lays down the qualifications of an elector negatively by prescribing who shall be disqualified for registration in an electoral roll. A disqualified person is one who : (a) is not a citizen of India; or (b) is of unsound mind and stands so declared by a competent court; _or (c) is for the time being disqualified from voting under the provisions of any law relating to corrupt practices and other offences in connection with elections". Section 19 lays down the two conditions for registration on the electoral roll of a constituency. The person to be registered must not be less than 21 years of age on the qualifying date and must 178 be ordinarily resident in the constituency. The persons so registered, whose names appear on the electoral roll, constitute the electorato for the legislative Assembly of each State. Section 5 of the Representation of People Act, 43 of 1.951 enacts : "5. Qualifications for membership of a Legislative Assembly: A person shall not be qualified to be chosen to fill a seat in the Legislative Assembly of a State unless (a) in the case of a seat reserved for the Scheduled Castes or for the Scheduled Tribes of that State, he is a member of any of those castes or of those tribes, as the case may be, and is an elector for any Assembly consti tuency in that State; (b) in the case of a seat reserved for an autonomous district of Assam, other than a seat the constituency for which comprises the cantonment and municipality of Shillong, he is a member of a Scheduled Tribe of any autonomous district and is an elector for the Assembly constituency in which such seat or any other seat is reserved for that district; and (c) in the case of any other seat, he is an elector for any Assembly constituency in that State"; Coming to the Legislative Council, we find that the qualifications for the four "electorates" are indicated by article 171(3)(a)(b)(c) & (d). And, the qualifications of candidates for seats in a Legislative Council are given in Section 6 of the Representation of People Act 43 of 1951 which lays down: "6. Qualifications for membership of a Legislative Council. (1) A person shall not be qualified to be chosen to fill a seat in the Legislative Council of a State to be filled by election unless he is an elector for any Assembly con stituency in that State. (2) A person shall not be qualified to be chosen to fill a seat in the Legislative Council of a State to be filled by nomination by the Governor unless he is ordinarily resident in the State". A look at Article 171(2), set out above, indicates that the composition of the Legislative Council of a State was a matter to be also provided for by law made by Parliament. It is evident that the constitution makers had directed their attention specifically towards the methods of election and composition of the legislature 179 of each State. They themselves prescribed same qualifications to be possessed by members of each House of the Legislature. Article 173 lays down : "173. A person shall not be qualified to be chosen to fill a seat in the Legislature of a State unless he (a) is a citizen of India, and makes and subscribes before some person authorised in that behalf by the Election Commission an oath or affirmation according to the form set out for the purpose in the Third Schedule; (b) is, in the case of a seat in the Legislative Assembly, not less than twenty five years of age and, in the case of a seat in the Legislative Council, not less than thirty years of age; and (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament". An important and very noticeable difference between, quali fications prescribed by Parliament for the membership of a Legislative Assembly by Section 5 of the Representation of People Act of 1951 and those for the membership of a Legislative Council by Section 6 of that Act is that, so far as a member of the Legislative Assembly is concerned, he or she has to be an Elector in the Constituency from which he or she stands, but a member of a Legislative Council in a State is not, similarly, required to be a member of the electorate. All that Parliament says, in Section 6 of the Representation of People Act, 1951, is that the, person to be chosen as a member of the Legislative Council has to be "an elector for any Assembly constituency" in the State to whose legislative Council he was to be chosen. He has to be "ordinarily resident" in the State to qualify for nomination. No other qualifications, apart from those found in Article 173 of the Constitution and Section 6 of the Representation of People Act of 1951, are to be found laid down anywhere. But, an additional qualification was found, by the judgment under appeal before us, to exist by resort ' ing to a presumed legislative intent and then. practically adding it to those expressly laid down. It may be possible to look for legislative intention in materials outside the four corners of a statute where its language is really ambiguous or conflicting. But, where no such difficulty arises, the mere fact that the intentions of the law makers, sought to be demonstrated by what was said by some of them or by those advising them when the Constitution was on the anvil, were really different from the result which clearly follows from language used in the Legislative provisions under consideration, could not authorise the use of such an exceptional mode of construction. "It is well accepted", said Lord Morris (See: Davies Jankins & 180 Co. vs Davies) ', "that the beliefs and assumptions of those who frame Acts of Parliament cannot make the law". The judgment under appeal, after discussing the manner in which Article 171 of the Constitution was framed and the different views expressed about the nature of the Second Chambers to be set up by it in our States, says : "The system of functional, which is also called occupational representation, as distinguished from territorial representation, was borrowed from the Irish Constitution and that is the underlying principle in Article 171. The opinion of political thinkers and statement on the wisdom of such representation may not be unanimous. Whatever be the divergent views, the accomplished fact in the Constitution is that such a representation has been given recognition and it has to be implemented. In making the Legislative Council as a representative body, the framers of the Constitution have not made it exclusively one of elected representatives according to their occupations. It is intended to be a hetergenous and more broad based body consisting of persons of different walks of life, some elected and some nominated, each with the experience in his own field of activity". The learned Judge concluded; "It is with these objects that clauses (a),, (b), and (c) of Article 171(3) have been conceived so that persons in those walks of life could make their contribution to the Legislative functions of the State. Article 1.71 in fixing the composition of the Legislative Council as a functional chamber. has also indirectly laid down certain qualifications and also disqualifications of members to be elected thereunder". Whatever may have been the opinions of Constitution makers or of their advisers, whose views are cited in the judgment under appeal, it is not possible to. say, on a perusal of Article 171 of the Constitution, that the Second Chambers set up in nine States in India were meant to incorporate the principle of what is known as "functional" or "vocational" representation which has been advocated by Guild Socialist and Syndicalist Schools of political thought. , Some of the observations quoted above, in the judgment under appeal itself, militate with the conclusions reached there. All that we can infer from our Constitutional provisions is that additional representation or weightage was given to persons possessing special type of knowledge and experience by enabling them to elect their special representatives also for Legislative Councils. The concept of such representation does not carry with it, as a necessary consequence, the further notion that the representative must also possess the very qualifications of those he represents. In the case of the Graduates ' constituency, it is provided in Article 171(3)(b) that the electors must have held their degrees (1) 1967 2 W.L.R. p. 11 39 @ 11 56. 181 for at least three years before they become qualified an electors. Thus,. in laying down the test of competence of voters of such a constituency, more possession of degrees by them was not considered sufficient. Moreover, graduates are not an occupational or vocational group but merely a body of persons with an educational qualification. It would, therefore, not be correct to describe the additional representation sought to be given to them as an attempt to introduce the "functional" or "vocational" principle. On the face of it, Article 171 appears to be designed only to give a right to choose their representatives to those who have certain types of presumably valuable knowledge and education. If the presumption of their better competence to elect a suitable representative in there, as we think that there must be, it would be for the members of such a constituency themselves to decide whether a person who stands for election from their constituency possesses the right type of knowledge, experience, and wisdom which satisfy certain standards. It may well be that the constitution makers, acting upon such a presumption, had intentionally left the educational qualifications of a candidate for election from the graduates constituency unspecified. A test laid down by Blackburn J. in R. vs Cleworth(1), to determine what the correct presumption, arising from an omission in a statute should be, was whether what was omitted but sought to be brought within the legislative intention was "known" to the law makers, and could, therefore, be "supposed to have been omitted intentionally". "It makes no difference", says Craies 'in "Statute Law"(2) "that the omission on the part of the legislature was a mere oversight, and that without doubt the Act would have been drawn otherwise had the attention of the legislature been directed to the oversight at the time the Act was under discussion". In the case before us, it could not possibly be said that the question to be dealt with was not "known" to the, legislators. It could not even be said that qualifications of the electors/ as well as of those to be elected were not matters to which the attention of the law makers, both in the Constituent Assembly and in Parliament, was not specially directed at all or that the omission must be by mere oversight. The provisions discussed above demonstrate amply how legislative attention was paid to the qualifications, of the electors 'as well as of the elected in every case. Hence, the correct presumption, in such a case, would be that the omission was deliberate. A glance at the legislative history lying behind Article 171 also enables us to reach the conclusion that the omission by the Constitution makers or by Parliament to prescribe graduation as (1) [1864] 4 BSS 927, 934 (2) Crains on Statute Law 5th En. 182 must be deliberate. Sections 60 and 61 of the Government of India Act, 1935, deal with composition of Provincial legislatures and of the two Chambers of such legislatures. The Upper Chambers in the Provincial Legislatures were to be composed of members retiring every third year in accordance with provisions of the Fifth Schedule to the Act. Rule 10 of this Schedule lays down: "In a Province in which any seats are to be filled by representatives of backward areas or backward tribes, representatives of commerce, industry, mining and planting, representatives of landholders, representatives of universities or representatives of labour, persons to fill those seats. . . shall be chosen in such manner as may be prescribed". On 30th April, 1936, the Government of India (Provincial Legislative Assemblies) Order of 1936 was issued by His Majesty in Council. It prescribed the qualifications of persons to be chosen from the "special constituencies" set up for representation in the Legislative Councils, A glance at the provisions relating to these qualifications, including those for the University seats, indicates that it was invariably expressly provided, where it was so intended, that a necessary qualification of a candidate for a seat was that he or she should be "entitled to vote for the choice of a member to fill it". Hence, legislative history on the subject would also indicate. that, whenever any qualification of the candidate was intended to be imposed, this was expressly done and not left to mere implications. We think that the view contained in the Judgment under appeal, necessarily results in writing some words into or adding them to the relevant statutory provisions to the effect that the candidates from graduates ' constituencies of Legislative Councils must also possess the qualification of having graduated. This contravenes the rule of "Plain meaning" or "literal" construction which must ordinarily prevail. A logical corollary of that rule is that "a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made" (See: Craies on Statute Law 6th Edn. p. 70). An application of the rule necessarily involves that addition to or modification of words used in statutory provisions is not generally permissible (see e.g. Sri Ram Narain Medhi & Ors. vs The State of Bombay(1), British India General Insurance Co. Ltd. vs Captain Itbar Singh & Ors. (2), R. G. Jacob vs Union of India(3). Courts may deppart from this rule only to avoid a patent absurdity (see e.g. State 'of Madhya Pradesh vs M/s. Azad Bharat Finance Co. & Anr.(4). In Hira Devi vs District Board, Shahiahanpur(5), this Court observed (1) ; (2) (3) ; (4) A.T.R. (5) A.T.R. 365. 183 "No doubt it is the duty of the Court to try and harmonise the 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". Cases in, which defects in statutory provisions may or may not be supplied by Courts have been indicated in well known works such as Sutherland 's "Statutory Construction" (3rd Edn.(Vol. 2) (Paragraph 4924 at pages 455 558) and in Crawford 's "Construction of statutes" (1940 Edn.). Only one passage from the last mentioned work need be cited here: (p. 269) : "Where the statutes meaning is clear and explicit, words cannot be interpolated. In the first place, in such a case, they are not needed. If they should be interpolated, the statute would more than likely fail to express the legislative intent, as the thought intended to be conveyed might be altered by the addition of new words. They should not be interpolated even though the remedy of the statute would thereby be advanced, or a more desirable or just result would occur. Even where the meaning of the statute is clear and sensible, either with or without the omitted word, interpolation is improper, since the primary source of the legislative intent is in the language of the statute". We think that the language as well as the legislative history of Articles 171 and 173 of the Constitution and Section 6 of the Representation of People Act, 1951, enable us to presume a deliberate omission of the qualification that the representative of the Graduates should also be a graduate. In our opinion, no absurdity results if we presume such an intention. We cannot infer, as the learned Judge of the Madras High Court had done, from the mere fact of such an omission and opinions about a supposed scheme "functional representation" underlying Article 171 of our Constitution, that the omission was either unintentional or that it led to absurd results. We think that, by adding a deemed to be necessary or implied qualification of a representative of the Graduates which the Constitution makers, or, in any event, the Parliament, could have easily imposed, the learned Judge had really invaded the Legislative sphere. The defect, if. any, in the law could be removed only by law made by Parliament. We conclude, after considering all the relevant constitutional and statutory provisions relating to the qualifications of a candidate for election from the Graduates ' constituency of the Legislative Council of the Madras State, that the appellant possesses all the qualifications laid down for such a candidate. 184 Therefore, we allow this appeal, set aside the Judgment and order of the Madras High Court, and dismiss the, Respondent 's election petition. The appellant is entitled to his costs throughout. V.P.S. Appeal allowed.
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The respondent challenged the appellant selection to the Madras Legislative, Council from the Madras District Graduates ' Constituency on the grounds, (1) that, the purpose of article 171 of the Constitution was to confer a right of functional representation upon persons possessing certain educational or other qualifications so that the appellant who was not a graduate could not be elected to the Legislative Council from the Graduates ' Constituency; (2) that, it would be absurd and destructive of the concept of representation that an individual, who did not possess the essential or basic qualification of the electors, should be their representative, and (3), that, the Constitution, being an organic instrument, must be interpreted in a broad and liberal manner so as to give effect to the underlying principles and purposes of the system of representation sought to be embodied in it.
The High Court set aside the election.
Allowing the appeal to this Court, HELD: (1) (a) Graduates are not an occupational or vocational group, but merely a body of persons with particular educational qualifications.
It would, therefore, not be correct to describe the additional representation sought to be given to them in the Legislative Council as an attempt to introduce functional or vocational representation.
[181B] (b) The qualifications of the elector constituting the electorate, and of those who can represent each electorate, contemplated by the Constitution and supplemented by Parliament, are separately set out for each House.
As regards the Legislative Council, the qualifications for the four electorates are indicated in article 171 (3) (a), (b), (c) and (d).
The plain and ordinary meaning of the term "electorate is that it is the body of persons who elect.
It does not take in the extended notion of a body of persons electing representatives from amongst themselves.
It does not impose a requirement that the person to be chosen must also be a member of the electorate.
[177D F] (c) The qualifications of candidates for seats in the Council are given in section 6 of the Representation of the People Act, 1951.
While a member of the Legislative Assembly should also be an elector in the constituency from which he stands, the member of the Legislative Council is not so required to be a member of the electorate.
All that is required is that the person to be chosen as a member of the Legislative Council should be an elector for an Assembly constituency in the State to whose Legislative Council he is chosen.
[179E] (d) Whatever may have been the opinions of the Constitution makes or their advisors it is not possible to say, on a perusal of article 171, that the Second Chamber found here were meant to provide for functional 173 or vocational representation.
AR that can be inferred is that additional representation or weightage was given to persons possessing special types of knowledge and experience by enabling them to elect their special representatives.
The concept of such representation does not carry with it the further notion that, the representative must also possess the very qualifications of those he represents.
The High Court erroneously travelled outside the four corners of the statutory provisions when there was no ambiguity at all in the language, and by resorting to a presumed legislative intent, it added a qualification to those expressly laid down in the Constitution and other statutory provisions.
[1 80F] Davies Jankins & Co. vs Davies, 1967 (2) W.L.R. p. 1139 (a_) 1156, inferred to.
2(a) Article 171 is designed only to give a right to choose their representatives to those who have certain types of presumably valuable knowledge and education.
If the presumption of their better competence to elect a suitable representative is there, it would be for the members of such a constituency themselves to decide whether a person who stands for election from their constituency possesses the right type of knowledge , experience and wisdom.
The Constitution makers, acting on such a presumption, may have intentionally left the educational qualifications of candidate for election from the Graduates Constituency unspecified.
[181C] (b) It could not possibly be said that the question to be dealt with was not known to the legislators.
The provisions of law show that the qualifications of the electors as well as of those to be elected were matters to which the attention of the law makers, both in the Constituent Assem bly and in Parliament, was specifically directed.
Hence, the omission must have been deliberate.
[181G] R. vs Cleworth, (1864) 4 BSS 927 and Craies on Statute Law6th Edn.
1963 72, referred to.
(c) The legislative history of the Article also shows that the omission by the Constitution makers or by Parliament, to prescribe graduation as a qualification of the candidate from the Graduates ' constituency, was deliberate.
The provisions of the Government of India (Provincial Legislative Assemblies) Order, 1936, prescribing the qualifications of persons to be chosen from special constituencies set up for representation in the Legislative Councils under the Government of India Act, 1935, indicate that it was invariably expressly provided where it was so intended, that a necessary qualification of a candidate for a seat was that he should be entitled to vote for the choice of a member to fill it.
Such a qualification was not left to mere implication.
[181H 182E] (3) It is true that a constitution should be interpreted in a broad and generous spirit, but the rule of "plain meaning" or "literal" interpretation could not altogether be abandoned.
The object of interpretation is to discover the intention of the law makers, and this object can obviously be best achieved by first looking at the language used in the relevant provisions.
A logical corollary of the rule of literal interpretation is that a statute may not be extended to meet a case for which provision has clearly and undoubtedly not been made; and an application of this rule necessarily involves that addition to, or modification of, words used in statutory provisions is not generally permissible.
Courts may depart from this rule only to avoid a patent absurdity.
[175D] Sri Ram Narain Medhi & Ors.
vs The State of Bombay, A.I.R. ; British India General Insurance Co. Ltd. vs
Captain 174 itbar Singh & Ors., ; R. C. Jacob vs Union of India; , ; State of Madhya Pradesh vs M/s. Azad Bharat Finance Co. & Anr.
A.I.R. 1967 S.C. 276; Hira Devi vs District Board, Shabiahanpur, ; & 365, referred to.
From the language as well as the legislative history of articles 171 and 173 of the Constitution and section 6 of the Representation of the People Act, 1951, it could be presumed that the omission of the qualification that the representative of graduate should also be a graduate was deliberate.
By presuming such an intention of the law makers, no absurdity results.
By adding 'deemed to be necessary ' or 'implied ' qualification of a representative of the graduates, which the Constitution makers or Parliament could easily have imposed, the Court would be invading the legislative sphere.
[183F]
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The person who brought the case argued that the election of the appellant (the person who won the election) to the Madras Legislative Council was wrong. The election was from the Madras District Graduates' Constituency. The reasons were: (1) Article 171 of the Constitution was meant to give people with certain education the right to representation. The appellant was not a graduate, so he shouldn't have been elected from the Graduates' Constituency. (2) It doesn't make sense for someone who doesn't have the basic qualifications of the voters to be their representative. (3) The Constitution should be interpreted broadly to achieve its goals for representation.
The High Court agreed and canceled the election.
The appellant appealed to this Court. The Court *HELD*: (1) (a) Graduates are not a work-related group. They are simply people with specific educational degrees. So, giving them extra representation in the Legislative Council is not about giving representation based on jobs or professions.
(b) The Constitution, along with laws from Parliament, clearly states the requirements for voters and for those who can represent them in each House. For the Legislative Council, Article 171 (3) (a), (b), (c), and (d) lists the requirements for the four groups of voters. The term "electorate" means the group of people who vote. It doesn't mean that only people from that group can be elected. It doesn't say that the person elected must be a member of the group that votes for them.
(c) Section 6 of the Representation of the People Act, 1951, lists the requirements for candidates for the Council. A member of the Legislative Assembly must be a voter in the area they represent. But a member of the Legislative Council does not have to be a member of the group of voters that elected them. They only need to be a registered voter in an Assembly area in the State where they are elected to the Legislative Council.
(d) Even if the people who wrote the Constitution had certain ideas, Article 171 doesn't say that the Second Chamber (Legislative Council) was meant for job-based representation. It only shows that extra representation was given to people with special knowledge and experience by letting them elect their own representatives. This doesn't mean that the representative must have the same qualifications as the people they represent. The High Court made a mistake by looking beyond the clear laws when there was no confusion. It added a requirement to the Constitution and laws based on what it thought the lawmakers intended.
2(a) Article 171 only gives people with certain knowledge and education the right to choose their representatives. If they are believed to be better at choosing a good representative, then the members of that group should decide if a candidate has the right knowledge, experience, and wisdom. The Constitution writers may have intentionally not listed specific educational requirements for candidates from the Graduates' Constituency, assuming the voters would choose wisely.
(b) The lawmakers definitely knew about this issue. The laws show that they specifically considered the requirements for both voters and those being elected. So, the omission of a graduation requirement must have been on purpose.
(c) The history of the Article also shows that not requiring graduation for candidates from the Graduates' Constituency was a deliberate choice by the Constitution writers and Parliament. The Government of India (Provincial Legislative Assemblies) Order, 1936, which listed the requirements for special constituencies in the Legislative Councils under the Government of India Act, 1935, always clearly stated if a candidate needed to be a voter in that constituency. This requirement was never just implied.
(3) It's true that the Constitution should be interpreted broadly. But we can't ignore the "plain meaning" or "literal" interpretation. The goal of interpretation is to find out what the lawmakers intended. The best way to do that is to look at the words they used in the laws. A logical result of literal interpretation is that a law can't be stretched to cover a situation it clearly doesn't address. So, we generally can't add to or change the words in the laws. Courts can only ignore this rule if it would lead to a completely absurd result.
Based on the language and history of Articles 171 and 173 of the Constitution, and Section 6 of the Representation of the People Act, 1951, we can assume that not requiring a graduate representative to also be a graduate was deliberate. This assumption doesn't lead to any absurd results. If the Court added a "necessary" or "implied" requirement that the representative of graduates must also be a graduate, it would be interfering with the lawmakers' job.
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Civil Appeals Nos. 805, 806 and 972 977 of 1973 From the judgment and decree dated the 8th June 1971 and 23rd November 1971 respectively of the High Court of Andhra Pradesh at Hyderabad in Appeal Suit Nos. 766 of 1968, 18 of 1969, 779, 780, 782 to 785 of 1968, respectively. 776 F. section Nariman, J. V. K. Gurunathan, T. V. Narasimhan Murty and A. Subha Rao, for the appellants. P. Ram Reddy and P. P. Rao, for the respondents. The Judgment of the Court was delivered by JASWANT SINGH, J. This batch of Appeals Nos. 805, 806 and 972 to 977 of 1973 by certificate from the judgments and decrees of the High Court of Andhra Pradesh in Appeals Nos. 766 of 1968, 18 of 1969, 779 of 1968, 780 of 1968, 782 of 1968, 783 of 1971, 784 of 1968 and 785 of 1968 raise a simple but an interesting question namely, whether for the supplies of rice made by the appellants in January and February, 1964, they are to be paid price according to the rate specified in the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964 dated March 23, 1964 or according to the rate specified in the Rice (Andhra Pradesh) Price Control order as it stood in 1963. The question arises in the following circumstances: The appellants are millers and carry on the business of paddy and rice in the State of Andhra Pradesh. On July 31, 1959, the Governor of Andhra Pradesh in exercise of the powers conferred on him by section 3 of the (Central Act X of 1955) hereinafter referred to as `the Act ' made an order called the Andhra Pradesh Rice Procurement (Levy) order, 1959 clause 3 of the order required every dealer and every miller to sell to the State Government on requisition served on him by the requisitioning authority at the controlled price (a) 40 percent of the quantity of rice held in stock by him at the commencement of the order and (b) 40 percent of the total quantity of rice purchased by him every day beginning with the commencement of the order. Clause 2(a) of the order defined "controlled price" as meaning the maximum price fixed under section 3 of the Act for the sale of rice by the Central Government from time to time (emphasis supplied). On December 19, 1963, the Central Government in exercise of the power conferred on it by section 3 of the Act made an order called the Rice (Andhra Pradesh) Price Control order, 1963, which extended to the districts of Krishna, West Godavari, East Godavari, Guntur, Nizamabad, Warangal and Nellore in the State of Andhra Pradesh. Clause (2) of the order provided that the maximum prices at which the varieties of rice specified in column (1) of the Schedule to that order were to be sold in wholesale quantities would be as specified in the corresponding entries in column (2) of the said Schedule. The said Schedule inter alia provided that Akkulu rice would be sold at Rs. 46.89 per quintal. In compliance with the requisitions served on them by the requisitioning authority of the State of Andhra Pradesh, the appellants sold various quantities of that variety of rice to the Government of that State from January 26, 1964, to February 21, 1964, and were paid at the aforesaid rate of Rs. 46.89 per quintal. By means of the Rice (Andhra Pradesh) Price Control (Second Amendment) order, 1964, dated March 20, 1964, the Central Government amended sub clause (1) of clause 2 of the Rice (Andhra Pradesh) Price Control order, 1963 and ordained that in the said sub clause for the words "the Schedule ', the words and figures schedule I shall be substituted. on 777 March 23, 1964, the Central Government issued the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964. Clause 2 of the order ran thus: 2. In the Rice (Andhra Pradesh) Price Control order, 1963, in Schedule I, for the varieties of rice and the maximum prices thereafter, the following shall be substituted namely: ____________________________________________________________ Varieties or rice maximum price per quintal. ____________________________________________________________ 1. Districts other than Nellore . . Akulu . 52 25 . . ____________________________________________________________ On the issue of this order, the appellants made representations to the Government of Andhra Pradesh requesting that for the aforesaid supplies of Akkulu rice made by them from January 26 to February 21, 1964, they should also be paid at the enhanced price of Rs. 52.25 per quintal. As the representations made by them did not evoke a favourable response, they filed suits in the Court of the Subordinate Judge, Machilipatnam for recovery of the difference between the controlled prices specified in the Rice (Andhra Pradesh) Price Control order, 1963, dated December 19, 1963 and Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964. The suits filed by them were decreed by that Court. Aggrieved by these judgments and decrees the State of Andhra Pradesh preferred appeals to the High Court at Hyderabad which were allowed on the ground that is the supplies of rice were made by the appellants before the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964, they were entitled only to the price specified in the Schedule to the Rice (Andhra Pradesh) Price Control order, 1963. Dissatisfied with these judgments and decrees, the appellants applied for certificate under Article 133(1) (a) of the Constitution which was granted to them. The sole question for determination in these appeals, as already indicated, is whether the appellants were to be paid price for the supplies to rice made by them from January 26, 1964, to February 21, 1964, at the rate of Rs. 46.89 per quintal the rate specified in the Rice (Andhra Pradesh) Price Control order, 1963, dated December 19, 1963 or at the enhanced rate of Rs. 52.25 per quintal as fixed by the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964 dated March 23, 1964. Mr. Nariman appearing on behalf of the appellants has laid great emphasis on the word "substituted" occurring in clause 2 of the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964 and has urged that the claim of the appellants cannot be validity ignored Elaborating his submission, counsel has contended that as the prices fixed by the Government are meant for the entire season, the appellants have to be paid at the controlled price as fixed vide the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964, regardless 778 of the dates an which the supplies were made. We cannot accede to this contention. It is no doubt true that the literal meaning of the word "substitute" is "to replace ' but the question before us is from which date the substitution or replacement of the new Schedule took effect. There is no deeming clause or some such provision in the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964 to indicate that it was intended to have a retrospective effect. It is a well recognized rule of interpretation that in the absence of express words or appropriate language from which retrospectivity, may be inferred, a notification takes effect from the date it is issued and not from any prior date. The principle is also well settled that statutes should not be construed so as to create new disability or obligations or impose new duties in respect of transactions which were complete at the time the Amending Act came into force. (See Mani Gopal Mitra vs The State of Bihar. The aforesaid sales in the instant cases having been made by the appellants before the coming into force of the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964, and the property in the goods having passed to the Government of Andhra Pradesh on the dates the supplies were made, the appellants had to be paid only at the controlled price obtaining on the dates the sales were effected and not at the increased price which came into operation subsequently. This view is in consonance with the provisions of section 3 of the Act and the Andhra Pradesh Rice Procurement (Levy) order, 1959 which clearly indicate that the price payable to the dealers and Millers for the supplies of rice made by them is the control price obtaining on the date when the sale is made. Similar view is taken in the unreported decision dated April 20, 1962 of this Court in K. Appayya Shambhague and Co. vs The State of Mysore & Anr. where it was laid down that the order made under section 3(2) (f) of the Act are offers of sale which the person on whom a requisition is served has no option but to accept and that the price that has to be paid is the controlled price fixed by the Government under section 3(2) (c) of the Act on the date when he goods are ascertained or when the property in the goods passes to the buyer. This decision was followed by the High Court of Andhra Pradesh in The Union of India, represented by the Secretary, Ministry of Food and Agriculture, Government of India, New Delhi vs Kanuri Damodariah & Co. Alluri Venkatanarasiah, where it was held that an order under section 3(2) (f) amounts to an agreement for sale and the price payable for the quantities of rice supplied is a price payable in accordance with the price notified under the provisions of section 3(3) of the Act. In the instant cases, the sale having been made before the coming into force of the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964, the appellants cannot justifiably claim the benefit of the increased price specified in the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964. The acceptance of the. 779 contention raised on behalf of the appellants will lead to grave consequences. It will have the effect of reopening the transactions past and closed and would thus give rise to lots of difficulties. Mr. Nariman has, in support of his contention, relied on the following passage occurring at p. 394 in Craies on Statute Law (Sixth Edition): "Explanatory and declaratory Acts retrospective Where a Statute is passed for the purpose of supplying an obvious omission in a former statute, or, as Parke J. (afterwards Baron Parke) said in R. V. Dursley ; , 469 "to `explain a former statute," the subsequent statute has relation back to the time when the prior Act was passed. Thus in Att. Gen vs Poughtt (1816) 2 Price 381, 392, it appeared that by a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s. , but the Act omitted to state that it was to be 9s. per cwt., and to remedy this omission another Customs Act 53 Geo. c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty 9s. per cwt., but Thomson C. B., in giving judgment for the Attorney General, said: "The duty in this instant was in fact imposed by the first Act, but the gross mistakes of the omission of the weight for which the sum expressed was to have been payable occasioned the amendment made by the subsequent Act, but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act. " Where an Act is in its nature declaratory, the presumption against construing it retrospectively is inapplicable. ' This passage has, in our opinion, no bearing on the question before us in view of the fact that the Rice (Andhra Pradesh) Price Control (Third Amendment) order, 1964 is neither explanatory nor declaratory, as sought to be interpreted by the counsel. The contention of Mr. Nariman that the controlled prices fixed by the Central Government for sale of rice are seasonal prices not being based upon any cogent material cannot also be accepted. The High Court was, therefore, right in allowing the aforesaid appeals preferred by the respondent and reversing the judgment and decrees passed by the Subordinate Judge, Machilipatnam. In the result, the appeal, fail and are dismissed with cost, limited to one set. M.R. Appeals dismissed.
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Under section 3 of the , the respondent passed the Andhra Pradesh Procurement (Levy) order 1959, requiring every miller and dealer of rice (including the appellants) to sell to the respondent certain specified varieties and quantities of rice at controlled price on requisition being served on him.
Clause 2(a) of the order defined "controlled price" as the maximum price fixed by the Central Government from time to time under section 3 of the Act for the sale of rice.
On December 19, 1963, the Central Government Passed the Rice (Andhra Pradesh) Price Control order 1963, fixing the maximum price of akkulu rice at Rs. 46.89 per quintal.
The appellants sold several quantities of akkulu rice to the respondent from January 26, 1964, to February 21, 1964, and were paid at the controlled rate.
On March 23, 1964 the Central Government issued the Rice (Andhra Pradesh) Price Control (3rd amendment) order 1964, and substituted Rs. 52.28 for Rs. 46.89 as the maximum price per quintal, of akkulu rice.
The appellant 's claim for the benefit of the enhanced price for the earlier sales was rejected by the Government of Andhra Pradesh.
The appellants succeeded before the Subordinate Judge, Machilipatnam in their suits for recovery of the difference between the two controlled prices but lost before the High Court, in appeals preferred by the State of Andhra Pradesh.
It was contended before this Court that the prices fixed by the Government are for the entire season, and the appellants are entitled payment at the amended rates, regardless of the dates when the supplies were made, and that the word "substitute" infers retrospective effect.
Dismissing the appeals, the Court.
^ HELD: In the absence of express words or appropriate language from which retrospectivity may be inferred, a notification takes effect from the date it is issued and not from any prior date.
Statutes should not be construed so as to create new disabilities or obligations or impose new duties in respect of transactions which were complete at the time the Amending Act came into force.
[778B C] (2) The property in the goods having passed to the Government of Andhra Pradesh on the dates the supplies the made, the appellants had to be paid only at the controlled prices obtaining on the dates the sales were effects and not at the increased price which came into operation subsequently.[778 D] K. Appayya Shanbhague & Co. vs The State of Mysore and Anr.
(Unreported decision S.C. dated 20 4 1962); The Union of India.
represented by the Secretary Ministry of Food & Agriculture, Government of India, New Delhi vs Kanuri Damodariah & Co. Alluri Venkatanarasiah (1968) 1 An.
W.K. 81 and Mani Gopal Mitra vs The State of Bihar (1969) 2 S.C.R. 411, followed.
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According to section 3 of the law, the person in charge said that all rice millers and dealers (including the people appealing this case) had to sell certain types and amounts of rice to the government at a set price. The government would send them an order to do so.
Clause 2(a) of the order said that "controlled price" meant the highest price the Central Government set for rice sales under section 3 of the law.
On December 19, 1963, the Central Government made the Rice (Andhra Pradesh) Price Control order 1963. This order set the highest price for akkulu rice at Rs. 46.89 per quintal (a unit of weight).
From January 26, 1964, to February 21, 1964, the people appealing the case sold akkulu rice to the government several times. They were paid the controlled price at the time.
On March 23, 1964, the Central Government changed the Rice (Andhra Pradesh) Price Control order 1964. They raised the maximum price of akkulu rice from Rs. 46.89 to Rs. 52.28 per quintal.
The government of Andhra Pradesh refused to pay the higher price for the rice that had already been sold.
The people appealing the case won in the lower court, where the judge said they should be paid the difference between the two prices. But the High Court overturned this decision when the State of Andhra Pradesh appealed.
The people appealing the case argued before the Supreme Court that the prices set by the government were for the entire season. They said they should be paid at the new, higher price, no matter when the rice was sold. They also argued that the word "substitute" meant the price change should apply to past sales.
The Court rejected their appeals and said:
The Court HELD: Unless it is clearly stated or implied that a price change should apply to past sales, it only takes effect from the date it is announced. It doesn't apply to any earlier date.
Laws should not be interpreted in a way that creates new disadvantages, obligations, or duties for transactions that were already completed when the new law was made.
[778B C] (2) Because the government of Andhra Pradesh owned the rice on the dates it was delivered, the sellers (the people appealing the case) should only be paid the controlled price that was in effect on those dates. They are not entitled to the higher price that came into effect later.[778 D] K. Appayya Shanbhague & Co. vs The State of Mysore and Anr. (Unreported decision S.C. dated 20 4 1962); The Union of India. represented by the Secretary Ministry of Food & Agriculture, Government of India, New Delhi vs Kanuri Damodariah & Co. Alluri Venkatanarasiah (1968) 1 An. W.K. 81 and Mani Gopal Mitra vs The State of Bihar (1969) 2 S.C.R. 411, followed.
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Appeal No. 1743 of 1967. Appeal by Special Leave from the judgment and Decree dated 15th October, 1958 of the Patna High Court in Appeal from Appellate Decree No. 552 of 1953. V. section Desai and D. Goburdhan, for the appellants. Sarjoo Prasad, R. K. Jain and E.C. Agarwal, for respondents Nos. 2 to 12. The Judgment of the Court was delivered by BEG, J. In this appeal by special leave the short question involved relates to an application of Sec. 141 of the Indian Succession Act to the facts of the case. This section reads as follows : "141. If a legacy is bequeathed to a person Who is named an executor of the will, be shall not take the legacy, 431 unless he proves the will or otherwise manifests an intention to, act as executor". "Illustration: A legacy is given to A, who is named an executor. A orders the funeral according to the directions contained in the will, and dies a few days after the testator, without having proved the will. A has manifested an intention to act as executor". The plaintiffs appellants before us claim as the heirs of Sham Narain Singh who died issueless in August 1913. One Achhaiber Singh, a collateral of Shyam Narain Singh, had made a will on 3rd July, 1912, under which he gave life interests in the properties owned by him to his three daughters in law Deolagan Kuer, Chapkali Kuer, and Alodhan Kuer. He laid down that, after the death of these three ladies, a half share in the properties would go to the two daughters of Alodhan Kuer, and another half to the above mentioned Shyam Narain Singh, a grandson of the testator 's first cousin: Achhaiber Singh died in November, 1912. It was found by all the Courts that Shyam Narain Sing took part in the cremation ceremony, of Achhaiber Singh. Apparently, the members of the family in which Achhaiber Singh had been adopted were not well disposed towards him. It was, therefore, not surprising that Shyam Narain Singh, with, whom he was well pleased, should tight the funeral pyre as his agnate in the absence of his sons who had predeceased him. It has also been found that Chapkali Kuer and Alodhan Kuer had applied for the Probate of the will of Achhaiber Singh after the death of Shyam Narain Singh. Hence, Shyam Narain Singh could not possibly join them at that time. He had died before the will could be duly proved. He was also said to have looked after the properties of the two ladies. The question before us is whether by taking part in cremation ceremonies and by helping two daughters in law to manage properties, Shyam Narain Singh manifested his inten tion to act as an executor so as to be covered by Sec. 141 of the Indian Succession Act, and, therefore, to claim his legacy. We may mention here that there was some previous litigation also between the parties. In suit No. 144 of 1946, brought by the heirs of Shyam Narain Singh, against some of the defendants in the suit before us, the precise question before us for decision had arisen, but the High Court had not decided it. It had dismissed the suit on the ground that the, plaintiffs had not locus standi. On the strength of that decision the bar of res judicata is relied upon by the Defendants Respondents before us as it was in the Courts below. But, as this appeal can be disposed of on the first question, already mentioned by us, relating to the application of section 141 Indian Succession Act. we need not deal with the plea of res judicata. The suit before us was filed by the heirs of Shyam Narain Singh for a declaration of the rights of Shyam Narain Singh in the property bequeathed, and for a declaration that the compromise decree in suit No. 74 of 1944 was fraudulent, collusive, invalid, and not binding upon 432 the plaintiffs. The Trial Court and then the Additional District Judge of Patna, on the first appeal of the Defendants Respondents before us, had decreed the plaintiffs ' suit. The Additional District Judge had held that, by taking part in the cremation ceremonies and by helping the two legatees daughters in law of the testator, Shyam Narain Singh had manifested an intention to act as an executor before he died. The Additional District Judge had also taken into account the fact that the heirs of Shyam Narain Singh had taken some interest in the properties left by Achhaiber Singh by litigating for it. He thought that this was only possible if Shyam Narain Singh had himself manifested an interest in his right, , under the will. This evidence was considered sufficient for holding that Shyam Narain Singh had manifested an intention to act as executor. The High Court of Patna had allowed the second appeal of defendants on the ground that the findings of fact recorded by Courts below were not enough to attract the application of Section 141 of the Indian Succession Act. The conduct of the relations of Shyam Narain Singh, in litigating for the properly left by Achhaiber Singh was, as the High Court rightly pointed out, not relevant for determining the intentions of Shyam Narain Singh. Nor was the fact that he looked after the proprieties of the two co legatees, who were widows, a manifestation of his own intention to assert his own rights as an executor. What was most important was the provision in the will itself which had been overlooked by the first two courts. Achhaiber Singh had laid down in the will : "That on the death of me, the executant, the aforesaid executors, should perform the Shradh ceremonies of me, the executant according to the means and custom in the family". The High Court had accepted the contention that there was no evidence that Shyam Narain Singh had performed Shradh ceremonies of Achhaiber Singh in accordance with "the means and the custom in the family". The only contention which could be advanced before us on behalf of the plaintiffs appellants was that cremation ceremonies do not end with actual cremation of the testator, but include other ceremonies such as Sraddha ceremonies which come later. In reply, we have been referred to the meaning of the term "Sraddha" given in Sir M. Monier Williams ' Sanskrit English Dictionary (p. 1097) as follows ". .a ceremony in honour and for the benefit of dead relatives observed with great strictness at various fixed periods and on occasions of rejoicing as well as mourning by the surviving relatives (these ceremonies are performed by the daily offering of water and on stated occasions by the offering of Pindas or balls of rice and meal to three paternal and three maternal forefathers, i.e. to father, grand father, and great grandfather, it should be borne in mind that a Sraddha is not a funeral ceremony (antyeshti) but a supplement to such a ceremony; it is an act of reverential homage to a deceased person performed by relatives, and is moreover supposed to supply the dead with strengthening nutriment after the performance of the previous funeral ceremonies has endowed 433 the with ethereal bodies; indeed until those antyeshti or funeral rites ' have been performed, and until the succeeding first Sraddha has, been celebrated the deceased relative is a prata or restless, wandering ghost, and has no real body (only a lingrasarira, q.v.); it is not until the first Sraddha has taken place that he attains a position among the Pitris or Divine Fathers in their blissful abode called Pitri loka, and the Sro is most desirable and efficacious when performed by a son;" Thus, it is clear that there is a distinction between cremation ceremonies and Sraddha ceremonies which are periodic. It is also evident that what the testator desired his executors to do was that they should perform his Sraddha ceremonies. The manner in which he refers to Shyam Narain Singh in his will, almost as a substitute for a son, shows that he expected Shyam Narain Singh to perform his Sraddha ceremonies as his 'own sons had predeceased him. There is no evidence whatsoever on record that Shyam Narain Singh ever performed any such ceremony. The conclusion reached by the High Court is, therefore, correct. Accordingly, we dismiss this appeal with costs. There is also a Civil Miscellaneous Petition No. 4146 of 1968 before us for an amendment of the plaint in case we order a remand of the case. We see no reason to allow this application which is also dismissed. Appeal dismissed.
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A made a will giving life interest in his properties to three daughters in law '.
After the death of the three ladies, half share of the property was to go to two daughters of one of the daughters in law and the other half to one S, collaterally related to A. S was appointed as one of the executors of the will.
One of the terms of the will was "that on the death of me, executant the aforesaid executors should perform the Shradh ceremonies of the executant according to the means and customs in the family." S performed the cremation ceremonies and helped the two daughters in law to manage properties.
There was no evidence to show that he performed the Shradh as well.
S died before the will was duly proved.
The principal question in the suit filed by the heirs of S was whether there was adequate manifestation of an intention to act as an executor on the part of section The two lower Courts held that the intention to act as an executor was apparent from the facts while the High Court held that, since there was no evidence of Shradh being performed by there was no 'manifestation ', as required by Sec.
141 of the Indian Succession Act.
Dismissing the appeal, HELD : There is a distinction between the cremation ceremonies and shradh ceremonies which are periodic.
It is also evident that what the testator desired his executors to do was that they should perform his shradh ceremonies.
The manner in which the testator has referred to S in his will, almost as a substitute for a son, shows that he expected S to perform his shradh ceremonies as his own sons, who had predeceased him, would have preformed these.
There is no evidence whatsoever on record that S ever performed any such ceremony.
The conclusion reached by the High Court, therefore, is correct.
[433 C]
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A made a will, giving his daughters-in-law the right to use his property for their lives.
After the daughters-in-law died, half of the property would go to two daughters of one of the daughters-in-law. The other half would go to S, a distant relative of A. S was chosen to be one of the people in charge of carrying out the will (called executors).
The will said that after A died, the executors should perform his funeral ceremonies (Shradh) in the way that was normal for the family and within their means. S helped with the cremation and helped the daughters-in-law manage the property.
But there was no proof that he actually performed the Shradh ceremonies.
S died before the will was officially approved by the court.
The main question in the lawsuit filed by S's family was whether S had clearly shown that he intended to act as an executor. The two lower courts said that his intention was clear. But the High Court said that because there was no proof that S performed the Shradh, he didn't show the "manifestation" (clear sign) required by law.
The court rejected the appeal, stating: There is a difference between the cremation and the Shradh ceremonies, which happen regularly over time.
It’s clear that the person who wrote the will (testator) wanted his executors to perform his Shradh ceremonies.
The way the testator talked about S in his will, almost like he was a son, shows that he expected S to perform the Shradh ceremonies like his own sons would have done if they were still alive.
There is no evidence that S ever performed these ceremonies.
So, the High Court's decision is correct.
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Appeals Nos. 1235 to 1237 of 1966:. Appeals from the judgment and decree dated September 20, 1963 of the Kerala High Court in Appeal Suit No. 304 of 1962. Rameshwar Nath, Mahinder Narain and Swaranjit Sodhi, for ' the appellants (in C.A. No. 1235 of 1966) and respondent No, 11 (in C.As. Nos. 1236 and 1237 of 1966). K. Javaram and R. Thiagarajan, for the appellants (in C.As. Nos. 1236 and 1237 of 1966) and respondents Nos. 1 to 7 (in C.A. No. 1235 of 1966). M.R.K. Pillai, for respondent No. 3 (.in C.As. 1236and 1237 of 1966) and respondent No. 9 (in C.A. No. 1235 of 1966). The Judgment of the Court was delivered by Ramaswami, J. KavaIappara estate is an impartible estate. Succession thereto is governed by the Marumakkathayam law, that is to say, the eldest member of the family by female descent will succeed to the Gaddi and hold the estate. The parties to the suit are members of the Kavalappara Swaroopam, the 1st defendant being the Sthanee. The 7th defendant is the mother and the 9th defendant the elder brother of the plaintiffs. The plaintiffs claimed maintenance based on family custom entitling the members ' to maintenance out of the entire income of the Sthanam. Past maintenance was claimed for each of the plaintiffs 1 to 4 for 12 years at Rs. 500/ per mensem; for plaintiff No. 5 at the above rate and for plaintiffs 6 to 8 at Rs. 400/ per mensem from their respective dates of birth. Future maintenance from date of suit was also claimed at the aforesaid rates. The suit was contested by the 1st defendant on the ground that the plaintiffs had no enforceable legal right to maintenance from the Sthanam estate; that from olden times two kalams, Palachithara and Velliyad of the Sthanam estate had been set apart for the maintenance of the 38 junior members of the Swaroopam that the plaintiffs have to look to those two kalams only for their maintenance "as deposed by him in the former suit" in O.S. No. 46 of 1934; that even after the Privy Council had decided O.S. No. 46 of 1934 declaring him to be absolute owner of the Sthanam properties, he had been paying maintenance out of affection; that though there was no recognised custom binding on him, he had been adopting the generosity of the predecessor Sthanees and paying to the junior members of the Swaroopam Rs. 17,000/ annually and that the plaintiffs had no right to claim income from the Sthanam estate. The trial court granted maintenance for the period claimed until the date of decree at the rate of Rs. 250/ per mensem for each of the plaintiffs charged on the corpus and income of the Sthanam estate. The first defendant appealed to the Kerala High Court in A.S. No. 304 of 1962. The plaintiffs preferred cross objections. The High Court partly allowed the appeal negativing the plaintiffs ' claim for arrears of maintenance and modified the trial court 's decree. The High Court dismissed the cross object.ions of the plaintiffs. C.A. No. 1235 of 1966 is brought to this Court by certificate on behalf of defendant No. 1 and C.As. 1236 and 1237 of 1966 are brought to this Court by certificate on behalf of plaintiffs. The first question to be considered is whether the plaintiffs are entitled to maintenance out of the Sthanam properties as a matter of family custom. It is argued on behalf of the 1st defendant that the maintenance allowance was previously given by the Sthanee only as an act of generosity and not in recognition of any legal claim of junior members of the Swaroopam. In any case it was contended that the practice prevailing in the past was that the income from two kalams "Pilachithara" and "Velliyad" was given to the Amma Nethiar for the benefit of the members of the Swaroopam and that the members of the Swaroopam could not insist on anything more than the same as a matter of right. In our opinion there is no justification for this argument. There is sufficient evidence on the record of the case to support the finding of the Subordinate Judge and the High Court that the plaintiffs have established a customary right of maintenance from the Sthanam properties. In the first place there are two decisions O.S. 991 and 992 of the year 1817 granting a decree for maintenance to two members of the Kavalppara Sthanam (Exhibits A 57 and A 58). It was contended for the Sthanee in those suits that separate properties had been allotted to Amma Nethiar to maintain all the females and minors in the Swaroopam, that only major males in the Swaroopam can claim separate maintenance from him and that those members who chose to live away from the palace had no right to claim maintenance. These contentions were not accepted by the Court which gave each of the plaintiffs a money 39 decree for maintenance both past and future. The material portions of the two decisions are quoted below: "On a careful consideration of all the particulars referred to and in view of the circumstances that the Plaintiff went separate from the tarwad members in disregard of the orders of Defendant who is the present Moopil Nair of Kavalppara and in opposition to the status, ranks and dignities (Sthanamanams) and propriety of Sthanam and merely for their own pleasure and that, even after the Moopu had caused negotiations to be made through Brahmins and other respectable persons under his (Moopu 's) written authority with a view to avoid the Moopu (Sthanam) falling into disgrace (as a result of family) dissension and in view of the fact that, in spite of the efforts of the said persons, the plaintiff did not return and live together (have common residence and mess), it is only proper, as the Defendant contends in his written statement, that it is the Amma Nethiar who should provide for the maintenance of the plaintiff along with that of the lady members. The plaintiff 's witnesses Cherumpatte Manakkal Vasudevan Bhattathiripad and Pannasseri Adisseripad state on solemn affirmation that, since it is the Moopu that manages the properties forming the assets of the Swaroopam (esstate) and received 16,000 and old fanams being 2 per 10 from the Government if the next nephew as well as the heir and next of kin of the Moopil Nair were to live separate from the Moopil Nair and demand maintenance for whatever reasons it might be, such person ought to be paid maintenance expenses and supported as befitting the Sthanamanam (rank and dignity) of such person and not necessary (sic). The plaintiff and his mother Valiakava Nethiar left Kavalappara on the 16th Medom 992 (26th April 1817) and went to and stayed at Mangalathu, Panambala Kode and Melarkode for reasons not apparent. Under the orders of the Defendant maintenance had been paid to plaintiff, the said Nethiar and 20 persons from that date, 16th of Medom (26th of April) to the month of Edavam (May June). Thereafter the defendant ordered payment of maintenance to 16 persons from 1st Mithunam (13th June) and to 12 persons thereafter. Subsequently the Moopu ordered that maintenance need be paid for 8 persons only including (the plaintiff). The written statement (deposition) does not make any mention as to nor have the plaintiff 's witnesses proved as to what expenses the sum of claimed in the plaint relate to. It is therefore 40 decreed that the Defendant do pay plaintiff 450 fanams being the maintenance expenses for 3 months as evidenced by the plaintiff 's witnesses after deducting 25 (? ) fanams from the amount claimed in the plaint, that the Defendant do also pay the plaintiff 's future maintenance at the rate of 150 fanams a month as mentioned above and that the plaintiff and Defendant do pay and receive proportionate costs. " Ext. A 58: "On looking into the matters mentioned above, there is nothing to show on what ground the plaintiff had gone and lived separate from the tarwad members of her own accord in disregard of the order of the present Kavalappara Moopil Nair and without considering the status, dignity and propriety (of the Sthanam). Even though the Defendant 's contention in his written statement that it is the Amma Nethiar who should look after the maintenance of the plaintiff in as much as the plaintiff did not return to and stay in the Kavalppara in spite of the attempts made through the Brahmins and other respectable persons to avoid the Moopu getting a bad name owing to a rumour getting afloat that there is dissension among the members as a result of the plaintiffs action, is a proper only, the court is of the opinion that, if the members who are related to the Moopil Nair as his direct sister and direct nephew like the 3rd Nair and who are closely related together as heirs to the properties live separate for any reason whatsoever and ask for their maintenance, the Moopil Nair ought to have ordered payment of their maintenance, amounts and maintained them in accordance with their status in the Sthanam. Instead of doing this, the Moopil Nair cannot stop the maintenance paid to the Anandaravas who may be of bad temperament. The plaintiff 's and defendant 's witnesses prove that the plaintiff had been paid for the maintenance from the Medom 992 (April May, 1817) when she went separate until the 30th of Karkitakam (about the 16th of August) and that the Moopil Nair had stopped paying for the maintenance thereafter. From the evidence of the plaintiff 's witnesses it has been proved that the plaintiff and the persons staying with her would all together require 3 fanams for maintenance expenses and 1 fanam for extra expenses for a day. It, therefore, does not appear from the oral and documentary evidence that they would require anything more than fanams for the maintenance for the 3 months from 41 the 1st of Chingam (14th August) to the 1st of Vrichigam (14th November) the date of the suit, calculating at 120 fanams a month. It is not clear from the plaint as to what expenses the sum of Rs. 150 claimed in the plaint relates. I therefore direct the defendant to pay to plaintiff a sum of Rs. 360 fanams after deducting 165 fanams from the amount claimed by the plaintiff and I also direct that the Defendant do pay to the plaintiff the future maintenance at the rate of 120 fanams a month and that the plaintiff and Defendant do pay and receive proportionate costs. " Exhibit B 1 is a deposition given in O.S. 2 of 1859 by the then Sthanee of the Kavalappara Swaroopam. The deposition is marked as exhibit 67(b) in O.S. 46 of 1934 and reads as follows: "The properties belong to the Sthanam only. Two Kalams (lands attached to two granaries) have been set apart for the maintenance of the members of the tarwad. And it has been the practice that the rest of the members maintain themselves therefrom. It has been so separately allotted from ancient times. When precisely, is not known. It could be seen from the accounts that It has been so set apart. It is only if I think it necessary to take back what has been so set apart, that I should give them their maintenance expenses . I have not enquired whether there were any other places where the entire properties and the Malikhan belonged to the Sthanam only and the tarwad has no separate property of its own." [The High Court has observed that this translation is not correct and that 'kalam ' denotes a division of the estate for purposes of collecting rents from the tenants. Again a true translation of the first sentence in the above quotation would be 'only the Sthanam has properties and no.t the properties belong to the Sthanam only".] This deposition shows clearly that the Sthanee in office admitted over a century ago his obligation to maintain junior members of the Swaroopam. The next piece of evidence is the deposition of the Sthanee in O.S. No. 46 of 1934. In the present case the 1st defendant did not give evidence. He admitted that his deposition in the previous suit O.S. No. 46 of 1934 contained a true statement of facts. The previous deposit;on of the 1st defendant in exhibit B 13 and reads as follows: "4. The eldest lady in the Swaroopam is called Aroma Nethiyar. Some properties had been allotted for the L 1 Sup CI/70 4 42 maintenance of the members in the name of Amma Nethiar . . Those properties had been allotted in ancient times in her name from the properties of the Moopil Nair. The Moopil Nair was originally a ruling chief. The grant of properties in the name of Amma Nethiyar should have been made when the Moopil Nair was a ruling chief. The present Amma Nethiyar has even now the right to manage the properties which had been so allotted. It was in ignorance of such allotment that my eider brother and after him, myself managed those properties along with the stanam properties. I am willing to hand back the management of those properties to Amma Nethiyar. If those properties are handed back, I shall no more be liable to pay the maintenance of the members. " In his written statement defendant No. 1 made the following admission in para 6: " . . The defendant does not deny that the members of the Swaroopam are entitled to be maintained by the Moopil Nayar by virtue of custom. But that does not make him any the less a Stani nor detract from the Stanom character of the properties. " In our opinion the evidence adduced in the case sufficiently proves a custom in Kavalappara Estate by which the Sthanee was legally obliged to give maintenance to junior members of the family. It is possible that the practice of paying maintenance to junior members originated as an act of generosity of the previous Sthanee. But it has continued without interruption for such a length of time that it has acquired the character of a legal right. On behalf of defendant No. 1 it was contended that the Judicial Committee had said that the payment for maintenance was an act of generosity on the part of the Sthanee and was not a legal right of the junior members. Reference was made to the following passage in the judgment in Kochunni vs Kuttanunni(1): "The maintenance claimed was a customary one originating in ancient times when admittedly the Muppil Nair was a Sthani in possession of Sthanam rights. There is no evidence as to how the maintenance allowance arose, whether it was given in recognition of a legal claim or was only a generous provision made for the benefit of the women and younger members, which the Raja was perfectly competent to do out of property (1) A.I.R. 1948(P.C.).47at p. 52. 43 which he regarded exclusively as his own. The claims of generosity often prevail over a sense of ownership, especially when the recipient of the bounty is a near relative in a dependent position. " In our opinion this argument proceeds on a misreading of the judgment of the Judicial Committee. The Judicial Committee has observed that the claim for maintenance was based on customary rights and was not ex gratia payment. In the course of the judgment Mr. M.R. Jayakar states: "The documents material in this connection are Exs. 'O ' and 'P ' being the decree and judgment respectively in two suits for maintenance brought in the year 1817 against the then Muppil Nair, the first by the then third Nair, a minor, and the second by his mother. It is material to note what the issue was and what was decreed in these suits. In the pleadings of both the parties the claim for maintenance was stated to be based on customary rights. The plaintiff alleged it is 'the usual custom ' that Nair should pay the maintenance. The defendant admitted 'the custom ' but denied his liability to pay the maintenance on the ground that his ancestors in ancient times had already settled in accordance with the 'usual practice ' certain lands on a lady called Amma Nethiar for the maintenance of herself and the junior members, and that the maintenance claimed in the suit, even if it was due, which he denied, should primarily come out of the lands so set aside in previous times. He also denied his liability on the ground that the minor and his mother, contrary to his advice and that of the well wishers of the family had gone away to live elsewhere. The defendant denied his liability also on other grounds which it is unnecessary to consider in tiffs case. He, however, expressed his willingness to supplement the maintenance, if the Court thought proper, on particular occasions. The Judge, while admitting that it was the responsibility of Amma Nethiar to maintain the plaintiffs, held that as the plaintiffs stood in the very near relationship of sister and nephew to the defendant and were his next heirs it was 'only proper ' that the defendant should grant them a periodical allowance for past and future maintenance. In the light of the pleadings set out above, the admissions made therein by bolt sides about the customary nature of the maintenance and the words it was 'only proper ' in the judgment, their Lordships cannot accept this as a decision contra 44 dicting the incidents of the property in the hands of the Muppil Nair. " In any event the question as to whether the right of maintenance was given by the Sthanee in recognition of the legal claim or whether it was an ex gratia payment was not directly in issue in the previous suit. The question for determination was whether the existence of maintenance allowance was inconsistent with the Sthanam character of the properties in possession of the then Moopil Nair. On this point it was held by the Judicial Committee that the payment of the maintenance allowance for junior members was not inconsistent with the Sthanam character of the property on which it was grounded. At p. 53 of the Report Mr. Jayakar has observed; "Their Lordships think that in the proceedings of these two cases there is hardly anything to support the view of the High Court that the decrees in these two suits are inconsistent with the Sthanam character of the properties in the possession of the then Muppil Nair or that he did anything which could be regarded as an admission that the properties in his hands were not Sthanam properties. On the question whether and how far the existence of a maintenance allowance is inconsistent with the Sthanam character of the property, on which it is grounded, the following passage in Sundata Aiyar 's book (p. 255, bottom) may be noted: "The point of view suggested in some cases in which the question has arisen is that the members of the family have rights of maintenance in the property of the Sthanam itself: that is practically assimilating these properties to impartible zemindaries before the recent cases. ' Besides, the Sthanam in dispute in this case belonged, as stated above, to the second category, and in such a case the existence of maintenance allowance would be perhaps not so inconsistent as in the case of a Sthanam of the third class, carved out of the family property for the support and dignity of its senior member. " The question at issue before the Judicial Committee was whether the Kavalppara Estate was a Tarawad or joint family property belonging to the joint family or whether the properties appertained to the Sthanam and belonged to defendant No. 1 as a Sthanee exclusively. The question as to the right of maintenance of the plaintiffs was incidentally gone into and it was ultimately held that the existence of such maintenance fight of junior members of 45 the family was not inconsistent with the Sthanam character of the properties. In our opinion the High Court. was right in its finding that the plaintiffs have established their right to maintenance from the Sthanam properties as a matter of custom. Counsel on behalf of defendant No. 1 has been unable to make good his argument on this aspect of the case. An alleged custom, in order to be. valid, must be proved by testimony to have been obeyed from consciousness of its obligatory character. A mere convention between family members or an arrangement by mutual consent for peace and convenience cannot be recognised as custom. In Ramroa vs Yeshwantrao(1) it was proved that it had been the practice in a Deshpande Vatandar 's family for over a hundred and fifty years, without interruption or dispute of any kind whatever, to leave the performance of the services of the vatan and the bulk of the property in the hands of the eider branch and to provide the younger branches with maintenance only. It was held that such practice was due in its origin to a local or family usage and not to a mere arrangement and that it was therefore to be recognized and acted upon as a legal and valid custom. In order, therefore, that a custom should acquire the character of law the custom must be accompanied by the intellectual element, the opinion necessitatis "the conviction on the part of those who use a custom that it is obligatory and not merely optional". In other words the mark which distinguishes custom in the legal sense from mere convention is the opinion necessitatis, the recognition that there is authority behind it. "In the modern state the custom, if legally recognized has behind it the court and an apparatus of coercion. In primitive communities we do not find authority necessarily organized in the institutional sense. We must ask, 'what is the ultimate power in the group to settle conflicts or to prescribe rules ? ' It may be the old men, the military group, the priests, or merely a general consensus of opinion. But the opinion necessitatis can come into existence only when the community in some way throws its force behind the particular rules. " (See G.W. Paton Jurisprudence 3rd edn. p. 164) We have shown in the present case that the plaintiffs have established their right to maintenance from the Sthanam properties not merely as an act of generosity on the part of the Sthanee but the (1) I.L.R. 10 Bombay 327. payment of maintenance has been made by the Sthanee as a matter of legal obligation. The next question is whether the plaintiffs are entitled to arrears of maintenance. It appears that after the decision of the Privy Council declaring the ist defendant as exclusive owner of properties he has paid Rs. 17,000 annually to the Amma Nethiar for the maintenance of the junior members of the Swaroopam. It is not disputed by the plaintiffs that such payments were made before the institution of the present suit. Even after the institution of the suit the 1st defendant had been depositing annually Rs. 25,000 in court for the maintenance of the plaintiffs and other members of the Swaroopam as ordered by the trial court. It was alleged by the plaintiffs that they have not been paid any maintenance. But the High Court found that maintenance had been given to the plaintiffs ' mother with whom plaintiffs had been living. For these reasons the High Court held that there was no ground for awarding arrears to maintenance before the date of suit. We see no reason for taking a view different from that of the High Court in the matter. As regards the rate of maintenance the trial court granted decree at the rate of Rs. 250/ p.m. for every one of the plaintiffs irrespective of age. It has been found by the trial court that the net income of the Swaroopam was about Rs. 2 lakhs per annum. It is admitted that the income of the Swaroopam consists mostly of rents from cultivating tenants. With the abolition of perquisites and the fixation of fair rents by recent tenancy legislation there appears to have been a reduction of the net income of the Sthanam in recent years. It also appears that the plaintiffs are the only minor members in the family and excepting the 7th defendant who is their mother the defendants are males whose children would not be members of the Swaroopam. In the Madras Estates (Abolition and Conversion into Ryotwari) Act 26 of 1948 compensation to members of the family entitled to maintenance out of an impartible estate is fixed at 1/5 of what is paid for the estate in view of these considerations the High Court held that the provision of Rs. 250/ p.m. to each of the plaintiffs was adequate. The High Court, however, directed that it is open to the parties after two years to move the trial court for variation in the rate of maintenance fixed on the ground of altered circumstances of the Estate. Having heard the parties we see no reason for interfering with the judgment of the High Court in this matter. In the result we dismiss all the three appeals (Civil Appeals Nos. 1235, 1236 and 1237 of 1966). There will be no order as to costs with regard to any of the appeals. G.C. Appeals dismissed.
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Defendant No. 1 was the Sthanee of Kavalappara estate which was an impartible estate governed by Marumakkathayam law.
The plaintiffs claimed maintenance based on a family custom entitling the members to maintenance out of the entire income of the Sthanam.
Past maintenance was claimed as also future maintenance from the date of the suit.
Defendant No. 1 denied that the plaintiffs had any right based on custom as claimed by them; according to him from older times two kalams of the Sthanam had been set apart for their maintenance.
He claimed that the Privy Council in suit No. 46 of 1934 had declared him absolute owner of the Sthanam properties but despite that, out of generosity only he had been paying to the junior members of the Swaroopam Rs. 17.000/ annually.
The trial court granted maintenance to the plaintiffs for the period claimed at the rate of Rs. 250/ per mensem for each of the plaintiffs.
Defendant No. 1 appealed to the High Court and the plaintiffs filed cross objections as the rate of maintenance allowed to them was lower than they had claimed.
The High Court partly allowed the appeal negativing the plaintiffs ' claim for arrears of maintenance, and dismissed the cross objections of the plaintiffs.
Both the parties appealed to this Court.
The questions that fell for consideration were: (i) whether the right to maintenance as claimed by the plaintiffs was based on custom; (ii) whether the High Court was right in disallowing the claim of the plaintiffs to arrears of maintenance; (iii) whether the rate of maintenance as ordered by the trial court and ' confirmed by the High Court was justified.
HELD: (i) An alleged custom, in order to be valid, must be proved by testimony to have been obeyed from consciousness of its obligatory character.
A mere convention between family members or an arrangement by mutual consent for peace and convenience cannot be recognised as custom.
In order that a custom should acquire the character of law the custom must be accompanied by the intellectual element, the opinion necessitatis.
the recognition that there is authority behind it.
[45 B C; D E] Rarnrao vs Yeshwantrao, I.L.R. , applied.
In the present case the evidence sufficiently proved a custom in Kavalappara estate by which the Sthanee was legally obliged to give maintenance to junior members of the family.
It was possible that the practice of paying maintenance to junior members originated as an act of generosity of the previous Sthanee.
But it had continued without interruption for such a length of time that it had acquired the character of a legal right.
[42] Kochuni vs Kuttanunnt, A.I.R. 1948 (P.C.) 47, 52, explained.
37 (ii) Although it had been alleged by the plaintiffs that they had not been paid any maintenance, the High Court had ' found that maintenance had been given to the plaintiffs ' mother with whom the plaintiffs had been living.
The High Court 's refusal to grant to the plaintiffs arrears of maintenance before the date of the, suit must, in the circumstances, be upheld.
[46 C] (iii) The High Court in fixing the amount of maintenance for each of the plaintiffs at Rs. 250./ per month had taken into account all the relevant factors.
It had further directed that it was open to the parties after two years to move the trial court for variation in the rate of maintenance fixed on the ground of altered circumstances of the Estate.
There was no reason for interfering with the judgment of the High Court in this matter.
[46. G]
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Defendant No. 1 was the leader of the Kavalappara estate. This estate could not be easily divided and followed special family laws.
The people who brought the case (the plaintiffs) said they should get money regularly. They claimed it was a family custom that all members got money from the estate's income.
They asked for money they should have received in the past, and money to be paid from the time they started the lawsuit.
Defendant No. 1 disagreed. He said the plaintiffs didn't have a right to money based on custom. He claimed that long ago, part of the estate's income was already set aside for their support.
He said that a court case in 1934 had declared him the absolute owner of the estate. But, he had been giving the younger family members about Rs. 17,000 each year out of kindness.
The first court ruled that the plaintiffs should get Rs. 250 per month each, for the time they asked for.
Defendant No. 1 appealed to a higher court. The plaintiffs also disagreed with the first court's decision because they thought they deserved more money.
The higher court changed the first ruling somewhat. It said the plaintiffs wouldn't get the money from the past, and rejected the plaintiffs' complaint about the amount.
Both sides then appealed to the highest court.
The questions for the court to decide were: (i) Did the plaintiffs have a right to money based on custom? (ii) Was the higher court right to deny the money from the past? (iii) Was the amount of money decided by the first court, and supported by the higher court, fair?
HELD: (i) For a custom to be valid, it must be proven that people have followed it because they felt it was required.
A simple agreement between family members for peace and convenience is not the same as a custom.
A custom only becomes law if people believe it is required and that there is a real reason to follow it.
This idea was used in the case of Ramrao vs Yeshwantrao.
In this case, there was enough evidence of a custom in the Kavalappara estate. The leader of the estate was legally required to give money to the younger family members.
It is possible that giving money to younger members started as a kind act by previous leaders.
However, it had been happening for so long without stopping that it became a legal right.
This idea was explained in the case of Kochuni vs Kuttanunni.
(ii) The plaintiffs said they hadn't been paid any money. However, the higher court found that money had been given to the plaintiffs' mother, who they lived with.
So, the higher court's decision to not give the plaintiffs money from before the lawsuit is supported.
(iii) The higher court considered everything when it decided that each plaintiff should get Rs. 250 per month.
It also said that after two years, either side could ask the first court to change the amount of money if the estate's situation changed.
There is no reason to change the higher court's decision on this.
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Civil Appeal No. 2994 of 1979. Appeal by Special Leave from the Judgment and Decree dated 11 7 1979 of the Patna High Court in Civil Writ Petition No. 1936 of 1979. Dr. Y. section Chitale and P. P. Singh for the Appellant. R. B. Datar and Miss A. Subhashini for the Respondent. The Collector of Central Excise & Customs, Patna, invited, by an advertisement dated 30th July, 1975, applications for filling up some posts of Inspector of Central Excise. Among those eligible for selection were "sportsmen who have represented the Universities in the Inter University Tournament conducted by the Inter University Sports Board. " The appellant, who was studying in the M. A. (Political Science) in the Mithila University, was one of the applicants and he was directed to appear for a physical test and an interview. On 12th December, 1975 the Collector of Central Excise and Customs issued a letter informing the appellant that he had been selected for appointment in a temporary vacancy of Inspector, and that he would be on probation for a period of two years. The appellant joined the post and continued therein. On 30th April, 1976 he received a letter from the Assistant Collector (Headquarters) Central Excise pointing out that he had submitted attested copies only of the sports certificates along with his application for appointment and he was directed to submit the original certificates. The appellant forwarded the original certificates. Nothing happened for some time, and the appellant continued in the post without any objection. It was almost a year later that the Assistant Collector (Headquarters) wrote to the appellant to supply details of the tournament at 732 which he had represented the University. On 27th February, 1978 the appellant referred to the Sports certificate date 28th July, 1975 issued by the Deputy Registrar of the L. N. Mithila University, Darbhanga. The original certificate had been sent by him to the Collector, along with the other certificates on 5th May, 1976. The appellant explained that he had qualified and was selected, to represent the Mithila University in the Inter University Tournament to be held at Banaras Hindu University, Varanasi, in the year 1972 but that a serious illness had intervened and prevented him from actually participating in the tournament. He pointed out that this had been made clear by him during the interview for selection before the Appointments Committee and that as he had been discharging his duties to the satisfaction of his superior officers ever since December, 1975 and had, in fact, captained the sports team on behalf of the Excise Department at Calcutta for two years, he was astonished that the question should be raised now. Another fourteen months later, on 16th June, 1979, the Assistant Collector (Headquarters) made an order, purporting to be under the proviso to sub rule (1) of Rule 5 of the Central Civil Service (Temporary Service) Rules 1965, terminating the services of the appellant. The appellant then applied for relief under Article 226 of the Constitution to the High Court against the order, but the High Court has summarily dismissed the writ petition. In this appeal, the appellant contends that he fulfiled the conditions of eligibility and that there was no justification for terminating his services. The case of the respondents is that the appellant was appointed under a mistake inasmuch as the condition of eligibility required actual representation of a University in an Inter University Tournament conducted by the Inter University Sports Board and that, therefore, the appellant was not entitled to any relief against the termination of his services. Having given the matter our careful consideration, it seems to us that the respondents have proceeded on a technical view of the matter wholly unjustified by the intent behind the condition of eligibility. The condition required that the applicant should have been a sportsman who had represented his university in an Inter University Tournament conducted by the Inter University Sports Board. There is no dispute before us that the appellant did qualify, and was selected, for representing the Mithila University in the Inter University Tournament at the Banaras Hindu University in the year 1972. All that remained was that he should have participated in the tournament. Unfortunately, for him, he fell ill and was unable to do so. The fact that he fell ill, 733 and for that reason was unable to represent his university, is not disputed. There is nothing to show that but for that illness he would not have actually taken part in the tournament. It seems to us that on a reasonable view of the facts the appellant should be taken to have fulfilled the condition of eligibility. The terms and conditions of service are intended to be construed reasonably, and too technical a view can defeat the essential spirit and intent embodied in them. The intention was to appoint meritorious sportsmen to the posts, and that object is served if a person who had qualified and was selected for representing his university in an Inter University Tournament conducted by the Inter University Sports Board is appointed, notwithstanding that he was actually prevented from participating because of reasons beyond his control. We have no doubt that on the interpretation which has found favour with us the appellant will be entitled to a certificate of eligibility, a requirement postulated by the terms of his appointment. The appeal is allowed, the order dated 16th June, 1979 made by the Assistant Collector (Headquarters) is quashed and the respondents are directed to treat the appellant as continuing in service. The appellant is entitled to his costs throughout. S.R. Appeal allowed.
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The appellant was selected for and appointed in a temporary vacancy of Inspector of Central Excise, as he was found to be a "sportsman who has represented the Universities in the Inter University Tournament conducted by the Inter University Sports Board".
He joined duty and continued therein.
On 30 4 1976 the Assistant Collector (Head Quarters) Central Excise called for the original sports certificate on the ground that only attested copies were furnished by the appellant earlier.
The appellant furnished the original documents on 5 7 76.
After a year, he was directed to supply the details of the tournament at which he had represented the University.
On 27 2 78, the appellant referred to the sports certificate dated 28th July 1975 issued by the Deputy Registrar of Mithila University, Darbhanga.
The appellant explained that he had qualified and was selected, to represent the Mithila University in the Inter University Tournament to be held at the Banaras Hindu University, Varanasi, in the year 1972 but that a serious illness had intervened and prevented him from actually participating in the tournament.
He pointed out that this had been made clear by him during the interview for selection before the Appointments Committee and that as he had been discharging his duties to the satisfaction of his superior officers ever since December, 1975 and had, in fact, captained the sports team on behalf of the Excise Department at Calcutta for two years, he was astonished that the question should be raised later.
Another fourteen months thereafter, on 16th June, 1979, the Assistant Collector (Headquarters) made an order purporting to be under the proviso to sub rule (1) of Rule 5 of the Central Civil Service (Temporary Service) Rules 1965, terminating the services of the appellant.
The appellant then applied for relief under Article 226 of the Constitution to the High Court against the order, but the High Court has summarily dismissed the writ petition.
Allowing the appeal on special leave, the Court ^ HELD: The terms and conditions of service are intended to be construed reasonably, and too technical a view can defeat the essential spirit and intent embodied in them.
The intention was to appoint meritorious sportsmen to the posts, and that object is served if a person who had qualified and was selected for representing his university in an Inter University Tournament conducted by the Inter University Sports Board is appointed, notwithstanding that he was actually prevented from participating because of reasons beyond his control.
[733 A C] In the instant case, the respondents have proceeded on a technical view of the matter wholly unjustified by the intent behind the condition of eligibility.
731 The condition required that the applicant should have been a sportsman who had represented his university in an Inter University Tournament conducted by the Inter University Sports Board.
The appellant did qualify, and was selected, for representing the Mithila University in the Inter University Tournament at the Banaras Hindu University in the year 1972.
All that remained was that he should have participated in the tournament.
Unfortunately, for him, he fell ill and was unable to do so.
The fact that he fell ill, and for that reason was unable to represent his university, is not disputed.
There is nothing to show that but for that illness he would not have actually taken part in the tournament.
On a reasonable view of the facts the appellant should be taken to have fulfilled the conditions of eligibility.
[732 G H, 733 A]
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The person appealing the case was chosen for a temporary job as an Inspector for Central Excise. This was because he was considered a "sportsman" who had played for his university in a tournament run by the Inter University Sports Board.
He started working and continued in the job. On April 30, 1976, the Assistant Collector of Central Excise asked for his original sports certificate. The person had only given copies before.
He gave the original papers on July 5, 1976. A year later, he was asked to give details about the tournament where he played for the university.
On February 27, 1978, the person showed a sports certificate from July 28, 1975. It was from the Deputy Registrar of Mithila University.
He explained that he was good enough and chosen to play for Mithila University in a tournament at Banaras Hindu University in 1972. But he got very sick and couldn't play. He said he had told the people choosing him about this during his interview. He had been doing his job well since December 1975. He had even been the captain of the Excise Department's sports team in Calcutta for two years. So, he was surprised that this question was being asked so late.
About fourteen months later, on June 16, 1979, the Assistant Collector made an order. This order said that under a specific rule (Rule 5 of the Central Civil Service Rules), the person's job was being ended.
The person then asked the High Court for help, saying the order was unfair. He used Article 226 of the Constitution, which allows people to ask for legal help when their rights are violated. But the High Court quickly rejected his request.
The Court looked at the appeal and said: The rules about jobs should be understood reasonably. If we are too strict, we can miss the real meaning of the rules. The goal was to hire good athletes. This goal is met if someone who was good enough and chosen to play for their university in a tournament is hired. It doesn't matter if they couldn't actually play because of something they couldn't control.
In this case, the people in charge were being too strict and missing the point of the rule. The rule said the person should have been an athlete who played for their university in a tournament. The person was good enough and chosen to play for Mithila University in the tournament at Banaras Hindu University in 1972. The only thing left was for him to play. But he got sick and couldn't. It's clear that he got sick and couldn't play for that reason. There's no reason to think he wouldn't have played if he hadn't been sick. So, looking at the facts reasonably, the person should be seen as meeting the requirements for the job.
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Appeals Nos. 2382 2384 of 1966. Appeals from the judgment and orders dated October 6, 1966 of the Mysore High Court in Writ Petitions Nos. 1056, 1607 and 1298 of 1966, section T. Desai, section C. Javali and Vineet Kumar, for the appellant (in all the appeals). M. M. Ramamurthi and Shyamala Pappu, for respondent No. 1 (in all the appeals) and respondent No. 2 (in C. A. No. 2382 of 1966). 89 The Judgment of the Court was delivered by Shah, J. On May 3, 1966 the Municipality of Raichur imposed octroi duty on goods specified in Sch. 11 to the Mysore. Municipalities Act 22 of 1964, entering the municipal limits for consumption, use or sale. The respondents who are traders in cloth at Raichur moved the High Court of Mysore by petitions under article 226 of the Constitution challenging the levy and collection of octroi duty on goods described in Sch. II of the Act in pursuance of the notification dated May 3, 1966. The High Court of Mysore held that the tax was properly imposed, but in their view collection of the tax was not authorised by law. The High Court accordingly issued a writ of mandamus restraining the Municipal Council, Raichur from recovering the octroi duty levied in pursuance of the notification dated May 3, 1966. The Municipal Council, Raichur, has appealed to this Court against the orders passed by the High Court. The relevant provisions of the Mysore Municipalities Act 22 of 1964 and the Bye Laws may be summaried. By section 94 the Municipal Council is authorised, subject to the general or special orders of the Government, and after observing the preliminary procedure prescribed by section 95, to levy, among other taxes, octroi on goods specified in Sch. II entering the municipal limits for consumption, use or sale therein. By sub section (3) of section 94 it is provided that the taxes specified in sub section (1) shall be assessed, levied and collected in accordance with the provisions of the Act and the rules made by the Government under section 323. Section 95 prescribes the procedure preliminary to imposition of tax. A municipal council has by resolution passed at a general meeting to select for the purpose one or more of the taxes specified in section 94 and in such resolution to specify the classes of persons or of property or of both which the municipal council proposes to make liable and to prescribe exemptions which it proposes to make, the amount or rate at which the municipal council. proposes to assess any such class, and in the case; of octroi, the octroi stations. The resolution must be published in the official Gazette and in such other manner as may be prescribed. Any inhabitant of the municipality may within one month from the publication of the notice submit his objection to the imposition of the tax or to the amount or rate proposed, or to the classes of persons or property to be made liable, or to any exemptions proposed. The municipal council must take into consideration the objections and submit to the Government of the State such objections with its opinion thereon and any modifications proposed in accordance therewith together with a copy of the notice. A resolution sanctioned by the Government together with a notice reciting the sanction and the date and number thereof may then be published by the ,municipal council in the official Gazette, and the tax as prescribed by the, resolution shall be imposed accordingly. Sub section (2) of "The publication of a notice under this section shall be conclusive evidence that the tax has been imposed in 90 accordance with the provisions of this Act and the rules made thereunder". Section 123 provides that every municipal council when submitting for sanction a proposal for the imposition of octroi, shall submit therewith for sanction bye laws for the purposes of cl. (m) of sub section (1) of section 324 or adopt model bye laws made for the said purposes. Section 124 deals with "non liability for octroi and refund of octroi on goods in transit". Section 125 invests the municipal council with power to exempt articles liable to octroi duty, and section 126 relates to the presentation of bills for octroi and prescribes penalties for evasion of payment of octroi. Section 127 prescribes the penalty for selling articles liable to octroi without a licence, or for being in possession of any such article on which octroi has not been paid. Section 323 authorises the Government to make rules for carrying out all or any of the purposes of the Act and to prescribe forms for any proceeding for which it considers that a form shall be prescribed. Exercising the authority conferred by section 323 the Government of Mysore published on September 2, 1965, the Mysore Municipalities Taxation Rules, 1965. Rules 25 to 32 deal with the collection of octroi. Rule 25 deals with the mode of collection; r. 26 with pay ment of octroi, r. 27 with assessment and collection of octroi at octroi station; and r. 28 with the procedure in case where octroi is leviable ad valorem. Rule 3.1 requires the municipal council to maintain a list of traders and public bodies allowed to have an account current, and r. 32 requires a trader or public body allowed, to have an account current to present a declaration in Form VII. Section 324 authorises the municipal council to make, alter or rescind bye laws, subject to the provisions of the Act and the rules made thereunder. Clause (m) provides, insofar as it is material: " providing for the exhibition of tables of octroi, requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the, conditions on or subject to which such licence may be granted, refused, suspended or withdrawn, regulating, subject to any general or special orders which the Government may make in this behalf, the system under which refunds are to be made on account thereof when the goods on which the octroi has been paid, or article manufactured wholly or in part from such goods, are again exported and the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality;. . . Section 325(2) provides that a municipal council may by resolution adopt in respect of any matter the model bye laws made by the Government under sub section (1) of section 325 in respect 'of matters specified in section 324. Sub section (3) of section 325 provides: "If a municipal council proposes to adopt the model bye laws in respect of any matter subject to any modifications, the procedure specified in sub sections (4), (5) and (6) 91 of section 324 shall be followed as if the modifications were bye laws proposed to be made by the municipal council. The modifications as approved by the Government shall be published in the prescribed manner and the model bye laws shall subject to such modifications come into force from such date as may be specified by the municipal council and where no date is specified on the date of such publication". Sub sections (4) & (5) of section 324 set out the procedure to be followed by the municipal council in the making and publication of bye laws. Sub section (6) authorises the local Government while approving the bye laws to make any changes therein which appear to it to be necessary. In the present case the Municipal Council adopted the model bye laws framed by the Government. It appears, however, that the table of rates in model bye law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was left blank. The Municipal Council has however by resolution prescribed a, table of rates of storage fee and charges in respect of different classes of articles stored in the bonded warehouses. The respondents challenge in this Court the validity of the imposition of octroi duty on two grounds: (i) that there was no valid resolution by the Municipal Council under section 94 of the Act selecting the octroi duty for imposition, and (ii) that the model bye laws having been altered by adding a tariff of storage fee in the bonded warehouses without following the procedure prescribed under section 324(4) & (5), the model bye laws could not be deemed to have been validly adopted by the Municipal Council. They also submit that the Municipal Council has no authority to collect octroi duty, and support the judgment of the High Court, on that question. Before considering the arguments advanced at the Bar, the steps taken by the Municipal Council for imposing the tax and for adoption of the model bye laws may be briefly set out. On June 11, 1965 the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch. 11 under section 94 of the Mysore Municipalities Act, ' 1964, at the maximum rates at the octroi barriers specified therein. It was recited in the resolution that confirmation of the general body be obtained. By resolution dated June 28, 1965 the general body resolved unanimously to confirm the recommendations of the Standing Committee dated June 11, 1965. On October 27, 1965 the notification under section 95 of the Act by the Municipality inviting objections to the proposals to impose octroi tax was published. No Objections were received from any resident of the Municipality against the proposal to levy octroi. On February 26, 1966 there was a special general body meeting of the, Municipal Council and it was resolved to levy 92 octroi with effect from April 1, 1966. The resolution was in the following terms: "After due decision and consideration it was unanimously resolved to levy the octroi duty on all the goods imported within municipal limits of Raichur under the Schedule II of Mysore Municipalities Act, 1964, from the first day of April 1966. Further the Committee resolved that the Hyderabad District Municipalities Octroi Rules, 1959, will continue till the new Octroi Rules and Bye laws are finalised under Mysore Municipalities Act, 1964. " But this resolution was amended on March 25, 1966, and the second paragraph was substituted by the following paragraph: "Further the Committee resolved that the appended Bye laws framed by the Municipality in the light of Octroi Model Bye laws 1965 published by the Government in the Mysore Gazette dated 11th November, 1965, have been fully approved. " Approval to the modification in the second paragraph was ob tained by circulation to the members and not in an open general meeting. On March 31, 1966 the minutes of the meeting dated February 26, 1966, and the adoption of the resolution modifying the second paragraph by circulation on March 25, 1966, were read, heard and confirmed unanimously. The storage fee under bye law 16 of the model bye laws was also adopted. On April 16, 1966 sanction of the Government under section 96 of the Act to the levy of octroi and the adoption of model bye laws was given, and on May 3, 1966, the notification under section 97 of the Act imposing octroi duty under Sch. II to the Act and adopting the bye laws was published. Thereafter on various dates in the months of July and August 1966, the writ petitions out of which these appeals arise were filed. There is no substance in the contention that the municipal council had not passed a resolution selecting the octroi tax for imposition. As stated earlier, on June 11, 1965, the Standing Committee of the Municipal Council had "resolved to impose octroi duty" under Sch. 11 to the Act. But the resolution also stated that confirmation of the general body meeting should be obtained. The Municipal Council at its meeting dated June 28, 1965 treated the resolution of the Standing Committee as a recommendation and confirmed the recommendation. The resolution dated June 28, 1965, was passed by the general body and thereby the Municipal Council adopted the recommendations of the Standing Committee, and resolved to select levy of octroi duty at the maximum rates at the octroi barriers specified therein. It is true that the resolution modifying the original resolution dated February 26, 1966 was passed by circulation on March 25, 93 1966. But in view of the terms of section 80(5) the validity of the resolution was not liable to be questioned on the ground of irregularity which manifestly did not affect the merit of the case. , It may be recalled that on March 31, 1966 the "circulation dated 25 3 66 were read, heard and confirmed unanimously. " The plea that a resolution passed by the Municipal Council cannot, under the Act, be modified or cancelled within three months is without force. Section 57 of the Act provides that no resolution of a municipal council shall be modified or cancelled within three months after the passing thereof except by a resolution passed in the manner prescribed in that behalf. There are no materials on the record to prove that the requirements of section 57 were not complied with, and section 97(2) prohibits an enquiry into the regularity of the procedure for imposition of the tax after a notice under section 97(1) is published. This Court in Municipal Board, Hapur vs Raghuvendra Kripal & Ors.(1) in dealing with a similar provision in section 135 of the U. P. Municipalities Act 2 of 1916, held that section 135(3) shuts out enquiry into the procedure by which a tax had been imposed. Hidayatullah, J., speaking for the majority observed (p. 958) . "There is a difference between the tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. What the sub section does is to put beyond question the procedure by which the tax is imposed, that is to say, the various steps taken to impose it." Section 97(2) makes the publication of the notice under section 97(1) conclusive evidence that the tax has been imposed in accordance with the provisions of the Act and the rules made thereunder. The expression "imposed in accordance with the provisions of this Act", in our judgment, means "imposed in accordance with the procedure provided under the Act". All enquiry into the regularity of the procedure followed by the Municipal Council prior to the publication of the notice is excluded by section 97(2). This is not a case in which the Municipal Council had not selected a tax for imposition by a resolution: nor is it a case in which the Municipal Council was seeking to levy tax not authorised by law. A Municipal Council when submitting for sanction a proposal for the imposition of octroi has to submit under section 123 with the proposal for imposition of octroi, also ' bye laws for the purposes of cl. (m) of sub section (1) of section 324, or to adopt model bye laws made for the said purposes. It is to be noticed that under section 94(3) of the Act the tax has to be. assessed, levied and collected in accordance (1)[1966] I S.C.R. 950. 94 with the provisions of the Act and the rules made by the Government under section 323. Bye laws contemplated to be made under section 324(1)(m) and required to be adopted from the model bye laws or specially framed and submitted under section 123 deal with matters of details, such as the exhibition of tables of octroi; requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the conditions on or subject to which such licence may be granted, refused, suspended or withdrawn , regulating the system under which the refunds are to be made when the goods on which the octroi has been paid are again exported; for the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality; prescribing a period of limitation after which no claim for refund of octroi shall be entertained; and prescribing the minimum amount for which any claim for refund may be made. If bye laws in respect of these matters specified in cl. (m) of section 324(1) are made and submitted for sanction or model bye laws framed by the Government for those purposes are adopted, the requirements of section 123(1) will be satisfied, and if the State Government sanctions the resolution of the Municipal Council imposing octroi duty under section 97(1) and the notice is duly published, octroi duty may be collected by the Municipal Council. Defect in the bye laws will not affect the authority of the Municipal Council to collect the tax, for the authority arises under section 94(3) from the Act and the rules. The Municipal Council of Raichur adopted the model byelaws made by the Government. None of the bye laws "for the purposes" of cl. (m) of section 324 in the model bye laws was defective or incomplete. The model bye laws undoubtedly did not prescribe the storage fee, and the resolution of the Municipal Council levying storage fee at the rates set out in the bye laws and submitted to the Government was not made in conformity with the terms of section 324(4) & (5). The High Court held that the bye laws adopted by the Muni cipal Council were invalid because (1) the resolution dated February 26,1966 could not have been modified by circulation; and (2) that it was not shown that the Municipal Council had complied with the requirements of section 57 when modifying the resolution dated February 26, 1966; and (3) that the State Government had not fixed the time prescribed by bye laws Nos. 23(e), 27, 28 and 32, and since no decision was taken on those bye laws by the Municipal Council, the enforcement of the octroi levy was "rendered difficult". It is clear that under section 325(3) modifications to the model bye laws alone require compliance with sub sections (4) & (5) of section 324. It may be assumed that fixing a tariff for storage fee under bye law 16 which is not prescribed under the model bye laws amounts to 95 modification of the bye laws, but even on that assumption only bye law 16 may be deemed to be invalid, and the power to collect the storage fee may not be lawfuly exercised by the Municipal Council: that does not affect the validity of the other bye laws. If without a particular bye law, the scheme of the. rest of the bye laws may be unworkable, it may follow by necessary implication that the other bye laws have also become ineffective. But that cannot be said of the defect in adopting the table of fees for the purpose of bye law 16. The Municipal Council may not be entitled to levy any charge for storage under bye law 16, but that is the only effect of non compliance with the terms of sub sections (4) and (5) of section 324. The other bye laws remain valid and operative, for they are plainly severable. Bye law 23(e) of the model bye laws provides that no refunds shall be allowed in respect of goods which are transported outside the municipal limits within one month of their being brought into the municipal limits, but regarding which the intimation has not been given to the Municipal Commissioner or Chief Officer within such time as may be fixed by the Municipal Council. Bye law 27 provides that the application for refund with the goods to which it relates shall be presented at the Octroi Station through which it is transported outside the municipal limits within such interval from the hour of examination as the municipal council may determine. Similarly bye law 28 provides that the Octroi Official inCharge of the Octroi Station shall satisfy himself that the goods produced for transport outside the municipal limits as covered by the refund application correspond with the entries in the refund application form and that they are presented within the time fixed by the Municipal Council under bye law 27. In our judgment, the time contemplated to be fixed for the purposes of bye laws 23(e), 27 & 28 need not be fixed by the bye laws. If time is fixed by resolution of the Municipal Council even after the bye laws are sanctioned, there would be no defect in the bye laws. Bye law 32 provides that no person shall sell articles men tioned therein without obtaining a licence granted in that behalf. The model bye law is silent as to the articles which may not be sold without obtaining a licence. Bye laws 313 to 36 depend for their 'operation upon the list of articles being effectively incorporated in bye law 32. Failure to incorporate the list of articles would result in the Municipal Council being unable to enforce compliance with the requirements of taking out a licence. But we are unable to hold that because of the failure to fix the time under bye laws 23(e), 27, 28, or for failure to incorporate the list of articles in bye law 32, the rest of the bye laws became ineffective. We are of the view that even without these bye laws and bye law 16, octroi duty may be levied by the Municipal Council. In our view, the High Court was in error in holding that the model byelaws which were adopted by the Municipal Council were unenforceable. 96 The appeals must therefore be allowed and the petitions filed by the respondents dismissed with costs in this Court. One hearing fee. The order passed by the High Court regarding the costs is maintained. G.C. Appeals allowed.
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On June 11, 1965, the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch.
II under section 94 of the Mysore Municipalities Act, 1964.
It was recited in the resolution that the confirmation of the general body be obtained.
The general body unanimously approved the resolution of the Standing Committee.
On October 27, 1965 the notification under section 95 of the Act inviting objections from the public was published; no objections were received.
On February 26, 1966 there was a special general body meeting and it was.
resolved to levy octroi with effect from April 1, 1966.
This resolution was however amended by modification of its second paragraph on March 25, 1966.
Approval to this modification was obtained at first by circulation to the members on March 31, 1966 the minutes of the meeting dated February 26, 1966 and the adoption of the resolution modifying the second paragraph by circulation on March 25, 1966, were read, heard and confirmed unanimously.
As required by section 123 of the Act the model bye laws framed by Government were adopted but the table of rates in model bye law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was, left blank.
The rates were fixed by the Council by its resolution of March 31, 1966.
On April 16, 1966 sanction of the Government under section 96 of the Act to the levy of octroi and the adoption of model by laws was given and on May 3, 1966, the notification under section 97 of the Act imposing octroi duty under Sch.
II and adopting the bye laws was published.
The respondents who were dealers in cloth in Raichur moved the High Court of Mysore under article 226 of the Constitution.
The High Court held that though octroi had been properly levied its collection wag unau thorised owing to defects in the bye laws adopted.
The municipality appealed.
The following questions fell for consideration: (i) whether the resolution levying the octroi and the subsequent modification of the said resolution were procedurally valid (ii) whether the fixation of rates for the purpose of model bye law 16 was validly made, the procedure in section 324(4) and (5) not having been followed , (iii) whether the bye laws were unenforceable for the reason that they did not fix the time for the purpose of bye laws 23, 27 and 28 and did not give a list of articles for the purpose of bye laws 33 to 36.
HELD:(i) The resolution of the Standing Committee selecting octroi tax for imposition expressly stated that confirmation of the general body would be obtained, and such confirmation was actually obtained.
It could not in the circumstances be contended that 88 there was no valid resolution by the Municipal Council under section 94 selecting octroi duty for imposition.
[92F H] The resolution modifying the original resolution dated February 26, 1966 was no doubt passed by circulation but later the said circulation was "read, heard and confirmed unanimously" by the general body.
Under section 80(5) any irregularity not affecting the merit of the case can be cured and section 97(2) prohibits enquiry into the regularity of the procedure by which a tax has been imposed after a notice under section 97 (1) is published.
No material had been placed before the Court to show that in making the modification section 57 had not been complied with.
[93A D] Municipal, Board, Hapur vs Raghuvendra Kripal & Ors., ; , relied on.
(ii)If bye laws in respect of the matters specified in cl.
(m) of section 324(1) are made and submitted for sanction or model bye laws framed by the Government for those purposes are adopted, the requirements of section 123(1) will be satisfied, and if Government sanctions the resolution of the Municipal Council imposing octroi duty under section 97(1) and the notice is duly published.
octroi duty may be collected by the Municipal Council.
Defect in 'the bye laws will not affect the authority of the Municipal Council to collect the tax for the authority arises under section 94(3) from Act and the Rules.
[94C D] The Municipal Council by fixing a tariff for storage fee under bye law 16 modified the model bye laws, and since the modification was made without the Procedure prescribed in section 324(4) and (5) the said bye law was invalid.
As a result the Municipal Council was not entitled to levy any charge for storage under bye law 16.
But the validity of other bye laws was not thereby affected.
[94H 95C] (iii)The time contemplated to be fixed for the purposes of byelaws 23(e), 27 and 28 need not be fixed in the bye laws.
If time is fixed by resolution of the Municipal Council after the bye laws are sanctioned, there would be no defect in the bye laws.
[95E F] Bye laws 33 to 36 depend for their operation upon the list of articles being effectively incorporated in bye law 32.
Failure to incorporate the list of articles would result in the Municipal Council I being unable to enforce compliance with the requirement of taking out a licence.
The rest of the by laws did not threby become ineffective.
[95G H]
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On June 11, 1965, the Raichur Municipal Council decided to charge an octroi duty (a tax on goods entering the city) based on a list called Sch. II. This was done under section 94 of the Mysore Municipalities Act, 1964 (a law about local governments). The decision said they needed approval from the general body (the main group of council members). The general body agreed with the decision.
On October 27, 1965, a notice was published to get public feedback, as required by section 95 of the Act. Nobody objected.
On February 26, 1966, a special meeting was held. It was decided to start collecting the octroi tax on April 1, 1966. However, this decision was changed slightly on March 25, 1966, by modifying the second paragraph.
The change was approved by sending it around to the members on March 31, 1966. The minutes (official record) of the February 26, 1966 meeting and the change made on March 25, 1966, were read and approved unanimously.
As required by section 123 of the Act, the standard rules (bye-laws) created by the government were adopted. But the list of rates for storage fees in rule 16, which applied to goods stored in bonded warehouses (secure storage areas), was left empty. The Council set those rates on March 31, 1966.
On April 16, 1966, the government approved the octroi tax and the rules, as required by section 96 of the Act. On May 3, 1966, a notice was published under section 97 of the Act, officially imposing the octroi duty under Sch. II and adopting the rules.
The respondents (the opposing party), who were cloth sellers in Raichur, went to the High Court of Mysore under article 226 of the Constitution (the legal basis for challenging government actions). The High Court said the octroi tax was properly created, but collecting it was not allowed because there were problems with the rules. The municipality appealed (asked a higher court to review the decision).
The court had to consider these questions: (i) Was the decision to charge the octroi tax and the later change made correctly, following the right procedures? (ii) Was it valid to set the storage fee rates for rule 16, since the procedure in section 324(4) and (5) was not followed? (iii) Are the rules unenforceable (can't be put into effect) because they don't set specific times for rules 23, 27, and 28, and they don't list the items covered by rules 33 to 36?
HELD (Decision): (i) The decision by the Standing Committee to impose the octroi tax clearly stated that the general body would have to approve it, and they did. So, it can't be argued that there was no valid decision by the Municipal Council under section 94 to choose octroi duty. The change to the original decision from February 26, 1966, was approved by sending it around to members, but later the general body "read, heard, and confirmed unanimously" the changes.
Under section 80(5), any minor mistake that doesn't affect the core issue can be fixed. Also, section 97(2) says that once a notice is published under section 97(1), you can't question whether the procedure for imposing the tax was correct. No evidence was presented to show that section 57 was not followed when making the change. The court relied on a previous case, Municipal, Board, Hapur vs Raghuvendra Kripal & Ors.
(ii) If rules are made about the topics in section 324(1)(m) and submitted for approval, or if the government's standard rules are adopted for those topics, then section 123(1) is satisfied. If the government approves the Municipal Council's decision to impose octroi duty under section 97(1) and the notice is published, the Municipal Council can collect the octroi duty. Problems with the rules don't affect the Municipal Council's power to collect the tax because that power comes from section 94(3) of the Act and the Rules.
By setting a storage fee under rule 16, the Municipal Council changed the standard rules. Since this change was made without following the procedure in section 324(4) and (5), that rule is invalid. So, the Municipal Council can't charge any storage fees under rule 16. But this doesn't invalidate the other rules.
(iii) The specific times required for rules 23(e), 27, and 28 don't have to be written in the rules themselves. If the Municipal Council sets those times by a separate decision after the rules are approved, the rules are still valid.
Rules 33 to 36 only work if the list of items they cover is included in rule 32. If the list of items isn't included, the Municipal Council can't force people to get a license. But the rest of the rules still remain in effect.
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Civil Appeal No. 691 of 1970. Appeal by Special Leave from the Judgment and Order dated 12 8 1969 of the Mysore High Court in Civil Revision Petition No. 1322 of 1967. section section Javali, M. Veerappa and J. R. Das for the Appellant. section C. Javali, P. G. Gokhale and B. R. Agarwala for the Respondents. The Judgment of the Court was delivered by GUPTA J. The only question that arises for decision in this appeal by special leave is whether the respondents before us are entitled to relief under section 25(ii) of the Bombay Agricultural Debtors Relief Act, 1947. The question arises on the following facts. On June 1, 1927 the predecessors in interest of the appellants transferred to one Krishnaji two plots of land bearing survey numbers 125/1 and 136 measuring respectively 14.5 and 21.31 acres in village Murnal, Bagalkot Taluk in Bijapur District. The document by which the transfer was effected, described as a sale deed, shows that the two items of property were sold "absolutely" for a total sum of Rs. 2000/ . In 1932 Krishnaji sold the plot bearing survey No. 136 to one Ramanna, predecessor in interest of respondent Nos. 2(a) to 2(e). for Rs. 400/ . In 1935, Krishnaji sold the other plot, survey No. 125/1, for Rs. 1000/ to Utalsab Dogrisab. Walikar, predecessor in interest of respondents 1(a) to 1(c). After the Bombay Agricultural Debtors Relief Act, 1947 came into force, the appellants applied under section 4 of the Act for adjustment of debts claiming that the transaction in 1927 was really not a sale but a mortgage. The trial court held that the transaction was a mortgage and not a sale but dismissed the application on the view that the respondents were entitled to protection under section 25(ii) of the Act. The District Judge reversed the decision and allowed the application under section 4. The matter was taken to the High Court in revision and the High Court recorded a consent order that the tran 125 saction was not a sale but a mortgage and remitted the case to the trial court for a decision on the question whether the purchasers, Ramanna and Walikar, were transferees for value without notice of the real nature of the transaction between the appellants ' predecessors and Krishnaji and as such entitled to the protection of section 25(ii). This order of the High Court was made on January 25, 1963. At this stage we may mention that our attention was drawn to an order made in the same matter by the High Court on January 31, 1962, which is reported in , that shows that the same learned Judge had set aside the order of the appellate court and restored that of the trial court. Counsel for both sides appeared to think that the order made by the High Court in 1962 must have been set aside later on review though neither of them was able to produce the order by which the 1962 order had been set aside. However both learned counsel agreed that for the purpose of this appeal it is the order of the High Court made on January 25, 1963 that need be considered. That the 1963 order held the field would be apparent from the fact that the case was reconsidered by the trial court as directed by the aforesaid order. The trial court on hearing the matter after remand dismissed the application under section 4 on the finding that the purchasers were bona fide transferees for value without notice of the real nature of the original transaction. The lower appellate court reversed this decision. The purchasers then moved the High Court in revision from the order passed by the appellate court. The High Court by the impugned order set aside the order of the appellate court and restored that of the trial court agreeing with the trial court that the purchasers had no notice of the real nature of the transaction of 1927. Section 24 of the Bombay Agricultural Debtors Relief Act, 1947 empowers the court to declare any transfer of land by a person whose debts are being adjusted under this Act purporting to be a sale, to be a mortgage if the court was satisfied that the circumstances connected with the transfer showed it to be in the nature of a mortgage. Section 25(ii) provides that nothing in section 24 shall apply to "any bona fide transferee for value without notice of the real nature of such transfer or his representative where such transferee or representative holds under a registered deed executed on or before the 15th day of February, 1939". The document evidencing the transfer of the plots to Krishnaji in 1927 is discribed as a "sale deed" and contains a statement that the vendors "have absolutely sold both the said lands to Krishnaji" and that the "entire ownership" was Krishnaji 's "alone". It is also said that possession of the lands has also been given to Krishnaji. The High Court found that the purchasers from Krishnaji had no "actual knowledge or notice" of the real nature of the transaction in 1927. But the High Court also held that the notice contemplated in section 126 25(ii) was "actual notice" and that "constructive notice was clearly beyond the contemplation of section 25(ii)". It seems to us that construing the notice referred to in section 25(ii) as actual notice only is likely to defeat the purpose of the statute which was enacted to provide for the relief of agricultural debtors in the province of Bombay. We are of the view that section 25(ii) does not exclude constructive notice. However on the facts of the case it appears that the transferees had no notice, actual or constructive, of the real nature of the transaction of 1927. It has been found that they had no actual notice; the High Court appears to have also found that they had no constructive notice. Referring to the provision of section 25(ii) requiring that the transferee must hold under a registered deed executed on or before February 15, 1939 the High Court says: "It will be seen that the reference is to a period anterior to the coming into force of the Act, a period therefore during which the special provisions of the Act could not have been within the contemplation of anybody. If those provisions were not in contemplation it is impossible to postulate a situation where any given circumstance could be regarded as sufficient to excite suspicion that the transaction might be hit by the statute and therefore persuade people to start and pursue further enquiries." Mr. section section Javali appearing for the appellants contends that the fact that the lands in question were transferred for a smaller amount in 1932 and 1935 than the price Krishnaji had paid for them in 1927 was a circumstance that should have put the transferees on enquiry and that if reasonable enquiries had been made they would have had knowledge of the real nature of the transaction of 1927. The fact that the lands were sold to the respondents for a price lower than what they fetched in 1927 might have been due to various reasons and it cannot be said that this ground alone was sufficient to raise a suspicion that the transaction of 1927 was really a mortgage. As pointed out by the High Court, the Act of 1947 could not have been within the contemplation of anyone in 1932 or 1935. Ramappa in his deposition said that he paid Rs.400/ for the land as it was "fallow", and that if there were no weeds the price would have been Rs. 600/ . As for the land sold to Utalsab, he was dead when the matter came up for hearing before the trial court. The record of rights also does not contain 127 any indication that the transaction of 1927 was in the nature of a mortgage. The evidence discloses that Krishnappa put the transferees in possession of the lands in question. There was therefore, no such occasion or circumstance to impel the transferees to start an enquiry as to the real nature of the transaction between Krishnaji and the predecessors in interest of the appellants in 1927. The appeal is dismissed but in the circumstances of the case without any order as to costs. N.K.A. Appeal dismissed.
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Section 25(ii) of the Bombay Agricultural Debtors ' Relief Act, 1947 provides that nothing in section 24 shall apply to any bona fide transferee for value without notice of the real nature of such transfer or his representative where such transferee or representative holds under a registered deed executed on or before 15th February, 1939.
The predecessors in interest of the appellants transferred two plots of land in 1927 to one Krishnaji.
The document evidencing the transfer of the plots was described as a sale deed and contained a statement that the vendors had absolutely sold both the said lands to him, that the entire ownership was his "alone" and that possession had been given to him.
In 1932 and 1935 Krishnaji sold the two plots to the predecessors in interest of the respondents at a price lower than that paid by him when he purchased the plots.
After the coming into force of the 1947 Act the appellants applied under section 4 of the Act for adjustment of debts claiming that the transaction of 1927 was really not a sale but a mortgage.
Although the trial court came to the conclusion that the transaction was mortgage and not a sale it dismissed the application on the ground that the respondents were entitled to protection under section 25(ii) of the Act.
On appeal the District Judge allowed the application under section 4.
In revision, the High Court recorded a consent order that the transaction was not a sale but a mortgage and remitted the case to the trial court for a decision whether the purchasers were transferees for value without notice of the real nature of the transaction and were entitled to protection of section 25(ii).
On remand the trial court dismissed the application under section 4 holding that the purchasers were bona fide transferees for value without notice of the real nature of the original transaction.
The lower appellate court reversed this decision.
The High Court set aside the order of the appellate court and restored that of the trial court on the view that the purchasers had no actual knowledge or notice of the real nature of the transaction of 1927.
It also held that the notice contemplated by section 25(ii) was actual notice and that constructive notice was clearly beyond the contemplation of section 25(ii).
Dismissing the appeal, ^ HELD: Construing the notice referred to in section 25(ii) as actual notice only is likely to defeat the purpose of the statute which was enacted to provide for the relief of agricultural debtors in the province of Bombay.
Section 25(ii) does not exclude constructive notice.
[126A B] 124 In the instant case, however, the transferees had no notice, actual or constructive, of the real nature of the transaction of 1927.
[126B] The fact that the lands were sold to the respondents for a price lower than what they fetched in 1927 might have been due to various reasons and it cannot be said that this ground alone was sufficient to raise a suspicion that the transaction was really a mortgage.
The Act of 1947 could not have been within the contemplation of any one in 1932 or 1935 when the lands were sold.
The lands were fallow and barren.
The record of rights does not contain any indication that the transaction was a mortgage.
The transferees were put in possession of the lands.
Therefore there was no occasion or circumstance to impel the transferees to start an enquiry as to the real nature of the transaction between the seller and the predecessors in interest of the appellants in 1927.
[126F H, 127A B]
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Section 25(ii) of the Bombay Agricultural Debtors' Relief Act, 1947, says that section 24 doesn't apply to someone who honestly bought land, didn't know about any hidden issues with the sale, and has a registered deed from February 15, 1939, or earlier. This also applies to anyone who inherited the land from that person.
The people who owned the land before the current owners (appellants) sold two pieces of land to Krishnaji in 1927.
The paper that showed the sale said it was a real sale. It said the sellers were giving Krishnaji full ownership of the lands, and he now had control of them.
In 1932 and 1935, Krishnaji sold the two pieces of land to the people who owned the land before the current owners (respondents). He sold them for less money than he paid for them.
After the 1947 law came into effect, the first owners (appellants) asked the court to adjust their debts under section 4 of the law. They said the 1927 sale was really a mortgage (a loan where the land is used as security).
The trial court agreed that the 1927 deal was a mortgage, not a sale. But it still denied the request because the current owners (respondents) were protected by section 25(ii) of the law.
On appeal, the District Judge said the first owners (appellants) could get their debts adjusted under section 4.
The High Court reviewed the case and made an agreement that the 1927 deal was a mortgage, not a sale. It sent the case back to the trial court to decide if the current owners (respondents) bought the land honestly, without knowing it was really a mortgage, and if they were protected by section 25(ii).
The trial court then denied the request because it said the current owners (respondents) were honest buyers who didn't know the original deal was really a mortgage.
The lower appeals court changed this decision.
The High Court then cancelled the appeals court's order and agreed with the trial court. It said the current owners (respondents) didn't actually know or have reason to know about the 1927 deal being a mortgage.
It also said that section 25(ii) only covers situations where the buyer actually knew about the hidden issue, and not when they should have known.
The appeal was denied because the court said that thinking section 25(ii) only covers actual knowledge would go against the law's purpose, which was to help farmers in debt in the Bombay area.
Section 25(ii) also covers situations where someone should have known about the issue.
However, in this specific case, the current owners (transferees) had no reason to know, either directly or indirectly, that the 1927 deal was really a mortgage.
The fact that the current owners bought the lands for less than they sold for in 1927 could be for many reasons. This fact alone isn't enough to make someone think the deal was really a mortgage.
The 1947 law didn't exist when the lands were sold in 1932 or 1935.
The lands were unused and empty.
The official records don't say anything about the deal being a mortgage.
The current owners were given control of the lands.
So, there was no reason for the current owners to investigate the original deal between the seller and the first owners (appellants) in 1927.
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: Criminal Appeal Nos. 343 and 446 of 1988. 503 From the Judgment and Order dated 8.4.1988 of the Patna High Court in Crl. A. No. 140 of 1987 and Death Ref. No. 3 of 1987 and Crl. A. No. 136 of 1987. R.K. Garg, Salman Khurshid, Rakesh Luthra, Irshad Ahmad, Vinayak D. Phadke, Mrs. Bimla Sinha and Gopal Singh for the Appellants. A. Sharan, D. Goburdhan, D.N. Goburdhan and B .B. Singh for the Respondent. The Judgment of the Court was delivered by AHMADI, J. The appellants in these two appeals by spe cial leave are the six accused persons who were arraigned before the learned Third Additional Sessions Judge, Siwan, for trial. Criminal Appeal No. 343 of 1988 is by original accused Nos. 1, 2, 3 and 5 (Allauddin Mian, Keyamuddin Mian, Saheb Hussain and Afzal Mian) and Criminal Appeal No. 466 of 1988_is by original accused Nos. 4 and 6 (Sarif Mian and Mainuddin Mian). For the sake of convenience we will refer to them by their original positions in the Trial Court. AccuSed Nos. 1 and 2 were charged with the commission of offences punishable under Sections 302, 452 and 148, I.P.C. The prosecution case was that accused Nos. 1 and 2 along with accused Nos. 3 to 6 constituted an unlawful assembly, the common object of which was to kill PW 6 Baharan Mian and in pursuance of the said object accused No. 1 caused the death of Sahana Khatoon aged about seven years and accused No. 2 caused the death of Chand Tara aged about seven months. Accused Nos. 1 and 2 were substantively charged under Section 302, I.P.C., whereas accused Nos. 3 to 6 were sought to be held vicariously liable under Section 302/149, I.P.C. Accused Nos. 3 and 4 were further charged under Sections 447 and 148, I.P.C., and accused Nos. 5 and 6 were charged under Sections 447 and 147, I.P.C. The Trial Court convicted accused Nos. 1 and 2 on all the three counts and awarded the sentence of death to both of them for the com mission of the offence punishable under Section 302, I.P.C. Each of them was also sentenced to suffer rigorous imprison ment for one year on each count under Sections 148 and 452, I.P.C. The substantive sentences were directed to run con currently. Accused Nos. 3 and 4 were convicted under Sec tions 302/149, 447 and 148, IPC and for the offence under Section 302/149 each of them was directed to suffer impris onment for life. For the offences under Sections 148 and 447,/.P.C., they 504 were directed to suffer rigorous imprisonments for one year and three months, respectively. The substantive sentences were ordered to run concurrently. Accused Nos. 5 and 6 were convicted under Sections 302/149, 447 and 147, I.P.C. For the offence under Section 302/149, I.P.C., they were sen tenced to undergo imprisonment for life whereas for the offences punishable under Sections 447 and 147, I.P.C., they were directed to suffer rigorous imprisonments for three months and six months, respectively. The substantive sen tences were ordered to run concurrently. Since accused Nos. 1 and 2 were awarded the death penalty a reference was made to the High Court which came to be numbered as Reference No. 3 of 1987. Accused Nos. 1, 2, 3 and 5 preferred an appeal, Criminal Appeal No. 140 of 1987, challenging their convic tions and sentences awarded to them by the Trial Court. Accused Nos. 4 and 6 preferred a separate appeal, Criminal Appeal No. 136 of 1987, against their convictions and sen tences by the Trial Court. The said reference and both the appeals were disposed of by the High. Court by a common judgment. The High Court dismissed the appeal insofar as accused Nos. 1 and 2 are concerned and, while accepting the reference, confirmed the sentence of death awarded to them for the murder of two the infant girls. The conviction of the remaining four accused under Section 302/149 was, howev er, altered to Section 326/149 and the sentence of imprison ment for life given to each of them was substituted by a sentence of rigorous imprisonment for seven years. Their convictions and sentences on the other counts were, however, maintained. Feeling aggrieved by the convictions and sen tences awarded to them on different counts all the six accused persons have preferred the present two appeals by special leave. Briefly stated the prosecution case is that on the afternoon of 25th July, 1985 around 4.30 p.m. when PW 6 Baharan Mian was sitting at the entrance of his house, the aforesaid six accused persons came from the west armed with deadly weapons; accused Nos. 1 and 2 were carrying 'farsas ', accused Nos. 3 and 4 were armed with spears (bhalas) and accused Nos. 5 and 6 were armed with sticks (Lathis). On seeing them PW 6 got up and went to the 'osra ' (verandah) of his house. Accused No. 3 began to untie the buffalo tethered in front of the house while the other accused persons show ered abuses on PW 6, to which the latter objected. There upon, accused Nos. 4 and 6 shouted 'Sale ko jan se mar do '. Immediately thereafter, accused Nos. 1 and 2 moved menacing ly towards PW 6. The two infants Sahana Khatoon and Chand Tara were then playing in the 'dalan ' outside the western room. On seeing accused Nos. 1 and 2 approaching him duly armed with farsas PW 6 apprehended trouble and ran into the adjoining room to 505 arm himself with a spear. His wife, PW 5 Laila Khatun, who was in the room, however, prevented him from going out for fear that he may be done to death by the accused persons. Realising that PW 6 has entered the inner room and was prevented by his wife from coming out, accused No. 1 gave farsa blows on the head, abdomen and left thumb of Sahana Khatoon causing serious injuries. Accused No. 2 gave one farsa blow on the head of infant Chand Tara. The neighbors PW 2 Ful Mohammad Mian, PW 3 Ali Asgar, PW 4 Vidya Giri and others, namely, Jalaluddin Ahmad, Sadik Mian, Ram Chandra Prasad, Bhikhari Mian, etc. intervened, pacified the assail ants and sent them away. After the assailants had left the scene of occurrence the two injured girls were removed to the city dispensary where the First Information Report of PW 6 was recorded at about 6.45 p.m. Unfortunately, Sahana Khatoon died shortly after she was admitted to the dispen sary. Her younger sister Chand Tara succumbed to her in juries on 23rd August, 1985. Immediately after the two injured were removed to the dispensary for treatment, PW 7 Dr. Haliwant Singh who examined Sahana Khatoon noted that she had a sharp cutting injury on the anterior half of the head causing a fracture of cranial bone with the brain substance protruding out, a sharp cutting injury on the left illiao fossa and a sharp cutting injury on the left thumb and left index finger. PW 1 Dr. Anil Kumar Verma, the Senior Assistant Surgeon in Siwan Sadar Hospital, performed the autopsy on the dead body of Sahana Khatoon on the afternoon of 26th July, 1985. Since the fact that Sahana Khatoon died a homicidal death is not in dispute, we need not set out the findings recorded by PW 1 in his postmortem report. Suffice it to say that in the opinion of PW 1 death was due to shock and haemorrhage resulting from the injuries caused to the victim with the farsa. The injured Chand Tara was examined on the same day by PW 7. He had noticed a sharp cutting injury on the anterior half of the head slightly to the right of the mid line with the brain matter coming out from the posterior half. She was admitted as an indoor patient but was discharged on 13th August, 1985. A few days later she died on 23rd August, 1985. PW 10 Dr. Ahmad performed the autopsy on the dead body of Chand Tara and he found that she had an infected ulcer 3" x 1 1/4" by cranial cavity deep communicated with brain on the anteriofrontal portion of the head, On dissection the meningities and the brain matter were found to be congested. In his view, the meningitis and encephalitis which had resulted due to infection resulting from the injury caused by a sharp cutting weapon like a farsa were the cause of death. It is evident from the above evidence that Chand Tara also died a homicidal death. 506 The finding that both the girls died a homicidal death is unassailable in view of the clear evidence of the aforesaid three medical men, namely, PW 1, PW 7, and PW 10. The ques tion then is whether the appellants are re sponsible for their deaths and if so, to what extent? To bring home the guilt against the six accused persons, the prosecution examined five eye witnesses to the occurrence, namely, PWs 2 to 6. These five eye witnesses have unfolded the prosecution case that the six accused persons had formed an unlawful assem bly the common object whereof was to kill PW 6 Baharan Mian. In pursuance of that common object they, duly armed with weapons such as farsas, bhalas and lathis, entered the resi dential premises of PW 6 on the evening of 25th July, 1985 and committed the acts set out earlier. The courts below found that the presence of PWs 5 and 6 in the house at that point of time could not be doubted. In fact these accused persons had come to the house to kill PW 6. PWs 2, 3 and 4 who can be said to be dependable witnesses have also supported the prosecution case as narrated by PWs 5 and 6. The evidence of these prosecution witnesses stands further corroborated by the evidence of PW 7 who had seen the wounds on the two in jured soon after the incident. PWs 1 and 10 who performed the post mortem examination on the dead bodies also lend corroboration to the testimony of the eye witnesses. The courts below, therefore, recorded the convictions relying on the evidence of the aforesaid witnesses as set out earlier. In the backdrop of these facts, the learned counsel for the accused made the following submissions: 1. The evidence adduced by the prosecution to bring home the guilt against the accused, particularly the evidence of PWs 2 to 6, is not reliable and should not be acted upon. Even on the facts found proved by the courts below, the four accused persons, name ly, accused Nos. 3 to 6 cannot be held guilty of murder with the aid of Section 149, I.P.C. as the killings of the two girls was outside the common object of the unlawful assembly 3. Even if the conviction of accused Nos. 1 and 2 for the murder of the two girls is confirmed, the facts of the case do not war rant a death penalty, more so because the procedural requirement of Section 235(2) of the Cr. P.C. was not followed in letter and spirit, and 4. Section 302, I.P.C., and Section 354(3), Cr. P.C., insofar as they permit the imposi tion of the death penalty are violative of 507 Articles 14, 19 and 21 of the Constitution of India. We will immediately proceed to deal with these contentions. The learned counsel Shri Garg took us through the evi dence of the five eye witnesses with a view to satisfying us that their version regarding the incident was not free from blemish and it would be highly unsafe to place implicit reliance on their evidence. We have carefully scrutinised the evidence of the aforesaid five eye witnesses and we are inclined to think that their evidence was correctly appreci ated by both the Courts below. The presence of PWs 5 and 6, the parents of the two victim girls, in the house at that point of time cannot be disputed. In fact, the accused persons had constituted an unlawful assembly with a view to killing PW 6, the father of the two girls. With that avowed object they went, duly armed with lethal weapons, to launch an attack on PW 6. After accused No. 3 had untied the buf fallo notwithstanding the protest from PW 6, accused Nos. 4 and 6 gave the call to kill PW 6. Encouraged by this call accused Nos. 1 and 2 moved menacingly towards PW 6 who was then standing in 'osra '. Realising that accused nos. 1 and 2 were out to kill him, PW 6 went inside the room to fetch a bhala to defend himself. His wife PW 5 who was in the room sensing danger to his life stood in his way and did not permit him to go out and face accused Nos. 1 and 2. PWs 2, 3 and 4 who were neighbours saw the incident from close quar ters when accused Nos. 1 and 2 dealt fatal blows with their farsas to the two girls who were playing in the 'dalan '. PW 2 who is the brother of PW 6 was in the field to the east of the house and was, therefore, in a position to see the incident. PW 3 was returning from the bazar when he saw the accused persons at the door of PW 6. He heard the accused persons uttering abuses and the call given by accused Nos. 4 and 6 to kill PW 6. He also saw the accused persons entering the house and going towards the room which PW 6 had entered to fetch a bhala. In the end he saw accused Nos. 1 and 2 inflicting farsa blows on the two girls. He was cross exam ined at length but except for minor contradictions here and there which are only to be/expected when a witness gives evidence after a lapse of time, nothing substantial shaking the substratum of the prosecution case has surfaced to discredit him. PW 4 was at the saw mill of Ram Chandra Prasad when he saw the accused persons coming from the west and proceeding towards the east. He saw these persons going to the house of PW 6 and heard them showering abuses. In his cross examination an attempt was made to show that he could not be present at Ram Chandra Prasad 's saw mill at that hours since he was a Government Servant and admittedly his normal duty hours were from 508 10 a.m. to 5 p.m. Further effort was to show that he was connected with a case between Bhikhari Dass and Sita Ram Prasad pending under Section 145, Cr. P.C. in respect of possession of some land. He has also disowned knowledge of any dispute between Bhikhari Dass and Mainuddin Mian in respect of another parcel of land. He was cross examined at length to prove that he was an interested and a biased witness. Even if the evidence of this witness is ignored, there is sufficient evidence on record to support the find ings recorded by both the courts below. We are, therefore, of the opinion that there is no substance in the contention of the learned counsel for the accused that the prosecution evidence is not reliable and should not be acted upon for confirming the conviction of the accused persons. It was next submitted by learned counsel for the accused that some of the prosecution witnesses, namely, Jallaluddin, Bhikhari Mian and Ram Chandra Prasad who were admittedly present at the scene of occurrence according to the prosecu tion and had witnessed the entire incident were deliberately dropped with a view to suppressing the truth. We cannot accept this contention for the simple reason that apart from both PW 5 and PW 6 having deposed that they were pressurised by the defence the High Court has found in paragraph 36 of its judgment that efforts were made by the defence to scare away the witnessess from giving evidence. There is ample material on record to conclude that considerable pressure was exerted on the prosecution witnesses to stay away from the witness box. Some succumbed to the threats and pressure while some others did not and displayed courage to give evidence and state the truth. In this backdrop, if the prosecution did not examine Jallaluddin, Ram Chandra Prasad and Bhikhari Mian on learning that they were won over it cannot be said that the prosecution was unfair to the ac cused persons. Mr. Garg submitted that there was nothing to show that the accused persons were in any way guilty of pressurising or threatening the witnesses. That is besides the point. What is relevant is the fact it so happened. Therefore, the non examination of the aforesaid witnesses cannot affect the probative value of the evidence of other prosecution witnesses. We now proceed to consider whether accused Nos. 3 to 6 have been rightly convicted with the aid of Section 149 for the acts of accused Nos. 1 and 2. Section 141, I.P.C., defines an unlawful assembly as an assembly of five or more persons whose common object is to commit any one of the five acts enumerated therein. The explanation to that section makes it clear that an assembly which was not unlawful when it assembled, may subsequently become an unlawful assembly. 509 Section 142 states: whoever, being aware of facts which render any assembly an unlawful assembly, intentionally joins that assembly, or continues in it, is said to be a member of an unlawful assembly. Section 143 sets out the punishment for being a member of an unlawful assembly. Section 144 prescribes the punishment for joining an unlaw ful assembly armed with deadly weapons. Section 145 pre scribes the punishment for joining or continuing in an unlawful assembly which has been commanded to disperse. Section 146 defines rioting. It says that whenever force or violence is used by an unlawful assembly, or by any member thereof, in prosecution of the common object of such assem bly, every member of such assembly is guilty of the offence of rioting. Section 147 then prescribes the punishment for rioting. Section 148 prescribes the punishment for rioting by members of an unlawfully assembly armed with deadly weapons. Then comes Section 149 which reads as under: "If an offence is committed by any member of an unlawful assembly in prosecution of the common object of that assembly, or such as the members of that assembly knew to be likely to be committed in prosecution of that object, every person who, at the time of the commit ting of that offence, is a member of the same assembly, is guilty of that offence. " Therefore, in order to fasten vicarious responsibility on any member of an unlawful assembly the prosecution must prove that the act constituting an offence was done in prosecution of the common object of that assembly or the act done is such as the members of that assembly knew to be likely to be committed in prosecution of the common object of that assembly. Under this section, therefore, every member of an unlawful assembly renders himself liable for the criminal act or acts of any other member or members of that assembly provided the same is/are done in prosecution of the common object or is/are such as every member of that assembly knew to be likely to be committed. This section creates a specific offence and makes every member of the unlawful assembly liable for the offence or offences commit ted in the course of the occurrence provided the same was/were committed in prosecution of the common object or was/were such as the members of that assembly knew to be likely to be committed. Since this section imposes a con structive penal liability, it must be strictly construed as it seeks to punish members of an unlawful assembly for the offence or offences committed by their associate or associ ates in carrying out the common object of the assembly. What is important in each case is to 510 find out if the offence was committed to accomplish the common object of the assembly or was one which the members knew to be likely to be committed. There must be a nexus between the common object and the offence committed and if it is found that the same was committed to accomplish the common object every member of the assembly will become liable for the same. Therefore, any offence committed by a member of an unlawful assembly in prosecution of anyone or more of the five objects mentioned in Section 141 will render his companies constituting the unlawful assembly liable for that offence with the aid of Section 149, I.P.C. In the present case, the common object of the unlawful assembly as alleged in the charge was to kill PW 6 Baharan Mian. To accomplish that objective accused Nos. 1 and 2 went after PW 6. Sensing danger PW 6 ran into the adjoining room to fetch a spear to defend himself. His wife PW 5, however, blocked his way and did not permit him to go out. When accused Nos. 1 and 2 realised that PW 6 was beyond their reach, they, frustrated at their failure to accomplish their mission, wielded their weapons on the innocent girls who were playing in the Dalan. The common object having thus been frustrated, accused Nos. 1 and 2 took out their wrath on the innocent girls which was no part of the common object of the unlawful assembly. It was not necessary to kill these girls to accomplish their object of killing PW 6 as these two girls had not prevented them from reaching PW 6. The learned counsel for the accused, therefore, rightly submit ted that while accused Nos. 1 and 2 can be punished for their individual acts committed after the common object stood frustrated and abandoned on PW 6 placing himself beyond their reach, the other members of the unlawful assem bly could not be punished for the acts of accused Nos. 1 and 2 as the killing of the girls was no part of the common object of the assembly. Once PW 6was beyond the reach of his two tormenters, the common object to kill him stood frus trated and whatever the individual members did thereafter could not be said to have been done in prosecution of the common object of the assembly. It is not the intention of the legislature in enacting Section 149 to render every member of an unlawful assembly liable to punishment for every offence committed by one or more of its members. In order to invoke Section 149 it must be shown that the in criminating act was done to accomplish the common object of the unlawful assembly. Even if an act incidental to the common Object is committed to accomplish the common object of the unlawful assembly it must be within the knowledge of other members as one likely to be committed in prosecution of .the common object. If the members of the assembly knew or were aware of the likelihood of a particular offence being committed in prosecution of the common object they would be liable for the same 511 under Section 149, I.P.C. In the instant case, however, the members constituting the unlawful assembly had gone to the house of PW 6 to kill him. That was the common object of the unlawful assembly. For accomplishing that common object it was not necessary to kill the two girls who were not an hinderance to accused Nos. 1 and 2 accomplishing their common object. We are, therefore, of the opinion that ac cused Nos. 3 to 6 cannot be convicted for the injuries caused to the two minor girls by accused Nos. 1 and 2 with the aid of Section 149, I.P.C. We, therefore, set aside the conviction under Section 326/149, I.P.C., and also the sentence imposed on accused Nos. 3 to 6 on that count. We, however, hold accused Nos. 3 and 4 guilty under Sections 447 and 148, I.P.C., and confirm the sentences awarded to them on those counts. So also we hold accused Nos. 5 and 6 guilty under Sections 447 and 147, IPC and confirm their sentences for the said offences. Having come to the conclusion that Allauddin Mian and Keyambuddin Mian are guilty of murder, the next question is what punishment should be awarded to them, namely, whether extinction of life or incarceration for life. Section 302, IPC casts a heavy duty on the Court to choose between death and imprisonment for life. When the Court is called upon to choose between the convicts cry 'I want to live ' and the prosecutor 's demand 'he deserves to die ' it goes without saying that the Court must show a high degree of concern and sensitiveness in the choice of sentence. In our justice delivery system several difficult decisions are left to the presiding officers, sometimes without providing the scales or the weights for the same. In cases of murder, however, since the choice is between capital punishment and life imprisonment the legislature has provided a guideline in the form of Subsection (3) of Section 354 of the Code of Crimi nal Procedure, 1973 ("the Code") which reads as under: "When the conviction for an offence is punish able with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded, and, in the case of sentence of death, the special reasons for such sentence. " This provision makes it obligatory in cases of conviction for an offence punishable with death or with imprisonment for life or for a term of years to assign reasons .in sup port of the sentence awarded to the convict and further ordains that in case the Judge awards the death penalty, "special reasons" for such sentence shall be stated in the 512 judgment. When the law casts a duty on the Judge to state reasons it follows that he is under a legal obligation to explain his choice of the sentence. It may seem trite to say so, but the existence of the 'special reasons clause ' in the above provision implies that the Court can in fit cases impose the extreme penalty of death which negatives the contention that there never can be a valid reason to visit an offender with the death penalty, no matter how cruel, gruesome or shocking the crime may be. Basing his submission on what is described as the humanitarian ideology or the rehabilitarian philosophy, Mr. Garg submitted that any law which permits the supreme right to life being sacrificed for the failure of the State to establish a social order in which such crimes are not committed must be struck down as offending Articles 14, 19 and 21 of the Constitution. While rejecting the demand of the protagonist of the reformatory theory for the abolition of the death penalty the legisla ture in its wisdom thought that the 'special reasons clause ' should be a sufficient safeguard against arbitrary imposi tion of the extreme penalty. Where a sentence of severity is imposed, it is imperative that the Judge should indicate the basis upon which he considers a sentence of that magnitude justified. Unless there are special reasons, special to the facts of the particular case, which can be catalogued as justifying a severe punishment the Judge would not award the death sentence. It may be stated that if a Judge finds that he is unable to explain with reasonable accuracy the basis for selecting the higher of the two sentences his choice should fall on the lower sentence. In all such cases the law casts an obligation on the Judge to make his choice after carefully examining the pros and cons of each case. It must at once be conceded that offenders of some particularly grossly brutal crimes which send tremors in the community have to be firmly dealt with to protect the community from the perpetrators of such crimes. Where the incidence of a certain crime is rapidly growing and is assuming menacing proportions, for example, acid pouring or bridge burning, it may be necessary for the Courts to award exemplary punish ments to protect the community and to deter others from committing such crimes. Since the legislature in its wisdom thought that in some rare cases it may still be necessary to impose the extreme punishment of death to deter others and to protect the society and in a given case the country, it left the choice of sentence to the judiciary with the rider that the Judge may visit the convict with the extreme pun ishment provided there exist special reasons for so doing. In the face of this statutory provision which is consistent with Article 21 of the Constitution which enjoins that the personal liberty or life of an individual shall not be taken except according to the procedure established by law, we are unable to countenance counsel 's extreme submission of death in no 513 case. The submission that the death penalty violates Arti cles 14, 19 and 21 of the Constitution was negatived by this Court in Bachan Singh vs State of Punjab, Mr. Garg, however, submitted that the said decision needs re consideration as the learned Judges constituting the majority did not have the benefit of the views of Bhagwati, J. who ruled to the contrary. We are not impressed by this submission for the simple reason that the reasons which prevailed with Bhagwati, J., could not have been unknown to the learned Judges constituting the majority. Even a casual glance at the provisions of the Penal Code will show that the punishments have been carefully graded corresponding with the gravity of offences; in grave wrongs the punishments prescribed are strict whereas for minor offences leniency is shown. Here again there is considerable room for manoeuvre because the choice of the punishment is left to the discretion of the Judge with only the outer limits stated. There are only a few cases where a minimum punishment is prescribed. The question then is what proce dure does the Judge follow for determining the punishment to be imposed in each case to fit the crime? The choice has to be made after following the procedure set out in sub section (2) of Section 235 of the Code. That sub section reads as under: "If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of Section 360, hear the accused on the question of sentence, and then pass sen tence on him according to law. " The requirement of hearing the accused is intended to satis fy the rule of natural ' justice. It is a fundamental re quirement of fairplay that the accused who was hitherto concentrating on the prosecution evidence on the question of guilt should, on being found guilty, be asked if he has anything to say or any evidence to tender on the question of sentence. This is all the more necessary since the Courts are generally required to make the choice from a wide range of discretion in the matter of sentencing. To assist the Court in determining the correct sentence to be imposed the legislature introduced sub section (2) to Section 235. The said provision therefore satisfies a dual purpose; it satis fies the rule of natural justice by according to the accused an opportunity of being heard on the question of sentence and at the same time helps the Court to choose the sentence to be awarded. Since the provision is intended to give the accused an opportunity to place before the Court all the relevant material having a bearing on the 514 question of sentence there can be no doubt that the provi sion is salutary and must be strictly followed. It is clear ly mandatory and should not be treated as a mere formality. Mr. Garg was, therefore, justified in making a grievance that the Trial Court actually treated it as a mere formality as is evident from the fact that it recorded the finding of guilt on 31st March, 1987, on the same day before the ac cused could absorb and overcome the shock of conviction they were asked if they had anything to say on the question of sentence and immediately thereafter the decision imposing the death penalty on the two accused was pronounced. In a case of life or death as stated earlier, the presiding officer must show a high degree of concern for the statutory tight of the accused and should not treat it as a mere formality to be crossed before making the choice of sen tence. If the choice is made, as in this case, without giving the accused an effective and real opportunity to place his antecedents, social and economic background, mitigating and extenuating circumstances, etc., before the Court, the Court 's decision on the sentence would be vulner able. We need hardly mention that in many cases a sentenc ing.decision has far more serious consequences on the of fender and his family members than in the case of a purely administrative decision; a fortiori, therefore, the princi ple of fairplay must apply with greater vigour in the case of the former than the latter. An administrative decision having civil consequences, if taken without giving a hearing is generally struck down as violative of the rule of natural justice. Likewise a sentencing decision taken without fol lowing the requirements of sub section (2) of Section 235 of the Code in letter and spirit would also meet a similar fate and may have to be replaced by an appropriate order. The sentencing court must approach the question seriously and must endeavour to see that all the relevant facts and cir cumstances bearing on the question of sentence are brought on record. Only after giving due weight to the mitigating as well as the aggravating circumstances placed before it, it must pronounce the sentence. We think as a general rule the Trial Courts should after recording the conviction adjourn the matter to a future date and call upon both the prosecu tion as well as the defence to place the relevant material bearing on the question of sentence before it and thereafter pronounce the sentence to be imposed on the offender. In the present case, as pointed out earlier, we are afraid that tile learned Trial Judge did not attach sufficient impor tance to the mandatory requirement of sub section (2) of Section 235 of the Code. The High Court also had before it only the scanty material placed before the learned Sessions Judge when it confirmed the death penalty. Apart from what we have said earlier, we may now proceed to 515 consider whether the imposition of death penalty on the two accused persons found guilty of murder is justified. The Trial Court has dealt with the question of sentence in paragraphs 42 to 44 of its judgment. The reason which weighed with the Trial Court is: it is one of the gravest cases of extreme culpability in which two innocent and helpless babies were butchered in a barbarous manner. After taking note of the mitigating circumstances that both the offenders were married young men with children, the Trial Court found that since the murders were committed without provocation and in cold blood there, was no room for lenien cy as the crime was so abhorrent that it shocked the con science of the court. The High Court while maintaining the conviction of the said two accused persons proceeded to deal with the question of sentence thus: "The conviction of Allauddin Mian and Keyamud din Mian having been upheld the question is whether the reference should be accepted and the sentence of death against them be upheld. In my view Allauddin Mian and Keyamuddin Mian have shown extreme mental depravity in causing serious fatal injuries to helpless girls of the age of 7/8 years and 7 months. In my view, therefore, this murder can be characterised as rarest of the rare cases. the extreme mental depravity exhibited by Allauddin Mian and Keyamuddin Mian impels me to uphold the sen tence imposed on Allauddin Mian and Keyamuddin Mian by the learned Additional Sessions Judge. " It will be seen from the above, that the courts below were considerably moved by the fact that the victims were innocent and helpless infants who had not provided any provocation for the ruthless manner in which they were killed. No one can deny the fact that the murders were ghastly. However, in order that the sentences may be proper ly graded to fit the degree of gravity of each case, it is necessary that the maximum sentence prescribed by law should, as observed in Bachan Singh 's case (supra), be reserved for 'the rarest of rare ' cases which are of an exceptional nature. Sentences of severity are imposed to reflect the seriousness of the crime, to promote respect for the law, to provide just punishment for the offence, to afford adequate deterrent to criminal conduct and to protect the community from further similar conduct. It serves a three fold purpose (i) punitive (ii) deterrent and (iii) protective. That is why this Court in Bachan Singh 's case observed that when the question of choice of sentence is under consideration the Court must not only look to the crime and the victim but also the 516 circumstances of the criminal and the impact of the crime. on the community. Unless the nature of the crime and the circumstances of the offender reveal that the criminal is a menace to the society and the sentence of life imprisonment would be altogether inadequate, the Court should ordinarily impose the lessor punishment and not the extreme punishment of death which should be reserved for exceptional cases only. In the subsequent decision of Machhi Singh vs State of Punjab, this Court, after culling out the guidelines laid down in Bachan Singh 's case, observed that only in those exceptional cases in which the crime is so brutal, diabolical and revolting as to shock the collective conscience of the community, would it be permissible to award the death sentence. In the present case, unfortunately the material for choice of sentence is scanty. The motive for the crime is obscure, the one stated, namely, the quar rel between two infants of both sides, does not seem to be correct. The killings were not for gain. The charge shows that the target was PW 6, the father, and not the two in fants. The killing of the two infants was not in the contem plation of any of the accused. Both the girls were the victims of the offenders ' ire resulting from frustration at the escape of their target. There is nothing so uncommon about the crime as to make the case an exceptional one. The mere fact that infants are killed, without more, is not sufficient to bring the case within the category of 'the rarest of rare ' cases. In Bachan Singh 's case the question of laying down standards for categorising cases in which the death penalty could be imposed was considered and it was felt that it would be desirable to indicate the broad guidelines consist ent with section 354(3) of the Code without attempting to formulate rigid standards. That was because it was felt that standardisation of the sentencing process would leave little room for judicial discretion to take account of variations in culpability even within the same category of cases. After referring to the aggravating circumstances (Para 202) and the mitigating circumstances (Para 206) pointed out by counsel, the Court observed that while 'these ,were relevant factors it would not be desirable to fetter judicial discre tion. It pointed out that these factors were not exhaustive and cautioned: 'courts, aided by broad illustrative guide lines indicated by us, will discharge the onerous function with evermore scrupulous care and human concern ' consistent with Section 354(3) of the Code. In the subsequent decision in Machhi Singh 's case, the Court tried to indicate the type of cases which may fall within the exceptional class without attempting to introduce rigidity. It would not be fair to read the decision as an attempt to fetter judicial discre tion. Even in cases of the 517 type indicated in that case, circumstances may vary, which would necessitate a different approach. For example, the circumstances of this case show that the offenders had killed the two girls not because of any hatred for them or to accomplish their objective but out of frustration and anger at having lost their target. Unfortunately as the trial Judge did not give time to the convicts to reflect on the question of sentence, the chance, however remote, of the true motive for the crime surfacing was lost. The anteced ents of the accused, their socioeconomic conditions, the impact of their crime on the community etc., have not come on record. The absence of these particulars makes the choice of punishment difficult. In view of what we have observed earlier and having regard to the circumstances in which the murders took place, we think the extreme punishment of death is not warranted. In the result both the appeals are partly allowed. The conviction of accused Nos. 1 and 2 under all the heads is confirmed but their sentence of death for killing Shahna Khatoon and Chand Tara, respectively, is converted to im prisonment for life. So far as accused Nos. 3 to 6 are concerned, their conviction and sentence under Section 326/ 149, 1.P.C. is set aside; however, their conviction and sentence under the other heads is maintained. Their bail bonds will stand cancelled if they have already served out their sentences; otherwise they will surrender to their bail and serve out the remaining sentence. The appeals will stand disposed of accordingly. R.S.S. Appeals allowed partly.
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Accused Nos. 1 to 6, constituting an unlawful assembly the common intention of which Was to kill Baharan Mian, came to his house armed with deadly weapons.
Baharan Mian, appre hending trouble, ran inside Co arm himself but his wife prevented him from coming out again.
At that time, Baharan Mian 's two infant daughters, Sahana Khatoon aged about seven years and Chand Tara aged about seven months, were playing in the 'dalan ' of his house.
Failing in their object to kill Baharan Mlan, accused No. 1 gave farsa blows on the head, abdomen and left thumb of Sahana Khatoon causing serious injuries, and accused No. 2 gave one farsa blow on the head of infant Chand Tara.
As a result of these injuries, Sahana Khatoon died the same day while Chand Tara died after 28 days.
Accused Nos.1 and 2 were charged under sections 302, 452 and 148 I.P.C., whereas accused Nos.
3 to 6 were sought to be held vicariously liable under section 302/149 I.P.C. Accused Nos. 3 and 4 were further charged under sections 447 and 148, I.P.C. and accused Nos. 5 & 6 were charged under sections 447 and 147, I.P.C. The Trial Court convicted accused Nos. 1 and 2 on all the three counts and awarded the sentence of death to both of them for the commission of the offence punishable under section 302, I.P.C. Accused Nos. 3 and 4 were convicted under sections 302/149, 447 and 148, I.P.C. and for the offence under section 302/149, each of them was directed to suffer imprison 499 ment for life.
Accused Nos. 5 and 6 were convicted under sections 302/149, 447 and 147, I.P.C.
For the offence under sections 302/149, I.P.C., they were sentenced to undergo imprisonment for life.
The High Court dismissed the appeal of accused Nos. 1 and 2 and, while accepting the reference, confirmed the sentence of death awarded to them for the murder of the two infant girls.
The conviction of the remaining four accused under section 302/149 was, however, altered to sections 326/149 and the sentence of imprisonment for life given to each of them was substituted by a sentence of rigorous imprisonment for seven years.
Their convictions and sen tences on the other counts were, however, maintained: Before this Court it was contended on behalf of the appellants that (1) the evidence adduced by the prosecution was not reliable; (2) Even on the facts found proved by the courts below, accused Nos.
1 to 6 could not be held guilty of murder with the aid of section 149, I.P.C. as the kill ings of the two girls was outside the common object of the unlawful assembly; (3) the facts of the case did not warrant a death penalty in the case of accused Nos. 1 and 2, more so because the procedural requirement of section 235(2) of the Cr.
P.C. was not followed in letter and spirit; and (4) section 302, I.P.C., and section 354(3), Cr.
P.C., insofar as they permit the imposition of the death penalty were viola tive of Articles 14, 19 and 21 of the Constitution of India.
While partly allowing the appeals by converting the sentence of death in the case of accused nos.
1 and 2 to imprisonment for life under section 302, I.P.C., and setting aside the conviction of accused nos.
3 to 6 under section 326/149 I.P.C., the Court, HELD: (1) There is no substance in the contention that the prosecution evidence is unreliable and should not be acted upon for confirming the conviction of the accused persons.
[508B C] (2) If the prosecution did not examine some persons who were admittedly present at the scene of occurrence, on learning that they were won over, it cannot be said that the prosecution was unfair to the accused persons.
The non examination of these persons cannot affect the probative value of the evidence of other prosecution witnesses.
[508F] (3) Section 149.
I.P.C., creates a. specific offence.
Since this section imposes a constructive penal liability, it must be strictly construed.
[509G] 500 (4) It is not the intention of the legislature in enact ing section 149 to render every member of an unlawful assem bly liable to punishment for every offence committed by one or more of its members.
In order to invoke section 149 it must be shown that the incriminating act was done to accom plish the common object of the unlawful assembly.
Even if an act incidental to the common object is committed to accom plish the common object of the unlawful assembly, it must be within the knowledge of other members as one likely to be committed in prosecution of the common object.
If the mem bers of the assembly knew or were aware of the likelihood of a particular offence being committed in.
prosecution of the common object they would be liable for the same under sec tion 149.
I.P.C. [510F H] (5) What is important in each case is to find out if the offence was committed to accomplish the common object of the assembly or was one which the members knew to be likely to be committed.
There must be a nexus between the common object and the offence committed, and if it is found that the same was committed to accomplish the common object, every member of the assembly will become liable for the same.
[509H; 510A B] (6) In the instant case, the common object of the unlaw ful assembly, as alleged in the charge, was to kill Baharan Mian.
When accused Nos. 1 and 2 realised that Baharan Mian was beyond their reach.
frustrated at their failure to accomplish their mission, wielded their weapons on the innocent girls, which was no part of the common object of the unlawful assembly.
For accomplishing their common object it was not necessary to kill the two girls who were not a hinderance to accused Nos. 1 and 2 accomplishing their common object.
Accused Nos.
3 to 6 cannot, therefore, be convicted for the injuries caused to the two minor girls by accused Nos. 1 and 2, with the aid of section 149.
[511A B] (7) Section 302, I.P.C, casts a heavy duty on the Court to choose between death and imprisonment for life.
When the Court is called upon to choose between the convict 's cry 'I want to live ' and the prosecutor 's demand 'he deserves to die ', it goes without saying that the Court must show a high degree of concern and sensitiveness in the choice of sen tence.
[511D E] (8) In our justice delivery system several difficult decisions are left to the presiding officer, sometimes without providing the scales or the weights for the same.
In cases of murder, however, since the choice 501 is between capital punishment and life imprisonment, the legislature has provided a guideline in the form of sub section (3) of section 354 of the Code of Criminal Proce dure, 1973.
[511E F] (9) When the law casts a duty on the Judge to state reasons it follows that he is under a legal obligation to explain his choice of the sentence.
It may seem trite to say so but the existence of the 'special reason clause ' in the above provision implies that the Court can in fit cases impose the extreme penalty of death which negatives the contention that there never can be a valid reason to visit an offender with the death penalty, no matter how cruel, gruesome or shocking the crime may be.
[512A C] (10) Where a sentence of severity is imposed, it is imperative that the Judge should indicate the basis upon which he considers a sentence of that magnitude justified.
Unless there are special reasons, special to the facts of the particular case, which can be cataloged as justifying a severe punishment, the Judge would not award the death sentence.
If a Judge finds that he is unable to explain with reasonable accuracy the basis for selecting the higher of the two sentences, his choice should fail on the lower sentence.
[512D E] (11) The choice of the sentence has to be made after following the procedure set out in sub section (2) of sec tion 235 of the Code.
Since the provision is intended to give the accused an opportunity to place before the Court all the relevant material having a bearing on the question of sentence, there can be no doubt that the provision is salutary and must be strictly followed.
[513D, H; 514A] (12) The requirement of hearing the accused is intended to satisfy the rule of natural justice.
In the case of life or death, the presiding officer must show a high degree of concern for the statutory right of the accused and should not treat it as a mere formality to be crossed before making the choice of the sentence.
If the choice is made without giving the accused an effective and real opportunity to place his antecedents, social and economic background, mitigating and extenuating circumstances, etc.
before the Court, the Court 's decision on the sentence would be vulner able.
[514C] (13) A sentencing decision taken without following the requirements of sub section (2) of section 235 of the Code in letter and spirit may have to be replaced by an appropri ate order.
In the instant case, the Trial Court actually treated it as a mere formality as is evident from 502 the fact that it recorded the finding of guilt on 31st March, 1987, and on the same day before the accused could absorb and overcome the shock of conviction they were asked if they had anything to say on the question of sentence.
Immediately thereafter the decision imposing the death penalty on the two accused was pronounced.
[514B, E] (14) As a general rule, the Trial Courts should after recording the conviction adjourn the matter to a future date and call upon both the prosecution as well as the defence to place the relevant material bearing on the question of sentence before it and thereafter pronounce the sentence to be imposed on the offender.
[514F G] (15) In the instant case, the Trial Court did not attach sufficient importance to the mandatory requirement of sub section (2) of section 235 of the Code.
The High Court also had before it only the scanty material placed before the Sessions Judge when it confirmed the death penalty.
Absence of particulars of ancedents of accused, their socio economic conditions, the impact of their crime on the community, etc. makes the choice of punishment difficult.
[514G H] (16) It is necessary that the maximum sentence pre scribed by law should be reserved for 'the rarest of rare ' cases which are of an exceptional nature.
Sentences of severity are imposed t9 reflect the seriousness of the crime, to promote respect for the law, to provide just punishment for the offence, to afford adequate deterrent to criminal conduct and to protect the community from further similar conduct.
[515G] (17) In the instant case, unfortunately the material for choice of sentence is scanty.
The motive for the crime is obscure, the one stated.
namely, the quarrel between two infants of both sides, does not seem to be correct.
The killings were not for gain.
The change shows that the target was Baharan Mian, the father, and not the two infants.
The killing of the two infants was not in the contemplation of any of the accused.
Both the girls were the victims of the offenders ' ire resulting from frustration at the escape of their target.
There is nothing so uncommon about the crime as to make the case an exceptional one.
The mere fact that infants are killed, without more, is not sufficient to bring the case within the category of 'the rarest of rare ' cases.
[516C E] Bachan Singh vs State of Punjab, ; and Machhi Singh vs State of Punjab, , referred to.
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Accused people 1 through 6 were part of an illegal group. Their goal was to kill Baharan Mian, and they came to his house with dangerous weapons.
Baharan Mian thought there would be trouble, so he ran inside to get a weapon. But his wife stopped him from going back outside.
At that time, Baharan Mian's two young daughters, Sahana Khatoon (about seven years old) and Chand Tara (about seven months old), were playing in the open space of his house.
The group failed to kill Baharan Mian. Accused person 1 then hit Sahana Khatoon on the head, stomach, and left thumb with a tool called a "farsa," causing serious injuries. Accused person 2 hit infant Chand Tara on the head with a farsa.
Sahana Khatoon died the same day from her injuries. Chand Tara died 28 days later.
Accused people 1 and 2 were charged with crimes under sections 302 (murder), 452 (trespassing to cause harm), and 148 (rioting with deadly weapon) of the Indian Penal Code (I.P.C.). Accused people 3 through 6 were charged as being responsible for the crime because they were part of the group, under section 302/149 I.P.C. (unlawful assembly with common object). Accused people 3 and 4 were also charged under sections 447 (trespassing) and 148 I.P.C., and accused people 5 and 6 were charged under sections 447 and 147 (rioting) I.P.C. The trial court found accused people 1 and 2 guilty on all three charges. They were sentenced to death for the crime of murder under section 302 I.P.C. Accused people 3 and 4 were found guilty under sections 302/149, 447, and 148 I.P.C. Each of them was sentenced to life in prison for the crime under section 302/149.
Accused people 5 and 6 were found guilty under sections 302/149, 447, and 147 I.P.C.
They were sentenced to life in prison for the crime under section 302/149 I.P.C.
The High Court (higher court) rejected the appeal (request to change the decision) of accused people 1 and 2. It agreed with the death sentence for the murder of the two infant girls.
However, the High Court changed the conviction of the other four accused people under section 302/149 to sections 326/149 (voluntarily causing grievous hurt by dangerous weapons or means). The life sentence was changed to seven years of hard labor in prison.
The convictions and sentences for the other charges were kept the same. The lawyers for the accused people argued before this Court (likely the Supreme Court) that: (1) the evidence presented by the prosecution (government lawyers) was not reliable; (2) even based on the facts that the lower courts found to be true, accused people 1 through 6 should not be found guilty of murder with the help of section 149 I.P.C., because killing the two girls was not the original goal of the illegal group; (3) the facts of the case did not justify a death sentence for accused people 1 and 2, especially because the correct legal process under section 235(2) of the Criminal Procedure Code (Cr. P.C.) was not followed completely; and (4) section 302 I.P.C. and section 354(3) Cr. P.C., which allow for the death penalty, were against Articles 14 (equality before the law), 19 (freedom of speech and expression), and 21 (protection of life and personal liberty) of the Constitution of India.
The Court partly allowed the appeals. It changed the death sentence for accused people 1 and 2 to life in prison under section 302 I.P.C. It also overturned the conviction of accused people 3 through 6 under section 326/149 I.P.C. The Court stated the following: (1) There is no reason to believe that the prosecution's evidence is not reliable, and it should be used to confirm the convictions of the accused people.
[508B C] (2) If the prosecution did not call some people who were at the scene as witnesses because they learned that those people had been bribed or convinced to lie, it cannot be said that the prosecution was unfair to the accused people.
Not calling these people as witnesses does not change the value of the evidence from other prosecution witnesses.
[508F] (3) Section 149 I.P.C. creates a specific crime.
Because this section makes someone responsible for a crime based on their membership in a group, it must be interpreted very carefully.
[509G] (4) The lawmakers did not intend for section 149 to punish every member of an illegal group for every crime committed by one or more of its members.
To use section 149, it must be shown that the crime was done to achieve the group's common goal.
Even if a crime that is related to the common goal is committed, it must be something that the other members knew was likely to happen in order to achieve the common goal.
If the members of the group knew or were aware that a particular crime was likely to be committed to achieve the common goal, they would be responsible for it under section 149 I.P.C. [510F H] (5) The important thing in each case is to find out if the crime was committed to achieve the group's common goal, or if it was something the members knew was likely to be committed.
There must be a connection between the common goal and the crime committed. If it is found that the crime was committed to achieve the common goal, every member of the group will be responsible for it.
[509H; 510A B] (6) In this case, the common goal of the illegal group, as stated in the charges, was to kill Baharan Mian.
When accused people 1 and 2 realized that they could not reach Baharan Mian, they became frustrated and attacked the innocent girls with their weapons. This was not part of the group's common goal.
Killing the two girls was not necessary to achieve their common goal, as the girls were not preventing accused people 1 and 2 from doing so.
Therefore, accused people 3 through 6 cannot be found guilty for the injuries caused to the two minor girls by accused people 1 and 2, with the help of section 149.
[511A B] (7) Section 302 I.P.C. places a great responsibility on the Court to choose between death and life in prison.
When the Court has to choose between the convict's plea to live and the prosecutor's demand for death, the Court must be very careful and sensitive in choosing the sentence.
[511D E] (8) In our legal system, many difficult decisions are left to the judge, sometimes without clear guidelines.
However, in murder cases, because the choice is between the death penalty and life in prison, the lawmakers have provided guidance in the form of subsection (3) of section 354 of the Code of Criminal Procedure, 1973.
[511E F] (9) When the law requires the Judge to state reasons, it means that he has a legal duty to explain his choice of sentence.
The "special reason" clause in the law means that the Court can, in certain cases, impose the death penalty. This goes against the argument that there can never be a valid reason to punish someone with death, no matter how cruel the crime may be.
[512A C] (10) When a severe sentence is given, the Judge must explain why he believes such a severe sentence is justified.
Unless there are special reasons related to the specific facts of the case that justify a severe punishment, the Judge should not give the death sentence.
If a Judge cannot explain clearly why he is choosing the higher of the two sentences, he should choose the lower sentence.
[512D E] (11) The choice of sentence must be made after following the procedure in subsection (2) of section 235 of the Code.
This law is meant to give the accused person a chance to present all the relevant information that could affect the sentence. Therefore, this law is important and must be followed carefully.
[513D, H; 514A] (12) The requirement to hear the accused person is meant to satisfy the rules of natural justice (fairness).
In cases of life or death, the judge must be very careful to protect the accused person's legal rights, and should not treat it as a mere formality before choosing the sentence.
If the choice is made without giving the accused person a real chance to present their background, social and economic situation, and any reasons that could make the crime seem less severe, the Court's decision on the sentence could be challenged.
[514C] (13) A sentencing decision made without following the requirements of subsection (2) of section 235 of the Code may have to be replaced with a new decision.
In this case, the trial court treated it as a mere formality. The court found the accused people guilty on March 31, 1987, and on the same day, before the accused could understand and accept the conviction, they were asked if they had anything to say about the sentence.
Immediately after that, the court announced the death penalty for the two accused people.
[514B, E] (14) As a general rule, after finding someone guilty, the trial courts should postpone the matter to a later date. They should ask both the prosecution and the defense to present relevant information about the sentence. Then, they should announce the sentence to be given to the offender.
[514F G] (15) In this case, the trial court did not give enough importance to the requirement of subsection (2) of section 235 of the Code.
The High Court also only had the limited information that was presented to the trial judge when it confirmed the death penalty.
The lack of details about the accused people's backgrounds, their social and economic situations, and the impact of their crime on the community makes it difficult to choose the right punishment.
[514G H] (16) The maximum sentence allowed by law should be saved for the rarest and most exceptional cases.
Severe sentences are given to show the seriousness of the crime, to promote respect for the law, to provide fair punishment for the offense, to discourage criminal behavior, and to protect the community from similar crimes in the future.
[515G] (17) In this case, unfortunately, there is not much information to help choose the sentence.
The reason for the crime is unclear. The stated reason, a fight between two infants, does not seem to be correct.
The killings were not for money. The charges show that the target was Baharan Mian, the father, and not the two infants.
Killing the two infants was not planned by any of the accused.
Both girls were victims of the offenders' anger resulting from their failure to reach their target.
There is nothing unusual about the crime to make it an exceptional case.
The mere fact that infants were killed is not enough to make the case one of the "rarest of rare" cases.
[516C E] Bachan Singh vs State of Punjab, and Machhi Singh vs State of Punjab, were mentioned.
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Appeal No. 90 of 1956. Appeal by special leave from the judgment and decree dated August 5, 1953, of the Bombay High Court in Appeal from the Appellate Decree No. 915 of 1951. M. section K. Sastri, for the appellant. A. G. Ratnaparkhi, for respondent No. 1. 1961. April 12. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J. This appeal, by special leave, is against the judgment and decree of the High Court of Bombay, dismissing the suit of the plaintiff appellant. The plaintiff sued for a declaration that the property in suit which is situate at Mouje Digvale, a village held by khots in the district of Ratnagiri, was owned by him, was under his management and that the defendants had no right or interest therein. He claimed title to the property on the basis of the sale of occupancy rights under the sale deed executed in his favour by Sitabai on February 10, 1945. Sitabai was the widow of Vishram Anna Shirsat, who succeeded Ram Raghu Shirsat, the occupancy tenant of the land in suit. Ram Raghu Shirsat sold the occupancy rights in the land in suit to Laxman Chandba Raut by a deed dated March 8, 1892. By a compromise in a civil suit between the heirs of Laxman Chandba Raut and Tanu Daulat Gavade Sakaram, the heir of Laxman Raut got 3/5ths share and Tanu Daulat got 2/5ths share in these occupancy rights. Dattatraya Bhikaji Khot Kulkarni, a paternal uncle of respondent No. 1, purchased. the shares of these persons by 907 the sale deeds dated December 14,1903, and February 13, 1904. On Kulkarni 's death, respondent No. 1 became the owner of the property. Respondents nos. 2 to 4 are the tenants of respondent No. 1. The land in suit is khoti land as defined in el. (10) of section 3 of the Khoti Settlement Act, 1880 (Bom. Act 1 of 1880), hereinafter called the Act. It is not disputed that Ram Raghu Shirsat was the occupancy tenant of the land in suit and that he could not transfer his tenancy right without the consent of the khot, which, according to cl. (2) of section 3, includes a mortgagee lawfully in possession of khotki and all co sharers in a khotki. It is also admitted that the transferors of the afore mentioned sale deeds of 1892 in favour of the predecesror in interest of respondent No. 1, or of the sale deed of 1945 in favour of the appellant, did not obtain the consent of the khot before executing the deed of transfer. The plaintiff alleged that the sale deed in favour of respondent No. 1 was void and that therefore he had title to the suit land on the basis of the sale deed in his favour. Respondent No. 1 contended that Ram Raghu Shirsat lost his rights in the property in suit after he had executed the sale deed on March 8, 1892, and that, therefore the plaintiff obtained no title on the basis of the sale deed in his favour. The trial Court held the sale deed of 1892 to be good sale deed and binding on the plaintiff and dismissed the suit. On appeal, the Assistant Judge reversed the decree and decreed the suit holding that a transfer of the occupancy rights in the suit lands by Ram Raghu Sirsat in favour of Laxman Raut was void and that the plaintiff obtained good title under the sale deed in his favour in view of the amendment of section 9 of the Act by section 31 of the Bombay Tenancy Act, 1939 (Act XXIX of 1939), by which no consent of the khot was ,necessary for executing the sale deed in 1945. Respondent No. 1 preferred a second appeal to the High Court which set aside the decree of the Assistant Judge and restoring the decree of the trial Court, dismissed the suit. It held that the sale deed in favour 908 of the plaintiff too would be hit by the provisions of s.9 of the Act. It further held that the provisions of s.9 indicate that there was no absolute prohibition against a transfer of the occupancy right. A transfer by an occupancy tenant without the consent of the khot cannot be held to be void for all purposes and it would be invalid only in so far as it would be contrary to the right of the khot and not otherwise. It therefore held the transfer in favour of the respondent No. 1 's predecessor in interest in 1892 not to be void. It is the correctness of this order that is challenged in this appeal. This appeal has no force. Section 31 of the Bombay Tenancy Act, 1939, made amendments to section 9 of ado. the Act and the section after amendment reads: "The rights of khots and privileged occupants shall be heritable and transferable". 'Privileged occupant ' included a permanent tenant under cl. (5) of section 3 of the Act. The Bombay Tenancy Act received assent of the Governor of Bombay on April 2, 1940, but it came into force in April 1946 when the Government issued the necessary notification in exercise of the powers conferred under subs. (3) of section 1 of that Act. It is clear therefore that section 9, as it stood on February 10, 1945, when Sitabai executed the sale deed in favour of the appellant, made the rights of permanent tenants nontransferable without the consent of the khot, and that therefore the sale in favour of the appellant was as much hit adversely by the provisions of section 9 of the Act as the sale of the land in suit in favour of the predecessor in interest of respondent No. 1. It is therefore not necessary to determine the question whether the sale was absolutely void or voidable as held by the Court below, as neither of the two sales has been challenged by the khot whose consent for the transfer was necessary. The plaintiff has no title whether a transfer by a permanent tenant without the consent of the khot be void or voidable. If such a transfer is void, the sale in favour of the appellant did not convey any title to him. If such a sale was merely voidable at the instance of the khot, the first sale in favour of the 909 respondent No. 1 's predecessor in interest was not avoided by the khot, and therefore validly conveyed title to him. Consequently no title passed to the plaintiff under the sale deed in his favour as his transferor had no title. In either case the plaintiff fails to prove his title to the land in suit. The dismissal of his suit is therefore correct. We accordingly dismiss this appeal with costs. Appeal dismissed.
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The land in suit was Khoti land land section 9 of the Khoti Settlement Act, 1880, prior to its amendment prohibited the. transfer of the occupancy right without the consent of the Khot.
Section 31 of the Bombay Tenancy Act, 1939, which came into force from April 1946, amended section 9 of the Khoti Settlement Act by which no consent of the Khot was necessary for transferring the occupancy rights in the land.
In 1892, R sold his occupancy right without the consent of tile Khot to L, the predecessor in interest of respondent No. 1.
In 1945, R 's successor again sold the same occupancy right to the appellant also without the consent of the Khot.
The appellant 's case was that the sale deed in 1892 in favour of the predecessor in interest of respondent No. 1 was void as the transfer of the occupancy right was made without consent of the Khot; whereas respondent No. 1 contended that R by the sale deed in 1892 had already lost his right to the property in suit and therefore R 's successors had no title to pass in 1945 in favour of the appellant.
Held, that the occupancy right in a Khoti land could not be transferred without consent of the Khot prior to April 1946, when the Bombay Tenancy Act, 1939, came into force 114 906 Held, further, that in the present case as both the sales of 1892 and 1945 were without the consent of the Khot, it was not necessary to determine whether such a transfer was void or voidable, If void, the plaintiff had no title.
If voidable, the first sale in 1892, validly conveyed title to respondent No 1 's predecessor in interest, and consequently no title passed to the plaintiff under the sale deed in 1945, as the transferor had no title.
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This case involves land that was Khoti land. A law called the Khoti Settlement Act of 1880 said you couldn't transfer the right to live on and use the land without the Khot's (landowner's) permission.
Later, in 1946, another law called the Bombay Tenancy Act of 1939 changed the old law. Now, you didn't need the Khot's permission to transfer those rights.
Back in 1892, someone named R sold their right to live on and use the land to L, who is related to respondent No. 1 in this case. R didn't get the Khot's permission for this sale.
Then, in 1945, R's family sold the same right to the appellant (the person bringing the case). Again, they didn't get the Khot's permission.
The appellant argued that the 1892 sale was invalid because R didn't have the Khot's permission. Respondent No. 1 argued that R lost all rights to the land in 1892, so R's family had nothing to sell to the appellant in 1945.
The court decided that before 1946, you couldn't transfer the right to live on and use Khoti land without the Khot's permission. Since both the 1892 and 1945 sales happened without the Khot's permission, the court didn't need to decide if the sales were completely invalid ("void") or just able to be canceled ("voidable"). If the first sale was void, the appellant has no claim. If it was voidable, the first sale gave the rights to respondent No. 1's family, so R's family had nothing to sell in 1945.
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riminal Appeals Nos. 65 and 66 of 1952, 5 and 19 of 1953 and Petitions Nos. 170 of 1952, 19 and 57 of 1953. Appeals from Orders, dated the 9th April, 1952, of the High Court of Judicature at Bombay in Criminal Applications Nos. 707 and 708 of 1951, from the Judgment and Order, dated the 15th December, 1952, of the High Court of Judicature at Bombay in Criminal Application No. 1310 of 1952; from the Judgment and Order, dated the 29th November, 1952, of the Judicial Commissioners Court Vindhya Pradesh, Rewa, in Criminal Miscellaneous No. 49 of 1952; and Petitions under article 32 of the Constitution of India. J.B. Dadachanji and Z. F. Bootwala for the appellants in Criminal Appeals Nos. 65 and 66 of 1952 and 5 of 1953. C.K. Daphtary Solicitor General for India(G. N. Joshi, with him) for respondents Nos. I and 2 in 121 934 Criminal Appeals Nos. 65 and 66 of 1952 and respondent No. 1 in Criminal Appeal No. 5 of 1953. K.B.Asthana, for the appellant in Criminal Appeal No. 19 of 1953. C.K. Daphtary, Solicitor General for India, (Porus A. Mehta and G. N. J08hi, with him) for the respondent in Criminal Appeal No. 19 of 1953. section P. Sinha (Sri Narain Andley, with him) for the petitioners in petition No. 170 of 1952. Gopalji Mehrotra for respondent No. I in petition No. 170 of 1952. C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for respondent No. 3 in petition No. 170 of 1952. section P. Sinha (section N. Mukherji, with him) for petitioner in petition No. 19 of 1953. Gopalji Mehrotra for respondent No. I in petition No. 19 of 1953. G. N. Joshi for respondent No. 3 in petition No. 19 of 1953. H.J. Umrigar, amicus curiae, for the petitioner in petition No. 57 of 1953. C. K. Daphtary, Solicitor General for India (G. N. J08hi, with him) for the respondents in petition No. 57 of 1953. February 15. The Judgment of Mahajan C.J., Mukherjea, Vivian Bose and Ghulam Hassan JJ. was delivered by Ghulam Hasan J. Das J delivered a seperate judgment. Criminal Appeals Nos. 65 and 66 of 1952. GHULAM HASAN J. This batch of appeals raises a common question of the constitutional validity of section 7 of the Influx from Pakistan (Control) Act (XXIII of 1949). Section 3 of the same Act is also assailed on behalf of some of the appellants but for the purpose of deciding these appeals it will not be necessary to deal with the latter question. Criminal Appeals Nos. 65 and 66 of 1952, which are directed against the judgment and order of the High Court of Judicature at, Bombay in two petitions under article 226 of the Constitution praying for the issue of 935 a writ of mandamus requiring the respondent not to remove them from India on the ground that the impugned section 7 is void may be treated as the leading case which will govern the other appeals. The facts of each of these appeals are slightly different but they proceed upon the common assertion that the appellants are citizens of the Indian Republic. This fact was assumed in the leading case but it is not, disputed that the status of the appellants as Indian citizens in all the cases has not been investigated and determined by any of the courts below against whose decision the appeals have been brought. Having heard the learned counsel appearing in support of the appeals and the learned Solicitor General we have reached the conclusion that section 7 is void in so far as it infringes the right of a citizen of India under article 19(1) (e) of the Constitution. The Act in question received the assent of the Governor General on April 22, 1949, and was published in the Gazette of India Extraordinary on April 23. It is a short Act containing nine sections. It is intituled an Act to " control the admission into, and regulate the movements in, India of persons from Pakistan ". The preamble opens with the words "Whereas it is expedient to control the admission into, and regulate the movements in, India of persons from Pakistan. " Section 2 (b) defines " officer of Government " as any officer of the Central Government and 2 (c) defines "permit" as a "Permit issued or renewed or the period whereof has been extended in accordance with the rules made under this Act. " Section 3 says II No person shall enter India from any place in Pakistan, whether directly or indirectly, unless (a) he is in possession of a permit or (b) being a person not domiciled in India or Pakistan, he is in possession of a valid passport as required by the Indian Passport Act, 1920 (XXXIV of 1920), or (c) he is exempted from the requirement of bein in possession of a permit by or in accordance with the rules made under this Act. " 936 Section 4 empowers the Central Government, by notification in the Official Gazette, to make rules: (a) prescribing the authorities by which and the conditions subject to which permits may be issued or renewed or the period thereof extended, the condition to be satisfied by the applicants for such permits and the forms and classes of such permits; (b) regulating the movements in India of any person who is in possession of a permit; (c) providing for the exemption, either absolutely or on conditions, of any person or class of persons from the requirement of being in possession of a permit or from the operation of any rule made under the section ; and (d). . . . . . . . . . . section 5 is the penal section which says " (a) Whoever enters India in contravention ' of the provisions of section 3, or having entered India contravenes the provisions of any rule made under section 4, or commits a breach of any of the conditions of his permit, shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both. " Section 6 confers power of arrest upon an,officer of Government. Section 7 is as follows: " Without prejudice to the provisions contained in section 5, the Central Government may, by general or special order, direct the removal from India of any person who has committed, or against whom a reason , able SUSPICION exists that he has committed, an offence under this Act, and thereupon any officer of Government shall have all reasonable powers necessary to enforce such direction. " Section 8 provides for protection to persons acting in good faith and section 9 repeals the Influx from, Pakistan (Control) Ordinance, XXXXIV of 1948. The use of the word 'person ' in section 7, read with the title and preamble of the Act leaves no doubt that. the Act applies to citizens and non citizens alike. So 937 far as a non citizen is concerned, it is not contended before us3 that the executive Government has no authority to direct his removal from India and the only contention raised before us is whether the Central Government has any power to direct the removal of an Indian citizen on either of the grounds mentioned in section 7. Section 7, it is contended, confers upon the Central Government unfettered power to direct the removal from India not only of a person who has committed an offence punishable under section 5 of the Act but also one against whom a reasonable suspicion exists that he has committed such an offence. That an Indian citizen visiting Pakistan for any purpose whatsoever and returning to India may be required to produce D, permit or passport as the case may be before he can be allowed to enter the country, may well be. regarded as a proper restriction upon entry but to say that if he enters the country without a permit or on an invalid permit, or commits a breach of any of the conditions of the permit he may, on conviction for such offence, be ordered to be removed from the country is tantamount to taking away his fundamental right guaranteed under article 19(1) (e), " to reside and settle in any part of the territory of India. " The order is sought to be supported by the learned Solicitor General on the ground that it falls within exception (5) of article 19. The proposition that the order imposes in the interest of the general public a reasonable restriction on the exercise of the. right conferred upon an Indian citizen to reside and settle in any part of the territory of India is hardly statable. It is possible to conceive of an Indian citizen being guilty of serious prejudicial Acts such as espionage and disloyalty to his country in which case he may render himself liable to the gravest penalty which the Government may think fit by law to impose upon him but it would be repugnant to all notions of democracy and opposed to the fundamental rights guaranteed in Part III of the Constitution to order his expulsion from the country, for to hold otherwise would be tantamount to destroying the right of citizenship conferred by Part II of the, Constitution. This 938 result is permissible only by recourse to article 11 of the Constitution. Again it will be noticed that section 7 imposes the penalty of removal not only upon a conviction under section 5 but goes further and brings about the same result even where there is a reasonable suspicion entertained by the Central Government that such an offence has been committed. The question whether an offence has been committed is left entirely to the subjective determination of the Government. The inference of a reasonable suspicion rests upon the arbitrary and unrestrained discretion of the Government, and before a citizen is condemned, all that the Government has to do is to issue an order that a reasonable suspicion exists in their mind that an offence under section 5 has been committed. The section does not provide for the issue of a notice to the person concerned to show cause against the order nor is he afforded any opportunity to clear his conduct of the suspicion entertained against him. This is nothing short of a travesty of the right of citizenship. The learned Solicitor General argued that the provision must be viewed in the back ground of the events which took place at the time of the partition and the unsatisfactory relations existing between India and Pakistan. up to the present day. Even so the penalty imposed upon a citizen by his own Government merely upon a breach of the permit Regulations, however serious it may be and, more, upon a reasonable suspicion only by the executive authority of his having violated the conditions of the permit is utterly disproportionate th the gravity of the offence and is in our opinion indefensible. A law which subjects a citizen to the extreme penalty of a virtual forfeiture of his citizenship upon conviction for a mere breach of the permit Regulations or upon a reasonable suspicion of having committed such a breach can hardly be justified upon the ground that it imposes a reasonable restriction upon the fundamental right to reside and settle in the country in the interest of the public. The Act purports to control admission into and regulate the movements in India of persons entering from Pakistan but section 7 oversteps the limits of control 939 and regulation when it provides for removal of a citizen from his own country. To use the language of this court in Chintaman Rao vs The State of Madhya Pradesh and Ram Krishna vs The State of Madhya Pradesh(1), " The effect of the provisions of the Act, however, has no reasonable relation to the subject in view but is so drastic in scope that it goes much in excess of that object. It may be said that the sentry on guard at any of the check posts on the frontier between the two countries can prevent not only unauthorised entry of a citizen by force but can also throw him out if the person has managed to enter surreptitiously. Exactly what the sentrys ' duties are was not argued before us. They would naturally vary according to the circumstances and the orders which be receives but ordinarily we apprehend that the duty of a sentry at the border would be to prevent as far as lay in his power un authorised entry into India. If any person claims to have the right to enter, the sentry 's duty would be to hand him over to the Commander of the Guard and normally it would be the duty of that Commander to hand him over to the proper authority empowered to determine the right which he claims. In the case of an unauthorised entry, ordinarily the duty of the sentry is to arrest a man and hand him over to the proper authority for punishment and in extreme cases he may have the right to shoot the person who does not halt on his command and explain his presence at the outpost. In normal circumstances we doubt if the sentry would have the right to forcibly expel a man who crosses the border. The learned Chief Justice (Chagla C. J.) took the view that section 7 is consequential to section 3 and held that if section 3 controlling admission by means of a permit is valid, section 7 must be held to be equally valid. This argument is fallacious. In the first place, section 7 is by no means wholly consequential to section 3. The first part no doubt renders the person concerned liable to removal upon conviction under section 5 but further empowers. the Central Government (1) ; 940 to pass the same order independently of these provisions even where there is no conviction and a reasonable suspicion exists that an offence has been committed. Assuming, however, that section 7 is consequential to section 3 it gives no opportunity to the aggrieved person to show cause against his removal. There is no forum provided to which the aggrieved party could have recourse in order to vindi cate his character or meet the grounds upon which it is based. Neither the Act nor the rules framed thereunder. indicate what procedure is to be followed by Government in arriving at the conclusion that a breach of section 3 or of the rules under section 4 has taken place, In Shabbir Hussain vs The State of Uttar Pradesh and Another(1) the Allahabad High Court held that a law allowing the removal from a territory of India of any citizen is in contravention of article 19 (1) (d) and(e) of the Constitution and is void in view of article 13(1). The order which was challenged before them was one passed under section 7 and was set aside. In Criminal Writ No. 147 of 1951 decided on December 11, 1951, a Bench of the Punjab High Court (Weston C. J. and Harnam Singh J.) while setting aside the order under section 7 against a citizen of India who had entered India without a permit and was first convicted and then ordered to be externed observed: "The powers of removal or banishment given by section 7 of the Influx from Pakistan (Control) Act, 1949, connot be invoked against citizens of India. No doubt, she committed an offence under section 3 of that Act which applied to all persons, but that cannot justify her removal even though her entry may have been contrary to the provisions of the Act. " We are not prepared to accede to the contention urged by the Solicitor General that a citizen of India who returns to the country without a permit or without a valid permit commits such a grave offence as to justify his expulsion from the country. The object of the Act is, not to deport Indian nationals (1) A.I.R. 1952 All. 941 committing a breach of the permit or passport Regulations but merely to control admission into and regulate movements in India of persons from Pakistan and therefore there is no substance in the argument that section 7 was intended to achieve the objective of expelling Indian citizens, by and large, if they brought themselves within the mischief of section 3. It was faintly contended that the order of physical, removal from India, in addition to the punishment imposed under section 5 of the Act, amounted to what may be called " double jeopardy " and is in conflict with article 20 (2) of the Constitution. The short answer to this contention is that there is no second prosecution for the same offence and therefore no question of double jeopardy arises. See Maqbool Hussain vs The State of Bombay etc.(1). As a result of the foregoing discussion we declare section 7 to be void under article 13(1) in so far as it conflicts with the fundamental right of a citizen of India under article 19(1) (e) of the Constitution and set it aside. The order will, however, operate only upon proof of the fact that the appellants are citizens of India. The case will, therefore, go back to the High Court for a finding upon this question. It will be open to the High Court to determine this question itself or refer it to the court of District Judge for a finding. Parties will be given full opportunity to file affidavits or give other evidence which they may wish to produce. Criminal Appeal No. 5 of 1953. GHULAM HASAN J. The appellant in this case is a resident of Godhra, District Panchmahals, in the State of Bombay. He went to Pakistan in Marc 1948, and returned to India on May 30, 1949, after obtaining a permit for permanent return to India from the High Commissioner for India. In January, 1950, he was prosecuted under section 5 of Act XXIII of 1949 for having obtained a permit which was not in accordance with the provisions of the Act. The prosecution was withdrawn after 21 years. Subsequently on December 5, 1952, he was served with a notice (1) ; 122 942 ordering him to leave India for Pakistan within 10 days else he would be bodily removed to the Indo Pakistan border. Thereupon the appellant filed a petition under article 226 contending that section 7 was contrary to his fundamental rights under articles 14 and 19 of the Constitution and that the same provided no opportunity to the appellant to put his case before the Government officers, nor was any such opportunity afforded to him. He asserted that he was a citizen of India. The application was summarily dismissed on December 15, 1952, whereupon leave to appeal to this court was granted under article 132(1) of the constitutional. As this appeal also raises the question of the constitutional validity of section 7, it will be governed by the decision which we have arrived at in appeals Nos. 65 and 66 of 1952. Criminal Appeal No. 19 of 1953. GHULAM HASAN J. The appellant, Haji Faqir Ahmad, is a resident of Rewa in Vindhya Pradesh and alleges that he is a citizen of India. He was prosecuted under section 5 of Act XXIII of 1949 on the ground that he entered India from Pakistan without a permit and convicted and sentenced. Thereafter he was by an order passed under section 7 bodily removed out of India. His father applied under article 226 of the Constitution and section 491 of the Code of Criminal Procedure for setting aside the order. The learned Judicial Commissioner dismissed the application summarily holding that section 7 was not ultra Vires the Constitution. Mr. Asthana, who appeared on behalf of the appellant, raised a further question that the order was void under article 14 inasmuch as it discriminated against members of a particular community coming from Pakistan. There is no warrant for this contention. The Act applies to citizens as well as non citizens. It applies to all communities irrespective of caste or creed. It is contended that the Act must be held to be discriminatory not only by virtue of its provisions but because of the discriminatory manner in which those provisions have been applied. This argument is 943 to be mentioned only to be rejected, for there is no material whatsoever placed before us to justify the statement. The case in Yick W o vs Peter Hopkins (1) is wholly inapplicable to the facts of the present case. We accordingly reject the contention. This case will also be governed by the decision in Appeals Nos. 65 and 66 of 1952. Petition No. 170 of 1952. AND Petition No. 19 of 1953. GHULAM HASAN J. These petitions under article 32 of the Constitution raise the constitutional validity of section 7 of the Influx from Pakistan (Control) Act, XXIII of 1949. Mr. section P. Sinha, who appears for the petitioners, withdraws these petitions and undertakes to file two petitions under article 226 of the Constitution within a fortnight from this day before the High Court. When these have been filed, they will automatically be governed by the decision given in Ap peals Nos. 65 and 66 of 1652. No other order is called for. The petitions are allowed to be withdrawn. Petition No. 57 of 1953. GHULAM HASAN J. This a petition under article 32 of the Constitution by Inamullah Khan alias Qamar Jamali for the issue of a writ in the nature of habeas corpus directing that the petitioner, who is illegally arrested and detained be brought before the court and set at liberty and for the issue of a writ of certiorari calling for the said order for arrest and detention and the relevant papers and for setting them aside as being void and in operative. It is further prayed that the State of Bhopal and the Superintendent of Central Jail,, Bhopal, where he was being detained be restrained from putting into effect the said order. The petition was made on March 11, 1953. It is stated that the petitioner is a citizen of India having been born in Bhopal in 1922. He was employed in Bhopal for 5 years immediately preceding (1) ; 944 the commencement of the Constitution of India. He also edited a weekly paper "Tarjuman" from Bhopal. His name appears as. a voter in the voters" list of the Bhopal Legislative Assembly (1951 52), as well as in the electoral roll of the Municipal Board, Bhopal. The was arrested on November 24, 1952 by the Sub Inspector of Police at lbrahimpura, Bhopal, under section 7 of the Influx from Pakistan (Control) Act XXIII of Pakistan. At the time of the arrest the petitioner was being tried under section 448, Indian Penal Code, in the court of 1st Class Magistrate, Bhopal, and was on bail. The petitioner alleges that he never went to Pakistan, nor entered India without a permit and was never tried and convicted under the Influx from Pakistan (Control) Act of 1949. He challenges the order under section 7 as being void under article 19(d) and (e) and articles 21 and 22. The fact that the petitioner is a resident of Bhopal and was employed in the State is not denied on behalf of the State. The affidavit on behalf of the State mentions that the petitioner had gone to Pakistan in may, 1952, and returned in August, 1952, without a permit. He was arrested on November 24, 1952, without any prior notice but was told at the time of the arrest that he was to be removed out of India. The petitioner filed an application through his uncle before the Judicial Commissioner, Bhopal, under article 226 on November 25, 1952, challenging. the order. The Judicial Commissioner granted an interim stay order on the same day. The petition was dismissed on February 23, 1953, and the interim order was vacated on March 10, 1953. It is admitted that an oral request was made to the Judicial Commissioner for leave to appeal to this court and it was prayed that pending the grant of leave the order of stay should continue. Leave was refused on the same day and the stay order was vacated. There is an affidavit by the Chief Secretary of the State admitting that the petitioner on, the same day banded an application to the Superintendent of Jail 945 addressed to this court. The Superintendent of Jail sent it to the Chief Secretary on March 13, 1953. It was put up before him on the 14th when he forwarded it to the Law Department for opinion on March 16. The petition was returned to him on the 19th with the remark that it should be forwarded to the Supreme Court. It was sent to this ' court on ;March 22. On the same day a telephonic communication was sent, by the Registrar of this court through the States Ministry directing that the petitioner should be detained if he was still in India, but it appears that the petitioner had been handed over to the Rajas than Police at Kotah on March 12, 1953, and a reply was received by the Inspector General of Police, Jaipur, that the petitioner had crossed the border on March 18, 1953. The Superintendent of Jail has also filed an affidavit supporting the Chief Secretarpand has admitted that it was wrong on his part not to have sent the, petition submitted by the prisoner immediately to this court and that he in good faith believed that as the order for stay had been vacated by the Judicial Commissioner, he should first send it to the Registrar of that court. It is obvious that the Superintendent was grossly in error and his action in not submitting the petition resulted in the unlawful removal of the petitioner out of the country. He, has made amends by tendering an unqualified apology and nothing further need be said about it. In Ebrahim Wazir Mavat vs The State of Bombay and Others and Noor Mohammad Ali Mohammad vs The State of Bombay and Others (Criminal Appeals Nos. 65 and 66 of 1952) in which we have just delivered judgment we have held that section 7 of the Act is void as against a citizen of India being. , an encroachment on his fundamental right under article 19 (1) (e) of the Constitution. Following that decision we hold that the order of removal of the petitioner is liable to be set aside. Mr. Umrigar, who appeared for the petitioner, pointed out that the Judicial Commissioner has already held that the petitioner is a citizen of India and that it will serve no useful purpose by remanding 946 the case to him for an inquiry into the question. The Solicitor General on behalf of the Union of India has read to us the order of the Judicial Commissioner and admits that this is so. It is, therefore, not necessary to adopt the course that we have taken in the aforesaid a peals involving the validity of section 7. We accordingly hold that the order passed against the petitioner is void and set it aside. Mr. Umrigar requests that the order should be communicated to the petitioner through the High Commissioner for India in Karachi to whom the petitioner sent a representation praying that he should be allowed to return to India. This request is granted. Criminal Appeals Nos. 65 and 66 of 1952, No, 5 of 1953 and No. 19 of 1953 and Petitions No. 170 of 1952, No. 19 of 1953 and No. 57 of 1953. DAs J. I regret I am unable to agree with the judgment just delivered. Four Criminal Appeals namely, Criminal Appeals Nos. 65 and 66 of 1952, No. 5 of 1953 and No. 19 of 1953 and three Criminal Miscellaneous Petitions, namely Petition No. 170 of 1952, No. 19 of 1953 and No. 57 of 1953, were posted for hearing and were heard by us one after another. In each one of those appeals and petitions the appellants or the petitioners, as the case may be, challenged the constitutional validity of the Influx from Pakistan (Control) Act,1949 (Act XXIII of 1949). Learned advocate appearing in support of petitions No. 170 of 1952 and No. 19 of 1953 asked for leave to withdraw them with liberty to file fresh ' petitions in the High Court. Such leave having been given nothing further need be said about those two petitions. The facts of each of the remaining appeals and the remaining petition have been set out in the judgment just delivered,, and need not be repeated. Suffice it to say that the appellants in Appeals Nos. 65 and 66 of 1952 first came to India from Pakistan on temporary permits issued by the High Commissioner for India in Pakistan but stayed on after the expiry of the 947 period and were convicted under section 5 of the Act. Later on they returned ' to Pakistan on a temporary permit issued by the High Commissioner for Pakistan in India and eventually came back to India on a permanent permit issued by the High Commissioner for India in Pakistan. That permanent permit was cancelled on the. allegation that it had been obtained on the strength of a "no objection" certificate which had been obtained by them by the suppression of material facts, namely, that they had previously come. to India on a temporary permit. The appellant in Appeal No. 5 of 1953 came to India from Pakistan on a permanent permit which was subsequently can celled on the allegation that it had been obtained by fraud. The appellant in Appeal No. 19 of 1953 came to India from Pakistan without any permit and was prosecuted and convicted under section 5 of the Act and later on arrested and sent back to Pakistan. The petitioner in Petition No. 57 came to India without any permit at all. On this petitioner as well as on the appellants orders had been made under section 7 of the impugned Act to the effect that unless they left India within the time specified in the respective orders they would be bodily removed from India. These orders were made on the ground that they had entered India in violation of section 3 of the Act and/ or the rules and order made thereunder. Each of these persons claimed that they were citizens of India and complained that the orders made against them violated their fundamental rights under Chapter III of the Constitution of India. It will be recalled that on the 15th August, 1947, there was a partition of India and two Dominions were formed under the Indian, Independence Act, 1947. A grave emergency arose on the partition of India resulting in mass migration of population from one Dominion to the other accompanied by riots, arson, murder, rape and loot. Intense bitterness and hatred were generated in the minds of the people of one Dominion against those of the other Dominion. Even in one Dominion there was suspicion in the 948 minds of the members of one community against those of the other. In those circumstances the uncontrolled and indiscriminate entry of persons, Hindu or Muslim, from Pakistan into India was naturally regarded as fraught with the possibility of espionage and sabotage the prevention of which was essential for the security of the Dominion of India. Further an uncontrolled entry of large numbers of people was calculated to place and in fact placed a tremendous strain on the economy of India and on the law and order situation in the country. It was in order to prevent such result that it was necessary to exercise some control over such influx of persons from Pakistan into India. Accordingly, the Influx from West Pakistan (Control) Ordinance (XVII of 1949) was promulgated on the 19th July 1948, by the Governor General in exercise of the powers conferred on him by section 42 of the Government of India Act, 1935. The preamble to that Ordinance recited that an emergency had arisen which made it necessary to control the admission into and regulate the movements in India of persons from Pakistan. Thereafter the Influx from Pakistan (Control) Ordinance (XXXIV of 1948) was issued on the 10th November, 1948, replacing the earlier Ordinance. This Ordinance applied to persons entering into India from both West Pakistan and East Pakistan. It substantially reproduced all the sections of the previous Ordinance . Finally, on the 22nd April, 1949, the Influx from Pakistan (Control) Act (XXIII of 1949) replaced the second Ordinance. Sections 3 and 7 of this Act substantially reproduced the provisions of sections 3 and 7 of the Ordinance. The Permit System Rules of 1948 were replaced on the 20th May, 1949, by the Permit System Rules of 1949. This Act, however, was repealed on the 15th October, 1952, by Act LXVI of 1952. Section 3 of this repealing Act, however, expressly preserved the application of section 6 of the . Although the Influx from Pakistan (Control) Act, 1949 has been repealed and the number of persons who, like the appellants and the petitioners before us. are affected by that Act is small, nevertheless the matter has to 949 be scrutinised closely, for our decision may conceivably affect the passport regulations which have replaced the permit system. The contention advanced in these appeals and the petition is that sections 3 and 7 of the Act have, since the commencement of the Constitution, become void in that they violate the fundamental rights guaranteed by articles 14 and 19(1) (d) and (e) of the Constitution. The provisions of these two sections, which have been sufficiently set out in the judgment just delivered, will at once show that they applied to all persons coming from Pakistan,, whether they were citizens or noncitizens and irrespective of the community to which they belonged or the religion which they professed. It will also appear that, as regards citizens, they did not touch all citizens but affected only such of them as came from Pakistan, whether they were Hindus, Muslims or Christians. It is, therefore, quite clear that the Act applied to a small well defined class of persons who were grouped together on an obviously reasonable basis of classification as explained in the previous decisions of this court. In this view of the matter no question of unconstitutional discrimination can arise at all and, indeed, the plea based on the equal protection clause of the Constitution has not been seriously pressed. The main contest has centred round the question whether these two sections offend against the provisions of article 19(1)(d) and (e) of the Constitution. The learned Solicitor General appearing for the respondents contends that those sections are protected by article 19(5) as being reasonable restrictions on the exercise of the rights guaranteed by sub clauses (d) and (e) of clause (1) of that article. In State of Madras vs V. G. Row (1) Patanjali Sastri C.J. observed: " It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as, applicable to all cases. (1) at p. 607. 123 950 The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the,judicial verdict. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment I in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives, of the people have, ' in authorising the imposition of the restrictions, considered them to be reasonable." The impugned sections have, therefore, to be examined in the light of the above observations. I find nothing unconstitutional about section 3 of the impugned Act It does not debar the entry of any person absolutely. It only requires that a person entering India from any place in Pakistan must be in possession of a permit or a valid passport or be exempted from such requirements. Passport regulations obtain in every civilized country including even those the constitutions whereof confer similar fundamental rights on their citizens, e.g., Switzerland (articles 43 45), Wiener Germany (article III), Czechoslovakia (article 108), Jugoslavia (article 10), Danzig (article 75) and Albania (section 202). Such regula tions serve to check up the persons who enter the territories of the State and are necessary for the safety of the State. Seeing that such regulations obtain everywhere and have a definite utility for the protection of the general public by securing the safety of the State, I have no manner of doubt in my mind that such restrictions as are. contemplated by section 3 must be regarded as reasonable restrictions permissible under 951 clause (5) of article 19 of the Constitution. Indeed, the objection of section 3 has not been seriously pressed before us. The main objection urged by learned counsel appearing in support of these appeals and petitions was directed to the question of the validity of section 7. In the ' first place, it is clear that no objection can be taken to section 7 in so far as it affected persons who were 'not citizens of India, for article 19 guarantees certain fundamental rights to the citizens of India only. In the next place, this section did not affect all citizens but touched only a well defined small class of citizens, namely, those who went to Pakistan and intended to return to India. The question is whether qua these citizens section 7 can also be regarded as a reasonable restriction within the meaning of clause (5) of article 19. The High Court of Bombay has held, and in my opinion quite correctly, that the provisions of section 7 cannot but be regarded as consequential to the provisions of section 3. Suppose at the check post a person from Pakistan, whether a, citizen or not, tried to cross the border without a permit. Surely, the officer at the check post would have been well within the law to prevent a violation of section 3 of the Act and with that end in view to prevent that person, who had no permit, from crossing the border and entering India. I have no doubt that the officer might also have prevented a person from Pakistan from crossing the border if he suspected that the permit produced by the person was forged or otherwise irregular and left him to take up the matter with the higher authorities from Pakistan. Suppose the man who sought to enter India without a permit or with a permit which was suspected to spurious forcibly crossed the border and took a step or two on our side of the line, the Indian officer would certainty have been entitled to throw him back to the other side of the line. Surely, such a person could not be permitted to take advantage of his own wrong and could not be heard to say that, in such circumstances, he had, by his wrong doing, acquired a better right than the person 952 who had not the temerity to violate the provisions of section 3. If this is so then, logically, I can see no difference if the man ran into the Indian territory for some distance and the Indian officer ran after him, overtook him and took him back to the check post and pushed him out of our side of the line. It is, futile,, in such a situation, to expect or to say that the officer should have held a judicial enquiry and come to a judicial decision after hearing an argument as to the validity of the permit or as to the status of the permit holder or the fundamental rights of a, citizen Of India to move freely in India and to settle anywhere he liked in India. The truth and substance of the matter are that in acting in the way indicated above the officer simply performed an executive act and prevented a person who held no permit or held a permit which appeared to the officer to be spurious from entering India from Pakistan in violation of section 3 of the Act. To throw out such a person was not. to inflict any punishment on him or to do him any greater injury than what was imposed on or done to a person who, not having a permit, was stopped at the check post and not allowed to enter India at all. The man thus thrown out was placed under no greater disability than the man who had initially been prevented from entering India at the check post barrier. In both cases such a person might, while staying in Pakistan, have taken steps to obtain a permanent permit upon proof of his status as an Indian citizen and if such permit was illegally withheld from him he might have through some agent in India taken proceedings in Indian courts ' for appropriate reliefs. To my mind the position of the person who,entered India on a temporary permit but who, in violation of the rules or order made under the Act stayed on after the period of the permit expired, was, as from that date, logically the same as that of the person who entered India without a permit. To arrest such a person, after the expiry of the period of the temporary permit, with a view to sending him back back to where he came from and to actually send him back there did not involve or 953 constitute a judicial act at all but Was a rough and ready executive act for enforcing and giving effect to the provisions of section 3 of the Act. To arrest and send such a person back to Pakistan was not to inflict a punishment but was only to restore the status quo and to put him back to the position he would have been in but for his illegal act. In my opinion the act, authorized by section 7 was in essence.a purely executive act for implementing the provisions of section 3. Without such a provision it would have been impossible for the State to control the admission into India of persons from Pakistan and to prevent the concomitant dangers referred to above. The act authorised by the section being an executive act, discretion had perforce to bib left to the executive Government which, by reason of the information available to it" was in a much better position than the courts to know and judge the antecedents of such a person and his ultimate purpose. ' Suppose an Indian, citizen, no matter whether he was a Hindu or a Muslim, had entered India from Pakistan without a permit and suppose he was, upon confidential reports which: could not be safely disclosed, suspected to be engaged in espionage in the interests of Pakistan, would it have been safe enough in those hectic days to have only prosecuted him under section 5 and inflicted on him a fine of rupees one thousand or a term of imprisonment not exceeding a year and then to have left him free, after the term of imprisonment was over, to surreptitiously carry on his nefarious activities of espionage and sabotage against our State while embarking upon a protracted judicial enquiry to ascertain the truth or* otherwise of his claim to Indian citizenship ? It cannot ,be overlooked that there are. long common borders between Pakistan and India both on the west and on the east. The Kashmir situation had also aggravated the emergency brought about by the partition of India. Having regard to all, the circumstances, the tension, bitterness and hatred between the two countries that were generated at,the time of the partition and all which must enter into the judicial verdict, the provisions of section 7 appear to me to have been eminently reasonable restrictions imposed in the interests of the 954 general public upon the exercise by Indian ' citizen coming from Pakistan without a permit of the rights conferred by article 19(1)(d) and (e) of the Constitution. The Indian citizen who was thrown out for not having the proper permit or who was suspected to have violated the provisions of the Act was placed in no worse position than an Indian citizen who, not having a permit, had not been permitted to enter into India at all. They were by no means without remedy. They could from the other side of the border take steps under the rules to obtain valid permanent permits upon proof of their citizenship of India and if such permits were. illegally withheld from them they could move the appropriate High Court under article 226 or even this court under article 32 while they were outside India and might, on proof of their citizenship, have got appropriate writs or orders directing the State or its officers to issue suitable permits and to desist from otherwise preventing them from entering India or interfering with their movement while in India. It is said that if such a person would have been entitled to a permit on proof of his status as an Indian citizen then why should he have Been thrown out at all unless and until he failed to establish his claim to Indian citizenship ? There occur to my mind several answers to this question. In the first place, it would have been putting a premium on wrong doing. In the second place, the person would have been left free to carry on his secret activities, if any, while judicial proceedings would have been going on for ascertaining his status. In the third place, if the person could not be thrown out before his status had been judicially determined there would have been no incentive on his part to take proceedings in court to establish his status and it would have thrown upon the State the duty of initiating proceedings and of discharging the onus of proving the negative fact, of his not being a citizen of India. In view of all the circumstances prevailing at the time the law was enacted and remained in force and in view of the considerations herein before alluded to I have no ' doubt in ray mind except What 955 arises out of my respect for the opinions of my Lord and other learned brothers that the provisions of section 7 were necessary and reasonable and fell within clause (5) of article 19. In my judgment the four appeals as well as Petition No. 57 of 1952 should be dismissed. Appeals allowed, cases remanded. Agents for the appellants and petitioners: section section Shukla, R. A. Govind, Sardar Bahadur and P. K. Chatterji. Agents for the respondents: G. H. Rajadhyaksha and C. P.Lal.
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Held, (Per MEHR CHAND MAHAJAN 0.
J., MUKEMRJFA, ViviAN BosE and GHULAM HASAN JJ. ; section R. DAs J. dissenting) that section 7 of the Influx from Pakistan (Control) Act, 1949 is void under article 13(1) in so far as it conflicts with the fundamental eight of a citizen of India under art.19(1) (a) of the Constitution and the order of physical removal of the citizen from in Is therefore liable to beset aside.
Per DAB J.
In view of the circumstances the provisions of section 7 of the Act were reasonable restrictions within the meaning of el. 5 of article 19 of the constitution imposed in the interests of the general public upon the exercise by Indian citizen coming from Pakistan without a permit of, the rights conferred by article 19(1)(d) and (e) of the Constitution.
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The court decided (with Justices MEHR CHAND MAHAJAN, MUKEMRJFA, VIVIAn BOSE, and GHULAM HASAN in agreement, and Justice R. DAS disagreeing) that section 7 of the Influx from Pakistan (Control) Act, 1949 is not valid. This is because it goes against Article 13(1) of the Constitution. It also violates the basic right of an Indian citizen under Article 19(1)(a) of the Constitution. So, any order to physically remove a citizen from India based on this law can be overturned.
Justice DAB believed that section 7 of the Act placed reasonable limits. According to him, these limits were allowed under Article 19(5) of the Constitution. He thought they were in the best interest of the public. He said they applied to Indian citizens who came from Pakistan without permission and were using their rights under Article 19(1)(d) and (e) of the Constitution.
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Appeal No, 110 of 1960. Appeal by special leave from the judgment and decree dated April 13, 1956, of the former Nagpur High Court in F.A. No. 99 of 1947. Naunit lal, for the appellants. B. A. Masodkar, B. D. Najbile and Ganpat Rai, for the respondents. September 12. The judgment of the Court was delivered by GAJENDRAGADKAR, J. This appeal by special leave raises a short question about the construction of section 149 (2) of the C. P. Land Revenue Act, 1917 (No II of 1917) (hereinafter called the Act). The validity of a revenue sale of their properties held on February 27, 1941 under section 128(f) of the Act was challenged by the appellants by their suit 30 . filed in the Court of the Additional judge, Nagpur on November 12, 1946. Ganpatrao Vishwanathji Deshmukh who had purchased the properties at the said auction sale was impleaded as defendant No. 1 to the said suit. During the pendency of the litigation, the said Ganpatrao has died and his heirs have been brought on the record. They will be referred to as respondent No. 1 in the course of this judgment. The appellants challenged the impugned sale on five different grounds. They alleged that the sale was without jurisdiction; that as the final bid was not accepted by the Dy. Commissioner, it was invalid; that as the sale was brought about fraudulently by respondent No. 1 in collusion with the Revenue Clerk, it was invalid; that as the Commissioner was not competent to confirm the sale on November 13 1945, it was invalid; and that the sale could not be held validly for the recovery of Rs. 1,354/9/ which was shown in the proclamation of sale as the arrear for which the property was put to sale. The trial court rejected all the contentions raised by the appellants in impeaching the validity of the sale and so, the relief claimed by the appellants against respondent No. 1 by way of injunction restraining him from recovering possession of the property and disturbing the appellants ' possession thereof was rejected. The appellants then preferred an appeal in the Nagpur High Court. The High Court has confirmed the findings of the trial court and accordingly, the appeal has been dismissed. It is against this decree that the appellants have come to this Court by special leave; and the only point which has been raised on their behalf by Mr. Naunit Lal is that the view taken by the courts below that the impugned sale could not be effectively challenged by the appellants under s.149 (2) is not justified on a fair and reasonable construction of the said provisions. The material facts leading to this point are very few, and they are not in dispute. The appellants are Lambardars of Mahal No. 2 of Mouza Gujarkhedi, 31 Tehsil Saoner, District Nagpur, and they held therein an undivided interest of As. /11/ . On or about October 4, 1940, they were found to be in arrears of land revenue to the extent of Rs. 730/13/ in respect of the suspended Rabi kist of 1938 39 and the Rabi kist of 1939 40. The Tehsildar of Saoner .made a report on October 4, 1940 to the Dy. Commissioner that the said arrears were due from the appellants and asked for sanction to sell by auction the property in suit. 'Along with this report, a draft of the sale proclamation containing the relevant details was also submitted for the signature of the S.D.O. in case the Dy. Commissioner sanctioned the sale. The S.D.O. forwarded the said report to the Dy. Commissioner who accorded sanction to the proposal of the Tehsildar on December 17, 1940. Thereafter, on December 23, 1940. the S.D.O. signed the said proclamation and on getting the said documents back, the Tehsildar ordered on January 7, 1941 that the sale proclamation should be published and that the sale should be held on February 26, 1941. On that date, the sale was adjourned to February 27, 1941 for want of adequate bids. On the next day the sale was held and the property was sold to respondent No. 1 for Rs. 600/ . Ultimately, the said sale was confirmed. It is common ground that though at the relevant time, arrears due from the appellants amounted only to Rs. 730/13/ , in the Parchanama the said amount was shown as Rs. 1,354/9/ and the property in fact was sold to recover the said amount of arrears under section 128(f) of the Act. The appellants ' contention is that the arrear, Rs. 1,354/9/ , for which his property has been sold under section 128(f) was not due; what was due was the lesser amount of, Rs. 730/13/ and so, the sale in question is invalid under section 149 (2) of the Act. In dealing with this point, it is necessary to refer to the relevant provisions of the Act. Chapter X of the Act deals with the collection of land revenue, and it consists of sections 122 to 160. Section 124 32 confers power on the State Government to regulate payment of sums payable under the Act and provides for the number and amount of the instalments, and the time, place and manner of payment of any sum payable under a settlement or sub settlement, or otherwise under an assessment made under this Act. Sub section (2) of section 124 requires that unless the State Government otherwise directs, all such payments shall be made as prescribed under sub section A notice of demand can be issued by Tehsildar or Naib Tehsildar under section 127 and it may be served on any defaulter before the issue of any process under section 128 for the recovery of an arrear. Section 128 provides for the process for recovery of an arrear and it prescribes that an arrear payable to Government may be recovered, inter alia,. (f) by selling such estate, mahal or land, or the share or land of any co sharer who has not paid the portion of the land revenue which, as between him and the other co sharers, is payable by him. Section 131 prescribes the procedure for attachment and sale of movables and attachment of immovable property. Then section 132 provides for holding enquiry into claims of third persons in respect of property attached or proceeded against. Section 138 (1) provides that the purchaser of any estate, mahal, share or land sold for arrears of land revenue due in respect thereof shall acquire it free of all encumbrances imposed on it, and all grants and contracts. made in respect of it, by any person other than the purchaser. Sub sections (2), (3) and (4) make other provisions, but it is unnecessary to refer to them. Section 143 lays down that if the arrear in respect of which the property is to be sold is paid at any time before the lot is knocked down, the sale shall be stayed. Section 145 provides for application to set aside sale on deposit of arrear, and section 146 provides for application to set aside sale for irregularity. Under section 148 it is provided that on the expiry of 30 days from the date of sale if no application has been made under section 145 or 146 or no claim has been made under section 151, or if 33 such application or claim has been made. and rejected, the Dy. Commissioner shall pass an order confirming the sale. Section 151 refers to claims of pre emptions. That takes us to section 149. Section reads as follows : "(1) if no application under section 146 is made within the time allowed therefor, all claims on the grounds of irregularity or mistake shall be barred. (2) Nothing in sub section (1) shall bar the institution of a suit in the Civil Court to set aside a sale on the ground of fraud or on the ground that the arrear for which the property is sold is not due. " It would thus be seen that the scheme of the relevant provisions of the Act in relation to revenue sales appears to be self contained. The revenue process for recovering arrears begins with the report as to the arrears and ends with the confirmation of sale. Provision is made for the examination of claims of third parties as well as for setting aside sales on account of deposit or on account of irregularities committed in conducting the sales. , It is in the light of this self contained scheme that section 149 (1) provides that if no application under section 146 is made within the time prescribed, all claims on the grounds of irregularity or mistake shall be barred. In other. words '. the effect of this provision is that if a party aggrieved by a revenue sale of his property wants to challenge the validity of the said sale on grounds of irregularity or mistake, the Act has provided a remedy for him by s.146 and it he fails to avail himself of that remedy, it would not be open to him to challenge the impugned sale on the said grounds by a separate suit. The grounds of irregularity or mistake must be urged by an application made under section 146 and if no such application is made, then the party is precluded from taking the said grounds otherwise. Thus far there is no difficulty or dispute. 34 Sub section (2) of section 149 provides an exception to sections (1), and it says that the institution of a suit would not be barred in a Civil Court to set aside 'a sale on two grounds; if the sale is challenged on the ground of fraud, a suit will lie; similarly, if a sale is challenged on the ground that the arrear for which the property is sold is not due, a suit will lie. The effect of this provision is that if fraud is proved in regard to a revenue sale, a suit will lie and the sale will be set aside; similarly, if it is shown that the arrear for which the property is sold was not due, a suit will lie and the sale will be set aside. There is no difficulty or dispute about this position also. The question on which the parties are at issue before us is in regard to the interpretation of the clause "the arrear for which the property is sold. " It has been held by the High Court that what this clause requires is not that the arrear for which the property is sold should be stated with meticulous accuracy, if a mistake is made in showing the actual amount of arrear due from the defaulter for which the property is sold, that mistake would not render the sale invalid; it would be a mistake within the meaning of ss.(1) and so, to cases of that kind sub section (2) will not apply. On the other hand, Mr. Naunit Lal contends that the clause "the arrear for which the property is sold" is plain and unambiguous. In considering the question as to whether this clause is attracted or not, one has to look at the proclamation of sale and enquire whether the amount shown as arrears due from the defaulter was in fact due or not. If the said amount was not due, the clause will apply notwithstanding the fact that a lesser amount may have been due from the said defaulter. In construing section 149(2) it is relevant to remember that the provision in question is made in relation to revenue sales and there is no doubt that the revenue sales are authorised to be held under the summary procedure prescribed by the relevant sections of the 35 Act, and so, it would not be unreasonable to construe these provisions strictly. That is why we are not inclined to accept the view that in interpreting the relevant clause, we should assume that the Legislature did not expect the authorities to specify the arrear for which the property is sold with meticulous care. If the defaulter 's property is being sold under revenue sale and the object of issuing the proclamation is to show for what arrear it is being sold, it is, we think, fair to assume that the said arrear must be stated with absolute accuracy. It would not be enough to say that some arrear was due and so, the sale should be upheld though it was purported to be held for recovery of a much larger arrear. Nor is this consideration purely academic. As we have seen, section 143 provides that if the arrear in respect of which the property is to be sold is paid before the lot is knocked down, the sale shall be stayed. In the present case, if the arrear had been properly shown at Rs. 730113/ , it is theoretically possible that the appellants may have been in a position to deposit this amount before the lot was knocked down and the sale would have been stayed. Since the arrear was shown to be much larger, it is theoretically possible that the appellants could not make a successful attempt to deposit the said amount. Now, in working out the provisions of section 143, there should be no difficulty in determining the amount which the defaulter has to deposit to avoid the revenue sale. The arrear in question must be correctly stated in the proclamation so that everybody concerned knows the exact amount for which the revenue sale is held. That is another consideration which supports the construction for which the appellants contend. Mr. Masodkar for respondent No. 1 argued that the construction for which the appellants contend is mechanical and it may lead to anomalies. In support of this argument, he took the illustration of a case where the amount of arrears is accurately shown in the proclamation, but after the proclamation is 36 issued, a part of it is paid by the defaulter; (as in fact Rs. 291/ were deposited by the appellants in the present case) the contention is that in such a case, if the original amount ,of arrears continues to be shown in the proclamation, the sale would be invalid on the construction suggested by the appellants. We are not impressed by this argument. Our attention has not been drawn to any specific provision of the Act under which a partial payment of the arrear due is allowed +lo be made by the defaulter. If such a payment is made, it may, at best be treated as deposited on account, and no deduction would be made from the arrear notified to be due from him in the proclamation at that stage. The only provision which has been cited before us in that behalf is section 143 and section 143 expressly provides for the payment of the whole of the arrear due and lays down that on such payment before the lot is knocked down, the sale shall be stayed. Therefore, the complication sought to be introduced by Mr. Masodkar by taking a hypothetical case of a part payment of the arrears due from the defaulter, does not affect the construction of section 149(2). It is then argued that the impugned sale cannot be said to be irregular in the present case, because on the date when it was, actually held, the amount of Rs. 1,354 /9/ was in fact due from the appellants as arrears. It is common ground that after the proclamation was issued, a further amount of arrears became due from the appellants and on the date of the sale, the total amount came to be Rs. 1,354/9/ . In our opinion, arrears accumulating. after an order for sale has been passed and the proclamation in that behalf has been issued, cannot come into the calculation while construing s.149 (2). Every arrear for which the sale is ordered must be specifically dealt with as provided by the Act. It is not open to the authorities to deal with a specific arrear as prescribed by the Act and to pass an order for sale of the defaulter 's property on the 37 basis of that arrear and then add to it subsequently accruing arrears without following the procedure prescribed in that behalf. Once the amount of arrear is determined and sale is ordered by reference to it, it is that amount which must be shown in the proclamation and it is for that amount of arrear for which the property must be sold. That, in our opinion, is clearly the effect of the relevant clause in section 149 (2). We must, therefore, hold that the High Court was in error in coming to the conclusion that the sale of the appellants ' property on the 27th February, 1941 was valid. We are satisfied that the arrear for which the appellants ' property was sold was not due within the meaning of s.149 (2), and so, the sale must be set aside. In support of his argument that the impugned sale cannot be held to be invalid, Mr. Masodkar relied on a decision of the Privy Council in Rewa Mahton vs Ram Kishen Singh(1). In that case, the Privy Council was dealing with a question which had reference to the true construction of section 246 of the Civil Procedure Code of 1877 (Act X of 1877). The said section had provided that if cross decrees between the same parties and for the payment of money be produced in the Court, execution shall be taken out only by the party who holds the decree for the larger sum, and for so much only as remains after deducting the smaller sum. It appears that contrary to the provisions of this section, an auction sale was held and when the title of the auction purchaser was challenged, it became necessary to consider that the effect of noncompliance with the provisions of section 246 would be on the title of the auction purchaser. The Privy Council held that a purchaser under a sale in execution is not bound to inquire whether the judgment debtor had a cross judgment of a higher amount such as would have rendered the order for execution incorrect. If the Court has jurisdiction, such purchaser is no more bound to inquire into the correctness of an (1) (1886) L. R. 13 I. A. 106. 38 order for execution than he is as to the correctness of the judgment upon which execution issues. In other words, the effect of this decision is that if in contravention of the provisions of section 246 an executing Court orders a sale to be held, the auction purchaser gets a good title notwithstanding non compliance with section 246. We do not see how this case can assist Mr. Masodkar in the present appeal. The decision turned upon the construction of section 246. But the present dispute has to be decided on a construction of section 149 (2). It is wellknown that execution sales held under the Code of Civil Procedure can be challenged only in the manner prescribed and for the reasons specified, say, for instance, by O. XXI r. 89, 90 and 91. The fact that certain irregularities committed during the conduct of execution sales would not render the sales invalid, flows from the relevant provisions of the Code and so, it would not be reasonable to invoke the assistance of the decisions dealing with irregularities committed in execution sales in support of the argument that a revenue sale held under section 128 (f) should be judged by the same principles. The question as to whether the revenue sale is valid or not must obviously be determined in the light of the relevant provisions of the Act and that again takes us to the construction of section 149 (2). Mr. Masodkar had also relied on the decision of the Calcutta High Court in Ram Prosad Choudhury vs Ram Jadu Lahiri (1)in support of his argument that a revenue sale held under section 128 (f) of the Act would not be rendered invalid merely because the amount of arrears shown in the proclamation is not accurate. In the case of Ram Prosad Choudhury, the sale had been held under the provisions of the Bengal Land Revenue Sales Act (Act XI of 1859). Under section 5 of the said Act, notice had to be issued before the sale could be held. In the notice. issued prior to the sale had been shown a sum which had then not become due as an arrear along with other sums (1) 39 which had become arrears, and the subsequent sale was held on the footing of the total amount thus shown being the arrears due. It was urged that the sale was invalid because of the irregularity committed in the issue of the notice under section 5. This argument was rejected and it was held that despite the said irregularity, the sale was valid. Now, in appreciating the effect of this decision ' it is necessary to refer to the provisions of section 33 of the said Act under which the sale was challenged. We have already referred to the fact that section 5 required a notice to be issued prior to the sale. The notice provided for by this section had to specify the nature and amount of arrear or demand, and the latest date on which payment thereof shall be received. Section 33 provides that no sale for arrears of revenue shall be annulled, except upon the ground of its having been made contrary to the provisions of this Act, and then only on proof that the plaintiff has sustained substantial injury by reason of the irregularity complained of '; with the rest of the section we are not concerned. The argument which was urged in the case of Ram Prosad Choudhury was that the notice under section 5 having been irregularly issued, the sale should be deemed to have been held contrary to the provisions of the said Act, and this argument was not accepted. It would be noticed that section 33 justifies a claim for annulling the sale only if two conditions are satisfied; that the sale should have been made contrary to the provisions of the Act and that the plaintiff must show that he has sustained substantial injury by reason of the irregularity complained of. It is in the context of these requirements that the Calcutta High Court held that the inclusion of an amount in the notice which had not become an arrear on the date of the notice did not render the impugned sale invalid. We do not think that this decision can assist us in interpreting section 149 (2) with which we are concerned. The scope and effect of the relevant provisions of section 149(2) are not at all similar to the scope and effect of 40 s.33 of the Bengal Act. Therefore, we are not inclined to accept Mr. Masodkar 's argument that the defect in the sale on which the appellants rely would not render the sale invalid. The result is, the appeal is allowed, the decree passed by the High Court is set aside and the appellants ' suit decreed, There would be no order as to cost throughout. Appeal allowed.
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The appellants are Lambardars of Mahal No.2 of Mouza Gujarkhedi, and they held therein an undivided share of As.
/II / and as they were found in arrears of land revenue to the extent of Rs. 730/13/ , the property was sold for Rs. 600/ but the sale proclamation recited the amount of arrears due as Rs. 1345 9 0 and that the properties were being sold for 29 recovering that amount.
It was contended by the appellants, that it was open to them to have the sale set aside in the Civil Court on the ground that the arrear for which the property was sold was not due.
The trial court dismissed the suit on the ground that the suit did not lie and the High Court affirmed the decision.
Held, that section 149 (2) of the Act was plain and unambiguous and that if the arrear in respect of which the sale was held was not due it gave a right to the owner of the property to have the sale set aside in a Civil Court.
The fact that subsequent to the sale proclamation but on the date of the sale further amounts towards land revenue had become due was not material, the scheme of the Act being that in respect of each specific arrear separate proceedings had to be taken.
Held, further, that mistakes and irregularities contemplated by the Act which would not furnish grounds for invalidating and setting aside the sale were of a different kind and from the scheme of the Act it is clear that a sale for an arrear that was not due was put in a separate category.
Rewa Mahten vs Ram Kishan Singh (1886) L.R. 13 I.A. 106 and Ram Prosad Choudhury vs Ram Jadu Lahiri, (1936) 40 C.W.N. 1054, distinguished.
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The people appealing this case, called Lambardars, owned a share of land. They owed about 730 rupees in unpaid land taxes. The land was sold for 600 rupees because of this debt. However, the notice about the sale said they owed about 1345 rupees, and that the sale was to pay back that larger amount.
The Lambardars argued that they should be able to ask the regular court to cancel the sale. They said the tax debt they supposedly owed wasn't actually correct.
The first court disagreed and said they couldn't sue about it. The High Court agreed with the first court's decision.
The court in this appeal said that a certain section of the law is clear. If the tax debt that caused the sale wasn't really owed, then the landowner has the right to cancel the sale in a regular court.
The fact that more taxes became due after the sale notice, but on the day of the sale, doesn't matter. The law says each unpaid tax debt needs its own separate legal process.
The court also said that the law mentions mistakes and errors that wouldn't be a good reason to cancel a sale. But, according to the law, selling property for a tax debt that isn't really owed is a different and much more serious issue.
Two previous cases, Rewa Mahten vs Ram Kishan Singh and Ram Prosad Choudhury vs Ram Jadu Lahiri, were different from this situation and didn't apply.
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il Appeal No. 1102 of 1966. Appeal from the judgment and order dated December 27, 1965 of the Jammu and Kashmir High Court in W. P. No. 67 of 1965. C.K. Daphtary, Attorney General, section V. Gupte, Solicitor General, Jaswant Singh, Advocate General for the State of J. & K. H. R. Khanna; section Javali, Ravinder Narain, for the appellants. B. Sen, I. N. Shroff, M. K. Banerjee, B. N. Kirpal, R. K. Kaul, R. N. Kaul, P. L. Handu, Lalit Bhasin and T. R. Bhasin, for respondent No. 1. The Judgment of the Court was delivered by Sarkar C.J. This is an appeal by the State of Jammu and Kashmir, G. M. Sadiq, Chief Minister of that State and D. P.Dhar its Home Minister. The appeal is contested by respondent 403 No. 1, Bakshi Ghulam Mohammad. The other respondent, N., Rajagopala Ayyangar, a retired Judge of this Court, has not appeared in this Court or in the court below. These are the parties to the proceedings before us. After the accession of the State of Jammu and Kashmir to India in 1947, a responsible Government was set up there under the Prime Ministership of Shiekh Mohammad Abdulla. Bakshi Ghulam Muhammad was the Deputy Prime Minister in that Government and G. M. Sadiq was also in the Cabinet. In 1953 Sheikh Mohammad Abdulla was dismissed from office and a new Government was formed with Bakshi Ghulam Mohammad as the Prime Minister and G. M. Sadiq and D. P. Dhar were included in the Cabinet. On January 26, 1957, a new Constitution was framed for Jammu & Kashmir. In the first elections held under the Constitution, a party called the National Conference got the majority of votes. Bakshi Ghulam Mohammad and Sadiq were members of this party. A Ministry was then formed with Bakshi Ghulam Mohammad as the Prime Minister. It appears that G. M. Sadiq left the party sometime after 1957 and rejoined it along with D. P. Dhar in December 1960 and they were taken into the Cabinet. The next General Elections were held in 1962. Again, the National Conference Party came into power. In the Government that was formed, Bakshi Ghulam Mohammad became the Prime Minister and G. M. Sadiq and D. P. Dhar were taken in the Ministry. In September 1963, Bakshi Ghulam Mohammad resigned from the Ministry under what is called the Kamraj Plan and Shamsudd in became the Prime Minister in his place. It will be noticed that Bakshi Ghulam Mohammad was the Deputy Prime Minister of the State from 1947 to 1953 and its Prime Minister from 1953 to 1963. So he held these offices, one after the other, for a total period of about sixteen years. In February 1964, Shamsuddin left office and a new Govern ment was formed with G. M. Sadiq as the Prime Minister. It is said that shortly thereafter, political rivalry between him and Bakshi Ghulam Mohammad started. In August 1964, a notice was issued fixing a session of the Legislature of the State in the following September. According to Bakshi Ghulam Mohammad, thereafter, some of the legislators wanted to bring in vote of no confidence against G. M.Sadiqs Ministry and by September 21, 1964 the no confidence motion had obtained the support of the majority of. members of the Assembly. On September 22, 1964, at 5 o 'clock in the morning, Bakshi Ghulam Mohammad and some of his supporters were arrested under the Defence of India Rules. At 8.30 a.m. on the same day the notice of the motion of no confi dence with the signatures of some members was handed over to the Secretary of the Legislative Assembly. G. M. Sadiq challenges the genuineness of the, signatures on the notice of the motion and also denies that it had the support of, a majority: of the Assembly , At 9 a.m. the Legislative Assembly which was to meet on that day,. 404 was prorogued by the Speaker under the directions of the Sadar i Riyasat, the constitutional head of the State. Sometime in November 1964, a petition for a writ of habeas corpus for the release of Bakshi Ghulam Mohammad was presented to the High Court of Jammu and Kashmir. On December 15, 1964, before the petition could be heard and decided, Bakshi Ghulam Mohammad was released from arrest by the State Government. On January 30, 1965, a Notification was issued by the State Government appointing a Commission of Inquiry constituted by N. Rajagopala Ayyangar to enquire into (1) the nature and extent of the assets and pecuniary resources of Bakshi Ghulam Mohammad and the members of his family and other relatives mentioned in the first Schedule to the Order, in October 1947 and in October 1963; and (ii) whether during this period, Bakshi Ghulam Mohammad and the others mentioned in the Schedule had obtained any assets and pecuniary resources or advantages by Bakshi Ghulam Mohammad abusing the official positions held by him or by the aforesaid people set out in the first Schedule by exploiting that position with his knowledge, consent and connivance. The Notification provided that in making the inquiry under head (ii) the Commission would examine only the allegations set out in the second Schedule to it. It is this Noti fication that has given rise to the present proceedings. The Commission held certain sittings between February 1965 and August 1965 in which Bakshi Ghulam Mohammad took part. On September 1, 1965, Bakshi Ghulam Mohammad moved the High Court of Jammu and Kashmir under sections 103 and 104 of the Constitution of Jammu and Kashmir, which correspond to articles 226 and 227 of the Indian Constitution, for a writ striking down the Notification and quashing the proceedings of the Commission taken till then and for certain other reliefs to which it is not necessary to refer. The petition was heard by a Bench of three learned Judges of the High Court. The High Court allowed the petition, set aside the Notification and quashed the proceedings of the Commission. This appeal is against the judgment of the High Court. In the High Court, eight grounds had been advanced in support of the petition, three of which were rejected but the rest were accepted, some unanimously and some by the majority of the learned Judges. They have however not all been pressed in this Court. The Notification had been issued under the Jammu & Kashmir Commission of Inquiry Act, 1962. The first point taken was that the Notification was not justified by the Act because under the Jammu & Kashmir Constitution, a Minister was responsible for his acts only to the Legislature and no action could be taken against him except for criminal and tortuous acts in the ordinary courts of law, unless the Legislature by a resolution demanded it. The substance of this contention is that an inquiry cannot be directed under the Act into the actions of a Minister except at the instance of the Legislature, it cannot be directed by an order of the Government. This contention is based on section 37 of the Jammu 405 & Kashmir Constitution. That section states that the Council of Ministers shall be collectively responsible to the Legislative Assembly. It is contended that this implies that in no other way is a Minister responsible for anything that he does when in office. It is also said that is the convention in Britain and it has been adopted in the State of Jammu & Kashmir. We confess to a certain amount of difficulty in appreciating this argument. The point about the British convention need not detain us. It has not been shown that any such convention, even if it exists in England, as to which we say nothing, has been adopted in the State of Jammu & Kashmir. The Jammu & Kashmir Constitution is a written document and we can only be guided by its provisions. It is said that section 37 indicates that the British convention was adopted by the State of Jammu & Kashmir. We are unable to agree with this view. Section 37 talks of collective responsibility of Ministers to the Legislative Assembly. That only means that the Council of Ministers will have to stand or fall to other, every member being responsible for the action of any Other. The emphasis is on collective responsibility as distinguished from individual responsibility. The only way that a legislature can effectively enforce this responsibility of the Council of Ministers to it is by voting it out of office. Furthermore, this responsibility is of the Council of Ministers. Bakshi Ghulam Mohammad did not, at the date of the Notification, belong to that Council. He did not on that date owe any responsibility to the Legislature under section 37. That section has no application to this case Again section 3 of the Inquiry Act states, "The Government may and shall if a resolution in this behalf is passed by the Jammu & Kashmir State Legislative Assembly or the Jammu & Kashmir Legislative Council by notification appoint a Commission of Inquiry". It ,would, therefore, appear that the Act gave power to the Government to set up a Commission and also to both the Houses of the Legislature to require a Commission to be set up. It is important to note that even the Legislative Council has a right to get a Com mission appointed though section 37 of the Constitution does not say anything about the responsibility of the Ministers to that Council. The Act was passed by the State Legislature consisting of both the Houses. It would show that the Legislature did not consider that there was any convention or anything in section 37 which prevented a Commission of Inquiry being set up under the Act at the instance of the Government or the Legislative Council. The High Court had rejected this contention and we think that it did so rightly. The next point urged in support of the petition was that the Act permitted a Commission to be set up for making an inquiry into a definite matter of public importance and the matters which the Commission had been set tip to inquire into were not such. This contention found favour with all the learned Judges of the High Court. We are, however, unable to accept it. It is true that 406 a Commission can be set up only to inquire into a definite matter of public importance. But we think that the matters into which the Commission was asked to inquire were such matters. The first inquiry was as to the assets possessed by Bakshi Ghulam Mohammad and the other persons mentioned in the Notification, in October 1947 and in October 1963 and the second was whether during this period being the sixteen years when he held office as Prime Minister and Deputy Prime Minister, he and the other persons named had obtained any assets or pecuniary advantage by abuse of his official position or by that position being exploited by the others with his consent, knowledge or connivance, this inquiry being confined only to the instances set out in the second Schedule to the Notification. That Schedule contains 38 instances, the first of which, in substance, repeats the second head of inquiry earlier mentioned. The other items refer to individual instances of people being made to part with property under pressure brought upon them by abuse of official position and of public money being misappropriated. At the end of this Schedule, there is a note ' stating that the gravamen of the charge was that Bakshi Ghulam Mohammad abused his official position and the other persons named, exploited that position with his consent, knowledge or connivance in committing the acts whereby they acquired vast wealth. The inquiry was, therefore, into the assets possessed by Bakshi Ghulam Mohammad and the persons named, respectively in October 1947 and in October 1963 and to find out whether they had during this period acquired wealth by the several acts mentioned in the second Schedule by abuse or exploitation of Bakshi Ghulam Mohammad 's official position. The first question is, whether these are matters of public importance. Two of the learned Judges held that they were not and the third took the contrary view. This was put on two grounds. First, it was said that these matters were not of public importance because they had to be so at the date of the Notification and they, were not so on that date as Bakshi Ghulam Mohammad did not then hold any office in the Government. It was next said that there was no evidence of public agitation in respect of the conduct complained of and this showed that they were not matters of public importance. We do not think that either of these grounds leads to the view that the matters were not of public importance. As regards the first, it is difficult to imagine how a Commission can be set up by a Council of Ministers to inquire into the acts of its head, the Prime Minister, while he is in office. It certainly would be a most unusual thing to happen. If the rest of the Council of Ministers resolves to have any inquiry, the Prime Minister can be expected to ask for their resignation. In any case, he would himself go out. If he takes the first course, then no Commission would be set up for the Ministers wanting the inquiry Would have gone. If he went out himself, then the Commission would be set up to inquire into the acts of a person who was no longer in office and 407 for that reason, if the learned Judges of the High Court were right, into matters which were not of public importance. The result would be that the acts of a Prime Minister could never be inquired into under the Act. We find it extremely difficult to accept that view. These learned Judges of the High Court expressed the view that the acts of Bakshi Ghulam Mohammad would have been acts of public importance if he was in office but they ceased to be so as he was out of office when the Notification was issued. In taking this view, they appear to have based themselves on the observation made by this Court in Ram Krishan Dalmia vs Shri Justice section R. Tendolkar(1) that "the conduct of an individual may assume such a dangerous proportion and may so prejudicially affect or threaten to affect the public well being as to make such conduct a definite matter of public importance, urgently calling for a full inquiry". The learned Judges felt that since Bakshi Ghulam Mohammad was out of office, he had become innocuous; apparently, it was felt that he could no longer threaten the public wellbeing by his acts and so was outside the observation in Dalmia 's case. We are clear in our mind that this is a misreading of this Court 's observation. This Court, as the learned Judges themselves noticed, was not laying down an exhaustive definition of matters of public importance. What is to be inquired into in any case are necessarily past acts and it is because they have already affected the public well being or their effect might do so, that they became matters of public importance. It is irrelevant whether the person who committed those acts is still in power to be able to repeat them. The inquiry need not necessarily be into his capacity to do again what he has already done and it may well be into what he has done. The fact that Bakshi Ghulam Mohammad is no longer in office does not affect he question whether his acts already done constitute matters of public importance. If once it is admitted, as it was done before us, that if he had been in office his acts would have been matters of public importance, that would be acknowledging that his acts were of this character. His resignation from office cannot change that character. A Minister, of course, holds a public office. His acts are necessarily public acts if they arise out of his office. If they are grave enough, they would be matters of public importance. When it is alleged that a Minister has acquired vast wealth for himself, his relations and friends, as is done here, by abuse of his official position, there can be no question that the matter is of public importance. It was said that the object of inquiry was to collect material for the prosecution of Bakshi Ghulam Mohammad and, therefore, the matters to be required into were not of public importance. This contention is, in our view, fallacious. It is of public importance that public men failing in their duty should be called upon (1) ; 5SCI 28 408 to face the consequences. It is certainly a matter of importance to the public that lapses on the part of the Ministers should be exposed. The cleanliness of public life in which the public should be vitally interested, must be a matter of public importance. The people are entitled to know whether they have entrusted their affairs to an unworthy man. It is said that the Notification did not mention anything about the steps to be taken to prevent recurrence of the lapses in future. But that it could not do. Before the facts were found steps could not be thought of, for the steps had to suit the facts. The inquiry proposed in this case will, in the course of finding out the lapses alleged, find out the process as to how they occurred and it is only after the process is known that steps can be devised to meet them. It was also contended that the inquiry was into allegations of misconduct against Bakshi Ghulam Mohammad and an inquiry into allegations was not contemplated by the Inquiry Act. We are wholly unable to agree. An inquiry usually is into a question. That question may arise on allegations made. Dabnia 's case(1) dealt with an inquiry ordered at least in part into allegations made against people in charge of a big mercantile enterprise. Allegations may very well raise questions of great public importance. Suppose it is alleged that people in a city are suffering from ill health and that is due to the contaminated water supplied by the city admi nistration. It cannot be said that these allegations about the existence of poor health and its causes are not matters of grave public importance. They would be so even if it was found that the people 's health was not poor and the water was not contaminated. It cannot also be said that allegations can never be definite. They can be as definite as any existing concrete matter. It must depend on what the allegation is. Then as to the question whether the allegations against Bakshi Ghulam Mohammad were not matters of public importance because there was no public agitation over them. The Notification itself and the affidavits filed in this case on behalf of the appellants in fact state that there had been allegations made by the public against Bakshi Ghulam Mohammad that he had amassed a large fortune by the misuse of his office. But it was said that there was no proof that the allegations had actually been made. Whether there was proof would depend on whether the statements in the Notification and the affidavits were accepted or not. We are, however, unable to agree that a matter cannot be of public importance unless there was public agitation over it. Public may not be aware of the gravity of the situation. They may not know the facts. Some members of the public may be aware of individual cases but the entire public may not know all of them. There may have been influences working to prevent public agitation. Again, whe (1)[1959] S.C.R. 279. 409 ther a matter is of public importance or not has to be decided essentially from its intrinsic nature. If a matter is intrinsically of public importance, it does not cease to be so because the public did not agitate over it. Take this case. Suppose the Government sets up a Commission to inquire into the mineral wealth in our country. The public are not likely to agitate over this matter for they would not know about the mineral wealth at all. Can it be said that the inquiry does not relate to a matter of public importance because they did not agitate over it? The answer must plainly be in the negative. This would be so whether there were in fact minerals or not. Considering the allegations contained in the Notification by themselves, we think for the reasons earlier mentioned, that they constitute matters of public importance even if there was no public agitation over them. It was said that G. M. Sadiq, D. P. Dhar and various other people had praised the administration of Bakshi Ghulam Mohammad. That they no doubt did. But these were speeches made in support of party politics. They might again have been made without knowledge of full facts. They cannot, in any event, turn a matter of public importance into one not of that character. It was then pointed out that the Notification only mentioned that the matters were of public importance but did not say that they were definite matters of public importance. The Act, as we have earlier pointed out, requires that the matters to be inquired into shall be definite matters of public importance. But this omission of the word "definite" in the Notification does not, in our opinion, make any difference. A Court can decide whether the matters to be inquired into are definite matters of public importance. 'Definite ' in this connection means something which is not vague. One of the learned Judges of the High Court held that the matters set out in the second Schedule were vague as some of the instances did not give any date or year. He also said that the note at the end of the second Schedule., to which we have earlier referred, added to the vagueness. We are unable to accede to this view. What the learned Judge had in mind was apparently the particulars of the acts. In most cases, the acts are identifiable from the particulars given in the second Schedule in respect of them. Further, it is obvious that they had to be identified at the hearing and could not be proved nor any notice taken of them unless that was done. It does not appear to have been contended before the Commission that there was any matter not so identifiable. Neither do we think that the note drawing attention to the gravamen of the charges at the end of the second schedule indicates any indefiniteness. In most of the allegations it had been expressly stated that the act was done by the misuse of Bakshi Ghulam Mohammad 's official position and by his permitting others to exploit that it is this which made the matters, matters of public importance and it was for greater safety that the note was appended so that no 5SCI 28(a) 410 doubt was left as to the gravamen of the charge in each of the allegations made. The next point against the validity of the Notification was based on section IO of the Act which is in these terms: "10. (1) If at any stage of the inquiry the Commission considers it necessary to inquire into the conduct of any person or is of opinion that the reputation of any person is likely to be prejudicially effected by the inquiry, the Commission shall give to that person a, reasonable opportunity of being heard in the inquiry and producing evidence in his defence; Provided that nothing in this sub section shall apply when the credit of a witness is being impeached. (2)The Government, every person referred to in sub section (1) and with the permission of the Commission, any other person whose evidence is recorded by the Commission: (a) may cross examine any person appearing before the Commission other than a person produced by it or him as a witness, (b) may address the Commission. (3) It was contended that it showed that an inquiry may be made under the Act into the conduct of a person only incidentally, that is to say, it can be made only when that becomes necessary in connection with an inquiry into something else. It was, therefore, contended that the present inquiry which was directly into the conduct of Bakshi Ghulam Mohammad was outside the scope of the Act. It was also said that section 10 gives a statutory form to the rules of natural justice and provides for the application of such rules only in the case when a person 's conduct comes up for inquiry by the Commission incidentally. It was then said that the Act could not have contemplated an inquiry directly into the conduct of an individual since it did not provide specifically that he should have the right to be heard, the right to cross examine and the right to lead evidence which were given by section 10 to the person whose conduct came to be inquired into incidentally. We are unable to accept this view of section 10. Section 3 which permits a Commission of Inquiry to be appointed is wide enough to cover an inquiry into the conduct of any individual. It could not be a natu ral reading of the Act to cut down the scope of section 3 by an implication drawn from section 10. We also think that this argument is illfounded for we are unable to agree that section 10 does not apply to a person whose conduct comes up directly for inquiry before a Commission set up under section 3. We find nothing in the words of section 10 to justify that view. If a Commission is set up to inquire directly into the conduct of a person, the Commission must find 411 it necessary to inquire into that conduct and such a person would therefore, be one covered by section 10. It would be strange indeed if the Act provided for rights of a person whose conduct incidentally came to be enquired into but did not do so in the case of persons whose conduct has directly to be inquired into under the order setting up the Commission. It would be equally strange if the Act contemplated the conduct of a person being inquired into incidentally and not directly. What can be done indirectly should obviously have been considered capable of being done directly. We find no justification for accepting the reading of the Act which learned counsel for Bakshi Ghulam Mohammad suggests. The next attack on the Notification was that it had been issued mala fide. One of the learned Judges of the High Court expressly rejected this contention and the others also seem to have been of the same view for they did not accept it. We find no reason to accept it either. In that view of the matter, we consider it unnecessary to discuss this aspect of the case in great detail. We have set out the broad events of the case and it is on them that the case of mala fide is based. It is not in dispute that for some time past there was political rivalry between Bakshi Ghulam Mohammad and G. M. Sadiq. It was also said that there was personal animosity because G. M. Sadiq wanted to advance the interest of his relatives and followers by ousting persons belonging to Bakshi Ghulam Mohammad 's group in various fields. This allegation of personal animosity cannot be said to have been established. It is really on the political rivalry and the events happening since September 21, 1964 that the allegation of male fide is founded. It was said that the steps taken since the arrest of Bakshi Ghulam Mohammad down to the setting up of the Commission of Inquiry were all taken with the intention of driving him out of the political life so that G. M. Sadiq would have no rival as a political leader. First, as to the arrest. The case of Bakshi Ghulam Mohammad was that the arrest was mala fide. On the other side, it was said that since about July 1964 various allegations of abuse of power by Bakshi Ghulam Mohammad some of which formed the subject matter of inquiry, had come to the notice of the Government and thereupon investigations were started by the Criminal Investigation Department at the instance of the Government. In order to stop the investigation Bakshi Ghulam Mohammad and his followers started dowdyism and other form of breaches of law and order endangering public safety and maintenance of public order. It was pointed out that the situation in Kashmir had not been easy for some time past due to the hostile intentions of Pakistan and China and breach of law and order added to the seriousness of the position. It was said that for these reasons Bakshi Ghulam Mohammad had to be arrested and detained under the Defence of India Rules. it was said on behalf of Bakshi Ghulam Mohammad that prior to the arrest, a no confidence motion had been sponsored and had actually gathered in volume and the arrest was made to stultify 412 it. What support the no confidence motion had we do not know. It would appear however that the Criminal Investigation Department had been making inquiries against Bakshi Ghulam Mohammad 's acts for some time past and the situation in Kashmir was inflammable. In those circumstances, it cannot be said that Bakshi Ghulam Mohammad 's arrest was mala fide. He was no doubt released from arrest after a petition had been moved for his release and before the petition was heard. It was said that he was released because the Government found that the petition was bound to succeed. We have no material before us on which we can say that the petition was bound to succeed. On behalf of G. M. Sadiq and D. P. Dhar it was said that he was released because of ill health. This does not appear to have been denied. It was also said on behalf of G. M. Sadiq that the investigation having been completed there was no cause for Bakshi Ghulam Mohammad to instigate breaches of law and order and therefore it was not necessary to keep him in detention any longer. On the evidence before us, we are unable to say that the case made by G. M. Sadiq cannot be accepted. As to the prorogation of the Assembly, it is said by the appellants that it was necessary because it was apprehended that if the Assembly met, there might have been trouble inside the House created by Bakshi Ghufam Mohammad 's followers who resented the arrest. On the materials before us, we are unable to say that this apprehension was pretended. It was also said by the appellants that the prorogation had been decided upon before the arrest of Bakshi Ghulam Mohammad but the order could not be passed because the Sadar i Riyasat was out of Srinagar from before September 15, 1964 when both the arrest and prorogation had been decided upon and did not return there till some time on September 21, 1964. The fact that the Sadar i Riyasat returned on that date is not denied. As we have said, the arrest and the prorogation took place on the next day, that is, September 22, 1964. Bakshi Ghulam Mohammad was released on December 15, 1964 and the Notification challenged was issued on January 30, 1965. On these facts, we are unable to hold that Bakshi Ghulam Mohammad has been able to establish that the inquiry had been set up mala fide owing to political rivalry. It has been said on behalf of the appellants that there could be no political rivalry because, as appears from Bakshi Ghulam Mohammad 's own affidavit, he had declared his intention to retire from politics. On behalf of Bakshi Ghulam Mohammad it was stated that G. M. Sadiq had made a statement that he would be released after a Commission of Inquiry was set up and this would show that the detention was mala fide and that would indicate that the Notification had also been issued mala fide. That statement is not before us. On behalf of G. M. Sadiq it was said that such a statement had not been made and what had been said was that he would be released after the completion of investigation by the Criminal Investigation Department as thereafter, there 413 will be no occasion for Bakshi Ghulam Mohammad to disturb the public peace and safety. It was also said that it had been mentioned that after the completion of the investigation, the Commission of Inquiry would be set up. This is not denied. It however does not make the arrest mala fide. It was further said by Bakshi Ghulam Mohammad that the statement showed that the Commission was set up to prevent him from disturbing public safety and law and order and that, therefore, it was outside the scope of the Inquiry Act. This was denied on behalf of G. M. Sadiq. In the absence of the statement, it is impossible for us to say which is the correct version. Another point taken was that the affidavits filed on behalf of the appellants showed that the Government were satisfied about the correctness of the allegations into which the inquiry was directed. It was contended that since the inquiry is for finding facts, if the Government were already satisfied about them, there was no need for further inquiry. This contention has no force at all. What the affidavit really said was that the Government were prima facie satisfied. They had to be so before they could honestly set up the Commission to make the inquiry. It was said on behalf of G. M. Sadiq that before setting up the Commission the Government had investigated into the facts through the Criminal Investigation Department and if the Government 's intention was mala fide, they could have started criminal proceedings and ruined the political life of Bakshi Ghulam Mohammad just as well thereby and kept him busy and out of politics for a long time. It was pointed out that this might have resulted in serious consequences for Bakshi Ghulam Mohammad which the Commission of Inquiry would not. It was also pointed out that the Commissioner appointed was a retired Judge of the Supreme Court of India. All this, it was said, would indicate that the action had not been prompted by malice. We cannot say that these contentions of the appellants have no force. The next ground of attack on the Notification was based on article 14. It was said that most of the matters into which the Commission had been directed to inquire formed the subject matters of Cabinet decisions. It was pointed out that since such matters are confidential and no one is allowed to divulge in what way the members of the Cabinet voted on them, it must be held that they were all equally responsible for the acts sanctioned. That being so, it was contended that by picking Bakshi Ghulam Mohammad out of the entire Cabinet for the purpose of the Inquiry the Government had discriminated against him in a hostile way. It was contended that the Notification must be set aside on that ground. We find this contention untenable. The inquiry is in respect of wealth acquired by Bakshi Ghulam Mohammad and his friends and relatives by misuse of his official position. It would be strange if all the members of the Cabinet voluntarily abused their office for putting money into the pockets of Bakshi Ghulam Mohammad and his friends. Let us, however, assume that all the 414 members of the Cabinet assisted Bakshi Ghulam Mohammad in doing this. It is however not said that other members had acquired wealth by these acts. He was, therefore, in a class by himself. This classification has further a rational connection with the setting up of the Commission, for the object is to find out whether the wealth had been acquired by Bakshi Ghulam Mohammad by the abuse of official position. It remains now to deal with the last point. This was directed against the proceedings of the Commission. It was said that the proceedings had been conducted in a manner contrary to the rules of natural justice and to statutory provisions. Two specific complaints were made. The first was that the Commission had not allowed Bakshi Ghulam Mohammad to inspect all the documents before he was called upon to answer the allegations made against him. The second was that the Commission had refused him permission to cross examine persons who had filed affidavits supporting the allegations made against him. We have now to set out the procedure followed by the Commission. It first called upon the Government to file affidavits in support of the allegations in the second schedule to the Notification and to produce the documents which supported them. It then asked Bakshi Ghulam Mohammad to file his affidavit in answer. Thereafter the Commission decided whether any prima facie case had been made for Bakshi Ghulam Mohammad to meet and in that process rejected some of the allegations. Bakshi Ghulam Mohammad was told that there was no case, which be had to meet in respect of them. Out of the remaining allegations, a group was selected for final consideration and it was decided that the rest would be taken up gradually thereafter. In connection with that group of cases, counsel for Bakshi Ghulam Mohammad wanted to cross examine all the persons who had filed affidavits supporting the Government 's allegations in the cases included in that group. The Commissioner ordered that he would not give permission to cross examine all the deponents of affidavits but would decide each case separately. It was after this that the petition for the writ was presented. The question of inspection is no longer a live question. It is true that when Bakshi Ghulam Mohammad was directed to file his affidavits he had not been given inspection of ' all the documents and files which the Government proposed to use to support their case. On behalf of Bakshi Ghulam Mohammad it was said that this was a denial of the rules of natural justice. It is not necessary to consider this question because it is admitted that since then inspection of the entire lot of files and documents has been given. At the final hearing of the allegations, therefore, Bakshi Ghulam Mohammad would no longer be at any disadvantage. The next point is as to the right of cross examination. This claim was first based on the rules of natural justice. It was said 415 that these rules require that Bakshi Ghulam Mohammad should have been given a right to cross examine all those persons who had sworn affidavits supporting the allegations against him. We are not aware of any such rule of natural justice. No authority has been cited in support of it. Our attention was drawn to Meenglas Tea Estates vs Their Workmen(1), but there all that was said was that when evidence is given viva voce against a person be must have the opportunity to hear it and to put the witnesses questions in cross examination. That is not our case. Furthermore, in Meenglas Tea Estate case(1) the Court was not dealing With a fact finding body as we are. Rules of natural justice require that a party against whom an allegation is being inquired into should be given a hearing. Bakshi Ghulam Mohammad was certainly given that It was said that the right to the hearing included a right to cross examine. We are unable to agree that is so. The right must depend upon the circumstances of each case and must also depend on the statute under which the allegations are being inquired into. This Court has held in Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam(1) that "the rules of natural justice vary with the varying constitution of statutory bodies and the rules prescribed by the Act under which they function; and the question whether or not any rules of natural justice had been contravened, should be decided not under any preconceived notions, but in the light of the statutory rules and provisions. " We have to remember that we are dealing with a statute which permits a Commission of Inquiry to be set up for fact finding purposes. The report of the Commission has no force proportion vigorous. This aspect of the matter is important in deciding the rules of natural justice reasonably applicable in the proceedings of the Commission of Inquiry under the Act. 'Then we find that section 10 to which we have earlier referred, gives a right to be heard but only a restricted right of cross exaniination. The latter right is confined only to the witnesses called to depose against the person demanding the right. So the Act did not contemplate a right of hearing to include a right to crossexamine. It will be natural to think that the statute did not intend that in other cases a party appearing before the Commission should have any further right of cross examination. We, therefore. think that no case has been made out by Bakshi Ghulam Mohammad that the rules of natural justice require that lie should have a right to cross examine all the persons who had sworn affidavits supporting the allegations made against him. We will now deal with the claim to the right to cross examine based on statutory provision. That claim is based on section 4(c) of the Act. The relevant part of the section is as follows: "The Commission shall have the power of a Civil Court. while trying a suit under the Code of Civil Proce (1) ; (2) ; 416 dure Svt. 1977, in respect of the following matters, namely: (a) summoning and ao enforce the attendance yof an person and examining him on oath; (b) (c) receiving evidence on affidavits" ' It is not in dispute that the Code of Civil Procedure of Jammu and Kashmir State referred to in this section is in the same terms as the Indian Code of Civil Procedure. Order 19 r. I. of the Indian Code reads as follows: "Any Court may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness may be read at the hearing, on such conditions as the Court thinks reasonable: Provided that where it appears to the Court that either party bona fide desires the production of a witness for cross examination, and that such witness can be produced, an order shall not be made authorising the evi dence of such witness to be given by affidavit. " The contention is that the powers of the Commission therefore to order a fact to be proved by affidavit are subject to the proviso that power cannot be exercised when a party desires the production of the persons swearing the affidavits for cross examining them. The contention was accepted by the High Court. We take a different view of the matter. We first observe that the inquiry before the Commission is a fact finding inquiry. Then we note that section 10 which, in our opinion, applies to a person whose conduct comes up for inquiry by the Commission directly, has a right to cross examine only those persons who give viva voce evidence before the Commission against him. If section 4(c) conferred a right to cross examine every one who swore an affidavit as to the facts involved in the inquiry, then section 10(2) would become superfluous. An interpretation producing such a result cannot be right. It also seems to us that O. 19 r. I has to be read with O. 18 r. 4 which states that the evidence of the witnesses in attendance shall be taken orally in open court. It would appear, therefore, that O. 19 r. I. is intended as a sort of exception to the provisions contained in O. 18 r. 4. The Act contains no provision similar to O. 18 r. 4. Therefore, when section 4(c) of the Act gave the Commission the power of receiving evidence on affidavits, it gave that as an independent power and not by way of an exception to the general rule of taking evidence viva voce in open court. It would be natural in such circumstances to think that what the Act gave was only the power 417 to take evidence by affidavit and did not intend it to be subject to the proviso contained in O. 19 r. I. If it were not so, then the result really would be to require all evidence before the Commission to be given orally in open court. If that was intended, it would have been expressly provided for in the Act. We should here refer to Khandesh Spinning etc. Co. Ltd. vs Rashtriya Girni Kamgar Sangh(1) where this Court dealing with a somewhat similar section like section 4(c) observed that facts might be proved by an affidavit subject to O. 19 r. (1). The observations appear to have been obiter dicta. In any case that case was dealing with a statute different from the one before us. The observation there made cannot be of much assistance in interpreting the Jammu and Kashmir Inquiry Act. The number of witnesses swearing affidavits on the side of the Government may often be very large. In fact, in this case the number of witnesses swearing affidavits on the side of the Government is, it appears, in the region of four hundred. The statute could not have intended that all of them had to be examined in open court and subjected to cross examination, for then, the proceedings of the Commission would be interminable. We feel no doubt that the Act contemplated a quick disposal of the business before the Commission, for, otherwise. the object behind it might have been defeated. While on this topic, we would impress upon the Commission the desirability of speedy disposal of the inquiry. For these reasons, in our view, section 4(c) of the Act does not confer a right on a party appearing before the Commission to require a witness giving evidence by an affidavit to be produced for his cross examination. The Commission would, of course, permit cross examination in a case where it thinks that necessary. The view that we take should not put any party in any difficulty. He can always file affidavits of his own denying the allegations made in affidavits filed on behalf of the other party. If the evidence on both sides is tendered by affidavits, no one should be at any special disadvantage. We have also to remember that section 9 of the Act gives the Commission power to regulate its own procedure subject to any rules made under the Act. We find that the rules provide that evidence may be given by affidavits and the Commission may after reading it, if it finds it necessary to do so, record the evidence of the deponents of the affidavits and also of others; see ff. 6, 7 and 8. Rule 10 reproduces the restricted right of cross examination given by section 10. Rule 11 says that in all matters not provided by the rules, the Commission may decide its own procedure. One of the matters covered by the rules is cross examination of witnesses. So the rules contemplate cross examination as a matter of procedure and the Commission is free to decide what cross examination it will allow provided that in doing so it cannot go behind the rules relating to cross examination. Section 9 of the Act has to be read in the light of these rules. All this. we think, supports (1)[1060] 2 S.C.R. 841. 418 the interpretation we have put on section 4(c). We also feel that the procedure before a body like the Commission has necessarily to be flexible. We, therefore, reject the last contention. In our view, for these reasons, the judgment of the High Court cannot be supported. We accordingly set it aside. The appeal is allowed. Appeal allowed.
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The first respondent became a member of the Council of Ministers of the State of Jammu and Kashmir in 1947 and was the Prime Minister of the State from 1953 'to January 1963, when he resigned.
Thereafter a Notification was issued by the State Government under section 3 of the Jammu and Kashmir Commission of Inquiry Act 1962 setting up a Commission to inquire into the wealth, acquired by the first respondent and certain specified members of his family during his period of office; the Commission was also to inquire whether in acquiring this wealth there was any abuse of his official position by the first respondent or the said relatives.
The Commissioner so appointed held certain sittings between February 1965 and August 1965 in which the first respondent took part.
In September 1965 he filed a writ petition before the High Court of Jammu and Kashmir and the High Court, allowing the said petition, set aside the Notification instituting the inquiry and quashed the proceedings of the Commission.
The State appealed to the Court.
HELD: (i) Section 37 of the Constitution of Jammu and Kashmir talks of the collective responsibility of Ministers to the Legislative Assembly.
That, only means that the Council of Ministers will have to stand or.
fall together, every member being responsible for the action of any other.
The section does not mean that a Minister is responsible for his acts only to the Legislature and no action can be taken against him except for criminal or tortuous acts, in the ordinary course of law, unless the Legislature by a resolution demanded it.
No British convention to this effect, if any, can be said to have been adopted by section 37.
Furthermore, the responsibility to the Legislature is of the Council of Ministers, and not of those who have, like the first respondent ceased to be Ministers.
[405C E].
(ii)Section 3 of the Commission of Inquiry Act expressly gives power to Government as well as to both the Houses of Legislature to initiate action instituting an inquiry.
When enacting it the Legislature obviously did not consider that there was any convention or anything in section 37 which prevented a Commission of Inquiry being set up under the Act at the instance of the Government or the Legislative Council.
[405F G], (iii)The acts of a Minister while in office do not cease to be matters of public importance after he ceases to hold office; their character cannot change.
When it is alleged that a Minister has acquired vast wealth for himself and his friends by abuse of his official ' position, there can be no question that the matter is of public 402 importance.
It does not cease to be of public importance merely because what is proposed is to inquire into allegations and not into the steps to be taken to prevent lapses in the future.
Nor can absence of public agitation show that the facts to be inquired into are not of, public importance.
[407E G; 408 G] Ram Krishan Dalmia vs Shri Justice section R. Tendolkar, ; , referred to.
(iv) It is incorrect to say that) allegations mentioned are not definiteor that an inquiry into them is not contemplated by the Inquiry Act.
[409 E F] (v) It cannot be inferred from the provisions of section 10 of the Act that a Commission of Inquiry can inquire into the conduct of a person only incidentally, when the main inquiry is in respect of something else.
What can be done indirectly should obviously have been considered capabe of being done directly.
[411B] (vi)On the facts of the case the inquiry could not be said to be mala fide.
[412F] (vii)The. doctrine of Cabinet responsibility does not mean that if an inquiry was made against one of the members of the Cabinet that would be discrimination under article 14.
The respondent was in a class, by himself and the classification was justified.
[414A B] (viii)The rule of natural justice only requires that a hearing should be given.
When the Commission refused permission to the first respondent to cross examine all the witnesses who had filed affidavits against him no rule of natural justice was violated.
[415G] Meenglas Tea Estate V. Their Workmen, [1964]2 S.C.R. 165 and Nagendra Nath Bora vs Commissioner of Hills Division & Appeals, ,Assam ; (ix)Section 10 of the Act gives a right to cross examine only these persons who give viva voce evidence before the Commissioner.
[416F] (x)Section 4(c) of the Act does not confer a right on a party appearing before the Commission to require a witness giving evidence by affidavit to be produced for his cross examination.
The Commission would, of course, permit cross examination in a case where it thinks that necessary.
[417E]
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The first person in this case became a member of the government in Jammu and Kashmir in 1947. He was the Prime Minister of the state from 1953 until he quit in January 1963.
After that, the state government made an order under a law called the Jammu and Kashmir Commission of Inquiry Act of 1962. This order set up a Commission to look into the money and property that the first person and some of his family members got while he was in office. The Commission was also supposed to find out if he or his family used his position unfairly to get this wealth.
The Commissioner, who was in charge of the Commission, held meetings between February and August 1965. The first person in this case attended these meetings.
In September 1965, he filed a legal paper called a writ petition in the High Court of Jammu and Kashmir. The High Court agreed with him and canceled the order that started the investigation. They also stopped the Commission's work.
The state government then appealed this decision to a higher court.
HELD: (i) Section 37 of the Jammu and Kashmir Constitution talks about how all the government ministers are responsible to the state's law-making body, called the Legislative Assembly.
This means that the ministers must work together and support each other. Each minister is responsible for what the others do.
However, this section doesn't mean that a minister is only responsible to the Legislative Assembly. It doesn't say that a minister can only be punished for breaking the law (like committing a crime or harming someone) if the Legislative Assembly demands it. Any British custom that says this is not part of Section 37.
Also, the responsibility to the Legislative Assembly belongs to the group of ministers as a whole, not to people who used to be ministers, like the first person in this case.
(ii) Section 3 of the Commission of Inquiry Act clearly gives the government and both parts of the Legislative Assembly the power to start an investigation.
When they made this law, the lawmakers didn't think that any custom or Section 37 would stop a Commission of Inquiry from being set up by the government or the Legislative Council.
(iii) The things a minister does while in office are still important to the public even after they leave office. Their importance doesn't change.
When it's said that a minister got a lot of money and property for himself and his friends by misusing his position, that's definitely a matter of public importance.
It doesn't become less important just because the plan is to investigate the claims instead of taking steps to prevent problems in the future. Also, just because people aren't publicly upset doesn't mean the facts being looked into aren't important to the public.
Ram Krishan Dalmia vs Shri Justice section R. Tendolkar, case is mentioned.
(iv) It's wrong to say that the claims aren't clear or that the Inquiry Act doesn't allow an investigation into them.
(v) We can't assume from Section 10 of the Act that a Commission of Inquiry can only look into someone's actions as a side issue, when the main investigation is about something else. If something can be done indirectly, it should also be able to be done directly.
(vi) Based on the facts of this case, the investigation can't be called unfair or dishonest (mala fide).
(vii) The idea of government responsibility doesn't mean that investigating one member of the government is unfair treatment under Article 14 of the Constitution.
The person being investigated is in a unique situation, and the way they are being treated is justified.
(viii) The basic rules of fairness only say that a person should have a chance to be heard.
When the Commission didn't allow the first person in this case to question all the witnesses who made written statements against him, it didn't violate any rules of fairness.
Meenglas Tea Estate V. Their Workmen, and Nagendra Nath Bora vs Commissioner of Hills Division & Appeals, Assam cases are mentioned.
(ix) Section 10 of the Act only gives someone the right to question people who give spoken evidence to the Commissioner.
(x) Section 4(c) of the Act doesn't give a party appearing before the Commission the right to demand that a witness who gave evidence in writing be brought in for questioning.
The Commission can allow questioning if they think it's necessary.
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ppeals from" judgments and decrees of the High Court of Judicature at Calcutta dated 25th August, 1943, in First Appeals Nos. 20 and 173 of 1939 which arose out of a decision of the President of the Calcutta Improvement Tribunal in Case No. 95 of 1935. Civil Appeals Nos. 95 and 96 of 1949. Panchanan Ghose (Upendra Chandra Mullick, with him) for the appellant in Civil Appeal No. 95 and respondent in Civil Appeal No. 96. S.P. Sinha (Nagendra Nath Bose, with him) for respond ents Nos. 1 to 3 in Civil Appeal No. 95 and appellants Nos. 1 to 3 in Civil Appeal No. 96. S.N. Mukherjee, for respondent No. 4 in Civil Appeal No. 95. March 14. The judgment of the Court was delivered by FAZL ALl J. These appeals are directed against the judgment and decree of the High Court of Judicature at Fort William in West Bengal, confirming a decision of the Presi dent of the Calcutta Improvement Tribunal, which modified an award of the First Land Acquisition Collector of Calcutta, made under the Land Acquisition Act in respect of the acquisition of two premises, which may conveniently be referred to as Nos. 140 and 141, Cotton Street. In order to understand the points of contest between the various claimants to the compensation awarded in the case, it seems necessary to refer to certain facts showing how they came to be interested in the premises which are the subject matter of the land acquisition proceedings. These premises belonged at one time to one Sewanarayan Kalia, and afterwards they became the property of a deity, Sree Sree Iswar Gopal Jieu Thakur, installed by Sewanarayan Kalia at Chinsurah in the district of Hoogly. Sewanarayan, who had three wives, died in 1836, leaving behind him his third wife, Muni Bibi, two daughters by his 334 predeceased wives, these being Jiban Kumari and Amrit Ku mari, and a mistress named Kissen Dasi. On the 23rd August, 1836, these persons executed a deed of solenama which was in the nature of a family arrangement, by which the remainder of the estate of Sewanarayan (i.e., what was left after excluding the dedicated properties) was divided in the terms of his will, with the result that Muni Bibi got subject to certain conditions, among other properties, the premises described as 140, Cotton Street, and Jiban Kumari got the contiguous premises, No. 141, Cotton Street. Muni Bibi and Jiban Kumari also became the she baits of the Thakur or deity with power to appoint their successors. On the 20th January, 1848, Muni Bibi by an arpannama dedicated 140, Cotton Street, to the Thakur. It is recited in this deed, among other things, that on account of annual droughts and inundation and consequent diminution in the produce of the lands, certain properties dedicated to the sewa of the deity had been sold for arrears of revenue, that "Jiban Kumari had been making advances from her private funds for the expenses of jatra, mahotsob etc. , of the deity, when the amount fell short, this being against the provisions laid down by her late husband", that the house known as 140, Cotton Street, having been let out, was yielding a rent of Rs. 30 p.m., that after deducting the necessary expenses the surplus income left was Rs. 20 p.m., and that "if this amount was included in the expenses for the sheba etc., of the deity every month, the provision made by her deceased husband may remain in force. " After reciting these facts, it is stated that the rental of the house "shall be permanently and perpetually included in the expenses of the sheba. " About 20 years later, on the 30th September, 1869, Muni Bibi created a permanent (maurasi mokrari) lease of the premises bearing No. 140, Cotton Street, in her capacity as a shebait in favour of one Nehal Chand Panday (who was admittedly a benamidar for one Bhairodas Johurry), at a rental of Rs. 25 p.m. (See exhibit L a kabuliyat executed by Nehal Chand in favour of Muni Bibi). In the same year, on the 8th 335 December, Jiban Kumari granted a permanent lease to Bhairo das Johurry, in respect of the premises known as 141, Cotton Street at a rental of Rs. 90 p.m. (See exhibit K a kabuliy at executed by Johurry in favour of Jiban Kumari). The main question which has been raised in this case is whether the two ladies were competent to give debutter properties by way of permanent lease to another person. In 1870, Muni Bibi died, and, on the 15th January, 1872, Jiban Kumari ap pointed Gourimoni Devi a shebait by a registered deed and dedicated the premises known as 141, Cotton Street, to the deity. Both Jiban Kumari and Gourimoni Debi died shortly afterwards, and Gopal Das, a minor son of Gourimoni, became the shebait of the idol. During his minority, his father, Raghubar Dayal, became his certificated guardian, and, in that capacity, he executed a usufructuary mortgage deed in respect of the Cotton Street properties to one Lal Behari Dutt, on the 31 August, 1878. After the death of Raghubar Dayal one Ajodhya Debi and after her one Kalicharan Dutta became the certificated guardian of Gopal Das, and, on the 17th August, 1890, the latter mortgaged some debutter properties including 140and 141, Cotton Street, to Lal Behari Dutt for a sum of Rs. 2,230. On attaining majority, Gopaldas executed on the 17th January, 1896, a usufructuary mortgage deed in respect of all debutter properties includ ing the Cotton Street houses in favour of Lal Behari Dutt for paying the previous mortgage dues which amounted on that date to Rs. 4,955 and odd. This deed provided among ' other things that the mortgagee was to collect rents, outgoings, carry on the sheba of the deity, and that whatever balance was left out of the income of the property was to go towards the satisfaction of the mortgage dues. Gopaldas died in 1900, leaving behind him surviving his widow, Annapuma, who also died in 1905. By 1918, Lal Behari Dutt also was dead, and his interest in the mortgaged properties, to which reference has been made, was sold to one Naba Kishor Dutt on the 12th December, 1918. On the 17th November, 1933, Naba Kishor assigned the mortgagee 's 336 interest in the mortgaged properties to two of the Bagarias, respondents 1 and 2 in appeal No. 95, and m the same year the three respondents (1 to 3) also acquired the lessee 's interest in the Cotton Street houses. The land acquisition proceedings, which have given rise to these appeals, were started about the year 1934 in respect of the premises bearing Nos. 140 and 141, Cotton Street, as well as two adjoining premises with which we are not concerned in this case. In these proceedings, the following claims were put forward by three sets of persons: 1. The Bagarias (respondents 1 to 3 in appeal No. 95) at first claimed the entire amount of compensation on the allegation that they were the absolute owners of the prem ises in question, but later on they claimed only as mortga gees and permanent lessees of those premises. On behalf of the deity, the entire amount of compen sation money was claimed by Deosaran Singh and Ram Lakshman Singh, who alleged themselves to be shebaits, on the basis that the premises in question were debutter properties of the deity, and the Bagarias had acquired no interest therein either by the assignment of the usufructuary mortgage or the alleged purchase of the tenant 's rights in the properties. Respondent No. 4 claimed compensation as a lessee for 99 years on the basis of a lease alleged to have been given to him by the original landlords. In the present appeals, we are concerned with the first two claims only, and we shall briefly state how they were dealt with by the Collector and the courts below. On the 22nd May, 1935, the Collector awarded Rs. 31,740 as compen sation for landlord 's interests, to be shared by the deity as owner and two of the Bagarias, respondents Nos. 1 and 2 in appeal No. 95 in their capacity of usufructuary mortga gee, and awarded a sum of Rs. 1,58,000 to the respondents Nos. 1, 2 and a as compensation for their rights as perma nent tenants of the premises in question. Subsequently, 3 separate petitions of reference were filed 337 by the a claimants against the Collector 's award and the reference made by the Collector in pursuance thereof was registered as apportionment case No. 95 of 1935 in the Court of the Calcutta Improvement Tribunal. Meanwhile, Deosaran Singh and Ram Lakshman Singh, who had put in claims as shebaits, retired from the contest, and the President of the Tribunal appointed one Narendra Nath Rudra as the next friend of the deity to represent and protect its interests. On the 31st August, 1938, the President of the Tribunal gave his decision, by which he substantially upheld the award of the Collector, but modified it in one respect only. He held that the usufructuary mortgage, on the basis of which re spondents 1 and 2 had put in a claim, had been paid off and therefore they were not entitled to any compensation, and the whole sum of Rs. 31,740 should be paid to the deity. Respondents 1 to 3 however were held entitled to the sum of Rs. 1,58,000 as permanent tenants, on the ground that leases had been created for legal necessity and therefore were binding on the deity, He also held that the deity was not entitled to question the leases by virtue of article 134 (a) of the Limitation Act. Regarding costs, he directed that all costs incurred on behalf of the deity should be paid out of the compensation money lying in deposit in court. Two appeals were thereafter preferred to the High Court by the two main contesting parties and ultimately both these ap peals were dismissed, and the High Court upheld the decision of the Tribunal. Subsequently, the present appeals were preferred to this Court, the deity having obtained a certif icate granting leave to appeal from the High Court, and the Bagaria respondents having obtained special leave from the Privy Council to prefer a cross appeal. The main questions which arise in these appeals are : (1) whether the two mourasi mokrari leases, to which reference has been made were justified by legal necessity; and 44 338 (2) whether the mortgages on the basis of which the Bagarias had laid their claim to compensation had been satisfied. The first question arises in Appeal No. 05, and the second question arises in Appeal No. 96. So far as the question of legal necessity is concerned, there are concurrent findings of the Tribunal and the High Court against the appellant in appeal No. 95, but we allowed his counsel to argue the question at some length, because it was urged before us that on the facts of the case the point in issue was not a question of fact but one of mixed fact and law, especially as the decision of the High Court turned upon the construction of the leases and the inference drawn from the fact that the permanent nature of the tenancy had remained unquestioned for a very long period. The tenancy in question came into existence as long ago as 1869, and it is not surprising that no direct evidence bearing on the issue of legal necessity is available now. We have therefore to fall back upon the recitals in the documents, to ascertain the circumstances under which the documents, exhibits L and K, were executed, because it is well settled that if all the original parties to the trans action and those who could have given evidence on the rele vant points have passed away, a recital consisting of the principal circumstances of the case assumes greater impor tance and cannot be lightly set aside. [See Banga Chandra Dhar Biswas vs Jagat Kisore Chowdhuri(1) 1 It appears to us that the recitals in the documents afford valuable evidence, because the tenancies were created by two pious ladies who were keenly interested in the sheba of the deity and with regard to whom it was not suggested that they expected to derive any personal advantage from the transactions in question. It seems to us most unlikely that they would be parties to any untrue recitals merely to support the trans action. It may be recalled here that in 1848, certain properties belonging to the deity had been sold for arrears of rent, and Jiban Kumari (1) 43 I.A. 249. 339 had been supplementing the income of the residue from her own properties for meeting the expenses of performing cer tain essential services to the deity, such as jatra, mahot sob, etc. We also find from the arpannama that the value of the property which is the subject matter of the mokrari kabuliyat dated the 30th September, 1869 (exhibit L) was Rs. 2,000 in 1848, that it was not in the khas possession of Muni Bibi but had been let out to a tenant and that its net income was Rs. 20 p.m. At the time when the arpannama was executed, Muni Bibi clearly thought that the sum of _Rs. 20 p.m., if included in the expenses for the sheba of the deity, would enable the sheba to be carried on without any extraneous help. From the recitals in exhibit L, it appears that the house bearing No. 140, Cotton Street, was in a dilapidated condition and had collapsed in the rains of 1270 B.S. (1868 A.D.), and Muni Bibi was unable to bear the expenses of constructing a new building at the place. The problem before her therefore was whether the deity should go without any income from this property, or she should enter into such an arrangement as would secure a permanent income for the expenses of the deity, which should not in any case be less than the income which the property had theretofore yielded. She decided to choose what must have appeared to her to be the better and more prudent course, with the result that she got a sum of Rs. 500 cash for the deity as the price of the materials which were sold to the lessee, and also secured a regular monthly income of Rs. 25. There can be no doubt that the transaction was in the best inter ests of the deity and clearly beneficial to it. A reference to the arpannama shows that the house was in the possession of a, tenant even in 1848, and from the recitals in the document it is clear that what Muni Bibi contemplated was that the house should continue to remain in the possession of a tenant, and the rent of the house should be used for the sheba of the deity. At that time, she did not contemplate any other mode of using the property she was going to dedicate. We do not know who was the tenant of the 340 house in 1848 and what were the commitments of Muni Bibi at that time, but, even apart from these facts, it is difficult to believe that a devout person like her, who was not only a shebait but also the widow of the founder of the deity and who had shown such keen interest for the upkeep of the worship of the deity, should have entered into the transac tion in question unless she considered it absolutely neces sary to do so. The contention put forward before us is that it has not been shown that there was no other course open to Muni Bibi than to. grant a permanent lease in respect of the property, but it is manifest that at this distance of time no evidence can be available to show the actual pressure or necessity which impelled Muni Bibi to adopt the course she did. It is now well settled that where the validity of a permanent lease granted by a shebait is called into question a long time after the grant, although it is not possible to ascertainfully what the circumstances were in which it was made, the court should assume that the grant was made for necessity so as to be valid beyond the life of the grantor. [See Bava Magniram Sitgram vs Kasturbhai Manibhai(1)]. In the present case, the circumstances which can be gathered from the recitals together with the fact that the document has remained unquestioned for more than half a century, seem to us to be quite sufficient to support the conclusion that the grant was made for legal necessity and is binding on the deity. On the facts narrated, it would appear that there were several shebaits between the death of Muni Bibi and the commencement of the present litigation, but the lease was never impugned as being beyond the power of the shebait who granted it. On the other hand, we find that the permanent character of the lease was recognized in a deed executed by Gourimoni on the 18th October, 1873 (exhibit Y), and in a mortgage deed executed by Raghubar Dayal, the guardian of Gopaldas, on the 31st August, 1878. The properties in question were subsequently mortgaged by Kali Charan Dutt and Gopaldas, but neither of these persons nor (1) 41 I. A. 54. 341 the mortgagees ever came forward to question the permanent nature of the tenancy. The counsel for the appellant relied upon exhibit VI, which is a copy of the judgment of the High Court in a suit instituted by Nabakishore Dutt in 1995 against the Adminis trator General of Bengal for the rent of the house in ques tion. It appears from this judgment that the tenancy was admitted by the defendant and it was also admitted by him that rent was due, but he claimed that he was entitled to insist upon a receipt specifying the money to have been paid as mourasi mokrari rent. The learned Judge, who dealt with the case, however, thought that the point raised by the defendant did not strictly speaking arise in a suit for rent, which according to him could not be converted into a suit for declaration of title, and on that basis, he passed a decree in favour of the plaintiff. The judgment does not say in so many words that Nabakishore resisted the claim as to the tenancy being mourasi mokrari, but, however that may be, assuming that such an assertion was really made by him, it cannot affect the character of a tenancy which had re mained unquestioned for nearly half a century. The legal position with regard to 141, Cotton Street, is almost identical with that of the adjoining premises with which we have already dealt. As has been already stated, a mourasi mokrari tenancy was created by Jiban Kumari on the 8th December, 1869, as is evidenced by exhibit K. This document recites among other things that the house which was the subject of the lease, "stands in need of repairs and for want of such repairs there is chance of some portion thereof breaking down during the year. " It also recites that whatever income was derived till then from that house was derived by letting it out on rent and that the mourasi tenancy was being created for the purpose of repair ing the house and keeping it in existence. At the end of the document, it is stated that "the shebait shall keep the kabuliyat and patta in force and shall on taking the sum of Rs. 90 as rent, defray the expenses of the sheba of the deity. " It is 342 noteworthy that the actual dedication of this property took place on the 15th January, 1872, more than 2 years after the kabuliyat. On that date, a registered deed of gift was executed by Jiban Kumari in favour of Srimathi Gourimoni Debi and it was recited therein that the income of the house was being dedicated by the former to the sheba of the deity. There was also a further clause in that deed to the follow ing effect : "In accordance with the terms of the solenama the ex penses of the Iswar seba shall be met from the income of those properties which have been dedicated for the perform ance of the work of the said seba and the amount by which the expenses for the festivals would fall short and the expenses which would be incurred for repairs to house for sheba of the said Thakur shall be met and the Tahailia (attendant) and the Brahman cook and the Brahman priest (now) employed and to be employed hereafter shall get (their) salaries, from the income of the said property." On reading this document along with the solenama and the mok rari lease granted by Jiban Kumari, it appears that she dedicated the property after having created a mokrari lease, that what she purported to dedicate was the income derived by way of rent from the mourasi mokrari tenancy, and that she had dedicated this income for specific purposes with the object of making up the deficit in the income received from other debutter properties. If it is held that Jiban Kumari was an absolute owner of the property at the time the moura si mokrari lease was granted and afterwards she dedicated only the income of the property then the permanent lease cannot be assailed. If, on the other hand, it is held on reading the solenama that Jiban Kumari had only a life estate in the house and it was one of the terms of the solenama that after her death the expenses of the deity were to be borne out of the income from the house, then in that case the question may arise as to whether she was entitled to create a lease beyond her lifetime. Such a question however does not need an elaborate answer, because the same considerations which apply to 140, Cotton Street. will 343 apply to this house, and the presumption as to necessity which is raised by the long lapse of time, would arise here also. This presumption is considerably strengthened here as well as in the case of the lease granted by Muni Bibi, by the fact that the grantor of the lease was so devoted to the object of the endowment that it does not seem likely that she would have granted a permanent lease unless she was impelled to do so by absolute necessity. It seems to us therefore that the view taken by the High Court is substan tially correct and the respondents Nos. 1 and 2 are entitled to compensation as permanent lessees. In this view, Appeal No. 95 must fail, and it is dismissed. As to Appeal No. 96, it has been concurrently found by the President of the Tribunal and the High Court that the appellants have failed to prove by proper evidence that there is any money still due to them on the usufructuary mortgage executed by Gopaldas in 1886. In arriving at this finding, they have dealt with every possible argument that could be urged and was urged on behalf of the appellants to show that the mortgage had not been satisfied. This court has repeatedly held that it will not generally interfere with concurrent findings on a pure question of fact, and nothing has been shown on behalf of the appellants to induce us to depart from this rule. In the result Appeal No. 96 also is dismissed. Having regard to the circumstances of the case, we shall make no order as to costs in either of these appeals. Appeals dismissed. Agent for the appellant in Civil Appeal No. 95 and respondent in Civil Appeal No. 96: Sukumar Ghose. Agent for respondents Nos. 1 to 3 in Civil Appeal No. 95 and appellants Nos. 1 to 3 in Civil Appeal No. 96:S. C. Banerjee. Agent for respondent No. 4 in Civil Appeal No. 95: P.K. Chatterjee.
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Where the issue is whether there was legal necessity for a particular transaction, if all the original parties to the transaction and those who could have given evidence on the relevant points have passed away, a recital consisting of the principal circumstances of the case assumes greater importance and cannot be lightly set aside.
Banga Chandra Dhar Biswas vs Jagat Kishore Chowdhuri (43 I.A. 249) referred to.
Where the validity of a permanent lease granted by a shebait has remained unquestioned for a very long time since the grant, although it is not possible to ascertain fully what the circumstances were in which it was made, the Court should assume that the grant was made for necessity so as to be valid beyond the life time of the grantor.
333 Bawa Magniram Sitaram vs Kasturbhai Manibhai (49 I.A. 54) referred to.
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If a legal case involves deciding if a deal was absolutely necessary, and all the people involved or who knew about it are dead, then a written summary describing the situation becomes very important. It can't be easily dismissed.
This idea is supported by the Banga Chandra Dhar Biswas vs Jagat Kishore Chowdhuri case.
Also, if a long-term lease was given by a caretaker of a religious property and no one questioned it for many years, the court should assume the lease was necessary. This means it's valid even after the caretaker's death, even if we don't know all the reasons why the lease was originally made.
The Bawa Magniram Sitaram vs Kasturbhai Manibhai case supports this idea.
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Civil Appeal No. 1462 of 1971. Appeal by special leave from the Judgment and Order dated 16th April 1971 of the Patna High Court in Tax Case No. 76/68. A. K. Sen, section T. Desai, Somen Bose, D. N. Mukherjee and K. N. Jain, for the appellant. V. section Desai and B. P. Singh for the Respondent. The Judgment of the Court was delivered by GOSWAMI, J. This appeal by special leave is directed against the judgment of the Patna High Court in a reference under section 21B(1) of the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 (briefly the Act) as amended. The facts as appearing from the statement of case annexing the various orders of the authorities may briefly be stated: The appellant, M/s. National Transport Company, is a transport undertaking without its transport. The appellant (hereinafter to be described as the assessee) was the sole transporter by road of the cement manufactured by the Associated Cement Company at Sindri (briefly the company) from Sindri to different stockists at various places in Bihar and West Bengal. In order to have some sort of uniformity in price at different places the manufacturing company used to fix the transport charges according to a schedule. The assessee 's contract with the manufacturing company commenced some time on October 12, 1963. Since the assessee did not have its own fleet of trucks, it used to engage thirty six trucks covered by public carrier permits belonging to various persons at different times for transporting the cement. The assessee was not registered under section 4 of the Act. On September 3, 1966, there was a surprise inspection of the office of the assessee and certain books of accounts containing accounts of transport charges realised by the assessee for transporting of cement from the Sindri factory to the stockists in Bihar and West Bengal were seized. The assessee also produced some books of accounts during the hearing before the Officer. The assessee maintained his accounts ledger wise in respect of the transport charges realised and realisable from different stockists of Bihar and West Bengal for transport of cement by it from the Sindri factory to their godowns. There were two ledgers. One was party wise showing charges realised or realisable from the stockists and other truck wise showing hire charges 899 paid to various trucks. The assessee also produced a list of trucks showing the names of the truck owners with their respective places of residence. Out of thirty six trucks, twenty four were registered in Bihar and twelve in West Bengal. Agreements with the truck owners were also produced by the assessee. The Bills from the petrol supplying company which were paid by the assessee were also filed showing the total amount and the truck wise amount. The ledger party wise showed rates charged from the stockists. The ledger truck wise showed hire charges and also deductions on account of petrol, diesel and other lubricants and also for loss in the way as per agreement. On the basis of the statement furnished by the assessee as corroborated by the books of accounts maintained by it the Assessing Officer determined the total taxable amount and imposed a tax of Rs. 1,41,618.37 by his order of November 1, 1966. A penalty of Rs. 5000/ was also imposed under section 7(5) of the Act. The assessee appealed to the Additional Deputy Commissioner of Commercial Taxes without success. Thereafter the assessee preferred an application in revision before the Commercial Taxes Tribunal, Bihar, which also met with the same fate. The Tribunal, however, on the application of the assessee under section 218(1) of the Act referred the following question of law to the High Court: "Whether in the facts and circumstances of the case the Tribunal has rightly held the applicant to be the 'owner ' of the vehicles within the meaning of section 2(d) of the Act and whether the imposition of tax and levy of penalty was legal and justified". The High Court noted the facts found by the Tribunal as follows: (a) The assessee was the sole transporting company of the cement of the manufacturing company, (b) it had engaged certain trucks for use in his (sic) transport work, (c) it was providing petrol and oil for the running of the trucks in the transport work, although the prices paid by the assessee were later on adjusted in the hiring charges, (d) it was obtaining receipts for delivery of the goods to the stockists, (e) it was maintaining a complete record of the trucks used by it for the transport work, (f) it was keeping a complete record of the charges realisable and realised from the stockists on account of freight payable by them, (g) it was keeping a complete record of the charges actually paid to the real owners of the trucks, and 900 (h) the receipts given by the stockists indicated that they had received from the assessee, certain quantities of cement by a particular vehicle". From the above eight factors the Tribunal came to the conclusion that the assessee was in charge of the trucks for the time being within the meaning of section 2(d) of the Act. The High Court agreed with the Tribunal in the following words: "In any case, even if the conclusion that the assessee was in charge of the trucks, for the time being, be a conclusion in law, I do not think that any error in law has been committed by the Tribunal, in arriving at its conclusion against the contentions raised on behalf of the assessee. Relevant facts have been found and a relevant finding has been given on them, before saddling the assessee with liability". The High Court thereupon upheld the Tribunal 's decision against the assessee. The only question that is canvassed by Mr. A. K. Sen on behalf of the appellant is that, on the various facts found by the Tribunal, it has erred in law in holding that the assessee is an 'owner ' within the meaning of section 2(d) of the Act. We may, therefore, immediately turn to the definition of owner as given under section 2(d) 2(d) " 'owner ' means the owner of a public service motor vehicle in respect of which a permit has been granted by a Regional or State Transport Authority under the provisions of the (IV of 1939) and includes the holder of a permit under the said Act in respect of a public service motor vehicle or any person for the time being in charge of such vehicle or responsible for the management of the place of business of such owner". It is clear that the above definition is an inclusive definition. Owner means not only the owner of the specified type of vehicle but also includes the permit holder in respect of such a vehicle as also any person for the time being in charge of such vehicle or any person responsible for the management of the place of business of such owner. The definition has fairly widened the meaning of "owner". We are only concerned in this appeal with one category included in the definition, namely, that an owner is a person for the time being in charge of a public service motor vehicle. There is no dispute that the trucks in question are public service motor vehicles. We are only required to consider whether the assessee is a 'person ' "for the time being in charge of such vehicle". As the preamble shows the Act is to provide for the levy of tax on passengers and goods carried by public service motor vehicles. The taxing event is, thus, the carriage of goods and passengers by public service motor vehicles. By section 2(a) 'business ' means the business of the owner for the purpose of this Act. 901 Section 3 in the charging section and may be read: 3(1) "On and from the date on which this Act is deemed to have come into force under sub section (3) of section 1, there shall be levied and paid to the State Government a tax on all passengers and goods carried by a public service motor vehicle; such tax shall be levied and paid at the rate of twelve and a half per centum of the fares and freights payable to the owner of such vehicle; * * * * (2) Every owner shall, in the manner prescribed in section 9, pay to the State Government, the amount of tax due under this section. (3) Every passenger carried by a public service motor vehicle and every person whose goods are carried by such vehicle shall be liable to pay to the owner the amount of tax payable under this section and every owner shall recover such tax from such passenger or person, as the case may be." * * * * Under section 4(1) every owner liable to pay tax shall apply for his registration within such period and in such manner as may be prescribed. Under sub section (2) of section 4, if the application is in order, the prescribed authority shall grant a certificate of registration in the prescribed form. Under section 6 every owner shall furnish to the prescribed authority such returns, within such period, as may be prescribed. There is a provision under this section for imposition of penalty on failure to submit a return without any reasonable cause. Section 18 is the penal section for various offences under the Act including failure to apply for registration or to submit return or for contravention of any other provision of the Act of the Rules and the offender is punishable with fine which may extend to Rs. 1000/ , and when the offence is a continuing one, with a daily fine not exceeding fifty rupees during the period of the continuance of the offence. By section 3(h) of the Act, a 'public service motor vehicle ' means any motor vehicle used or adopted to be used for the carriage of passengers and goods for hire or reward and includes a motor cab, a stage carriage, a contract carriage or a public carrier. For the purpose of tax under the Act not every public service motor vehicle but only such a vehicle carrying goods and passengers is exigible to tax for the carriage of those goods and passengers under the Act. The tax again is a percentage of the fares or freights realised. The fares and freights have to be realised as a fact. Such a vehicle carrying goods and passengers driven by employees of the owner of the 902 vehicle would ordinarily be in charge of that owner or of the permit holder wherever it may ply. The physical presence of the owner or the proprietor or of the permit holder in the running vehicle is not essential. Even if the driver or the conductor realises the freight it is done on behalf of the owner of the vehicle or of the permit holder and the former is accountable to the latter. Suppose the conductor misappropriates the collection en route, that will not absolve the permit holder from liability to pay the tax actually realised for the carriage of the goods or the passengers. In view of the terms of the agreement, on which great reliance has been placed by Mr Sen, it can be safely assumed that the appellant took full responsibility for the carriage of the goods from the Sindri factory to various destinations. This is manifest even in absence of production by the appellant of agreements, if any, between it and the company or the stockists. Cement bags will not be loaded on any and every vehicle that reports at the factory but only on those vehicles whose registration numbers must have been communicated to the company or which were taken there by the appellant 's representative who has to be present at the time of loading the trucks with cement as will appear from clause (1) of the agreement. Clause (1) reads "Cement will be loaded into your lorry at the Sindri Works through us". The Sindri factory, therefore, entrusted the carriage of their cement bags to the appellant for delivery to various stockists who again in turn, at destinations, gave buyer 's receipts as per clause (3) of the agreement. Clause (3) States: "You will obtain proper receipts for such deliveries from the consignees on the challans handed over to you and bring back all the documents including the challan duly signed by the consignees leaving one copy of the challan with the consignees". On delivery to the appellant of the buyer 's receipt by the truck owner or his representative. "the bills of hire charges" of the truck owner are paid with three weeks thereafter at the rates "as per our schedule" agreed between the appellant and the truck owners". Clause (12) of the agreement says: "Your bills of hire charges as per our schedule will be prepared every fortnight and will be paid within 3 weeks thereafter." The truck owners, in this case, received as per agreement, only "hire charges" and there is nothing to show nor is there any averment by the appellant that those charges included taxes under the Act although freight had been admittedly realised by the appellant from the stockists. In the above background of facts and circumstances, there is no escape from the conclusion that the appellant was in charge of the trucks for the purpose of the 'business ' of the appellant during the entire course of transportation of the cement bags from the Sindri factory to the various stockists and as such comes within the third clause of the definition under section 3(d) of the Act. 903 The fact that under the terms of the agreement some incidental arrangement involving contingent financial implications in respect of carriage of the goods had been entered upon does not entitle the appellant to be relieved of the "charge" of the loaded truck for the purpose of tax under the Act for the carriage of the goods. The matter would have been different if the truck owners had been given the tax collections in addition to the hire charges, but absence of any provision for tax payment by the truck owners in the agreement militates against the contention that in this case the truck owners are liable for the payment of tax under the Act for the carriage of the cement bags. The owner of the truck under a public carrier permit or a public carrier permit holder is undoubtedly an 'owner ' under section 2(d) of the Act. But in a given case, the person who is for the time being in charge of the loaded truck and who or on whose behalf some one received the freight or fare is also an 'owner ' within the third clause of the definition under section 2(d) of the Act. The significant words "for the time being in charge of such vehicle" have to be comprehended in the context of the provisions of the taxing statute and these words have nexus with the actual realisation and appropriation of the freight for the goods carried by the vehicle. The meaning given to the words "in charge of vehicle" in connection with traffic cases in criminal prosecution, as has been referred to by Mr. Sen citing two English cases, is of no avail to the appellant in this case. Mr. Sen forcefully submits that the present case is squarely covered by a decision of this Court in Jagir Singh & Ors. etc. vs State of Bihar and Anr.(1) This was a case where the same Act with some identical Acts from other States came up for consideration. It is submitted by Mr. Sen that the truck owners lost in that decision and in this appeal also, therefore, they cannot escape from their legal liability by shifting it to the appellant. We must bear in mind that those applications were under article 32 of the Constitution while the present matter comes to us out of a reference in the fifth tier of litigation after the matter had been gone into in great detail taking note of various facets of the rival pleas by the respective authorities and lastly by the High Court. In Jagir Singh 's case (supra) this Court was concerned merely with Booking Agents and Forwarding Agents who were sought to be made liable under the Act at the instance of the permit holders of the public service vehicles who did not own their liability for payment of tax under the Act. This Court observed in that case as follows: "If the permit holder lets out the vehicle to any person on hire it is a matter of internal arrangement between the owner who is the permit holder and the person who is allowed by the permit holder to hire the vehicle to collect tax in order to enable the owner to discharge the liability. If the owner does not make adequate provision in that behalf the owner cannot escape liability by pleading that the hirer of the vehicle is liable to pay tax and the owner is not liable". 904 From the terms of the agreement in the present case, it is clear that the liability to pay taxes was entirely upon the appellant as the owners of the trucks were only entitled to "hire charges". Legal liability for payment of tax under the Act is well known to the appellant carrying on transport business. The appellant has taken charge of the vehicles for the purpose of the collection of tax for the carriage of the goods. The appellant has actually collected the freight from the stockists on delivery of cement bags. The appellant has only paid to the truck owners "the hire charges" as per its own schedule of rates without any mention of tax. These facts clearly distinguish the present case from what apears to have been pleaded in the writ application in Jagir Singh 's case (supra) and he decision is of no aid to the appellant. Being "in charge" of the vehicle in the context of the provisions of the Act does not relate to mere physical charge or control in the process of movement of the vehicle from one place to another but to charge or control for fulfilment of the legal obligation under the Act for payment of taxes for the carriage of goods or passengers. Whether a certain person is in charge of the vehicle for the time being depends always on the particular facts of each case and the answer cannot be put in the straitjacket of a formula. On the facts of the present case we are clearly of opinion that the appellant comes within the meaning of the third clause of the definition under section 2(d) of the Act. We should observe that once the tax is realised for a particular transaction from one category of owner as defined, no further tax can be collected for the same carriage from any other person even though that person also may come within the definition of "owner" under the Act. The Tribunal was, therefore, justified in holding the appellant as "owner" for the purpose of the Act. The High Court was right in not interfering with the conclusion of the Tribunal and in answering the question against the assessee. In the result the appeal is dismissed but we make no order as to costs. V.P.S. Appeal dismissed.
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Under section 3(1) and (2) of the Bihar Taxation on Passengers and Goods (Carried by Public Services Motor Vehicles) Act, 1961, every owner shall pay to the State Government a tax on all passengers and goods carried by a public motor vehicle.
Under section 2(d), 'owner ' means not only the owner of the specified type of vehicle but also includes, inter alia, "any person for the time being in charge of such vehicle".
Under section 4(1) every owner liable to pay tax shall apply for registration, and under section 6 every owner shall furnish the prescribed return to the prescribed authority.
Section 18 provides for penalties for failure to apply for registration or to submit the return.
The assessee was the sole transporting company of the cement of a manufacturing company.
Since it did not have its own fleet of trucks, it used to engage trucks for use in its transport work.
It was providing petrol and oil for the running of the trucks in the transport work although the prices paid by the assessee were later on adjusted in the hiring charges.
The assessee was obtaining the receipts of delivery of the goods to the various stockists indicating the quantities of cement received through a particular vehicle.
On delivery to the appellant of the buyers ' receipt by the truck owner or his representative, the bills of hire charges of the truck owner were paid by the appellant as per the agreement between the appellant and the truck owner.
The assessee was maintaining a complete record of the trucks used by it for the transport work, of the charges realisable and realised from me stockists on account of freight payable by them, and of the charges actually paid to the truck owners.
The assessee was not registered under section 4.
After a surprise check, the total taxable amount of the assessee was determined and the tax and a penalty were imposed on the assessee.
The assessee 's appeal, revision to the tribunal, and reference to the High Court, were all decided against the assessee.
Dismissing the appeal to this Court, ^ HELD: The appellant was in charge of the trucks for the purpose of its business during the entire course of transportation of the cement from the factory to the various stockists and, as such, came within the definition of owner under section 2(d).
[904 D E] (1) Whether a certain person is in charge of the vehicle for the time being depends on the particular facts of each case.
Being in charge ' of the vehicle, in the context of the provisions of the Act, does not relate to mere physical charge or control in the process of movement of the vehicle from one place to another but 'to charge or control ' for fulfilment of the legal obligation under the Act for payment of taxes for the carriage of goods or passengers.
The words "for the time being in charge of such vehicle" have to be comprehended in the context of the provisions of the taxing statute and these words have nexus with the actual realisation and appropriation of the freight for the goods carried by the vehicle.
In a given case, the person, who is for the time being in charge of the loaded truck and who or on whose behalf some one like a driver or conductor received the freight or fare.
is also a owner within the meaning of the definition in section 2(d).[903 C D; 904 C D] (2) On the facts of the present case the appellant took full responsibility for the carriage of the goods from the factory to various destinations.
The freight had been realised by the appellant from the stockists and the truck 898 owner received only 'hire charges. ' There is nothing to show nor is there any averment by the appellant that those charges included the taxes under the Act.
The matter might have been different if the truck owners had been given the tax collections in addition to the hire charges.
Further the absence of any provision for tax payment by the truck owners in the agreement militates against the contention that it is only the truck owners that are liable.
[902 B C, G 903 B] (3) The case of Jagir Singh vs State of Bihar ; was an application under article 32 of the Constitution and was concerned with booking agents and forwarding agents who were sought to be made liable under the Act at the instance the truck owners but the truck owners were held to be liable.
Unlike that case, the liability to pay taxes was entirely upon the appellants in the present case as the truck owners were entitled only to hire charges.
[903 F G; 904 A]
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Under sections 3(1) and (2) of a Bihar law from 1961 about taxes on passengers and goods in public vehicles, every owner must pay the government a tax on all passengers and goods carried in their public vehicle.
According to section 2(d) of the same law, an "owner" is not just the person who owns the vehicle. It also includes anyone who is currently in charge of the vehicle.
Section 4(1) says that every owner who has to pay the tax must apply to be registered. Section 6 says that every owner must send a report to the right authority.
Section 18 describes the penalties for not applying for registration or for not sending in the report.
In this case, the company being taxed (the assessee) was the only company that transported cement for a cement factory.
Because the company didn't own its own trucks, it hired trucks for its transport business.
The company paid for the gas and oil to run the trucks, but the money it spent was later taken out of the hiring costs.
The company got receipts when the cement was delivered to different stores, showing how much cement was delivered by each truck.
The company paid the truck owner the agreed-upon hire charges when the truck owner or their representative gave the company the buyer's receipt confirming the delivery.
The company kept a complete record of the trucks it used for transport, the money it could collect from the stores for freight (transport costs), and the money it actually paid to the truck owners.
The company had not registered under section 4.
After a surprise inspection, the amount of tax the company owed was calculated, and the company was charged the tax and a penalty.
The company appealed, asked for a review from a special court (tribunal), and then took the case to the High Court, but all decisions were against the company.
The Supreme Court then dismissed the company's appeal, saying: The company was in charge of the trucks for its business while the cement was being transported from the factory to the stores. Therefore, it fits the definition of "owner" in section 2(d).
[904 D E] (1) Whether someone is in charge of a vehicle at a specific time depends on the details of each case.
Being "in charge" of the vehicle, according to this law, doesn't just mean physically controlling the vehicle as it moves from one place to another. It means having the responsibility to follow the law and pay taxes for carrying goods or passengers.
The phrase "for the time being in charge of such vehicle" must be understood based on the purpose of the tax law. These words connect to who actually receives and uses the money earned from transporting the goods in the vehicle.
For example, the person who is currently in charge of the loaded truck and who (or whose driver or conductor) receives payment for the transport is also an owner according to section 2(d). [903 C D; 904 C D]
(2) In this case, the company took full responsibility for transporting the goods from the factory to their destinations.
The company collected the freight charges from the stores, and the truck owner only received "hire charges." There is no evidence that these charges included the taxes required by the law.
The situation might be different if the truck owners had received the tax money in addition to their hire charges.
Also, the fact that the agreement didn't mention the truck owners paying taxes suggests that only the company was responsible for the taxes. [902 B C, G 903 B]
(3) The case of Jagir Singh vs State of Bihar involved booking agents and forwarding agents who were being held responsible under the law at the request of the truck owners, but the court decided that the truck owners were actually responsible.
Unlike that case, the company in this case was entirely responsible for paying the taxes because the truck owners were only entitled to hire charges. [903 F G; 904 A]
| 5,529
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Appeal No. 409 of 1966. Appeal by special leave from the judgment and order dated July 5, 1963, of the Gujarat High Court in Special Civil Application No. 827 of 1961. R. Gopalakrishnan, for the appellant. G. L. Sanghi, section K. Dholakia and R. N. Sachthey, for the respondent. This is an appeal by special leave from a judgment of the Gujarat High Court dismissing a petition under L83Sup. CI/69 2 246 article 226 of the Constitution by which the order, retiring the appellant from service before he had attained the age, of 55 years, had been challenged. The appellant had joined the service of the erstwhile State of Junagadh on August 1, 1934. That State merged into the State of Saurashtra on January 20, 1949. The appellant continued to remain in the service of that State having been confirmed as an Executive Engineer on September 24, 1956. On the merger of Saurashtra in the new billingual State of Bombay on November 1, 1956, the appellant was absorbed in the service of the said State. On the bifurcation of the State of Bombay on May 1, 1960, he was assigned to, the State of Gujarat and was absorbed as a permanent Executive Engineer there. On October 12, 1961 the State of Gujarat made an order retiring the appellant from the service with effect from January 12, 1962. On that date he had not attained the age of 55 years but he was about 53 years old. This, order was made 'in exercise of the powers conferred by Rule 161 of the Bombay Civil Service Rules, 1959. The order of retirement was challenged by the appellant by means of a writ petition which was dismissed. It is common ground that when the appellant was in the ,service of the erstwhile State of Junagadh his conditions of :service were governed by the Junagadh State Pension and Parwashi Rules which had been made by the ruler of the State who exercised sovereign legislative powers. According to those rules the age of superannuation was 60 years. Before the inclusion of the Junagadh State in the State of Saurashtra the Rajpramukh had promulgated an Ordinance called the Saurashtra State Regulation of Government Ordinance 1948. By section 4 of that Ordinance all the laws in force in the covenanting States prior to their integration were continued in force in the State of Saurashtra until repealed or amended under section 5. Notwithstanding this the Saurashtra Government adopted and applied the Bombay Civil Service Rules which were then in force in the State of Bombay by an order dated September 23, 1948. This Court in Bholanath ,J. Thaker vs The State of Saurashtra(1) held that the Rules as regards the age of superannuation which prevailed in the covenanting State which in that case was the State of Wadhwan continued to govern those government servants who had come from that State and had been absorbed in the services of the State of Saurashtra. In view of that decision the State of Saurashtra made the Saurashtra Covenanting State Servants (Superannuation age). Rules, 1955, hereainafter called the "Saurashtra Rules", in exercise of the power conferred by article 309 of the Consti tution. Rule 3(i) provided (1) A.I.R. 1954 S.C. 680. 247 "A Govt. servant shall, unless for special reasons otherwise directed by Govt. retire from service on his completing 55 years of age. " After the integration of the Saurashtra State into the State of Bombay a resolution was passed by the Government on Janu ary 7, 1957 applying the old Bombay Civil Service Rules to Saurashtra area. On July 1, 1959 the Bombay Civil Service, Rules 1959, hereinafter called the "Bombay Rules" were pro mulgated under article 309 of the Constitution. Clause (c)(2) (ii) (1) of Rule 161 is as follows "Except as otherwise provided in this Sub clause Government servants in the Bombay Service of Engineers, Class 1, must retire on reaching the age of 55 years, and may be required by the Government to retire on reaching the age of 50 years, if they have attained to the rank of Superintending Engineer. " It was under this rule that the order retiring the appellant was made. In the High Court the writ petition filed by the appellant was heard and disposed of with two other similar petitions in which identical questions had been raised. A number of points were raised in the High Court but it is unnecessary to refer to them because the questions on which the present appeal can be disposed of are only two : (1) Whether the appellant was governed by the Saurashtra Rules or the Bombay Rules and (2) even if the Saurashtra Rules were applicable could the retirement of the appellant be ordered before he, had attained the age of 55 years. The High Court rightly looked at the provisions of section 115(7) of the . It is provided thereby that nothing in the section shall be deemed to affect after the appointed. day the operation of the provisions of Chapter 1 of of the Constitution in relation to 'the determination of the conditions of service of persons serving in connection with the affairs of the Union or any State. The proviso is important and lays down that the conditions of service applicable immediately before the appointed day to the case of any person referred to in sub section (1) or sub section (2) (of section 115) shall not be varied to his disadvantage except with the previous approval in the Central Government. The case of the appellant fell within the proviso and it had, therefore, to be, determined whether the conditions of service applicable to the appellant immediately before the appointed day which admittedly were contained in the Saurashtra Rules had been varied to his disadvantage, and if so, whether the approval of the Central Government had been obtained. It was conceded before the High Court by the, learned 248 Advocate General, who appeared for the State, that no previous approval of the Central Government had been obtained to vary the conditions of service of those public servants who were serving in the State of Saurashtra until November 1, 1956. The High Court in this situation proceeded to decide whether by the application of Rule 161 of the Bombay Rules the conditions of service of the appellant contained in the Saurashtra Rules had been varied to his disadvantage. It was argued on behalf of the appellant that the expression "unless for special reasons otherwise directed by Government" in Rule 3 (i) of the Saurashtra Rules provided for extension of the age of superannuation beyond 55 years and not for reduction thereof. The Advocate General had argued that what was meant by the aforesaid words was that Government could, for special reasons, retire a Government servant before he had attained the age of 55 years which was the normal superannuation age. If that was so Rule 161 (c) (2) (ii) (1) of the Bombay Rules could not be regarded as having varied the conditions of service contained in the Saurashtra Rules to the disadvantage of the Government servants. The High Court was of the view that while framing the Saurashtra Rules the draftsmen who must have been well aware of the then Bombay Civil Service Rules which were in the same terms as Rule 161 of the Bombay Rules could not have framed the clause in such manner as to introduce an element of discrimination between Executive Engineers who had been absorbed from a Covenanting State and those who had been appointed or recruited directly by the State Government. In the opinion of the High Court even under the Saurashtra Rules retirement could be ordered before a person had attained the age of 55 years. It was, therefore, held that the conditions in Rule 161 (c) (2) (ii) of the Bombay Rules had not been shown to be less advantageous or disadvantageous to the appellant than the conditions in Rule 3 (i) of the Saurashtra Rules by which the appellant was governed until November 1, 1956. In this manner the proviso to section 115(7) of the did not stand in the way of the applicability of the Bombay Rules. We find it difficult to concur with the view of the High Court. Rule 3 (i) of the Saurashtra Rules, if construed or interpreted in the manner in which it has been done by the High Court, would bring it into direct conflict with the law laid down by this Court in Moti Ram Deka etc. vs General Manager, N.E.F. Railways Maligaon, Pandu etc.(1), which is a _judgment of a bench of seven judges of this court. One of the matters which came up for consideration was the effect of a service rule which permitted compulsory retirement without fixing the minimum period of service after which the rule could be invoked. According to the (1) ; 249 observations of Venkatarama Ayyar, J., in The State of Bombay vs Saubhagchand M. Doshi(1) the application of such a rule would be tantamount to dismissal or removal under article 311(2) of the Constitution. There were certain other decisions of this Court which were relevant on this point, viz. P. Balakotaiah vs The Union of India & Ors.(2) and Dalip Singh vs The State of Punjab(3). All these decisions were considered in Moti Ram Deka 's case(4) and the true legal position was stated in the majority judgment at page 726 thus : "We think that if any Rule permits the appro priate authority to retire compulsorily a civil servant without imposing a limitation in that behalf that such civil servant should have put in a minimum period of service, that Rule would be invalid and the so called retirement ordered under the said Rule would amount to removal of the civil servant within the meaning of article 311(2). " In Gurdev Singh Sidhu vs State of Punjab & Anr.(5), it was pointed out that the only two exceptions to the, protection afforded by article 311(2) were, (1) where a permanent public servant was asked to retire on the ground that he had reached the age of superannuation which was reasonably fixed; (2) that he was compulsorily retired under the Rules which prescribed the normal age of superannuation and provided a reasonably long period of qualified service after which alone compulsory retirement could be valid. The basis on which this view has proceeded is that for efficient administration it is necessary that public servants should enjoy a sense of security of tenure and that the termination of service of a public servant under a rule which does ,not lay down a reasonably long period of qualified service is in substance removal under article 311(2). The principle is that the rule relating to compulsory retirement of a Government servant must not only contain the outside limit of superannuation but there must also be a provision for a reasonably long period of qualified service which must be indicated with sufficient clarity. To give an example, if 55 years have been specified as the age of superannuation and if it is sought to retire the servant even before that period it should be provided in the rule that he could be retired after he has attained the age of 50 years or he has put in service for a period of 25 years. Now Rule 3 (i) of the Saurashtra Rules will have to be dec lared invalid if the expression "unless for special reasons other (1) ; (2) [1958] S.C.R. 1052. (3) (4) ; (5) ; 250 wise directed by Government" is so construed as to give a power to order compulsory retirement even before attaining the age of 55 years. It is well known that a law or a statutory rule should be so interpreted as to make it valid and not invalid. If this expression is confined to what was argued before the High Court, namely, that it gives power to the Government to allow a Government servant to remain in service even beyond the age of 55 years for special reasons the rule will not be rendered invalid and its validity will not be put in jeopardy. So construed it is apparent that the appellant could not have been retired compulsorily under the Saurashtra Rules before he had attained the age of 55 years. By applying the Bombay rule his conditions of service were varied to his disadvantage because he could then be compulsorily retired as soon as he attained the age of 50 years. As the previous approval of the Central Government was not obtained in accordance with the proviso to section 115(7) of the , the Bombay rule could not be made applicable to the appellant. Counsel for the State pressed us to look into certain docu ments for the purpose of finding out whether prior approval of the Central Government was obtained in the matter of varying the conditions of service of the appellant by applying the Bombay rules. But none of these documents were referred to before the High Court and in the presence of a clear concession by the learned Advocate General we see no justification for acceding to such a request. In this view of the matter this appeal must succeed and it is hereby allowed with costs in this Court. It is declared that the appellant was entitled to remain in service until he attained the age of 55 years and that the impugned order directing his retirement was invalid and ineffective. G.C. Appeal allowed.
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The appellant originally joined the service of the State of Junagadh in 1934 and was after the merger of that State in Saurashtra confirmed in September, 1956 as an executive engineer in the service of the latter State.
Rule 3(i) of the Saurashtra Covenanting States Servants (Superannuation age) Rules 1955 provided : "A Govt.
servant shall, unless for special reasons otherwise directed by Govt.
retire from service on his completing 55 years of age.
" After the merger of Saurashtra in the bilingual State of Bombay the old Bombay Civil Service Rules were applied to Saurashtra area with effect from January 7, 1957.
On July 1, 1959 the Bombay Civil Service Rules, 1959 were promulgated.
Accord ing to r. 161 (c) (2) (ii) (1) the age of retirement for class 1 Engineers in the State Service was fixed at 55 years but it was further laid down that they "may be required by the Government to retire on reaching the age of 50 years, if they have attained to the rank of Superintending Engine.
" On the formation of the State of Gujarat the appellant 's 'services were transferred to that State but the Bombay Rules continued to apply.
Under the Bombay Rule aforesaid, namely, r. 161(c)(2)(ii)(1) the Government of the State of Gujarat retired the appellant at the age of about 53 years.
The appellant filed a writ petition in the High Court.
The High Court took into account section 115(7) of the but held that since the Saurashtra Rule 3(i) also empowered the 'State Government to retire the appellant at an age earlier than 55 years there was no variation of conditions of service to his disadvantage under the Bombay Rule and therefore the latter rule was not invalid for want of Presidential assent.
The High Court took the view that the expression "unless for special reasons otherwise directed by Government" in r. 3 (i) of the Saurashtra Rules meant that the Government could for special reasons retire a Government servant before he had attained the normal superannuation age of 55 years.
Against the High Court 's judgment dismissing his writ petition the appellant came by special leave, to this Court.
HELD : Rule 3(i) of the Saurashtra Rules, if construed of interpreted in the manner in which it had been done by the High Court, would bring it into direct conflict with Moti Ram Deka 's case as well as other cases decided by this Court.
In Moti Ram Deka 's case it was laid down that if any rule permitted the appropriate authorities to retire compul sorrily a civil servant without imposing a limitation in that behalf that such 245 civil servant should have put in a minimum period of service.
that rule would be invalid and the so called retirement ordered under the said rule would amount to removal of the civil servant within the meaning of article 311(2) of the Constitution.
The principle is that the rule relating to compulsory retirement of a Government servant must not only contain the outside limit of superannuation but there must also be a provision for a reasonably long period of qualified service which must be indicated with sufficient clarity.
For example if 55 years have been specified as the age of superannuation and if it is sought to retire the servant even before that period it should be provided in the rule that he could be retired after he has attained the age of 50 years or he has put in service for a period of 25 years.
[248 G 249 G] On the above principle rule 3 (i) of the Saurashtra Rules would have to be declared invalid if the expression "unless for special reasons otherwise directed by Government" is so construed as to give a power to order compulsory retirement even before attaining the 'age of 55 years.
A statutory rule, however, should be so interpreted as to make it valid and not invalid.
The correct interpretation of Rule 3(i) is that it gives power to the Government to allow a Government servant to remain in service even beyond the age of 55 years for special reasons; so construed the Rule would not be invalid and the appellant could not under it have been retired before be had attained the age of 55 years.
By applying the Bombay Rule his conditions of service were varied to his disadvantage because he could then be compulsorily retired as soon as he attained the age of 50 years.
As the previous approval of the Central Government was not obtained in accordance with the proviso to section 115(7) of the , the Bombay Rule could not be made applicable to the appellant.
[249 G 250 C] The appellant was thus entitled to remain in service until he attained the age of 55 years and the impugned order directing his retirement was invalid and ineffective.
[250 E F] Bholanath J. Thaker vs State of Saurashtra, A.I.R. (1954) S.C. 680, referred to.
Moti Ram Deka etc.
vs General Manager N.E.F. Railways Maligaon, Pandu etc.
; , State of Bombay vs Saubhag chand M. poshi; , , P. Balakotaiah vs Union of India; , , Dalip Singh vs State of Punjab, and Gurdev Singh Sidhu vs State of Punjab & Anr. ; , applied.
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The person appealing this case (called the appellant) started working for the State of Junagadh in 1934. After Junagadh joined with Saurashtra, he became a certified executive engineer for Saurashtra in September 1956.
A rule called Rule 3(i) of the Saurashtra Covenanting States Servants (Superannuation age) Rules 1955 said: "A government worker must retire at age 55, unless the government says otherwise for special reasons." After Saurashtra joined the larger State of Bombay, the old Bombay Civil Service Rules started being used in the Saurashtra area on January 7, 1957.
On July 1, 1959, the Bombay Civil Service Rules, 1959 were created. Rule 161 (c) (2) (ii) (1) said that Class 1 Engineers in the State Service had to retire at age 55. But it also said that the government could make them retire at age 50 if they became a Superintending Engineer. When the State of Gujarat was formed, the appellant's job was moved to that state, but the Bombay Rules still applied.
Using the Bombay Rule mentioned above, Rule 161(c)(2)(ii)(1), the government of Gujarat made the appellant retire when he was about 53 years old. The appellant then filed a legal paper (called a writ petition) in the High Court.
The High Court looked at section 115(7) but said that because Saurashtra Rule 3(i) also allowed the State Government to retire the appellant before age 55, his job conditions weren't changed to be worse under the Bombay Rule. So, they said the Bombay Rule was valid even without the President's approval. The High Court thought that the phrase "unless for special reasons otherwise directed by Government" in Saurashtra Rule 3 (i) meant the government could retire someone early for special reasons.
The appellant disagreed with the High Court's decision to dismiss his case and brought it to the higher court.
HELD (the court's decision): If Saurashtra Rule 3(i) is understood the way the High Court did, it would go against a previous case called Moti Ram Deka's case, as well as other cases decided by this Court.
In Moti Ram Deka's case, the court said that if a rule let the authorities force a government worker to retire without saying they had to work a certain amount of time, that rule would be invalid. Ordering retirement under that rule would be the same as firing the worker, according to article 311(2) of the Constitution (the country's basic law). The idea is that a rule about forced retirement must include both the maximum age for retirement and a clear statement about how long someone needs to work before they can be retired. For example, if 55 is the retirement age, and they want to retire someone earlier, the rule should say they can be retired after age 50 or after working for 25 years.
Based on this, Rule 3 (i) of the Saurashtra Rules would be invalid if the phrase "unless for special reasons otherwise directed by Government" is understood to mean the government can force retirement even before age 55. However, a law should be interpreted to make it valid, not invalid. The correct way to understand Rule 3(i) is that it lets the government allow someone to work past age 55 for special reasons. If understood this way, the Rule is valid, and the appellant shouldn't have been retired before age 55.
By using the Bombay Rule, the appellant's job conditions were changed to be worse because he could be forced to retire as early as age 50. Since the Central Government didn't approve this change as required by section 115(7), the Bombay Rule couldn't be used for the appellant.
The appellant had the right to work until age 55, so the order to retire him was invalid and had no effect.
The court referred to these previous cases: Bholanath J. Thaker vs State of Saurashtra, A.I.R. (1954) S.C. 680; Moti Ram Deka etc. vs General Manager N.E.F. Railways Maligaon, Pandu etc. ; , State of Bombay vs Saubhag chand M. poshi; , , P. Balakotaiah vs Union of India; , , Dalip Singh vs State of Punjab, and Gurdev Singh Sidhu vs State of Punjab & Anr. ; ,
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Appeal No. 326 of 1957. Appeal by special leave from the judgment and order dated February 16, 1955, of the Orissa High Court in N. J. C. No. 117 of 1951. C. K. Daphtary, Solicitor General of India, K. N. Rajagopal Sastri, R. H. Dhebar and D. Gupta, for the appellants. Rameshwar Nath, section N. Andley and J. B. Dadachanji, for the respondent. May 5. The Judgment of the Court was delivered by KAPUR, J. This appeal pursuant to special leave is brought by the Commissioner of lncome tax against the judgment of the High Court of Orissa holding that the amounts received by the assessees respondents were not received in what was British India and 870 therefore not liable to income tax. The respondents at all material times were non residents carrying on business at Secunderabad which was then in the territories of the Nizam of Hyderabad. They acted as agents for the supply of gas plants manufactured by Messrs. T. V. section Iyengar & Sons, Madura, to the Nizam 's Government, and also as agents of the Lucas Indian Services, Bombay branch, for the supply of certain goods to that Government. The year of assessment is 1945 46. There does not appear to have been any written agreement between the two manufacturers and the respondents but the goods were to be supplied on a commission basis. In pursuance of this agreement the respondents received from M/s. T.V.S. lyengar & Sons, Madura, cheques drawn on the Imperial Bank of India, Madras, amounting to Rs. 35,202 in respect of all goods supplied from Madura and also from Lucas Indian Services, Bombay, by cheques drawn on Imperial Bank of India, Bombay branch, amounting to Rs. 5,302 in respect of goods supplied by them, thus making a total of Rs. 40,504. These cheques were sent by post and when received by the respondents at Secunderabad were credited in the account books of the respondents and sent to their banker G. Raghunathmal for collecting and crediting to the account of the respondents. As against these sums so deposited the respondents at once drew cheques and thus operated on these amounts deposited. In regard to the commission received from the Bombay firm it was paid into the account on December 22, 1944, but was given credit for only on January 2, 1945. The Income tax Officer assessed these sums as taxable income holding that the entire amount of Rs. 40,504 was received in British India and not at Secunderabad. An appeal was taken by the respondents to the Appellate Assistant Commissioner who upheld the order holding that income must be held to have accrued, arisen or received in British India. Against this order the respondents took an appeal to the Income tax Appellate Tribunal and it was held that the amounts were received by the respondents from Madura and Bombay firms as commission but 871 they were received at Secunderabad. The appeal was therefore allowed. The finding Of the Appellate Tribunal in their own words was: " The contention of the Appellants is that the cheques being negotiable instruments and the creditor having accepted them and passed through their books, II the receipt must be taken to be receipts in Hyderabad. We agree with the view submitted by the appellants. In Bhashyam 's Negotiable Instruments Act, 8th Edition, Revised, page 556, it is stated that it will be open to a creditor to accept a cheque in absolute payment of money due to him, in which case it will be equivalent to cash payment. That being the position it cannot be said that the income was received in British India ". At the instance of the Commissioner a reference under section 66(1) of the Act was made to the High Court of Orissa for their opinion on the following question : " Whether in the circumstances of the case, the sums of Rs. 35,202 and Rs. 5,302 received as commission from T. V. section lyengar & Sons Ltd., and Lucas Indian Services Ltd., respectively were income that accrued, arose or were received in British India ". The High Court found that the statement of case was imperfect and that the real question was different. It said : " The real question in all such cases is not merely whether the cheques were drawn on a bank in British India, and sent for collection to that bank. The question is whether when the cheques were received by the assessee having his place of business outside British India, those cheques were in fact received as absolute and final payments by way of unconditional discharge or whether they were received as mere conditional payments on realisation. The fact that cheques were drawn on a bank in British India or that they were sent for collection through a Secunderabad banker of the assessee though relevant, are not conclusive ". It therefore remitted the case to the Appellate Tribunal for submission of supplementary statement of case. It appears that at that stage the controversy was 872 confined to the question whether the cheques having been sent to Secunderabad and having been realised in British India would amount to a final discharge or an unconditional one. The Tribunal in its supplementary statement found that the course of conduct followed by the parties showed that the cheques were received from the Bombay and Madura firms in full satisfaction of the commission ascertained from time to time and due on such date. It said: " The facts that such entries were made in the assessee 's books, that the cheques were put into the bank immediately, that the bank at once gave credit to the assessee for these sums after charging discount thereon and immediately allowed the assessee to operate on those sums are significant ". Therefore the finding of fact by the Tribunal although not specific was that the receipt of the cheque by the respondents operated as full discharge of the debt due on account of commission from these two firms. The matter was decided by the High Court against the appellant and in the meanwhile this Court had given a judgment in Commissioner of Income tax vs Ogale Glass Works Ltd (1). Even after considering the decision of that case the High Court was of the opinion that the income of the respondents was not received in British India and answered the question against the Revenue. The High Court refused to give leave to appeal to this Court and it was this Court which gave special leave to appeal. The question is whether the amounts, of commission paid by cheques, drawn respectively on banks at Madras and Bombay and respectively posted from Madura and Bombay, can in the circumstances of this case be held to have been received in what was British India or at Secunderabad ? The Appellate Tribunal found that all the cheques whether from Madura or from Bombay were sent by the two respective firms from Madura or Bombay and were received by the respondents at Secunderabad and were treated as payment. The question still remains as to the effect of the sending of the cheques from Madura or Bombay by post. If there is an express request by the (1) 873 creditor that the amount be paid by cheques to be sent by post and they are so sent there is no doubt that the payment will be taken to be at the place where the cheque or cheques are posted. The respondents argued that there was an agreement between the Madura and Bombay firms and the respondents that the money would be paid whether in cash or by cheque 'at Secunderabad ' and therefore when the cheques were sent by post the post office was the agent of the debtor and not of the respondents. There is in support of the respondents an affidavit which was filed in the assessment proceedings and which was relied upon in the High Court. According to this affidavit it was verbally agreed that the commission would be paid at Secunderabad in cash or by cheque (as the case may be), the language used in the affidavit was: " The above commission was verbally decided to be paid to Messrs. Patney & Co. Ltd., Secunderabad the Agent Company in Hyderabad State at Secunderabad in cash or by cheque as the case might be ". In the case of payment by cheques sent by post the determination of the place of payment would depend upon the agreement between the parties or the course of conduct of the parties. If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted. Therefore the post office is an agent of the person to whom the cheque is posted if there be an express or implied authority to send it by post (Commissioner of Income tax vs Ogale Glass Works Ltd. (1)). In that case there was an express request of the assessee to remit the amount of the bills outstanding against the debtor, that is, Government of India by means of cheques. But it was observed by this Court that according to the course of business usage in general which has to be considered as a part of the surrounding circumstances the parties must have intended that the cheques should be sent by post which is the usual and normal mode of transmission and therefore the posting of cheques in Delhi amounted to payment in (1) 110 874 Delhi to the post office which was constituted the agent of the assessee. But it was argued for the respondents that in the absence of such a request the post office could not be constituted as the agent of the creditor and relied on a passage in Ogale 's case (1) at p. 204 where it was observed: " Of course if there be no such request, express or implied, then the delivery of the letter or the cheque to the post office is delivery to the agent of the sender himself ". It was further contended that in this case there was an express agreement that the payment was to be made at Secunderabad and therefore the matter does not fall within the rule in Ogale Glass Works case (1) and the following principle laid down in judgment by Das, J. (as he then was), is inapplicable : " Applying the above principles to the facts found by the Tribunal the position appears to be this. The engagement of the Government was to make payment by cheques. The cheques were drawn in Delhi and received by the assessee in Aundh by post. According to the course of business usage to which, as part of the surrounding circumstances, attention has to be paid under the authorities cited above, the parties must have intended that the cheques should be sent by post which is the usual and normal agency for transmission of such articles and according to the Tribunal 's finding they were in fact received by the assessee by post." In our opinion this contention is well founded. Whatever may be the position when there is an express or implied request for the cheque for the amount being sent by post or when it can be inferred from the course of conduct of the parties, the appellant in this case expressly required the amount of the commission to be paid at Secunderabad and the rule of Ogale Work 's case (1) would be inapplicable. The High Court judgment in our view was correct and we would therefore dismiss this appeal with costs. Appeal dismissed.
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The respondents, who were non residents carrying on business at Secunderabad within the territories of the Nizam of Hyderabad, were acting as agents of two firms in Bombay and Madurai, in British India, for the supply of certain goods to the Nizam 's Government.
In respect of the Commission due to the respondents by the firms the agreement between the parties was that the amounts were to be paid to the respondents in cash or by cheques at Secunderabad.
For these amounts cheques drawn by the firms on the Bombay and Madras branches, respectively, of the Imperial Bank of India, were sent by post at Bombay and Madurai to the respondents at Secunderabad, and when received, they were credited in their books of account, the cheques being sent to their banker there for collecting and crediting to their account.
For the assessment year 1945 1946 the Income tax Officer, Berhampur (in British India), assessed these sums as taxable income holding that the amount was received in British 869 India and not at Secunderabad.
The Appellate Tribunal found that all the cheques received at Secunderabad by the respondents were treated by them as payment.
The respondents claimed that in view of the agreement between the parties that the amount of commission should be paid at Secunderabad, when the cheques were sent by post, the post office was the agent of the debtor and not of the respondents, that the amount must be treated as having been received when the post office delivered the cheques to the respondents, and that, consequently, the amount cannot be treated as having been received in British India.
The Income tax authorities relied on the decision in Commissioner of Income tax vs Ogale Glass Works Ltd., [1955] I S.C.R. 185.
Held, that in the case of payment by cheques sent by post the determination of the place of payment would depend upon the agreement between the parties or the course of conduct of the parties.
If it is shown that the creditor authorised the debtor either expressly or impliedly to send a cheque by post the property in the cheque passes to the creditor as soon as it is posted.
But where, as in the present case, the agreement was that the amount was to be paid at Secunderabad, outside British India, when the cheques were received by the respondents there the amount must be deemed to have been received at that place, and, therefore, the amount was not liable to be taxed in British India.
Commissioner of Tncome tax vs Ogale Glass Works Ltd., , distinguished.
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Some business owners lived in Secunderabad, which was ruled by the Nizam of Hyderabad. They were agents for companies in Bombay and Madurai, which were part of British India. They helped these companies sell goods to the Nizam's government.
The agreement was that the business owners would be paid their commission (money earned for sales) in Secunderabad, either in cash or with checks.
The companies sent checks by mail from Bombay and Madurai. These checks were from branches of the Imperial Bank of India. The business owners recorded the checks in their accounts when they received them. Then, they deposited the checks in their bank in Secunderabad.
For the tax year 1945-1946, the tax officer in Berhampur (British India) said this commission money was taxable. He believed the money was received in British India, not Secunderabad.
But the appeals court said the business owners treated the checks as payment once they got them in Secunderabad.
The business owners argued that their agreement said they should be paid in Secunderabad. They said when the companies mailed the checks, the post office was acting for the company sending the money, not for them. So, they argued, the money was received when the post office delivered the checks in Secunderabad, meaning it wasn't received in British India.
The tax authorities referred to a previous court case, *Commissioner of Income tax vs Ogale Glass Works Ltd.*
The court held that when payments are made by mailed checks, where the payment happens depends on the agreement between the parties or how they usually do business.
If the person being paid said it was okay to mail a check, then the check becomes their property as soon as it's mailed.
But in this case, the agreement was to pay in Secunderabad, outside of British India. So, when the business owners received the checks in Secunderabad, the money was considered received there. Therefore, the money couldn't be taxed in British India.
The court said the *Commissioner of Income tax vs Ogale Glass Works Ltd.* case was different from this one.
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l Appeals Nos. 1302 to 1906 of 1968. 752 Appeals by special leave from the judgment and orders dated September 26, 27 and 29, 1967 of the Mysore High Court in Writ Petitions Nos. 907, 1004, 1005, 1175 and 1245 of 1967. Jagadish Swarup, Solicitor General, C. R. Somasekharan 'and R. B. Datar for the appellants (in all the appeals). M. Veerappa and G. Narayana Rao, for respondent No. 1 (in all the appeals). section section Javali and section P. Nayar, for respondent No. 2 (in all the appeals). The Judgment of the Court was delivered by Vaidialingam, J. These five appeals, by special leave, by the City Municipal Council, Mangalore and the Commissioner of the City Municipal Council, are directed against the orders passed by the Mysore High Court in Writ Petitions Nos. 907, 1004, 1005, 1175 and 1245 of 1967, quashing the demand notices issued by the appellants against the first respondent in each of these appeals for payment of property tax for the half year ending September 30, 1966. As the grounds of attack levelled against the demand notices by the said respondents are common, we will only refer to the averments contained in Writ Petition No. 907 of 1967 out of which Civil Appeal No. 1302 of 1968 arises. buildings situated in Ward 11 and Ward XX, within Mangalore Municipality in the South Canara District, which originally formed part of the Madras State and which, on reorganisation of the States, became part of the State of Mysore. The Mysore Municipalities Act, 1964 (Act XXII of 1964) (hereinafter referred to as the Mysore Act) came into force from April 1, 1965 as per the notification, dated September 23, 1965 issued by the State Government. Certain sections had already come into force. Till the Mysore Act came into force, the Mangalore Municipality was governed by the Madras District Municipalities Act, 1920 (Act V of 1920) (hereinafter called the Madras Act). The Madras Act had provided for levy of property tax the procedure to be adopted for the same and as to how the annual value of a building was to be arrived at as well as the percentage at which the property tax was to be levied. Similarly the Mysore Act had also provided for levy of property tax, prescribing the ascertainment of annual ratable value and also the rate at which the tax was to be levied. Although the Mysore Act came into force from April 1, 1965 the appellants issued demand notices for property tax under the said Act for the assessment year 1965 66. In those demand notices, the Municipal Council determined the ratable annual 753 value under section 101 (2) of the Mysore Act and assessed the tax on the basis of that annual ratable value, but at rates under the Madras Act. The tax was paid as per the demand notices. But on March 16, 1967 the appellant issued the impugned notices of demand under the Madras Act for payment of property tax for the year 1966 67. The tax demanded on the basis of the Madras Act was considerably higher than that originally demanded and paid under the Mysore Act for the assessment year 1965 66. Notwithstanding the protest made by the first respondent, the appellants threatened to collect the tax as per the demand notices and hence the first respondent filed Writ Petition No. 1907 of 1967 challenging the demand notices. The main grounds of attack against the. demand notices, as raised in the said Writ Petition were that after the passing of the Mysore Act the appellants had no power to levy property tax under the Madras Act and therefore the demands were illegal. The demand notices were further attacked on the ground that section 382 of the Mysore Act, which related to the repeal of many Acts including the Madras Act and the saving provisions contained therein did not justify the issue of the demand notices. The first respondent accordingly prayed for quashing the demand notices issued under the Madras Act. He had also raised certain contentions regarding the levy of health cess included in the notices; but it is unnecessary to refer to those averments as the High Court has held against the first respondent and that question does not arise in these appeals. The appellants pleaded that under the Mysore Act property tax, among other things, has been imposed after following the procedure prescribed in sections 95 to 97 therein and the imposition of tax has come into force from April 1, 1967, but for the period in question viz., the year 1966 67 the demands were legal and valid in view of the provisions contained in section 382 of the Mysore Act. Notwithstanding the repeal of the Madras Act, the provisions contained in section 382 of the Mysore Act clearly saved the right of the appellants to levy property tax under the Madras Act to adopt both the annual value as well as the rate of tax as per the assess ment registers maintained under the said Act. In particular, the appellants relied upon the second proviso in section 382(1) of the Mysore Act and the third proviso inserted in the said section with retrospective effect, by the Mysore Municipalities (Amendment) Act ', 1966 (Mysore Act XXXIV of 1966). According to the appellants, as necessarily the imposition of property tax under the Mysore Act, after following the procedure contained therein will take time, the Legislature had made consequential provisions in section 382 with a view to enable the imposition of property tax under the repealed enactments during the interim period. The High Court has, by and large, accepted the contentions of the first respondent. According to the High Court, although 754 the higher rate of tax under the Madras Act is preserved by proviso 3 to section 382(1) of the Mysore Act, the provision for the determination of the annual value under section 82(2) of the Madras Act is not saved. The High Court is further of the view that the second proviso to section 382(1) of the Mysore Act only continues the old impost and the third proviso preserves the old rates and that they do not continue the old annual value. The net result of the decision of the High Court is that the Municipal Council has to determine the annual ratable value of the building as provided by section 10 1 (2) of the Mysore Act and to assess the property tax at the rate at which it is assessed under the Madras Act. Finally the High Court quashed the demand notices issued by the appellants. The learned Solicitor General, appearing for the appellants, urged that the High Court was in error in interpreting the second and third provisos to section 382(1) of the Mysore Act. it was urged that as the levy of property tax after adopting the procedure indicated in the Mysore Act will take time, the Legislature had, by incorporating the necessary provisions in section 382, particularly the second and third provisos to sub section (1), preserved the right of the, Municipal Council concerned to adopt not only the annual value but also the rate of property tax payable according to the assessment registers maintained under the Madras Act, till they are superseded by anything done under ' the Mysore Act. The learned Solicitor General, further urged that the view of the High Court that the annual ratable value has to be determined under the Mysore Act and the computation of the rate 'of tax has to be under the Madras Act, was anomalous and was not warranted by the provisions of the Mysore Act. On the other hand, Mr. Veerappa, learned counsel appearing for the first respondent in all the appeals, has supported the view taken by the High Court and urged that a proper interpretation had been placed on section 382 of the Mysore Act. According to the learned counsel, normally, after the coming into force of the Mysore, Act, no assessments could be made under ' the Madras Act, but section 382 of the Mysore Act, repealing the Madras Act, had made certain special provisions the existence of which alone would attract certain actions taken under the Madras Act. In order to appreciate the contentions, noted above, it is necessary to refer broadly to the scheme of the two Acts relating to the levy of property tax. We shall first advert to the, Madras Act. Under section 78(1) power given to the Municipal Council to levy, among other taxes, a property tax. Under sub section (3), a resolution of a municipal council determining to levy a tax has to 755 specify the rate at which such tax is to be levied and the date from which it shall be lived. Section 81(1) provides that it a Council by resolution determines that a property tax shall be levied, such tax shall be levied on all buildings and lands within the municipal limits save those exempted by the statute or by any other law. Sub section (2) states that the tax shall be levied at such percentages of the annual value or the buildings or lands as may be fixed by the Municipal Council, Subject to section 78. under this section, we are informed that 25 % has been fixed as the maximum rate. Sub section (2) of section 82 provides that the annual value of the lands and buildings shall be deemed to be the gross annual rent at which they may reasonably be, expected to be let from month to month or from year to year less a deduction in the case or buildings, or ten per cent of that portion of such annual rent which is attributable to buildings alone. it further provides that the sale deduction shall be in lieu or all allowance for repairs or on any other account. Section 86 provides that the property tax shall be levied every halt year and shall, excepting as otherwise provided in schedule IV, be paid lay the owner within thirty days of the commencement of the half year. Section 124 provides that the rules and tables embodied in Schedule IV shall be read as part of Chapter VI, dealing with Taxation and Finance. Schedule IV deals with Taxation and Finance Rules. Rule 2 provides for the preparation and maintenance of assessment books showing the persons and property liable to taxation under the Act and the assessment books being made available for inspection by the tax payers. Rule 6 provides for the value of any land or building for purposes of property tax being determined by the executive authority. Under rule 7, the executive authority has to enter in the assessment books the annual or capital value of all lands and building and the tax payable thereon. Rule 8(1) states that the assessment books shall be completely revised by the executive authority once in every five years. Sub rule (2) thereof provides for amending the assessment books at any time between one general revision and another in the manner indicated therein. A. perusal of the provisions referred to above, shows that under the Madras Act the property tax is levied on the annual value of buildings which is deemed to be the gross annual rental value less a deduction of ten per cent of that portion of annual rent is attributable to the buildings alone. The Municipal Council has to pass a resolution determining to levy the property tax and that resolution should also specify the rate at which such tax is to be levied as also the date from which it shall be levied and the tax is levied every half year. The executive authority has to maintain the assessment books containing entries regarding the annual value as well as the tax payable thereon. The executive authority is under an obligation to completely revise the assessment once in very five years. L5SupCI 3 756 There is no controversy that the Madras Act was applicable to the City of Mangalore, even after it formed part of the Mysore State on me reorganization of the States. The Madras Act, as we have mentioned earlier, was repealed by the Mysore Act, which came into force with effect from April 1, 1965. Coming to the Mysore Act, Chapter VI deals with Municipal Taxation. section 94 enables a municipal council to levy a tax on buildings or lands or both situated within the municipality, after complying with tile procedure indicated therein and subject to any general or special orders of Government and at rates not exceeding those specified in Schedules I to VII. The maximum rate has been fixed at 24 % of the annual ratable value. Section 2(1) defines annual retable value ' as the gross annual rent for which any building or land exclusive of furniture or machinery might reasonable be expected to be let from month to month or year to year. Section 95 deals with the procedure to be adopted preliminary to imposing a tax. Section 10 1 (2) provides that the annual ratable value of a building shall be the gross annual rent as defined in cl. (1) of section 2, less a deduction of sixteen and two thirds per cent of such annual rent. It further states that the said deduction shall be in lieu of all allowances for repairs or on any other account whatsoever. Section 103 deals with the preparation of an assessment list. Section 382(1) repeals the various enactments referred to therein, including the Madras Act. The first proviso, which saves certain matters, does not come into the picture in this case. The second proviso as well as the third proviso, introduced by the Mysore Municipalities (Amendment) Act, 1966 are relevant for our purpose and they ire as follows "(2) Provided further that subject to the preceding proviso anything done or any action taken (including any appointment or delegation made, tax, fee or cess imposed, notification, order, instrument, or direction issued, rule, regulation, form, bye law or scheme framed, certificate obtained, permit or licence granted or registration effected) under the said laws shall be deemed to have been done or taken under the corresponding provisions of this Act and shall continue to be in force accordingly unless and until superseded by anything done or any action taken under this Act : (3) Provided further that notwithstanding anything contained in the preceding proviso where any tax, duty, fee or cess other than a duty on transfers of immovable properties has been imposed under the said laws at a rate higher than the maximum rate permissible under this Act. such tax,. fee or cess may continue to be 757 imposed and collected at such higher rate unless and Until superseded by anything done or any action taken under this Act. " The third proviso has been introduced with retrospective effect by the Amending Act. It is not really necessary for us to consider more elaborately the scheme of the Mysore Act because. even according to the appellants, the procedure indicated therein whatever may be the procedure, about which we express no opinion has not been taken before the issue of the demand notices which were under challenge before the High Court. On the other hand, the appellants have exclusively relied on the second and third provisos to section 382 (1) of the Act. The learned Solicitor General has urged that the assesment books under the Madras Act were prepared on April 1, 1964 and, if so, under the second and third provisos to section 382(1) the property tax can be levied and collected as per the provisions of the Madras Act. In particular, the learned Solicitor General placed reliance upon the provisions of the Madras Act relating to the maintenance of assessment books and the assessment books having to be revised only once in every five years and pointed out that in this case the assessment books having been prepared on April 1, 1964 they will have currency for a period of five years till March 31, 1969. The second proviso to section 382(1) no doubt saves any tax which had been imposed under the Madras Act. Similarly, under the third proviso, the Municipal Council will have authority to collect tax even at a rate higher than the maximum rate permissible under the Mysore Act; but the essential requisite for attracting the two provisos is that the tax should have been imposed under the Madras Act, as per the second proviso and tax at a higher rate should have been imposed again under the Madras Act as per the third proviso. We are not inclined to accept the contention of the learned Solicitor General that by merely preparing the assessment registers under the Madras Act on April 1, 1964 it can be stated that a tax has been imposed under the second proviso or a tax at a higher rate has been imposed under.the third proviso. We have already referred to the material provisions of the Madras Act relating to the ' levy of property tax. Those provisions show that the municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for such official year. This was the view expressed by this Court in Municipal Corporation vs Hiralal(1), while interpreting certain provisions of the Madhya Bharat Municipalities Act, 1954. No doubt the wording in the Madhya Bharat Act in section 76, dealing with assessment list was slightly different but in our opinion the (1) ; 758 principle enunciated in that decision regarding the municipal tax being an annual tax leviable for a particular official year and the assessment list, on the basis or which the tax is assessed having currency for each such official year, is applicable also to the interpretation of the Madras Act. No resolution passed by the Municipal Council regarding the levy of the property tax and the rate at which it is to be levied, having currency for the year 1966 67, has been brought to our notice. The learned Solicitor General has drawn our attention to the minutes, dated September 15, 1966 as well as the Council 's resolution No. 1280 dated December 20, 1966 relating to the levy of property tax in the City of Mangalore for the period in question, under the Mysore Act. Those proceedings will not assist the appellant as the necessary procedure, under the Mysore Act, has not been followed and therefore that resolution cannot have any legal validity, so as to justify the imposition of tax. Normally, the municipal council will have to prepare a fresh assessment list, every year. By virtue of section 124 of the Madras Act, the rules and tables embodied in Schedule IV have to be read as part of Chapter VI dealing with Taxation and Finance. Though, ordinarily, the Municipality would have to prepare a fresh assessment list every year, rule 8 of Schedule IV permits the Municipal Council to continue the same assessment list for the next four succeeding years and to revise it once every five years. But, in order to enable the Municipal Council to levy and collect a tax, it has to pass a resolution determining to levy a tax, the rate at which such tax has to be levied as also the date from which it shall be levied. That the tax is an annual tax is also borne out by sub section (2) of section 82. If the contention of the learned Solicitor that the assessment list, once prepared, has to be adopted for five years, is accepted, it will result in the annual value on a particular building or house being static for five years, during which a municipal council can go on adopting the assessment list prepared in an earlier year and the owner or occupier of the building being deprived of the. right to object to the valuation regarding the annual value or the tax assessed thereon. This will be the result even though the annual value may have decreased for one reason or the other. It follows that the contention that the preparation of the assessment books amounts to imposing of a tax so as to justify the issue of the demand notice, cannot be accepted. Having due regard to the second and third provisos to section 382(1) and the other material provisions of the Mysore Act, the position is that a property tax must have been imposed by the Madras Act and even though the rates of such tax were higher than under the Mysore Act, the said higher tax could be collected. But no such tax having been imposed under the Madras Act, the 759 second and third provisos to section 382(1) do not apply and hence the demands for payment of property tax for the period are not justified. Though we are not in agreement with some of the reasons given by the High Court for issuing the writ, the conclusion arrived at by the High Court that the second and third provisos to section 382(1) of the Mysore Act do not justify the issue of the demand notices for the period in question, is correct. The result is that the appeals fail and are dismissed with costs. There will be only one hearing fee.
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The first respondent was the owner of some buildings within the appellant Municipality.
The appellant was governed by the Madras District Municipalities Act,, 1920, till April 1, 1965, when the Mysore Municipalities Act, 1964 came into force and thereafter by the Mysore Act.
For the year 1966 67 the appellant issued notices of demand for payment of property tax under the Madras Act.
The tax was higher than under the Mysore Act.
The first respondent challenged the levy by a writ petition, and the appellant justified the levy under section 382(1) of the Mysore Act and its provisos.
The High Court quashed the demand notices.
In appeal to this Court, HELD : Under the second and third provisos to section 382(1) of the Mysore Act if a property tax has been imposed by the Madras Act, even though the rate of such tax is higher than that under the Mysore Act, the higher tax could be collected.
The provisions of Madras Act namely sections 78, 81, 82, 124 and r. 8 of 'Schedule IV of the Act, show that the municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for such official year.
Though, ordinarily, the Municipality would have to prepare a fresh assessment list every year, r. 8 of Schedule IV of the Madras Act which, by virtue of section 124 has to be read as part of Chapter VI of the Act dealing with Taxation and Finance permits the Municipal Council to continue the same assessment list for the next 4 succeeding years and to revise it once every 5 years.
But, in order to enable the Municipal Council to levy and collect a tax, under section 78 it has to pass a resolution determining to levy a tax, the rate at which such tax has to be levied as also the date from which it shall be levied.
In the present case, no such resolution was passed by the Municipal Council.
Therefore, by merely preparing the assessment registers under the Madras Act on April 1, 1964, which will have currency for a period of 5 years till March 31, 1969, it cannot be said that a tax or that a tax at a higher rate had been imposed.
No such tax having been imposed under the Madras Act, the provisos to section 382(1) of the Mysore Act do not apply and the demands for payment of the property tax were not justified.
[757 E H; 758 D H; 759 A] Municipal Corporation vs Hiralal, ; , followed.
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The first person in this case owned some buildings in the town managed by the appellant.
The appellant (the town government) used to follow the Madras District Municipalities Act from 1920. On April 1, 1965, they switched to the Mysore Municipalities Act from 1964.
For the year 1966-67, the appellant sent out bills for property tax based on the Madras Act.
The tax amount was more than what it would have been under the Mysore Act.
The first person challenged the tax through a legal petition. The appellant said they were allowed to charge that amount under section 382(1) of the Mysore Act and its exceptions.
The High Court said the tax bills were invalid.
In an appeal to this Court, it was DECIDED: According to the second and third exceptions in section 382(1) of the Mysore Act, if a property tax was already set by the Madras Act, the higher amount could still be collected, even if it was more than the Mysore Act allowed.
The Madras Act (sections 78, 81, 82, 124, and rule 8 of Schedule IV) says that the town tax is an annual tax. It's charged for a specific year, and the assessment list (the list used to calculate the tax) is also for that year.
Usually, the town government has to make a new assessment list every year. But rule 8 of Schedule IV of the Madras Act (which is part of the law about taxes because of section 124) lets the town council use the same list for the next 4 years and only update it every 5 years.
However, in order to charge and collect a tax under section 78, the town council has to officially decide to charge the tax, how much the tax will be, and when the tax will start.
In this case, the town council never made that official decision.
So, just because they prepared the assessment registers under the Madras Act on April 1, 1964, which would be good for 5 years until March 31, 1969, doesn't mean that a tax, or a higher tax, was actually put in place.
Since no tax was officially put in place under the Madras Act, the exceptions to section 382(1) of the Mysore Act don't apply. The demands for property tax were therefore not valid.
[757 E H; 758 D H; 759 A] Municipal Corporation vs Hiralal, ; , followed.
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N: Criminal Appeal No. 193 of 1979. From the Judgment and Order dated 23 1 1979 of the Gujarat High Court in Special Criminal Application No. 8/79. P. H. Parekh and M. Mudgol for the Appellant. N. M. Phadke, section P. Nayyar and M. N. Shroff for the Respondent. The Judgment of the Court was delivered by CHINNAPPA REDDY, J. Kanchanlal Maneklal Chokshi who is in preventive detention under the provisions of the and whose petition for the issue of a writ of Habeas Corpus was rejected by the High Court of Gujarat is the appellant in this appeal. The High Court, while rejecting the petition, granted a certificate under Article 133(1) of the Constitution that the case involved a substantial question of law of general importance which needed to be decided by the Supreme Court. The substantial question of law so certified was 'whether it is necessary for the detaining authority to consider whether a person should be prosecuted before an order of detention is made against him '. The Division Bench of the Gujarat High Court in rejecting the particular contention of the appellant 5 475 SCI/79 56 purported to follow an earlier decision of another Division Bench of the same Court in Ashok Murlidhar vs State of Gujarat.(1) In that case Divan C. J., and Majumdar, J., though inclined to the view that the possibility of a criminal prosecution being launched should be present to the mind of the detaining authority, felt constrained to hold otherwise because of what, they thought had been decided by this Court in Hardhan Saha & Anr. vs State of West Bengal & Ors.(2). In our view, this Court did not say in Hardhan Saha vs State of West Bengal that the possibility of a prosecution being launched was an irrelevant consideration which need never be present to the mind of the detaining authority. On the other hand, we do not also think that it is axiomatic, as sought to be contended by the learned Counsel for the appellant, that the detaining authority must invariably consider the possibility of launching a prosecution before making an order of detention and that, if not, the order of detention must necessarily be held to be bad. In Hardhan Saha vs State of West Bengal, the vires of the provisions of the Maintenance of Internal Security Act was in question. One of the contentions was that Section 3 of the Act offended Article 14 of the Constitution as it permitted 'the same offence to be a ground for detention in different and discriminatory ways '. It was submitted that while A might be prosecuted but not detained preventively, might not be prosecuted but only detained preventively and C might be both prosecuted and detained preventively. Dealing with the contention, a Bench of five judges of this Court explained the basic distinction between preventive detention and detention following upon conviction and observed: "The power of preventive detention is qualitatively different from punitive detention. The power of preventive detention is precautionary power exercised in reasonable anticipation. It may or may not relate to an offence. It is not a parallel proceeding. It does not overlap with prosecution even if it relies on certain facts for which prosecution may be launched or may have been launched. An order of preventive detention may be made before or during prosecution. An order of preventive detention may be made with or without prosecution and in anticipation or after discharge or even acquittal. The pendency of prosecution is no bar to an order of preventive detention. An order of preventive detention is also not a bar to prosecution". 57 The Court then referred to various earlier decisions and deduced the following principles: "First merely because a detenu is liable to be tried in a criminal court for the commission of a criminal offence or to be proceeded against for preventing him from committing offences dealt with in Chapter VIII of the Code of Criminal Procedure would not by itself debar the Government from taking action for his detention under the Act. Second, the fact that the police arrests a person and later on enlarges him on bail and initiates steps to prosecute him under the Code of Criminal Procedure and even lodges a first information report may be no bar against the District Magistrate issuing an order under the preventive detention. Third, where the concerned person is actually in jail custody at the time when an order of detention is passed against him and is not likely to be released for a fair length of time, it may be possible to contend that there could be no satisfaction on the part of the detaining authority as to the likelihood of such a person indulging in activities which would jeopardise the security of the State or the public order. Fourth, the mere circumstance that a detention order is passed during the pendency of the prosecution will not violate the order. Fifth, the order of detention is a precautionary measure. It is based on a reasonable prognosis of the future behaviour of a person based on his past conduct in the light of the surrounding circumstances". Clearly, the Court did not lay down that the possibility of a prosecution being launched was an irrelevant consideration, not to be borne in mind by the detaining authority. All that was laid down was that the mere circumstance that a detenu was liable to be prosecuted was not by itself a bar to the making of an order of preventive detention. It does not follow therefrom that failure to consider the possibility of a prosecution being launched cannot ever lead to the conclusion that the detaining authority never applied its mind and the order of detention was, therefore, bad. In Bhutnath Mate vs State of West Bengal(1) Krishna Iyer and Sarkaria JJ., declared the detention illegal for denial of opportunity to make effective representation. On the question whether the failure of criminal prosecution was a bar to preventive detention the answer was a definite 'no '. The learned judges however expressed 58 apprehension against the danger to the democratic way of life inherent in 'the potential executive tendency to shy at Courts for prosecution of ordinary offences and to rely generously on the easier strategy of subjective satisfaction '. The question presently under consideration, namely, whether the failure of the detaining authority to keep in mind the possibility of a prosecution would necessarily vitiate the order of detention was not considered by the learned judges. In Srilal Shaw vs State of West Bengal & Ors.(1), the prosecution was dropped and thereafter an order of preventive detention was passed. The substance of the allegation against the detenu was that he was in unlawful possession of scrap metal belonging to the Railway. The Court came to the conclusion that on the material which was available to the detaining authority, it was impossible to arrive at the conclusion that the possession of the petitioner was unlawful. The Court found that the reason given by the District Magistrate for dropping the prosecution was unacceptable. It was observed that the prosecution was in all probability dropped as the petitioner might have been able to establish that his possession of the goods was not unlawful. The case struck the Court as a typical case in which for no apparent reason a person who could easily be prosecuted under the punitive law was being preventively detained. It is seen that the decision turned on the peculiar facts of the case and throws no light on the question presently raised before us. In Abdul Gaffer vs State of West Bengal(2) the order of detention was passed on the basis of a few instances of theft of Railway property for which the detenu could well and easily have been prosecuted. The contention before the Court was that the order of detention was passed by the detaining authority mechanically without applying its mind to the question whether the facts disclosed the tendency of the petitioner to act prejudicially in the manner mentioned in the detention order. The bald and sweeping allegation was made in the counter filed on behalf of the State that material witnesses were afraid of giving evidence in the Court against the detenu. The material witnesses were members of the Railway Protection Force. In that situation Sarkaria J., observed that the version given in the counter was incredible and could not be swallowed. The learned Judge then observed "the conclusion therefore is inescapable that the petitioner has been proventively detained without application of mind as to whether the prosecution against him was foredoomed to failure on the ground of witnesses being afraid to depose against the detenu 59 in Court. The impugned order has been made in a casual and cavalier manner". It is seen that there was an express allegation that recourse was had to preventive detention despite the fact that criminal prosecutions could well have been successfully launched, based as the case was on the evidence of members of the Railway Protection Force. The reason given by the State for taking recourse to preventive detention was found to be fantastic. The decision thus stands on the special facts of the case. In Dulal Roy vs The District Magistrate, Burdwan & Ors.,(1) the Court had to consider a situation where a month after a person was arrested in connection with a criminal case he was discharged but was taken into custody on the same day pursuant to an order of detention. Krishna Iyer and Sarkaria, JJ., while observing that as an abstract legal proposition an order of preventive detention could be validly passed against a person in jail custody on the same facts on which he was being prosecuted for a substantive offence in a Court, pointed out that such an order of detention was readily vulnerable to the charge that the detaining authority was taking recourse to preventive detention in order to circumvent the penal law and the process of the Court. The learned Judges were satisfied that the discharge of the detenu in a criminal case was not due to any shortcoming in the evidence or difficulty in its production in Court. The order of detention was, therefore, quashed on the ground of non application of mind by the detaining authority. In Salim vs State of West Bengal,(2) Chandrachud J., speaking for the Court observed that the fact that the detenu could have been prosecuted for the acts attributed to him did not affect the validity of the order of preventive detention. The further question whether it was incumbent on the detaining authority to consider the question of possibility of prosecution was not considered by the Court. In Ashok Murlidhar vs State of Gujarat, (supra) Divan C.J., and Majumdar, J., appeared to think that the Bench of five Judges of this Court which decided Hardhan Saha & Anr. vs State of West Bengal & Ors. , (supra) had taken a view different from that expressed in Bhuthnath Mate vs State of West Bengal, Abdul Gaffer vs State of West Bengal, Srilal Shaw vs State of West Bengal & Ors., Dulal Roy vs The District Magistrate, Burdwan & Ors. , (supra) We do not think that there is any such conflict as thought by the Division Bench of the Gujarat High Court. The principles emerging from a review of the 60 above cases may be summarised in the following way: The ordinary criminal process is not to be circumvented or short circuited by ready resort to preventive detention. But, the possibility of launching a criminal prosecution is not an absolute bar to an order of preventive detention. Nor is it correct to say that if such possibility is not present to the mind of the detaining authority the order of detention is necessarily bad. However, the failure of the detaining authority to consider the possibility of launching a criminal prosecution may, in the circumstances of a case, lead to the conclusion that the detaining authority had not applied its mind to the vital question whether it was necessary to make an order of preventive detention. Where an express allegation is made that the order of detention was issued in a mechanical fashion without keeping present to its mind the question whether it was necessary to make such an order when an ordinary criminal prosecution could well serve the purpose, the detaining authority must satisfy the Court that that question too was borne in mind before the order of detention was made. If the detaining authority fails to satisfy the Court that the detaining authority so bore the question in mind the Court would be justified in drawing the inference that there was no application of the mind by the detaining authority to the vital question whether it was necessary to preventively detain the detenu. The facts of the present case are that the grounds of detention served on the appellant contain a very elaborate statement of facts quite clearly pointing to an application of the mind by the detaining authority. The appellant did not complain in the Writ Petition that the detaining authority had not applied its mind and in particular had not considered the question of the possibility of a prosecution. Nor are there any facts appearing from the record which can lead us to infer that the detaining authority did not apply its mind to relevant considerations. We do not, therefore, think that the order of detention is in any manner infirm. The appeal is accordingly dismissed. P.B.R. Appeal dismissed.
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In Ashok Murlidhar vs State of Gujarat a Division Bench of the High Court thought that this Court in Hardhan Saha & Anr.
vs The State of West Bengal & Ors., ; laid down that where a person was sought to be detained preventively the possibility of a prosecution being launched was an irrelevant consideration which need never be present to the mind of the detaining authority.
Purporting to follow this decision another Division Bench of the High Court rejected the habeas corpus petition of the appellant who was in preventive detention under the provisions of .
The Division Bench certified that a substantial question whether it is necessary for the detaining authority to consider whether a person should be prosecuted before an order of detention is made against him needed to be decided by this Court.
In appeal to this Court it was contended on behalf of the appellant that it was axiomatic that the detaining authority must invariably consider the possibility of launching a prosecution before making an order of detention, in the absence of which the order of detention must be held to be bad.
Dismissing the appeal, ^ HELD: 1.
In Hardhan Saha 's case this Court did not say that the possibility of a prosecution being launched was an irrelevant consideration which need never be present to the mind of the detaining authority.
All that was laid down in that case was that the mere circumstance that a detenu was liable to be prosecuted was not by itself a bar to the making of an order of preventive detention.
It does not follow therefrom that failure to consider the possibility of a prosecution being launched cannot ever lead to the conclusion that the detaining authority never applied its mind and the order of detention was, therefore, bad.
[57 F G] 2.
The principles emerging from a review of the cases decided by this Court are that the ordinary criminal process is not to be circumvented or short circuited by ready resort to preventive detention, but that the possibility of launching a criminal prosecution is not an absolute bar to an order of preventive detention.
Nor is it correct to say that if such possibility is not present to the mind of the detaining authority the order of detention is necessarily bad.
However, the failure of the detaining authority to consider the possibility of launching a criminal prosecution may, in the circumstances of a case, lead to the conclusion that the detaining authority had not applied 55 its mind to the vital question whether it was necessary to make an order of preventive detention.
Where an express allegation is made that the order of detention was issued in a mechanical fashion without keeping present to its mind the question whether it was necessary to make such an order when an ordinary criminal prosecution could well serve the purpose, the detaining authority must satisfy the court that the question too was borne in mind before the order of detention was made.
If the detaining authority fails to satisfy the court that the detaining authority so borne the question in mind the court would be justified in drawing the inference that there was no application of the mind of the detaining authority to the vital question whether it was necessary to preventively detain the detenu.
[60 A D] In the instant case the grounds of detention served on the appellant contained a very elaborate statement of facts quite clearly pointing to an application of the mind by the detaining authority.
The appellant did not complain in his petition that the detaining authority had not applied its mind and in particular had not considered the question of the possibility of a prosecution nor were there any facts appearing from the record which could lead to the conclusion that the detaining authority did not apply its mind to relevant considerations.
The order of detention is not infirm in any manner.
[60 E F] Bhuthnath Mate vs The State of West Bengal, ; ; Srilal Shaw vs State of West Bengal & Ors., ; ; Abdul Gaffer vs State of West Bengal, AIR 1975 SC 1496; Dulal Roy vs The District Magistrate, Burdwan & Ors., ; ; Salim vs State of West Bengal; ; ; explained.
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In the case of Ashok Murlidhar vs State of Gujarat, a group of judges at the High Court thought that a previous case, Hardhan Saha & Anr. vs The State of West Bengal & Ors., said that when someone might be held to prevent them from doing something wrong (preventive detention), whether they could also be charged with a crime is not important. The police don't need to think about it.
Based on that previous case, another group of judges at the High Court turned down the request of someone who was being held preventively. This person, the appellant, asked for a *habeas corpus* petition, which is a request to be released.
The High Court judges said that a very important question needed to be answered: Does the police need to think about charging someone with a crime before deciding to hold them preventively?
The appellant argued that the police must always think about whether they can charge someone with a crime before holding them preventively. If they don't, the order to hold the person should be considered invalid.
The Court rejected the appeal.
1. The Court said that in the Hardhan Saha case, they did not say that the possibility of charging someone with a crime is never important for the police to consider.
All that the Hardhan Saha case said was that just because someone *could* be charged with a crime, that doesn't automatically mean they can't be held preventively.
However, it doesn't mean that *not* thinking about whether to charge someone with a crime can *never* mean that the police didn't properly consider the situation and that the order to hold the person is invalid.
2. The Court said that after looking at many similar cases, these are the rules: the usual criminal process shouldn't be avoided by quickly using preventive detention. However, being able to charge someone with a crime doesn't automatically stop the police from using preventive detention.
Also, it's not correct to say that if the police don't think about the possibility of charging someone with a crime, the order to hold them is always invalid.
However, if the police *don't* think about whether they could charge someone with a crime, it might suggest that they didn't properly consider whether it was really necessary to hold the person preventively.
If someone claims that the order to hold them was made without thinking about whether a regular criminal charge would be enough, the police must prove to the court that they *did* think about this before making the order.
If the police can't prove that they considered this, the court can assume that they didn't properly think about whether it was really necessary to hold the person preventively.
In this specific case, the reasons given for holding the appellant had a very detailed description of the facts, which clearly showed that the police *did* think about the situation.
The appellant didn't complain that the police hadn't thought about whether they could charge him with a crime instead. Also, there was nothing in the records to suggest that the police didn't properly consider everything.
Therefore, the order to hold him is valid.
The Court also discussed these cases: Bhuthnath Mate vs The State of West Bengal, Srilal Shaw vs State of West Bengal & Ors., Abdul Gaffer vs State of West Bengal, Dulal Roy vs The District Magistrate, Burdwan & Ors., and Salim vs State of West Bengal.
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l Appeal No. 61 of 1951. Appeal from the Judgment and Decree dated the 10th November, 1944. , of the High Court of Judicature at Lahore in Civil Regular First Appeal No. 259 of 1942, arising out of the Judgment and Decree dated the 29th July, 1942, of the Court of the Extra Assistant Settlement Officer and Assistant Collector of the 61 First Grade as Senior Sub Judge, Gurgaon, in Suit No. 35 of 1940 41. Dr. Bakshi Tek Chand, (Ram Nath Chadha and Ganpat Rai, with him) for the appellants. Naunit Lal for respondents Nos. 1, 3, 7 to 11 and 13 to 19. April 21. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal is brought against the judgment and decree dated November 10, 1944, of the Lahore High Court (Sir Trevor Harries C. J. and Mr. Justice Mahajan, the present Chief Justice of this Court) reversing the judgment and decree of the Assist,ant Collector, First Grade, Gurgaon, as Senior Subordinate Judge, and dismissing the plaintiffs appellants ' suit. Dalmir, Dilmor and Chhinga were three brothers and Amir Khan and Sharif Khan were the two collaterals. Alif Khan was the son of Amir Khan. The present dispute is between the descendants of the five branches of the family. The suit was brought by the descendants of Dalmir against the descendants of Dilmor, Cbhinga, Alif Khan and Sharif Khan. To this suit were also impleaded as defendants some of the descendants of Dalmir. The plaintiffs claimed a declaration that they along with defendants Nos. 17 to 19 are full owners in possession of 819 Bighas 19 Biswas land situate in village Manota Tehsil Ferozepore Jhirka. in the Gurgaon District, that the defendants Nos. I to 16 had no right to claim partition of that land and that they were entitled only to the produce of land measuring 140 Bighas 19 Biswas possessed by them without payment of land revenue. The aforesaid defendants, it was alleged, were bound by the terms embodied in the agreement dated September II, 1861, in the Wajib ul arz of that Settlement and repeated in subsequent Settlements which debarred them from any right to. claim partition. Defendants Nos. I to 16, who are the contesting defendants, pleaded in defence that the plaintiffs along with the pro forma defendants Nos. 17 to 19 were recorded in revenue 62 papers as owners of 1/5th share in the land in dispute, while the contesting defendants were recorded as owners of the remaining 4/5th share and as such they were entitled to claim partition. The defendants denied that any agreement or condition in the Wajib ul arz restricting their right to partition was binding after the expiry of the term of the Settlement and contended that it could not operate as a bar to their claim to partition. The Assistant Collector trying the suit as a Civil, Court under section 117 of the Punjab Land Revenue Act (Act XVII of 1887) decreed the claim. He held that the contesting defendants were entitled only to get produce of 140 Bighas and 19 Biswas of land in their possession without payment of land revenue and had no interest in the remaining land. This decree was reversed on appeal, the High Court holding that the defendants are entitled to 4/5th share as proprietors, that the original agreement repeated in subsequent Settlements was binding on the parties so long as the Settlements were in force, that it ceased to have any effect after the expiry of the Settlements and that the renewal of its terms in the Settlement of 1938 39 was not binding as they were not agreed to by the contesting defendants. The learned Judges held that the judgment (D. 4) dated June 15, 1893 of the Chief Court of Punjab inter parties, which held that the prohibition of partition contained in the Wajib ul arz did not survive the expiry of the period of the Settlement, was binding upon them. They took the view that the contesting defendants being. proprietors, the right of partition was inherent in their right of ownership. As a result of these findings the suit was dismissed. We have heard Dr. Tek Chand, learned counsel for the appellants, in support of the appeal at length but we are of opinion that there is no force in the appeal. The parties are Meos and the land in dispute is situate in village Manota in Tehsil Ferozepore Jhirka in Gurgaon District. According to the Gazetteer of Gurgaon District (1910) the Meos owned nearly the whole of the Ferozepore Tehsil and various other villages in Gurgaon. They are divided into several sub tribes, and these sub tribes possess a strong feeling of unity and the 63 power of corporate action. It was stated that " in the mutiny the members of each sub division generally acted together; and district officers are advised to keep themselves informed of the names and characters of the men, who from time to time possess considerable influence over their fellow tribesmen." (P. 60). The documentary evidence regarding the title to the property in dispute ranges over a period of four Settlements, each Settlement being for a period of thirty years. The first Settlement was made in 1839 42, the second in 1872 1879, the third in 1903 08 and the last in 1938 39 which is the current Settlement. The village was assessed to annual revenue of Rs. 323 for the, period of 30 years from 1246 to 1275 Fasli (corresponding to 1839 1862 A.D.) which was made payable by Dalmir Lamberdar who is described as sole owner. The Settlement papers were, however, lost during the mutiny and after taking fresh measurements the settle : ment papers were completed. Alif Khan, Dalmir and Dilmor signed what is called an agreement binding them by all conditions, provisions and declarations made at the time of the Settlement (P. 12). It is common ground that the property was originally, granted in 1822 A. D. to Dalmir by Nawab Ahmad Bakhsh Khan Rais of Ferozepore Jhirka. The grant is not in writing and there is no contemporaneous record which could throw any light on its terms. Dalmir claimed to be the sole grantee with full proprietary rights. A number of documents are attached to the Settlement record of 1863. They are important as showing how the property was dealt with by the Settlement authorities from time to time and the state of the revenue records. The earliest document on record appe ars to be an agreement dated September 28, 186 1, which is incorporated in paragraph 18 of the Wajib ul arz of village Manota. It says that the tenure of the village is zamindari. Dalmir is entitled to profit and liable for loss in respect of the entire village. The other biswadars are owners of the produce of the land cultivated by them but they pay no revenue. This, it is stated, is the benefit they enjoy (P. 35 = D. II). This document is signed in token of verification by Dalmir Lamberdar, 64 Dilmor, Alif Khan Biswadar and Phusa Biswadar, who ,ire described as proprietors. Phusa, we are told, is the alias of Chhinga. There is a report of Mr. John Lawrence (later Lord Lawrence), Settlement Officer referred to in the Gazetteer, which says that the arrange ment then in vogue was that a few owners shared the profit and loss of the land revenue and the others were exempted from responsibility. Manota was one of the few villages which continued to follow the system (P. 179). Paragraph 2 of the Wajib ul arz which relates to the mode of partition, after stating the area of the village as 837 Bighas and 9 Biswas, says "When we, the co sharers want to partition it, we ourselves will do so of our accord in accordance with our shares shown in the Khewat papers or through the village Patwari in the,presence of Panchayat of the brotherhood. The new abadi (cultivation of new land) will be made with the consent of all the biswadars. One biswdar is not competent to make a new abadi". D. 10). P. 4 is a statement showing apportionment of Jama, (i.e., Khewat money) in the village. After stating that the Settlement of the village was made in the name, of Dalmir, sole owner, and that he alone was entitled, to profit and liable for loss, it goes on to say that Alif Khan son of Amir and Phusa son of Chhinga and Dilmor having cultivated a specified area of land be. came owners of the produce of the land without payment of rent and also became entitled to profit and liable for loss. Paragraph 10 of the Wajibul arz contains an agreement about trees. It shows that the trees standing in the house or field of the owner belong to him, and he is competent to plant and cut them. So far as the occupancy tenants are concerned, the trees standing in their houses also belong to them as they cultivate land but Dalmir alone had the right to cut or sell them. These are all the material documents pertaining to the Settlement record of 1863. We now come to the Settlement record of is an important document. Paragraph I which deals with the history of the village is reproduced below: ' "Fifty two years ago in Sambat 1880, Dalmir, Caste Meo, Got Sogan, along with Dilmor and Chhinga, his real brothers, took possession of the area of this village, with the permission of Nawab Ahmed Bakhshi Khan Sahib. Rais of Ferozepore, who granted him a Biswadari estate without payment of any Nazrana in lieu of the services rendered by him and made this desolate, tract abad. He along with his brothers jointly remained in possession thereof and enjoyed profit and bore loss. After him Amir Khan became abad in the village and along with us, proprietors, remained in possession. Accordingly, we the proprietors got his name, entered as a Biswadar at the time of the Revised Settlement. After him Sharif Khan, son of Ghariba, who was also a collateral, came to this village in Sambat 1916 and remained in possession along with us proprietors. Accordingly we got his name also recorded along with ours on the 14th September, 1863. We have up to this day been joint owners. This village has never been partitioned. Shares are given in the Khewat papers. ," This document shows that although the name of Dalmir is mentioned as being the sole grantee by virtue of the services rendered by him to the Nawab, his two brothers also were in joint possession with him. Not only this but Amir Khan and Sharif Khan, who are both collaterals, also had joint possession of the village. They are all described as proprietors and their names are recorded as joint owners. The authenticity of this documentisbeyondquestion. It out sat the root of the theory of Dalmir being the sole owner. It is true that Dalmir was mentioned as the sole owner in D. 4 but the grant was treated by Dalmir himself as being the joint property of his two brothers and the two couaterals whether or not it was originally intended for the benefit of the family as understood in its widest sense. Paragraph 5 of the Wajib ul arz relating to the tenure of the village and the mode of payment of revenue 9 66 says that the village is bilijmal (joint) and that the sons of Dalmir shall continue to pay the Government revenue in respect of their own shares as well as the shares of the sons of his two brothers and the shares of the collaterals. The reason given is that no money is taken from the said co sharers on account of relationship. (P. 15). This statement is consistent only with joint ownership. Paragraph 7 of the Wajib ul arz also describes the tenure as Zamindari bilijmal and Repeats the statement that the other co sharers of Dalmir do not pay any rent or Jama in respect of the land cultivated by them on account of their relationship. No single sharer has the right to reclaim the Banjar area without the consent of all the proprietors (P. 19). This Wajib ul arz is verified by the proprietors, tenants, Bhandadars (a village servant to whom cultivation is allotted rent free), Kamins (menials) and the inhabitants of the village. It is admittedly signed by the ancestors of the parties (P. 22). The Khewat and the Khatauni (P. 31) prepared during the Settlement both record the five branches of the family as being in possession of a 1/5th share each. A similar entry is to be found in the Khatauni (D. 18). It appears that during the currency of this Settlement two suits for partition were filed in the Revenue Court but the partition was not allowed (P. 5). Coming to the Settlement of 1903 08 we find a Statement in clause 3 of the Wajib ul arz (D. 13) that the descendants of Dalmir alone could get the land partitioned in five equal shares but the descendants of the other four co sharers, who were, cultivating land without payment of revenue, owing to non rendition of account in respect of profit and loss of their respective shares, could not have the land partitioned. , Lastly we come to the Jamabandi of 1937 38 (P. 1). This shows that all the five branches were entered as being in possession of equal shares. Mehrab, grandson of Dalmir and one of the plaintiffs, who gave evidence as P. W. 5 admitted that defendants 67 Nos. I to 16 were shown as proprietors in the Jamabandi but he never raised any objection to it. He also admitted that Mehar Singh, grandson of Sharif Khan, sold his half share to Chhote Khan and Bhola, his coplaintiffs and that they did not challenge the same. We may now refer to the civil litigation which started in 1891. It arose upon the rejection of the applications for partition made by Alif Khan and Sharif Khan on September 24, 1890, by the Assistant Collector. Alif Khan filed a suit against the descendants of the three brothers and the descendants of Sharif Khan. In the plaint (D. 1) he claimed a declaration of 1/5th share of the entire village. The sons of Dalmir denied the claim. In their written statement (B. 2) they alleged that in previous proceedings they had deniedthe plaintiffs ' right to partition and that the defendants had been in adverse possession of the land and that the plaintiffs and others had been cultivating land as Bhandadars (village servants). The Subordinate Judge decreed the claim (D. 3). This decree was upheld by the Divisional Judge, but the judgment is not on record. In second appeal the Chief Court amended the decree by declaring that the plaintiff was entitled to 1/5th share in the village to be enjoyed subject to the qualifications and restrictions set forth in the Khewat and the Wajib ul arz which do not permit of his obtaining partition while the present Wajib ul arz was in force. This decree was made upon the admission made by the defendants in the course of the arguments. Paragraph 8 of the Wajib ul arz of 1877 (D. 12=p. 16) which was the subject of conflicting interpretation by the parties was interpreted by the Chief Court to mean that its effect was to prohibit general division among the co sharers while the Wajibul arz was still in force. They held that the five sons of Dalmir could separate their shares inter se but not the other co sharers. We are of opinion that this judgment which is inter partes finally set at rest the controversy between them by declaring that the parties were joint owners holding equal shares and constitutes res judicata. The judgment is also in conformity with the true effect of the documentary evidence on the 68 record. No doubt the name of Dalmir was entered. in some documents as the sole owner but that entry by itself is not conclusive and must be read in conjunction with the other entries in the Settlement record. Dalmir may have been the original grantee but his own conduct shows that he did not regard himself as absolute owner to the exclusion of his own brothers. Indeed according to the entry he even treated his collaterals on an equal footing. His description as sole owner in the circumstances carries no value. Whatever may have been the position at the time of the original grant, the subsequent conduct of the parties unmistakably shows that all the five branches were treated as owners in equal shares. Dalmir as the lamberdar was made responsible for the payment of the entire landrevenue. He was entitled to profit and was responsible for loss. The others were given less land and were exempted from payment of rent or revenue on account of relationship. This arrangement appears to have been fairly general in those days as appears from the report of Mr. (later Lord) Lawrence, Settlement Officer, re ferred to above. The arrangement was that ' a few owners shared the profit and loss of the land revenue assessment while the others were exempted. The Government was primarily interested in the payment of the revenue and they apparently found it more convenient to hold the head or the most influential member of the family as responsible for payment of the entire revenue leaving it to him to make such arrangement among his co sharers as he thought fit. In later Settlements the owners accepting responsibility for the payment of the land revenue did not find it profitable and the system gradually disappeared. Lord Lawrence remarks that at the third Settlement the number of villages which still continued the system was reduced to three and one of these was Manota in Ferozepore Tehsil (page 179). This accounts for Dalmir being called the sole owner and being made responsible for payment of Government revenue. By section 44 of the Punjab Land Revenue Act an entry made in the record of rights or in an annual record shall be presumed to be, true until the contrary 69 is proved. That entries in the Jamabandies fall within the purview of the record of rights under section 31 of the Act admits of no doubt. Section, 16 of the old Act (XXIII of 1871) laid down that entries in the record of rights made or authenticated at a regular Settlement shall be presumed to be true. We are satisfied that the materials on the record taken as a whole justify the view which has been taken by the High Court that the contesting defendants are joint owners and not mere cultivators who are not entitled to claim partition of the property. The judgment of the Chief Court also recognized the proprietary right of the defendants but qualified it by the declaration that so long as the Settlement was in force, they were not entitled to partition by reason of their agreement recorded in the Settlement papers. The Settlements of 1877 and 1908 09 have ceased to operate and the entry in the current Settlement of 1938 39 having been made under the orders of the Collector has no value when the contesting defendants did not agree to its being incorporated. The previous agreement was not one for perpetuity but for a limited period only and there is no reason in law why the prohibition against partition should be now enforced against the contesting defend. It has been held in a number of cases that the entry regarding agreement in a Wajib ul arz holds good during the period of the Settlement in which it is made and becomes inoperative when the Settlement has come to an end: Hira and others vs Muhamadi and Other8 (1); Allah Bakhsh and Others. Mirza Bashir uddin and Others (2) and Lieut. Chaudhri Chattar Singh vs Mt. Shugni and Another (3). We agree with the High Court in holding that partition is a right incident to the ownership of property and once the defendants are held. as co owners, their right to partition cannot be resisted. It was contended by Dr. Tek Chand that the appellants had acquired title by adverse possession over the defendants ' share for more than 56 years. This plea was raised in the plaint but evidently it w as not pressed (1)16 P.R. 1915 (P. 89). (2)1932 LIT.Rn. (3) A.I.R. 194 Lah. 70 for no issue was framed, nor any finding recorded by the trial Court. This point is not taken even in the grounds of appeal to this Court. The plea has no substance and was rightly rejected by the High Court on the ground that possession was under an arrangement between the co sharers. and no question of adverse possession could arise under the circumstances. We hold that there is no force in this appeal and dismiss it with costs. Appeal dismissed.
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Held, that an entry regarding agreement in a Wajib ul arz holds good during the currency of the Settlement and does not survive the expiry of the period of Settlement.
Hira and Others vs Muhamadi and Others (16 P.R. 1915 at P. 89), Allah Bakhsh and Others vs Mirza Bashir ud Din and Others and Lieut.
Chaudhri Chattar Singh vs Mt. Shugni and Another (A.I.R. referred to.
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The court decided that a statement about an agreement in a Wajib-ul-arz (a record of rights) is valid only while the land settlement is in place. It doesn't remain in effect after the settlement period ends.
This decision is supported by previous court cases, including Hira and Others vs Muhamadi and Others, Allah Bakhsh and Others vs Mirza Bashir ud Din and Others, and Lieut. Chaudhri Chattar Singh vs Mt. Shugni and Another.
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Appeal No. 124 of 1951. Appeal by Special Leave granted by His Majesty in Council, dated the 30th October, 1945, from the Judgment and Decree, dated the 12th July, 1944, of the High Court of Judicature at Lahore in Civil Regular Second Appeal No. 450 of 1942, against the Judgment and Decree, dated the 14th January, 1942, of the Court of the District Judge, Gurdaspur, in Appeal No. 91 of 1941, arising from the Judgment and Decree, dated 31st July, 1941, of the Court of Senior Subordinate Judge, Gurdaspur, in Suit No. 80 of 1940. G. section Vohra and Harbans Singh for the appellants. Achhru Ram (J. B. Dadachanji and R. N. Sachthey, with him) for respondents. 45 1954. April 1. The Judgment of the Court was delivered by GHULAM HASAN J. This is an appeal by special leave granted by the Privy Council against the judgment and decree dated July 12, 1944, of a Division Bench of the High Court at Lahore passed in second appeal confirming the dismissal of the appellants ' suit cone currently by the trial Court and the Court of the District Judge, Gurdaspur. The two appellants are admittedly the first cousins of the respondent, Harnam Singh, and belong to village Gillanwali, Tahsil Batala, District Gurdaspur. Gurmej Singh, respondent No. 2, is a collateral of Harnam Singh in the 8th degree. The appellants sued for a declaration that the deed of adoption executed by Harnam Singh on July 30, 1940, adopting Gurmej Singh was invalid and could not affect the reversionary rights of the appellants after the death of Harnam Singh. The appellant 's case was that under the Customary Law of Gurdaspur District applicable to the Gill Jats ,of village Gillanwali, Harnam Singh could only adopt a is near collateral" and Gurmej Singh being a distant collateral his adoption was invalid. The defence was a denial of the plaintiffs ' claim. Both the trial Judge and the District Judge on appeal held that the factum and the validity of the adoption were fully established. In second appeal Trevor Harries C. J. and Mahajan J. (as he then was) held that there was sufficient evidence of the factum of adoption as furnished by the deed and the subsequent conduct of Harnam Singh. They held that all that was necessary under the custom to constitute an adoption was the expression of a clear intention on the part of the adoptive father to adopt the boy concerned as his son and this intention was clearly manifested here by the execution and registration of the deed of adoption coupled with the public declarations and treatment as adopted son. Upon the legal validity of the adoption the High Court found that the answer to Question 9 of the Riwaj i am of Gurdaspur District of the year 1913 laying down that the adoption of "near collaterals only " was recognised was not mandatory. The High Court relied in support of their 46 conclusion on a decision of Tek Chand J. in Jowala vs Diwan Singh (1) and the Privy Council decision in Basant Singh vs Brij Raj Saran Singh (2). The first question regarding the factum of adoption need not detain us long. The deed of adoption, Exhibit D. 1, recites that Harnam Singh had no male issue who could perform his kiry a karam ceremony after his death, that Gurmej Singh had been brought up while he was an infant by his wife and that he had adopted him according to the prevailing custom. The recital continues that since the adoption he had been treating and calling Gurmej Singh as his adopted son. This fact was well, known in the village and the adoptee was en joying all rights of a son. He had executed a formal document in his favour in order to put an end to any dispute which might be raised about his adoption. As adopted son he made him the owner of all of his property. We are satisfied that there is ample evidence to sustain the finding on the factum of adoption. The main question which falls to be considered is whether under the terms of the Riwaj i am applicable to the parties, Gurmej Singh being a collateral of Harnam Singh in the 8th degree could be validly adopted. The custom in question is founded on Question 9 and its answer the Customary Law of the Gurdaspur District. They are as follows: " Question 9. Is there any rule by which it is required that the person adopted should be related to the person adopting ? If so, what relatives may be adopted ? Is any preference required to be shown to particular relatives ? If so, enumerate them in order of preference. Is it necessary that the adopted son and his adoptive father should be (1) of the same caste or tribe; (2) of the same got? Answer : The only tribes that recognised the adoption of a daughter 's son are the Sayyads of the Shakargarh and the Arains of the Gurdaspur Tahsil. The Brahmans of the Batals Tahasil state that only such of them as are not agriculturists by occupation recognize such adoption. The Muhamadan Jats of the (1) (2) I.L.R. 57 All 494. 47 Gurdaspur. Tahsil could not come to an agreement on this point. The remaining tribes recognise the adoption of War collaterals only. The right of selection rests with the person adopting. The Khatris, Brahmans and Bedis and Sodis of the Gurdaspur Tahsil, however, state that the nearest collaterals cannot be sperseded and selection should always be made from among them" It is contended for the appellants that the expression " near collaterals only " must be construed to mean a collateral up to the third degree and does not cover the case of a remote collateral in the 8th degree. The restriction as regards the degree of relationship of the adoptee, it is urged, is mandatory and cannot be ignored. The expression " near collaterals " is not defined by the custom. The relevant answer which we have underlined above gives no indication as to the precise import of the words " near collaterals. " The custom recorded in the Riwaj i am is in derogation of the general custom and those who set up such a custom must prove it by clear and unequivocal language. The language is on the face of it ambiguous and we can see no warrant for limiting the expression to signify collateral relationship only up to a certain degree and no further. We are also of opinion that the language used amounts to no more than an expression of a wish on the part of the narrators of the custom and is not mandator. If the intention was to give it a mandatory force, the Riwaj i am would have avoided the use of ambiguous words which are susceptible of a conflicting interpretation. The provision that the right of selection rests with the person adopting also detracts from the mandatory nature of the limitation imposed upon the degree of relationship. Though the adoption of what the custom describes as "near collaterals only" was recognized by the community of Jats, the right of selection was left to the discretion of the adopter. There is no meaning in conferring a discretion upon the adopter if he is not allowed to exercise the right of selection as between collaterals inter se. We are unable to read into the answer a restriction upon the choice of the adopter of any particular collateral however near in degree he may be, 48 In his valuable work entitled "Digest of Customary Law in the Punjab" Sir W.H. Rattigan states in paragraph 35 that "a sonless proprietor of land in the central and eastern parts of the Punjab may appoint one of his kinsmen to succeed him as his heir" and in paragraph 36 that "there is no restriction as regards the age or the degree of relationship of the person to be appointed". It appears to us that the basic idea underlying a customary adoption prevalent in the Punjab is the appointment of an heir to the adopter with a view to associate him in his agricultural pursuits and family affairs. The object is to confer a personal benefit upon a kinsman from the secular point of view 'unlike the adoption under the Hindu Law where the primary consideration in the mind of the adopter if a male is to derive spiritual benefit and if a female, to confer such benefit upon her husband. That is why no emphasis is laid on any ceremonies and great latitude is allowed to the adopter in the matter of selection. Mulla in his well known work on Hindu Law says: "It has similarly been held that the texts which prohibit the adoption of an only son, and those which enjoin the adoption of a relation in preference to a stranger, are only directory; therefore, the adoption of an only son, or a stranger in preference to a relation, if completed, is not invalid. In cases such as the above, where the texts are merely directory, the principle of factum valet applies, and the act done is valid and binding." (Page 541). We see no reason why a declaration in a Riwaj i am should be treated differently and the text of the answer should not be taken to be directory. However peremptory may be the language used in the answers given by the narrators of the custom, the dominant intention underlying their declarations which is to confer a temporal benefit upon one 's kinsmen should not be lost sight of. A number of cases have been cited before us to show that in recording the custom the language used was of peremptory nature and yet the Courts have held that 49 the declarations were merely directory and non compliance with those declarations did not invalidate the custom. In Jiwan Singh and Another vs Pal Singh and Another(1) Shah Din and Beadon JJ. held "that by custom among Randhawa Jats of Mauza Bhangali, Tahsil Amritsar, the adoption, by a registered deed, of a collateral in the 9th degree who is of 16 years of age is valid in the presence of nearer collaterals. " The adoption was objected to on the ground that the adoptee was a remote collateral and that he was not under the age of twelve at the time of the adoption as required by the Riwaj i am. The learned Judges held that the provision as regards the age was recommendatory and not of a mandatory character. In Sant Singh vs Mula and Others ) Robertson and Beadon Jj. held "that among Jats and kindred tribes in the Punjab, the general, though not 'the universal, custom is that a man may appoint an heir from amongst the descendants of his ancestor and that he need not necessarily appoint the nearest collateral. " This was a case where a distant collateral was preferred to a nearer collateral. The learned Judges expressed the opinion that the clause which points to the advisability of adopting from amongst near collaterals was nothing more than advisory. In Chanan ' Singh vs Buta Singh and Others(3), a case from Jullundur District, the question and answer were as follows : "Q. No. 71: Are any formalities necessary to constitute a valid adoption, if so, describe them. State expressly whether the omission of any customary ceremonies will vitiate the adoption ? A. . The essence of adoption is that the fact of adoption be declared before the brotherhood or other residents of the village. The usual practice is that the Baradari gathers together and the adopter declares in their presence the fact of the adoption. Sweets are distributed and a deed of adoption is also drawn up. If (1) 22 P.R. (2) 44 P.R. (3) A.I.R. 1935 Lah. 7 50 these formalities are not observed the adoption is not considered valid. " The adoption was challenged on the ground that there was no gathering of the brotherhood. The learned Judges (Addison and Beckett JJ.) held that it was immaterial whether there was or was not a gathering of the brotherhood at the time. It appears that the adopter had made a statement in Court acknowledging the appointment or adoption in question. The next day he celebrated the marriage of the boy as his son, and thereafter he looked after his education and allowed him to describe himself as his adopted son or appointed heir, and the boy lived with him as his son. The learned Judges held that the details given in the answers to questions in various Customary Laws were not necessarily mandatory but might be merely indicatory. In Jowala vs Dewan Singh(1) Tek Chand J. held "that an adoption of a collateral in the fourth degree, among Jats of Mauza Hussanpur, Tahsil Nakodar, District Jullundur, is valid although nearer collaterals are alive." He also held "that an entry in the Riwaj i am as to the persons who can be adopted is merely indicatory". In a case from Delhi reported in Basant Singh and Others vs Brij Raj Saran Singh(2)the Privy Council held "that the restriction in the Riwaj i am of adoption to persons of the same gotra is recommendatory and a person of a different gotra may be adopted. " Counsel for the appellants frankly conceded that he could cite no case where the declarations governing customary adoptions were held to be mandatory. Whether a particular rule recorded in the Riwaj i am is mandatory or directory must depend on what is the essential characteristic of the custom. Under the Hindu Law adoption is primarily a religious act intended to confer spiritual benefit on the adopter and some of the rules have, therefore, been held to be mandatory and compliance with them regarded as a condition of the validity of the adoption. On the other hand, under the (1) (2) 57 All, 494. 51 Customary Law in the Punjab, adoption is secular in character, the object being to appoint an heir and the rules relating to ceremonies and to preferences in selection have to be held to be directory and adoptions made in disregard of them are not invalid. There is no substance in the appeal and we dismiss it with costs. Appeal dismissed.
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Held, that under the Customary Law of Gurdaspur District (Punjab) applicable to the Gill Jats of village Gillanwali, the adoption of a collateral of the 8th decree is not invalid.
The answer to question 9 in Customary Law of the Gurdaspur District that "the adoption of near collateral only" should be recognised is not mandatory but directory.
Under the Customary Law in the Punjab, adoption is secular in character, the object being to appoint an heir and the rules relating to ceremonies and to preferences in selection have to be held to be directory and adoptions made in disregard of them are not invalid.
Jiwan Singh and Another vs Pal Singh and Another (22 P.R. 1913 at p. 84); Sant Singh vs Mula and Others (44 P.R. 1913 at p. 173); Charan Singh vs Butta Singh and Others (A.I.R. ; Jowala vs Dewan Singh ; and Basant Singh and Others vs Brij Raj Saran Singh (I.L.R. 57 All. 494) referred to:
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The court decided that, based on the traditional rules in the Gurdaspur District of Punjab for the Gill Jat people of Gillanwali village, adopting a relative who is an eighth-degree relative is allowed.
The rule that says "only close relatives can be adopted" in the Gurdaspur District's traditional law is a suggestion, not a requirement.
Traditional adoption laws in Punjab are not religious. The main goal is to choose an heir. Rules about adoption ceremonies and choosing specific relatives are only suggestions. If these suggestions are ignored, the adoption is still valid.
The court mentioned these previous cases: Jiwan Singh and Another vs Pal Singh and Another; Sant Singh vs Mula and Others; Charan Singh vs Butta Singh and Others; Jowala vs Dewan Singh; and Basant Singh and Others vs Brij Raj Saran Singh.
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N: Criminal Appeal No. 690 of 1982 etc. From the Judgment and order dated 20.5.1982 of the Patna High Court in Criminal Appeal No. 329 of 1980. R.K. Garg, R.K. Jain, Rajendra Singh, S.N. Jha, R.P. Singh, Rakesh Khanna, Md. Israeli and Ranjit Kumar for the Appellants. Pramod Swaroop and Mrs. G.S. Misra for the Respondents. B.B. Singh (Not Present) for the Respondents. A.K. Panda for the Complainant in all the appeals. The Judgment of the Court was delivered by DUTT, J. These appeals are directed against the judgment of the Patna High Court affirming the order of the First Additional Sessions Judge, Arrah, convicting all the appellants under sections 302/34 IPC and section 27 of the Arms Act and sentencing each of them to rigorous imprisonment for life and rigorous imprisonment for three years respectively and further convicting the appellant Hare Krishna Singh under section 379 IPC and sentencing him to rigorous imprisonment for three years; all the sentences are to run concurrently. The accused included two persons having the same name Paras Singh, one of Village Dhobaha, brother in law of Hare Krishna Singh, one of the appellants in Criminal Appeal No. 690 of 1982, and the other of Village Birampur and nephew of Jagdish Singh, the appellant in Criminal Appeal No. 616 of 1982. We shall hereinafter refer to 6 the said two persons as 'Paras Singh of Dhobaha ' and 'Paras Singh of Birampur ' respectively. The prosecution case as appearing from the Fardbeyan or the FIR lodged by one Sarabjit Tiwary (P.W. 3), a social worker, on 12.12.1987 in the Arrah Sadar Police Station, was that on that day at about 7.00 A.M. he was going to his brother in law Raghubir Mishra and just he reached near the main gate of the Sadar Hospital, he saw seven persons, namely, "(1) Hare Krishna Singh, resident of Dhanpura; (2) Sheo Narain Sharma, resident of Berkhembe Gali; (3) Ram Kumar Upadhyaya, resident of village Dumaria; (4) Jagdish Singh 's nephew of Birampur in military service; (5) brother in law of Hare Krishna Singh of Dhobaha in military service" and two more persons whom he could not identify. All the said persons were armed with rifle, gun and pistol, and were standing near northern side of the eastern gate of the hospital. At that time, two Rickshaws were coming from the eastern side. In the front Rickshaw, Jitendra Choudhary and another person named Lallan Rai, Resident of village Maniya, were sitting and in the rear Rickshaw there were two girls. As the Rickshaw of Jitendra Choudhary came near the persons mentioned above, all of a sudden, Hare Krishna Singh fired at Jitendra Choudhary from his gun, whereupon the latter fell down from the Rickshaw with the rifle which he was carrying with him. The other persons also fired upon Jitendra Choudhary along with Hare Krishna Singh, as a result of which he died. After that Hare Krishna Singh picked up the rifle of Jitendra Choudhary and touching his body said, "He is dead, let us take to our heels". It may be mentioned here that the two girls referred to in the Fardbeyan or FIR are Premlata Choudhary (P.W. 1) and Sobha Choudhary (P.W. 2), sisters of the deceased Jitendra Choudhary. After investigation by P.W. 9, the chargesheet was submitted against all the appellants and they were put up for trial. The prosecution examined as many as 9 witnesses, of whom P.Ws. 1, 2, 3 and 8 were eye witnesses. The defence of Hare Krishna Singh was that he was going to Patna along with the appellant Ram Kumar Upadhyaya and one Madan Singh in a Rickshaw and when the Rickshaw reached near the shop of Sita Ram, he received a bullet from behind and fell down. He looked back and saw that one Dipu Prasad and Ram Lal were firing. He also saw the deceased Jitendra Choudhary, Chhatu Choudhary and Lallan Rai (P.W. 8) firing from the eastern gate of the Hospital. He examined five witnesses, D.Ws. 1 to 5, to prove the nature of injury sustained by him. 7 The defence of Paras Singh of Dhobaha was that he had not visited the village Dhanpura for the last fifteen years. The defence of other appellants is also a denial of their complicity in the crime. The learned Additional Sessions Judge, after an elaborate discussion and analysis of the evidence adduced on behalf of the parties, accepted the prosecution case and convicted and sentenced the appellants as mentioned above. Regarding the injury sustained by Hare Krishna Singh, the learned Additional Sessions Judge was of the view that such injury had been deliberately introduced by him and held that he was not injured in the occurrence. On appeal by the appellants, the High Court affirmed their convictions and sentences. Hence these appeals be special leave. It is contended by Mr. Garg, learned Counsel appearing on behalf of Hare Krishna Singh, one of the appellants in Criminal Appeal No. 690 of 1982, that the prosecution having failed to explain the injury sustained by the appellant in the same occurrence, such injury being a serious one, the prosecution witnesses should be disbelieved. Counsel submits that in such circumstances, it should be held that the plea of the appellant of self defence has been probabilised, and that the prosecution must have withheld the true facts as to the genesis and origin of the occurrence. Further, it is submitted that in any event, it has cast a great doubt on the prosecution case and the benefit of that doubt should go to the appellant. The question, however, is whether it is an invariable rule that whenever an accused sustains an injury in the same occurrence, the prosecution is obliged to explain the injury and on the failure of the prosecution to do so, the prosecution case should be disbelieved. Before answering the question we may refer to a few decisions of this Court cited at the Bar. Mr. Garg has placed much reliance upon the decision of this Court in Lakshmi Singh vs State of Bihar, In that case, the accused sustained injuries in the same occurrence. Fazal Ali, J., who delivered the judgment of the Court, observed that no independent witness had been examined by the prosecution to support the participation of the appellant in the assault. Further, it was observed that the evidence of P.Ws. 1 to 4 clearly showed that they gave graphic description of the assault with regard to the order, the manner and the parts of the body with absolute consistency which gave an impression that they had given a parrot like version acting under a conspiracy to depose to one set of facts and one set of facts only. In view of the nature of evidence of P.Ws. 1 to 4, this 8 Court accepted the contention made on behalf of the accused, particularly taking the entire picture of the narrative given by the witnesses, that P.Ws. 1 to 4 had combined together to implicate the accused falsely because of the long standing litigation between them and the said witnesses. Thereafter, the Court considered the injuries that were inflicted on the person of the accused Dasrath Singh and laid down that where the prosecution fails to explain the injuries on the accused, two results follow: (1) that the evidence of the prosecution witness is untrue; and (2) that the injuries probabilise the plea taken by the appellants. The principle of law laid down in the earlier decision of this Court in Mohar Rai vs State o f Bihar; , was followed. In Mohar Rai 's case it has been laid down 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 case 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 principles that have been laid down in Lakshmi Singh 's case have to be read in the context of the facts of that case. It has been already pointed out that the prosecution witnesses have been disbelieved by this Court before it considered the question of failure of the prosecution to explain the injuries sustained by one of the accused. If the prosecution witnesses had been believed in that case, the non explanation of the injuries sustained by the accused would not have affected the prosecution case. Indeed, it has been laid down in Lakshmi Singh 's case that the non explanation of the injuries by the prosecution will not affect the prosecution case where injuries sustained by the accused are minor and superficial or where the evidence is so clear and cogent, so independent and disinterested, so probable, consistent and creditworthy, that it far outweighs the effect of the omission on the part of the prosecution to explain the injuries. In Mohar Rai 's case (supra), the first appellant Mohar Rai was convicted under section 324 IPC for shooting and injuring P.W 1 at the instigation of the second appellant Bharat Rai, who was himself convicted of an offence under section 324 read with section 109 IPC. 9 The prosecution proceeded on the basis that the revolver (exhibit III), which was recovered from Mohar Rai, was the weapon that was used by him in the commission of the offence. The ballistic expert, who was examined as D.W. 1, was positive that the seized empties as well as the misfired cartridge could not have been fired from exhibit III. The evidence of D.W. 1 was accepted both by the trial court as well as by the High Court. This Court rejected the prosecution case that Mohar Rai had fired three shots from exhibit III. This Court held that once it was proved that the empties recovered from the scene could not have been fired from exhibit III, the prosecution case that those empties were fired from exhibit III by Mohar Rai stood falsified. Thereafter, the injuries sustained by the two appellants, Mohar Rai and Bharath Rai, were considered by the Court and it held that the prosecution had failed to explain the injuries sustained by the appellants and observed that the failure of the prosecution to offer any explanation in that regard showed that the evidence of prosecution witnesses relating to the incident was not true or, at any rate, not wholly true. Thus, in this case also the question of non explanation of the injuries on the accused was considered by the Court after it had rejected, on a consideration of evidence, the prosecution case that Mohar Rai had fired from the revolver (exhibit III). In other words, if the prosecution case had been believed that the appellant Mohar Rai had fired from exhibit III injuring P.W. 1, the non explanation of the injuries sustained by the accused would not have affected the prosecution case. On the other hand, in Bhaba Nanda Sharma vs State of Assam ; it has been categorically laid down by this Court that the prosecution is not obliged to explain the injuries on the person of the accused in all cases and in all circumstances. It depends upon the facts and circumstances of each case whether the prosecution case becomes reasonably doubtful for its failure to explain the injuries on the accused. In Ramlagan Singh vs State of Bihar, this Court again examined the question and it has been laid down that the prosecution is not called upon in all cases to explain the injuries received by the accused persons. It is for the defence to put questions to the prosecution witnesses regarding the injuries of the accused persons. When that is not done, there is no occasion for the prosecution witnesses to explain the injuries on the person of the accused. In the instant case also, the injury sustained by the appellant Hare Krishna Singh, has not been put to the prosecution witnesses and so they had no occasion to explain the same. In such circumstances, as laid down in Ramlagan Singh 's case, the non mention of the injuries on the person of the appellant in the prosecution evidence would not 10 affect the prosecution case, which has been accepted by the courts below. In Onkarnath Singh vs State of U. P., this Court has reiterated its view as expressed in Bankey Lal vs State of U.P., and Bhagwan Tana Patil vs State of Maharashtra, that the entire prosecution case cannot be thrown overboard simply because the prosecution witnesses do not explain the injuries on the person of the accused. Thereafter, it was observed as follows: "Such non explanation, however, is a factor which is to be taken into account in judging the veracity of the prosecution witnesses, and the court will scrutinise their evidence with care. Each case presents its own features. In some case, the failure of the prosecution to account for the in juries of the accused may undermine its evidence to the core and falsify the substratum of its story, while in others it may have little or no adverse effect on the prosecution case. It may also, in a given case, strengthen the plea of private defence set up by the accused. But it cannot be laid down as an invariable proposition of law of universal application that as soon as it is found that the accused had received injuries in the same transaction in which the complainant party was assaulted, the plea of private defence would stand prima facie established and the burden would shift on to the prosecution to prove that those injuries were caused to the accused in self defence by the complainant party. For instance where two parties come armed with a determination to measure their strength and to settle a dispute by force of arms and in the ensuing fight both sides receive injuries, no question of private defence arises. Much reliance has been placed by Mr. Garg on the following observation of Fazal Ali, J. in Jagdish vs State of Rajasthan, ; "It is true that where serious injuries are found on the person of the accused, as a principle of appreciation of evidence, it becomes obligatory on the prosecution to explain the injuries, so as to satisfy the Court as to the circumstances under which the occurrence originated. But before this obligation is placed on the prosecution two conditions must be satisfied; 11 1. that the injuries on the person of the accused must be very serious and severe and not superficial; 2. that it must be shown that these injuries must have been caused at the time of the occurrence in question. " In Jagdish 's case, the High Court believed the prosecution witnesses and accepted the prosecution case that the injuries found on the deceased were very severe which resulted in his death and this Court agreed with the view taken by the High Court in convicting the appellant under section 302 IPC. In regard to this point we may cite two other decisions relating to the plea of the accused of private defence. In Munshi Ram vs Delhi Administration, it has been held by this Court that although the accused have not taken the plea of private defence in their statements under section 342 Cr. P.C., necessary basis for that plea had been laid in the cross examination of the prosecution witnesses as well as by adducing defence evidence. It has been observed that even if an accused does not plead self defence, it is open to the court to consider such plea if the same arises from the material on record. The burden of establishing that plea is on the accused and that burden can be discharged by showing preponderance of probabilities in favour of that plea on the basis of the material on record. Munshi Ram 's case arises out of a dispute over the possession of land. The case of the appellants that their relation was a tenant of the disputed land for over thirty years and that his tenancy was never terminated, was accepted by this Court. In other words, the appellants were found to be in lawful possession of the land in question and that P.Ws. 17 and 19 had gone to the land with their friends, P.W. 19 being armed with a deadly weapon, with a view to intimidating the relation of the appellants, whose tenancy was not terminated. They were held to be guilty of criminal trespass and of constituting an unlawful assembly. In the context of the above facts, this Court made the observation that it is open to the court to consider the plea of private defence even though the same does not find place in the statement under section 342 Cr. The next case that has been relied upon by Mr. Garg is that of State of Gujarat vs Bai Fatima, in that case, on behalf of the appellants the decision in Munshi Ram 's case (supra) was relied 12 upon in regard to the question of the plea of private defence. In rejecting the contention of the accused, this Court pointed out that not only the plea of private defence was not taken by the accused in their statements under section 342 Cr. P.C., but no basis for that plea was laid in the cross examination of the prosecution witnesses or by adducing any defence evidence. As regards the injuries sustained by one of the accused, this Court observed as follows: "In material particulars the evidence of the three eye witnesses as also the evidence of dying declaration of the deceased before P.W. Gulamnabi is so convincing and natural that no doubt creeps into it for the failure of the prosecution to explain the injuries on the person of respondent No. 1. The prosecution case is not shaken at all on that account. We have referred to the above decisions in extenso in order to consider whether it is an invariable proposition of law that the prosecution is obliged to explain the injuries sustained by the accused in the same occurrence and whether failure of the prosecution to so explain the injuries on the person of the accused would mean that the prosecution has suppressed the truth and also the genesis or origin of the occurrence. Upon a conspectus of the decisions mentioned above, we are of the view that the question as to the obligation of the prosecution to explain the injuries sustained by the accused in the same occurrence may not arise in each and every case. In other words, it is not an invariable rule that the prosecution has to explain the injuries sustained by the accused in the same occurrence. The burden of proving the guilt of the accused is undoubtedly on the prosecution. The accused is not bound to say anything in defence. The prosecution has to prove the guilt of the accused beyond all reasonable doubts. 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. The accused may take the plea of the right of private defence which means that he had inflicted injury on the deceased or the injured 13 person in exercise of his right of private defence. In other words, his plea may be that the deceased or the injured person was the aggressor and inflicted injury on the accused and in order to defend himself from being the victim of such aggression, he had inflicted injury on the aggressor in the exercise of his right of private defence. As has been held in Munshi Ram 's case (supra) the burden of establishing the plea of private defence is on the accused and the burden can be discharged by showing preponderance of probabilities in favour of that plea on the basis of the material on record. It, therefore, follows that simply because the accused has received injuries in the same occurrence, it cannot be taken for granted that the deceased or the injured person was the aggressor and consequently, he had to defend himself by inflicting injury on the deceased or the injured person. All the decisions of this Court which have been referred to and discussed above, show that when the court has believed the prosecution witnesses as convincing and trustworthy, the court overruled the contention of the accused that as the prosecution had failed to explain the injuries sustained by the accused in the same occurrence, the prosecution case should be disbelieved and the accused should be acquitted. Thus, it is not the law or invariable rule that whenever the accused sustains an injury in the same occurrence, the prosecution has to explain the injuries failure of which will mean that the prosecution has suppressed the truth and also the origin and genesis of the occurrence. The learned Additional Sessions Judge has not believed the case of Hare Krishna Singh that he had sustained a bullet injury in the same occurrence and he has given reasons therefor. The High Court has, however, come to the finding that Hare Krishna Singh was admitted in the hospital in an injured condition immediately after the occurrence. We do not propose to reassess evidence on the question as to whether Hare Krishna Singh had sustained any injury or not. We may assume that he had sustained a bullet injury in the same occurrence. But, even then, in the facts and circumstances of the case the prosecution, in our opinion, is not obliged to account for the injury and that the failure of the prosecution to give a reasonable explanation of the injury would not go against or throw any doubt on the prosecution case. The injury that was sustained by Hare Krishna Singh was on the back. The P.Ws. 1 and 2, the two sisters of the deceased Jitendra Choudhary, denied the suggestion put to them on behalf of Hare Krishna Singh that their brother Jitendra Choudhary had been shoot 14 ing from his rifle. P.W. 3, who is an independent witness and was present on the scene of occurrence, also denied the suggestion of the defence that there was firing on Hare Krishna Singh. P.W. 8 Lallan Rai also denied such suggestion of the defence. Hare Krishna Singh made a statement under section 313 Cr. It is not his case that in self defence he had fired at the deceased Jitendra Choudhary. He denied that he had any fire arms with him or that he had fired at Jitendra Choudhary. He also denied that none of the accused had any weapon with him. All the eye witnesses have stated that the appellant Hare Krishna Singh had fired on Jitendra Choudhary as a result of which he died. The prosecution witnesses have been believed by the learned Additional Sessions Judge and the High Court. In the circumstances, we do not think that the materials on record including the statement of Hare Krishna Singh under section 313 Cr. P.C., probabilise any case of self defence or that the deceased had inflicted on him the injury by firing at him from his rifle. It may be that two empties were found by the side of the dead body of the deceased, but the High Court has rightly observed that the presence of the empties does not necessarily mean that the deceased had fired. The High Court points out that three live cartridges were also recovered from the pocket of the deceased at the time of inquest and observes that keeping of empty cartridges by the side of the body of the deceased cannot be ruled out. We do not find any infirmity in the view expressed by the High Court. It is not at all amenable to reason that the deceased had started from his house along with his two sisters with a view to fighting with the accused. In the circumstances, we are of the view that the appellant Hare Krishna Singh has been rightly convicted and sentenced as above. Now we may deal with the case of Paras Singh of Dhobaha, one of the appellants in Criminal Appeal No. 690 of 1982. He was found with the accused persons including Hare Krishna Singh. It is not disputed that he is the brother in law of Hare Krishna Singh, as he has been described in the FIR. It is the categorical evidence of P.Ws. 1, 2, 3 and 8 that Paras Singh of Dhobaha had fired at the deceased Jitendra Choudhary. He has been identified by P.W. 1 in the T.I. Parade. In the circumstances, we do not find any reason to interfere with the order of conviction and sentence passed by the courts below. So far as Paras Singh of Birampur, the nephew of Jagdish Singh and the sole appellant in Criminal Appeal No. 616 of 1982, is concerned, his case stands on a different footing. Indeed, Mr. Rajender 15 Singh, the learned Counsel appearing on behalf of the appellant, has challenged the very presence of the appellant, Paras Singh of Birampur, at the time of occurrence. In the FIR, his name has not been mentioned, it has only been stated "Jagdish Singh 's nephew who is in military job of Birampur". Jagdish Singh may have more than one nephew. The I.O. (P.W. 9) in his evidence has stated that before the arrest of Paras Singh of Birampur, he did not know his name and he cannot say how many nephews Jagdish Singh has. The only distinctive particular for identification, as given in the FIR, is that the nephew is in military service. The prosecution has not adduced any evidence to show that the appellant is in military service, and that no other nephew of Jagdish Singh is in such service. Thus, the prosecution has not been able to identify the appellant Paras Singh of Birampur with the description of Jagdish Singh 's nephew as given in the FIR. The most significant fact is that P.W. 3 failed to identify the appellant in the T.I. Parade. P.W. 8 did not attend the T.I. Parade. His case is that he was not called to attend the T.I. Parade. On the other hand, it is the defence case that P.W. 8 was called but he did not attend the T.I. Parade. Whatever might have been the reason, the fact remains that no attempt was made by the prosecution to have Paras Singh of Birampur identified by P.W. 8. In such circumstances, the High Court was not justified and committed an error of law in relying upon the statement of P.Ws. 3 and 8 made before the police mentioning the name of Paras Singh of Birampur. It is true that P.Ws. 3 and 8 identified Paras Singh of Birampur in court, but such identification is useless, particularly in the face of the fact that P.W. 3 had failed to identify him in the T.I. Parade. In the circumstances, the prosecution has failed to prove the complicity of Paras Singh of Birampur in the crime. Indeed, the prosecution has failed to prove that Paras Singh of Birampur was present at the time of occurrence. His conviction and sentence cannot, therefore, be sustained. Now we may consider the cases of the remaining two accused, namely, Sheo Narain Sharma, the remaining appellant in Criminal Appeal No. 690 of 1982, and Ram Kumar Upadhaya, the sole appellant in Criminal Appeal No. 615 of 1982. These two appellants have been convicted as a consequence of their sharing the common intention to murder the deceased Jitendra Choudhary. Both of them have been named in the FIR. It is submitted by the learned Counsel appearing on behalf of these two appellants that no specific overt act has been attributed to either of them. It may be that they were found in the company of Hare Krishna Singh and Paras Singh of Dhobaha but, the 16 learned Counsel submits, that fact will not be sufficient to impute common intention to them. So far as the appellant Ram Kumar Upadhaya is concerned, there is evidence that he went with Hare Krishna Singh, but there is no evidence that he had also left the place of occurrence with him. It is the evidence of all the eye witnesses, namely, P.Ws. 1, 2, 3 and 8 that Hare Krishna Singh had fired a shot at the deceased Jitendra Choudhary, hitting him in the face and he rolled and fell down from the Rickshaw in front of the gate. Thereafter, Paras Singh of Dhobaha also fired at the deceased. After specifically mentioning the names of Hare Krishna Singh and Paras Singh of Dhobaha as persons who had fired at the deceased, P.W. 3 stated that thereafter two/three firings took place and all the accused went to the shop of Sita Ram in front of the gate on the road from where they also fired upon Jitendra Choudhary. P.W. 8 in his evidence has also made a general statement that all the accused started firing upon Jitendra Choudhary. It is not readily understandable why the witnesses did not specifically mention the names of Sheo Narain Sharma and Ram Kumar Upadhaya, if they had also fired at the deceased. Except mentioning that these two appellants were present, no overt act was attributed to either of them. The question is whether the crime was committed by Hare Krishna Singh and Paras Singh of Dhobaha in furtherance of the common intention of these two appellants also. Common intention under section 34 IPC is not by itself an offence. But, it creates a joint and constructive liability for the crime committed in furtherance of such common intention. As no overt act whatsoever has been attributed to the appellants, Ram Kumar Upadhaya and Sheo Narain Sharma, it is difficult to hold, in the facts and circumstances of the case, that they had shared the common intention with Hare Krishna Singh and Paras Singh of Dhobaha. When these two appellants were very much known to the eye witnesses, non mention of their names in the evidence as to their participation in firing upon the deceased, throws a great doubt as to their sharing of the common intention. The convictions and sentences of these two appellants also cannot, therefore, be sustained. For the reasons aforesaid, the convictions and sentences of Hare Krishna Singh and Paras Singh of Dhobaha are affirmed. Criminal Appeal No. 690 of 1982, in so far as it relates to Hare Krishna Singh and Paras Singh of Dhobaha, is dismissed. 17 The conviction and sentence of Sheo Narain Sharma are set aside A and he is acquitted of all the charges. Criminal Appeal No. 690 of 1982, in so far as it relates to Sheo Narain Sharma, is allowed. Criminal Appeal No. 615 of 1982 is allowed. The conviction and sentence of Ram Kumar Upadhaya are set aside and he is acquitted of all the charges. Criminal Appeal No. 616 of 1982 is allowed. The conviction and sentence of Paras Singh of Birampur are set aside and he is acquitted of all the charges.
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% The prosecution case as appearing from the Fardbeyan or the FIR lodged by P.W. 3, a social worker was that on 12.12.1987 at about 7.00 A.M. he was going to his brother in law and just as he reached the main gate of the Sadar Hospital, he saw seven persons: (1) Hare Krishna Singh.
(2) Sheo Narain Sharma, (3) Ram Kumar Upadhyaya, (4) Jagdish Singh 's nephew Paras Singh of Birampur, (5) Hare Krishna Singh 's brother in law, Paras Nath Singh of Dhobaha, the appellants and two more whom he could not identify.
All these persons were armed with rifle, gun and pistol and were standing near the northern side of the eastern gate, of the Hospital.
At that time two Rickshaws were coming from the eastern side.
In the front rickshaw the deceased Jitendra Choudhary, was sitting along with another person and in the rear rickshaw were his two sisters, PW I and PW 2.
As the rickshaw of the deceased came close to these seven persons, Hare Krishna Singh fired at the deceased from his gun, whereupon the latter fell down from the rickshaw with the rifle which he was carrying.
The other persons also fired upon the deceased as a result of which he died.
After that Hare Krishna Singh picked up the rifle of the deceased and took to his heels.
After investigation by PW 9, the charge sheet was submitted against all the appellants and they were put up for trial.
The prosecution examined as many as 9 witnesses of whom PWs.
1, 2, 3 and 8 were eye witnesses.
The defence of the appellant Hare 2 Krishna Singh was that while he was going to Patna along with appellant Ram Kumar Upadhyaya and one Madan Singh in a rickshaw, and that when the rickshaw in which the deceased was travelling came close to him, the deceased fired at him and that he sustained injuries.
He examined five witnesses DWs.
1 to 5, to prove the nature of injury sustained by him.
The defence of Paras Singh of Dhobaha was that he had not visited the village for the last fifteen years, while the defence of the other remaining appellants was a denial of their complicity in the crime.
The Additional Sessions Judge accepted the prosecution case, and convicted and sentenced the appellants to various periods of imprisonment.
On appeal by the appellants the High Court affirmed the convictions and sentences.
In the appeals by certificate to this Court it was contended: (a) on behalf of Hare Krishna Singh, appellant in Crl.
A. No. 690/82 that the prosecution having failed to explain the injury sustained by Hare Krishna Singh in the same occurrence, such injury being a serious one, the prosecution witnesses should be disbelieved, and that in such circumstances it should be held that the plea of the appellant of self defense shall be probabilised and that the prosecution must have withheld the true facts as to the genesis and origin of the occurrence, and that in any event a great doubt had been cast on the prosecution case and the benefit of that doubt should go to the appellant.
(b) on behalf of Paras Singh of Birampur, the nephew of Jagdish Singh, the sole appellant in Cr. A. No. 616/82 that in the FIR his name was not mentioned, that PW 3 failed to identify him in the T.I. Parade, that PW 8 did not attend the T.I. Parade, and that he was not present at the time of occurrence.
(c) on behalf of Sheo Narain Sharma the remaining appellant in Crl.
A. No. 690/82 and Ram Kumar Upadhayaya sole appellant in Crl.
A. No. 615/82, that no specific overt act had been attributed to either of them and the fact that they were found in the company of Hare Krishna Singh and Paras Singh of Dhobaha could not be sufficient to impute common intention to them.
Dismissing Criminal Appeal No. 690 of 1982 in so far as it relates to Hare Krishna Singh and Paras Singh of Dhobaha, and allowing it in 3 respect of Sheo Narain Sharma and acquitting him of all the charges; and allowing Crl.
A. Nos. 615 and 616 of 1982 and setting aside the convictions and sentences of Ram Kumar Upadhayaya and Paras Singh of Birampur and acquitting them of all the charges.
^ HELD: 1.
It is not an invariable rule that the prosecution has to explain the injuries sustained by the accused in the same occurrence.
The burden of proving the guilt of the accused is undoubtedly on the prosecution.
The accused is not bound to say anything in defence.
The prosecution has to prove the guilt of the accused beyond all reasonable doubts.
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.
[12E F]] 2.
When the prosecution comes with a definite case that the offence has been committed by the accused and proved its case beyond any reasonable doubt, it becomes hardly necessary for the prosecution to again explain how and in what circumstances the injuries have been inflicted on the person of the accused.
[12G] 3.
Simply because the accused has received injuries in the same occurrence, it cannot be taken for granted that the deceased or the injured person was the aggressor and consequently, he had to defend himself by inflicting injury on the deceased or the injured person.
[13B C] 4.
It is not the law or invariable rule that whenever the accused sustains an injury in the same occurrence the prosecution has to explain the injuries failure of which will mean that the prosecution has suppressed the truth and also the origin and genesis of the occurrence.
[13D E]] 5.
Common intention under section 34 IPC is not by itself an offence.
But, it creates a joint and constructive liability for the crime committed in furtherance of such common intention.
[16E F] 6.
As no overt act whatsoever has been attributed to the appellants, Ram Kumar Upadhyaya and Sheo Narain Sharma, it is difficult to hold, in the facts and circumstances of the case, that they had shared the common intention with Hare Krishna Singh and Paras Singh of Dhobaha.
When these two appellants were very much known to the eye witnesses PW 3 and 8 non mention of their names in the evidence as to 4 their participation in firing upon the deceased, throws a great doubt as to their sharing of the common intention.
The conviction and sentences of these two appellants cannot therefore be sustained.
They are therefore acquitted of all the charges.
[16F G] 7.
The Additional Sessions Judge has not believed the case of R Hare Krishna Singh that he had sustained a bullet injury in the same occurrence and he has given reasons therefor.
The High Court has, however, come to the finding that Hare Krishna Singh was admitted in the hospital in an injured condition immediately after the occurrence.
In the facts and circumstances of the case the prosecution is not obliged to account for the injury and that the failure of the prosecution to give a reasonable explanation of the injury would not go against or throw any doubt on the prosecution case.
All the eye witnesses have stated that the appellant Hare Krishna Singh had fired on Jitendra Choudhary as a result of which he died.
The prosecution witnesses have been believed by the Additional Sessions Judge and High Court.
In these circumstances it cannot be thought that the materials on record including the statement of Hare Krishna Singh under section 313 Cr.
P.C. probablise any case of self defence or that the deceased had inflicted on him the injury by firing at him from his rifle.
The appellant Hare Krishna Singh has therefore, been rightly convicted and sentenced.
[13E G; 14B C, F] 8.
As regards Paras Singh of Dhobaha he was found with the accused persons including Hare Krishna Singh.
It is not disputed that he is the brother in law of Hare Krishna Singh as has been described in the FIR.
It is the categorical evidence of PWs.
1, 2, 3 and 8 that Paras Singh of Dhobaha had fired at the deceased.
He has been identified by PW1 in the T.I. Parade.
In these circumstances there is no reason to interfere with the order of conviction and sentence passed by the Courts below.
[14F G]] 9.
The prosecution has not been able to identify the appellant Paras Singh of Birampur with the description of Jagdish Singh 's nephew as given in the FIR.
PW. 3 failed to identify the appellant in the T.I. Parade.
PW. 8 did not attend the T.I. Parade.
In such circumstances, the High Court was not justified and committed an error of law in relying upon the statements of PWs 3 and 8 made before the police mentioning the names of Paras Singh of Birampur.
The prosecution has failed to prove the complicity of Paras Singh of Birampur in the crime and that he was present at the time of occurrence.
His conviction and sentence cannot therefore be sustained and are set aside.
He is acquitted of all the charges.
[15C F] 5 Bhaba Nanda Sharma vs State of Assam, ; ; Ramlagan Singh vs State of Bihar, ; Onkarnath Singh vs State of U.P., ; Bankey Lal vs State of U.P., and Bhagwan Tana Patil vs State of Maharashtra, , relied on.
Lakshmi Singh vs State of Bihar, ; Mohar Rai vs State of Bihar; ; ; Jagdish vs State of Rajasthan; , ; Munshi Ram vs Delhi Administration and State of Gujarat vs Bai Fatima, , distinguished.
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The prosecution's case, based on the police report (called an FIR) filed by a social worker, stated that on December 12, 1987, around 7:00 A.M., the social worker was going to see his brother-in-law. As he got to the main gate of the Sadar Hospital, he saw seven people. These included Hare Krishna Singh, Sheo Narain Sharma, Ram Kumar Upadhyaya, Jagdish Singh's nephew Paras Singh from Birampur, Hare Krishna Singh's brother-in-law Paras Nath Singh from Dhobaha, and two others he didn't know.
These people had rifles, guns, and pistols. They were standing near the north side of the east gate of the hospital. At that moment, two rickshaws were coming from the east. Jitendra Choudhary, who later died, was in the front rickshaw with another person. His two sisters were in the back rickshaw.
As the rickshaw with Jitendra Choudhary got close, Hare Krishna Singh shot him with his gun. Jitendra Choudhary fell out of the rickshaw, along with the rifle he was carrying. The others also shot at him, and he died as a result. After that, Hare Krishna Singh picked up Jitendra Choudhary's rifle and ran away.
After an investigation, the police filed charges against all the people. They were then put on trial. The prosecution presented nine witnesses. Four of them were people who said they saw what happened.
Hare Krishna Singh said that he was going to Patna with Ram Kumar Upadhyaya and another person in a rickshaw. He claimed that Jitendra Choudhary fired at him when their rickshaws got close, and he was injured. He called five witnesses to prove his injuries.
Paras Singh from Dhobaha said he hadn't been to the village in fifteen years. The other people denied being involved in the crime.
The trial judge believed the prosecution's case. He found the people guilty and sentenced them to prison. The High Court agreed with the trial court's decision.
The people then appealed to the Supreme Court. Hare Krishna Singh argued that the prosecution didn't explain his injuries, which were serious. He said that because of this, the witnesses should not be believed. He also argued that he acted in self-defense and that the prosecution was hiding the truth. He believed there was reasonable doubt, and the court should rule in his favor.
Paras Singh from Birampur argued that his name wasn't in the initial police report. He said that a witness couldn't identify him in a lineup, and another witness didn't attend the lineup. He also claimed he wasn't there when the crime happened.
Sheo Narain Sharma and Ram Kumar Upadhayaya argued that they didn't do anything specific. They said that just because they were with Hare Krishna Singh and Paras Singh from Dhobaha, that wasn't enough to prove they were part of a plan.
The Supreme Court dismissed the appeal for Hare Krishna Singh and Paras Singh of Dhobaha. However, it allowed the appeals for Sheo Narain Sharma and Ram Kumar Upadhayaya. It overturned their convictions and set them free. It also allowed the appeal for Paras Singh of Birampur, overturning his conviction and setting him free as well.
HELD:
1. The prosecution doesn't always have to explain the injuries that the accused person sustained. The prosecution always has the responsibility to prove that someone is guilty. The accused person doesn't have to defend themself. The prosecution must prove guilt beyond any reasonable doubt. If the court believes the prosecution's witnesses and is convinced of the accused person's guilt, then the prosecution doesn't have to explain the accused person's injuries.
2. When the prosecution clearly proves that the accused person committed the crime beyond any reasonable doubt, it's usually not necessary for them to explain how the accused person was injured.
3. Just because the accused person was injured during the crime, it doesn't automatically mean that the person who died or was injured started the fight. It also doesn't mean that the accused person had to defend themself by hurting the other person.
4. The law doesn't say that the prosecution always has to explain an accused person's injuries. If they don't, it doesn't automatically mean they are hiding the truth about what happened.
5. Having a common intention to commit a crime isn't a crime itself. However, it means that everyone involved is responsible for the crime, even if they didn't directly commit it.
6. Since Ram Kumar Upadhyaya and Sheo Narain Sharma didn't do anything specific, it's hard to say that they shared a common intention with Hare Krishna Singh and Paras Singh of Dhobaha. The witnesses knew Ram Kumar Upadhyaya and Sheo Narain Sharma, but they didn't say that they saw them shooting at the person who died. This makes it hard to believe that they were part of the plan. Therefore, their convictions can't be upheld, and they are found not guilty.
7. The trial judge didn't believe Hare Krishna Singh's story that he was shot during the crime, and he gave his reasons. However, the High Court found that Hare Krishna Singh was taken to the hospital with injuries right after the crime. In this case, the prosecution didn't have to explain his injuries, and their failure to do so doesn't weaken their case. All the witnesses said that Hare Krishna Singh shot Jitendra Choudhary, who then died. The trial judge and the High Court believed the witnesses. Therefore, the evidence doesn't suggest that Hare Krishna Singh acted in self-defense or that the person who died shot him first. Hare Krishna Singh was correctly found guilty and sentenced.
8. Paras Singh of Dhobaha was with the other accused people, including Hare Krishna Singh. He is Hare Krishna Singh's brother-in-law, as stated in the initial police report. The witnesses clearly said that Paras Singh of Dhobaha shot at the person who died. One witness identified him in a lineup. Therefore, there's no reason to change the lower courts' decision to convict and sentence him.
9. The prosecution couldn't prove that Paras Singh of Birampur was the same person described in the initial police report as Jagdish Singh's nephew. One witness couldn't identify him in a lineup, and another witness didn't attend the lineup. Therefore, the High Court was wrong to rely on the witnesses' statements to the police about Paras Singh of Birampur. The prosecution failed to prove that Paras Singh of Birampur was involved in the crime or that he was even there. His conviction and sentence are overturned, and he is found not guilty.
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Civil Appeal No. 570 of 1976. Appeal by Certificate from the Judgment and Order dated 9.2.1976 of the Madras High Court in Tax Case No. 104 of 1969. T.A. Ramachandran, P.N. Ramaligam and A.T.M. Sampath for the Appellant. 628 V.Gauri Shanker, Manoj Arora, section Rajappa and Ms. A.Subhashini for the Respondent. The Judgment of the Court was delivered by RANGANATHAN, J. This is the assessee 's appeal form a judgment of the Madras High Court dated 10.1.1975 answering three questions referred to it by the Income tax Appellate Tribunal in favour of the Revenue and against the assessee. The reference related to the assessment year 1961 62, the previous year in respect of which commenced on 13.4.1960. The judgment of the High Court is reported as (1976) 102 I.T.R.622. The appellant assessee is a partnership firm. Since 1949, it was carrying on, in Malaya, a money lending business and, as part of and incidental to the said business, a business in the purchase and sale of house properties, gardens and estates. It had been reconstituted under a deed dated 26.3.1960. The firm 's accounts for the year 1960 61, which commenced on 13.4.60, would normally have come to a close on or about the 13th April, 1961. However, the firm closed its accounts as on 13.3.1961 with effect from which date it was dissolved. Along with its income tax return for the assessment year 1961 62 filed on 10th April 1962, the assessee filed a profit and loss account and certain other statements. In the profit and loss account, a sum of $ 1,01,248 was shown as "difference on revaluation of estates, gardens and house properties" on the dissolution of the firm on 13.3.61, such difference being $ 70,500 in respect of "house properties" and $ 30,748 in respect of estates and gardens. In the memo of adjustment for income tax purposes, however, the above sum was deducted on the ground that it was not assessable either as revenue or capital. A statement was also made before the officer that partner Ramanathan Chettiar, forming one group and the other partners forming another group, were carrying on business separately with the assets and liabilities that fell to their shares on the dissolution of the firm. The Income tax Officer (I.T.O.) issued a notice under section 23(2) on the same day (10.4.1962) posting the hearing for the same day and completed the assessment also on the same day, after making a petty addition of Rs. 2083 paid as property tax in Malaya, and recording the following note: "Audit assessment Lakshmanan appears return filed I.T. 86 acknowledged in list of books scrutinised order dictated". 629 For the subsequent assessment year 1962 63, the assessee filed a return showing nil income along with a letter pointing out that the firm had been dissolved on 13.3.1961. Thereafter, on 3.9.63, the I.T.O. wrote a letter to the assessee to the effect that the revaluation difference of $ 1,01,248 should have been brought to tax in the assessment year 1961 62 in view of the decision of the Madras High Court in Ramachari & Co. vs C.I.T., He called for the basis for the valuation and also for the assessee 's objections. The assessee sent a reply stating that no profit or loss could be assessed on a revaluation of assets. Relying on a circular of the Central Board of Revenue dated 21.6.1956, it was urged that the assessee was gradually winding up its business in Malaya and that therefore, the surplus would only be capital gains. It was urged that the revaluation had been at a market price prevalent since 1.1.1954 and that, therefore, no capital gains were chargeable to tax. The I.T.O. followed up his letter by a notice under section 148 read with section 147(b). The assessee objected to the reassessment on two grounds: (1) that the circumstances did not justify the initiation of proceedings under section 147(b); and (2) that no assessable profits arose to the firm on the revaluation of assets on the eve of the dissolution of the firm. Overruling these objections, the I.T.O. completed a reassessment on the firm after adding back the sum of Rs.1,58,057 (the equivalent of $ 1,01,248) to the previously assessed income. The assessee 's successive appeals to the Appellate Assistant Commissioner and the Appellate Tribunal and reference, at its instance, to the High Court having failed,the assessee is before us. Three questions of law were referred to the High Court by the Tribunal. These were: "1. Whether, on the facts and circumstances of the case, the reassessment made on the assessee firm for the assessment year 1961 62 under section 147 of the Income tax Act is valid in Law? 2. Whether, on the facts and circumstances of the case, assessment of the sum of $ 1,01,248 as revenue profit of the assessee firm chargeable to tax for the assessment year 1961 62 is justified in law? 3. Whether, on the facts, and circumstances of the case, the Appellate Tribunal is right in law in sustaining the assessment of the sum of $ 1,01,348 after having found that the Department Officers are bound by the Circular of the Central Board of Revenue?" 630 We may deal at the outset with the third question. Though the High Court has dealt with this question at some length, we do not think any answer to this question can or need be furnished by us for the following reasons. First, the assessee has not been able to place before us the circular of the Board on which reliance is placed. It is not clear whether it is a circular or a communication of some other nature. Second, the circular, to judge from its purport set out in the High Court 's judgment, seems to have been to the effect that the surplus arising from the sale of properties acquired by a money lender in the course of his business would be in the nature of capital gains and not of income. Obviously such a proposition could not have been intended as a broad or general proposition of law, for the nature of the surplus on sale of assets would depend on the nature of the asset sold and this, in turn, would depend on the facts and circumstances of each case. In this case, no material was placed at any stage to show that the assets in question constituted the capital assets of the firm and not its stock in trade. Third, the plea of the assessee which was in issue all through was that there was no sale of assets by the firm when its assets are distributed among its partners and that no profits whether capital or revenue could be said to arise to the firm merely because, at the time of the dissolution, the firm revalued its assets on the basis of market value or any other basis, for adjusting the mutual rights and liabilities of the partners on the dissolution of the firm. The terms of the circular, as set out in the order of the High Court, cannot therefore be of any assistance to the assessee in answering the issues in this case. We, therefore, do not answer the third question posed by the Tribunal. Turning now to the first question, the relevant facts have already been noticed. The following relevant and material facts viz. (i) the dissolution of the firm, (ii) the revaluation of its assets, (iii) the distribution thereof among two groups of its partners, and (iv) the division and crediting of the surplus on revaluation to the partner 's accounts were not only reflected in the balance sheet, the profit and loss account and the profit and loss adjustment account but were also mentioned in the statement filed before the I.T.O. along with the return. Clearly, action u/s 148 read with clause (a) of s.147 could not be initiated in these circumstances but is action under clause (b) of that section also impermissible? That is the question. We may now set out the provisions of clause (b) of section 147 for purposes of easy reference. This clause which corresponds to section 34(1)(b) of the Indian Income tax Act, 1922 (`the 1922 Act ') permits initiation of reassessment of proceedings, "notwithstanding 631 that there has been no omission or failure as mentioned in clause (a) on the part of the assessee" provided "the Income tax Officer has, in consequence of information in his possession, reason to believe that income chargeable to tax has escaped assessment". In the present case, on the information already on record and in view of the decision in Ramachari & Co. vs C.I.T., , there can be no doubt that the I.T.O. could reasonably come to the conclusion that income, profits and gains assessable for the assessment year 1961 62 had escaped assessment. But is that belief reached "in consequence of information in his posession"? The assessee 's counsel says "no", for, says he, it is settled law that the "information" referred to in clause (b) above, should be "information" received by the I.T.O. after he had completed the original assessment. Here it is pointed out that all the relevant facts as well as the decision in Ramachari (supra) had been available when the original assessment was completed on 10.4.1962. Action cannot be taken under this clause merely because the I.T.O., who originally considered the surplus to be not assessable, has on the same facts and the same case law which had been available to him when he completed the assessment originally, changed his opinion and now thinks that the surplus should have been charged to tax. The validity of the assessee 's argument has to be tested in the light of the decisions of this Court which have interpreted section 147(b) of the 1961 Act or its predecessor section 34(1)(b) of the 1922 Act and expounded its parameters. We may start with the decision in Maharaj Kumar Kamal Singh vs I.T.O., S.C. In this case it was held that the word "information" would include information as to the true and correct state of the law and would also cover information as to relevant judicial decisions. In that case the I.T.O. had re opened the assessment on the basis of a subsequent decision of the Privy Council and this was upheld. Referring to the use of the word "escape" in the section, the Court observed. "In our opinion, even in a case where a return has been submitted, if the income tax Officer erroneously fails to tax a part of asessable income, it is a case where the said part of the income has escaped assessment. The appellant 's attempt to put a very narrow and artificial limitation on the meaning of the word "escape" in section 34(1)(b) cannot, therefore, succeed." (underlining ours) 632 The meaning of the word "information" was again explained thus in C.I.T. vs A. Raman & Co., [1968] 67 I.T.R. 11 SC: "The expression `information ' in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. . Jurisdiction of the Income tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information, must, it is true, have come into the possession of the Income tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income tax Officer is not affected." (underlining ours) We may next refer to Kalyanji Mavji & Co. vs C.I.T., [1976 102] I.T.R. 287. It is unnecessary to set out the facts of this case. It is sufficient to refer to the enunciation of the law regarding the scope of section 34(1)(b) as culled out from the earlier decisions of this Court on the subject. At page 296 the Court observed: "On a combined review of the decisions of this Court the following tests and principles would apply to determine the applicability of section 34(1)(b) to the following categories of cases: (1) where the information is as to the true and correct state of the law derived from relevant judicial decisions; (2) where in the original assessment the income liable to tax has escaped assessment due to oversight, inadvertence or a mistake committed by the Income tax Officer. This is obviously based on the principle that the taxpayer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority; 633 (3) where the information is derived from an external source of any kind. Such external source would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment; (4) where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law." Before applying the above principles to the facts of the present case, we may refer to two earlier decisions of the Madras High Court which have been followed in the judgment under appeal. In Salem Provident Fund Society Ltd. vs C.I.T., , the Income tax officer, in calculating the annual profits of an insurance company, had, under the statute to work out the difference between the deficiencies as shown in the actuarial valuation of the company in respect of two successive valuation periods. At the time of original assessment, the Income tax Officer, by mistake, added the two deficiencies instead of subtracting one from the another. This mistake he committed not in one assessment year but in two assessment years. Subsequently, he discovered his mistake and initiated proceedings under section 34(1)(b). The contention urged on behalf of the assessee was that all the statements, on the basis of which the re assessment proceedings were taken, were already on record and that, in such a case, there was no `information ' which would justify the reassessment. An argument was also raised that the rectification, if any, could have been carried out only under section 35 and not under section 34. These contentions were repelled. In regard to the former objection, the High Court pointed out: "We are unable to accept the extreme proposition that nothing that can be found in the record of the assessment, which itself would show escape of assessment or under assessment, can be viewed as information which led to the belief that there has been escape from assessment or under assessment. Suppose a mistake in the original order of assessment is not discovered by the Income tax Officer himself on further scrutiny but it is brought to this notice by another assessee or even by a subordinate or a superior officer, that would appear to be information disclosed to the Income tax Officer. if the mistake itself is not extraneous 634 to the record and the informant gathered the information from the record, the immediate source of information to the Income tax Officer in such circumstances is in one sense extraneous to the record. It is difficult to accept the position that while what is seen by another in the record is `information ' what is seen by the Income tax Officer himself is not information to him. In the latter case he just informs himself. It will be information in his possession within the meaning of section 34. In such cases of obvious mistakes apparent on the face of the record of assessment that record itself can be a source of information, if that information leads to a discovery or belief that there has been an escape of assessment or under assessment. A similar question arose in CIT vs Rathinasabapathy Mudaliar, In that case the assessee, who was a partner in a firm, did not include in his return the income of his minor son admitted to the benefits of the partnership as required by section 16(3) of the 1922 Act. The minor son submitted a separate return and was assessed on this income. Subsequently, the Income tax Officer "discovered" his error in not assessing the father thereon and started re assessment proceedings. The re assessment was upheld by the Madras High Court on the same logic as had been applied in Salem Provident Fund Society Ltd. case (supra). The above line of thinking has not only held the field for about thirty years now but has also received approval in Anandji Haridas and Co. (P) Ltd. vs S.P. Kushare, Sales Tax Officer, [1968] 21 S.T.C. 326. This issue has further been considered in the decision of this Court in the case of Indian and Eastern Newspaper Society vs C.I.T. (the IENS case, for short) [1979] I.T.R. 996. In this case the income of the assessee derived by letting out certain portions of the building owned by it to its members as well as to outsiders was being assessed as business income. In the course of audit, an internal audit party expressed the view that the money realised by the assessee on account of the occupation of its conference hall and rooms should have been assessed under the head "income from property" and not as business income. The Income tax Officer thereupon initiated re assessment proceedings and this was upheld by the Tribunal. On a direct reference under s.257 of the Act, this Court held that the opinion of the audit party on a point of law could not be regarded as "information" and that the initiation of the reassessment proceedings was not justified. It was contended for the Revenue, that the reassessment proceedings would 635 be valid even on this premise. Dealing with this argument, the Court observed: "Now, in the case before us, the ITO had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The revenue contends that it is open to him to do so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on Kalyanji Mavji & Co. vs CIT, , where a Bench of two learned, Judges of this Court observed that a case where income had escaped assessment due to the "oversight, inadvertence or mistake" of the ITO must fall within section 34(1)(b) of the Indian Income Tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on re appraising the material considered by him during the original assessment, the ITO discovers that he has committed an error inconsequence of which income has escaped assessment, it is open to him to reopen the assessment. In our opinion, an error discovere on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this Court in Maharaj Kumar Kamal Singh vs CIT, [1959] 35 I.T.R. 1; CIT vs A. Raman & Co., and Bankipur Club Ltd. vs CIT and we do not believe that the law has since taken a different course. Any observation in Kalyanji Mavji & Co. vs CIT, suggesting the contrary do not, we say with respect, lay down the correct law." (underlining ours) The Court proceeded further to observe: "A further submission raised by the revenue on section 147(b) of the Act may be considered at this stage. It is urged that the expression "information" in section 147(b) refers to the realisation by the ITO that he has committed an error when making the original assessment. It is said that, when upon receipt of the audit note the ITO discovers or realizes that a mistake has been committed in the original 636 assessment, the discovery of the mistake would be "information" within the meaning of section 147(b). The submission appears to us inconsistent with the terms of section 147(b) Plainly, the statutory provision envisages that the ITO must first have information in his possession, and then in consequence of such information he must have reason to believe that income has escaped assessment. The realisation that income has escaped assessment is covered by the words "reason to believe", and it follows from the "information" received by the ITO. The information is not the realisation, the information gives birth to the realisation. " Sri Ramachandran submits that these decisions support his contention that reassessment proceeding can be validly initiated only if there is some information received by the I.T.O. from an external source after the completion of the original assessment but not in a case like the present where there is nothing more before the I.T.O. than what was available to him when the original assessment was completed. He also submits that the observations in the IENS case have cast doubts on the propositions enunciated in Kalyanji Mavji 's case (supra) and reiterates the proposition that reassessment proceedings cannot be availed of to revise, on the same material, the opinion formed or conclusion arrived at earlier in favour of the assessee. On the other hand, Dr. Gaurisankar, appearing for the Revenue, mentioned that the decision in the IENS case holding that the opinion of an audit party would not constitute `information ' and qualifying the principles enunciated in Kalyanji Mavji is pending consideration by a larger Bench of this Court. He, however, submitted that the reassessment in this case would be valid even on the strength of the observations in the IENS case. We shall proceed to consider the correctness of this submission. We have pointed out earlier that Kalyanji Mavji (supra) outlines four situations in which action under S.34(1)(b) can be validly initiated. The IENS case has only indicated that proposition (2) outlined in this case and extracted earlier may have been somewhat widely stated; it has not cast any doubt on the other three propositions set out in Kalyanji Mavji 's case. The facts of the present case squarely fall within the scope of propositions 2 and 4 enunciated in Kalyanji Mavji 's case. Proposition (2) may be briefly summarised as permitting action even on a "mere change of opinion". This is what has been doubted in the IENS case (supra) and we shall discuss its application to this case a 637 little later. But, even leaving this out of consideration, there can be no doubt that the present case is squarely covered by proposition (4) set out in Kalyanji Mavji & Co. (supra). This proposition clearly envisages a formation of opinion by the Income tax Officer on the basis of material already on record provided the formation of such opinion is consequent on "information" in the shape of some light thrown on aspects of facts or law which the I.T.O. had not earlier been conscious of. To give a couple of illustrations, suppose an I.T.O., in the original assessment, which is a voluminous one involving several contentions, accepts a plea of the assessee in regard to one of the items that the profits realised on the sale of a house is a capital realisation not chargeable to tax. Subsequently he finds, in the forest of papers filed in connection with the assessment, several instances of earlier sales of house property by the assessee. That would be a case where the I.T.O. derives information from the record on an investigation or enquiry into facts not originally undertaken. Again, suppose if I.T.O. accepts the plea of an assessee that a particular receipt is not income liable to tax. But, on further research into law he finds that there was a direct decision holding that category of receipt to be an income receipt. He would be entitled to reopen the assessment under s.147(b) by virtue of proposition (4) of Kalyanji Mavji. The fact that the details of sales of house properties were already in the file or that the decision subsequently come across by him was already there would not affect the position because the information that such facts or decision existed comes to him only much later. What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Mavji (supra)? The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the I.T.O. initiates reassessment proceedings in the light of "information" obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, for e.g., as in the two Madras decisions referred to earlier. Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the I.T.O., having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been brought to tax. In other words, as pointed out in IENS case, it also 638 ropes in cases of a "bare or mere change of opinion" where the I.T.O. (very often a successor officer) attempts to reopen the assessment because the opinion formed earlier by himself (or, more often, by a predecessor I.T.O.) was, in his opinion, incorrect. Judicial decisions had consistently held that this could not be done and the IENS case (supra) has warned that this line of cases cannot be taken to have been overruled by Kalyanji Mavji (supra). The second paragraph from the judgment in the IENS case earlier extracted has also reference only to this situation and insists upon the necessity of some information which make the ITO realise that he has committed an error in the earlier assessment. This paragraph does not in any way affect the principle enumerated in the two Madras cases cited with approval in Anandji Haridas, [1986] 21 S.T.C. 326. Even making allowances for this limitation placed on the observations in Kalyanji Mavji, the position as summarised by the High Court in the following words represents, in our view, the correct position in law: "The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income tax Officer subsequent to the original assessment. If the Income tax Officer had considered and formed an opinion on the said material in the original assessment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Income tax Officer had not considered the material and subsequently come by the material from the record itself, then such a case would fall within the scope of section 147(b) of the Act. " Let us now examine the position in the present case keeping in mind the narrow but real distinction pointed out above. On behalf of the assessee, it is emphasised (a) that the amount of surplus is a very substantial amount,(b) that full details of the manner in which it had resulted had been disclosed, (c) that the profit and loss account, the profit and loss adjustment account and statement made before the I.T.O. had brought into focus the question of taxability of the surplus and (d) that decision in Ramachari 's case had been reported by 10.4.1962. No Income tax Officer can be presumed to have completed the assessment without looking at all this material and the said decision. No doubt, some doubt had been thrown as to whether a statement had been given at the time of original assessment that the amount 639 of surplus was not taxable as an income or a capital gain but the case has proceeded on the footing that such a statement was there before the officer. This, therefore, is nothing but a case of "change of opinion". On the other hand, the authorities and the Tribunal have drawn attention to the fact that the return, the section 143(2) notice and assessment were all on the same day and counsel for the Revenue urged that obviously, in his haste, the I.T.O. had not looked into the facts at all. It is urged that no Income tax Officer who had looked into the facts and the law could have failed to bring the surplus to tax in view of then recent pronouncement in Ramachari 's case. Dr. Gaurishankar submitted that the Tribunal has found that the I.T.O. "had acted mechanically in accepting the return without bringing his mind to play upon the entry in the statement with reference to the distribution of the assets". He pointed out that there is no evidence of any enquiry with reference to this aspect and that, the amount involved being sufficiently large, the I.T.O., if he had been aware of the existence of the entry would certainly have discussed it. He urged that the question whether the I.T.O. had considered this matter at the time of the original assessment or not is purely a question of fact and the Tribunal 's conclusion thereon having been endorsed by the High Court, there is no justification to interfere with it at this stage. We think there is force in the argument on behalf of the assessee that, in the face of all the details and statement placed before the I.T.O. at the time of the original assessment, it is difficult to take the view that the Income tax Officer had not at all applied his mind to the question whether the surplus is taxable or not. It is true that the return was filed and the assessment was completed on the same date. Nevertheless, it is opposed to normal human conduct that an officer would complete the assessment without looking at the material placed before him. It is not as if the assessment record contained a large number of documents or the case raised complicated issues rendering it probable that the I.T.O. had missed these facts. It is a case where there is only one contention raised before the I.T.O. and it is, we think, impossible to hold that the Income tax Officer did not at all look at the return filed by the assessee or the statements accompanying it. The more reasonable view to take would, in our opinion, be that the Income tax Officer looked at the facts and accepted the assessee 's contention that the surplus was not taxable. But, in doing so, he obviously missed to take note of the law laid down in Ramachari which there is nothing to show, had been brought to his notice. When he subsequently became aware of the decision, he initiated proceedings under section 147(b). The material which constituted information and on 640 the basis of which the assessment was reopened was the decision in Ramachari. This material was not considered at the time of the original assessment. Though it was a decision of 1961 and the I.T.O. could have known of it had he been diligent, the obvious fact is that he was not aware of the existence of the decision then and, when he came to know about it, he rightly initiated proceedings for assessment. We may point out that the position here is more favorable to the Revenue than that which prevailed in the Madras cases referred to earlier. There, what the I.T.O. had missed earlier was the true purport of the relevant statutory provisions. It seems somewhat difficult to believe that the I.T.O. could have failed to read properly the statutory provisions applicable directly to facts before him (though that is what seems to have happened). Perhaps an equally plausible view, on the facts, could have been taken that he had considered them and decided, in one case, not to apply them and, in the other, on a wrong construction thereof. In the present case, on the other hand, the material on which the I.T.O. has taken action is a judicial decision. This had been pronounced just a few months earlier to the original assessment and it is not difficult to see that the I.T.O. must have missed it or else he could not have completed the assessment as he did. Indeed it has not been suggested that he was aware of it and yet chose not to apply it. It is therefore much easier to see that the initiation of reassessment proceedings here is based on definite material not considered at the time of the original assessment. In the above view of the matter, we uphold the High Court 's view on the first question. The second question raises a more difficult problem. There can be no doubt that the decision of the Madras High Court in Ramachari squarely covers the situation. Ramachari holds that the principle of valuing the closing stock of a business at cost or market at the option of the assessee is a principle that would hold good only so long as there is a continuing business and that where a business is discontinued, whether on account of dissolution or closure or otherwise, by the assessee, then the profits cannot be ascertained except by taking the closing stock at market value. Ramachari has subsequently been followed by the Kerala High Court in Popular Workshops vs Commissioner of Income Tax, and in Popular Automobiles vs Commissioner of Income Tax, Shri Ramachandran contends that the decision in Ramachari 641 does not lay down the correct law. He submits than, while it is no doubt true that the closing stock has to be valued, the well settled principle is that it should be valued, at cost or market whichever is lower and there is no justification for laying down a different principle for valuation of the closing stock at the point of discontinuance of business unless the goods are actually sold by the assessee at the time of discontinuance. Further, it has been held by a series of decisions of this Court that when a firm is dissolved and the assets are distributed among the partners, there is no sale or transfer of the assets of the firm to the various partners: vide, Addanki Narayanppa vs Bhaskara Krishnappa, ; ; CIT vs Dewas Cine Corporation, ; CIT vs 2Bankey Lal Vaidya, ; Malabar Fisheries Co. vs C.I.T., and in Sunil Siddharthbhai vs C.I.T., He submits that, in logical sequence, dissolution comes first and distribution of assets comes later. Therefore, revaluation of the assets of a firm, which is only for the division of the assets among the partners on a real and not a notional basis, is part of the division of the assets and therefore logically, in point of time, subsequent to the dissolution of the firm. Since the revaluation takes place after the dissolution no profits can be said to have accrued to the firm by the process of revaluation. The revaluation of the assets is not in the course of business and is not an activity which can partake of the nature of trade. Assuming but not conceding that it is possible to have a revaluation of the assets, for example, stock in trade before dissolution, any excess which arises on the revaluation is only an imaginary or notional profit and cannot be brought to tax for the following reasons: (i) As a result of such revaluation, there can be no profit, because the firm cannot make a profit out of itself: Vide Kikabhai Premchand vs C.I.T., (ii) The process of revaluation of stock by itself cannot bring in any real profits: vide C.I.T. vs K.A.R.K. Firm, [1934]2 I.T.R. 183; Chainrup Sampatram vs C.I.T., [1953) and C.I.T. V. Hind Construction ltd., [1972] 83 I.T.R. 211; and (iii) It is well settled that what is taxable under the income tax law is only real income vide C.I.T. vs M/s Shoorji Vallabhdas and Co., [1962] 46 I.T.R. 144 and C.I.T. vs Birla Gwalior (P) Ltd., There is, therefor, no principle by which the stock in trade can be valued at market price so as to bring to tax the notional profits which might in future be realised as a result of the sale of the stock in trade. 642 The question posed before us is a difficult one. We think, however, that the High Court was right in pointing out that the several decisions relied upon for the assessee as to the nature of the transaction by which a firm, on dissolution, distributes its assets among its partners, have no relevance in the present case. As the High Court rightly observed, those cases relate to what happens after or in consequence of the dissolution of a firm whereas we are here concerned with a question that arises before or at the time of dissolution. What we have to decide is the basis on which, in making up the accounts of a firm upto the date of dissolution, the closing stock with the firm as at a point of time immediately prior to the dissolution is to be valued. It is this principle that has been decided in Ramachari and the High Court decisions following it (including the one under appeal) and the question is whether they lay down the correct law. In the first place, it is settled law that the true trading results of a business for an accounting period cannot be ascertained without taking into account the value of the stock in trade remaining at the end of the period. Though, as pointed out by this Court in Chainrup Sempatram vs C.I.T., it is a misconception to think that any profit arises out of the valuation of closing stock, it is equally true that such valuation is a necessary element in the process of determining the trading results of the period. This is true in respect of any method of accounting and in C.I.T. vs Krishnaswamy Mudaliar, this Court pointed out that, even where the assessee is following the cash system of accounting, the valuation of closing stock cannot be dispensed with. In this decision, this Court quoted with approval the following observations in C.I.R. vs Cock, Russel & Co. Ltd. "There is no word in the statutes or rules which deals with this question of valuing stock in trade. There is nothing in the relevant legislation which indicates that in computing the profits and gains of a commercial concern the stock in trade at the start of the accounting period should be taken in and that the amount of the stock in trade at the end of the period should also be taken in. It would be fantastic not to do it: it would be utterly impossible accurately to assess profits and gains merely on a statement of receipts and payments or on the basis of turnover. It has long been recognised that the right method of assessing profits and gains is to take into account the value of the stock in trade at the beginning and the value of the stock in trade at the 643 end as two of the items in the computation. I need not cite authority for the general proposition, which is admitted at the Bar, that for the purposes of ascertaining profits and gains the ordinary principles of commercial accounting should be applied, so long as they do not conflict with any express provision of the relevant statutes. " Next the principles as to the method of valuation of the closing stock are equally well settled. Lord President Clyde set these out in Whimster & Co. vs C.I.R., in the following words: "In computing the balance of profits and gains for the purposes of income tax,. two general and fundamental commonplaces have always to be kept in mind. In the first place, the profits of any particular year or accounting period must be taken to consist of the difference between the receipts from the trade or business during such year or accounting period and the expenditure laid out to earn those receipts. In the second place, the account of profit and loss to be made up for the purpose of ascertaining that difference must be framed consistently with the ordinary principles of commercial accounting, so far as applicable, and in conformity with the rules of the Income tax Act, or of that Act as modified by the provisions and schedules of the Acts regulating excess profits duty, as the case may be. For example, the ordinary principles of commercial accounting require that in the profit and loss account of a merchant 's manufacturer 's business the values of the stock in trade at the beginning and at the end of the period covered by the account should be entered at cost or market price, whichever is the lower; although there is nothing about this in the taxing statutes. " The principle behind permitting the assessee to value the stock at cost is very simple. In the words of Bose, J. In Kikabhai Premchand vs C.I.T., [1953] 24 I.T.R. 506 S.C. it is this: "The appellant 's method of book keeping reflects the true position. As he makes his purchases he enters his stock at the cost price on one side of the accounts. At the close of the year he enters the value of any unsold stock at cost on the other side of the accounts thus cancelling out the entries relating to the sum unsold stock earlier in the 644 accounts; and then that is carried forward as the opening balance in the next year 's account. This cancelling out of the unsold stock from both sides of the accounts leaves only the transactions on which there have been actual sales and gives the true and actual profit or loss on his year 's dealings. " As against this, the valuation of the closing stock at market value invariably will create a problem. For if the market value is higher than cost, the accounts will reflect notional profits not actually realised. On the other hand, if the market value is less, the assessee will get the benefit of a notional loss he has not incurred. Nevertheless, as mentioned earlier, the ordinary principles of commercial accounting permit valuation "at cost or market, whichever is the lower". The rationale behind this has been explained by Patanjali Sastri, C.J. in Chainrup Sampatram vs C.I.T., , S.C. where an attempt was made to value the closing stock at a market value higher than cost. The learned Chief Justice observed: "It is wrong to assume that the valuation of the closing stock at market rate has, for its object, the bringing into charge any appreciation in the value of such stock. The true purpose of crediting the value of unsold stock is to balance the cost of those goods entered on the other side of the account at the time of their purchase, so that the cancelling out of the entries relating to the same stock from both sides of the account would leave only the transactions on which there have been actual sales in the course of the year showing the profit or loss actually realised on the year 's trading. As pointed out in paragraph 8 of the Report of the Committee on Financial Risks attaching to the holding of Trading Stocks, 1919, "As the entry for stock which appears in a trading account is merely intended to cancel the charge for the goods purchased which have not been sold, it should necessarily represent the cost of the goods. If it is more or less than the cost, then the effect is to state the profit on the goods which actually have been sold at the incorrect figure. . From this rigid doctrine one exception is very generally recognised on prudential grounds and is now fully sanctioned by custom, viz., the adoption of market value at the date of making up accounts, if that value is less, than cost. It is of course an anticipation of the loss that may be made on those goods in 645 the following year, and may even have the effect, if prices rise again, of attributing to the following year 's results a greater amount of profit than the difference between the actual sale price and the actual cost price of the goods in question" (extracted in paragraph 281 of the Report of the Committee on the Taxation of Trading Profits presented to British Parliament in April 1951). While anticipated loss is thus taken into account, anticipated profit in the shape of appreciated value of the closing stock is not brought into the account, as no prudent trader would care to show increased profit before its actual realisation. This is the theory underlying the rule that the closing stock is to be valued at cost or market price whichever is the lower, and it is now generally accepted as an established rule of commercial practice and accountancy. " From the above passage, it will be seen that the proper practice is to value the closing stock at cost. That will eliminate entries relating to the same stock from both sides of the account. To this rule custom recognises only one exception and that is to value the stock at market value if that is lower. But on no principle can one justify the valuation of the closing stock at a market value higher than cost as that will result in the taxation of notional profits the assessee has not realised. The High Court in Ramachari has, however, outlined another exception and seems to have rested this on two considerations. The first is the observation of Lord Buckmaster in C.I.T. vs Ahmedabad New Cotton Mills Co. Ltd., [1930] L.R. 57 I.A. 21 to the following effect: "The method of introducing stock into each side of a profit and loss account for the purpose of determining the annual profits is a method well understood in commercial circles and does not necessarily depend upon exact trade valuations being given to each article of stock that is so introduced. The one thing that is essential is that there should be a definite method of valuation adopted which should be carried through from year to year, so that in case of any division from strict market values in the entry of the stock at the close of one year it will be rectified by the accounts in the next year. " From these observations, the High Court inferred: "It is obvious from the above that the privilege of valuing 646 the opening and closing stock in a consistent manner is available only to continuing business and that it cannot be adopted where the business comes to an end and the stock in trade has to be the disposed of in order to determine the exact position of the business on the date of closure. " The second consideration which prevailed with the High Court is reflected in the following passage from the judgment: "It seems to us that none of these cases has any application to the facts of the present case . There is no authority directly in point dealing with this question, where a partnership concern dissolves its business in the course of the accounting year, what is the basis on which the stock in trade has to be valued as on the date of dissolution. We have accordingly to deal with the matter on first principles. The case of a firm which goes into liquidation forms a close parallel to the present case. In such a case all the stock in trade and other assets of the business will have to be sold and their value realised. It cannot be controverted that it is only by doing so that the true state of the profits or losses of the business can be arrived at. The position is not very different when the partnership ceases to exist in the course of the accounting year. The fact that Ramachari, one of the ex partners, took over the entire stock and continued to run the business on his own, is not relevant at all, when we consider the profits or losses of the partnership ' which has come to an end. It should, therefore, follow that in order to arrive at the correct picture of the trading results of the partnership on the date when it ceases to function, the valuation of the stock in hand should be made on the basis of the prevailing market price. " We are not quite sure that the first of the considerations that prevailed with the High Court is relevant in the present case. Even in a continuing business, the valuation at market value is permissible only when it is less than cost; it is not quite certain whether the rules permit an assessee if he so desires to value closing stock at market value where it is higher than cost. But, in either event, it is allowed to be done because its effect can be offset over a period of time. But here, where the business comes to a close, no future adjustment of an over 647 or under valuation is possible, In this context, it is difficult to see how valuation, at other than cost, can be justified on the principle of Ahmedabad Advance Mills case (supra). We, however, find substance in the second consideration that prevailed with the High Court. The decision in Muhammad Hussain Sahib vs Abdul Gaffor Sahib, [1950] 1 M.L.J.81 correctly sets out the mode of taking accounts regarding the assets of a firm. While the valuation of assets during the subsistence of the partnership would be immaterial and could even be notional, the position at the point of dissolution is totally different: "But the situation is totally different when the firm is dissolved or when a partner retires. The settlement of his account must be not on a notional basis but on a real basis, that is every asset of the partnership should be converted into money and the account of each partner settled on that basis. . The assets have to be valued, of course, on the basis of the market value on the date of the dissolution . " This applies equally well to assets which constitute stock in trade. There can be no manner of doubt that, in taking accounts for purposes of dissolution, the firm and the partners, being commercial man, would value the assets only on a real basis and not at cost or at their other value appearing in the books. A short passage from Pickles on Accountancy (Third Edn), p. 650 will make this clear: "In the event of the accounts being drawn up to the date of death or retirement, no departure from the normal procedure arises, but it will be necessary to see that every revaluation required by the terms of the partnership agreement is made. It has been laid down judicially that, in the absence of contrary agreement, all assets and liabilities must be taken at a "fair value," not merely a "book value" basis, thus involving recording entries for both appreciation and depreciation of assets and liabilities. This rule is applicable, notwithstanding the omission of a particular item from the books, e.g. investments, goodwill (Cruikshank vs Sutherland). Obviously, the net effect of the revaluation will be a profit or loss divisible in the agreed profit or loss sharing ratios. " 648 The real rights of the partners cannot be mutually adjusted on any other basis. This is what happened in Ramachari. Indeed, this is exactly what the partners in this case have done and, having done so, it is untenable for them to contend that the valuation should be on some other basis. Once this principle is applied and the stock in trade is valued at market price, the surplus, if any, has to get reflected as the profits of the firm and has to be charged to tax. The view taken by the High Court has held the field for about thirty years now and we see no reason to disagree even if a different view were possible. For these reasons, we agree with the answer given by the High Court to the second question as well. The appeal fails and is dismissed. But we would make no order regarding costs. R.N.J. Appeal dismissed.
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The Appellant Assessee, a partnership firm was engaged mainly, in Malaya, in money lending business since 1949 and incidental to this business was also doing the business of sale and purchase of house properties, gardens and estates.
It was reconstituted under a deed dated 26.3.1960.
The firm was dissolved on 13.3.1961 and closed its accounts with effect from that date.
In its income tax return filed on 10.4.1962 for the assessment year 1961 62 it had filed a profit and loss account wherein amount of $.1,01,248 equivalent of Rs.1,58,057 was shown as "difference on revaluation of the estates, gardens and house properties" on the dissolution of the firm.
In the memo of adjustment for income tax purposes this amount was deducted as being not assessable either as revenue or capital.
The Income Tax Officer issued notice under section 23(2) of the Act on that very day and completed the assessment also on the same day after making a petty addition of Rs.2088 paid as property tax in Malaya.
When for the subsequent year 1962 63, the assessee filed its return showing nil income stating in the forwarding letter that the Firm had been dissolved on 13.3.1961, the I.T.O. wrote to the assessee that the revaluation difference of Rs.1,58,057 should have been brought to tax in the previous year.
The assessee replied that no profit or loss could be assessed on a revaluation of assets, that the assessee was gradually winding up its business in Malaya, the surplus would be only capital 625 gains and that revalutation had been at the market price prevalent since 1954 and thus no capital gains were chargeable to tax.
Not satisfied, the I.T.O. issued a notice under section 148 read with Section 147(b) of the Income Tax Act, 1961.
The assessee filed objections.
Overruling all the objections, the Income Tax Officer completed reassessment of the assessee Firm adding back the sum of Rs. 1,58,057 to the previously assessed income.
Having failed right upto the High Court, the assessee came in appeal before this Court.
Dismissing the appeal, affirming the decision of the High Court, this Court.
HELD: (1) The proceedings u/s 147(b) were validly initiated.
The facts of this case squarely fall within the scope of propositions (2) and (4) enunciated in Kalyanji Mavji 's case.
Proposition (2) may be briefly summarised as permitting action even on a "mere change of opinion".
This is what has been doubted in the IENS case.
But, even leaving this out of consideration, there can be no doubt that the present case is squarely covered by proposition (4) set out in Kalyanji 's case.
This proposition clearly envisages a formation of opinion by the Income Tax Officer on the basis of material already on record provided the formation of such opinion is consequent on "information" in the shape of some light thrown on aspects of facts or law which the Income Tax Officer had not earlier been conscious of.
[636G 637B] The difference between the situations envisaged in propositions (2) and (4) of Kalyanji Mavji is this, that proposition (4) refers to a case where the Income Tax Officer initiates reassessment proceedings in the light of "information" obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier.
Proposition (2) no doubt covers this situation also but it is so widely expressed as to include also cases in which the Income Tax Officer, having considered all the facts and law, arrives at a particular conclusion, but reinitiates proceedings because, on a reappraisal of the same material which had been considered earlier and in the light of the same legal aspects to which his attention had been drawn earlier, he comes to a conclusion that an item of income which he had earlier consciously left out from the earlier assessment should have been brought to tax.
[637F H] It is true that the return was filed and the assessment was completed on the same date.
Nevertheless, it is opposed to normal human 626 conduct than an officer would complete the assessment without looking at the material placed before him.
It is not as if the assessment record contained a large number of documents or the case raised complicated issues rendering it probable that the Income Tax Officer had missed these facts.
It is a case where there is only one contention raised before the Income Tax Officer and it is, we think, impossible to hold that the Income Tax Officer did not at all look at the return filed by the assessee or the statements accompanying it.
The more reasonable view to take would, in our opinion, be that the Income Tax Officer looked at the facts and accepted the assessee 's contention that the surplus was not taxable.
But, in doing so, he obviously missed to take note of the law laid down in Ramachari which there is nothing to show, had been brought to his notice.
when he subsequently became aware of the decision, he initiated proceedings under section 147(b).
The material which constituted information and on the basis of which the assessment was reopened was the decision in Ramachari.
this material was not considered at the time of the original assessment.
Though it was a decision of 1961 and the Income Tax Officer could have known of it had he been diligent, the obvious fact is that he was not aware of the existence of that decision then and, when he came to know about it, he rightly initiated proceedings for reassessment.
[639E 640B] The material on which the Income Tax Officer has taken action is a judicial decision.
This had been pronounced just a few months earlier to the original assessment and it is not difficult see that the Income Tax Officer must have missed it or else he could not have completed the assessment as he did.
Indeed it has not been suggested that he was aware of it and yet chose not to apply it.
It is therefore, much easier to see that the initiation of reassement proceedings here is based on definite material not considered at the time of the original assessment.
[640D E] (2) The stock in trade of a firm at the time of its disolution, has to be assessed at a fair value.
there can be no manner of doubt that, in taking accounts for purposes of dissolution, the firm and the partners, being commercial men, would value the assets only on a real basis and not at cost or at their other value appearing in the books.
The real rights of the partners cannot be mutually adjusted on any other basis.
This is what happened in Ramachari.
Indeed, this is exactly what the partners in this case have done and, having done so, it is untenable for them to contend that the valuation should be on some other basis.
Once this principle is applied and the stock in trade is valued at market price, the surplus, if any, has to get reflected as the profits of the firm 627 and has to be charged to tax.
The view taken by the High Court has held the field for about thirty years now and we see no reason to disagree even if a different view was possible.
[642B D, 647E,648A C] Popular Automobiles vs Commissioner of Income Tax, ; Sunil Siddharthbhai vs Commissioner of Income Tax, ; Pupular Workshops vs Commissioner of Income Tax ; Malabar Fisheries Co. vs Commissioner of Income Tax, ; Indian & Eastern Newspaper Society vs Commissioner of Income Tax, ; Kalyanji Mavji & Co. vs Commissioner of Income Tax, [1976] 102 I.T.R. 287; M/s A.L.A. Firm vs The Commissioner of Income Tax, Madras ; Commissioner of Income Tax vs Hind Construction Ltd., ; Commissioner of Income Tax vs Birla Gwalior (P) Ltd., ; Anandji Haridas & Co. (P) Ltd. vs S.P. Kushare, Sales Tax Officer, [1968] 21 S.T.C. 326; Commissioner of Income Tax vs Dewas Cine Corporation, ; Ramachari & Co. vs Commissioner of Income Tax, ; Maharaj Kumar Kamal Singh vs Income Tax Officer, S.C.; Commissioner of Income Tax vs A Raman & Co., S.C.; Salem Provident Fund Society Ltd. vs Commissioner of Income Tax, ; Commissioner of Income Tax vs Rathinasabapathy Mudaliar, ; Addanki Narayanappa vs Bhaskara Krishnappa, ; ; Commissioner of Income Tax vs Bankey Lal Vaidya ; Kikabhai Premchand vs Commissioner of Income Tax, [1953] 24 I.T.R. 506 (S.C.); Commissioner of Income tax vs K.A.R.K. Firm, ; Chainrup Sampathram vs Commissioner of Income Tax, ; Commissioner of Income Tax vs M/s. Shoorji Vallabhadas & Co., , Commissioner of Income Tax vs Krishnaswamy Muldaliar, ; Commissioner of Income Tax vs Ahmedabad New Cotton Mills Co. Ltd., [1930] L.R. 57 I.A. 21; Muhammad Hussain Sahib vs Abdul Gaffor Sahib, reffered to.
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The company appealing the case, a partnership, was mainly in the money lending business in Malaya since 1949. They also bought and sold houses, gardens, and land as part of their business.
The partnership was changed under an agreement made on March 26, 1960.
The partnership ended on March 13, 1961, and they closed their financial records on that date.
In their income tax form filed on April 10, 1962, for the tax year 1961-62, they included a profit and loss statement. In it, they listed $101,248 (equal to Rs. 1,58,057 in Indian currency) as "difference on revaluation of the estates, gardens and house properties" when the partnership ended. Revaluation means re-estimating the value of something.
When calculating income tax, they subtracted this amount, saying it shouldn't be taxed as either regular income or investment income (capital).
The Income Tax Officer (ITO) sent a notice under section 23(2) of the Income Tax Act on the same day and also finished the tax assessment on the same day. They added a small amount of Rs. 2088 for property tax paid in Malaya.
For the next year, 1962-63, the company filed a tax form showing zero income. They stated in a letter that the partnership had ended on March 13, 1961. The ITO replied that the revaluation difference of Rs. 1,58,057 should have been taxed in the previous year.
The company replied that no profit or loss could be taxed just because they revalued their assets. They said they were slowly ending their business in Malaya, and any surplus would only be investment gains. They also said the revaluation was based on market prices since 1954, so no investment gains tax was due.
The ITO disagreed and sent a notice under section 148 along with Section 147(b) of the Income Tax Act, 1961.
The company objected.
The Income Tax Officer rejected all objections and reassessed the company, adding the Rs. 1,58,057 back to their previously assessed income.
After losing up to the High Court level, the company appealed to this Court.
The Court dismissed the appeal and supported the High Court's decision.
HELD: (1) The actions taken under section 147(b) were valid.
The facts of this case fit within the ideas explained in the Kalyanji Mavji case.
Idea (2) allows action even on a "mere change of opinion."
This idea was questioned in the IENS case.
But even without considering that, this case is covered by idea (4) in Kalyanji's case.
This idea says the Income Tax Officer can form an opinion based on information already on record. This is allowed if the opinion is based on "information" that sheds light on facts or laws the ITO wasn't aware of before.
[636G 637B] The difference between ideas (2) and (4) of Kalyanji Mavji is that idea (4) applies when the ITO starts reassessment after getting "information." This information comes from looking into existing records or researching the relevant law, which reveals a previously missed angle.
Idea (2) covers this situation too, but it's worded so broadly that it also includes cases where the ITO considered all the facts and laws and reached a conclusion. But then, after re-examining the same information and laws, they decide that an income item they previously chose not to tax should have been taxed.
[637F H] It's true the tax form was filed and the assessment was done on the same day.
However, it's unlikely that an officer would complete the assessment without looking at the information provided.
It's not like the assessment had many documents or complicated issues that the ITO might have missed.
Only one argument was raised before the ITO. It's hard to believe the ITO didn't look at the company's tax form or the attached statements at all.
The more reasonable view is that the ITO looked at the facts and accepted the company's argument that the surplus wasn't taxable.
But in doing so, they missed the law explained in Ramachari, and there's no evidence it was brought to their attention. When they later learned of the decision, they started proceedings under section 147(b).
The information that led to reopening the assessment was the decision in Ramachari.
This information wasn't considered during the original assessment.
Even though it was a 1961 decision and the ITO could have known about it if they had been careful, they obviously weren't aware of it then. When they found out about it, they rightly started reassessment proceedings.
[639E 640B] The ITO acted on a court decision.
This decision was made just a few months before the original assessment, so it's easy to see the ITO must have missed it, or they wouldn't have completed the assessment as they did.
It hasn't been suggested that they knew about it but chose not to apply it.
So, it's clear that the reassessment proceedings were based on specific information not considered during the original assessment.
[640D E] (2) The inventory (stock in trade) of a company when it ends its business must be assessed at a fair value.
When calculating accounts for closing the business, the company and partners, being business people, would value the assets based on their real value, not just the cost or other value listed in the books.
The partners' rights can only be fairly adjusted on this basis.
This is what happened in Ramachari.
This is exactly what the partners in this case did, and they can't argue that the valuation should be done differently.
Once this principle is applied and the inventory is valued at market price, any surplus must be recorded as the company's profits and taxed.
The High Court's view has been followed for about thirty years, and we see no reason to disagree, even if a different view was possible.
[642B D, 647E,648A C] Popular Automobiles vs Commissioner of Income Tax, ; Sunil Siddharthbhai vs Commissioner of Income Tax, ; Pupular Workshops vs Commissioner of Income Tax ; Malabar Fisheries Co. vs Commissioner of Income Tax, ; Indian & Eastern Newspaper Society vs Commissioner of Income Tax, ; Kalyanji Mavji & Co. vs Commissioner of Income Tax, [1976] 102 I.T.R. 287; M/s A.L.A. Firm vs The Commissioner of Income Tax, Madras ; Commissioner of Income Tax vs Hind Construction Ltd., ; Commissioner of Income Tax vs Birla Gwalior (P) Ltd., ; Anandji Haridas & Co. (P) Ltd. vs S.P. Kushare, Sales Tax Officer, [1968] 21 S.T.C. 326; Commissioner of Income Tax vs Dewas Cine Corporation, ; Ramachari & Co. vs Commissioner of Income Tax, ; Maharaj Kumar Kamal Singh vs Income Tax Officer, S.C.; Commissioner of Income Tax vs A Raman & Co., S.C.; Salem Provident Fund Society Ltd. vs Commissioner of Income Tax, ; Commissioner of Income Tax vs Rathinasabapathy Mudaliar, ; Addanki Narayanappa vs Bhaskara Krishnappa, ; ; Commissioner of Income Tax vs Bankey Lal Vaidya ; Kikabhai Premchand vs Commissioner of Income Tax, [1953] 24 I.T.R. 506 (S.C.); Commissioner of Income tax vs K.A.R.K. Firm, ; Chainrup Sampathram vs Commissioner of Income Tax, ; Commissioner of Income Tax vs M/s. Shoorji Vallabhadas & Co., , Commissioner of Income Tax vs Krishnaswamy Muldaliar, ; Commissioner of Income Tax vs Ahmedabad New Cotton Mills Co. Ltd., [1930] L.R. 57 I.A. 21; Muhammad Hussain Sahib vs Abdul Gaffor Sahib, reffered to.
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145 and 149 to 158 of 1959. Writ Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. Sardar Bahadur, for the petitioners. C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and T. M. Sen, for the respondents. March 30. The Judgment of the Court was delivered by WANCHOO, J. These eleven petitions raise a common point and will be disposed of together. The brief facts necessary for present purposes are these. The petitioners are dealers in motor spirit in Hyderabad. In 1949 the Hyderabad Sales of Motor Spirit Taxation Regulation, No. XXIV of 1358 Fasli (hereinafter called the Regulation) was passed and the petitioners were registered as retail dealers of petroleum products under the Regulation. In 1957 the petitioners and others filed writ petitions in the High Court of Andhra Pradesh questioning the validity of the Regulation. There was also a prayer for stay of the levy and collection of the tax and the High Court ordered that all further proceedings in the matter of levy, demand and collection of tax including cancellation of registration certificate and threatened attachment of property and the launching of criminal proceedings in pursuance of the Regulation be stayed. The petitioners allege that on this stay being granted by the High Court, they thought that section 3 of the Regulation was suspended during the period of stay and therefore they stopped collecting the tax from consumers. While these petitions were pending in the High Court, the Madras Sales of Motor Spirit Taxation (Andhra Pradesh Extension and Amendment) Act, No. V of 1958 (hereinafter called the Act), was passed by which 696 the Madras Sales of Motor Spirit Taxation Act, No. VI of 1939 was applied to Andhra Pradesh with some modifications and the Regulation was repealed. This Act, like the Regulation, had provisions for registration of dealers and in consequence fresh registration certificates were issued to the petitioners as well as to all other dealers in the State. In August 1958 the petitions challenging the validity of the Regulation were dismissed. In September 1958 notice& were issued to the petitioners informing them that they had failed to submit returns showing sales of motor spirit from March 1957 to March 1958 and they were required to submit returns within seven days, failing which best judgment assessments would be made under the relevant provision of the Regulation. The petitioners made repre sentations against this order and their main case was that they had not collected any tax from consumers during this period and it would therefore be harsh to demand tax from them in the circumstances. Thereupon it is said that best judgment ' assessments were made against the petitioners and they were required to pay the tax, though liberty to pay in installments was granted to them for this purpose. As however the petitioners failed to deposit the tax even in installments, the registration certificate of one of the petitioners was cancelled and other petitioners were threatened with cancellation of their registration certificates about October 1959. Consequently, the present petitions were filed soon after challenging the provisions of the Act relating to cancellation of registration certificates on the ground that such cancellation was not a reasonable restriction on the fundamental rights of the petitioners to carry on business under article 19 (1) (g) of the Constitution. The petitioners therefore pray for a declaration that sub sections (1) and (6) of section 4 of the Act and r. 14 purported to be framed thereunder are ultra vires as being violative of article 19 (1) (g) of the Constitution and for consequential orders against the respondents, namely, the State of Andhra Pradesh and its officers, from enforcing the said provisions. The petitions have been opposed by the respondents 697 and their case is that the provisions in question are reasonable restrictions on the right guaranteed under article 19 (1) (g) and are therefore perfectly valid and constitutional. The respondents also say that the allegation of the petitioners that they did not collect the tax during the period of the stay orders from consumers is false. In order to decide the constitutionality of the provisions which have been challenged it is necessary to look into the purpose and object of the Act in which those provisions appear. The Act was passed in order to levy and collect tax on retail sales of motor spirit in the interest of the general revenues of the State. Section 2 of the Act is the definition section. Section 3 is the charging section and provides the rates at which the tax is to be levied on all retail sales of motor spirit. Section 4 (1) which is being challenged is in these terms: "No person shall, after the commencement of this Act, carry on business in motor spirit as an importer or as a wholesale or retail dealer at any place in the State unless he has been registered as such under this Act. " Sub sections (2) and (3) make certain ancillary provisions and sub section (4) is in these terms: "Registration may be made subject to such conditions, if any, as may be prescribed including in the case of an applicant for registration as a retail dealer, the making of such deposit or the furnishing of such security as the registering authority may consider necessary to ensure the due payment of the tax which may from time to time be payable by him." Sub section (5) is unnecessary for our purpose, and sub section (6) is in these terms: "Any registration under sub section (1) may be suspended or cancelled by such authority, for such reasons, and in such manner, as may be prescribed. " It is not necessary to refer to other sections which make various provisions necessary for the enforcement of the Act till we come to section 26 which gives power to 88 698 the State Government to make rules to carry out the purposes of the Act. Rule 14 which has been attacked has been made under the power conferred under section 26 and it is not being disputed that if the main provisions contained in section 4 are constitutional, the rule is within the ambit of the Act and the rule making power of the State Government. It will be clear from this analysis of the impugned provisions of the Act that the purpose and object of the Act is to levy and collect tax for purposes of the general revenues of the State and the liability for payment is placed under section 3 upon the person effecting the sale. He is required by section 5 of the Act to keep books of account in the prescribed form and to submit to the Commercial Officer and to such other officers as may be prescribed, a I return in such form, 'containing such particulars and at such intervals, as may be prescribed. Along with the return, under section 6 he is required to pay the amount of tax due in respect of the motor spirit sold by him in retail during the preceding month according to the return. In order therefore that the State may have a check on the person from whom the tax is due section 4(l) provides for registration of dealers who carry on the business in motor spirit. Without such registration it would be impossible for the State to know the persons who are selling motor spirit and from whom the tax is due. The provision therefore under section 4(l) for registration of dealers is an eminently reasonable provision in order to carry out the object of the Act, namely, the levy and collection of this tax for purposes of the State. It is really no restriction on carrying on business in motor spirit; any one who carries on such business is free to do so and all that he has to do is to ask for registration, which he will get subject to the provisions of sub section That sub section has not been challenged in these petitions and therefore we proceed on the assumption that it is constitutional. It follows therefore that all that anyone who wants to carry on business in motor spirit has to do is to ask for registration which he will get under the rules, and the purpose behind registration is that those on whom the liability to pay tax 699 that it may realise the tax from them. The challenge therefore to the constitutionality of section 4(1) must fail. Then we turn to sub section (6), which provides that any registration under sub section (1) may be suspended or cancelled by such authority, for such reasons, and in such manner, as may be prescribed. The main attack of the petitioners is on this sub section. They contend that this sub section authorises the State to cancel a registration. The effect of such cancellation read with sub section (1) is that a person whose registration is cancelled cannot carry on business in motor spirit as he was doing before the cancellation. It is said that cancellation results in the total extinction of the business of the person whose registration is cancelled and thus the provision as to cancellation is an unreasonable restriction on the fundamental right to carry on business. There is no doubt that if a registration is cancelled under sub section (6) it will not be possible for the person whose registration is so cancelled to carry on his business in motor spirit. Rule 14 provides conditions under which the registration may be cancelled and we are in the present case concerned with two of them, namely, where the holder of at. registration certificate (a) fails to pay the tax or any other amount payable under the Act and (b) fraudulently evades the payment of the tax. The reasonableness of this provision as to cancellation of registration certificate has to be judged in the background of what we have already said about the purpose of the levy and its liability on the seller. It is true that there are other provisions in the law for realisation of public dues from those who default in making payments; but generally speaking cancellation of registration in cases like these is one more method of compelling payment of tax which is due to the State. Collection of revenue is necessary in order that the administration of the State may go on smoothly in the interest of the general public. The State has therefore armed itself with one more coercive method in order to realise the tax in such cases. It is true 700 that cancellation of registration may result in a dealer being unable to carry on the business, but the same result may even follow from the application of other coercive processes for realisation of dues from a trader, for his assets may be sold off to pay the arrears of tax and lie may thereafter be not in a position to carry on the business at all. Therefore the provision for cancellation of registration for failure to pay the tax or for fraudulently evading the payment of it is an additional coercive process which is expected to be immediately effective and enables the State to realise its revenues which are necessary for carrying on the administration in the interest of the general public. The fact that in some cases restrictions may result in the extinction of the business of a dealer would not by itself make the provision as to cancellation of registration an unreasonable restriction on the fundamental right guaranteed by article 19(1)(g). We may in this connection refer to Narendra Kumar vs The Union of India (1), where it was held that: "the word 'restriction ' in articles 19(5) and 19(6) of the Constitution includes cases of 'prohibition ' also; that where a restriction reaches the stage of total restraint of rights special care has to be taken by the Court to see that the test of reasonableness is satisfied by considering the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, the beneficial effect reasonably expected to result to the general public, and whether the restraint caused by the law was more than was necessary in the interests of the general public. " Applying these tests we are of opinion that the cancellation of registration will be justified even though it results in the extinction of business as such cancellation is in respect of a tax meant for the general revenues of the State to carry on the administration in the interest of the general public. (1) ; 701 Besides, there is another consideration to which we may advert in the end, though even otherwise the cancellation is justified. Though there is no provision in the Act or the Rules specifically authorising the seller to pass on the tax to the consumer, what actually happens is that the seller includes the tax in the price and thus passes it oil to the consumer. Then in his turn the seller pays the tax to the State. In effect by thus passing on the tax to the consumer through the price, the dealer has already collected the tax. Therefore the compulsion of payment which arises because of the provision for cancellation of registration is under the circumstances justified and there is no reason why he should fail to pay it to the State or evade payment thereof fraudulently. The fault for failure to pay the tax or fraudulent evasion in payment thereof lies in the circumstances entirely on the dealer and he cannot be heard to complain that cancellation of registration in such a case is a disproportionate restriction on the right to carry on business which cannot be justified in the interests of the general public. Under the circumstances we are of opinion that the ratio of Narendra Kumar 's case (1) applies fully to the present case and the provision contained in sub section (6) of section 4 is a reasonable restriction within the meaning of article 19(6) of the Constitution. The petitions therefore fail and are hereby dismissed with costs; there will be one set of hearing costs only. Petitions dismissed.
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The Madras Sales of Motor Spirit Taxation Act (Mad. VI of 1939) was made applicable to the, State of Andhra Pradesh by the Madras Sales of Motor Spirit Taxation (Andhra Pradesh Extension and Amendment) Act (Andhra Pradesh V of 1958).
The purpose and object of the Act was to levy and collect tax on retail sales of motor spirit and the liability for payment was placed upon the person effecting the sale.
In order that the State may know the persons from whom tax was due section 4(1) provided for registration of dealers and section 4(6) provided for the suspension of such registration in the event of some contraventions.
All that any one who wanted to carry on business had to do was to ask for registration which he would get under the rules.
The petitioners who were dealers in motor spirit in Hyderabad filed writ petition challenging the provisions of the said section 4 Of sub sections (1) and (6) on the ground that such registration and cancellation were not reasonable restrictions on the fundamental rights of the petitioners to carry on business under article 19(1)(g) of the Constitution particularly as the cancellation of registration resulted in the total extinction of the business and was an unreasonable restriction and prayed that sub sections
(1) and (4) Of section 4 Of the Act and r. 14 framed under section 26 of the Act be declared ultra vires.
Held, that the provisions of section 4(1) of the Act were consti tutional.
Registration of dealers under section 4(1)was an eminently reasonable provision in order to carry out the object of the Act, the purpose behind the registration being that those on whom the liability to pay tax under section 3 of the Act lay, were known to the State, so that it could realise the tax from them.
The provision Of section 4(6) for cancellation of registration for failure to pay the tax or for fraudulently evading the payment of it was an additional coercive process which was expected to be immediately effective and enabled the State to realise its revenue.
The fact that in some cases restriction might result in the extinction of the business of a dealer would not by itself 695 make the provision as to cancellation of registration an un reasonable restriction on the fundamental right guaranteed by article 19(1)(g) of the Constitution.
Narendra Kumar vs The Union of India, ; , referred to.
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The Madras Sales of Motor Spirit Taxation Act of 1939 was used in Andhra Pradesh because of a law passed in Andhra Pradesh in 1958.
The goal of the Act was to tax the retail sale of gasoline. The person selling the gas was responsible for paying the tax.
To know who owed taxes, the law said dealers had to register. Section 4(6) said this registration could be canceled if dealers broke the rules.
Anyone who wanted to sell gas just had to ask to be registered, and they would be.
Some gas dealers in Hyderabad filed a legal challenge. They argued that the registration and cancellation rules in Section 4, subsections (1) and (6), were unfair limits on their right to do business. This right is protected by Article 19(1)(g) of the Constitution. They said that losing their registration would shut down their business. They asked the court to declare these subsections and Rule 14 (made under Section 26 of the Act) as invalid.
The court decided that Section 4(1) of the Act was constitutional (allowed by the Constitution).
Registering dealers under Section 4(1) was a good way to make the Act work. It helped the state know who owed taxes so they could collect them.
Section 4(6) let the state cancel registrations if dealers didn't pay taxes or tried to avoid paying them. This was a way to quickly force dealers to pay what they owed.
The fact that losing registration might shut down a business didn't automatically make the rule unfair. It wasn't an unreasonable limit on the right to do business under Article 19(1)(g) of the Constitution.
The case of Narendra Kumar vs The Union of India was mentioned.
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N: Criminal Appeal No. 623 of 1983. 805 Appeal by Special leave from the Judgment and order dated the 17th January, 1982 of the Calcutta High Court in Crl. Appeal No. 160 of 1977. P. K. Chakraborty for the appellant. G. section Chatterjee for the respondent. The Judgment of the Court was delivered by DESAI, J. Special leave granted. Appellant Gopinath Ghosh was convicted by the learned Additional Sessions Judge, Nadia along with Bharat Ghosh @ Sadhu and Jagannath Ghosh under Sec. 302 read with Sec. 34 of the Indian Penal Code for having committed murder of Rabi Ghosh, son of Kartick Ghosh on August 19, 1974, Appellant Gopinath Ghosh is alleged to have caused an injury with a fala which landed on the left side chest below the neck of deceased Rabi. Information of the offence was lodged by Kartick Ghosh, father of deceased Rabi at Nakashipara Police Station at about 3.40 P.M. On the date of the occurrence. After completing the investigation, appellant and two others were charge sheeted for an offence under Sec. 302 read with Sec. 34 of the Indian Penal Code. The learned Magistrate committed the case to the Court of Sessions. The case came up for trial before the learned Additional Sessions Judge, Nadia who on appraisal of evidence held that appellant Gopinath Ghosh has caused the fatal injury in furtherance of the common intention of all the three accused and accordingly convicted them for an offence under Sec.302 read with Sec. 34 of the Indian Penal Code and sentence each of them to suffer imprisonment for life. Appellant and the two co accused preferred Criminal Appeal No. 160 of 1977 in the Calcutta High Court. A Division Bench of the High Court held that it is satisfactorily established that the present appellant caused the injury with a fala to deceased Rabi which proved fatal and therefore, the charge under Sec, 302 I.P.C. is brought home to him. The High Court further held that it is not shown that the two co accused Bharat Ghosh @ Sadhu and Jagannath Ghosh shared the common intention with the present appellant and accordingly allowed their appeal and set aside their conviction and sentence and acquitted them of all the charges. 806 Appellant Gopinath Ghosh has filed this appeal by special leave. Learned counsel who appeared for the appellant urged that on the date of the offence i.e. on August 19, 1974, appellant was aged below 18 years and was therefore a 'child ' within the meaning of the expression in the West Bengal Children Act, 1959 [ 'Act ' for short) and therefore, the Court had no jurisdiction to sentence him to suffer imprisonment after holding a trial, In view of this contention, the Court by its order dated March 11, 1983 framed the following issue for determination: "What was the age of the accused Gopinath Ghosh (appellant) on the date of the offence for which he was tried and convicted ?" and remitted the issue to learned Sessions Judge, Nadia to certify the finding after giving an opportunity to both sides to lead oral and documentary evidence. Liberty was reserved with the learned Sessions Judge to send accused Gopinath Ghosh to Chief Medical officer, Nadia to ascertain his age. on receipt of the order made by this Court, the learned Additional Sessions Judge, First Court, Nadia directed Superintendent of Krishnagar Jail to produce accused Gopinath Ghose in the office of the Chief Medical Officer, Nadia on June 4,1983 for medical examination with a view to ascertaining his age and submit the report to the court. Thereafter, the prosecution examined P.W. 1 Dr. A. K. Basu, Chief Medical officer of Health, Nadia, P.W. 2 Dr. J. C. Debnath, Radiologist, P.W. 3 Dr. C. R. Bhattacharyya, orthopaedic Surgeon and P.W. 4 Dr. R. B. Roy. Thereafter, Smt. Bhaktabala Dasi, mother of the appellant was examined as a witness for the defence. The case was adjourned as the appellant wanted to examine Mangalmoy Sarkar, Headmaster of Sudhakarpur High School to prove entries from the Admission Register. That request was granted and the Headmaster was examined. The learned Additional Sessions Judge after hearing both the sides certified his finding that appellant Gopinath Ghosh was aged between 16 and 17 years on the date of the offence i.e. On August 19,1974. This finding is not questioned before us. 2(d) of the Act defines 'child ' to mean a person who has not attained the age of eighteen years. 2(h) defines 'Juvenile 807 delinquent ' to mean a child who has been found to have committed an offence. Fasciculus of sections in Chapter III bears the heading 'Juvenile delinquents '. 22 provides for granting bail to a child pending inquiry. 23 casts an obligation on the officer in charge of the police station to which a child is brought after arrest to forth with inform the parent or guardian of the child, if he can be found, of such arrest and shall cause to be summoned to the Court before which the child will appear. 24 starts with a non obstante clause which takes away the jurisdiction of the Court to impose a sentence of death on a juvenile delinquent as well as the power to impose sentence of imprisonment or commitment to prison in default of payment of fine or in default of furnishing security on a juvenile delinquent. There is a proviso to sub cl.(2) of Sec. 24 which would enable the Court to impose a sentence of imprisonment on a juvenile delinquent, if the conditions therein prescribed are satisfied with an obligation on the Court to report the case to the State Government and direct the juvenile delinquent to be detained in such custody as it may think fit. 25 provides for inquiry by Court regarding juvenile delinquents. It reads as under: "Where a child having been charged with an offence appears or is produced before a Court, the Court shall hold the inquiry in accordance with the provisions in the Code of Criminal Procedure, 1898, for the trial of a summons case. " Sec. 26 confers power on the Court enabling it to pass orders regarding juvenile delinquents as therein mentioned. 4 confers power on the State Government to establish Juvenile Courts by a notification to be issued in that behalf. Sec, 5 provides that the powers conferred on Courts by the Act shall be exercised amongst others where a Juvenile Court is not established by a Court of Session. It is not clear whether juvenile court has been established for the area comprised in District Nadia. 6 provides that when a child is brought before a Magistrate or Court not empowered to pass an order under the Act, such Magistrate or Court shall forward the child to the nearest juvenile court or other Court or Magistrate having jurisdiction. 808 It clearly transpires from a combined reading of the sections hereinbefore extracted that where a juvenile delinquent is arrested, he/she has to be produced before a juvenile court and if no juvenile court is established for the area amongst others, the Court of Session will have produces of a juvenile court. Such a juvenile delinquent ordinarily has to be released on bail irrespective of the nature of the offence alleged to have been committed unless it is shown that there appears reasonable grounds for believing that the release is likely to bring him under the influence of any criminal or expose him to moral danger or defeat the ends of justice. 25 forbids any trial of a juvenile delinquent and only an inquiry can be held in accordance with the provisions of the Code of Criminal Procedure for the trial of a summons case and the bar of Sec. 24 which has been given an overriding effect as it opens with the non obstante clause likes away the power of the Court to impose a sentence of imprisonment unless the case falls under the proviso. Unfortunately, in this case, appellant Gopinath Ghosh never questioned the jurisdiction of the Sessions Court which tried him for the offence of murder. Even the appellant had given his age as 20 years when questioned by the learned Additional Sessions Judge. Neither the appellant nor his learned counsel appearing before the learned Additional Sessions Judge as well as at the hearing of his appeal in the High Court ever questioned the jurisdiction of the trial court to hold the trial of the appellant, nor was it ever contended that he was a juvenile delinquent within the meaning of the Act and therefore, the Court had no jurisdiction to try him, as well as the Court had no jurisdiction to sentence him to suffer imprisonment for life. It was for the first time that this contention was raised before this Court. However, in view of the underlying intendment and beneficial provisions of the Act read with cl. (f) of article 39 of the Constitution which provides that the State shall direct its policy towards securing that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that childhood and youth are protected against exploitation and against moral and material abandonment, we consider it proper not to allow a technical contention that this contention is being raised in this Court for the first time to thwart the benefit of the provisions being extended to the appellant, if he was otherwise entitled to it. The report of the learned Additional Sessions Judge is self evident. It is unquestionably established on unassailable evidence 809 that on August 19, 1974, the date of the offence, appellant was aged between 16 and 17 years. He was therefore, a juvenile delinquent, Obviously, the learned Magistrate could not have committed his case to the Court of Session. Only an inquiry could have been held against him as provided in Sec. 25 of the Act and unless the case of the appellant falls within the proviso to Sec. 24 (2), he could not be sentenced to suffer imprisonment. Therefore, the entire trial of the appellant is without jurisdiction and is vitiated. Therefore, the conviction of the appellant for having committed an offence under Sec. 302 IPC and sentence for imprisonment for life imposed by the learned Additional Sessions Judge and confirmed by the High Court are unsustainable and they must be set aside. The next question is what should be the sequel to our decision ? The appellant has been in prison for some years. But neither his antecedents nor the background of his family are before us. It is difficult for us to gauge how the juvenile court would have dealt with him. Therefore, we direct that the appellant be released on bail forthwith by the learned Additional Sessions Judge, Nadia. The case is remitted to the learned Magistrate for proceeding further in accordance with law keeping in view the provisions of the Act. Before we part with this judgment, we must take notice of a developing situation in recent months in this Court that the contention about age of a convict and claiming the benefit of the relevant provisions of the Act dealing with juvenile delinquents prevalent in various States is raised for the first time in this Court and this Court is required to start the inquiry afresh. Ordinarily this Court would be reluctant to entertain a contention based on factual averments raised for the first time before it. However, the Court is equally reluctant to ignore, overlook or nullify the beneficial provisions of a very socially progressive statute by taking shield behind the technicality of the contention being raised for the first time in this Court. A way has therefore, to be found from this situation not conducive to speedy disposal of cases and yet giving effect to the letter and the spirit of such socially beneficial legislation. We are of the opinion that whenever a case is brought before the Magistrate and the accused appears to be aged 21 years or below, before proceeding with the trial or undertaking an inquiry, an inquiry must be made about the age of the accused on the date of the occurrence. This ought to be more so where special acts dealing with juvenile delinquent are in force. If necessary, the Magistrate may refer the 810 accused to the Medical Board or the Civil Surgeon, as the case may be, for obtaining credit worthy evidence about age. The Magistrate may as well call upon accused also to lead evidence about his age. Thereafter, the learned Magistrate may proceed in accordance with law. This procedure, if properly followed, would avoid a journey upto the Apex Court and the return journey to the grass root court. If necessary and found expedient, the High Court may on its administrative side issue necessary instructions to cope with the situation herein indicated. The appeal for the reasons herein indicated is allowed and the conviction of the appellant for an offence under Sec. 302 IPC and sentence imprisonment for life imposed by the learned Additional Sessions Judge and confirmed by the High Court are set aside and the case is remitted to learned Magistrate for disposal according to law. S.R. Appeal allowed.
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The appellant, Gopinath Ghosh along with Bharat Ghosh @ Sadhu, and Jagannath Ghosh, was convicted and sentenced to life imprisonment under Section 302 read with Section 34 I.P.C. for having committed the murder of Rabi Ghosh, son of Kartik Ghosh on August 19, 1974.
The High Court in appeal, accepted the plea of the two other accused only and acquitted them, while confirming the conviction and sentence of the appellant.
The appellant for the first time in the Supreme Court raised the New Plea that as he was a "child" within the meaning of the expression in West Bengal Children Act, 1959, the entire trial was vitiated.
The court, by its order dated March 11,1983 directed the Session Judge Nadiar to give a finding on the age of the appellant on the date of the occurrence.
The Sessions Judge, in his report, after detailed examination of the evidence of Chief Medical officer of Health, Nadia, (PWI), Radiologist (PW2) orthopaedic Surgeon (PW3), another doctor Mr. R.B. ROY (PW4), the mother of the appellant (PW5) and the Headmaster of the School who brought records of the School, gave a finding that the appellant was aged between 16 and 17 years on the date of occurrence i.e. on August 19, 1974, which finding is not challenged by the State.
Allowing the appeal by Special leave, the Court, ^ HELD: 1.1 A combined reading of Sections 2(d), 2(h), 4 to 6, 22, 23, 24 (2) and 26 of the West Bengal Children Act, 1959 makes it clear that where a juvenile delinquent is arrested, he/she has to be produced before a juvenile court, and if no juvenile court is established for the area amongst others, the court of Session will have powers of a juvenile court; (b) such a juvenile delinquent ordinarily has to be released on bail irrespective of the nature of the offence alleged to have been committed unless it is shown that there appears reasonable grounds for believing that the release is likely to bring him under the influence of any criminal or expose him to moral danger or defeat the ends of justice; (c) Section 25 forbids any criminal or a juvenile delinquent and only an inquiry can be held in accordance with the provisions of the code of Criminal 804 Procedure for the trial of a summons case; and (d) the bar of Section 24 which had been given an over riding effect as it opens with the non obstante clause takes away the power of the court to impose a sentence of imprisonment unless the case falls under the proviso.
[808 A C 1.2 In the instant case, the entire trial of the appellant is without jurisdiction and is vitiated.
The report of the Sessions Judge unquestionably established by unassailable evidence that the appellant having been 16 to 17 years of age on the date of occurrence was a juvenile delinquent and therefore the Magistrate could not have committed his case to the court of Session.
Only an inquiry could have been held against him as provided in Section 25 of the Act unless the case of the appellant falls within the proviso to Section 24 (2).
[808 H, 809 A B] 1.3 ordinarily, the Supreme Court would be reluctant to entertain a based on factual averments for the first time before it.
However, the court is equally reluctant to ignore, overlook or nullify the beneficial provisions of a very socially progressive statute by taking shield behind the technicality of the contention being raised for the first time in court.
In view of the underlying intendment and beneficial provisions of the Act read with clause (f) of Article 39 of the Constitution which provides that the State shall direct its policy towards securing that children are given opportunities and facilities to develop in a healthy manner and in conditions of freedom and dignity and that child hood and youth are protected against exploitation and against moral and material abandonment, it would not be proper to allow a technical contention that the plea is being raised for the first time in the court and thereby thwart the benefit of the provisions being extended to the appellant, if he was otherwise entitled to it.
F H] Practice Directions: Whenever a case is brought before the Magistrate and the accused appears to be aged 21 years or below, before proceeding with the trial or under taking an inquiry, an inquiry must be made about the age of the accused on the date of occurrence.
This sought to be made so where special Acts dealing with juvenile delinquents are in force.
If necessary, the Magistrate may refer the accused to the medical Board or the Civil Surgeon, as the case may be, for obtaining credit worthy evidence about age.
The magistrate may as well call upon accused also to lead evidence about his age.
Thereafter, the learned Magistrate may proceed in accordance with law.
This procedure, if properly followed, would avoid, a journey upto the apex court, and the return journey to the gross root court.
[809 H; 810 A B] (The court suggested, that if necessary an found expedient, the High Court, on the administrative side may issue necessary instructions to cope with such situation).
[810 B]
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Gopinath Ghosh, along with Bharat Ghosh and Jagannath Ghosh, was found guilty of murder. They were sentenced to life in prison under Section 302 along with Section 34 of the Indian Penal Code (I.P.C.). They were accused of killing Rabi Ghosh, the son of Kartik Ghosh, on August 19, 1974.
In an appeal, the High Court agreed with the other two accused and let them go free. However, they upheld the guilty verdict and sentence for Gopinath Ghosh.
Gopinath Ghosh argued for the first time in the Supreme Court that he was a "child" under the West Bengal Children Act of 1959. Because of this, he said the entire trial was unfair.
On March 11, 1983, the Supreme Court ordered the Session Judge of Nadiar to determine Gopinath Ghosh's age on the day of the murder.
The Sessions Judge looked at evidence from the Chief Medical Officer of Health, the Radiologist, the Orthopedic Surgeon, another doctor, Gopinath Ghosh's mother, and the school's Headmaster. The Headmaster provided school records. The judge found that Gopinath Ghosh was between 16 and 17 years old on August 19, 1974. The State did not disagree with this finding.
The Court allowed the appeal. It *HELD*:
1.1 After looking at Sections 2(d), 2(h), 4 to 6, 22, 23, 24 (2), and 26 of the West Bengal Children Act, 1959, it is clear that: (a) If a young person breaks the law and is arrested, they must be taken to a juvenile court. If there is no juvenile court in the area, the court of Session has the powers of a juvenile court. (b) This young person should usually be released on bail, no matter what crime they are accused of. The only exception is if there is a good reason to believe that being released will put them in contact with criminals, expose them to danger, or prevent justice from being served. (c) Section 25 says that a criminal trial cannot be held for a young person who breaks the law. Instead, there should be an inquiry following the rules of the Code of Criminal Procedure for a summons case. (d) Section 24 prevents the court from sentencing a young person to prison, unless the case falls under an exception.
1.2 In this case, the entire trial of Gopinath Ghosh was unfair because the court did not have the authority to hold it. The Sessions Judge's report proved that Gopinath Ghosh was 16 to 17 years old on the day of the murder, making him a young person who broke the law. Because of this, the Magistrate should not have sent his case to the court of Session. Only an inquiry should have been held, as stated in Section 25 of the Act, unless Gopinath Ghosh's case fell under the exception in Section 24 (2).
1.3 Usually, the Supreme Court does not want to hear arguments based on new facts that are presented for the first time in the Supreme Court. However, the Court also does not want to ignore a law that helps young people by hiding behind a technicality. The law aims to give children chances to grow up healthy and protected, as stated in Article 39(f) of the Constitution. Therefore, it would not be right to refuse to consider Gopinath Ghosh's argument just because it is being raised for the first time in the Supreme Court, if he deserves the protection of the law.
Whenever a case comes before a Magistrate and the accused person looks to be 21 years old or younger, the Magistrate must ask about the accused person's age on the day the crime happened before starting the trial or inquiry. This is especially important when there are special laws for young people who break the law. If needed, the Magistrate can ask the accused person to be examined by a medical board or the Civil Surgeon to get reliable information about their age. The Magistrate can also ask the accused person to provide evidence of their age. Then, the Magistrate can proceed according to the law. Following this procedure would prevent unnecessary appeals to the Supreme Court.
The court suggested that the High Court could issue instructions to help deal with these situations.
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les tax could be imposed retrospectively. Therefore, even though in this case the tax was levied retrospectively by a validation ordinance, the respondent would be deemed to have entered the trade and carried it on the basis that it would be liable to pay sales tax. [571 D] 569 (b) Even assuming that the respondent carried on the trade thinking that it would not be liable to pay sales tax, the area of concensuality still left for the purpose of agreeing to the final terms of the transactions between the respondent and its retail dealers was quite sufficient for the application of the ratio of Vishnu Agencies. [571 F G] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2028 of 1974. Appeal by Special Leave from the Order dated 6 9 1975 of the Punjab and Haryana High Court in L.P.A. No. 516/73. Hardev Singh and R. section Sodhi for the Appellants. L. N. Sinha, P. P. Singh and E. C. Agarwala for the Respondent. The Judgment of the Court was delivered by UNTWALIA J. The respondent company in this appeal by special leave has a Distillery and Brewery at Jammu. It maintains wholesale depots at various places in the State of Punjab, the main depot being at Ludhiana. As a whole seller it supplied Indian made foreign liquor to permit holders on the permits issued by the respective Excise and Taxation Officers, the competent authorities under the Punjab Excise Act and the Rules framed thereunder. Sales tax under the Punjab General Sales Tax Act, 1948 was imposed in respect of the sales aforesaid by an order of assessment dated the 30th November, 1972. The respondent, thereupon filed a Writ Petition in the High Court for the quashing of the said order and to restrain the appellants from recovering the amount of Rs. 46,396.22 paise from the petitioner. The main ground of attack on the imposition of sales tax was that the alleged sales were not sales in the eye of law as the respondent had no volition in the distribution of liquor which was received from the manufacturing concern at Jammu. The prices were fixed by the competent authorities and the respondent had to charge the fixed price from its retailers holding L 2, L 4, L 5 and L 10 licences. The respondent company holds L 1 licence which is meant for whole sale dealers. The State contested the application and in its counter asserted that the excise trade like many other trades, or even more, had to be regulated and controlled by various Rules and Regulations and in spite of all the restrictions placed thereby an area was still left where the whole seller and the retail purchaser had to arrive at an agreement by their volition. According to the case of the appellants "the quality and brand of Foreign Liquor, lifting of the specified quantity in bulk liter or in instalments, the size of packages (i.e. Bottles, pints, or Nips) and mode of payment (cash or credit or part payment) and 570 the prices, are the matters which are decided by the petitioner and his purchasers and there is no law or rule restricting the volition or liberty of the petitioner in this respect. " Following a Division Bench decision of the Punjab & Haryana High Court in Jagatjit Distilling and Allied Industries Ltd. vs The State(1) a learned single Judge of that Court allowed the writ application and quashed the assessment order. A Letters Patent appeal from the said order was dismissed in limine. Hence this appeal. This case, in our opinion, is squarely covered by a recent decision of this Court delivered by a Bench of seven Judges in M/s Vishnu Agencies (Pvt.) Ltd. etc. vs Commercial Tax Officer and others etc.(2) The High Court in the case of Jagatjit Distilling and Allied Industries Ltd. (supra) had mainly relied upon two decisions of this Court to hold that the transactions in that case were not sales. The said decisions are M/s New India Sugar Mills Ltd. vs Commissioner of Sales Tax, Bihar(3) and Chittar Mal Narain Das vs Commissioner of Sales Tax U.P.(4). In the case of Vishnu Agencies (supra) the former case was considered in paragraph 36 to 39 of A.I.R. volume at pages 463 464 and it was held that the view expressed in the majority judgment was not good law and the one contained in the minority judgment was approved. Chittar Mal 's case was also considered in paragraph 44 45 at page 467 and it was distinguished on the ground that the said decision "can be justified only on the view that clause 3 of the Wheat Procurement Order envisages compulsory acquisition of wheat by the State Government from the licensed dealer. " But then the criticism in that case of the Full Bench decision of the Allahabad High Court in Commr. Sales tax, U.P. vs Ram Bilas Ram Gopal(5) "which held while construing cl. 3 that so long as there was freedom to bargain in some areas the transaction could amount to a sale though effected under compulsion of a Statute" was not endorsed. It is, therefore, plain that to that extent Chittar Mal 's case is also not good law. The decision of the High Court in Jagatjit 's case is no longer good law. We have examined the various relevant provisions of the Punjab Excise Act and the Rules framed thereunder. We find that an area of agreement sufficient enough for the parties to cover by their volition to bring the transactions in question within the ambit of sales was left in the field. Broadly speaking the stand taken on behalf of the 571 appellants in their counter was correct, except that in regard to the fixation of price we assume in favour of the respondent company that the price had been fixed, as usually it is so in the excise trade. Even so the decision of this Court in Vishnu Agencies (supra) and the various other previous decisions reviewed therein justifies in law the imposition of sales tax by the impugned order in question. Mr. Lal Narayan Sinha tried to distinguish the decision in Vishnu Agencies (supra) by pointing out that sales tax for the period in question was imposed by the Punjab General Sales Tax (Amendment and Validation) Ordinance, 1972 which was promulgated on the 15th November, 1972 with retrospective effect. The respondent company, counsel submitted, cannot be said to have entered into the trade and carried it on during this period by a volition as it did not know that sales tax would be chargeable for this period and, therefore, it had not realised sales tax from its customers. He drew our attention to paragraph 33 of the judgment of this Court in Vishnu Agencies at page 461. In our opinion the argument of the learned counsel is not sound and for two reasons. Firstly, it is well settled and it was not disputed that sales tax could be imposed retrospectively. That being so the respondent company will be deemed to have entered the trade and carried it on the basis that it would be liable to pay sales tax. Secondly, even assuming it was not so, what has been pointed out in the begining of paragraph 33 as a primary fact of willingness to trade in the commodity strictly on the terms of Control Orders is only one of the reasons which led to the decision that an area of agreement between the parties was left to their consensus. In our opinion such a part of the area as the one hinted at is not very important and does not form the whole and sole basis of the conclusions arrived at in the case of Vishnu Agencies. Even assuming in favour of the respondent company that it did not carry on the trade thinking that it would be liable to pay sales tax, the area of consensuality still left in the field for the purpose of agreeing to the final terms of the transactions between the company and its retail dealers was quite sufficient for the application of the ratio of Vishnu Agencies. Having considered all that was submitted on behalf of the respondent company we find that there is no escape from the conclusion in this case that the transactions in question were sales exigible to sales tax. For the reasons stated above, we allow this appeal with costs in this Court only. The judgment and order of the High Court are set aside. P.B.R. Appeal allowed.
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The sales tax authorities levied tax on the sales of liquor effected by the respondent who was a wholesaler in that commodity.
Impugning the levy, the respondent contended in the High Court that when it sold liquor against permits issued by the authorities there was no volition because the price and the quantity of goods to be sold and the person to whom sold were all fixed and therefore there was no sale in the eye of law which would attract tax.
The Department, on the other hand, contended that even when goods were sold against a permit there was still an area of volition in that the parties could decide on the quality and brand of liquor, the quantity, whether in bulk or in instalments, the size of the package and so on, all of which showed that there was no restraint on the volition of the parties and therefore there was sale which attracted tax.
A single judge of the High Court, following a decision of the Division Bench of the same High Court in Jagatjit Distilling and Allied Industries Ltd. vs The State [28 STC 709], quashed the order of assessment.
A Division Bench dismissed the appeal in limine.
Allowing the State 's appeal ^ HELD: The transactions were sales exigible to tax.
[571 G] 1.
The decision of this Court in Vishnu Agencies (Pvt.) Ltd. vs Commercial Tax Officer, ; justifies imposition of sales tax on the sale of liquor on permits.
A conspectus of the provisions of the Punjab Excise Act and the Rules shows that there is an area of agreement sufficient enough for the parties to bring, by their volition, the impugned transactions within the ambit of sales.
[570 G; 571 A] Vishnu Agencies (P) Ltd. etc.
vs Commercial Tax Officer Jagatjit Distilling and Allied Industries Ltd. vs The State, 28 STC 709 overruled.
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The state's tax people charged a tax on the liquor sales of a wholesaler.
The wholesaler disagreed with the tax. They argued in court that when they sold liquor using permits from the government, they didn't have a choice. The price, amount, and buyer were all set. Because of this, they said it wasn't really a sale under the law, so it shouldn't be taxed.
The state argued that even with permits, the parties still had some choice. They could decide on the liquor's quality, brand, how much to buy, and the package size. This showed the parties had some freedom, so it was a real sale and should be taxed.
A judge agreed with an earlier court case and canceled the tax order.
Another court later dismissed the state's appeal quickly.
The Supreme Court allowed the state's appeal, saying the liquor sales could be taxed.
The Supreme Court said that the Vishnu Agencies case supports taxing liquor sales made with permits.
Looking at the laws about alcohol in Punjab, the parties have enough freedom to make these sales taxable.
The Supreme Court overruled the Jagatjit Distilling case.
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minal Appeal No. 116 of 1964. Appeal by special leave from the judgment and order dated December 20, 1963 of the Punjab High Court in Criminal Revi sion No. 824 of 1963. K.Baldev Mehta, G. D. Gupta and Indu Sani, for the appel lant. Bikramjit Mahajan and R. N. Sachthey, for the respondent. 441 The Judgment of the Court was delivered by Shelat, J. In 1961 Ravi Datt Joshi was the Assistant District Inspector of Schools at Kamal and the appellant was then working under, him as a clerk. Between March to December 1961, Joshi authorised the appellant to draw certain amounts from the State Bank of India, Karnal. Accordingly, on March 11, 1961, the appellant drew Rs. 979.12 for payment to M/s. Joti Pershad Gupta & Sons. On March 31, 1961, he drew a further sum of Rs. 1449.38 out of which Rs. 1404 were to be paid to the Indian Red Cross Society. He made an entry in the cash book showing as if that amount was paid to the said Society and got that entry initialled by Joshi. On July 3, 1961, he encashed a bill for Rs. 424, the amount being payable to two teachers, Ishwar Datt and Chand Ram. The appellant made an entry in the acquittance roll showing as if he had paid Rs. 200 to Chand Ram. On November 15, 1961 he received Rs. 281.15 in respect of arrears of salary of one teacher, Harbhajan Kaur and on December 2, 1961, he received Rs. 42.66 and Rs. 494, the first amount being the, salary of Ram Sarup, another teacher and the other as contingent fund payable to the staff. None of these amounts was paid to any of the aforesaid persons for payment to whom they were received by him. On M/s. Joti Pershad Gupta & Sons complaining to Joshi that the amount due to them was not paid, Joshi looked into the matter and finding that that amount and other amounts were embezzled, he lodged a complaint before the Police. The police thereupon registered a case under section 409 against the appellant and under sections 409, 465, 477 A and section 120 B of the Penal Code against Joshi. The trial Magistrate convicted Joshi and the appellant under section 120 B and under section 409 for criminal breach of trust in respect of Rs. 3414.53 and also under section 477 A and awarded different sentences and fines directing the sentences to run concurrently. In appeal, the Additional Sessions Judge acquitted Joshi of all the charges. He also acquitted the appellant on charges under section 120 B and section 477 A but upheld his conviction under section 409. The appellant filed a revision in the High Court where he conceded that the aforesaid amounts were received by him from the Bank but pleaded that he had handed them over to Joshi and that it was Joshi 's duty to disburse those amounts and to maintain accounts as Joshi was incharge of the office. The High Court held that the said moneys having been admittedly received by the appellant, the burden of proof was upon him to show what he had done with them, that there being no evidence that he handed them over to Joshi except his bare allegation, the appellant had failed to discharge the burden and was, therefore, rightly convicted under section 409. The High Court relied upon the evidence of Sukhminder Singh, the District Inspector of Schools that the appellant had confessed before him that 442 out of the said sum of Rs. 3414 53 he had misappropriated Rs. 2500 and that Joshi had misappropriated the balance of Rs. 979 and that the appellant was prepared to deposit the amount of Rs. 2500. The evidence of the District Inspector of Schools also was relied upon as showing that when approached for payment, the appellant had falsely represented to M/s. Joti Pershad Gupta & Sons and the Assistant Secretary of the Red Cross Society that he had remitted to them the two amounts payable to them. Before the High Court, the appellant contended that the trial suffered from misjoinder of charges, that Joshi being the drawing and disbursing officer, it was he and not the appellant who was responsible for the said misappropriation, that he had applied to the trial Magistrate for production of certain documents, that those documents were not produced and that he was prejudiced by the said non production as he could have shown from those documents that he had handed over the said amounts to Joshi as Joshi was the officer responsible for disbursements. The High Court rejected these contentions and on merits accepted the finding both of the Magistrate and the Additional Sessions Judge that the appellant had misappropriated the said amounts and dismissed the revision. Hence this appeal by special leave. Mr. Mehta for the appellant first contended that the High Court erred in proceeding with the, case as if the appellant had to prove his case beyond reasonable doubt that he had handed over the said moneys to Joshi. In support of his contention he relied upon Woolmington vs The Director of Public Prosecutions(1) and argued that if the appellant could show that his case was reasonably probable and could cast a doubt on the prosecution case that would be enough to entitle him to the benefit of reasonable doubt. There was, however, no question of the appellant raising any reasonable doubt in view of (a) his admission that he had received the said moneys, (b) the evidence of the District Inspector of Schools that he had confessed before him of having misappro priated Rs. 2500 at least and was prepared to deposit the said amount, and (c) the evidence as to his false representations to M/s. Joti Perhad Gupta & Sons and the Assistant Secretary of the Red Cross Society that moneys due to them had already been remitted. But the argument of Mr. Mehta was 'that he could have raised a doubt on the prosecution evidence if the documents called for by the appellant had been produced and his application for their production had not been rejected. In his statement under section 342 of the Code of Criminal Pro cedure the appellant admitted that he had drawn the said amounts from the Bank. His case, however, was that he did so on Joshi (1)[1935] A.&. 443 authorising him to do so and that he had handed them over to Joshi. He pleaded that he had made entries in the remittance transfer register showing disbursement of these amounts but those entries were made by him at the instance of Joshi and Joshi had initialled those entries. The argument was that in order to prove his case the production of the said documents was necessary. The appellant had called for five documents, viz., (1) A Memo dated June 27, 1960 from the Secretary to the Finance Department to all heads of Departments showing that it was the. head of office, i.e., Joshi, who was responsible for disbursement, (2) Instructions issued in 1962 according to which a clerk could make disbursement only if he had furnished security of Rs. 600, (3) the Bill book which witness Des Raj admitted was maintained and which if produced would have shown that the appellant had handed over the said moneys to Joshi, (4) the remittance transfer register admitted by the District Inspector of Schools could be found in the office, and (5) the sub voucher for Rs. 494 which the District Inspector assured the trial Magistrate he would send for but failed to produce. Regarding item No. 1 a copy of the Memo was in fact filed in the court and admitted in evidence. For the rest of the items, the trial Magistrate passed an order directing the prosecuting police inspector to make a report. On December 29, 1962, the officer made the report that there was no bill book, i.e. item No. 3, that item No. 4, the remittance transfer register was part of the record of the Assistant District Inspector 's office and that the same could be found there and that the sub voucher item No. 5 was not traceable. No grievance remained in respect of items 1 and 2 as a copy of the said Memo was admitted in evidence. Therefore, there would be no dispute that Joshi was the disbursing authority. But in view of the extra judicial confession made by the appellant that he had in fact misappropriated Rs. 2500, the fact that Joshi was the disbursing authority would not be of any importance. Items 3 and 5, according to the said report, could not be traced. No point, therefore, can be made on the score of their non production. There remained, therefore, only the remittance transfer register. The order sheet of the Magistrate shows that at the time when the prosecution closed it,, case and the statements of the appellant and Joshi were recorded under section 342 of the Code, no objection was taken by the appellant that the case should not proceed until the said register was produced. The case was adjourned to December 29, 1962 for defence evidence. On that date also no objection appears to have been taken and the case was allowed to proceed. Ultimately on January 14, 1963, the Magistrate passed his aforesaid order of conviction. Apart from that, since the moneys were not remitted to the parties concerned there can be no question of there being any R.T.R. in respect of them. Evidentially that 444 document was called for by the appellant in order to create confusion knowing full well that it was not there. We find, therefore, no substance in the contention that if these documents had been produced the appellant could have, thrown some doubt on the prosecution evidence and could have made out a reasonably probable case that he had handed over the said amounts to Joshi. Mr. Mehta next argued that under section 409 assuming that the said moneys were entrusted to the appellant, such entrustment must be in his capacity as a public servant. Being a clerk in the office of the Assistant District Inspector of Schools the appellant undoubtedly was a public servant. But the contention was that it was not his duty as a clerk to receive these moneys and that he had only received them at the instance of Joshi. Not being his duty so to receive the said moneys, it cannot be said that it was in his capacity as a clerk or as part of his duties that the said moneys were entrusted to him. There was, however, evidence that the appellant not only used to receive moneys but also used to disburse them. Whether it was done by him as part of his duties, would clearly be a matter of evidence. This contention was not raised in the High Court and being dependent on evidence, he is not entitled now to raise it before us. The decision ,of this Court in Budha Lal vs The State of Rajashan(1) rested on different facts as there was clear evidence that entrustment of moneys deposited in the complainant 's savings account in the post ,office was to the accused 's brother who was the post master and not to the accused. In the present case the position is that Joshi authorised the. appellant to draw and receive the moneys in question for the express purpose of payment to different parties. There was, therefore, entrustment to the appellant of the said moneys for an express purpose. The decision in Budha Lal 's,(1) case cannot apply. The third contention of Mr. Mehta was that the charge as to ,criminal breach of trust against the appellant and Joshi being one under section 409 read with section 120B and there being no charge under section 409 simplicitor a conviction under section 409 only is not valid. He argued that as the prosecution failed to establish conspiracy the appellant could not be convicted of the offence under section 409 simplicitor. In our view, there is no substance in this contention. If the charge of conspiracy to commit criminal breach of trust is followed by a substantive charge of criminal breach of trust in pursuance of such conspiracy there is nothing to prevent the court convicting an accused under the second charge even if the prosecution fails to establish conspiracy. In any event, there was no prejudice caused to him as he was aware that there was a sub (1) Criminal Appeal 156 of 1962 decided on 27th January, 1965. 445 stantive charge under section 409 against him. Mr. Mehta, however, relied upon a decision of the Kerala High Court in Kizhakeppallik Moosa vs The State(1). That decision cannot be of any avail as it is directly contrary to this court 's decision in Willie Slaney vs The State of Madhya Pradesh(2). It was then argued that the trial suffered from misjoinder of charges in that there were six items of moneys in respect of which misappropriation was alleged and three entries in respect of which falsification of accounts was charged against the appellant. There is some conflict of judicial opinion as to whether a charge of misappropriation where a lump sum consisting of several items together with a charge of falsification of several entries made with a view to screen the misappropriation is correct. We need not in the present case decide which view is correct. The appellant did not at any earlier stage take objection to the charges under sections 409 and 477 A on the ground that he was likely to be embarrassed in his defence. He has also not shown that any prejudice was caused to him and that being so this contention also must fail. The last contention was that though he was charged under section 120 B and section 477 A no sanction under section 196 A(2) of the Criminal Procedure Code was obtained and, therefore, the entire trial was vitiated. We may observe that the Additional Sessions Judge found that sanction was not obtained though the appellant and the said Joshi were charged under the aforesaid two sections along with the charge under section 409. Reliance in this connection was placed on a decision of the Patna High Court in Abdul Mian vs The King(3), where it was held that sanction to prosecute is a condition precedent to the institution of prosecution and that it is the sanction which confers jurisdiction on the court to try the case. The charge sheet in that case was under section 295 A of the Penal Code and sanction having not been obtained for prosecution the High Court held that even though the Magistrate trying the accused ultimately convicted him under section 298 which did not require sanction the trial was vitiated as the Magistrate could not proceed with the charge sheet without the requisite sanction. The decision in Govindram Sunder Das vs Emperor ( 4 ) was also called in aid as it has been observed there that where the offence of conspiracy to commit forgery is charged against a person and the previous consent of the local Government under section 196A though required is not obtained, the court cannot take cognizance of the complaint. These decisions, however, are in respect of cases where a single charge in respect of an offence requiring sanction was preferred against the accused and previous sanction was not obtained and the court held that in the absence of such sanction the trial court could not take cognizance of the complaint. (1) I.A.R. 1963 Kerala 68. (2) ; (3) [A.I R] 1951 Pat. 513 (4) A.I.R. 1942 Sind 63. 446 Section 196A(2) provides that no court shall take cognizance of the offence of criminal conspiracy punishable under section 120 B in a case where the object of the conspiracy is to commit any noncognizable offence or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, unless the State Government or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government has, by order in writing, consented to the initiation of the proceedings. It is clear that the court cannot take cognizance without the necessary consent in the case of a charge of criminal conspiracy under section 120 B of which the object is as stated therein. The conspiracy to commit an offence is by itself distinct from the offence to do which the conspiracy is entered into. Such an offence, if actually committed, would be the subject matter of a separate charge. If that offence does not require sanction though the offence of conspiracy does and sanction is not obtained it would appear that the court can proceed with the trial as to the substantive offence as if there was no charge of conspiracy. In Sukumar Chatterjee vs Mosizuddin Ahmed(1) where the charge was under section 404 read with section 120 B and no sanction was obtained it was held that the case could proceed though only under section 404. Similarly, in Syed Yawar Bakht vs The Emperor(2), the accused was charged under section 120 B read with section 467 and also under section 467 read with section 109 of the Penal Code. No sanction was obtained. It was held that the consequence of not obtaining the sanction was as if the charge under section 120B read with section 467 had never been framed but the accused could be convicted under the other charge viz., under section 467 read with section 109 of the Penal Code. The same view has also been taken by the Punjab High Court in Ram Pat vs State(3) where it was held that where a complaint discloses more offences than one, some of which can be inquired into without sanction and others only after sanction has been obtained, there can be no objection to the inquiry being carried on in respect of the first category of offences. Reference may be made to the decision in Nibaran Chandra Bhattacharyya vs Emperor (4 ) . The two petitioners were convicted under section 120B. They were also convicted under section 384 and section 384 read with section 114 of the Penal Code respectively. The learned Judge accepted the contention that the trial was vitiated as no sanction was obtained in respect of the charge under section 120 B and set aside the conviction also under section 384 and section 384 read with section 114 passed against petitioners 1 and 2. But the report of the decision shows that he did so because he felt that by proceeding with the charge under section 120 B admitting evidence on that charge and that charge resulting in conviction prejudice was caused to the petitioners in the matter of the other charges and (1) (2) (3) (4) A.I.R. 1929 Cal. 447 that therefore the trial could not be said to be severable. No such question of prejudice can be said to arise in the present ease in view of the extra judicial confession of the appellant of having misappropriated Rs. 2,500 out of Rs. 3,414 and odd in question. There was in the instant case not only a charge for conspiracy under section 120 B but also two other separate charges for offences under sections 409 and 477 A alleged to have been committed in pursuance ofthe conspiracy. Though the charge under section 120B required sanction no such sanction was necessary in respectof the charge under section 409. At the most, therefore, it can be argued that the Magistrate took illegal cognizance of the charge under section 120 B as section 196 A(2) prohibits entertainment of certain kinds of complaints for conspiracy punishable under section 120 B without the required sanction. The absence of sanction does not prevent the court from proceeding with the trial if the complaint also charges a co conspirator of the principal offence committed in pursuance of the conspiracy or for abetment by him of any such offence committed by one of the co conspira tors under section 109 of the Penal Code. (See Mohd. Bachal Abdulla vs The Emperor(1). In our view, the fact that sanction was not obtained in respect of the complaint under section 120 B did not vitiate the trial on the substantive charge under section 409. No prejudice could be said to have resulted in view of the appellant 's confession that he had in fact misappropriated Rs. 2,500 and was prepared to deposit that amount. The appeal is dismissed. Y.P. Appeal dismissed.
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J had authorised the appellant a clerk under him, to withdraw moneys from Bank for payments to different persons.
J, discovering that the moneys were not paid to persons concerned, lodged a report.
The appellant admitted to have withdrawn the moneys, but stated that he had handed them over to J, and made entries in the register showing disbursement at J s instance, and J had initiated them.
J was charged under section 409 and the appellant under sections 409, 465, 477A and 120 B I.P.C.
The Trial Court convicted both under sections 120 B and 409 but the Sessions Judge acquitted J and convicted the appellant under section 409 only.
The High Court, too, maintained the appellant 's conviction holding that the moneys having been admittedly received by the appellant, the burden of proof was upon him to show what he had done with them and there being no evidence that he handed them over to J, except his bare allegation he had failed to discharge that burden.
In appeal to this Court, the appellant contended that (i) the case proceeded erroneously as if the appellant had to prove his case beyond reasonable doubt that he had handed over the moneys to J and a reasonable doubt could have been raised in the prosecution evidence if the document called for by the appellant had been produced and his application for their production had not been rejected; (ii) it was not his duty as a clerk to receive these moneys and that he had only received them at the instance of J; (iii) the charge as to criminal breach of trust against the appellant and J being one under section 409 read with section 120 B and there being no charge under section 409 simplicitor a conviction under section 409 only was not valid; (iv) the trial suffered from misjoinder of charges in that there were six items of moneys in respect of which_ misappropriation was alleged and three entries in respect of which falsification of accounts was charged against the appellant; and (v) though he was charged under section 120 B and section 477 A no sanction tinder section 196 A(2) of the Criminal Procedure Code was obtained and, therefore, the entire trial was vitiated.
HELD:The appeal must be dismissed.
(i)There was no question of the appellant raising any reasonable doubt in view of his admission that he had received the moneys.
There was no substance in the contention that if the documents had been produced the appellant could have made out a reasonably probable case that he had handed over the moneys to J. [444A B] (ii)There was evidence that the appellant not only used to receive moneys but also used to disburse them.
Whether it was done by him as part of his duties would clearly be a matter of evidence, which cannot be gone into in this Court as it was not raised in the High Court.
J 440 authorised the appellant to draw and receive the moneys in question far the express purpose of payment to different parties.
There was, therefore, entrustment to the appellant of the said moneys for an express purpose.
[444D, F] Budha Lal vs State of Rajasthan, Cr.
A. No. 156 of 1962 decided on 27th January[1965], referred to.
(iii)If the charge of conspiracy to commit criminal breach of trust is followed by a substantive charge of criminal breach of trust in pursuance of such conspiracy there is nothing to prevent the court convicting an accused under the second charge even if the prosecution fails to establish conspiracy.
In any event, there was no prejudice caused to him as he was aware that there was a substantive charge under section 409 against him.
[444H 445B] Kizhakkeppallik Moosa vs State, A.I.R. 1963 Kerala 68, disapproved.
Willie Slaney vs State of Madhya Pradesh, [1955] 2 S.C.R. 1140, referred to.
(iv)The appellant did not at any earlier stage take objection to the charges under sections 409 and 477 A on the ground that he was likely to be embarrassed in his defence.
He has also not shown that any prejudice was caused to him and that being so this contention also must fail.
[445D] (v)Though the charge under section 120 B required sanction no such sanction was necessary in respect of the charge under section 409.
At the most, therefore, it can be argued that the Magistrate took illegal cognizance of the charge under section 120 B as section 196(2) prohibits entertainment of certain kinds of complaints for conspiracy punishable under section 120 D without the required sanction.
The absence of sanction does not prevent the court from proceeding with the trial if the complaint also charges a co conspirator of the principal offence committed in pursuance of the conspiracy or for abatement by him of any such offence committed by one of the conspirators under section 109 of the Penal Code.
The fact that sanction was not obtained in respect of the complaint under section 120 B did not vitiate the trial on the substantive charge under section 409.
No prejudice could be said to have resulted in view of the appellant 's confession.
[447C F] Abdul Mian vs The King, A.I.R. 1951 Pat.
513, Govindram Sunder Das vs Emperor, A.I.R. 1942 Sind. 63 and Nibaram Chandra Bhattacharyya vs Emperor, A.I.R. 1929 Cal.
754, referred to.
Sukumar Chatterjee vs Mosizuddin Ahmed, Syed Yawar Bhakat vs Emperor, , Ram Pat vs Emperor, (1962) 64 P.L 'R. 519 and Mohd. Bachal Abdulla vs The Emperor, , approved.
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J had allowed the appellant, who was a clerk working for him, to take money from the bank to pay different people.
J found out that the money was not given to the right people and reported it.
The appellant admitted he took the money but said he gave it to J. He also said he wrote in the register that the money was paid out because J told him to, and that J had approved these entries.
J was accused of a crime under section 409 of the Indian Penal Code (I.P.C.). The appellant was accused of crimes under sections 409, 465, 477A, and 120 B I.P.C. These sections relate to things like criminal breach of trust, forgery, and falsifying records.
The trial court found both J and the appellant guilty under sections 120 B (criminal conspiracy) and 409. But the Sessions Judge (another judge) said J was not guilty and only the appellant was guilty under section 409.
The High Court also said the appellant was guilty. They said that because the appellant admitted he got the money, it was his job to prove what he did with it. Since there was no proof he gave it to J, except for his own statement, he did not prove his case.
The appellant appealed to this Court (the Supreme Court). He argued that: (i) the case was wrongly decided because he was treated as if he had to prove he gave the money to J beyond any doubt. He said there would have been a reasonable doubt if the prosecution had shown a document that he asked for but was denied; (ii) it was not his job to receive the money and he only did it because J told him to; (iii) he and J were charged with criminal breach of trust under section 409 along with section 120 B (criminal conspiracy), but there was no separate charge under just section 409. Therefore, being found guilty under only section 409 was not right; (iv) the trial had too many charges mixed together, because there were six amounts of money that were said to be wrongly used, and three entries where the appellant was charged with falsifying records; and (v) he was charged under section 120 B and section 477 A, but they did not get permission under section 196 A(2) of the Criminal Procedure Code, which is needed to start the trial. Because of this, he said the whole trial was wrong.
HELD: The appeal must be rejected (the appeal is lost).
(i) There was no need for the appellant to raise any reasonable doubt, since he admitted he got the money.
There was no good reason to believe that the documents would have helped the appellant prove he gave the money to J.
(ii) There was proof that the appellant used to both receive and pay out money.
Whether this was part of his job is something that would have to be shown with evidence. This cannot be discussed in this Court because it was not brought up in the High Court.
J gave the appellant permission to take the money to pay different people.
So, the appellant was trusted with the money for a specific purpose.
(iii) If someone is charged with planning to commit criminal breach of trust, and then is also charged with actually committing criminal breach of trust because of that plan, the court can find them guilty of the second charge even if they are not found guilty of the first charge (the planning).
Also, the appellant was not harmed by this because he knew he was also charged under section 409.
(iv) The appellant did not complain about the charges under sections 409 and 477 A earlier, saying that he would have trouble defending himself.
He also has not shown that he was harmed in any way. So, this argument also fails.
(v) Even though the charge under section 120 B needed permission, the charge under section 409 did not.
So, the most that can be said is that the Magistrate (a judge) wrongly took up the charge under section 120 B, since section 196(2) says that certain complaints about planning crimes under section 120 D cannot be taken up without permission.
But not having permission does not stop the court from continuing the trial if the complaint also charges someone with the main crime committed as a result of the plan, or with helping someone commit the crime under section 109 of the Penal Code.
The fact that there was no permission for the complaint under section 120 B did not make the trial on the main charge under section 409 wrong.
It cannot be said that the appellant was harmed in any way, because he confessed.
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iminal Appeals Nos. 75, 100 and 101 of 1963. Appeals from the judgment and order dated February 27, 28, 1963 of the Bombay High Court in Criminal Appeal No. 1077 of 1962. section G. Patuwardhan and A. G. Ratnaparkhi for the appellant(in Cr. A. No. 75 of 1963). B. B. Tawakley, Harbans Singh and A. G. Ratnaparkhi, for the appellants (in Cr. A. Nos. 100 and 101 of 1963). D. R. Prem, K. L. Hathi and B. R. G. K. Achar, for R. H. Dhebar, for the respondents. August 27, 1963. The Judgment of the Court was delivered by DAS GUPTA J. On June 11, 1961 at 5 p.m. the road in front of the Temple of Shri Maruti in the village of Chinchpur of Taluk Sholapur was the scene of a terrible tragedy. Three persons Revansidappa, and his two maternal uncles, Yellappa and Maruti were done to death there in a most gruesome manner. Revansidappa 's neck was severed from the body, except for a piece of skin and one of his legs was chopped off. The spinal cord and vertebra of Yellappa were cut off. The jaw, vertebra, tongue and a major part of the neck of Maruti were cut off. The first information that reached the police station of this tragedy was by a letter of the village police patel written on the same day and addressed to the Police Sub Inspector of Mandrup. It merely stated that three murders had taken place in course of riot and maramari at 5 p.m. in the evening and mentioning the names of the men who had been murdered. This letter reached the police sta 591 tion at 2.30 a.m. Head Constable Bansode who was in charge of the police station then left for the place of occurrence after having sent a report to the Police Sub Inspector who was camping at Bhandrkavathe village. The Sub Inspector reached Chinchpur at about 11 a.m. on the 12th. Some constables had already reached the village. Vishwanath, Head Constable of Mandrup with two other constables who had been on duty on the bridge over the Bhima river which runs west of the village Chinchpur learnt of these terrible murders at 7 p.m. on the very date of the murders and left for the place, arriving at the village at 9.30 p.m. They found the three dead bodies lying there and the Police Patel and some other persons present. Head Constable Ram Chandra Bansode reached the place at 6.30 a.m. on the 12th and after making enquiries had three persons, Gurpadappa, Parasappa and Daulappa brought to the place. They were arrested by the Sub Inspector when he arrived. The only witness the Sub Inspector could examine on that date was Parwati, the step mother of the deceased Revansidappa. He found that all the men had left the village and only women were present. After completing the investigation the Sub Inspector sent up cliarge sheet against 13 persons. All the thirteen were tried by the Sessions Judge on a charge under section 148 of the Indian Penal Code, on three charges under section 302/34 of the Indian Penal Code, with three alternative charges under section 302/149 of Indian Penal Code and a further charge under section 342 of the Indian Penal Code. Three out of the 13, viz., Gurpadappa, Parasappa and Annarava Shivabala were convicted by the learned Sessions Judge under section 302/34 of the Indian Penal Code on each of the three counts and sentenced to imprisonment for life. All the three were also convicted under section 342 of the Indian Penal Code and sentenced to six months ' rigorous imprisonment. Gurpadappa and Annaraya were also convicted under section 147 of the Indian Penal Code and sentenced to rigorous imprisonment for two years. Parasappa was convicted under section 148 of the Indian Penal Code and sentenced to rigorous imprisonment for three years. The sentences were directed to run concurrently. The other 10 accused persons were acquitted by the learned Judge. 592 Gurpadappa, Parasappa and Annaraya Shivabala appealed to the High Court of judicature at Bombay against their conviction and sentence. Their appeal was dismissed and the conviction and sentence of Gurpadappa and Annarava were affirmed. Parasappa 's conviction was also affirmed but after notice on him as to why the sentence should not be enhanced, the sentence of life imprisonment was enhanced to one of death. The State appealed against the order of acquittal of all other accused except that of Sangappa. The High Court allowed the State 's appeal in respect of three of these, viz., Shranappa, Ganpati and Tipanna and convicted them of the offence with which they were charged. The High Court sentenced Shranappa to death and Ganpati and Tipanna to imprisonment for life. The State 's appeal in respect of the other six were dismissed. Sliranappa had filed the present appeal under article 134(1)(a) of the Constitution. The other five, viz., Gurpadappa, Parasappa, Annaraya, Ganpati and Tipanna were granted special leave to appeal by this. Court and on the basis of that they have filed the appeals against the orders of conviction and sentence passed against them. The prosecution case is that there had for sometime been trouble between Gurpadappa and his brother Dhannappa on the one side and Parwati and the deceased Revansidappa on the other over the possession of a plot of land in Chinchpur. According to Parwati and Revansidappa this land had merely been mortgaged to Gurpadappa by Revansidappa 's father and the debt had been paid out and they were entitled to get back possession. To this Gurpadappa did not agree. He, however, agreed to Parwati 's request that the dispute may be settied by a Panchayat. But without calling a Panchayat Gurpadappa and his brother started cultivating the land on June 10. When Parwati saw this, she protested ; but to no purpose. The two brothers said that there would be no Panchayat. On the next day i.e., June 11, Revansidappa who used to live with his maternal uncles at the neighbouring village, Chanegaon, came to Parwati 's house at Chinchpur with his two uncles, Maruti and Yellappa. Shortly after this all the thirteen accused persons came in front of 593 the house and demanded that Revansidappa, Yellappa and Maruti should come out of the house. When they did not, some of the accused went on the roof of the house and began to remove it by means of spades. Some iron sheets were actually removed. Ultimately, at the instance of two neighbours Gourava and Panchppa the three unfortunate young men came out of the house. They were led to the school which stands some way north of Parwati 's house. From there one by one they were taken near the Maruti Temple outside the Ves, the village wall and done to death. It is said that Yellappa was struck by Parasappa and Shranappa with axes while the other accused beat him with sticks. He died instantaneously. Next was the turn of Revansidappa. He was also struck with axes by Shranappa and Parasappa and all others with sticks. Revansidappa died immediately. Maruti was brought there last of all; Parasappa and sangappa struck him with axes and the other accused with sticks. He also died on the spot. All the accused then left the place. Three of them, Gurpadappa, Parasappa and Daulappa were taken into custody on the very next day. Annaraya Shivabala was arrested on June 13 and Sliranappa and Ganpati Shamraya on the following day. Three more accused, Dhanappa, jakanna and Ganpati Gurling were arrested three days later. On August 6, 1961 were arrested Tipanna and Dhondappa. The remaining accused Sangappa surrendered in Court on October 16, 1961. All the accused pleaded not guilty. Their case was that they had been falsely implicated Gurpadappa and his brother Dhanappa because they were in possession of the land purchased by them, which Revansidappa and his step mother, Parwati, had been claiming and the other accused either on suspicion or because they had supported Gurpadappa and his brother over the land dispute. Shranappa 's appeal is one of right under article 134(1) (a) of the Constitution. To decide his appeal it is therefore necessary for us to examine the evidence adduced in the case for ourselves and to see whether the assessment of the evidence on which the High Court convicted him is proper and justified. That evidence consists in this case of the testimony of a single witness Par 594 wati, given by her in the Court of the Committing Ma gistrate. This is undoubtedly substantive evidence, which if believed, would be sufficient in law to support the order of conviction. For, it was brought on the record of the Sessions Court under the provisions of section 288 of the Code of Criminal Procedure ; when in, the Sessions Court Parwati resiled from her previous statement before the Committing Magistrate and made a definite statement that she had not seen the occurrence the question has. naturally been raised whether this evidence of Parwati which is substantive evidence at the Trial under the provisions of section 288 of the Code of Criminal Procedure required corroboration before the Court should act on it. The question how far evidence in the Committing, Court given by a witness who refiles from it at the Trial in Sessions and which is brought in as evidence at the Trial under section 288 of the Code of Criminal Procedure requires corroboration or not, has engaged the attention of most of the High Courts in India in numerous cases. Many such judgments have been cited before us and extensive passages have been read out from some of them. While the dust of controversy sometimes obscured the simplicity of the true position, most of the learned Judges have, if we may say so, with respect, appreciated the situation correctly. That is this. On the one hand, it is true that corroboration of such evidence is not required in law ; but it is equally true that in order to decide which of the two versions, the one given in the Committing Court and the one in the Sessions Court, both of which are substantive evidence, should be accepted, the judge of facts would almost always feel inclined to look for something else beyond this evidence itself to help his conclusion. We cannot do better in this connection than to quote from the observations on this question by their Lordships of the Privy Council in Bhuboni Sahu vs The King(1). In that case the evidence of an approver in the Committing Court had been brought on the record under section 288 of the Code of Criminal Procedure. Dealing with the question as to the value that can be attached to such evidence their Lordships observed thus (1)A.I.R. 1949 (P.C.) 257. 595 "Apart from the suspicion which always attaches to the evidence of an accomplice it would plainly be unsafe, as the judges of the High Court recognized, to rely implicitly on the evidence of a man who had deposed on oath to two different stories. " This, if we may say so, with respect, is the crux of the question. Where a person has made two contradictory statements on oath it is plainly unsafe to rely implicitly on his evidence. In other words, before one decides to accept the evidence brought in under section 288 of the Code of Criminal Procedure as true and reliable one has to be sa tisfied that this is really so. How can that satisfaction be reached? In most cases this satisfaction can come only if there is such support in extrinsic evidence as to give a reasonable indication that not only what is said about the occurrence in general but also what is said against the particular accused sought to be implicated in the crime is true. If there be a case and there is such infinite variety in facts and circumstances of the cases coming before the courts that it cannot be dogmatically said that there can never be such a case where even without such extrinsic support the Judge of facts, after bearing in mind the intrinsic weakness of the evidence, in that two different statements on oath have been made, is satisfied that the evidence is true and can be safely relied upon, the judge will be failing in his duty not to do so. The present is not one such case. It is true that Parwati has in this deposition in the Committing Court given a detailed account of not only the incidents at the house and the three young men, Rvansidappa, Maruti and Yellappa being taken out of her house to the accused persons but also as regards how they were led to the village school, how one after the other the three were taken near the Maruti Temple, how her entreaties to spare them were in vain and the manner of attack on each of the victims. The learned judges of the High Court appear to have been impressed by the very vividness of this description and persuaded themselves apparently from this alone that she was speaking the truth. Unfortunately the important fact that the witness had made a totally different statement on oath in another Court and denied to have seen the occurrence did not receive from the lear 596 ned judges the attention it deserved. Again, the ability to describe vividly should not be mistaken for anxiety to speak truly. For, one often exists without the other. Closer scrutiny of Parwati 's statement in the Committing Court discloses some features, at least, for which no explanation is available. According to her account Yellappa was first taken from the school to the temple and that all the thirteen took part in the attack. If that be true, there were none of the accused party to guard Revansidappa and Maruti, who were in the school during this time. Who however was left to guard them? To this we find no answer from Parwati 's deposition. There is the same mystery as to who was left to guard Maruti when Revansidappa was next taken and killed all the thirteen taking part in the attack according to her. It is also to be noticed that she does not clearly state in this deposition where exactly she was standing or sitting during the occurrence. The place where the bodies were discovered and where undoubtedly these three young men were killed is outside the village wall. This wall would have a door through which, if the prosecution story is true, the victims were taken out. Was Parwati also allowed to go out? If she was riot, could she have seen the actual attack on these three persons from her place on the village side of the Ves. We look in vain in Parawiti 's deposition for any answer to these questions. Again, according to her story, three axes were used in the attack. Only one axe was however discovered at the place of occurrence. How is it that while two axes were taken away the third was left behind? There may be a good answer to this question. But none is furnished by the evidence on the record. This being the nature of Parwati 's evidence it is, in our opinion, clearly unsafe to accept her testimony against any of the accused persons unless corroborated by other evidence. In respect of Shranappa, whose appeal we are now considering, there is admittedly no such corroboration. It is not possible therefore to accept what Parwati had said against this appellant as true. The High Court has, in our opinion, fallen into error in acting on her testi 597 mony even in the absence of corroboration. We hold that the prosecution has failed to prove its case against him and he must be acquitted of the charges against him. The appeals by the other five, is by special leave of this Court, but what we have stated above as regards the need of corroboration of Parwati 's testimony in the Cornmiting Court applies equally in respect of each of them also. There is no such corroboration whatsoever in respect of Parwati 's story of participation in the occurrence of Gurpadappa, Ganpati Shamraya and Tipanna. As regards the other two appellants, Parasappa and Annaraya Shivabala, some slight corroboration has been offered by the prosecution. That is in the presence of stains of human blood on the soles of the Chappals seized from them at the time of their arrest. The value of this corroboration is considerably reduced however by the fact that before these chappals were seized from Parasappa on Julie 12 and from Annaraya Shivabala on June 13, these accused persons had been brought up to the place of occurrence. There is scope therefore for thinking that the soles of the chappals became stained with blood when they walked over the blood stained ground. It will not be reasonable thereforeto treat the presence of these blood stains on the soles of their chappals as sufficient corroboration of Parwati 's evidence against them. The conviction of these five appellants also cannot therefore stand. Accordingly, we allow the appeals, set aside the order of conviction and sentence passed against them and order that they be acquitted. Appeals allowed.
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The appellants were convicted by the High Court for com mitting three murders.
In this case the High Court considered the testimony of one "Parwati", given by her in the committing court.
She was in eye witness of the occurrence according to her testimony in the committing court.
In the sessions court she resiled from her previous statement before the committing Magistrate and made a definite statement that she had not seen the occurrence.
Her evidence before the committing court was tendered as evidence under section 288 Criminal Procedure Code in the court of sessions.
Her evidence before the committing court was not corroborated in respect of participation in the occurrence by four appellants.
The High Court convicted the appellants on the basis of the statement made by Parwati before the committing Magistrate on the ground that it was substantive evidence which did not require any corrobo ration.
Held, that the evidence of a witness tendered under section 288 of the Code of Criminal Procedure before the Sessions Court is substantive evidence.
In law such evidence is not required to be corroborated.
But where a person has made two contradictory statements on oath it is ordinarily unsafe to rely implicitly on her 590 evidence and the judge, before he accepts one or the other of the statements as true, must be satisfied that this is so.
For such satisfaction it will ordinarily be necessary for the evidence to be supported by extrinsic evidence not only as to the occurrence in general but also about the participation of the accused in particular.
But in a case where even without any extrinsic evidence the judge is satisfied about the truth of one of the statements, his duty will be to rely on such evidence and act accordingly.
Bhuboni Sahu vs The King, A.I.R. 1949 P.C. 257, relied on.
On the facts of this case, it was held that without corrobo ration from extrinsic evidence, the High Court was not justified in acting on the evidence of the only eye witness Parwati, given in the committing court.
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The people appealing the case were found guilty of three murders by the High Court.
In this case, the High Court looked at the testimony of a woman named Parwati. She had given this testimony in an earlier court hearing.
She claimed to have seen the murders happen, according to what she said in that earlier court.
But in the main trial (called the sessions court), she changed her story. She stated clearly that she had not seen the murders.
Her earlier testimony from the first court hearing was used as evidence in the main trial, following a rule in the Criminal Procedure Code (section 288).
Her earlier testimony wasn't backed up by other evidence that showed the four people appealing were involved in the murders.
The High Court found the people appealing guilty based on Parwati's earlier statement. They said it was important evidence that didn't need to be confirmed by other evidence.
The court decided that a witness's testimony presented under section 288 of the Criminal Procedure Code is valid evidence.
The law says this kind of evidence doesn't have to be confirmed by other evidence.
However, if someone makes two statements under oath that contradict each other, it's usually not safe to fully trust their testimony. The judge must be sure that one of the statements is true before believing it.
To be sure, the judge will usually need other evidence that supports the statement. This evidence should support not only the murders in general but also the specific involvement of the accused people.
But if the judge is sure that one of the statements is true, even without other supporting evidence, then they should use that statement as evidence.
The court relied on a past case, Bhuboni Sahu vs The King, A.I.R. 1949 P.C. 257, to make this decision.
In this specific case, the court decided that the High Court was wrong to rely only on Parwati's earlier testimony without other supporting evidence. She was the only eyewitness.
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ivil Appeal No. 673 of 1986. From the Judgment & Order dated 17.2.1986 of the Madhya Pradesh High Court in Election Petition No. 41 of 1985. S.S. Khanduja, Y.P. Dhingra and B .K. Satija for the Appel lant. Mrs. J. Wad for the Respondent. The Judgment of the Court was delivered by KASLIWAL, J. This appeal under Section 116 A of the Representation of People Act, 1951 (in short "the Act") is directed against the Judgment of the High Court of Madhya Pradesh dated 17th February, 1986. Election of Legislative Assembly of the State of Madhya Pradesh was held in the month of February, 1985. One of the Constituencies was No. 14 Lahar (District Bhind). The nomination papers were filed before 6th February, 1985 and the scrutiny was done on 7th February, 1985. Several persons filed their nomination papers. The nomination paper of Ramprakash was rejected by the Returning Officer in the scrutiny. The order passed by the Returning Officer rejecting the nomination paper reads as under: "Candidate is not identified as per electoral roll. His representative has accepted this mistake also. Hence reject ed. Advised for correction but did not correct. The candi date did not correct after advising to correct mistake. Even did not appear at the time of scrutiny to correct mistake. Hence rejected. See section 33(4) R.P.A." Result of the election was declared on 5th March, 1985 and Shri 506 Mathura Prasad appellant declared elected. Ajeem Khan one of the voters of the Constituency filed an election petition under Sec. 88 of the Act challenging the election of Mathura Prasad on several grounds but it is not necessary to state all the grounds as the controversy in the present appeal centres round the wrongful rejection of the nomination paper of Ramprakash. The ground in this regard taken in the election petition was that the nomina tion paper of Ramprakash was wrongly rejected as the defect in his nomination paper was not of a substantial character. It was alleged that in the nomination paper filed by Rampra kash the column meant for stating the candidate 's serial number in the electoral roll was left blank. 1t was thus alleged that the said defect was not of a substantial char acter and the nomination paper should not have been rejected in view of the provisions contained in Section 36(4) of the Act. On the other hand the case of Mathura Prasad, the elect ed candidate was that neither Ramprakash nor any other person on his behalf was present before the Returning Offi cer when the nomination paper of Ramprakash was taken up for scrutiny. At the time of scrutiny, the Returning Officer had pointed out that voter number was not mentioned in the nomination paper and Jaiprakash (RW.3) who 'was the proposer of Ramprakash had told the Returning Officer that he would inform Ramprakash regarding the above defect. The Returning Officer then put that nomination paper aside and took other nomination papers for scrutiny. Jaiprakash remained present in the hail awaiting the arrival of Ramprakash. The Return ing Officer after scrutinising all the other nomination papers again called out the name of Ramprakash. As Rampra kash had not arrived till then, Jaiprakash left the hall after informing the Returning Officer that he would fetch Ramprakash. Jaiprakash left the place and went in search of Ramprakash but his efforts to search Ramprakash went in vain and he did not return back before the Returning Officer. In view of the above circumstances, the Returning Officer passed the order rejecting the nomination paper of Rampra kash under sec. 33(4) of the Act. On the pleadings of the parties Learned Single Judge of the High Court who tried the election petition framed Issue No. 1 in this regard which reads as under: (i) Whether rejection of the nomination paper of Ramprakash by the Returning Officer was illegal, as alleged? 507 Both the parties lead evidence in support of their case. The petitioner in support of his case regarding the above issue examined himself, Mitthookhan, Gourishanker and Pahalwan. By the evidence of the aforementioned witnesses a story was put forward that shortly before the nomination paper of Rampra kash was taken up for scrutiny, Ramprakash had gone out for passing urine. He had left behind Mitthookhan as his repre sentative and when the nomination paper of Ramprakash was taken up for scrutiny and the defect was pointed out, Mit thookhan after informing the Returning Officer went out for calling Ramprakash. He alongwith Ramprakash returned back after five minutes only but the nomination paper had already been rejected by the Returning Officer. On the contrary Mathura Prasad examined himself and Jaiprakash who was not only the proposer of Ramprakash but was also his cousin. Jaiprakash fully supported the case of Mathura Prasad. Learned Single Judge after analysing the evidence of both the parties arrived to the conclusion that the entire story as advanced by the election petitioner and his wit nesses was obviously a fabrication. He further held that such story being fabricated it deserved to be rejected outright. He further observed as under: "The versions of the respondent (R.W. 1) are corroborated not only by the returning officer Shri Hoshiyarsingh, exam ined by the petitioner himself as P.W. 1, but also by the petitioner 's cousin Jaiprakash (R.W. 3) who was also his proposer and the evidence is also consistent with the grounds of rejection stated by the returning officer in his order. The returning officer Shri Hoshiyarsingh (P.W. 1) is an independent witness and Jaiprakash (R.W. 3), who is cousin and proposer of Ramprakash (P.W. 4), also has no reason to tell lies. I, therefore, see no reason to disbe lieve the versions of the respondent (P.W. 1) as to what transpired when the nomination paper of Ramprakash (P.W. 4) came up for scrutiny and under which circumstances it was rejected by the returning officer". After recording the above finding the Learned Single Judge took into consideration the fact that in the nomination paper of Ramprakash, his name, his father 's name, his postal address, the number and name of the Constituency to which nomination paper related and the 508 number of the part of the electoral roll of the same con stituency in which part his name was entered as a voter were duly and correctly filled up. It was further observed that Exhibit P. 1 a certified copy of that part of the electoral roll showed that the total number of voters registered therein was 10 11 and the name of Ramprakash was entered therein at serial No. 735. At the time of scrutiny, the Returning Officer must have naturally been assisted by some members of his subordinate staff. Learned Single Judge further observed that according to the Returning Officer himself the nomination paper was put of by him in the midst of the scrutiny proceedings and it was rejected subsequently after the scrutiny of all other nomination papers was over. There was thus ample time to locate the serial number of the candidate in the above mentioned part of the electoral roll. The Returning Officer had admitted that no effort was made by him to locate it. Learned Single Judge thus concluded that it was not the contention of the Returning Officer that it was not possible for him to locate the name of Ramprakash in the electoral roll and find out his serial number but in fact the Returning Officer made no effort in this regard. Learned Single Judge distinguished a decision of this Court in Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl. S.C.R. 1 592. He further held that candidate 's absence was immaterial and the Returning Officer could have himself found out the electoral number of the candidate Ramprakash readily with a very little effort by referring to the elec toral roll part mentioned in the nomination paper and the same being also available with him at the time of scrutiny the electoral number could have been found out without the assistance of any of the persons mentioned in Sec. 36(1) of the Act and the defect in the nomination paper cannot be held to be of a substantial character. Issue No. 1 was thus decided in favour of the petitioner Ajeem Khan and as a result of which the election petition was allowed and the election of Mathura Prasad was declared void. Aggrieved against the decision of the High Court, Mathu ra Prasad the winning candidate filed the present appeal before this Court. We have heard learned counsel for both the parties and in our view this appeal has to be allowed. As already mentioned above the Learned Single Judge himself did not accept the story as put forward by the petitioner Ajeem Khan, rather it was held that the entire story narrated by him was a fabrication and the same de served to be rejected outright. The Returning Officer who was an independent witness and Jaiprakash who was a proposer of Ramprakash were believed and it was held that the entire 509 circumstances under which the nomination paper of Ramprakash came up for scrutiny and was rejected were correct. Thus a perusal of the circumstances put forward by these witnesses at the time of scrutiny and rejection of the nomination paper of Ramprakash shows that Ramprakash himself was not present and even his proposer Jaiprakash after having gone to fetch Ramprakash did not return back and ultimately the Returning Officer rejected the nomination paper of Rampra kash. The order passed by the Returning Officer rejecting the nomination paper of Ramprakash clearly makes a mention that the candidate was not identified as per electoral roll. His representative had accepted the mistake also and was advised for correction but did not correct the same. The candidate did not correct after advising to correct the mistake. It further makes a mention that the candidate even did not appear at the time of scrutiny to correct the mis take. In the circumstances mentioned above we have no hesi tation at all in holding that the Returning Officer was perfectly justified in rejecting the nomination paper of Ramprakash. It depends on the facts and circumstances of each case to find as to what mistake in a nomination paper can be considered a mistake of substantial nature. It is correct that the Returning Officer should not reject a nomination paper merely on a mistake of technical or formal nature, where the identity of the candidate can be ascer tained by him on the material made available to him. He should also give an opportunity to the candidate or his representative present at the time of scrutiny to remove the defect. However, in case neither the candidate nor his representative be present and without removing such defect in the nomination paper the identity of the candidate cannot be ascertained, then there is no statutory duty cast on the Returning Officer to make a roving enquiry by going through the Material placed before him and to remove such defect himself. We may also refer to some cases cited before us at the bar. Dalip Kumar Gon vs Durga Prasad Singh, AIR 1974 SC 2343 is the case on which strong reliance has been placed by Learned counsel for Ajeem Khan. In the above case in the column of printed nomination form meant for making a decla ration of the candidates of the Scheduled Caste/Tribe con testing for a reserve seat, Abdul Hamid contesting from general constituency had not (a) filled his specific caste in the blank meant for that purpose and further (b) he had in that column left the words 'Scheduled Castes ' unscored. The Returning Officer rejected the nomination papers on the ground that the failure of the candidate to delete the words 'Scheduled Castes ' means that "he belongs to Scheduled Caste which is not true" and consequently, the 510 nomination papers were not filled up properly. An electoral of the constituency filed an election petition on the ground that the nomination papers of Abdul Hamid and Khatir Ali had been improperly rejected. Learned Single Judge of the High Court upheld the above rejection of nomination paper by the Returning Officer and held that the candidate 's filling of these enteries were on the face of it, not proper and did not comply with the requirements of law. It was further held that this defect was not trivial or technical but of a substantial character. On appeal before the Supreme Court the Judgment of the High Court was set aside and it was held as under: "The High Court 's view that in scoring out only the word 'Jan Jati ' (tribe) and leaving the word 'Jati ' (caste) untouched in the aforesaid column of the nomination form, Abdul Hamid had failed "to comply with the requirement of the law on the subject" 'was entirely misconceived. It overlooked the fact that the Jamtara Constituency was a 'General ' Constituency and the seat for which the candidates wanted to contest the election was not a Reserved seat. Section 33(2) of the Representation of the People Act, 195 1, or any other statutory provision does not enjoin upon a candidate who is contesting the election for a General Seat, and not for a Reserved Seat, to specify in his declaration his caste or tribe. Further, the 'Returning Officer appear ing as R.W. 2, had clearly admitted that at the time of the scrutiny of the nomination papers, he was aware that Abdul Hamid was not a member of the Scheduled Caste and that he had deposited Rs.250 as security. The omission to strike off the column in the printed nomination form relating to Sched uled Caste/Tribe did not amount to a defect in the eye of law, much less was it a defect of a substantial character, warranting rejection of the nomination papers in Amolak Chand vs Raghuveer Singh, ; 1968 SC 1203. The nomination papers of two candidates contesting for a general constituency were rejected on a similar ground. Holding that the rejection was improper, Ramaswami, J. Speaking for the Court stated the law on tile point thus: "The printed form 2 A is meant both for general and reserved constituencies but why it is obligatory for candidates in the reserved constituency to make a declaration in the proper 511 column that he is a member of a particular caste or tribe there is no such rule with regard to general constituency. 33(2) of the Act imposes an obligation on the candidate in the reserved constituency to make a declaration in the proper column but there is no such direction in the statute with regard to the general constituencies. In our opinion, the mention of the caste of the candidate in the nomination form was a clear superfluity because it was not necessary for the candidate to fill in the column when he was contest ing in a general constituency. In the light of what has been said above, we would, reverse the finding of the High Court and hold that the nomination papers of Abdul Hamid were improperly reject ed by the Returning Officer". In the above case the facts were entirely different and it lends no assistance to the case set up by Ajeem Khan, respondent before us. In the above case it was clearly held that Sec. 33(2) of the Act or any other Statutory provision does not enjoin upon a candidate who is contesting the election for a general seat, and not for a reserved seat, to specify in his declaration his caste or tribe. However, the Returning Officer had clearly admitted that at the time of the scrutiny of the nomination papers, he was aware that Abdul Hamid was not a member of the Scheduled Caste and that he had deposited Rs.250 as security. Thus it was held that the omission to strike of the column in the printed nomina tion form relating to Scheduled Castes/Tribe did not amount to a defect in the eye of law, much less it was a defect of a substantial character. In Brij Mohan vs Sat Pal, ; one Dog Ram had filed his nomination papers for contesting election to the Haryana Legislative Assembly from Jind Constituency. His name was proposed by Ram Pratap, an elector of the Constitu ency. Dog Ram was registered as an elector at serial No. 177 and house number 57 in part 39 of the electoral roll of the constituency whereas his proposer Ram Pratap was registered as electoral at serial No. 313. and house number 6 in part 39 of the same constituency. The name and postal address of Dog Ram were correctly given in the nomination papers but the part of the electoral roll was mentioned as 57 instead of 39 by an inadvertant mistake committed by the person who filed the nomination papers. 512 Similarly in the case of the proposer the serial number of the elector and the members of the constituency were given correctly but the number of his house was wrongly entered in the column meant for the part of the electoral roll. At the time of scrutiny no other candidate or proposer objected to the acceptance of the nomination paper of Dog Ram but the Returning Officer of his own rejected the nomination paper on the ground that particulars of the candidate and the proposer had been wrongly entered in the nomination papers. The High Court considered the question as to whether the nomination paper of Dog Ram was improperly rejected. On the evidence led by the parties the Single Judge found that the candidate Dog Ram and his proposer were registered as voters in the constituency and were qualified to contest the elec tion and propose the candidate respectively. It was further found that errors in regard to electoral roll numbers of the candidates and the proposer in the electoral roll and the nomination paper do not constitute defects of a substantial character as mentioned in the Proviso to Section 33(4) of the Act. Learned Single Judge accepted the evidence of the proposer (P.W.2) to the effect that when he and the candi date presented the nomination paper, the Returning Officer told them that it was in order and that the Returning Offi cer had tripped them into an error and if the Returning Officer had told them that there were some discrepancies in the nomination paper they would have either made corrections then and there and could have gone more fully prepared to make objections at the time of the scrutiny. The High Court in these circumstances allowed the election petition on the ground that the nomination paper of Dog Ram was improperly rejected. On appeal to this Court by the elected candidate it was held that the Returning Officer could not be said to have improperly rejected the nomination paper of Dog Ram. This Court did not believe the evidence of proposer (P.W.2) which was not corroborated by the evidence of any other witness. In the facts and circumstances of the case it was held that the Single Judge was not justified in accepting the evidence of P.W.2 and in holding that the Returning Officer was guilty of tripping the candidate and the proposer by any assertion on his part into anyone believing that there was nothing wrong in the nomination paper. In the above case this Court observed as under: "It is not possible to say generally and in the abstract that all errors in regard to electoral rolls or nomination papers do not constitute defects of a substantial character. They 513 would not be defects of a substantial character only if at the time of the scrutiny the Returning Officer either by himself with the materials placed before him during the scrutiny or with the assistance of the candidate or his proposer or any other person is able to find out the correct serial number of the candidate and the proposer in the electoral roll. If that is not the case, he would be commit ting a grave error by accepting the nomination paper without verifying whether the candidate is a voter in that or any other constituency of the State and whether the proposer is a voter in that constituency". "The candidate and,the proposer are always expected to go fully prepared to meet any objection that may be raised by any candidate or even by Returning Officer himself suo motu at the time of the scrutiny and they cannot be expected to go any the less prepared merely because the Returning Offi cer had received the nomination paper without raising any objection. It is at the time of scrutiny which is done in the presence of all concerned that the nomination papers come up for more detailed consideration at the hands of the Returning Officer against whom there is no estoppel in regard to the statutory duty of scrutiny". In the above case this Court clearly held that the defects would not be of a substantial character only if at the time of scrutiny the Returning Officer either by himself with the materials placed before him during the scrutiny or with the assistance of the candidate or his proposer or any other person is able to find out the correct serial number of the candidate and the proposer in the electoral roll. It no where lays down that it is the statutory duty of the Returning Officer himself to cure the defect at the time of the scrutiny. We cannot read in the above authority, as sought to be argued by the Learned counsel for the respond ent, that in the case before us even though Ramprakash or any other representative on his behalf was not present to cure the defect, still it was the duty of the Returning Officer himself to find out the correct identity of Rampra kash. As already discussed above the learned Single Judge had himself held that the case set up by Ajeem Khan was a fabricated one and the story put forward by the winning candidate Mathura Prasad and his witnesses was correct. From the evidence of Returning Officer it was clear that the defect in the nomi 514 nation paper of Ramprakash was brought to the notice of his proposer Jaiprakash and the nomination paper was not reject ed in the first round. An ample opportunity was given to Jaiprakash to bring Ramprakash but he failed to turn up. The nomination paper was then rejected after the scrutiny of all other nomination papers was over. The Returning Officer in the above circumstances was perfectly justified in rejecting the nomination paper of Ramprakash. Learned Single Judge wrongly distinguished the case of Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl. 1 S.C.R. 592 (supra). In this case the .election of Lila Krishan from Fatehbad Constituen cy of Haryana Assembly was challenged on the ground that the nomination papers of two candidates being Mani Ram Chhapola and Raj Tilak had been improperly rejected by the Returning Officer. The Proposer of Mani Ram Chhapola was one Brij Bhushan while proposer of Raj Tilak was one Upendra Kumar. Brij Bhushan 's serial number in the electoral roll was 26 while Upender Kumar 's was 77. In form 3A these numbers were correctly indicated but in the nomination papers the numbers had been shown as 126 and 177 respectively. The Returning Officer rejected these nomination papers as the serial numbers of the proposers as disclosed in the nomination papers did not tally with reference to the electoral roll. The High Court set aside the election of Lila Kishan holding that the Returning Officer acted mala fide and had either directly or indirectly been responsible for the alteration in the nomination papers, since the nomination papers when filed were in order and while they were in the custody of the Returning Officer 's establishment, interpolations have been made and on the basis thereof of nomination papers had been rejected. Appeal filed in Lila Krishan was allowed by this Court and it was held that the conclusion of the High Court that the Returning Officer either by himself or through somebody caused the interpolation to be done was totally unwarranted. On the basis of the above facts it was held as under: Indisputably the insistence on disclosure of the serial number in the prescribed column against the proposer is for the purpose of indentifying the proposer and ascertaining that he is competent to propose. The scope of scrutiny is obviously to verify the contents of the nomination paper with a view to ascertaining whether the form is in order and what is required to be complied with by the election law has been duly complied with. This Court has repeatedly held that election proceedings are strict in nature and what is 515 required to be performed in a particular manner has to be done as required or the Rules made thereunder. That is why an exception has been made by inserting Sub section (4) of Sec tion 36 of the Act. Therefore, to cast the obligation of the Returning Officer to look through the entire electoral roll of a particular part with a view to finding out the identity of the proposer is not the requirement of the law. To read that as an obligation is likely to lead a unworkable posi tion". "In the instant case, no one was available, for instance, when the Returning Officer took up the nomination paper of Mani Ram Chhapola to indicate to the Returning Officer that his serial number in the electoral roll was 26 and not 126. If this had been pointed out and on summary enquiry the identity of Brij Bhushan was not in dispute, there would have been end of the matter. If the correlation has not been made and the Returning Officer has no assistance to fix up the identification it cannot be said to be a defect not of substantial character. Moreover, it could not be statutory obligation of the Returning Officer to scrutinise the elec toral roll for finding out the identity of the proposer when the serial number turns out to be wrong. But if interested and competent persons point out to the Returning Officer that it is a mistake, it would certainly be his obligation to look into the matter to find out whether the mistake, is inconsequential and has, therefore, either to be permitted to be corrected or to be overlooked. When scrutiny was taken up Mani Ram Chhapola and Raj Tilak on their own showing were not present before the Returning Officer. Similarly, the proposers, Brij Bhushan and Upender Kumar were also absent. Though there is evidence on the side of the election peti tioners that the Assistant Returning Officer was present at the time of scrutiny, he as P.W. 4 has categorically denied that fact. The Returning Officer, R.W. 3, has stated that the Assistant Returning Officer was not present when he took up scrutiny on the nomination papers. There is also evidence from the side of the appellant that the Assistant Returning Officer was not present. In the circumstances, if the nomi nation papers have been rejected for mistake in 516 the nomination papers it is the candidates themselves who have to thank their lot and no mistake can be found with the Returning Officer. Therefore, the nomination papers were validly rejected". Thus in the above case it was clearly laid down that to cast an obligation on the Returning Officer to look through the entire electoral roll of a particular part with a view to finding out the identity of the proposer is not the requirement of the law. In the case before us even if it may be considered for a moment that by making some effort by the Returning Officer, the identity of Ramprakash could have been ascertained, there being no statutory duty cast on him to do so coupled with the fact that neither the candidate Ramprakash nor any representative on his behalf was ready to assist the Return ing Officer in curing the defect and in proving the correct identity of Ramprakash, it cannot be said that the Returning Officer committed any error in rejecting the nomination paper of Ramprakash. The Returning Officer not only granted ample time but even brought the defect to the notice of Jaiprakash proposer but still the defect in the nomination paper was not removed. In the result this appeal is allowed, the Judgment of the High Court dated 17th February, 1986 is set aside and it is held that the Returning Officer rightly rejected the nomination paper of Ramprakash. The appellant would also be entitled to costs. R.N.J. Appeal al lowed.
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Election to the Legislative Assembly of the State of Madhya Pradesh was held in February, 1985.
For Constituency No. 14 Lahar (Distt.
Bhind) nomination papers were filed before 6th February, 1985 and scrutiny done on February 7, 1985.
During the scrutiny the nomination paper of Ramprakash who was one of the candidates was rejected by the Returning Officer.
The order rejecting the paper reads as under: "Candidate is not identified as per electoral roll.
His rep resentative has accepted this mistake also.
Hence rejected.
Advised for correction but did not correct.
The candidate did not correct after advising to correct mistake.
Even did not appear at the time of Scrutiny to correct mistake.
Hence rejected.
See Section 33(4) R.P.A." Result of the election was declared on ' 5th March, 1985 and the appellant declared elected.
The election of the appellant was challenged by the Respondent who was one of the voters of the constituency through an election petition on several grounds the main ground being the wrongful rejection of the nomination paper of Ramprakash.
On the pleadings of the parties the High Court framed issue No. 1 which reads as under: (i) Whether rejection of the nomination paper of Rampra kash by the Returning Officer was illegal, as alleged? The High Court on an analysis of the evidence came to the conclusion that the entire story advanced by the elec tion petitioner and his witnesses was a fabrication and deserved to be rejected outright.
How 504 ever after recording this finding the learned single judge of the High Court went on to hold that the candidate 's absence was immaterial and the Returning Officer could have himself found out the electoral number of the candidate Ramprakash readily with a little effort without the assist ance of any of the persons mentioned in Section 36(1) of the Act and that the defect in the nomination paper cannot be held to be of a substantial character.
Issue No. 1 was thus decided in favour of the election petitioner as a result of which the election petition was allowed and the election of the appellant declared void.
Hence this appeal by the elect ed candidate.
Allowing the appeal and setting aside the judgment of the High Court, this Court, HELD: There is no statutory duty cast on the Returning Officer to himself look through the entire electoral roll of a particular part with a view to finding out the correct identity of a candidate at the time of the scrutiny even though neither the candidate himself nor any other represen tative on his behalf was present to cure the defect.
[516B D] A perusal of the circumstances put forward by the wit nesses at the time of scrutiny and rejection of the nomina tion paper of Ramprakash shows that Ramprakash himself was not present and even his proposer Jaiprakash after having gone to fetch Ramprakash did not return back and ultimately the Returning Officer rejected the nomination paper of Ramprakash.
The order passed by the Returning Officer re jecting the nomination paper of Ramprakash clearly makes a mention that the candidate was not identified as per elec toral roll.
His representative had accepted the mistake also and was advised for correction but did not correct the same.
The candidate did not correct after advising to correct the mistake.
It further makes a mention that the candidate even did not appear at the time of scrutiny to correct the mis take.
In the circumstances mentioned above we have no hesi tation at all in holding that the Returning Officer was perfectly justified in rejecting the nomination paper of Ramprakash.
[509A C] .
It depends on the facts and circumstances of each case to find as to what mistake in a nomination paper can be considered a mistake of substantial nature.
It is correct that the Returning Officer should not reject a nomination paper merely on a mistake of technical or formal nature, where the identity of the candidate can be ascertained by him on the material made available to him.
He should also give an opportunity to the candidate or his representative present at the time of scrutiny to remove the defect.
Howev er, in case neither the candidate nor his representative be present and without removing such defect in the 505 nomination paper the identity of the candidate cannot be ascertained, then there is no statutory duty cast on the Returning Officer to make a roving enquiry by going through the material placed before him and to remove such defect himself.
[509D F] Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl.
S.C.RI 592; Dalip Kumar Gon.
vs Durga Prasad Singh, AIR 1974 SC 2343; Amolak Chand vs Raghuveer Singh, ; and Brij Mohan vs Sat Pal, ; , referred to.
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In February 1985, there was an election for the Legislative Assembly in Madhya Pradesh.
For voting area number 14, Lahar (in Bhind district), people running for office had to file their papers by February 6, 1985. These papers were checked on February 7, 1985. During this check, the election official (called the Returning Officer) rejected Ramprakash's paper.
The reason for rejecting Ramprakash's paper was written as: "The candidate's identity doesn't match the voting list. His representative agreed there was a mistake. So, rejected. He was told to fix it but didn't. The candidate didn't fix the mistake after being told to. He didn't even show up to fix it. See Section 33(4) of the Representation of the People Act." The winner of the election was announced on March 5, 1985, and it was the person mentioned earlier.
The election of this person was challenged by another person who voted in that area. This challenge, called an election petition, was based on several reasons. The main reason was that Ramprakash's paper was wrongly rejected. The High Court (a type of court) created a question to be answered: "Was the rejection of Ramprakash's paper illegal, as claimed?" After looking at the evidence, the High Court decided that the voter's story and witnesses were not believable and should be ignored.
However, even though the High Court didn't believe the voter, it also said that Ramprakash's absence didn't matter. The High Court said the election official could have easily found Ramprakash's voting number himself without needing help from others, as mentioned in Section 36(1) of the Act. The High Court also said that the mistake on Ramprakash's paper wasn't a big deal. So, the High Court decided that the rejection was wrong. As a result, the High Court allowed the election petition and declared the winner's election invalid. The elected candidate then appealed this decision.
The higher court, after reviewing the case, said that the election official doesn't have a legal duty to search through the entire voting list to find a candidate's correct information during the paper check. This is especially true if the candidate or someone representing them isn't there to fix the mistake.
Looking at what the witnesses said about the rejection of Ramprakash's paper, Ramprakash wasn't there. Even his supporter, Jaiprakash, didn't come back after going to get Ramprakash. So, the election official rejected Ramprakash's paper. The official's reason clearly stated that Ramprakash's identity didn't match the voting list. His representative admitted the mistake but didn't fix it. The candidate also didn't fix it after being told to. He didn't even show up to correct it. Given these circumstances, the court believed the election official was right to reject Ramprakash's paper.
Whether a mistake on a nomination paper is serious depends on the specific situation. It's true that an election official shouldn't reject a paper for a minor, technical mistake if they can figure out the candidate's identity using the information they have. They should also give the candidate or their representative a chance to fix the mistake if they are present. However, if neither the candidate nor their representative is present and the mistake prevents identifying the candidate, the election official doesn't have a legal duty to investigate and fix the mistake themselves.
The following cases were referenced: Lila Krishan vs Mani Ram Godara & Ors., [1985] Suppl. S.C.RI 592; Dalip Kumar Gon. vs Durga Prasad Singh, AIR 1974 SC 2343; Amolak Chand vs Raghuveer Singh, ; and Brij Mohan vs Sat Pal, ; , .
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Appeal No. 328 of 1960. Appeal from the order dated March 4, 1958, of the Punjab High Court, Chandigarh, in Civil Reference No. 29 of 1952. A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellant. Hardyal Hardy and D. Gupta, for the respondent. December 6. The Judgment of the Court was delivered by SHAH, J. The Income Tax Appellate Tribunal, Delhi Bench, stated under section 66(1) of the Indian Income Tax Act the following question for decision of the High Court of Judicature at Chandigarh: "Whether the assessee 's receipts from consumers for laying service lines, (that is, not distributing mains) were trading receipts and whether the profit element therein, viz., service connection receipts minus service connection cost was taxable income in the assessee 's hands?" The High Court answered the question as follows: ". the company 's receipts from the consumers for laying the service lines are trading receipts and 958 the profit element therein being the difference bet ween the service connection receipts and the service connection costs is taxable income in the hands of the company." With certificate granted under section 66A(2) of the Income Tax Act, this appeal is preferred by the Hoshiarpur Electric Supply Company hereinafter referred to as the assessee. The assessee is a licensee of an electricity undertaking. In the year of account, April 1, 1947March 31, 1948, the assessee received Rs. 12,530 for new service connections granted to its customers. Out of this amount, Rs. 5,929 were spent for laying the service lines, and Rs. 1,338 were spent for laying certain mains. The Income Tax Officer treated the entire amount of Rs. 12,530 as trading receipt. In appeal to the Appellate Assistant Commissioner, the cost incurred for laying service lines and mains was excluded and the balance was treated as taxable income. In appeal, the Appellate Tribunal agreed with the Appellate Assistant Commissioner and held that the service connection receipts were trading receipts and that the "profit element" therein was taxable income in the hands of the assessee. In a reference under section 66(1) of the Income Tax Act, the High Court substantially agreed with the view of the Tribunal. The assessee has installed machinery for producing electrical energy and has also laid mains and distributing lines for supplying it to its customers. The assessee makes no charge to the consumers for laying service lines not exceeding 100 ft. in length from its distributing main to the point of connection on the consumer 's property in accordance with cl. 6(1)(b) of the Schedule to the . But where the length of a service line to be installed exceeds 100 ft., the cost is charged at certain rates by the assessee. The charge consists usually of cost of wiring copper as well as galvanised iron, service and other brackets, insulators, meter wiring, poles and appropriate labour and supervision charges. In the year of account, the assessee gave 229 new connections 959 and received Rs. 12,530 out of which Rs. 5,929 have been regarded as taxable income. In the forms of account prescribed under the Indian Electricity Rules framed under section 37 read with section 11 of the , the assessee credited service connection receipts to the revenue account and debited the Inc, corresponding cost of laying service lines to the capital account. But the classification of the receipts in the form of accounts is not of any importance in considering whether the receipt is taxable as revenue. The assessee contended that the service lines when installed became the property of the assessee, because they were in the nature of an extension of the assessee 's distributing mains. On behalf of the Revenue, it was urged relying upon the judgment of the High Court that the service lines which are paid for by the consumers do not become the property of the assessee. We do not think that it is open to us in an appeal from an order under section 66 of the Indian Income Tax Act to enter upon this question. The Tribunal did not record a finding on the question whether the assessee was the owner of the service lines. Undoubtedly, contributions were made by the consumers towards the cost of the service lines installed by the assessee which exceeded 100 ft. in length. Normally, a person who pays for installation of property may be presumed to be the owner thereof; but such a presumption cannot necessarily be made in respect of a service line, which so long as it is used for supplying electrical energy remains an integral part of the distri buting mains of an electrical undertaking. The High Court was exercising advisory jurisdiction, and the question as to who was the owner of the service lines after they were installed could be adjudicated upon only by the Tribunal. It was for the Tribunal to record its conclusion on that question, but the Tribunal has recorded none. In our judgment, the High Court was in error in assuming to itself jurisdiction substantially appellate in character and in proceeding to decide the question as to ownership of the service lines which is a mixed question of law and fact, on which the Tribunal has given no finding. 960 The assessee contended that the amount paid by the consumers for new connections is capital receipt and not liable to tax, because the amount is paid by the consumers towards expenditure to be incurred by the assessee in laying new service lines an asset of a lasting character. This question falls to be determined in the light of the nature of the receipt irrespective of who remained owner of the materials of the service lines installed for granting electrical connections to new customers. The assessee only spends a part of the amount received by it from the consumers. It is not clear from the statement of the case whether amongst the 229 new connections given, there were any which were of a length less than 100 ft. Payments received by the assessee must of course be for service lines installed of length more than 100 ft., but it is not clear on the, record whether the expenditure of Rs. 5,929 incurred by the assessee is only in respect of service lines which exceeded 100 ft. in length or it is expenditure incurred in respect of all service lines. It is however not disputed that a part of the amount received from the consumers remains with the assessee after meeting the expenses incidental to the construction of the service lines. But an electric service line requires constant inspection and occasional repairs and replacement and expenses in this behalf have to be undertaken by the assessee. The amount contributed by the consumer for obtaining a new connection would of necessity cover all those services. The amount contributed by the consumer is in direct recoupment of the expenditure for bringing into existence an asset of a lasting character enabling the assessee to conduct its business of supplying electrical energy. By the installation of the service lines, a capital asset is brought into existence. The contribution made by the consumers is substantially as consideration for a joint adventure; the service line when installed becomes an appanage of the mains of the assessee, and by the provisions of the Electricity Act, the assessee is obliged to maintain it in proper repairs for ensuring efficient supply of energy. The assumption made by the 961 Department that the excess remaining in the hands of the assessee, after defraying the immediate cost of installation of a service line must be regarded as a trading profit of the company is not correct. The assessee is undoubtedly carrying on the business of distributing electrical energy to the consumers. Installation of service lines is not an isolated or casual act; it is an incident of the business of the assessee. But if the amount contributed by the consumers for installation of what is essentially reimbursement of capital expenditure, the excess remaining after expending the cost of installation out of the amount contributed is not converted into a trading receipt. This excess which is called by the Tribunal "profit element" was not received in the form of profit of the business; it was part of a capital receipt in the hands of the assessee, and it was not converted into a trading profit because the assessee was engaged in the business of distribution of electrical energy, with which the receipt was connected. In Commissioner of Income tax vs Poona Electric Supply Co. Ltd. (1), it was held by a Division Bench of the Bombay High Court that the amount received from the Government of Bombay by the Poona Electric Company in reimbursement of expenses incurred for constructing new supply lines for supplying energy to new areas not previously served, was a capital receipt and not a trade receipt. The question of the taxability of the "profit element" in the contribution received from the Government was not expressly determined; but the court in that case held that the entire amount received by the Poona Electric Company from the Government as contribution was a capital receipt. In Monghyr Electric Supply Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa (2), it was held that the amount paid by consumers of electricity for meeting the cost of service connections was a capital receipt in the hands of the electricity undertaking and not revenue receipt and the difference between the amount received on account of service connection charges and (1) (2) 962 the amount immediately not expended was not taxable as revenue. The receipts though related to the business of the assessee as distributors of electricity were not inciden t nor in the course of the carrying on of the assessee 's business; they were receipts for bringing into existence capital of lasting value. Contributions were not made merely for services rendered and to be rendered, but for installation of capital equipment under an agreement for a joint venture. The total receipts being capital receipts, the fact that in the installation of capital, only a certain amount was immediately expended, the balance remaining in hand, could not be regarded as profit in the nature of a trading receipt. On that view of the case, in our judgment, the High Court was in error in holding that the excess of the, receipts over the amount expended for installation of service lines by the assessee was a trading receipt. The appeal is allowed and the question submitted to the High Court is answered in the negative. The assessee is entitled to its costs in this court as well as in the High Court. Appeal allowed.
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The assessee, an electricity supply undertaking, received certain sum of money for new service connections granted to its customers.
Part of this amount was spent for laying mains and service lines.
The Income tax Officer treated the entire amount as trading receipt.
In appeal the Appellate Assistant Commissioners excluded the cost of laying service lines and the mains and treated the balance as taxable income.
The Appellate Tribunal agreed with the Appellate Assistant Commissioner and held that the service connection receipts were trading receipts and the "profit element" therein was taxable income in the hands (1)[1929] A.C. 386; 957 of the assessee.
In a reference under section 66(1) of the Income tax Act, the High Court substantially agreed with the view of the Tribunal.
On appeal by the assessee, Held, that the High Court erred in holding that the excess of the receipts over the amount spent by the assessee for installation of service lines was a trading receipt.
The receipts though related to the business of the assessee as distributors of electricity were not incidental to nor in the course of the carrying on of the assessee 's business.
They were receipts for bringing into existence capital of lasting value.
The total receipts being capital receipts the balance remaining after a part thereof was expended for laying service lines and mains, could not be regarded as 'profit ' in the nature of a trading receipt.
Commissioner of Income tax vs Poona Electric Supply Co. Ltd., and Monghyr Electric Supply Co. Ltd. vs Commissioner of Income tax, Bihar and Orissa, , discussed and applied.
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A company that provides electricity received money when it connected new customers to its service.
The company spent some of this money to install power lines and connections. The tax officer said all the money received was regular business income.
When the company appealed, the appeals officer said the cost of installing the lines should not be included. Only the remaining money was taxable.
The appeals court agreed. They said the money from new connections was business income, and the "profit" part was taxable.
The High Court mostly agreed with the appeals court, based on a tax law.
The company appealed again. The court decided the High Court was wrong to say the extra money (after paying for the lines) was business income.
Even though the money came from the electricity business, it wasn't part of the company's normal operations. It was payment for creating something valuable that would last a long time.
Since the money was for a long-term asset, the money left over after paying for the power lines wasn't "profit" that could be taxed as business income. Other similar cases were discussed and used to make this decision.
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N: Criminal Appeal No. 169 of 1978. From the Judgment and order dated 10.11.1975 of the Gujarat High Court in Criminal Revision Application No. 273 of 1975. V.C. Mahajan, Mrs. Indira Sawhney and Miss. A. Subhashini for the Appellants. 453 G.A. Shah, Anil K. Naurya, K.L. Hathi Miss Madhu Moolchandani, Vimal Dave and M.N. Shroff for the Respondents. The Judgment of the Court was delivered by THAKKAR, J. Does the acquittal of an accused charged with having committed an offence punishable under Section 111 read with Section 135 of the Customs Act, 1969 create a legal bar to the said accused subsequently being prosecuted under Section 85 of the Gold (Control) Act, 1968? The High Court having answered this question (in the affirmative) against the prosecution and having directed the dropping of the subsequent proceedings on the premises that the acquittal in the former proceedings operated as a legal bar to the prosecution of the accused in the latter proceedings, the State has approached this Court by way of the present appeal. By certificate under Article 134(i)(c) of the Constitution of India. Respondents 1 to 3 came to be prosecuted as a result of a raid at their house in which primary gold valued at Rs.84,770 at the material time was found along with some other articles. They were prosecuted for an offence punishable under section 111 read with Section 135 of the Customs Act, 1969. In that case present respondent No. 3 was convicted whereas present respondent Nos. 1 and 2 were acquitted. The same alleged offenders were later on sought to be prosecuted under Section 85 of the Gold (Control) Act, 1968 relying on the find of primary gold from the very same premises at the time and on the occasion of the very same raid which gave rise to the prosecution under the Customs Act which had culminated in the conviction of respondent No. 3 and the acquittal of respondents 1 and 2. A contention was thereupon raised on behalf of respondents 1 to 3 that the new trial was barred. The Chief Judicial Magistrate accepted this plea and ordered that the prosecution be dropped. The learned Sessions Judge confirmed the said order. The appellant challenged the order passed by the learned trial Magistrate as confirmed by the learned Sessions Judge by way of a Revision Application Criminal Revision Application No. 273 of 1975 to the High Court. The High Court affirmed the decision of the Courts below holding that the present trial was barred by virtue of Section 403(1) of the Code of Criminal Procedure, 1898 (Cr. P.C.). Hence this appeal. In order to determine this question it is necessary to identify the ingredients which will have to be established by the prosecution in order to bring home the guilt under the different provisions. These ingredients may be catalogued as under: 454 Ingredients of the charge Ingredients of the charge for the offence under for the offence under Sec. Section 111 read with Sec. 85 of the Gold (Control) 135 of the Customs Act, for which the in respect of which the respondents are sought respondents were acquitted. to be prosecuted. i) Inter alia being in posses The offender owns or has in sion of or being concerned his possession, custody, or in keeping or concealing of control any primary gold of goods which the offender not less than 9 carats in knows or has reason to purity in unfinished or believe are liable to semi finished from or in confiscation under blocks, bars etc. Section 111. ii) The goods in question, gold, was imported within the Indian Customs waters contrary to a prohibition contained under the Customs Act. iii)There was a prohibition in respect of the import of gold at the material time as contemplated by Sec. 111 D of the Customs Act It is therefore evident that the ingredients required to be established in respect of the offence under the Customs Act are altogether different from the ones required to be established for an offence under the Gold (Control) Act. In respect of the former, the prosecution has to establish that there was a prohibition against the import into Indian sea waters of goods which were found to be in the possession of the offender. On the other hand in respect of the offence under the Gold (Control) Act, it is required to be established that the offender was in possession of primary gold meaning thereby gold of a purity of not less than 9 carats in any unfinished or semi finished form. In regard to the latter offence it is not necessary to establish that there is any prohibition against the import of gold into Indian sea waters. Mere possession of gold of purity not less than 9 carats in any 455 unfinished or semi finished form would be an offence under the Gold Control Act. It is therefore stating the obvious to say that the ingredients of the two offences are altogether different. Such being the case the question arises whether the acquittal for the offences under the Customs Act which requires the prosecution to establish altogether different ingredients operates as a bar to the prosecution of the same person in connection with the charge of having committed the offence under the Gold (Control) Act. Reliance has been placed on Section 403(1) of the Code of Criminal Procedure, 1898 (Cr P.C.) in support of the plea that the prosecution under the Gold (Control) Act would be barred on the basis of the undermentioned facts: i) that the respondents had been tried by a competent Court for the offence of being in possession of gold under the Customs Act and had been acquitted; ii) they are sought to be prosecuted on the same facts for an offence under the Gold (Control) Act. It is not in dispute that the respondents were tried and acquitted for the offence under the Customs Act in connection with the possession of a quantity of gold. Their trial would be barred by Section 403(1) provided they are sought to be prosecuted on "same facts" for any offence for which a different charge from the one made against them might have been made under Section 236 ' and for which they might have been convicted under Section 2372 1. "Section 403(1): A person who has once been tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force, not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made under Section 236, or for which he might have been convicted under section 237". If a single act or series of acts is of such a nature that it is doubtful which of several offences of the facts which can be proved will constitute the accused may be charged with having committed all or any of such offences, and any number of such charges may be tried at once; or he may be charged in the alternative with having committed some one of the said offences. Illustrations (a) xxxx (b) xxxx". ( 1) If in the case mentioned in section 236, the accused is charged with one offence, and it appears in evidence that he committed a different offence for which he might have been charged under the provisions of that section, he may be convicted of the offence which he is shown to have committed, although he was not charged with it. " 456 In order to successfully establish their plea of bar under Section 403(1) the concerned respondents will therefore have to establish that: i) It was doubtful as to which of the several offences the facts which could be proved by the prosecution would constitute. ii) And they could have been charged in the alternative with having committed one or other of the said offences. In other words what they would be required to establish would be that (1) there must have been a 'doubt ' as to whether the offence under the 'Customs Act ' could be proved or whether the offence under the 'Gold (Control) Act ' would be proved and (2) that in the context of this doubt an alternative charge could have been framed under Section 236. Now, on a. true interpretation of Section 236 it would appear that the Section would be attracted where the offence would fall either under one or the other of the two alternative charges. It would not be attracted if an offence could fall under both of the alternative charges. What is contemplated by Section 236 is framing of an alternative charge where on the facts of the case an offence would fall under one of the two alternative charges, but the act would not constitute an offence under both the charges. This point is made clear by the illustrations to Section 236 viz: "(a) A is accused of an act which may amount to theft, or receiving stolen property, or criminal breach of trust of cheating. He may be charged with theft, receiving stolen property, criminal breach of trust and cheating or he may be charged with having committed theft, or receiving stolen property, or criminal breach of trust or cheating. (b) A states on oath before the Magistrate that he saw hit with a club. Before the Sessions Court A states on oath that never hit C. A may be charged in the alternative and convicted of intentionally giving false evidence, although it cannot be proved which of these contradictory statements was false. " Illustration (a) refers to framing of an alternative charge in respect of theft or receiving of stolen property or criminal breach of trust or cheating. It will be seen that a person cannot be said to have committed the offence both of theft as also of 'receiving of stolen 457 property '. A person who himself commits the theft, cannot be guilty of the charge of 'receiving stolen property ' whereas a person who may have nothing to do with commission of theft, but who may be found in possession of the stolen property, would be guilty of the offence of 'receiving stolen property '. Now the prosecution cannot foresee whether the person from whose possession the stolen article was found was himself the thief or as merely a person who had received stolen property from the thief. A person cannot be found guilty of both 'theft ' as also for 'receiving stolen property '. And it is in such a case that an alternative charge under Section 236 could be framed. In the present case the concerned respondents could be found guilty of both the offences in the context of the possession of gold. If it was established that there was a prohibition against the import of gold and that he was found in possession of gold which he knew or had reason to believe was liable to confiscation he would be guilty of that offence. He would also be guilty of an offence under the Gold (Control) Act provided the gold is of a purity of atleast 9 carats. He would have violated the provisions of 'both ' the Customs Act and the Gold (Control) Act if the aforesaid ingredients were established. It is not as if in case he was found guilty of an offence under the Customs Act, he could not have been found guilty under the Gold (Control) Act or vice versa. Upon being found guilty of both the offences the Court may perhaps impose a concurrent sentence in respect of both the offences but the Court has also the power to direct that the sentence shall run consecutively. There is therefore no question of framing of an alternative charge one, under the Customs Act, and the other, under the Gold (Control) Act. If the ingredients of both the offences are satisfied the same act of possession of the gold would constitute an offence both under the Customs Act as also under the Gold (Control) Act. Such being the position it cannot be said that they could have been tried on the same facts for an alternative charge in the context of Section 236 Cr. P.C. at the time of the former proceedings. The submission urged in the context of Section 403(1) cannot therefore succeed for it cannot be said that the persons who are sought to be tried in the subsequent proceedings could have been tried on the same facts at the former trial under Section 236. Strong reliance has been placed on behalf of the respondents on Maqbool Hussain vs The State of Bombay & ors. etc., [1953] S.C.R. Vol. IV p. 730 in support of the submission that the second prosecution is barred. In Maqbool 's case the central issue arose in the context of the fact that a person who had arrived at an Indian Airport from abroad on being searched was found in possession of gold in 458 contravention of the relevant notification, prohibiting the import of gold. Action was taken against him by the Customs authorities and the gold seized from his possession was confiscated. Later on a prosecution was launched against him in the criminal court at Bombay charging him with having committed the offence under Section 8 of the Foreign Exchange Regulation Act (Act 7 of 1947) read with the relevant notification. In the background of these facts the plea of 'autrefois acquit ' was raised seeking protection under Article 20(2) of the Constitution of India. This Court came to the conclusion that the proceedings before the Customs authority did not constitute the 'prosecution ' of the appellant. The Court also took the view that the penalty imposed on him did not constitute a 'punishment ' by the judicial tribunal. Under the circumstances the trial was not barred. The ratio of the decision is altogether different and has no application in so far as the plea raised by the respondents is concerned. However, reliance is placed on certain observations made in the course of the discussion, at p. 737. To quote: " The test is whether the former offence and the offence now charged have the same ingredients in the sense that the facts constituting the one are sufficient to justify a conviction of the other, not that the facts relied on by the Crown, are the same in the two trials. A plea of 'autrefois acquit ' is not proved unless it is shown that the verdict of acquittal of the previous charge necessarily involves an acquittal of the latter." (Vide Halsbury 's Laws of England, Hailsham Edition Vol. 9 pages 152 and 153, paragraph 212). " (Emphasis added) We have already applied the very test indicated in this passage. But we have reached the conclusion that in the present case this test does not support the respondents ' submission in asmuch as the ingredients of the two offences are different in scope and content. The facts constituting the offence under Customs Act are different and are not sufficient to justify the conviction under the Gold Control Act. It must also be realized that what is necessary is to analyze the ingredients of the two offences and not the allegations made in the two complaints as declared by this Court in State of Bombay vs S.L. Apte & Another, [1961] 3 S.C.R. p. 107. We have also concluded that a separate charge could have been framed in respect of the distinct offence under Gold Control Act 459 Under the circumstances the plea raised by the defence cannot succeed. The two conclusions reached by us brings the matter squarely within the parametres of the law settled by this Court decades ago in section L. Apte 's case (Supra). In that case the element of 'dishonesty ' was required to be established under section 409 of Indian Penal Code whereas it was not required to be established under Section 105 of the Indian Insurance Act. In this backdrop this Court has enunciated the law in the context of the plea based on Article 20(2) of the Constitution, Section 26 of General Clauses Act and section 403(2) of the Criminal Procedure Code in no uncertain terms: "If, therefore, the offences were distinct there is no question of the rule as to double jeopardy as embodied in article 20(2) of the Constitution, being applicable. The next point to be considered is as regards the scope of section 26 of the General Clauses Act. Though section 26 in its opening words refers to "the act or omission constituting an offence under two or more enactments", the emphasis is not on the facts alleged in the two complaints but rather on the ingredients which constitute the two offences with which a person is charged. This is made clear by the concluding portion of the section which refers to "shall not be liable to be punished twice for the same offence". If the offences are not the same but are distinct, the ban imposed by this provision also cannot be invoked. It therefore follows that in the present case as the respondents are not being sought to be punished for "the same offence" twice but for two distinct offences constituted or made up of different ingredients the bar of the provision is inapplicable. In passing, it may be pointed out that the construction we have placed on article 20(2) of the Constitution and section 26 of the General Clauses Act is precisely in line with the terms of section 403(2) of the Criminal Procedure Code which runs: 403(2) A person acquitted or convicted of any offence may be afterwards tried for any distinct offence for which a separate charge might have been made against him on the former trial under section 235, sub section ( 1)". 460 There is no manner of doubt that section 403(1) does not come to rescue of the respondents 1 to 3 whereas section 403(2) of the Code clearly concludes the matter against them. The High Court was therefore in error in holding that subsequent trial was barred. We accept the appeal on this point and reverse the decision of the Courts below and the High Court. The appellant was understandably seriously aggrieved by the erroneous enunciation of law by the High Court as it would cause prejudice in other matters involving the same point which may have been pending or might arise in future. With the position of law being now settled in the appellant 's favour the main objective of the appellant is achieved. Learned counsel for the appellant indicated at the very commencement that the main purpose of the appeal was to have the true position in law settled. That 20 years have elapsed since the date of the seizure (November 15, 1968) is, in our opinion, no ground for not proceeding further with the matter inasmuch as the offence in question is a serious economic offence, which undermines the entire economy of the Nation. The delay occasioned in the working of the judicial system by the ever increasing workload cannot provide an alibi for upholding such a plea. However in the present case the Sessions Court has quashed the proceedings not only on this ground but also on the basis of certain factual findings as well and the learned Counsel for the appellant himself found it difficult to assail these findings at this juncture. The operative order passed by the High Court cannot therefore be disturbed in view of the facts and circumstances peculiar to this particular case. We accordingly allow the appeal to this extent and reverse the finding of the Lower Courts and High Court on the question of maintainability of the subsequent prosecution but find ourselves unable to pass any further orders under the circumstances. S.L. Appeal allowed.
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% Respondents 1 to 3 were prosecuted for an offence punishable under section 111 read with section 135 of the Customs Act, 1969, on the basis of recovery of primary gold from their house.
Respondent No. 3 was convicted and respondents Nos. 1 & 2 were acquitted.
Later, the same persons were sought to be prosecuted under section 85 of the Gold (Control) Act, 1968 relying on the find of the primary gold from the very same premises at the time and on the occasion of the same raid at the house of the said respondents, which had given rise to the prosecution under the Customs Act, as stated above.
The respondents 1 to 3 contended that the new trial was barred.
The trial Magistrate accepted this plea and ordered the prosecution to be dropped.
The Sessions Judge confirmed the order of the trial court.
The High Court affirmed the decision of the Courts below, holding that the trial was barred by virtue of section 403 (1) of the Code of Criminal Procedure, 1898 (Cr. P.C.).
The State then approached this Court by this appeal.
Allowing the appeal in part, the Court, ^ HELD: The ingredients required to be established in respect of an offence under the Customs Act are altogether different from the ones required to be established for an offence under the Gold (Control) Act.
In respect of the former, the prosecution has to establish that there was a prohibition against the import into Indian sea waters of goods which were found to be in the possession of the offender.
In respect of the offence under the Gold (Control) Act, it is required to be established that the offender was in possession of primary gold.
In regard to the latter offence, it is not necessary to establish that there is any prohibition against the import of gold.
Mere possession of gold of purity not less than 9 carats in any unfinished or semi finished form would be an offence under the Gold Control Act.
[454F H; 455A] 451 The respondents were tried and acquitted for the offence under the Customs Act in connection with the possession of gold.
Their trial would be barred by section 403(1) of the Code of Criminal Procedure, provided they are sought to be prosecuted on the "same facts" for any offence for which a different charge from the one made against them might have been made under Section 236 and for which they might have been convicted under Section 237, Criminal Procedure Code.
[455D E] In order to establish their plea of bar under Section 403(1), the respondents have to establish that (1) there must have been a 'doubt ' as to whether the offence under the 'Customs Act ' could be proved or whether the offence under the 'Gold (Control) Act ' would be proved and (2) that in the context of this doubt an alternative charge could have been framed under Section 236.
[456C] On a true interpretation of Section 236, it would appear that the Section would be attracted where the offence would fall either under one or the other of the two alternative charges.
It would not be attracted if an offence could fall under both of the alternative charges.
What is contemplated by section 236 is framing of an alternative charge where on the facts of the case an offence would fall under one of the two alternative charges, but the act would not constitute an offence under both the charges.
This point is made clear by the illustrations to Section 236.
In this case, the respondents could be found guilty of both the offences in the context of the possession of gold.
If it is established that there was a prohibition against the import of gold and that the respondents were found in possession of gold which they knew or had reason to believe was liable to be confiscated, they would be guilty of that offence.
They would also be guilty of an offence under the Gold (Control) Act, provided the gold was of a purity of at least 9 carats.
They would have violated the provisions of 'both ' the Customs Act and the Gold (Control) Act if the aforesaid ingredients were established.
It is not as if in case they were found guilty of an offence under the Customs Act, they could not have been found guilty under the Gold (Control) Act or vice versa.
Upon being found guilty of both the offences, the Court may impose a concurrent sentence in respect of both the offences or the sentences could be ordered to run consecutively.
There was, therefore, no question of the framing of an alternative charge one under the Customs Act and the other, under the Gold (Control) Act.
If the ingredients of both the offences are satisfied, the same act of possession of gold would constitute an offence both under the Customs Act and also under Gold (Control) Act.
It could not, therefore, be said that they 452 could have been tried on the same facts for an alternative charge in the context of section 236 Cr.
P.C. at the time of the former proceedings.
The submission urged in the context of Section 403(1) could not succeed.
[456C H; 457D F] A separate charge could have been framed in respect of the distinct offence under the Gold Control Act.
The conclusions reached by the Court brought the matter squarely within the parameters of the law settled by this Court in the State of Bombay vs section L. Apte & Anr., [1961] 3 S.C.R. 107.
[459A B] Section 403(1) does not come to the rescue of the respondents 1 to 3; section 403(2) of the Code clearly concludes the matter against them.
The High Court was in error in holding that the subsequent trial was barred.
The appeal was accepted on this point and the decision of the Courts below and the High Court was reversed.
That 20 years has elapsed since the date of the seizure was no ground for not proceeding further with the matter as the offence in question was a serious economic offence which undermines the entire economy of the Nation.
But the Sessions Judge had quashed the proceedings not only on this ground but also on the basis of certain factual findings which counsel for the appellant himself found difficult to assail at this juncture.
The operative order of the High Court could not, therefore, be disturbed in the peculiar facts and circumstances of the case.
The finding of the lower courts and the High Court was reversed on the question of maintainability of the subsequent prosecution but no further order could be passed in the circumstances.
[460A F] Maqbool Hussain vs State of Bombay & Ors.
etc., [1953] SCR Vol.
IV P 730; State of Bombay vs S.L. Apte & Anr., [1961] 3 S.C.R. p. 107, referred to.
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Respondents 1 to 3 were charged with a crime under the Customs Act of 1969. This was because the police found gold in their house.
Respondent No. 3 was found guilty, but respondents Nos. 1 & 2 were found not guilty.
Later, the government wanted to charge the same people under the Gold (Control) Act of 1968. This was based on the same gold found in their house during the same raid that led to the Customs Act charges.
Respondents 1 to 3 argued that they couldn't be tried again for the same thing.
The trial judge agreed and stopped the new charges.
The Sessions Judge agreed with the trial court's decision.
The High Court also agreed, saying that the trial was not allowed under section 403 (1) of the Code of Criminal Procedure (Cr. P.C.). This law prevents someone from being tried again for the same crime.
The government then appealed to this Court.
The Court said that the Customs Act and the Gold (Control) Act have different requirements for proving guilt.
For the Customs Act, the government must show that importing the goods found in the offender's possession was illegal.
For the Gold (Control) Act, the government must show that the offender had primary gold (gold in its raw form). The government doesn't have to prove that importing gold was illegal. Just having gold that is at least 9 carats pure is enough to be a crime under the Gold Control Act.
The respondents were already tried and found not guilty for the Customs Act offense related to the gold.
They can't be tried again under section 403(1) of the Code of Criminal Procedure if they are being charged for the "same facts." This means they can't be charged with a different crime that could have been included in the first trial, and for which they could have been found guilty.
To block the second trial under Section 403(1), the respondents must prove that: (1) there was "doubt" whether the "Customs Act" offense could be proven, or whether the "Gold (Control) Act" offense could be proven; and (2) because of this doubt, an alternative charge could have been made.
Section 236 says that alternative charges are used when the crime could be one of two different things. It doesn't apply if the crime could be both things. It's for when the facts of the case mean the crime is either one thing or the other, but not both. The examples in Section 236 make this clear.
In this case, the respondents could be guilty of both offenses for having the gold. If importing gold was illegal and the respondents had gold that they knew or should have known was going to be taken by the government, they would be guilty of the Customs Act offense. They would also be guilty of the Gold (Control) Act offense if the gold was at least 9 carats pure.
They would have broken both the Customs Act and the Gold (Control) Act if all of these things were true.
It's not a situation where they could only be guilty of one or the other.
If they are guilty of both, the court could give them sentences that run at the same time (concurrent) or one after the other (consecutive).
So, there was no reason to use alternative charges, one for the Customs Act and one for the Gold (Control) Act. If all the requirements for both offenses are met, then having the gold is a crime under both laws.
It can't be said that they could have been tried for an alternative charge under section 236 Cr. P.C. during the first trial. The argument based on Section 403(1) doesn't work.
A separate charge could have been made for the distinct offense under the Gold Control Act.
The Court's decision follows the established law from the case of State of Bombay vs section L. Apte & Anr.
Section 403(1) doesn't help respondents 1 to 3; section 403(2) of the Code makes it clear that they can be tried again. The High Court was wrong to say that the second trial was not allowed.
The appeal was accepted on this point, and the decisions of the lower courts and the High Court were reversed.
The fact that 20 years have passed since the gold was seized is not a reason to stop the case. This is a serious economic crime that hurts the country's economy.
But the Sessions Judge stopped the case not only for this reason, but also because of certain facts that the government's lawyer couldn't argue against.
So, the High Court's order cannot be changed because of the specific facts of the case.
The lower courts' and the High Court's decision was reversed on whether the second trial was allowed, but no further order could be made in these circumstances.
Maqbool Hussain vs State of Bombay & Ors. etc.; State of Bombay vs S.L. Apte & Anr. were referred to.
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IN Writ Petition Civil Nos. 348 352 of 1985. (Under Article 32 of the Constitution of India). Kapil Sibbal, Additional Solicitor General, Madan Lokur, Ms. Shobha Dikshit, Gopal Subramaniam and Ms. A. Subhashini (NP) for the appearing parties. Pramod Swarup for the Intervener and R.K. Mehta (NP) for the State of Orissa. The Judgment of the Court was delivered by RANGANATH MISRA, J. This is an interlocutory application at the instant of the respondents in the writ petitions where the following directions of this Court have been asked for: (i) grant time to State of Uttar Pradesh for implementing judgment and order dated 25th September, 1987 and commence the session for post graduate education from 2nd May, 1990 in all the seven medical colleges; (ii) further permit the State of Uttar Pradesh to hold the competitive examination for admitting the post graduate students for the year 1990 through the University of Luc know; and (iii) pass such other and further orders as it may deem fit and proper in the interest of justice. 138 The main judgment of this Court was delivered on 22nd June, 1984, in Dr. Pradeep Jain etc. vs Union of India & Ors. , ; By a subsequent order made on 21st July, 1986, this Court directed that the total number of seats for admission to post graduate courses in each medical college or institution on the basis of All India Entrance Examination shall be limited to 25% and such examination would be held by the All India Institute of Medical Sciences at New Delhi. By order dated September 25, 1987, this Court made clear directions for the sake of bringing about uniformity in post graduate medical teaching by requiring post graduate courses to be structured on a uniform basis; directing that diploma prevailing in Tamil Nadu may not be available for admission to a post graduate degree course; and ordering that provision in regard to super specialities like MD and other higher degrees need not be court controlled. For doing so this Court allowed a five year period upto 1992 inclu sive. With a view to bringing all the medical colleges and institutions subject to the scheme to one common discipline and for admissions beginning from 1993, the Court indicated that there should be only one pattern, namely, the three year degree course without any housemanship. After having done so the Court proceeded to fix uniform schedule for inviting applications for having the selection examination, declaration of the result, admission of students to the post graduate courses and commencement of the sessional teaching. The Court then desired that the discipline regarding holding of the selection examination, admission and commencement of courses should be effective from 1988. In the penultimate paragraph of that order. it was said: "All necessary directions for post graduate course are now complete. We direct the Union of India, the Medical Council of India, the State Governments, Universities, Medical Institutions and all other authorities that may be involved in implementation of the scheme to give full effect to the orders and directions made by this Court in the proper spirit so that the scheme may become operative as directed. We make it clear that no application for any modification of matters already covered by our order henceforth shall ordi narily be entertained. A copy of this order shall be communicated forth with to the Chief Secretary of every State and Union Terri tory for compliance. A copy of it be also sent to the Direc tor 139 Generals, All India ' Radio and Doordarshan for appropriate publicity of the order in general interest. " We have ascertained from the Registry that there was due compliance of the direction contained in the last paragraph of the order. A matter from Bihar forming subject of Civil Appeal No. 3589 of 1989 relating to admission in post graduate medical courses came before this Court. This Civil Appeal was dis posed of by this Court on 15.11.89 (AIR 1990 SC 749). Deal ing with the lapses on the part of the State of Bihar in the matter of compliance with the directions of 1987 which we have already referred to, this Court said: "Obviously the relevant directions have not been followed by the examining body for the current year. Similarly, the State of Bihar did not follow the directions of this Court while drawing up its prospectus. If the courses of study are to commence from May 2, the last qualifying date could not have been fixed as May 31, 1989. It has been reiterated before us that several States have not been following.the directions. Instead of issuing notice to the States and Union Territories for examining the correctness of the allegations of delay and non compliance of the directions, we have thought it appropriate to indicate that every one including the States, Union Territories and other authori ties running Medical Colleges with Post Graduate Courses are bound by our order and must strictly follow the time sched ule indicated in paragraph 6 of the order. We have not proceeded against the defaulting authorities for violation of this Court 's order, hoping that there would be no recur rence of it but we would like to administer a warning to everyone that if it is brought to our notice at any time in future that there has been violation, a serious view of such default shall be taken. We hope and trust that everyone concerned shall comply with the time frame strictly and there would be no lapse in this regard in future. " This application is grounded upon the default which this Court has been anxious to eliminate and apprehensive of non compliance of directions wherein a serious threat of punishment had been held out. Both the State of Uttar Pra desh and the seven medical colleges run by it are bound to implement the scheme in the main judgment as modified from time to time and were covered by the orders of 1987 and 140 1989. We have read our order of 1987 again and find no scope for the stand of the respondents in the present petition for the position that there was scope for confusion relating to the directions in regard to uniform pattern of the courses and the time scheduled for the various aspects concerned with the selection examination, admission of students into the Post Graduate and commencement of sessional teaching. These were two different matters and while in regard to items referred to in the order of 1987 a clear five year period was allowed to evolve the system of uniformity, time frame for every purpose like admission and teaching was intended to be brought into force from the year 1988. Two distinct sets of directions were made one in regard to the requirement of change of the regulations and rules and the procedural aspects in operating the scheme, and the other for regulating admission and commencement of teaching. We reject the plea of the Uttar Pradesh Government and the other respondents that there was scope for confusion and non compliance with the directions was relatable to a bona fide mistake. This is a clear instance of either wilful default or total callous indifference to binding and lawful orders made by this Court. Where the direction is clear and arising out of default of compliance, a further direction is made clarifying the position and warning defaulting parties of serious consequences we find no scope for any justifica tion for continued default. More so when the State Govern ment and its officers obliged to give effect to our direc tions fail to take notice of the same and exhibit a conduct of noncooperation and callousness. It was the obligation of the State of Uttar Pradesh in terms of the two orders referred to above to initiate action for admission in appropriate time so as to allow the com mencement of the course for the year 1990 with effect from May 2, 1990. It is the respondents ' stand that for the year 1990 the Entrance Examination for the remaining seats (besides 25% controlled by the AllMS) was to be conducted by the University of Lucknow on 27th May, 1990. This itself was contrary to the scheme and exhibited the same pattern of conduct as appeared in the Bihar case referred to above. In fact on looking at the matter from every possible angle we have not been able to appreciate the submissions of Mrs. Dixit and are of the view that the performance of the State of U.P. and its public authorities is anything short of contumacy. At one stage we were thinking of initiating contempt action against the State and the Principals of the seven medical colleges. Such steps for disciplining the State and the public authorities concerned would result in multiplicity of proceedings; therefore, instead of undertak ing such an exercise we have thought it appropriate to impose 141 exemplary costs against the State of Uttar Pradesh as also the principal of each of the seven medical colleges. We direct that the State of U.P. shall pay costs of Rs.20,000 (twenty thousand) while each of the Principals shall pay Rs.500 (five hundred) by way of costs. So far as the State of Uttar Pradesh is concerned it has of course to come from the public fund of the State. In regard to the principals of each of the seven medical colleges located at Lucknow, Agra, Kanpur, Jhansi, Meerut, Gorkhpur and Allahabad, the amount of costs shall be recovered personally from their salary and they would not be entitled to reimbursement of the same from the State exchequer. These payments be made with the Regis try of this Court by 30th of September, 1990. A copy of this order shall be made available to each of the principals of the seven medical colleges for compliance. The State of U.P. is directed to hold the Selection Examination stipulated by it for May 27, 1990, by 30th of September, 1990 and the University of Lucknow is authorised to conduct it. The result of the examination should be published within one week, that is, by 8th of October, 1990 and admissions should be completed on or before 26th of October, 1990, and classes shall commence on 1st of Novem ber, 1990. The classes shall be deemed to have commenced from 2nd May, 1990, and each of the medical colleges shall undertake to provide additional teaching in course of the session so as to compensate the students for the days lost on the basis that the course begun on 2nd May, 1990. Each of the principals of the medical colleges shall certify to the Registry of this Court by 15th November 1990, that this part of order has been implemented. Before we part with the case we would like to again administer a warning to everyone associated with the scheme for implementing the directions contained in the main judg ment and the subsequent orders that a future default by anyone in any part of the country shall indeed be seriously viewed and drastically dealt with. This Court has stated in the past and we would like now to reiterate that the direc tions of this Court are not intended to be brushed aside and overlooked or ignored. Meticulous compliance is the only way to respond to directions of this Court. P.S.S. Application disposed of.
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In Dr. Pradeep Jain vs Union of India, ; the Court had laid down a scheme of admission to medical colleges in graduate and post graduate courses.
By its order dated September 1987 in a miscellaneous petition the Court made certain specific directions for the sake of bringing about uniformity in post graduate medical teaching and allowed a five year period upto 1992 for doing so.
In 6 of the said order it also fixed a uniform schedule for inviting applications for holding the selection examination, declara tion of the result, and admission of students to the post graduate courses.
11 was laid down therein that the courses of study shall commence in every institution throughout the country from May 2 every year.
The said time frame was intended to be brought into force from the year 1988, The Union of India, the Medical Council of India, the State Governments, Universities, medical institutions and all other authorities involved were required to give full effect to the orders and directions.
copy of the order was communi cated forthwith to the Chief Secretary every State and Union Territory for compliance.
In State of Bihar vs San jay Kumar, AIR 1990 SC 749 dealing with the lapse on the part of the State of Bihar in the matter of compliance with the directions of 1987 the Court had expressed the hope and trust that everyone con cerned would comply with the time frame strictly in future and held out a serious threat of punishment against the defaulting authorities.
In the instant interlocutory application the respondents sought grant of time to the State of Uttar Pradesh for implementing the reader dated September 25, 1987 and com mence the session for post graduate education from 2nd May, 1990 in all the seven medical colleges run by 136 it, and to hold the competitive examination for admitting the postgraduate students for the year 1990 through the University of Lucknow.
Their stand was that there was scope for confusion relating to the directions and non compliance was relatable to a bona fide mistake.
Disposing of the application, the Court, HELD: 1.
The directions of the Court are not intended to be brushed aside and overlooked or ignored.
Meticulous compliance is the only way to respond to them.
[141G] 2.1 In the instant case, two distinct sets of directions were made by the Court one in regard to requirement of change of the regulations and rules and the procedural aspects of the scheme, and the other for regulating admis sion and commencement of teaching.
There was no scope for confusion relating to them.
[140C D] 2.2 It was the obligation of the State of Uttar Pradesh in terms of the orders of 1987 and 1989 to initiate action for admission in appropriate time so as to allow the com mencement of the course for the year 1990 with effect from May 2, 1990.
The respondents ' stand that the entrance exami nation for the remaining seats (besides 25% controlled by the AllMS) was to be conducted by the University of Lucknow on 27th May, 1990 itself was contrary to the scheme.
[140E F] 2.3 Where the direction is clear and arising out of default of compliance, a further direction is made clarify ing the position and warning defaulting parties of serious consequences, there was no scope for any justification for continued default.
In failing to take notice of the Court 's directions the State Government and its officers have exhib ited a conduct of non cooperation and callousness.
In fact, their performance was nothing short of contumacy.
It is but appropriate, therefore, to impose exemplary costs against the State of Uttar Pradesh as also the Principal of each of the seven medical colleges.
[140D; G H] The State of U.P. shall pay costs of Rs.20,000 while each of the Principals of the seven medical colleges shall pay Rs.500 by way of the costs which shall be recovered personally from their salary, and they would not be entitled to reimbursement of the same from the State exchequer.
[141A] 3.
The State of U.P. to hold the selection examination stipulated by it for May 27, 1990, by 30th of September, 1990 and the University 137 of Lucknow is authorised to conduct it.
The result of the examination should be published within one week, that is, by 8th of October, 1990 and admissions should be completed on or before 26th of October 1990 and classes shall commence on 1st of November, 1990.
The classes shall be deemed to have commenced from 2nd May, 1990, and each of the medical col leges shall undertake to provide additional teaching to compensate the students for the days lost.
[141D E] 4.
A warning is administered to everyone associated with the scheme for implementing the directions contained in the main judgment and the subsequent orders that a future de fault by anyone in any part of the country shall be serious ly viewed and drastically dealt with.
[141F]
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In the case of Dr. Pradeep Jain versus Union of India, the court created a plan for getting into medical schools for both undergraduate and graduate programs.
In September 1987, the Court gave specific instructions to make graduate medical teaching more consistent. They allowed five years, until 1992, to make these changes.
The order also set a standard schedule for applying to schools, holding entrance exams, announcing results, and admitting students to graduate programs.
It stated that classes should start on May 2nd of each year in every school across the country.
This schedule was supposed to start in 1988. The Union of India (the central government), the Medical Council of India, state governments, universities, medical schools, and all other involved groups had to follow these orders.
A copy of the order was immediately sent to the top official in every state and territory to make sure it was followed.
In the case of State of Bihar versus Sanjay Kumar, the Court dealt with Bihar's failure to follow the 1987 instructions. The Court hoped that everyone would follow the schedule strictly in the future and warned that those who didn't would be punished.
In this current request, the people involved asked for more time for the State of Uttar Pradesh to follow the September 25, 1987, order and start graduate programs on May 2, 1990, in all seven of its medical schools. They also asked to hold the entrance exam for graduate students in 1990 through the University of Lucknow.
They claimed they were confused about the instructions and that their failure to follow them was an honest mistake.
The Court responded: 1. The Court's instructions are not meant to be ignored. They must be followed carefully.
2.1 In this case, the Court made two sets of instructions: one about changing the rules and procedures of the plan, and another about managing admissions and starting classes. There was no reason for confusion about these.
2.2 Uttar Pradesh was required by the 1987 and 1989 orders to begin the admissions process in time to start classes on May 2, 1990. The claim that the University of Lucknow would hold the entrance exam for the remaining seats (besides the 25% controlled by the All India Institute of Medical Sciences or AIIMS) on May 27, 1990, was against the plan.
2.3 When an instruction is clear, and a further instruction is made to clarify the situation and warn those who are not following it of serious consequences, there is no excuse for continuing to fail to comply. The State Government and its officers showed a lack of cooperation and carelessness by ignoring the Court's instructions. Their actions were disrespectful to the court. Therefore, it is appropriate to punish the State of Uttar Pradesh and the principals of each of the seven medical schools.
The State of Uttar Pradesh must pay costs of Rs. 20,000. Each of the seven medical school principals must pay Rs. 500, taken directly from their salary, and they will not be repaid by the State.
3. The State of Uttar Pradesh must hold the entrance exam, which it had planned for May 27, 1990, by September 30, 1990. The University of Lucknow is allowed to conduct it. The results of the exam should be released within one week, by October 8, 1990, and admissions should be completed by October 26, 1990. Classes will begin on November 1, 1990. The classes will be considered to have started on May 2, 1990, and each medical school must provide extra teaching to make up for the days missed.
4. Everyone involved in following the instructions in the main decision and later orders is warned that any future failure by anyone, anywhere in the country, will be viewed seriously and punished severely.
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N: Criminal Appeal Nos. 346 and 387 of 1975. Appeals by Special Leave from the Judgment and Order dated 6 8 75 of the Bombay High Court in Criminal Appeal No. 1005 and 1006 of 1973. Lalit Chari, P. R. Guna, A. K. Srivastava and Vineet Kumar for the Appellant in Crl. A. No. 387/75. R. L. Kohli, P. P. Rao, R. C. Kohli and R. Nagarathnam for the Appellant in Crl. A. No. 346/75. V. section Desai, H. R. Khanna and M. N. Shroff for the Respondent in both the appeals. The Judgment of the Court was delivered by JASWANT SINGH, J. The above noted two criminal appeals which are directed against the common judgment and order dated August 6, 1975 of the High Court of Judicature at Bombay affirming on appeal the judgment and order dated August 6, 1973 of the Special Judge, Greater Bombay, convicting section P. Bhatnagar, appellant in the aforesaid first appeal, (hereinafter described as A 1) under section 120B read with sections 409 and 109 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act, 1947, and sentencing him to six months simple imprisonment on each of the said two courts as well as convicting A. section Krishnaswamy, appellant in the aforesaid second appeal (hereinafter described as A 2) under the aforesaid two counts but reducing his sentence from nine months ' imprisonment to six months simple imprisonment on each one of those counts, shall be disposed of by this judgment. Briefly put the case as set up by the prosecution was: In 1964, the Indian Oil Corporation (hereinafter referred to as 'the Corporation ') which is a Government owned company, decided to purchase 13 acres and odd of a hilly tract of land situate in village Mahul in Trombay (Bombay) from the Tatas for the purpose of erecting black furnace oil storage tanks and construction of administrative buildings. After the area was taken over by the Corporation Varandani (P. W. 20), Junior Engineer of the Corporation surveyed the land in October, 1964, under the directions of A 1 and A 2, the Engineering Manager and Senior Engineer respectively of the Engi 878 neering Department of the Marketing Division of the Corporation with a view to find out the extent of rock cutting and filling which might be required to be done for levelling the area of 7 acres out of the said tract of land. The kacha level plan (Exh. 125) and worksheets prepared by Varandani on October 13, 1964 and November 3, 1964 respectively during the course of his aforesaid survey (which were signed by A 1 and A 2, showed that 16,80,000 cft. of rock cutting work and 8,00,000 cft. of filling work would have to be done to suit the purpose for which the land was acquired. Estimate (Exh. 27) prepared by Varandani indicated that expenditure at the rate of Rs. 30/ per 100 cft. for rock cutting and Rs. 10/ per 100 cft. for filling would have to be incurred. Pucca tracing (Exh. 34) of level plan (Exh. 125) and copies thereof signed by A 1 and A 2, and contour plan prepared by Varandani and approved by Engineering Manager were kept on the record. On the basis of the survey and the estimate of expenditure made by Varandani, notice (Exh. 28) inviting tenders from experienced civil contractors for rock cutting, filling and levelling of the land in question was prepared by A 2 on February 2, 1965, and was forwarded (under his signatures) by A 1 to the Finance Department for approval on February 5, 1965. After the approval of the Finance Department, the Public Relations Officer of the Corporation by his letter (Exh. 29) dated February 11, 1965 requested Times of India, Indian Express and Free Press to publish the tender notice (Exh. 28) wherein it was stated that the tenders which should reach the Corporation by 2.30 P.M. on March 2, 1965 would be opened at 3.00 P.M. on that date. In response to this notice eleven firms of contractors including Ram & Co. submitted their tenders. N. N. Desai (hereinafter described as A 4) however abstained from submitting his tender. In the meanwhile, it was decided that instead of having stack measurement as provided in Exhibit 28, it would be desirable to have the measurements on the basis of differences between the existing and finished levels. Accordingly, on March 5, 1965, the aforesaid eleven tenderers were asked to submit revised tenders on the basis of the amended tender notice by March 15, 1965. Although fresh tenders were restricted to the original eleven tenderers, a tender form was issued to A 4 in response to the application made by him on March 8, 1965. On opening the tenders on March 15, 1965, it was found that five out of the eleven original tenderers and four new ones including A 4 had submitted their tenders, that the tender of Ram & Co. whereby it had quoted Rs. 28/ per 100 cft. for cutting work and 'nil amount for filling was the 879 lowest and that the second lowest tender was of A 4 who had quoted Rs. 26/ per 100 cft. for cutting and Rs. 6/ per 100 cft. for filling work. Thus, the actual amount as per quotation of Ram & Co. was Rs. 4,70,400/ and that of A 4 was Rs. 4,84,800/ for 16,80,000 cft. of cutting work and 8,00,000 cft. of filling work. On discovering that the tender of his firm was the lowest, Roshan Lal, a partner of Ram & Co. addressed communication dated March 20, 1965 to the Managing Director of the Corporation requesting him that the aforesaid job of rock cutting and filling be entrusted to his firm in view of its working experience detailed therein but handed over the same to A 1. At or about this time, Messrs Labitos Oil Fields Limited, a British firm whom the Corporation was trying to collaborate in its project advised the Corporation that instead of three levels (steppings) which had been planned as per cantour map (Exh. 34) there should be a single level and instead of the survey being on the basis of 100 ft. spacing as done earlier by Varadani, it should be on the basis of 10 ft. spacing. Accordingly A 1 and A 2 told Varadani (P.W. 20) and section D. Vaidya, another Assistant Engineer (hereinafter described as A 3) to make a fresh survey alongwith A 4 according to the advice of Messers Labitos Oil Fields Limited as it had been almost decided to entrust the aforesaid work to A 4. Pursuant to the instructions of A 1 and A 2, B. N. Desai, a representative of A 4 was associated with the revised survey which was carried from March 21 to March 26, 1965. As a result of the joint survey, kacha level plan (Exh. 22) and work sheet (Exh. 23) were prepared by A 3 under the directions of Varandani. As a result of this survey, it was found that rock cutting and filling would have to be done to the extent of 23,30,454 cft. and 31,500 cft. respectively as against 16,80,000 cft. and 8,00,000 cft. respectively as found as a result of the earlier survey. Notwithstanding the large variations in the cutting and filling work which required to be done as a result of the revised joint survey, the Engineering Department did not invite fresh tenders but instead prepared another comparative statement on the basis of the rates quoted by Ram & Co. and A 4 in their tenders opened on March 15, 1965 and showed therein that the tender of A 4 had turned out to be the lowest and that of Ram & Co. to be the second lowest. On April 7, 1965, A 2 drew up tender committee proceedings (Exh. 16) as reproduced below and got them signed by A 1 in the hope that the recommendations made therein would be accepted by Srivastava, (P.W. 5) the Financial Controller and Patel, the Operation Manager of the Corporation, who were the other members of the Tender Committee, in addition to A 1 and finally by Gopal Krishan, the then Chairman of the Company : 880 "Ref. No. ENG/ASK/Q 250 April 7, 1965. Subject : Tender Committee proceedings for the finalisation of rock cutting, levelling of plot, taken over from M/s. Tata at Bombay. (1) We had taken over 13.5 acres of land from M/s. Tata Power House at Trombay. It was intended to level this plot of land and recover about 7 acres of land by cutting and levelling in order to put up our Black Storage tanks and other allied facilities. Due to the uneven terrain, it was decided to have two steppings so that the storage tanks may be installed at a higher level and the remaining administrative blocks, were house stores etc., at a lower level. Accordingly, Public Tenders were invited for rock cutting and filling this area on 100 cft. basis. (2) Subsequently, M/s. Lobitos Oil Fields Ltd. Ellesmere Port, Wirral, Cheshire, had negotiations with us for putting up a Transformer Oil Blending Plant at this site. The representatives of the above firm during their discussions with C. & section M. and M. E. (accused No. 1) stated, that they would like to have only plain piece of land instead of steppings as was decided by us previously. This will entail additional cutting and minimise the quantity of filling. (3) Our estimated quantity previously was 16,80,000 cft. of cutting and 8,00,000 cft. of filling. As per the revision in the levels to be maintained at this site that the total quantity of cutting comes to 23,30,456 cft. The quantity of filling comes to 31,500 cft. The total estimated cost for the original work was Rs. 6,13,200/ . A comparative statement has been drawn as per the tendered rates quoted by the various parties and the position of the first three is as follows: ____________________________________________________________ section Name of Contractor Qty. Rate Amount Total No. %Cft. ____________________________________________________________ 1 N.N. Desai Cutting 23,30,450 26/ Sd. 605917 607807 Filing 31500 Cft. 1890 6/ 2 Ram & Co. Cutting 2330450 652526 652526 28/ Cft. Filing 31500 Cft. free 3 Library Construction Cutting 2330450 652526 28/ Cft. 655676 Filing 31500 Cft. 3150 ____________________________________________________________ 881 M/s. N. N. Desai, Contractor are the lowest. The Tender Committee therefore recommends that this work may be allotted to M/s. N. N. Desai, Contractor at their quoted rate of Rs. 6,07,807/ being the lowest tenderer. Sd/ (section P. Bhatnagar) M. E. (A. K. Srivastava) F.O. (H. B. Patel) O.M. Approved (P. A. Gopalakrishnan) Chairman. " Contrary to the expectations of A 1 and A 2, Srivastava (P.W. 5) refused to be a party to the Tender Committee recommendations. Ignoring not only the opposition of Srivastava and the suggestion of the Accounts Officer of the Finance Department and the Assistant Finance Controller of the Corporation made vide Exhibit 68 and Exhibit 31 respectively while processing the tender committee proceedings that in view of the fact that both the quantity and value of the work had increased substantially as a result of the revised survey, it would be fair and proper to ask all the contractors who had responded to the tender notice to re submit their quotations but also the offer made by Ram & Co. (which possessed the requisite skill and equipment) to execute the contract at the lower rates of Rs. 20/ per 100 cft. for rock cutting and Rs. 15/ per 100 cft. for filling as well as the flat refusal to reduce his rates given by A 4 during the negotiations conducted at the suggestion of the Accounts Department of the Corporation on April 17, 1965 with the three contractors mentioned in Exhibit 16, A 2 carried on, in pursuance of the conspiracy entered into between himself and A 1 and A 4 fresh negotiations with A 4 on or about April 20, 1965 without associating any member of the Finance Department and persuaded him to accept the lowest revised rates offered by Ram & Co. although he did not possess the requisite experience in and equipment for rock cutting and filling and by passing the Financial Controller forwarded the papers to the Operation Manager who not being conversant with the proceedings supported A 2 for entrusting the contract to A 4 at the lowest rates offered by Ram & Co. On the Tender Committee recommendations reaching him in circulation. Srivastava put on record his bold and emphatic protest but eventually reluctantly gave his con 882 currence to the recommendations made by A 1 and the Operation Manager as is evident from the concluding sentence of the Note: "The case is recommended for acceptance of the Chairman only because the Engineering Manager has certified that he would not be able to accept any responsibility about the deadline if work is not given to Desai." Although according to A 2 's note (Exh. 33) dated April 19, 1965, the Coordinator and Sales Manager was keen to have the site developed as early as possible, the latter held up the matter for nearly three months in the vain expectation that the work would be done free of cost either by the Government of Maharashtra or the Bharat Sevak Samaj and it was not before July 15, 1967 that he gave his approval to A 1 's proposal to award the contract to A 4 whereafter accepting the said proposal the Managing Director of the Marketing Division and Chairman of the Board of Directors of the Corporation accorded sanction to the entrustment of the work to A 4. On receipt of the sanction, A 1 forwarded the papers with his endorsement to the Financial Controller on July 29, 1965. On July 30, 1965, work order (Exh. 19) manifesting quantity of rock cutting work as 29,30,450 cft., filling work as 90,000 cft. and value of the work as Rs. 5,99,590/ as against the corresponding figures of 23,30,450 cft., 31,500 cft. and Rs. 4,70,000/ respectively as specified in the final sanction which was based on the aforesaid level statement (Exh. 22) and work sheet (Exh. 23) was prepared and handed over by A 2 to A 4. Copies of the work order were also endorsed by A 2 to the Bills Section of the Engineering Department and the Accounts Section of the Finance Department of the Corporation with the endorsement "the above has Chairman 's approval on our note of even reference dated 7th April 1965. Please have the agreement executed. Earnest money of unsuccessful tenderers may also please be refunded early. " On July 30, 1965, formal contract (Exh. 74) mentioning only the number and date of the work order in the blank columns of the printed form was prepared and signed by A 4 and a representative of the Company. The joint level statement Exhibit 22 and the work sheet Exhibit 23 in respect of the joint survey made between March 21 and 26, 1965 for ascertaining the extent of rock cutting and filling which formed the basis for invitation of tenders and the final sanction in favour of A 4 were not only left unsigned by the concerned but were actually removed from the file and were substituted by spurious level plan (Exh. 24) and its copy (Exh. 38) which were fabricated by A 3 to justify the inflated figures of rock cutting and filling work mentioned in the work order (Exh. 19) dated 883 July 29/30, 1965. On August 19, 1965, fabricated level plans (Exhibits 24 and 38) prepared by A 3 were sent to A 4 as annexures to Exhibit 106 which ran as under: "We are enclosing herewith two prints of spot level of land area to be dressed and levelled at our Trombay plot. The whole plot should be brought to a level of 102.00 as directed. Please return to us a copy of the Blue Print showing spot levels duly signed as a token of acceptance of the same for payment." While A 4 retained one of the spurious plans viz. Exhibit 38 with himself, he returned the other viz. Exhibit 24 after putting his initials thereon. Thereafter A 3 endorsed on the letter Exhibit 106 that 'the print signed by A 4 should be filed by Sukhtankar (P.W. 13) who is in charge of the filing section. ' Accordingly, Sukhtankar filed Exhibit 106 alongwith Exhibit 24 in the Bill Section. The actual rock cutting operations commenced with effect from August 1, 1965 and on August 27, 1965, A 4 prepared and submitted the first running bill (Exhibit 51) indicating that 8,00,000 cft. of cutting work and 80,000 cft. of filling work had been completed. This bill was accompanied by the certificate of A 3 reading as under : "The measurements on which column No. 3 of this bill are based were taken by me on 24 8 65 and recorded at pages of MMC No. 7201. Certified that the quantities of work actually executed as shown in column No. 4 has actually been done and in no case less than the on account payments claimed. " The above certificate was countersigned by A 2 on August 26, 1965. A 2, A 3 and A 4 also signed measurement certificate (Exhibit 52) which read as follows: "We certify that the measurements given above are the actual works carried out in accordance with the drawings and specifications as indicated in the work order referred to above. " On the basis of these certificates, the first on account running bill was passed and paid for. Thereafter the second and third running bills and measurement certificates Exhibits 53 and 54 dated Septem 884 ber 16, 1965 and November 17, 1965 respectively claiming that the additional cutting work of 5,00,000 cft. and 8,00,000 cft. had been done were likewise prepared by A 4 and signed by A 3 and counter signed by A 2. The fourth running bill and measurement certificate (Exh. 55) dated February 22, 1966 claiming that additional work to the extent of 7,00,000 cft. had been done was prepared by A 4 and signed by A 3. This bill which was countersigned by K. section Joshi, another Senior Engineer who was put incharge of the Project in the absence of A 2 who had been transferred to Delhi was also paid. On November 8, 1966, one Gurunath Naik (P.W. 17) who was working as a Junior or Assistant Engineer for some time in Bombay and for the remaining period at Allahabad, Kanpur and Mugalsarai was called by A 1 and asked to see Ramrao, the then Junior Engineering Manager. Accordingly Naik met Ramrao who directed him to go to the spot and have the level drawings. Pursuant to this direction, Naik went to the site for spot verification and reported to Ramrao vide Exhibit 18 that excepting at one place where he got a level of 102 9 nowhere else did he get a level of 102. Naik also reported that as against an area of 7.4 acres which had to be levelled hardly an area of 4.8 acres was attempted to be levelled. On December 30, 1966, A 4 submitted his final bill (Exh. 56) claiming to have completed the work by August 11, 1966. This bill bore the certificate dated December 29, 1966 of A 3 to the effect that the measurements on which column No. 3 of the bill was based was taken by him on that date, and had been recorded in the measurements of the M.B.M.C. book. A 3 also recorded a further certificate to the effect that the work had been completed 100% according to the specifications and drawings. This certificate of A 3 was followed by another certificate of A 4 that he accepted the above certificate and certified that the amount of payment which he received on that bill would be in full and final settlement of all his claims in respect of the work excepting the refund of his security deposit. By this bill, A 4 claimed to have done 3,84,720 cft. of cutting work and 18,200 cft. of filling work in addition to the work covered by the four earlier running bills. Thus A 4 claimed to have done 31,84,720 cft. of rock cutting work and 98,200 cft. of filling work. On this bill, which bore the certificates of A 3 and A 4 was countersigned by Ramrao on December 30, 1961 and wherein it was falsely claimed by A 4 that the work was completed on August 11, 1966 although that date was also much beyond the stipulated date A 3 recorded the following note: 885 "The final bill amounts to Rs. 6,51,674/ and is in excess of work order amount by Rs. 52,084. Since this excess is within 10% of the ordered amount, M.E. may kindly approve." Accordingly the papers were laid before A 1 who accorded the desired approval the moment the bill was laid before him and sent it for payment to the Accounts Officer ignoring the practice which required all such bills involving an excess of 10% over the sanctioned amount to be submitted to the Chairman for sanction. On the bill coming before the Accounts Department for scrutiny, it pointed out that since the actual work exceeded the sanctioned amount by Rs. 52,084/ for which originally the approval of the Chairman was taken, the excess needed to be regularised by obtaining his sanction. It was also pointed out that as the contractor had not completed the work within the stipulated time, the question of imposition of penalty also required to be considered. On the pay order being returned to the Engineering Department, Ramrao, the then Deputy Engineering Manager, submitted the following reply vide Exhibit 59 dated January 12, 1967: "The work is now completed as required. However to acquire the required level and gradient, the quantity of work has increased. The party has now submitted their final bill for this work amounting to Rs. 6,51,674/ which is in excess by Rs. 52,084/ than the original amount of work order. The excess is within 10% of the original estimate, M.D. is therefore requested to kindly approve the excess work done and to pass the final bill for Rs. 6,51,674/ . As per the work order, the work was to be completed within 4 months (120 working days). However, the Contractors could not complete this work including the disposal of the excavated stuff within this time limit due to the fact that there was no approach available to this plot. The party has completed the work expeditiously, after the approach was given to them by M/s. Tatas. M. D. is therefore, requested to consider this aspect and approve the time limit extension upto 11 8 1966, the date on which the party has completed the work." 886 On the matter coming back to the Finance Department, Shende (P.W. 16) pointed out that not only the quantities of rock cutting and filling work which were found as a result of the survey made between March 21 and 26, 1965 had been enormously inflated in the work order but the work claimed to have been done also exceeded the inflated figures mentioned in the work order. He, therefore, suggested that the Department might agree to the payment of extra amount to A 4 subject to A 1 's obtaining the Board 's ratification. Sometime before March 28, 1967, Krishnaswamy Rajam (P.W. 1), the Chief Internal Auditor, was summoned by the Managing Director and the General Manager and was asked to have a personal talk with A 3 in connection with the matter. On P.W. 1 's questioning A 3 on March 28, 1967, the latter made confessional statement (Exh. 21) which is reproduced below for facility of reference: "Regarding rock cutting and filling at Trombay site I wish to bring to your kind attention the following: I was assigned to this job after the work was started at site by M/s N. N. Desai. The original estimates for cutting and filling were 16,80,000 cft. and 8,00,000 cft. respectively. It was later revised to 23,30,450 cft. and 31,500 cft. for cutting and filling. I have got the workings for this revision with me at Ahmedabad. (He refers to the genuine level statements and plans and worksheets Exs. 22 and 23 which were prepared by him under the directions of Varandani between 21st and 26th March, 1965). Later on I was advised by my superiors to give a still further upward revision giving the quantities as 29,30,450 cft. for cutting and 90,000 cft. for filling. The work sheets prepared by me and signed by contractor only (N. N. Desai) has no bearing to actual quantities involved. I had merely acted as asked by my superiors in preparing worksheets accordingly which has resulted in this upward revision. I have also given measurement certificates in this regard in line with the revised wrong quantities. I realise now this has resulted in making excess payments to the contractor. I beg to be excused for having done such a thing which was done solely at the instance of my superiors in Engineering Depart 887 ment. E.M. (accused No. 1) and Dy. E.M. are aware of this. " Thereupon P.W. 1 put up the papers before the Managing Director and the General Manager who advised him to start investigation on particular lines. During the course of the inquiry, A 2 told P.W. 1 that the work order which as far as he remembered was prepared by A 3 was cursorily signed by him due to heavy rush of work and that while checking the running bills submitted for payment, he normally checked the percentage of progress of work certified by the Assistant Engineer. On further investigation made on April 1, 1967, A 3 produced the genuine level statement (Exh. 22) and the work sheet (Exh. 23) before P.W. 1 and told him that the substitution of the fabricated level statement and work sheet relating to rock cutting and filling at Trombay was done at the instance of Joshi, A 2 and A 1 and that they were aware of the same. To the further question as to what was the basis for the work order for the figure of 29,00,000 cft. of rock cutting and 90,000 cft. of filling, A 3 told P.W. 1 that there was no basis for the work order and the quantities were fixed to suit sanctioned amount. On a query being made by P.W. 1 from Ramrao regarding the final bill, he admitted that he had not personally checked the calculations and had counter signed the bill relying on the accuracy of the measurements shown in the bill which was prepared by A 3. He further stated that he had not personally checked the calculations based on the final bill and initialled joint levels which according to him were normally done by the Assistant Engineer. During the course of this inquiry, Murthy (P.W. 18) was deputed by A 1 and Krishnaswamy (P.W. 1) to go to the spot and find out the work which had actually been done. Thereupon, Murthy (P.W. 18) submitted his interim report on April 6, 1967 pointing out that at only one place the level was 103.94 and elsewhere it remained much more. By his final report (Exh. 44) dated April 20, 1967, Murthy (P.W. 18) pointed out that actually on the spot only 9,73,000 cft. of rock cutting and 50,000 cft. of filling had been done. After recording the statements of A 2, A 3 and A 4, Krishnaswamy (P.W. 1) submitted a detailed report (Exh. 25) on April 8, 1967 to the Managing Director through the Financial Controller. In his report, P.W. 1 also pointed out that contour plan/levels statement which in case of this nature are jointly signed by the contractor and the representative of the Engineering Department were not available in the instant case for inspection and that A 3 had produced a level statement alleged to have been processed by him and Varandani which was not signed by any body including A 3 's superiors. P.W. 1 also 888 pointed out in the course of the report that the quantities of rock cutting and filling shown in the work order were 29,30,450 cft. and 90,000 cft. respectively and that there was an increase of 6,00,000 cft. of rock cutting straightaway. Krishnaswamy (P.W. 1) also mentioned in his report that according to A 3, the level statement giving the figure of 29,30,450 cft. for cutting and 90,000 cft. for filling had been signed by A 4. On the report being put up before the then Financial Controller, he directed that before proceeding with the matter, it was necessary to call for the comments of A 1. Thereupon after calling for a report from Ramrao, A 1 gave his comments vide Exhibit 178 dated April 17, 1967 wherein after doubting the competence and qualification of P.W. 1 to hold the investigation, he offered to send one of the senior engineers from Western Branch to carry out an independent survey to find out the quantity of work done by A 4 and suggested that measurements might be made by reference to the kacha level statement (Exh. 125), the work sheet (Exh. 126) and the contour plan (Exh. 34) which were checked by A 2 and approved by him and which must be with the department. On April 18, 1967, A 1 sent for A 3 and questioned him in regard to the matter. In the statement penned by A 3 himself, he stated that he changed the levels of drawing of Trombay plot regarding rock cutting and filling job at the instance of A 2 and KSJ (i.e. Joshi) but did not inform A 1. On May 3, 1967, A 1 issued show cause notices to A 2 and A 3 with a view to hold departmental enquiry against them. By his reply dated May 20, 1967 to the show cause notice, A 3 stated that he had changed the original contour plan at the instance of A 2. On getting information on July 15, 1967 that A 4 was having some rock cutting done on the site although he had in his final bill claimed that he had fully completed the work on August 11, 1966, A 1 and A 2 visited the site along with Lakshmanan, the Operations Manager and finding that the work of rock cutting was still going on and that the claim of A 4 as certified by A 3 and countersigned by Ramrao about the work having been completed on August 11, 1966 was apparently false had the measurements of rock cutting and filling work taken by Ganapathy. As the measurements taken by Ganpathy were on the basis of level plans prepared by Tatas in which the bench mark was 94.5 as against the bench mark of 100 for the survey in question, the Managing Director had the measurements taken by M/s R. L. Dalal & Co. The report of Dalal & Co. showed that the rock cutting work done was 9,60,000 cft. and filling work was 1,96,000 cft. 889 On July 28, 1967, the Managing Director issued a charge sheet to A 1, A 2, A 3 and Ramrao. In his reply (Exh.64) dated August 4, 1967 to the charge sheet, A 3 submitted that whatever he did was under the orders of A 1 and the Deputy Engineering Manager. This time he did not mention A 2 to be responsible for anything done by him. On the same day i.e. August 4, 1967, A 1 sent for A 3 in his cabin and questioned him in the presence of three other officers viz. Roy Chowdhary (P.W.2), who was the Deputy Financial Controller, Shriyan (P.W.23), the Assistant Engineer, and Vora, the Senior Engineer. On this Occasion, A 3 allegedly made statement (Exh.43) absolving A 1 and throwing the entire responsibility on A 2. While the three other officers and A 1 signed the statement (Exh.48) made by A 3, A 3 declined to sign it and fled away from the chamber on some excuse and rushed to the chamber of Krishnaswamy, Chief Internal Auditor whereupon Roy Chowdhary (P.W.2) also followed A 3 to the chamber of Krishnaswamy. In the chamber of Krishnaswamy, A 3 resiled from the statement. Having regard to the position adopted by A 3 in resiling from his earlier statement of that very day before A 1, Roy Chowdhary reminded him that in the morning in his presence, he had stated that it was A 2 who was responsible for asking him to change the drawing and increase the quantities. To this question of Roy Chowdhary in the chamber of Krishnaswamy, A 3 replied in the negative and stated that A 1 called him and Joshi into his room and instructed him personally to increase the quantity. When questioned by Roy Chowdhary as to why he did not come out with that truth in the room of A 1 in the presence of Roy Chowdhary, A 3 replied that he did not do so out of fear or A 1. In his reply to the charge sheet, Ramrao inter alia stated that he signed the bill (Exh.56) relying on the certificate of A 3 who had been assigned to the job and added that according to the practice prevailing in the Corporation, Senior Engineers were not expected to verify the measurements. Elaborating his explanation, he stated that just as Senior Engineer, Doraiswamy could not proceed to a BPI nor Senior Engineer Vora nor Senior Engineer Chari could proceed to an installation just to verify the billed quantities in view of the fact that there were a number of bills on each work order and so many work orders for each location. Similarly in the Branches, Senior Engineers who were controlling the work for so many depots and installations were not expected to verify the quantities in each bill; that however, if there was a dispute with the contractor or there was some other reason to doubt the correctness of the Assistant Engineer 's certificate, the Senior 890 Engineer might either take measurements himself or get them taken by another Assistant Engineer; that subsequent to the counter signature by the Senior Engineer, the bill was passed on to the Engineering Bills Section where the bills were checked by the Accountant against sanctions, work order, rates and amounts, deductions for cement A.C. sheets or other materials supplied and security; deposit etc; that the Accountant prepared the pay order giving all these details for signature by a Senior Engineer as far as possible other than the countersigning Senior Engineer; that the bill then went to the Accounts Department where it was subjected to further detailed scrutiny before payment; that on December 30, 1966 Vaidya brought the bill for Rs.79, 674/ dated December 30, 1966 to him for counter signature; that it would have normally been put up to K. section Joshi but was brought to him as he was not available; that Vaidya was the Assistant Engineer who had handled that contract from the time of placing the work order; that the bill was for the work carried out by the Contractor subsequent to the previous 'on account bill ' 21 2 66 (nearly 10 months earlier) i.e. about 3.18 lakhs cft. at Rs. 20/ per 100 cft. of cutting and 18,200 cft. of filling at Rs. 15/ per 100 cft; that he had visited Trombay number of times in connection with other works during the period commencing from August, 1966 and was aware that the Contractor had carried out approximately that much work during 1966; that the extra quantity required sanction of competent authority; that the previous bills passed showed that the major portion of the work was carried out during the period August to December, 1965 and about 7 lakhs CFT of cutting during December, 1965 to February, 1966; that A. section Krishnaswamy who placed the work order had countersigned bills upto 21 lakhs cft. of cutting and 80,000 cft. of filling as early as November 17, 1965 and subsequently K. section Joshi had countersigned a bill for an additional 7 lakhs cft. of cutting and the contractor had already been paid Rs. 5.72 lakhs less security deposit; that he, therefore countersigned the bill dated December 30, 1966 and passed it on to M.E. for approval of the extra quantity of cutting; that M.E. approved on the same date and the bills was sent to Engineering Bills for scrutiny by the Accountant in respect of sanctions, work order terms etc; that he also particularly instructed that the bill should be shown to K. section Joshi before the pay order was issued since normally the bill should have gone to him for counter signature; that the Accountant carried out his instructions; that the counter signature did not denote final passing of a bill but only that it might be proceeded further and subjected to all the necessary administrative and financial checks before payment; that all the bills for the work had been certified by the Assistant Engineer incharge who was fully familiar with work and the previous bills had been counter 891 signed by colleagues of status equal to him; that he had no reasons to suspect any malpractice or mistakes and also there was no dispute with contractor; that he had exercise the normal technical checks which were the functions denoted by counter signature as per the prevailing practice and that countersignature did not imply correctness of the quantities certified by the Assistant Engineer (who alone was responsible for the correctness) in either the current or previous bills. When the matter was thus pending, a confidential information reached Rege, the Deputy Superintendent of Police, C.B.I. (P.W. 27) who registered the case on December 27, 1967. During the course of investigation, he visited the office of the Corporation, took charge of all the concerned documents, had the site measured by Shivashankar, Technical Examiner, Central Intelligence Service, (P.W.4) according to whom the cutting and filling work done by the contractor was to the extent of 9,61,000 cft. and 1,50,000 cft. respectively and after securing the requisite sanction, prosecuted A 1, A 2 and A 3 and also submitted the charge sheet against A 4 with the result that all the four accused were convicted. In these appeals, we have had the advantage of hearing full dressed arguments of counsel on both sides who diligently prepared the case and put across their respective contentions with great ability. We must point out at the outset that although the trial court had clearly acquitted A 1 of the charge under section 409 read with section 120 B and section 109 of the Indian Penal Code it unfortunately forgot to keep that fact in mind with the result that while concluding its judgment it held him guilty on that charge as well. In the circumstances, it was not open to the High Court in the appeal by A 1 to go into that charge and reverse the findings arrived at by the trial court. We will accordingly be concerned with the question of validity of A 1 's conviction under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act only but so far as A 2 is concerned, we will have to examine the validity of his conviction under all the charges. Before examining the sufficiency or otherwise of the material bearing, on the charges against both the appellants, we consider it necessary to have a clear concept of the meaning and ambit of the phraseology "by corrupt or illegal means or by otherwise abusing his position as public servant" used in section 5(1)(d) of the Prevention of Corruption Act, 1947 (hereinafter referred to as 'the Act ') for the contravention of which the appellants have been convicted. It will be advantageous in this connection to refer to two decisions rendered by this 892 Court in M. Narayanana Nambiar vs State of Kerala(1) and Major section K. Kale vs State of Maharashtra.(2) In the first case, Subba Rao, J. (as he then was) while construing clause (d) of sub section (1) of section 5 of the Act observed: "The pharaseology 'by otherwise abusing his position as public servant ' covers acts done otherwise than by corrupt or illegal means by an officer abusing his position. The gist of the offence under this clause is that a public officer abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage. "Abuse" means misuse i.e. using his position for something for which it is not intended. That abuse may be by corrupt or illegal means or otherwise than those means. The word 'otherwise ' has wide connotation and if no limitation is placed on it the words 'corrupt ', 'illegal ' and 'otherwise ' mentioned in the clause become surplusage, for on that construction every abuse of position is gathered by the clause. So some limitation will have to be put on that word and that limitation is that it takes colour from the preceding words along with which it appears in the clause, that is to say something savouring of dishonest act on his part. The contention of the learned counsel that if the clause is widely construed even a recommendation made by a public servant for securing a job for another may come within the clause and that could not have been the intention of the Legislature. But in our view such inocuous acts will not be covered by the said clause. The juxtaposition of the word otherwise ' with the words "corrupt or illegal means" and the dishonesty implict in the word "abuse" indicate the necessity for a dishonest intention on his part to bring him within the meaning of the clause. Whether he abused his position or not depends upon the facts of each case. " Following the decision in M. Narayanan Nambiar vs State of Kerala (supra), it was held by this Court in Major section K. Kale vs State of Maharashtra (supra) that the abuse of a position in order to come within the mischief of the section must necessarily be dishonest so that it may be proved that the accused caused deliberate loss to the department. It was further held in this case that it is for the prosecution to prove affirmatively that the accused by corrupt or illegal means or by abusing his position obtained any pecuniary advantage for some other 893 person. It would, therefore, be necessary to find out in this case as to whether the accused abused their position and acted dishonestly or with a corrupt or oblique motive in having the contract in question entrusted to A 4. As the courts below have rested their judgments on a constellation of circumstances, it would be well to bear in mind the fundamental rule relating to the proof of guilt based on circumstantial evidence which has been settled by a long line of decisions of this Court. The rule is to the effect that in cases depending on circumstantial evidence, there is always the danger that conjecture or suspicion may take the place of legal proof. In such cases the mind is apt to take a pleasure in adapting circumstances to one another, and even in straining them a little, if need be, to force them to form parts of one connected whole; and the more ingenious the mind of the individual, the more likely it is, considering such matters to cover reach and mislead itself, to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete. In cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypotheisis of the guilt of the accused. Again, the circumstances should be of a conclusive nature and they should be such as to exclude every hypothesis but the one proposed to be proved. In other words, there must be a chain of evidence so far complete as not to leave any reasonable grounds for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused. (See Hanumant Govind Nargundkar vs State of M.P.,(1) Palvinder Kaur vs State of Punjab(2) and Charan Singh vs State of U.P.(3). The principle that inculpatory fact must be inconsistent with the innocence of the accused and incapable of explanation on any other hypothesis than that of guilt does not mean that any extravagant hypothesis would be sufficient to sustain the principle, but that the hypothesis suggested must be reasonable. (See Govinda Reddy vs State of Mysore(4). 894 Keeping in view the aforesaid construction placed on section 5(1)(d) of the Act and the principles with regard to proof of guilt based on circumstantial evidence, let us now turn to the various circumstances which have been relied upon by the High Court in holding the appellants guilty and see whether they factually exist and if so whether they are of such a character as to be wholly incompatible with the innocence of the appellants and consistent only with their guilt. In so doing, we purpose to divide the aforesaid circumstances under the following broad heads and deal with them seriatim: 1. The conduct of the appellants evidencing their keenness to have the contract entrusted to A 4. 2. Issue of work order (Exh. 19) with inflated figures relating to rock cutting and filling. Removal of statement of level plan (Exh. 22) and work sheet (Exh. 23) from the departmental file and fabrication and substitution in their place of the fabricated ones by A 3. 4. Despatch on August 19, 1965 of spurious level plan (Exh. 24) and its copy (Exh. 38) by A 2 to A 4 as annexures to Exhibit 106. Counter signing of the on running bills by A 2. 6. The initialling of the final bill by A 1. The first circumstance relied upon by the High Court in this behalf is that though the revised tender notice was limited to the eleven contractors who had originally submitted their tenders in response to the Tender Notice (Exh. 28), the appellants improperly got a tender form issued to A 4 and entertained by the Tender Committee. It is true that the copies of Exhibit 15 on which the prosecution has sought to rely were sent by registered post to the eleven original tenderers by the Engineering Department of the Corporation but it cannot be overlooked that there is nothing in Exhibit 15 or elshhere on the record to indicate that other contractors were precluded from submitting their tenders or that the corrigendum extending the date for submission of the tenders was neither intended to be published nor was it actually published. It seems that the attention of the High Court was not drawn to the communication (Exh. 29) dated March 9, 1965 addressed by Ranganath, Public Relations 895 Officer, to the Advertisement Manager, Times of India and others and the corrigendum forming annexure thereto which ran as under: " INDIAN OIL CORPORATION LIMITED (MARKETING DIVISION) Clarke Road, Mahalaxmi, Bombay 34, WB, India IN REPLY PLEASE REFER TO PR 31 317 9th March, 1965 To The Advertisement Manager, The Times of India, (Bombay) The Indian Express, (Bombay) Free Press Journal, (Bombay) Dear Sir, Subject: Tender No. 249/65 Corrigendum Attached is text of an advertisement for IMMEDIATE Publication utilising the minimum possible space under Public Notice/Tenders or in its appropriate place. We would appreciate your treating this request as URGENT. Thanking you. Yours faithfully, Sd/ (B. V. Ranganath) Public Relations Officer Encl: One. Engineering Manager, H.O. with reference to their inter office memo No Eng/ASK dated 9 3 1965. We are trying to get it published on March 10. INDIAN OIL CORPORATION LTD. (MARKETING DIVISION) Corrigendum to Public Tender No. 249/65 The last date for receiving this Tender has been extended to 15th March, 1965 at 2 30 P.M. and will be opened the same day at The attention of the High Court also does not seem to have been invited to the above noted endorsement at the foot of Exhibit 29. The High Court also seems to be wrong in thinking that out of the nine contractors who submitted their tenders in response to the revised tender notice, eight were from the original nine tenders and the ninth was A 4. A comparison of the two lists viz. the one of the original tenders and the other of those contactors who submitted their tenders in response to the revised tender notice would make it clear that five contractors appearing in the second list were fresh tenderers. The Financial Controller 's note (Exh. 17) dated April 2, 1965 which appears to be the outcome of some personal pique itself shows that it was only on April 15, 1965 that it was agreed between the members of the Tender Committee that the grant of the contract would be confined to one the of the three lowest tenderers, one of whom was A 4. The fact that none of the eleven officers of the Finance and the Engineering Department of the Corporation who handled the file relating to the grant of the contract in question ever raised any objection regarding the improper reception or entertainment of A 4 's tender by the Engineering Department is a proof positive of the fact that there was nothing wrong about the issue of tender form to A 4 or its entertainment by the appellants. Thus it is clear that the first circumstance relied upon by the High Court had no factual existence and could not be pressed into service against the appellants. The next finding of the High Court that while Ram & Co. was best fitted for entrustment of the contract in question in view of the vast experience and equipment possessed by it, A 4 did not have any such merit. It is a matter of common knowledge that rock cutting is not a specialised job and no extra ordinary skill or experience is required for the same and that every civil construction involves some sort of rock cutting. It is also in evidence that A 4 who was the Corporation 's old and tried contractor had previously executed 98 works including the one on the An top Hill in Bombay for the Corporation to its entire satisfication, and out of the aforesaid works many related to installations which were more complicated than rock cutting and filling. It would also be noticed that in the notes put up 897 by them neither Srivastava (P.W. 5) nor Shivananda, Superintendent, nor Khurana, Assistant Financial Controller of the Finance Department, nor the Operation Manager ever pointed out that A14 lacked the requisite experience or competence which disentitled him to the grant of the contract. In fact Shivananda and Khurana had suggested as an alternative to inviting fresh tenders that A 4 should be asked to reduce his rates in view of the revised figures on account of which the value of the contract had gone up considerably. It would also be noticed that the High Court while rightly holding that Exhibit 122 was not delivered to A 1 by Roshan Lal (P.W. 19) tell into an error in observing that A 1 had a hand in suppressing it. It seems to have escaped its notice that at the negotiations conducted on April 17, 1965 with the three lowest tenderers viz. Ram and Co., Liberty and Co., and A 4 by the Tender Committee, of which P.W. 5 was a prominent member, Roshan Lal was present and while pressing his firm 's claim to the grant of the contract he did draw the attention of the members of the Committee to the contents of Ext. 122 sent earlier by his firm to the Corporation. This is evident from Roshan Lal 's own admission that he informed the corporation in writing as to his experience in the line and whatever he had written he had also told the concerned officers who were two or there in number. If A 1 would have had a hand in suppressing Ext. 122 he would not have allowed it is to remain on the file. That apart a bare perusal of report Ext. 33 which is fairly detailed is enough to show that neither A 1 nor A 2 was interested in suppressing or distorting any material fact. There was, therefore, hardly any justification for the observation in question. The third finding of the High Court that the appellants told Vrindani (P.W. 20) and Vaidya (A 3) that it had already been decided to entrust the contract to A 4 and in order not to loose time, a joint survey should be made, is also erroneous. It is unbelievable that A 1 and A 2 who were pre occupied with several projects would go and tell Vrindani who was three or four steps below them and was admittedly not a member of the conspiracy nor concerned with policy matters that it had been already decided to assign the contract to A 4. The aforesaid briefing attributed to the appellants also seems to be incredible in view of the fact that it was only on the basis of the level measurements taken by P.W. 20 and A 3 during the survey made by them between March 20 and 26, 1965 that A 4 turned out to be the lowest tenderer and at the time when the briefing is alleged to have been given the lowest tender was of Ram & Co. 898 The insinuation implicit in the fourth finding of the High Court that Exts. 16, 17, 30 33 and 123 led to the inference that A 1 was the author and architect of the proposal for acceptance of A 4 's tender, is also unwarranted. There is nothing in these documents which can be interpreted to indicate that the appellant was actuated by any ulterior or corrupt motive or that he was guilty of any mis demeanour, irregularity or impropriety. On the contrary the said documents particularly Exts. 16 and 33, which like an open book fairly set out all the facts and circumstances bearing upon the allotment of the contract in question including the claim thereto of Ram & Co. not only manifest, that the procedure referred to by P.W. 1 in his deposition for inviting and finalizing the tenders was meticulously followed in the present case, but also establish A 1 's bona fides. It has also to be borne in mind that the Tender Committee which comprised of the Operation Manager and the Financial Controller in addition to A 1 had only an advisory role to play and the decision to entrust the contract to a particular contractor lay with the Chairman of the Board of Directors in consultation with the coordinator and Sales Manager who was above the Tender Committee. That the appellant 's proposal favouring A 4 was in the interest of the corporation both from the point of view of economy as well as speedy and satisfactory execution of work and was solely inspired by his concern to avoid the sad experience which the corporation had in respect of rock cutting work at An top hill with the Kore Brothers which was a new party is evident from the following endorsement made on A 33 by H. B. Patel, Operation Manager: "In view of the urgency and our past experience with a new party at An top hill, I agree to Senior Engineer 's proposal that we give the job to M/s. N. N. Desai at the lowest tendered rates. " The fifth finding of the High Court that the appellants had negotiations on their own with A 4 with a sinister object is also against the weight of the material on the record. The act of the appellants in trying to ascertain from A 4 whether he was prepared to reduce his rates to the level of M/s. Ram & Co. which seems to have been taken in consultation and agreement with P.W. 5 was, in our opinion, guiltless, It would be well to remember in this connection that Shrivastava P.W. 5 himself admitted in the course of his deposition that there was practice in their corporation of asking the second lowest tenderer to match his rates with the lowest tender. The proposal about the allotment of work in favour of A 4 was, therefore, not only consistent with the practice but was also in the interest of the corporation. 899 In view of the foregoing we are inclined to think that the conduct of the appellants in prefering A 4 to any new contractor did not savour of dishonest intention. Re. 2: Coming to the work order (Exh. 19) containing inflated figures which is the corner stone of the prosecution case, it may be pointed out that the prosecution has not been able to produce any evidence showing the circumstances under which it was prepared. The observation od the High Court that the work order must be the creation of not only A 2 but of A 1 as well seems to be based upon mere conjecture. It would be noticed that the work order does not bear the signatures of A 1 and there is nothing to show that in the normal course, the work order had to come to A 1 before being issued to A 4 We cannot also in this connection afford to lose sight of the observations made by the trial court at page 279 of the Paper Book that 'it is a common ground that accused No. 1 is not concerned with the making of the order and that it is also a common ground that a work order is issued by the Engineer Incharge '. In these circumstances, it is difficult to understand how the High Court came to the conclusion that the work order (Exh. 19) was the creation of not only A 2 but of A 1 as well. It seems that the finding of the High Court was influenced by its finding with regard to Exhibits 16 and 33. In view, however, of our finding with regard to Exhibits 16 and 33, the observation of the High Court that the work order was also the creation of A 1 cannot be substained. We will, accordingly advert to the material on the record with a view only to see how far it reflects on the bonafides of A 2. The prosecution has not led any evidence to prove that A 2 dictated or prepared the work order. The proven facts show that according to the normal practice prevalent in the department it is not the Senior Engineer like appellant No. 2 who is incharge of the Project that prepared a work order but an assistant or Junior Engineer in charge of the work working under him. Although Varandani has in the course of his deposition tried to suggest that the work order was prepared by A 2, his suggestion cannot be relied upon in the face of Exhibit 67 wherein he told P.W. 1 that the work order was presumably prepared by Vaidya, A 3. It is highly improbable that on the very day of the grant of the sanction of the contract in question A 2 would take the extremely hazardous step of inflating the figures to obtain undue advantage for A 4 specially when he knew that the fraud would be at once discovered by reference to the sanction which had been transmitted to the Finance Department. The prosecution theory that the work order giving inflated figures was not only signed but was also prepared by A 2 is also negatived 900 by the following endorsement on the copy of the work order sent to the Bills and Accounts Sections of the Engineering Department of the Corporation: "The above has Chairman 's approval on our note of even reference dated 7th April, 1965. Please have the agreement executed. Earnest money of unsuccessful tenderers may be refunded early. " The above quoted endorsement completely demolished the prosecution case. If A 2 had been the author of Exhibit 19, or had suspected that his subordinate would have dared to inflate the quantities of the work, it is inconceivable that he would have made the above quoted insertion giving the particulars of the above mentioned note meant for the Chairman 's aproval in the copy of the work order addressed to the Bills and Accounts Sections which would have furnished a valuable clue for the speedy detection of the fraud that is alleged to have been perpetrated. Again if A 2 were really a conspirator who had falsely inflated the figures of rock cutting and filling in the work order he would have seen to it that the potential documentary evidence embodied in Exhibit 125 which showed the genuine levels on the spot was destroyed or done away with. The fact that he did not do anything of the kind raises a strong doubt about his culpability. Thus though it cannot be gainsaid that A 2 has been extremely negligent in not scrutinising the papers, it seems to us that he affixed his signatures in a routine manner to the work order prepared by his subordinate engineer without realizing the importance of his act placing implicit faith in the integrity of the latter. Re. 3: There is no clear, cogent and convincing evidence to show that A 1 or A 2 or both had a hand in the removal of the level plan (Exh. 22) or the work sheet (Exh. 23) from the departmental file relating to the contract in question and substitution in their place of the faked level plan (Exh. 24) and work sheet (Exh. 38) which were admittedly fabricated by A 3. The statements made from time to time by A 3 in this behalf being contradictory and discrepant as would be evident from the following table: ____________________________________________________________ section Date No.of Text of the statement No the Exhi bit ____________________________________________________________ 1 28 3 1967 21 The Original estimates for cutting and filling were 16,80,000 cft. and 8,00,000 cft. respectively. It was later revised 23,30,450 cft. and 31,500 cft 901 ____________________________________________________________ section Date No.of Text of the statement No the Exhi bit ____________________________________________________________ for cutting and filing. Later on I was advised by my superior in Engg. Dept., E and Dy. E.M. to give a still further upward revision giving the quantities as 29,30,450 cft. for cutting and 90,000 cft. for filling. 2 1 4 1967 36 ASK, KSJ and SPB asked me to substi tute SHS relating to rock cutting & filling at Trombay which was resulted in larger quantities of cutting and filling and they are fully aware of it. 3 18 4 1967 39 & 41 I told R. Krishnaswamy when he called me on 29 3 1967 that A.S. Krishnaswamy and K.S. Joshi told me to change the levels of drawings of Trombay plot regarding rock cutting/filling job . In reply to the further query of R. Krishna swamy, I told him that I did not inform M.E. about this and that he might be knowing. 5 20 5 1967 69 In addition to the statement dated 18 4 1967, I have to submit that I was asked to change the original contour, place by A.S. Krishnaswamy, Senior Engineer. 6 4 8 1967 43 Sometime in September, 1965, A.S. Krishnaswamy told me to increase the levels at random and bring the quality to about 30 lakhs cft. I did so accordingly. 7 4 8 1967 42 The Engineering Manager called me and Shri Joshi into his room one day and instructed me personally to increase the quantity. ____________________________________________________________ the prosecution ought to have made a serious attempt to produce K. section Joshi whose testimony was essential to clear up the mystery in which the whole affair is shrouded. The non production of K. section Joshi who appears to have been one of the main actors in the drama has left a lacuna which is very difficult to bridge. In the present state of evidence, it is inconceivable that A 1 who admittedly had a meritorious record of service, had won commendation from the Board of Directors for designing a tank and saving considerable sums of money and who was the only Head of Department to be given three advance increments for his integrity and efficient work and who had no are to grind would be a party to the unholy conspiracy for the removal of genuine level plan and work sheet and their substitution by spurious ones simply to obtain some pecuniary advantage for A 4 who was neither his friend nor relative. The position of A 2 is also 902 not materially different as in his case also the prosecution has not been able to show that he derived any monetary gain out of the transaction. Re. 4 : A bare perusal of statement contained in Exhibit 43 which according to H.N. Roy Chowdhary (P.W. 2) and C. L. Shriyan (P.W. 23) was voluntarily and without any pressure made by A 3 is enough to show that it was in September, 1965 that A 3 increased the levels shown in the original drawings and brought up the quantity of rock cutting to 30 lakhs cft. This statement totally knocks the bottom out of the prosecution case that the spurious level plan and the work sheet were despatched to A 4 on August 19, 1965 as annexures to Exhibit 106. If the spurious plan and the work sheet came into existence in September, 1965, it is difficult to understand how they could be despatched to A 4 alongwith Exhibit 106 on August 19, 1965. The conclusion, therefore, is irresistible that when the communication (Exh. 106) was despatched to A 4, it was not accompanied by fabricated level plan (Exh. 24) and work sheet (Exh. 38) but by the genuine ones viz. Exhibits 22 and 23 and that it was later on that the genuine ones were removed and retained by A 3 who during the course of the enquiry by R. Krishnaswamy (P.W. 1) brought them from Ahmedabad and handed them over to P.W. 1. The ommission on the part of Shriyan who claims to be certain that A 3 got the tracings Exhibits 24 and 38 prepared by him in April/May, 1965 to contradict A 3 when he made the aforesaid statement (Exh. 43) is also intriguing and lends assurance to the correctness of our conclusion. 5: The first thing to be borne in mind with regard to the measurement certificates on the running bills is that it is the Assistant Engineer incharge of the work who is responsible for taking measurements of the actual quantities of the work executed by the contractor for entering the same in the measurement book and for recording a certificate that the measurements given in the bill are of the actual work carried out on spot in accordance with the Department 's drawings and specifications. It has also to be remembered that A 1 had to look after the Corporation 's projects and installations all over India and A 2 had to look after and supervise a large number of the Corporation 's projects under the Western Branch which included installations at Sabarmati, Ahmedabad, Okha and Kandla in Gujarat and Sewri, Wadala and Trombay in Maharashtra and parts of Madhya Pradesh. It cannot also be ignored that according to Ganpati (D.W. 3) when a Senior Engineer visits the site, he determines the progress of the work by visual inspection determining visually the approximate 903 quantity of the work done. All this apart, an examination of the running bills (Exhibits 51, 53, 54, 55 and 56) shows that all of them bear the certificates as referred to and reproduced at page 11 of this judgment. It would be noted that whereas first three of these bills bear the counter signatures of A 2, Bill (Exh. 55) bears the countersignatures of K. section Joshi, Senior Engineer and Bill (Exh. 56) bears the counter signatures of Ramrao, another Senior Engineer, who was absolved in the departmental enquiry. Now the fact that A 2 countersigned the first three bills does not appear to be material in view of the following statement made by Ramrao vide Exhibit 107: "I had no reason to doubt Shri Vaidya 's figures. Countersignature of a bill as per our prevailing practice is not indicative of verification but only indicates that there is no reason to doubt the correctness of the figures. " The fact that K. section Joshi, Senior Engineer, also countersigned the bill (Exh. 55) which contains inflated figures and no action was taken against him also lends assurance to the inference that the counter signatures were appended merely as a routine by the Senior Engineers who seem to have reposed blind and unflinching faith on the honesty of their subordinates. Now if Ramrao who countersigned the bill (Exh. 56) showing the quantity of cutting work as 31 lakhs cft. was exonerated in the departmental enquiry and no action was taken against K. section Joshi who made the wrong endorsement in respect of the measurement on Exhibit 55 or against Vora who had prepared the note (Exh. 58) showing that the work had been completed, it is difficult to understand how A 2 could be treated differently and criminal intention attributed to him. The finding of the High Court in respect of the third running bill (Exh. 54) that the very defence of A 2 would itself furnish the best evidence of the conspiracy involving A 1 is not correct for apart from other infirmities from which if suffer, it is well settled that the defence taken by one accused cannot in law be treated as evidence against his co accused. Re. 6 : The finding of the High Court that A 1 signed the bill (Exh. 56) and sanctioned excess amount involved knowing full well that the bill was not true is also against weight of the evidence on the record. It cannot in the first instance be forgotten that it was on July 29, 1965 that A 1 could have had occasion to see the figures of the work for which sanction was granted by the Chairman of the Board of Directors and the bill (Exh. 56) was put up to him on 904 December 30, 1967. In the absence of the sanction from which the genuine figures could have been gleaned, it would not be reasonable to expect A 1 to remember the sanctioned figures after the lapse of 17 months specially when it is admitted on all hands that being the head of the Engineering Department, he had to tour extensively to supervise several projects spread all over the country and to discharge multifarious duties in connection therewith. The bill, it would be noted was prepared by A 3 and was countersigned by no less a functionary than the Deputy Engineering Manager, Ramrao, who was next below A 1 in the hierarchy of the Department. In the note prepared by him, it was not pointed out by A 3 that the bill had to go to the Managing Director. The evidence in the case also shows that A 1 was not expected to meticulously scrutinize the bill but was concerned only with the initialling of the note which although it had passed through several hands did not indicate that the competent authority to grant sanction for the excess amount was the Chairman of the Board of Directors. It will also be wrong to hold A 1 responsible for simply initialling the note contained in Exhibit 56 without examining Ramrao who approved the bill including the note and also countersigned the measurement certificate before it came to A 1. In the circumstances, the mere initialling by A 1 of the bill alongside the note marked for him by A 2 is, therefore not a circumstance which can unmistakably be said to point to the guilt of the appellant. An analysis of the circumstantial evidence adduced by the prosecution does not in our opinion lead to an unerring certainty that A 1 and A 2 acted with any dishonest or corrupt motive or abused their position. In conclusion we cannot help observing that non examination by the prosecution of Ramrao, Joshi, Vora and Patel who were material witnesses for the unfolding of its case has left some yawning gaps in the evidence which we have found very difficult to bridge. If these persons had been produce many of the points which have remained obscure and hidden up would have been cleared up. For the foregoing reasons, we allow the appeals, set aside the convictions of the appellants and the sentences imposed upon them and acquit them of the offences with which they were charged. P.B.R. Appeals allowed.
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Both the appellants were officers of Indian Oil Corporation.
The Corporation invited tenders from experienced contractors for rock cutting, filling and levelling of certain land acquired by it.
On the notified date it opened the tenders received from eleven contractors.
But in the meantime since it made a change in the specification of work to be done it asked the tenderers to submit revised tender.
The direction to submit fresh tenders was restricted only to the original 11 tenderers.
Even so it was alleged that a tender form was issued by the appellants to A 4, who was not one of the 11 tenderers.
there was again a change in the specification of the work to be done at the suggestion of foreign collaborators.
The appellants were alleged to have asked the concerned officers of the Corporation to make a fresh survey along with A 4, keeping in view the suggestion of the foreign collaborators.
Eventually the contract was given to A 4.
The prosecution alleged that (1) the conduct of the appellants showed their keenness to have the contract entrusted to A 4.
(2) the issue of work order was inflated with figures relating to rock cutting and filling; and (3) the appellants removed certain original documents from the departmental files and substituted in their place fabricated material.
The appellants who were charged with offences under section 120B and section 109 IPC and section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act, 1947 were convicted and sentenced to undergo imprisonment.
On the question whether the appellants had been rightly convicted under section 5(1)(d) of the Prevention of Corruption Act.
Allowing the appeals, ^ HELD: 1.
An analysis of the circumstantial evidence adduced by the prosecution did not lead to the unerring certainty that the appellants acted with any dishonest or corrupt motive or abused their position.
[904 F] 2.
(a) It is well settled that abuse of position, in order to come within the mischief of section 5(1)(d) of the Act, must necessarily be dishonest so that it may be proved that the accused caused deliberate loss to the department.
Further it is for the prosecution to prove affirmatively that the accused, by corrupt or illegal means or by abusing his position, obtained any pecuniary advantage for some other person.
[892 G; 893 A].
(b) Again, the fundamental rule relating to the proof of guilt based on circumstantial evidence is that there is always danger that conjecture or suspicion might take the place of legal proof.
In such cases the mind is apt to take a pleasure in adapting circumstances to one another and even in straining them a 876 little, if need be to force them to form parts of one connected whole and the more ingenious the mind of the individual the more likely it is, in considering such matters, to over reach and mislead itself to supply some little link that is wanting, to take for granted some fact consistent with its previous theories and necessary to render them complete.
[893 B D].
(c) In cases where the evidence is of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused.
Again, the circumstances should be of a conclusive nature and should be such as to exclude every hypothesis but the one proposed to be proved.
In other words there must be a chain of evidence so far complete as not to give any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act must have been done by the accused.
[893 D F].
M. Narayanana Nambiar vs State of Kerala, [1963] Supp.
2 SCR 724; Major section K. Kale vs State of Maharashtra, ; ; Hanumant Govind Nergundkar vs State of M.P., [1952] SCR 1091, AIR 1952 SC 343; Palvinder Kaur vs State of Punjab, ; ; Charan Singh vs State of U.P., AIR 1967 SC 529; referred to.
(d) The principle that inculpatory fact must be inconsistent with the innocence of the accused and incapable of explanation on any other hypothesis than that of guilt does not mean that any extravagant hypothesis would be sufficient to sustain the principle, but that the hypothesis suggested must be reasonable.
[893 G].
Govinda Reddy vs State of Mysore, AIR 1960 SC 29; referred to.
In the instant case the conduct of the appellants in preferring A 4 to any new contractor did not savour of dishonest intentions on their part.
Although the notice was sent by registered post to the 11 original tenderers there is nothing in that notice or elsewhere on the record to indicate that other contractors were precluded from submitting their tenders or that the corrigendum extending the date for submission of the tenders was neither intended to be published nor was it actually published.
The High Court had missed this fact.
The High Court was also wrong in thinking that out of the nine contractors who submitted their revised tenders eight were from the original nine tenderers and the ninth was A 4.
In fact five of the contractors that submitted the fresh tenders were fresh tenderers.
Moreover none of the officers of the Finance and Engineering Department of the Corporation who handled the file relating to the grant of contract ever raised any objection regarding the improper reception or entertainment of A 4 's tender.
This showed that there was nothing wrong about the issue of tender Form to A 4 or its entertainment by the appellants.
The contract in question was not a specialised job requiring any extra ordinary skill.
A 4 was the Corporation 's old and tried contractor who had previously executed a number of works including rock cutting.
(2) Though it cannot be gainsaid that the second appellant had been extremely negligent in not scrutinising the papers, he affixed his signature in a routine manner to the work order prepared by his subordinates without realising 877 the importance of his act, placing implicit faith in the integrity of the latter.
[900 E F] (3) There is no clear, cogent and convincing evidence to show that the appellants had a hand in the removal of the level plans from the departmental file relating to the contract and substitution of the faked plans.
[900 G].
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The two people appealing this case were officers of Indian Oil Corporation.
The company asked for bids from contractors who had experience cutting rock, filling land, and leveling land that the company had bought.
On the day they said they would, the company opened the bids they got from eleven contractors.
But because they had changed the job specifications, they asked the contractors to send in new bids.
Only the original 11 contractors were asked to submit new bids.
However, it was claimed that the officers gave a bid form to a company called A 4, even though A 4 wasn't one of the original 11.
Later, the job specifications were changed again, based on suggestions from foreign partners.
The officers supposedly told other officers at the company to do a new survey with A 4, considering the foreign partners' suggestions.
Eventually, the contract was given to A 4.
The prosecution (the lawyers trying to prove guilt) said that: (1) the officers seemed very eager to give the contract to A 4; (2) the work order (official document to start the job) had inflated numbers for rock cutting and filling; and (3) the officers took original documents from the company files and replaced them with fake ones.
The officers were charged with crimes under sections 120B and 109 of the Indian Penal Code (IPC), and section 5(2) along with section 5(1)(d) of the Prevention of Corruption Act of 1947. They were found guilty and sentenced to jail.
The question was whether the officers were correctly found guilty under section 5(1)(d) of the Prevention of Corruption Act.
The appeals were allowed, and the court decided: 1.
Looking at all the evidence, it wasn't clear that the officers acted with any dishonest or corrupt reason, or that they misused their position.
2. (a) It's a well-known legal principle that misusing a position, to fall under section 5(1)(d) of the Act, must be dishonest. It must be proven that the accused (the officers) caused a deliberate loss to the department. Also, the prosecution has to prove that the accused, through corrupt or illegal actions, or by misusing their position, gained money for someone else.
(b) Also, the basic rule about proving guilt based on circumstantial evidence (evidence that suggests something but doesn't directly prove it) is that there's always a risk that guessing or suspicion might replace real legal proof. In these cases, people might try to connect the evidence together and even twist it a little to make it fit a story. The smarter someone is, the more likely they might be to mislead themselves, fill in missing pieces, and assume facts to support their own ideas.
(c) When the evidence is circumstantial, the circumstances that lead to the conclusion of guilt must first be fully proven. All the proven facts should only point to the guilt of the accused. Also, the circumstances should be very convincing and rule out any other possibility besides guilt. In other words, there must be a complete chain of evidence that doesn't leave any reasonable doubt and shows that the accused most likely committed the act.
M. Narayanana Nambiar vs State of Kerala, [1963] Supp. 2 SCR 724; Major section K. Kale vs State of Maharashtra, ; ; Hanumant Govind Nergundkar vs State of M.P., [1952] SCR 1091, AIR 1952 SC 343; Palvinder Kaur vs State of Punjab, ; ; Charan Singh vs State of U.P., AIR 1967 SC 529; were referred to.
(d) The idea that evidence of guilt must be inconsistent with the innocence of the accused and can't be explained in any other way doesn't mean that any far-fetched idea is enough. The suggested idea must be reasonable.
Govinda Reddy vs State of Mysore, AIR 1960 SC 29; was referred to.
In this case, the officers choosing A 4 over a new contractor didn't seem dishonest.
Even though the notice was sent by mail to the original 11 contractors, there's nothing in the notice or anywhere else to say that other contractors couldn't submit bids, or that the change in the bid deadline wasn't meant to be published or wasn't actually published.
The High Court (lower court) was wrong about this.
The High Court was also wrong in thinking that of the nine contractors who submitted new bids, eight were from the original nine, and the ninth was A 4.
Actually, five of the contractors who submitted new bids were new contractors.
Also, none of the officers from the Finance and Engineering Department of the company who worked on the contract file ever objected to A 4's bid being accepted.
This shows that there was nothing wrong with giving a bid form to A 4 or with the officers accepting it.
The contract wasn't for a special job that required extra skill.
A 4 was a contractor the company had used before and trusted, who had done similar jobs before, including rock cutting.
(2) It's true that the second officer was very careless in not checking the papers closely. He signed the work order that his subordinates (people working under him) prepared in a routine way, without realizing how important his signature was and trusting them too much.
(3) There's no clear and convincing evidence that the officers had anything to do with removing the level plans (maps) from the contract file and replacing them with fake plans.
| 3,777
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Civil Appeal No. 5047 (NT) of 1985. From the Judgment and Order dated 17.7. 1985 of the Allahabad High Court in Sales Tax Revision No. of 1985. Madan Lokur for the Appellant. Ashok K. Srivastava for the Respondent. M/s. D.H. Brothers Pvt. Ltd., a registered dealer under the U.P. Sales Tax Act, is engaged in the sale of machinery including sugarcane crushers. After coming into force of the Uttar Pradesh Sales Tax Act, 1948 (hereinafter called 'the Act ') the State Government issued a notification dated June 7, 1948 exempting agricultural implements from the levy of sales tax. Thereafter fresh notifications were issued from the time to time. The relevant notification dated November 14,1980 enumerated the "Agricultural implements" as under: "Agricultural implements" worked by human or animal power, including Khurpi, Dibbler, Spade, Hansla (Sickle) Garden Knife, Axe, Gandasa, Chaff Cutters, Shears, Seca teurs, Rake, Shovel, Ploughs, Water lifting leather buckets (Pur and Mhot), Rahat and persian whell, Chain Pump, Harrows, Hoes, Cultivators, Seed Drills, Threshers, Shellers, Winnowing fans, Paddy weeders, Gardenfork, Lopper), Belcha, Bill Hook (Double edge), Kudali,Fork, garden Hatchet, Bill Hook (Single edge), Hay Bailer, Bund formers, Scrappers, Levellers or Levelling Karahas, Yokes, crop yield Judginghoops, Hand sprayers Hand dust ers, Animal driven vehicles including carts having pneumatic tyre wheels, crow bars, sugarcane Planters and accessories, attach ments and spare parts of these agricultural implements". The assessee invoked the jurisdiction of Commissioner, Sales Tax, Uttar Pradesh under Section 35 of the Act claim ing that the Kohlu meant for extracting juice from sugarcane was an agricultural implement within the above quoted noti fication and as such was exempt from levy of Sales Tax. The Commissioner by his order dated December 31, 1983 decided the question against the assessee. The assessee filed appeal against the said order before the Sales Tax Tribunal. Luc know Bench, under Section 10 of the Act. The Tribunal upheld the findings of the Commissioner and dismissed the appeal. Thereafter the assessee preferred a revision petition under Section 11 of the Act before the Allahabad. High Court. The High Court relying on its earlier decision in Bharat Engi neering and Foundry Works vs 426 The U.P. Government, [1963] 14 S.T.C. 262 dismissed the revision petition. In that case the question for considera tion before the High Court was "whether cane crushers are agricultural implements within the meaning of the words 'agricultural implements ' as mentioned in the Government Notification. . and hence exempt from U.P. sales tax. " The question was answered in the negative on the following reasoning: "Cane crushers and boiling pans are used only in the manufacture of gur from sugarcane. Sugarcane is an agricultural produce and the process which results in the production of sugarcane is undoubtedly agriculture, but the production of gur from sugarcane is a manufac turing process and not an agricultural proc ess. The agricultural process comes to an end with the production of sugarcane and when gur is subsequently being prepared it is manufac turing process that commences. Merely because sugarcane is an agricultural produce anything that is done to it after it is product is not necessarily a continuation of the agricultural process. It cannot be doubted that agricultur al produce can the subjected to a manufactur ing process; merely because gut is produced out of sugarcane which is an agricultural produce, the process of preparing gut does not become an agricultural process. . An agricultural implement is an implement that is used in agriculture; any implement that is used after the agricultural process comes to an end and a manufacturing process commences, is not an agricultural implement. " The High Court in Bharat Engineering case relied upon the following observations of this Court in Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy, "Agriculture is the basic idea underlying the expressions 'agricultural purposes ' and 'agricultural operations ' and it is pertinent therefore to enquire what is the connotation of the term 'agriculture '. As we have noted above, the primary sense in which the term agriculture is understood is agar field and cultracultivation, i.e., the cultivation of the field, and if the term is understood only in that sense agriculture would be restricted only to cultivation of the 427 land in the strict sense of the term meaning thereby, tilling of the land, sowing of the seeds, planting and similar operations on the land. They would be the basic operations and would require the expenditure of human skill and labour upon the land itself. There are however other operations which have got to be resorted to by the agriculturist and which are absolutely necessary for the purpose of effec tively raising the produce from the land. They are operations to be performed after the produce sprouts from the land, e.g., weeding, digging the soil around the growth, removal of undesirable undergrowths and all operations which foster the growth and preserve the same not only from insects and pests but also from depradation from outside, tending, pruning, cutting, harvesting, and rendering the produce fit for the market. The latter would all be agricultural operations when taken in conjunc tion with the basic operations above de scribed, and it would be futile to urge that they are not agricultural operations at all. . " It is clear from the above quoted observations of this Court that the agricultural process comes to an end when the crop is harvested and is brought home for marketing or for further processing. In the present case the agricultural process finishes when sugarcane is harvested. Preparation of gur from sugarcane is not the continuation of the agricul tural process. While giving meaning to an item in a taxing statute the Courts should give it a meaning as intended by the framers of the statute by looking at the various items mentioned in a particular group. The items in one group should be consid ered in a genderic sense. The notification dated November 14, 1980 includes various items under the head "agricultural implements". It is no doubt correct that the said definition cannot be confined to the various implements specifically mentioned therein. The definition being inclusive it has a wider import and any other implement which answers the description of an agricultural implement can be included in the definition. A bare reading of the notification, however, shows that all the implements mentioned by name after the word "including. . "are by and large those which are used for cultivation of land and other operations which foster the growth and preserve the agricultural produce. None of these implements can be worked after the agricultur al process in respect of a crop comes to an end. Therefore the intention of the framers of the 428 notification could only be to limit the general words in the notification to the implements of the same kind as are specified therein. We are, therefore, of the view that on the plain reading of the notification the sugarcane crushers do not come within the definition of agricultural imple ments. It has been brought to our notice that from 1985 onwards the State Government has specifically exempted sugarcane crushers from the levy of sales tax. We dismiss the appeal with no order as to costs. G.N. Appeal dis missed.
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The appellant, a registered dealer under U.P. Sales Tax Act, 1948 has been selling machinery including sugarcane crusher.
The State Government was issuing Notifications from time to time exempting agricultural implements from the levy of sales tax.
The State Government by its Notification dated 14.11.1980 amended the list and enumerated agricultural implements.
Since sugarcane crusher (Kohlu) was not included therein, the appellant claimed before the Sales tax Commis sioner that the Kohlu meant for extracting juice from sugar cane was an agricultural implement and as such was exempt from levy of sales tax.
Since the Commissioner negatived his claim, the appellant preferred an appeal before the Sales Tax Tribunal.
The Tribunal having upheld the findings of the Commis sioner, the appellant filed a revision petition before the High Court.
Relying on its earlier decision, the High Court dismissed the revision petition.
Aggrieved by the High Court 's decision, the appellant has preferred the present appeal.
Dismissing the appeal, this Court, HELD: 1.
The agricultural process comes to an end when the crop is harvested and is brought home for marketing or for further processing.
Preparation of gur from Sugarcane is not the continuation of the agricultural process.
[427D E] 424 Bharat Engineering and Foundry Works vs The U.P. Govern ment, [1963] 14 S.T.C. 262 and Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy, , relied on.
While giving meaning to an item in a taxing statue the Courts should give it a meaning as intended by the framers of the statute by looking at the various items mentioned in a particular group.
The items in one group should be considered in a generic sense.
[427F] 3.
In the instant case the notification dated November 14, 1980 includes various items under the head "agricultural implements".
The said definition cannot be confined to the various implements specifically mentioned therein.
The definition being inclusive it has a wider import and any other implement which answers the description of an agricul tural implement can be included in the definition.
A bare reading of the notification shows that all the implements mentioned by the name after the word "including. . "are by and large those which are used for cultivation of land and other operations which foster the growth and preserve the agricultural produce.
None of these implements can be worked after the agricultural process in respect of a crop comes to an end.
Therefore the intention of the framers of the notification could only be to limit the general words in the notification to the implements of the same kind as are specified therein.
As such sugarcane crushers do not come within the definition of agricultural implements.
[427F H; 428A B]
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The person appealing, a registered seller under the U.P. Sales Tax Act of 1948, was selling machines, including sugarcane crushers.
The state government kept issuing official notices that excused farming tools from sales tax.
In an official notice dated November 14, 1980, the state government changed the list and named specific farming tools.
Since sugarcane crushers (Kohlu) were not on the list, the seller argued to the Sales Tax Commissioner that the Kohlu, used to squeeze juice from sugarcane, was a farming tool and shouldn't have sales tax.
The Commissioner disagreed, so the seller appealed to the Sales Tax Tribunal.
The Tribunal agreed with the Commissioner, so the seller filed a revision request with the High Court.
The High Court used a past decision to dismiss the revision request.
The seller disagreed with the High Court's decision and filed this appeal.
The Court dismissed the appeal and stated: 1.
The farming process ends when the crop is harvested and brought home to sell or process further.
Making 'gur' (a type of sugar) from sugarcane is not part of the farming process.
[427D E] 424 Bharat Engineering and Foundry Works vs The U.P. Government, [1963] 14 S.T.C. 262 and Commissioner of Income tax, West Bengal, Calcutta vs Raja Benoy Kumar Sahas Roy, , were referenced.
When interpreting an item in a tax law, courts should understand it as the lawmakers intended, by looking at the other items in the same group.
The items in a group should be considered in a general sense.
[427F] 3.
In this case, the official notice from November 14, 1980, lists various items under the heading "farming tools."
The definition of "farming tools" isn't limited to the specific tools listed.
Since the definition includes other items, it's broad, and any tool that fits the description of a farming tool can be included.
Reading the notice, the tools listed after the word "including..." are mostly used for planting crops and helping them grow, and for preserving farm products.
None of these tools are used after the farming process for a crop is complete.
Therefore, the lawmakers only meant for the general words in the notice to apply to tools similar to those listed.
Sugarcane crushers don't fit the definition of farming tools.
[427F H; 428A B]
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iminal Appeal No. 09 of 1966. Appeal by special leave from the judgment and order dated November 24, 1965 of the Bombay High Court in Criminal Revi ion Application No. 232 of 1965. 194 A.S. R. Chari, N. C. Maniar, P. C. Bhartari and J. B. Dada. chanji, for the appellant. G. L. Sanghi and section P. Nayyar, for respondent No. 1. N. C. Maniar, K. L. Hathi and Atiqur Rehman, for respondent No. 2. The Judgment of the Court was delivered by Vaidialingam, J. In this appeal, by special leave, on behalf of the appellant, the fifth accused in Special Case No. 9 of 1963. in the Court of the Special Judge for Greater Bombay, Mr ' A. section R. Chari, learned counsel, challenges the order, dated November 24, 1965, passed by the High Court of Bombay, in Criminal, Revision Application No. 232 of 1965. There are five accused, in Special Case No. 9 of 1963. The appellant, and accused No. 4, are partners of an industrial concern, known as 'Premier Industries '. Accused No. 1 is an Income tax Consultant, and accused Nos. 2 and 3, are clerks. in the Income tax Department. The substance of the prosecution case. against these five accused, is that they formed a conspiracy, to cheat the income tax authorities, in respect of the income tax assessments, of the Premier Industries, for the assessment year 1960 61, and, in pursuance of the said conspiracy, committed ,offences, under section 420 IPC., and section 5(1)(d) read with section 5(2). of the Prevention of Corruption Act, 1947 (Act 11 of 1947). (hereinafter called the Act). They have also been charged with an offence, under section 468 IPC., alleged to have been committed, by them, in furtherance of the said conspiracy. The allegations, relating to the commission of the offence,. under section 420 IPC., is comprised in charge No. 2. That charge ends up by saying that, by the various acts, mentioned therein. the appellant, along with accused No. 1, who is the Income tax Practitioner, and accused No. 4, dishonestly or fraudulently induced the income tax authorities and obtained assessment order for less income tax than due by accused Nos. 4 and 5, and that. all the three of them, have committed an offence, under section 420. It is not necessary to refer to the other charges. The appellant raised an objection, to the framing of a charge. under section 420 IPC. According to him, the charge should really have been framed under section 417, on the ground that the assessment order, in this case, is not 'property '. He also raised an objection, that the assessment order, is not 'valuable security '. The Special Judge, by his order, dated February 3, 1965, re jected the preliminary objections, raised by the appellant. He held that the assessment order was 'property ', and that it was also 'valuable security '. Therefore, he held that the charge, framed 195 under section 420 IPC., was correct. There were certain other objections, raised 'by the appellant, viz., that sanction had not been obtained, under section 196A, Cr. P.C., that where the offence itself was alleged to have been committed, in pursuance of the conspiracy, and was the subject matter of charge, no charge of conspiracy could still be maintained, and that the period of conspiracy had been artificially fixed, in the charge. These objections have also been overruled, by the Special Judge. The appellant carried the, matter, in revision, before the High Court of Bombay. The learned Judge, by his order, dated November 24, 1965, which is under attack, has confirmed the order of the Special Judge. Here again, the High Court has taken the view that the assessment order is 'property ' and it is also 'valuable security ', under section 30, IPC. The High Court is further of the view that the allegations, contained in the material charge, do prima facie disclose an offence, under section 420 IPC. Certain other objections, raised before the High Court, were also negatived. Mr. A. section R. Chari, learned counsel for the appellant, has again reiterated the same objections. Except for the question, relating to the charge framed under section 420 IPC., we make it clear that we are not expressing any opinion, regarding the other points, raised by Mr. Chari. If any other objections are available to the appellant, or any other accused, he or they, will be perfectly entitled to raise the same, during the course of the trial. The argument, regarding the invalidity of the charge, framed under section 420, runs as follows. The essential ingredient of an offence, under section 420 IPC., is that the person cheating, must thereby, dishonestly induce, the person deceived, to deliver any property, or to make the whole or any part of a valuable security. We are not referring to the other matters, contained in section 420 IPC. The issue or delivery of an order of assessment, by an Income tax Officer is not in consequence of the cheating, committed by a party, though it may be that the computation of income, as found in the assessment order, may be the result of cheating, practised by the accused. Therefore, the accused cannot be considered to have, by creating, dishonestly induced the Income tax Officer, to deliver the assessment order, because that is issued, to a party, as a matter of routine. The assessment order, cannot also be considered to be 'property ', within the meaning of section 420 IPC. It cannot also be stated, that the accused, by cheating have dishonestly induced the Income tax Officer to make a valuable security, because an assessment order, can, in no sense, be considered to be a valuable security. No legal right is created by an assessment order. The liability to payment of income tax is created by the charging section, section 3, of the Indian 196 Income tax Act, 1922, and the demand, for payment of tax is made, on the basis of a notice of demand, issued by the Income tax Officer, concerned. At the most, the accused will be guilty of ' cheating ', as defined under section 415, IPC, inasmuch as they may have intentionally induced the Income tax Officer, who is deceived, to do or omit to do, anything which he would not do, or omit. if he were not so deceived, and they will be liable for punishment, under section 417, IPC. Mr. G. L. Sanghi, learned counsel for the State, has supported the views, expressed by the High Court. We are not inclined to accept the contentions of Mr. Chari, that there is any error, or illegality, in framing a charge, under section 420 IPC. As to whether the prosecution is able to make out its case, or not, is a different point. We are only concerned, at this stage, to consider as to whether, under the circumstances, a charge, under section 420, could have been framed. It is well known, that, under the Indian Income tax Act, liability to pay income tax arises on the accrual of the income, and not from the computation, made by the taxing authorities, in the course of assessment proceedings, and that it arises, at a point of time, not later than the close of the year of account. It has also been laid down, by this Court, that assessments particularise the total income of an assessee and the amount of tax, payable. But it is not as if that the assessment order is valueless, as is sought to be made out. The question, that arises for consideration, in this case, is whether there is any 'delivery of property ', or, at any rate, whether the Income tax Officer has been induced 'to make a valuable security '. 'Movable property ' is defined, in section 22, IPC; 'Document ' and 'valuable security ' are defined in sections 29 and 30, IPC, respectively. Under the scheme of the Income tax Act, it is clear that the assessment order determines the total income of the assessee, and the tax payable, on the basis of such assessment. The assessment order has to be served, on the assessee. The tax is demanded, by the issue of a notice, under section 29; but the tax demanded, is on the basis of the assessment order, communicated to an assessee. The communicated order of assessment, received by an assessee, is in our opinion, 'property ', since it is of great importance, to an assessee, as containing a computation, of his total assessable income and, as a determination, of his tax liability. In our view, the word 'property ', occurring in section 420, IPC, does not necessarily mean that the thing, of which a delivery is dishonestly desired by the person who cheats, must have a money value or a market value, in the hand of the person cheated. Even if the thing has no money value, in the hand of the person cheated, but becomes 197 a thing of value, in the hand of the person, who may get possession of it, as a result of the cheating practised by him, it would still fall within the connotation of the term 'property ', in section 420, IPC. Once the assessment order is held to be 'property ', the question arises as to whether there is a 'delivery ', of the, same, to the assessee, 'by the Income tax Officer. It is argued that the order is communicated, in the usual course, and that irrespective of any ,cheating ', the officer is bound to serve the assessment order. This argument, though attractive, has no merit. Communication, or service of an assessment order, is part of the procedure of the assessment itself. But it can be held that, if the necessary allega tions are established, the accused have dishonestly induced the Income tax Officer, to deliver the particular property, viz., the assessment order, as passed by him, in and by which a considerably low amount has been determined, as the total income of the assessee, on the basis of which the amount of tax, has been fixed. Nor are we impressed with the contention, that the deception, if at all, is practised, not when the assessment order is delivered, but at the stage, when the computation, of the total income, is made, by the Income ,tax Officer. The process of 'cheating ', employed by an assessee, if successful, would have the result of dishonestly inducing the Income tax Officer to make a wrong assessment order and communicate the same to an assessee. An offence under section 420, IPC, will also be made out, if it is established that the accused have cheated and, thereby, dishonestly induced the Income tax Officer to make a 'valuable security '. This takes us to the question : "Is the assessment order. 'valuable security ' ?" We have already referred to section 30, IPC, defining, valuable security '. The assessment order is certainly a 'document ', under section 29, IPC. The order of assessment does create a right, in the assessee, in the sense that he has a right to pay tax only on the total amount assessed therein and his liability to pay tax is also restricted to that extent. Therefore an 'order of assessment ' is a 'valuable security ', under section 420, IPC. Therefore, if the cheating, employed by the accused, resulted in inducing the Income tax Officer to make a wrong assessment order, it would amount to inducing the Income tax Officer, to make a 'valuable security '. Considering the question, from either point of view, as indicated above, it follows that the framing of a charge, for an offence, tinder section 420 IPC., is correct. The appeal, accordingly, fails, and is dismissed. G.C. Appeal dismissed.
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The appellant along with certain others was tried for the offence of entering into a conspiracy to cheat the income tax authorities in respect of the income tax assessment of a firm.
The prosecution levelled against him a charge inter alia, of the offence under section 420 I.P.C.
The appellant raised before the Special Judge an objection to the effect that the terms of section 420 I.P.C. were not satisfied inasmuch as (i) an assessment order was not 'property ', (ii) its communication to him was not 'delivery ', (iii) an assessment order was also not a 'valuable security '.
The Special Judge and the High Court rejected these contentions.
The appellant came to this Court by special leave.
HELD : (i) Even if an assessment order is not 'property ' in the hands of the Income tax Officer, it is 'property ' in the hands of the assessee because it contains a computation of his assessable income and a determination of his tax liability.
The word property occurring in section 420 I.P.C. does not necessarily mean that the. thing, of which a delivery is dishonestly desired by the person who cheats, must have a money value or a market value in the hands of the person cheated.
[196 G 197 A] (ii) Communication or service of an assessment order is part of the procedure itself.
But if the necessary allegations are established, the accused must be held to have dishonestly induced the Income tax Officer to 'deliver ' the particular property viz. the assessment order.
Nor could the contention be accepted that the deception, if at all, is practised not when the assessment order is delivered, hut at the stage when the computation of the total income is made by Income tax Officer, for, the process of 'cheating ' employed by an assessee, if successful, would have the result of dishonestly inducing the Income tax Officer to make a wrong assessment order and communicate the same to an assessee.
[197 C D] (iii) An order of assessment is a 'valuable security ' under section 420 [.P.C. because@ it creates a right in the assessee in the sense that he has right to pay tax only on the total amount assessed therein and his liability to pay tax is also restricted to that extent.
[197 F G] On the above reasoning, framing of a charge for an offence under 420 I.P.C. is correct.
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The person appealing (called the appellant) was on trial with others for planning to trick the income tax people about a company's income tax.
The prosecution (the lawyers trying to prove guilt) charged him with a crime under section 420 of the Indian Penal Code (I.P.C.). This law deals with cheating and dishonestly getting someone to give up property.
The appellant argued to the Special Judge that section 420 I.P.C. didn't apply because (i) an assessment order (a document stating how much tax is owed) wasn't "property," (ii) giving it to him wasn't "delivery" of property, and (iii) an assessment order wasn't a "valuable security" (a document that creates a right or obligation).
The Special Judge and the High Court disagreed with these arguments.
The appellant then took his case to this Court using a special permission.
HELD: (i) Even if an assessment order isn't "property" for the Income Tax Officer, it is "property" for the person being taxed (the assessee). This is because it shows how much income they have to pay tax on and how much tax they owe.
The word "property" in section 420 I.P.C. doesn't always mean that the thing someone is trying to get through cheating has to have a money or market value for the person being cheated.
(ii) Sending or giving an assessment order to someone is part of the tax process itself.
If the prosecution can prove their claims, then the accused person dishonestly tricked the Income Tax Officer into "delivering" that specific property, which is the assessment order.
Also, the argument that the cheating happens when the total income is calculated, not when the order is delivered, is wrong. If a taxpayer successfully cheats, it leads the Income Tax Officer to make a wrong assessment order and send it to them.
(iii) An assessment order is a "valuable security" under section 420 I.P.C. because it gives the taxpayer the right to only pay tax on the amount stated in the order. Their responsibility to pay tax is limited to that amount.
Because of these reasons, it was correct to charge the appellant with a crime under section 420 I.P.C.
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Appeal No. 846 and 1343 of 1972. Appeal by special leave from the judgment 'and order dated November 22, 1971 of the Delhi High Court in S.A.0. No. 83 D of 1965 And Civil Appeal No. 1343 of 1973 Appeal by Special leave from the judgment and order dated November 22, 1971 of the Delhi High Court in SAO No. 239 D of 1965. V.M. Tarkunde, section section Shukla and A. P. Gupta, for the appellant (in C. A. No. 846). S.P. Pandey, Shiv Prakash Pandey and section section Shukla, for the ,appellant (in C. A. No. 1343). D. N. Mukherjee, for respondent (in C. A. No. 846). Bakshi Man Singh and Harbans Singh, for the respondent (in C.A. No. 1343). 456 Sardar Bahadur Saharya, Vishnu Bahadur Saharaya and Y. Khushalani, for the Intervener (in C.A. No. 846). The Judgment of the Court was delivered by ALAGIRISWAMI, J. These two appeals by special leave are against the judgment of the High Court of Delhi allowing the ,appeals filed by the two respondents. The respondents are landlords of two houses in the Karol Bagh area of Delhi. The houses are built on lands given on long lease by the Delhi Improvement Trust to the rights, liabilities and assets ,of which the Delhi Development Authority has since succeeded. Under the terms of the lease, subject to revision of rent, the lessees were to put up residential buildings on the leased lands. ,and the lessees undertook : "(vi) not to use the said land and buildings that may be erected thereon during the Said term for any other purpose than for the purpose of residential house without the consent in writing of the said lessor; provided that the lease shall become void if the land is used for any purpose than that for which the lease is granted not being a purpose subsequently approved by the lessor. " The present landlords are not the original lessees but their successors in interest. Portions of buildings have been leased for commercial purposes, a barber shop in C.A. 846 and a scooter repair shop in C.A. 1343. The Delhi Development Authority appears to have given notice to them drawing their attention to the provision of the lease extracted above and that as they had permitted the buildings to he used for commercial purposes contrary to the terms of the lease deed, the lease was liable to be determined and called upon them to discontinue the use of the land for commercial purposes, failing which they were asked to show cause why their lease should not be determined 'and the land, together with the buildings thereon, reentered upon without any compensation to them. Thereupon the landlords issued notice to the tenants asking them to stop the com mercial use of the buildings and later instituted the proceedings out of which these appeals arise. In both these cases the buildings had been put to commercial use even before 1957 when the Delhi Development Authority Act of 1957 came into force. The Controller dismissed the petitions filed by the landlords and the appeals filed by them were dismissed. They thereupon filed appeals to the High Court. A learned single Judge of the High Court taking a view contrary to two earlier decisions in 457 Smt. Uma Kumari vs Jaswant Rai Chopra(1) and section P. Arora vs Ajit Singh (2 ) referred the question that arise in these appeals to a Division Bench which took a view contrary to that taken in the two earlier decisions above referred to, and decided in favour of the landlords. The question that arises for decision in these cases is this : Are the landlords estopped or otherwise prohibited from getting possession of the property from the tenants because they themselves had let it out for commercial purposes. We shall set out the relevant portion of the statutory provisions regarding this question. Section 14 of the Delhi Rent Control Act 1958, which deals with the question of protection to tenants against eviction, in so far as it is relevant, is as follows : "14. (1) Notwithstanding anything to the con trary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant : Provided that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on one or more of the following grounds only, namely (c) that the tenant has used the premises for a purpose other than that for which they were let (i) if the premises have been let on or after the 9th day of June, 1952, without obtaining the consent in writing of the landlord; or (ii)if the premises have been let before the said date without obtaining his consent. (k) that the tenant has, notwithstanding previous notice, used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi Development Authority or the Municipal Corporation of Delhi while giving him a lease, of the land on which the premises are situate. " Sub section 11 of the same section, which is also relevant, reads " (11) No order for the recovery of possession of any premises shall be made on the ground specified in clause (k) of the proviso to sub section (1), if the tenant, within such time as may be specified in this (1) P.L.R. (1960) 460. (2) I.L.R. (1970) 11 Delhi 130. 458 .lm15 behalf by the Controller, complies with 'the condition imposed on the landlord by any of the authorities referred to in that clause or pays to that authority such amount by way of compensation as the Controller may direct. " Section 14 of the Delhi Development Act 1957 is as follows "14. After the coming into operation of any of the plans in a zone no person shall use or permit to be used any land or building in that zone otherwise than in conformity with such plan : Provided that it shall be lawful to continue to use upon such terms and condition as may be prescribed by regulations made in this behalf any land or building for the purpose and to, the extent for and to which it is being used upon the date on which such plan comes into force." Before this Act was passed the United Provinces Town Improvement Act 1919 was in force in Delhi and the Delhi Improvement Trust was constituted thereunder. It was this Trust which had leased the lands to the predecessors of the two landlords in the present appeals. The Delhi Development Authority established under the Delhi Development Act 1957 succeeded to the asets, rights and liabilities of the Delhi Improvement Trust. We shall deal first with the question that arises under the Delhi Rent Control Act. Clause (k) of the proviso to sub section (1) of Section 14 provides that the Controller may, on an application made to him in the prescribed manner, make an order for the recovery of possession of the premises on the ground that the tenant has, notwithstanding previous notice, used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi Development Authority or the Municipal Corporation of Delhi while giving him a lease of the land on which the premises are situate. In this case the lease granted by the Delhi Improvement Trust, the predecessors in interest of the Delhi Development Authority, to the predecessors in interest of the landlords contains a condition that any building to be erected on the land shall not be used for any purpose other than residential purpose. There is no dispute that part of each of the buildings is being used in a manner contrary to that condition. The landlord has also given notice asking the tenant to cease using the building for that purpose. The two earlier decisions referred to held that notwithstanding this provision the landlord was not entitled to get possession of the land because he himself had leased the building for a commercial purpose and was, therefore, estopped from 459 claiming possession. The result will be this : The Delhi Development Authority can enforce the conditions of the lease and forfeit the leased land with the buildings thereon. In that case both the landlord as well as the tenant stand to lose. The landlords point but this situation and say that they are not interested in evicting the tenants but are interested only in seeing that the tenants do not use the buildings for commercial purpose with the consequences that they may have to lose the land and the buildings and the tenants also cannot any longer use it for a commercial purpose. It has been argued on behalf of the tenants that this clause will apply only where the tenant has used the land after previous notice from the landlord, i.e., if the landlord had told him at the 'beginning of the tenancy that the building was not to be, used for commercial purpose and notwithstanding that the tenant used it for a commercial purpose. They, therefore, contend that as in this case both the landlord and the tenant were aware of the use to which the ' building was to be put there is no question of any notice from the landlord asking the tenant not to use the building for commercial purpose and by merely issuing such notice the landlord cannot take advantage of clause (k). This is really another way of putting the argument that the landlord having granted the lease for a commercial purpose is estopped from contending that the tenant should not use it for commercial purpose. While the argument appears to be plausible we are of opinion that there is no substance in this argument. If it is a case where the tenant has contrary to the terms of his tenancy used the building for a commercial purpose the landlord could take action under clause (c). He need not depend upon clause (k) at all. These two clausesare intended to meet different situations. There was no need for anadditional provision in clause (k) to enable a landlord to get possession where the tenant has used the building for a commercial purpose contrary to the terms of (the tenancy. An intention to put in an useless provision in a statute cannot be imputed to the Legislature. Some meaning would have to be given to that provision. The only situation in which it can take effect is where the lease is for a commercial purpose agreed upon by both the landlord and the tenant but that is contrary to the terms of the lease of the land in favour of the landlord. That clause does not come into operation where there is no provision in the lease of the land in favour of the landlord, prohibiting its use for a commercial purpose. The legislature has clearly taken note of the fact that enormous extents of land have been leased by the three authorities mentioned in that clause, and has expressed by means of this clause its anxiety to see that these lands are used for the purpose for which they were leased. The policy of the legislature seems to be to put an 14 L79 6Sup C.I./73, 460 end to unauthorised use of the leased lands rather than merely to enable the authorities to get back possession of the leased lands. This conclusion is further fortified by a reference to sub section 11 of section 14. , The lease is not forfeited merely because the building put upon the leased land is put to an unauthorised use. The tenant is given an opportunity to comply with the conditions imposed on the landlord by any of the authorities referred to in clause (k) of the proviso to sub section (1). As long as the condition imposed is complied with there is no forfeiture. It even enables the Controller to direct compensation to be paid to the authority for a breach of the conditions. Of course, the Controller cannot award the payment of compensation to the authority except in the presence of the authority. The authority may not be prepared to accept compensation but might insist upon cessation of the unauthorized use. The sub section does not also say who is to pay the compensation, whether it is the landlord or the tenant. Apparently in awarding compensation the Controller will have to apportion the responsibility for the breach between the lessor and the tenant. The provision of clause (k) of the proviso to sub section (1) of section 14 is something which has to be given effect to whatever the original contract between the landlord and the tenant. The leases were granted in 1940, and the buildings might have been put up even before the Delhi and Ajmer Rent Control Act 1952 came into force. It was that Act that for the first time provided the kind of remedy which is found in clause (k). The relevant provision in that Act enabled the landlord to get possession where the tenant whether before or after the commencement of the Act used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi improvement Trust while giving him a lease of the land on which the premises are situate notwithstanding previous notice. The anxiety of the legislature is to prevent unauthorized user rather than protection of the tenant or strengthening the hands of Development Authority in effecting forfeiture. The Development Authority can always resort to the terms of the lease. There is no estoppel here because both the landlord and the tenant know that the tenancy was not one permitted under the terms of the lease of the land. In any case there can be no estoppel against the statute. It would not benefit the tenant even it it is held that the landlord cannot, under the circumstances, evict him. The landlord will lose Ms property and the tenant also will lose. He cannot, after the Development Authority takes over the building use it for a commercial purpose. We thus reach the conclusion that the leased in its inception was not void nor is the landlord estopped from claiming possession because he himself was a party to the breach of the conditions under which the land was leased to him. 461 Neither the clear words of the section, as in Waman Shriniwas Kini vs Rati Lal Bhagwandas(1), nor a consideration of the policy of the Act lead us to the conclusion that the lease was void in its inception if it was for an unauthorised user. We are also of the opinion that the High Court was not justified in leaving to the Controller no option but to pass. an order for eviction. That would make the alternative provided in subsection (11) of section 14 useless. The High Court is not correct in saying that since the Authority has no power to legalize the misuser of land contrary to the plans by acceptance of compensation under the Development Act, the Controller cannot order the payment of compensation by the tenant to the Delhi Development authority. This is in effect nullifying part of the provisions contained in sub section (11) of section 14. The High Court has arrived at its conclusion on the basis that section 14 of the Delhi Development Act applies to this Case. We shall presently show that that section has no relevance to the decision of this case. It is under the terms of the lease granted by the Delhi Improvement Trust that the use of this building for commercial purpose is prohibited and not under the Delhi Development Act. "Furthermore, section 14 applies not only to lands leased by authorities like the Delhi Development Authority containing conditions against unauthorised user as well as to lands which do not belong to that category. Its provisions are not intended to enforce the conditions in those leases. The proviso to that section deals with the use to which a land or building may continue to be put after the coming into force of any plan subject to such terms and conditions as may be prescribed by regulations, provided that building or land had been used for that purpose prior to the coming into force of the plan. The section does not therefore contemplate complete prohibition of the use of a land or building for purposes other than that permitted in the plan. Such uses can be continued subject to the terms and conditions prescribed by the regulations provided it had been so used even before the plan. It is admitted that no such regulations have been framed. Therefore, if a plan had come into operation in this area, the previous use can be continued till the regulations are framed and after the regulations are framed, they will be subject to the terms and conditions of those regulations. We are of opinion, therefore, that section 14 of the Development Act has no relevance in deciding the question at issue in his case. " The appeals are allowed and the judgment of the High Court is set aside. The matter will have to go back to the Controller for (1`) ; 462 deciding the question under sub section ( 1 1 ) of section 14 whether he should exercise the one or the other of the two alternatives mentioned therein. As already mentioned, no order awarding compensation under the second alternative given in that sub section can be made except in the presence of the Delhi Development Authority. In the circumstances of this case we direct the parties to bear their own costs. G.C. Appeals allowed.
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The respondents were landlords of two houses in the Karol Bagh area of Delhi.
The houses were built on lands given on long lease by the Delhi Improvement Trust to the rights, liabilities and assets.
of which the Delhi Development Authority subsequently succeeded.
Under the terms of the leases the buildings erected on the lands were to be used for residential purposes only.
If they were used for any other purpose without the approval of the lessor the leases would become void.
Portions of the buildings in question were however let out for commercial purposes viz.
a barber shop and a scooter repair shop.
The Delhi Development Authority gave notice to the landlords that since the buildings had been permitted to be used for commercial pur poses the leases were liable to be determined.
They were called upon to discontinue the use of the land for commercial purposes failing which they were asked to show cause why their leases should not be determined and the land together with the buildings thereon be not reentered upon without compensation.
Thereupon the landlords issued notice to the tenants asking them to stop the commercial use of the buildings.
The landlords later on instituted proceedings against the tenants under the Delhi Rent Control Act, 1958 but the Controller ,dismissed the petitions.
Their appeals were dismissed.
The Division Bench of the High Court decided in favour of the landlords.
In appeal to this Court by special leave the question for consideration was whether the landlords were estopped or otherwise prohibited from getting possession of the property from the tenants because they themselves had let it out for commercial purposes.
The Court had to consider the question in the light of the provisions of section 14 of the Act.
HELD : (i) If it is a case where the tenant has contrary to the terms of his tenancy used the buildings for a commercial purpose the landlord could take action under clause (c) of the proviso to section 14(1).
He need not depend upon clause (k) at all.
The only situation in which clause (k) can take effect is when the lease is for a commercial purpose agreed upon both by the landlord ,and the tenant but, that is ,Contrary to the terms of the lease of the land in favour of the landlord.
[459E G] (ii)The policy of the legislatures seems to be to put an end to unauthorised use of the leased lands rather than merely to enable the authorities to get back possession of the leased lands.
This conclusion is further fortified by a reference to sub section 11 of section 14.
The lease is not forfeited merely because the building put upon the leased land is put to unauthorised use.
The tenant is given an opportunity 455 to comply with the, condition imposed on the landlord by any of the authorities referred to in clause (k) of the proviso to sub section (1).
As long as the condition imposed is complied with there is no forfeiture.
It even enables the, controller to direct compensation to be paid to the authority for a breach of the conditions, which must be done in the presence of the authority.
[459H; 460A D] (iii)The anxiety of the legislature is to prevent unauthorised user rather than protection of the tenant or strengthening the hands of the Development Authority in effecting forfeiture.
The Development authority can always resort to the terms of the least, [460F G] There is no estoppel here because both the landlord and the tenant knew that the tenancy was not one permitted under the terms ofthe lease of the land.
In any case there can be no estoppel againstthe statute.
It would not benefit the tenant even if it is held thatthe landlord cannot, under the circumstances evict him.
The landlordwill lose his property and the tenant will also lose.
He cannot after the Development Authority takes over the building use it for a commercial purpose.
[460G H] Therefore the conclusion must be that the lease in its inception was not void not is the landlord estopped from claiming possession because he himself was a party to the breach of the conditions under which the land was leased to him.
Neither the clear words of the section nor a consideration of the policy of the Act lead us to the conclusion that the lease was void in its inception if it was for an unauthorised user.
[461A] Smt.
Uma Kumari vs Jaswant Rai Chopra, P.L.R. (1960) 460 and section P. Arora vs Ajit Singh, I.L.R. (1970) 11 Delhi 120, disapproved.
Waman Shriniwas Kini vs Rati Lal Bhagwandas, ; , referred to.
[The Court found that section 14 of the Delhi Development Act was inapplicable to the case.
The matter was sent back to the Controller for deciding the question under sub section (11) of Section 14 whether he should exercise the one or the other of two alternatives mentioned therein.]
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The landlords owned two houses in Delhi.
The houses were on land leased to them by the Delhi Improvement Trust.
Later, the Delhi Development Authority (DDA) took over the Trust's responsibilities.
The leases said the buildings could only be used for homes.
If they were used for anything else without permission, the leases would be canceled.
But parts of the buildings were rented out for businesses, like a barber shop and a scooter repair shop.
The DDA told the landlords that because the buildings were used for businesses, the leases could be ended.
The DDA ordered them to stop using the land for business. If they didn't, the DDA would take back the land and buildings without paying them.
So, the landlords told their tenants to stop using the buildings for business.
The landlords then sued the tenants under the Delhi Rent Control Act of 1958. But the court dismissed the cases.
The landlords appealed, but lost again.
The High Court, however, ruled for the landlords.
The tenants then appealed to the Supreme Court. The question was: could the landlords evict the tenants, since the landlords themselves had rented the property for business?
The Court looked at Section 14 of the Rent Control Act to decide.
HELD:
(i) If a tenant uses a building for business when their rental agreement says they can't, the landlord can take action under Section 14(1)(c) of the Act.
The landlord doesn't need to use Section 14(1)(k).
Section 14(1)(k) only applies when the landlord and tenant agree to use the property for business. But that use goes against the terms of the landlord's own lease for the land.
(ii) The law wants to stop people from using leased land without permission. It doesn't just want the government to get the land back.
Section 14, subsection 11 supports this idea.
The lease isn't automatically canceled if the building is used wrongly.
The tenant gets a chance to follow the rules that the DDA has set for the landlord in Section 14(1)(k).
As long as the rules are followed, the lease isn't canceled.
The court can even order the tenant to pay the DDA for breaking the rules. The DDA must be present when this happens.
(iii) The law wants to prevent unauthorized use, not just protect tenants or help the DDA take back land.
The DDA can always use the terms of the lease.
There's no reason to prevent the DDA from taking action in this case because both the landlord and tenant knew the business use wasn't allowed under the land lease.
Even if the landlord can't evict the tenant, it won't help the tenant.
The landlord will lose the property, and the tenant will lose their business.
After the DDA takes over the building, the tenant won't be able to use it for business anymore.
So, the lease wasn't invalid from the start. And the landlord isn't prevented from asking for the property back just because they allowed the rules to be broken.
The law's words and purpose show that the lease wasn't automatically void if it was for an unauthorized use.
[The Court decided that Section 14 of the Delhi Development Act didn't apply here.
The case was sent back to the lower court. They must decide under Section 14, subsection (11) whether to use one of the two options listed there.]
| 1,632
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il Appeals Nos. 751 of 1957 and 10 of 1958. Appeal from the judgment and order dated December 7, 1956, of the Calcutta High Court in Matters Nos. 29 and 58 of 1956. M. C. Setalvad, Attorney General of India, C. K. Daphtary, Solicitor General of India, Sukumar Mitra, Sankar Ghosh and B. N. Ghosh, for the appellants in C. A. No 751 of 57. M. C. Setalvad, Attorney General of India, Sankar Ghosh and D. N. Mukherjee, for the appellants in C. A. No. 10 of 1958. section M. Bose, Advocate Generalfor the State of West 905 Bengal, B. Sen and P. K. Bose, for the respondents (in both the appeals). 1960. September 27. The Judgment of the Court was delivered by HIDAYATULLAH J. These two appeals on a certificate under article 132(1) of the Constitution have been filed respectively by the Burmah Shell Oil Storage land Distributing Co., of India, Ltd., and the Standard Vacuum Oil Company (in this judgment referred to as the appellant Companies) against a common judgment of the High Court of Calcutta dated December 7, 1956. The High Court was moved for writs of mandamus, prohibition and certiorari under article 226, but the petition was dismissed by D. N. Sinha, J. The matter arises out of assessment to sales tax on sale of motor spirit for aviation purposes (shortly, aviation spirit) supplied by the appellant Companies to aircraft bound for countries abroad, under the Bengal Motor Spirit Sales Taxation Act, 1941, as amended by section 2(a)(i) of the Bengal Motor Spirit Sales Taxation (Second Amendment) Act, 1954. The Commercial Tax Officer, the Commissioner of Commercial Taxes and the State of West Bengal have been joined as respondents in this Court, as they had previously been joined in the High Court. The appellant Companies deal in Petroleum and Petroleum products, and carry on business at Calcutta. They maintain supply depots at Dum Dum Airport from which aviation spirit is sold and delivered to aircraft proceeding abroad and belonging to several Companies. It appears that such sales were treated by the sales tax authorities in the State of Bombay as not falling within the taxing Acts in force in the Bombay State by reason of the provisions of article 286 of the Constitution. The sales tax authorities in West Bengal, however, took a different view of the matter, and after sundry procedure resulting in assessment of tax, presented a demand notice for the tax assessed which was paid under protest by the appellant Companies. The appellant Companies filed petitions under article 226 of the Constitution in the High 906 Court of Calcutta questioning the legality of the imposition but without success. They have now filed these appeals after obtaining a certificate, as already stated. The contentions in this Court, as they were also before the High Court, 'are that such sales are made in the course of export of such aviation spirit out of the territory of India, that they take place outside the State of West Bengal, that inasmuch as aviation spirit is delivered for consumption outside West Bengal, the sales cannot fall within the Explanation to sub cl. (a) of the first clause of article 286, and that unless they can be said to become "Explanation Sales", the power to tax does not exist. It is argued in support of the last contention that there is not even an averment in the reply of the respondents before the High Court that aviation spirit is delivered for consumption within West Bengal. The case in the High Court was restricted to consideration of supplies to aircraft which either proceed to foreign countries directly from Dum Dum Airport, or do so ultimately, though landing en route at some place or places in the Indian territory. The case has been similarly confined in this Court also, and we are not required to express any opinion about sales of aviation spirit to aircraft flying from one place in West Bengal to another place also within that State, or even to some place in another State in the territory of India. The facts are fortunately not ' in dispute. Both parties admitted the procedure for the supply of aviation spirit to aircraft. Briefly described, it is as follows: Before the arrival of such an aircraft, a representative of the appellant Companies applies to the Airport Customs Officer to depute an Officer to supervise the refuelling of the aircraft. After the aircraft lands, the captain or the Ground Engineer gives instruction about the quantity of aviation spirit required, and on permission being given by the Customs authorities, the stated quantity is delivered in the presence of the Customs Officer deputed. Details of the delivery are entered in a delivery receipt, which 907 is signed by the representative of the appellant Companies and the Customs Officer deputed. Duty drawback shipping bills are also drawn up to show the ' quantity of aviation spirit and are countersigned by them and also by a representative of the aircraft. Later, claims for refund of customs duty are made, and refund is granted. In the petition filed in the High Court, it was averred that such aviation spirit is required for consumption during flight and/or outside the territory of India, and is thus delivered for purposes of consumption outside West Bengal and in some cases outside the territorial limits of India as well. It was also stated that it was sold in the course of export outside the territory of India, and drawback of customs duty was obtained. In the reply of the respondents, it was stated that the refund of customs duty was an irrele vant fact for the purpose of assessment. It was further stated in the affidavit of the Commercial Tax Officer as follows : " I further state that a foreign bound aircraft on leaving Dum Dum Airport consumes a portion of the aviation spirit taken in by it at the Airport within the territory of West Bengal before it moves out of the said territory or the territory of India. I do not admit that the entire quantity is used outside the territorial limits of India as alleged. I deny that the sale of such aviation spirit takes place outside the State of West Bengal and state that the sale takes place within the State of West Bengal and the purchaser pays its price within the State of West Bengal. The sale of such aviation spirit is completed by delivery at the Dum Dum Airport in West Bengal. " We have mentioned this fact, because it was argued that the respondents had not averred clearly that aviation spirit was sold for consumption within West Bengal even though the appellant Companies had denied it. The respondents pointed out that at least some of the aviation spirit must be consumed in the State, and that this was so stated in the affidavit filed in reply to the petition and quoted by us. This is 908 hardly a case for a fight on pleadings, especially as the entire procedure of the supply of aviation spirit and the use to which it is put are beyond controversy. The question that we have to consider is one of principle, and the answer depends upon broad facts and not on technicalities. Either the whole of the sale is within the taxing power of the State or it is not, and the fact that aviation spirit is consumed in taking off or in flying over the territory of West Bengal before it leaves that territory would make no difference either way to the principles applicable. Though parties entered into a debate on this part of the case, we do not propose to consider it, because, in our opinion, the question must be considered in substance and not in abstractions. The liability to sales tax, if any, is attracted when aviation spirit is sold, and immunity can only be claimed, if, as stated in article 286(1)(a) and the Explanation, the sale can be said to take place outside the State or can be regarded under article 286(1)(b) as having taken place " in the course of. export of the goods out of, the territory of India". Before we take up these two questions, we desire to refer to some provisions of certain Acts, which bear upon the matter. The Indian , is an Act for the control of the manufacture, possession, use, operation, sale, import and export of aircraft. Section 16 of this Act provides that the Central Government may, by notification in the Official Gazette, declare that any or all of the provisions of the Sea Customs Act shall, with such modifications and adaptations as may be specified in the notification, apply to the import and export of goods by air Sections 2(3) and (4) define " import" and " export ' respectively as " bringing into India " and " taking out of India ". A notification issued under the Indian , the rules framed thereunder and the Indian Aircraft Rules, 1920, appointed the Civil Aerodrome, Dum Dum, a Customs Aerodrome, and to that Customs Aerodrome, the provisions of the Sea Customs Act mutatis mutandis were made applicable by r. 63 (Part IX) of the Indian Aircraft Rules, 1920. As 909 a result, Dum Dum Airport became a Customs Aerodrome, and any aircraft coming into India from foreign countries or leaving for any such country has to comply with ordinary Customs formalities. Section 42 of the Sea Customs Act, which allows drawback on re export and is applicable mutatis mutandis, provides: " When any goods, capable of being easily identified, which have been imported by sea into any customs port from any foreign port, and upon which duties of customs have been paid on importation, are re exported by sea from such customs port to any foreign port, or as provisions or stores for use on board a ship proceeding to a foreign port seven eighths. of such duties shall, except as otherwise hereinafter provided, be repaid as drawback: ". (Provisos omitted). Under section 51, no drawback is allowed unless the claim to receive such drawback is made and established at the time of re export, and under section 52, the person claiming drawback has to make and subscribe to a declaration. The procedure which is described in an earlier portion of this judgment bears upon these matters. Coming now to the taxing Acts with which we are concerned, it may be pointed out that the Bengal Motor Spirit Sales Taxation Act, 1941, originally did not contemplate levy of a tax on the sale of aviation spirit. Motor spirit was defined to mean, " any liquid or admixture of liquids which is ordinarily used directly or indirectly as fuel for any form of motor vehicle or stationary internal combustion engine, and which has a flashing point below 76 degrees Fahrenheit ". Sub section (4) of section 3, which is the charging section, provided that no tax shall be levied on the sale of any motor spirit for the purpose of aviation. The Act was amended by the Second Amendment Act, 1954, and sub section (4) of section 3 was omitted, and the proviso to the first sub section was re enacted, adding one more clause to the following effect 910 the tax on all retail sales of motor spirit for the purpose of aviation, which are effected on or after the date of the commencement of the Bengal Motor Spirit Sales Taxation (Second Amendment) Act, 1954, shall be charged at the rate of three annas per gallon ". By the Bengal Motor Spirit Sales Taxation (Amendment) Act, 1955, the original Act was further amended. To the definition of" motor spirit ' quoted by us earlier, an Explanation was retrospectively added, which reads as follows: " Explanation For the avoidance of doubt, it is hereby declared that in this Act, the expression ' vehicle ' means any means of carriage, conveyance or transport, by land, air or water ". The original Act was again amended by the Bengal Motor Spirit Sales Taxation (Amendment) Act, 1957. This time, among other amendments involving rates of tax, the words " and which has a flashing point below 76 degrees Fahrenheit " were omitted from the definition of 'motor spirit '. The result of all these amendments was to make retail sales of aviation spirit liable to sales tax, and 'retail sale ' was defined, at all material times, as a sale " by a retail dealer for the purpose of consumption by the purchaser ". After the coming into force of the Constitution, section 22, in terms of article 286, was added to the original Act by paragraph 3 of, and the Eleventh Schedule to, the Adaptation of Laws Order, 1950. It read: " 22(1). Nothing in this Act shall be construed to impose or authorise the imposition of a tax on the sale or purchase of motor spirit: (a) where the sale or purchase takes place outside the State of West Bengal; (b) where the sale or purchase takes place in the course of the import of such motor spirit into, or export of such motor spirit out of the territory of India; or (c) (omitted). (2) The Explanation to clause (1) of article 286 of the Constitution shall apply for the interpretation of clause (a) of sub section (1) 911 Clauses (a) and (b) of the first sub section do no more than re enact the prohibition contained in article 286 of the Constitution with modifications to Suit motor spirit, and the Explanation to sub cl. (a) of cl. (1) of the said Article in the Constitution has been applied without an attempt to modify or adopt it. The Explanation to sub cl. (a) of the first clause of article 286, the meaning of which was much in dispute in this case, may conveniently be quoted here. It reads: " 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 laws relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State ". The High Court of Calcutta in its judgment dealt with the points urged, and rejected them. The reasons of the High Court briefly were as follows: The learned Judge declined to draw any inference from the fact that customs duties were refunded as drawbacks on aviation spirit delivered to the aircraft. He held that he was not required to decide whether the appellant Companies were entitled to claim and receive drawbacks of customs duty. He then gave a finding that the sale was physically within the State, because both the buyer and the purchaser were, at the time of sale, within the State of West Bengal even though delivery of aviation spirit was beyond the customs barrier. He then considered the legal position in the light of article 286 from three points of view. He first held that it was not an inter State transaction, because both the parties were in the State of West Bengal, and aviation spirit was not delivered outside the State. Thus, he held that el. (2) of article 286 did not apply. In this connection, he relied upon the decision of this Court in the Bengal Immunity Co., Ltd. vs State of Bihar and others (1). He next considered (1) 912 the matter under the first sub clause, and held that unless the fiction created by the Explanation applied, the sale must be treated as within the State under the law relating to sale of goods. In his opinion, the sale being completed within the State of West Bengal both as regards contract and delivery, the fiction could not be held applicable, because no " outside " State was involved, even though the aircraft might have to consume some aviation spirit while flying over the " outside " State. He, therefore, held that the Explanation and article 286(1)(a) which it seeks to explain, were both not applicable. He then considered the matter from the point of view of article 286(1)(b). He explained on the authority of the decision of this Court in State Of Travancore Cochin and others vs Shanmugha Vilas Cashewnut Factory and others (2) that the expression " in the course of export out of the territory of India" referred to sales which, by themselves, occasioned the export of goods out of the territory of India and not to sales for the purpose of export, even though the goods ultimately passed the customs barrier. He pointed out that there was no foreign purchaser to whom the aviation spirit could be said to have been exported, and that aviation spirit, in fact, was consumed en route and never taken to any foreign territory. He also pointed out that no bills of lading or shipping documents were drawn up, and therefore there was neither an export nor a sale in the course of export out of the territory of India. The appellant Companies claim that these sales come within the exemption granted the sub cls. (a) and (b) of the first clause of article 286. To claim the exemption granted by the first sub clause, they rely upon certain decisions of this Court, and contend that unless the sale can be said to fall within the Explanation, it must be treated as a sale outside the State of West Bengal, and is thus exempt. With regard to the second sub clause, they contend that there was an export out of the territory of India inasmuch as aviation spirit was taken abroad and any sale by which it is taken abroad is also exempt These (2) ; 913 arguments, as has been shown above, were urged before the High Court, but were not accepted. These two arguments need to be considered separately, as they have little in common. Article 286 places restrictions upon the power of the States to tax sales and purchase of goods, and cuts down the amplitude of Entry No. 54 in the Second List of the Seventh Schedule. Other restrictions are also to be found in Part XIII of the Constitution. With those we are not concerned in these appeals. We are also not concerned with the subsequent amendment of article 286, nor with the ban imposed by the second clause of the Article on taxes on sales in the course of inter State trade and commerce. We are concerned with the first clause only, as it stood before the amendment. That clause is divided into two sub clauses. The first sub clause prohibits the imposition of tax on the sale or purchase of goods where the sale or purchase takes place outside the State. AD Explanation is added to this sub clause, which has been quoted by us earlier. This Explanation has led to a long controversy in this Court during which somewhat conflicting views have been expressed about its meaning. This conflict has further been accentuated when the interplay between the two clauses has been considered. The view now accepted is that the bans imposed by the two clauses are independent and separate and each must separately be got over. In view of this, we are not required to travel beyond the first clause in this case. We have heard widely divergent arguments in these appeals. The learned Attorney General who appeared on behalf of the appellant Companies read to us copious extracts from the earlier decisions of this Court, and contended that unless the sales could be said to fall within the Explanation so as to become 'Explanation sales ', they must be regarded as having taken place outside the State of West Bengal and for that reason, not taxable. According to him, they could only become 'Explanation sales ' if aviation spirit was delivered for the purpose of consumption within the State of West Bengal. The learned Advocate General of West Bengal, on the other band, 914 contended that the Explanation did not apply to the facts here, and that the observations in the rulings were not relevant. The first sub clause in its opening portion says that 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 outside the State. It is thus plainly meant that a State is not to tax sales which take place outside that State. But, where does a sale take place ? Numerous elements go to make a sale, and they may take place in more than one State. Under the law relating to the sale of goods, property passes on the happening of certain events. When they happen, the sale is complete. Now, a contract for the sale of goods may be entirely within one State when all parties are within the State, the offer and acceptance also take place there, and the goods are also within that State, and there, the property in the goods passes and delivery also takes place. But it may also happen that the constituent elements may be spread over two or more States, some of the elements described above falling within one State and some others falling within one or more other States. Prior to the Constitution, multiple taxation of a single transaction of sale was possible, and Provincial legislation then existing clearly demonstrates that States having Some connection with the sale because one or more elements took place within those States, treated this as sufficient nexus between the taxing power and the States, authorising them to tax sales even where property passed in another State. The Constituent Assembly desired to achieve certain objects in the matter of taxation, particularly in relation to sales tax. Article 286 achieves, among other objects, the avoidance of this multiple taxation. The first sub clause of the Article is clear in its terms, when it says that a State cannot tax sales which take place outside the State. The converse is also true, that is to say, that a State can tax a sale of goods which takes place within the State. By sale here is meant a completed transaction by which property in the goods passes. Before the property in the 915 goods passes, the contract of sale is only executory, and the buyer has only a chose in action. " Property in the goods passes either by the fulfilment of the conditions of the contract, if any, or by the operation of the law relating to the sale of goods. Starting from the basic fact that what is to be taxed under the Constitution is a sale completed by the transference of property in the goods, we have to see at what stage and where this happens. The taxable event thus cannot be found at any earlier stage when the sale is not completed by the passing of property. The critical taxable event is the passing of property in the goods as a result of a contract for their sale. The parties to the contract can agree when that event is to take place, but where it happens may be a matter of some doubt and even of difficulty. Where the parties have not agreed as to the time of the passing of property, the law relating to the sale of goods furnishes the answer. There too, there may be the same difficulty as to the place of the passing of property. The place of physical delivery of the goods does not help to solve this difficulty, because delivery may, precede or follow the passing of property in the goods. Delivery of goods is, thus, not always an element which determines the completion of a sale, because the sale may be completed both before and after delivery. The Constitution, however, thinks in. ' terms of a completed sale by the passing of property and not in terms of an executory contract for the sale of goods. The essence of the matter being thus the passing of property in goods,, there was always a likelihood of more than one State claiming the right to tax the same transaction. One State might claim that goods in which property passed were in that State, and hence property in the goods passed there. Another State might claim that the conditions precedent to the passing of property were fulfilled in that State and hence the sale was completed by the passing of property there. Yet another State might claim that property passed in that State according as one or more events connected with the passing of property took place within that State. 916 It was to avoid this welter of confusion as far as possible that the Explanation was added, and it also avoided multiple taxation. The Explanation serves two purposes. It indicates the State where the tax can be levied, and also indicates the State or States where it cannot. It achieves these two purposes excluding all considerations as to where property the goods can be said to have passed under the law relating to the sale of goods. The purpose is achieved by the Explanation and particularly by the non obstante clause in the Explanation. Any State claiming to tax a sale of goods on the ground that it was completed by the passing of property in the goods in that State could not do so, if the goods as a direct result of the sale were delivered for the purpose of consumption in another State. The Explanation creates a fiction that the sale must be deemed to have taken place in the latter State and not in the State where the sale was completed by reason of passing of property. It thus discards the test of passing of property and adopts the test of delivery 'as a direct result of such sale for the purpose of consumption in that State '. Where more than one State is involved, any State claiming to tax the sale by reason of something anterior to the passing of property would not be able to claim that the sale took place there unless it was also the State of delivery, because the sale is complete only on the passing Of property, and till the sale is complete, liability to tax does not arise. Once the sale is complete, the delivery State gets the right to tax the sale by the fiction introduced. Now, the Explanation must be ' interpreted according to its own tenor, and it is meant to explain el. (1)(a) of the Article and not vice versa. It is an error to explain the Explanation with the aid of the Article, because this reverses their roles. The Explanation discards the test of passing of property, and adopts the test of delivery as a direct result of the sale for purposes of consumption. This delivery may be in the State where the passing of property also took place, but then, there is no difficulty. The sale is then entirely within the State. The sale is outside 917 the State only when the passing of property takes place in the State, but that is not the State where the goods have been actually delivered as a direct result of the sale for purposes of consumption in that State. The Constitution has, thus, for certain cases shifted and confined the situs of the taxable event to the State of the delivery of goods; but it must be remembered that this delivery,may precede as well as follow the passing of property. It is, therefore, plain that no single element of the contract of sale is by itself a decisive factor in determining which State is to tax the sale where there are more States than one involved, except the test of actual delivery of the goods in a State as a direct result of the sale for purposes of consumption in that State, and it is that State and that State only which has the right to tax the sale and none other. The Explanation is not applicable, unless there are more States than one involved. It is only a key to find out which of the States is competent to tax and which are not, and is by no means a definition of an 'outside sale '. It is an Explanation, which determines which State out of those connected with the transaction of sale can tax it. The interpretation which we have placed upon the first sub clause of article 286(1) is substantially the same, as was placed in the earlier rulings of this Court. In The State of Bombay and another vs The United Motors (India) Ltd. and others (1), it was pointed out that the Explanation formulated an easily applicable test to find out an 'outside sale ' and this, it was said, was done " by defining an inside sale ". It was observed further: " Are the goods actually delivered in the taxing State, as a direct result of a sale or purchase, for the purpose of consumption therein ? Then, such sale or purchase shall be deemed to have taken place in that State and outside all other States ". Certain reasons were given why this test was adopted, and it is these reasons and their effect on the second clause, which led to a re examination of the subclause in The Bengal Immunity Company Limited vs (1) ; 117 918 The State of Bihar and others (1). The majority in that case touched upon the various grounds which were advanced before this Court, but declined to express "any final opinion upon the matter ". The case went on to decide that the bans imposed by the two clauses of article 286 were independent, and needed to be separately enforced. But, on the meaning of the Explanation, no different view was expressed. Again, in M/8. Ramnarain Sons Ltd. vs Asst. Commissioner of Sales Tax and others(2), it was observed as follows: "So far as article 286(1)(a) is concerned, the Explanation determines by the legal fiction created therein the situs of the sale in the case of transactions coming within that category and when a transaction is thus determined to be inside a particular State it necessarily becomes a transaction outside all other States. The only relevant enquiry for the purposes of article 286(1)(a), therefore, is whether a transaction is outside the State and once it is determined by the application of the Explanation that it is outside the State it follows as a matter of course that the State with reference to which the transaction can thus be predicated to be outside it can never tax the transaction (Italics supplied). Now, in so far as this case is concerned, the words the Explanation determines by the legal fiction created therein the situs of the sale in the case of transactions coming within that category " in the extract last quoted, become important. The first question to consider is whether these cases can be governed by the Explanation at all. The learned Attorney General contends that the power to tax these transactions can only be found if the sales were 'Explanation sales ', in the sense that the goods were delivered as a direct result of the sale for consumption in West Bengal. In our opinion, the explanation can apply only if more than one State is involved in the same transaction. When there is no other State in which the goods can be said to be delivered for consumption, apart from the State where the property in the goods passed, the Explanation is not needed as a key. The (1) (2) ; 492. 919 power to tax in those circumstances which is exercisable by virtue of transfer of title to the property, can only be taken away if there be some other State in ' which the goods as a direct result of the sale were delivered for consumption. But if there is no such other State, the question does not arise. In the present cases, there is no such rival State. Where the purchaser buys goods in West Bengal for his own consumption, the test of an 'inside sale ' is satisfied when the property in the goods passes in the same State and all the elements of the contract of sale also take place inside it. Where the property in the goods passes to a buyer who is also the 'ultimate ,consumer, the terms of the Explanation are themselves satisfied. To exclude, thus, the powers of taxation of the State of West Bengal, the appellant Companies must be able to point out some other State where the goods can be said to have been delivered as a direct result of the sale for the purpose of consumption in that other State. Unless they can do so and they have not so done before us they cannot invoke the Explanation, and the cases, to borrow the language of the last quotation, cannot be said to be "within that category ". In our opinion, the learned Advocate General of West Bengal was right in his argument (which was accepted by the High Court) that the ban contained in article 286(1)(a) and the Explanation does not apply. The appellant Companies next rely upon article 286 (1)(b), which provides that: " 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 in the course of the. . export of goods out of, the territory of India ". The contention is that the sales in question must be regarded as having taken place in circumstances which exempt sales under the sub clause. This the appellant Companies argue from the following facts that aviation spirit is delivered outside the customs barrier, that aviation spirit is taken out of the territories of India, and that the sales occasion this 920 export. They rely upon the definition of 'export ' in other Acts to show that the word means no more than 'taking out of the country '. This clause of the Article has been construed on previous occasions by this Court, and what is meant by the expression " in the course of " has been well. established. Indeed, in State of Mysore vs Mysore Spinning and Manufacturing Co. Ltd. (1), this Court observed that the point could no longer be said to be at large. Fortunately, there is less disagreement on this point than on the interpretation of the Explanation, and it is sufficient to refer to the leading decisions of this Court. The earliest case on the subject is State of Travancore Cochin and others vs The Bombay Co. Ltd. (2), where four possible meanings of the expression " in the course of " were considered. It is not necessary to refer to all of them here, and it is sufficient to point out that of the view that the clause is not restricted to the point of time at which goods are exported from India and that the series of transactions which necesssarily precede export of goods also come within the purview of the clause, it was said that it was too wide. It was observed by this Court that: "A sale by export thus involves a series of integrated activities commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea. Such a sale cannot be dissociated from the export without which ' it cannot be effectuated, and the sale and resultant export form parts of a single transaction. Of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other. " The meaning of these observations was further explained in State of Travancore Cochin and others vs Shanmugha Vilas Cashew Nut Factory and Others (3). It was observed (p. 62) that the words "export out of " in this context did not refer to the article or commodity exported, and that the reference to "the (1) A.I.R. 1958 section C. 1002. (2) ; (3) ; 921 goods " and to the "territory of India " made it clear that the words " export out of " meant the exportation out of the country. It was then added that, "The word 'course ' etymologically denotes movement from one point to another, and the expression 'in the course of ' not only implies a period of time during which the movement is in progress but postulates also a connected relation. " This inter connection of the sale sought to be taxed with the course of export was emphasised again in clear terms thus : " The phrase 'integrated activities ' was used in the previous decision to denote that 'such sale ' (i.e., a sale which occasions the export) I cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction '. It is in that sense that the two activities the sale and export were said to be integrated. A purchase for the purpose of export like production or manufacture for export, is only an act preparatory to export and cannot, in our opinion, be regarded as an act done I in the course of the export of the goods out of the territory of India ' any more than the other two activities can be so regarded. " From the views here expressed, it follows that every sale or purchase preceding the export is not necessarily to be regarded as within the course of export. It must be inextricably bound up with the export, and a sale or purchase unconnected with the ultimate export as an integral part thereof is not within the exemption. It may thus be taken as settled that sales or purchases for the purpose of export are not protected, unless the sales or purchases themselves occasion the export and are an integral part of it. The views expressed in these two cases were accepted and applied in State of Madras vs Gurviah Naidu and Co. Ltd. (1), Kailash Nath vs State of U.P. (2), State of Mysore vs Mysore Spinning and Manufacturing Co. Ltd. (3) and Gordhandas Lalji vs B. Banerjee (1) A.I.R. 1956 S.C. 158. (2) A.I.R. 1057 S.C. 790. (3) A.I.R. 1958 S.C. 1002. 922 and others (1). These cases do not advance the matter further, and it is, therefore, not necessary to refer to them in detail. In the earlier cases, it was not necessary to explain the meaning of the word 'export ', because there was always a foreign buyer to whom the goods were ultimately sent. In none of the cases the facts found here were present. Here, the buyer does not export the goods to a foreign country, but purchases them for his own use on the journey of the aircraft to foreign countries. This difference is vital, and makes the position of the appellant Companies, if anything, weaker. It is for this reason that the appellant Companies depend on a wide meaning of the word 'export ', which they illustrate from other Acts where the word is tantamount to "taking out of the country '. We are of opinion that this meaning cannot be given to the word 'export ' in the clause. The word 'export ' may conceivably be used in more senses than one. In one sense, 'export ' may mean sending or taking out of the country, but in another sense, it may mean sending goods from one country to another. Often,, the latter involves a commercial transaction but not necessarily. The country to which the goods are thus sent is said to import them, and the words 'export ' and import ' in this sense are complementary. An illustration will express this difference vividly. Goods cannot be said to be exported if they are ordered by the health authorities to be destroyed by dumping them in the sea, and for that purpose are taken out of the territories of India and beyond the territorial waters and dumped in the open sea. Conversely, goods put on board a steamer bound for a foreign country but jettisoned can still be said to have been exported ', even though they do not reach their destination. In the one case, there is no export, and in the other, there is, though in either case the goods go to the bottom of the sea. The first would not be within the exemption even if a sale was involved, while any sale in the course of the second taking out would be. In both, the goods were taken out of the country. The difference lies in (1) A.I.R. 1958 S.C. 1006. 923 the fact that whereas the goods, in the first example, had no foreign destination, the goods, in the second example, had. It means, therefore, that while all exports involve a taking out of the country, all goods taken out of the country cannot be said to be exported. The test is that the goods must have a foreign destination where they can be said to be imported. It matters not that there is no valuable consideration from the receiver at the destination end. If the goods are ex. ported and there is sale or purchase in the course of that export and the sale or purchase occasions the export to a foreign destination, the exemption is earn. Purchases made by philanthropists of goods in the course of export to foreign countries to alleviate distress there, may still be exempted, even though the sending of the goods was a not a commercial venture but a charitable one. The crucial fact is the sending of the goods to a foreign destination where they would be received as imports. The two notions of export and import, thus, go in pairs. Applying these several tests to the cases on hand, it is quite plain that aviation spirit loaded on board an aircraft for consumption, though taken out of the country, is not exported since it has no destination where it can be said to be imported, and so long as it does not satisfy this test, it cannot be said that the sale was in the course of export. Further, as has already been pointed out, the sales can hardly be said to 'occasion ' the export. The seller sells aviation spirit for the use of the aircraft, and the sale is not integrally connected with the taking out of aviation spirit. The sale is not even for the purpose of export, as explained above. It does not come within the course of export, which requires an even deeper relation. The sales, thus, do not come within article 286 (1)(b). These sales must, therefore, be treated as made within the State of West Bengal. The customs barrier is a barrier for customs purposes, and duty drawback may be admissible if the goods once imported are taken out of the country. The customs duty drawbacks have nothing to do with the sale of aviation 924 spirit, which takes place in West Bengal. The cus toms barrier does not set a terminal limit to the territory of West Bengal for sales tax purposes. The sale beyond the customs barrier is still a sale, in fact, in the State of West Bengal. Both the buyer and the seller are in that State. The goods are also there. All the elements of sale including delivery, payment of price, take place within the State. The sale is thus completely within the territory of the taxing State. No outside State is involved where the goods can be said to have been delivered for consumption as a direct result of the sale that takes place. Article 286(1)(a) and the Explanation are wholly inapplicable, and the sale cannot, even by a fiction, be said to be outside the State of West Bengal. No doubt, aviation spirit is taken out of the State and also the territory of India, but it cannot be said to have been exported or delivered for consumption in some other State. The so called export is not occasioned by the sale, and the sale, on the authorities cited, is not in the course of export ', so as to attract article 286(1)(b). The decision of the High Court was correct. The appeals fail, and are dismissed with costs. One hearing fee. Appeal dismissed.
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The appellant companies which were carrying on business in Calcutta in petroleum and petroleum products maintained supply depots at Dum Dum Airport from which motor spirit for B the purposes of aviation was sold and delivered to aircraft which either proceeded to foreign countries directly from that Airport or did so ultimately, though landing en route at some place or places in the Indian territory.
Dum Dum Airport was a customs aerodrome and all aircraft coming into it or leaving it had to comply with ordinary customs formalities.
The sales tax authorities of West Bengal sought to levy tax on the sales of motor spirit as aforesaid under the provisions of the Bengal Motor Spirit Sales Taxation Act, 1941, as amended.
The appellant companies claimed that the sales were exempted from taxation under both the clauses (a) and (b) of article 286(i) of the Constitution of India on the grounds (i) that the sales in question had taken place outside the State of West Bengal, as they did not .come within the Explanation to article 286(1)(a), (2) that aviation spirit was delivered outside the customs barrier and therefore the sales were outside the State, and (3) that the sales had taken place in the course of export, as aviation spirit was taken out of the territory of India.
Held: (i) that by sale in article 286(i)(a) is meant a completed transaction by which property in the goods passes.
Before property in the goods passes the contract of sale is only executory and the buyer has only a chose in action.
The taxable event is not to be found at an earlier stage because the critical taxable event is the passing of property.
The Explanation to cl.
(1) of article 286 was added to avoid, among other things, multiple taxation of the same transaction.
It indicates the State where the tax can be levied and also the State where it cannot.
It achieves it by excluding from consideration the place where the property in the goods passed according to the law relating to sale of goods.
The non obstante clause establishes this.
By the fiction created by the Explanation a sale is deemed to have taken place in the State where the goods are delivered as a direct result of the sale for purposes of consumption in that State.
Where there are more States than one involved, any State claiming to tax a sale by reason of something anterior to the passing of property would not be able to claim that the sale took place there unless it was also the State of delivery.
The Explanation is meant to explain the Article and must be interpreted according to its tenor and the Explanation is not to be explained with the aid of the Article because that would reverse their roles.
The Explanation is not applicable unless there are more States than one involved.
The State of Bombay vs The United Motors (India) Ltd., , State of Travancore Cochin vs Shanmugha Vilas Cashewnut Factory, ; , Ramnayain Sons Ltd. vs Asst.
904 Commissioner of Sales Tax; , and The Bengal Immunity Company Ltd. vs The State of Bihar, [1955] 2 S.C.P. 603, considered.
(2) that to exclude the power of taxation of the State of West Bengal under article 286(i)(a), read with the Explanation, the appellant companies must be able to point out some other State where the goods could be said to have been delivered as a result of the sale for the purpose of consumption in that other State, and that where, as in the present case, aviation spirit was delivered to the aircraft, there was no such rival State, and therefore, the ban contained in article 286(i)(a) and the Explanation, did not apply.
(3) that in the phrase " in the course of export out of the territory of India " in article 286(i)(b) the word " export " does not merely mean 'taking out of the country '.
Export here means that the goods are being sent to a foreign destination at which the goods can be said to be imported.
In the Article the notions of import and export go in pairs.
State of Travancore Cockin vs The Bombay Co. Ltd., ; and State of Travancore Cochin vs Shanmugha Vilas Cashew Nut Factory, ; , relied on.
(4) that aviation spirit loaded on board the aircraft for consumption, though taken out of the country, was not exported since it had no destination where it could be said to be imported.
The sales in question could not, therefore, be said to have occasioned the export, nor were they in the course of export.
Accordingly, article 286(i)(b) was not applicable.
(5) that the sales must be treated as made within the State of West Bengal.
The customs barrier did not set a terminal limit to the territory of West Bengal for the purposes of sales tax, and the sales, though beyond the customs barrier, were still within the territory of the taxing State.
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Some companies in Calcutta sold petroleum products at Dum Dum Airport to airplanes. These planes either flew directly to other countries or stopped in India first.
Dum Dum Airport followed customs rules, like any airport where planes arrive or leave.
West Bengal wanted to tax the sale of these petroleum products under the Bengal Motor Spirit Sales Taxation Act of 1941.
The companies argued they shouldn't have to pay taxes because of Article 286(1)(a) and (b) of the Indian Constitution. They claimed: (1) the sales happened outside West Bengal; (2) the fuel was delivered outside the customs area, so the sales were outside the state; and (3) the sales were part of the export process, since the fuel was going out of India.
The court decided: (1) "Sale" in Article 286(1)(a) means when the ownership of the goods changes hands. Before that, it's just an agreement to sell. The important event for taxes is when the ownership is transferred. The explanation in Article 286(1) was added to prevent taxing the same sale multiple times. It shows which state can tax the sale and which cannot. It ignores where the ownership changed according to the sales laws. The explanation states that a sale is considered to happen in the state where the goods are delivered for use. If multiple states are involved, only the state where the delivery happened can tax the sale. The explanation clarifies the article, and should be used to interpret it. The explanation only matters if more than one state is involved. Several previous cases were considered.
(2) To avoid West Bengal taxes under Article 286(1)(a) and the explanation, the companies had to show another state where the fuel was delivered for use. In this case, the fuel was delivered to planes, and there was no other state involved. So, Article 286(1)(a) doesn't apply.
(3) In Article 286(1)(b), "export" means more than just taking goods out of the country. It means sending them to a foreign place where they can be considered "imported." Import and export go together. Some previous cases were referenced.
(4) The fuel loaded onto the planes for use was taken out of the country, but it wasn't really exported because it wasn't "imported" anywhere else. So, the sales didn't cause an export, and weren't part of the export process. Article 286(1)(b) doesn't apply.
(5) The sales happened in West Bengal. The customs area doesn't limit West Bengal's ability to tax sales, even if the sales were beyond the customs area. They were still within the state for tax purposes.
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Appeal No. 498 of 1958. Appeal from the judgment and order dated February 11, 1955, of the Andhra Pradesh High Court in T. R. C. No. 120 of 1953 arising out of the judgment and order dated December 29, 1952, of the Sales Tax Tribunal, Madras, in Tribunal Appeal No. 857 of 1951. A. V. Viswanatha Sastri, M. Ranganatha Sastri and M. section K. Sastri, for the appellants. D. Narasaraju, Advocate General for the State of 15 Andhra Pradesh., T. V. R. Tatachari, D. Venkatappayya Sastri and T. M. Sen, for the respondent. October 18. The Judgment of the Court was delivered by AYYANGAR J. This appeal on a certificate under article 133 of the Constitution granted by the High Court of Andhra Pradesh raises for consideration principally the question whether hardened or hydrogenated groundnut oil (commonly called Vanaspati) is " groundnut oil " within the meaning of Rule 18(2) of the Madras General Sales Tax (Turnover and Assess ment) Rules, 1939. Tungabhadra Industries Ltd. the appellant in this appeal has a factory of considerable size at Kurnool in the State of Andhra Pradesh. The company purchases groundnuts and groundnut kernels within the State and manufactures groundnut oil and also refined oil as well as hydrogenated oil all of which it sells. The appeal is concerned with the assessment to salestax of this company for the year 1949 50. Section 3 of the Madras General Sales Tax Act, 1939, enacts: " 3. (1) Subject to the provisions of this Act, (a) every dealer shall pay for each year a tax on his total turnover for such year; and (b) the tax shall be calculated at the rate of three pies for every rupee in such turnover. (2). . . . . . . . (3). . . . . . . . (4) For the purposes of this section and the other provisions of this Act, turnover shall be determined in accordance with such rules as may be prescribed: Provided that no such rules shall come into force unless they are approved by a resolution of the Legislative Assembly. (5) The taxes under sub sections (1) and (2) shall be assessed, levied and collected in such manner and in such installments, if any, as may be prescribed: Provided that (i) in respect of the same transaction of sale, the buyer or the seller, but not both, as determined by 16 (ii) where a dealer has been taxed in respect of the purchase of any goods in accordance with the rules referred to in clause (i) of this proviso, he shall not be taxed again in respect of any sale of such goods effected by him. " Rules were made by virtue inter alia of these provisions entitled " The Madras General Sales Tax Turnover and Assessment Rules, 1939 ". Of these, those relevant to the present context are Rules 4 & 5. Rule 4 reads: "4.(1) Save as provided in sub rule (2) the gross turnover of a dealer for the purposes of these rules shall be the amount for which goods are sold by the dealer. (2) In the case of the undermentioned goods the gross turnover of a dealer for the purposes of these rules shall be the amount for which the goods are bought by the dealer (a) groundnut ". The result of the combined operation of section 4(1)&(2) in the ' case of those who purchased groundnut and having crushed them sold the oil obtained was, that they had to pay tax on both their purchases of groundnut and their sales of oil produced therefrom. This was considered by the rule making authority to be an unfair burden and relief was accordingly provided by Rules 5 and 18 of the same rules, the material portions of which ran: " 5. (1) The tax or taxes under section 3. shall be levied on the net turnover of a dealer. In determining the net turnover the amounts specified in clauses (a) to (1) shall, subject to the conditions specified therein, be deducted from the gross turnover of a dealer. Clause (k) of this rule reads: (k) in the case of a registered manufacturer of groundnut oil and cake, the amount which he is entitled to deduct from his gross turnover under rule 18 subject to the conditions specified in that rule." (This rule was amended by a notification dated November 9, 1951, by the addition of the words 17 " groundnut oil ", but this modification of the rule is not relevant to the present case which is concerned with the assessment of a period anterior to the modification). Rule 18 referred to here reads, to quote only the material words: " 18. (1) Any dealer who manufactures groundnut oil and cake from groundnut and/or kernel purchased by him may, on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of groundnut oil and cake. (2) Every such registered manufacturer of groundnut oil will be entitled to a deduction under clause (k) of sub rule (1) of rule 5 equal to the value of the groundnut and/or kernel, purchased by him and converted into oil and cake if he has paid the tax to the State on such purchases: Provided that the amount for which the oil is sold is included in his net turnover: Provided further that the amount of the turnover in respect of which deduction is allowed shall not exceed the amount of the turnover attributable to the groundnut and/or kernel used in the manufacture of oil and included in the net turnover. Explanation. For the purpose of this sub rule(a) 143 lb. of groundnut shall be taken to be equivalent to 100 lb. of kernel; (b) 143 lb. of groundnut or 100 lb. of kernel when converted into oil will normally be taken to yield 40 lb. of oil; and (c) one candy of oil shall be taken to be equivalent to 500 lb. of oil." Then follow other provisions not relevant for the purposes of the present appeal. The appellant was registered as a manufacturer of groundnut oil under r. 18(1). That the appellant purchased the groundnuts, the value of which was claimed as a deduction in the turnover within the State and paid tax on such purchase to the State was not in dispute. Nor was there any controversy that the sale 18 price of the oil expressed out of and sold either as raw groundnut oil, refined oil or hydrogenated oil was, included in the turnover of the appellant. The Deputy Commercial Tax Officer, Kurnool, who completed the assessment of the appellant accepted the figures of purchases and sales submitted by it, and dealing with the claim for the deduct ion of the purchase price of. the groundnuts from the proceeds of the sale of all oil by the company raw, refined and hydrogenated granted a deduction in respect of the purchase price of the groundnuts attributable to the unrefined oil sold by the appellant, but held that the appellant was not entitled to the deduction claimed in respect of the refined and hydrogenated oil for the reason that it was only unrefined or unprocessed groundnut oil that was connoted by the expression groundnut oil ' in rule 5(1)(k) read with rule 18(1) and (2) of the Turnover and Assessment Rules. This order of the Deputy Commercial Tax Officer was affirmed by the Commercial Tax Officer on appeal and the appellant filed a further appeal to the Sales Tax Appellate Tribunal. The second appellate authority upfield the contention of the appellant in regard to the sale of refined oil but rejected it in so far as it related to the sales of hydrogenated oil. The matter was thereafter brought up before the High Court of Andhra Pradesh by a Tax Revision Case filed under section 13(b)(1) of the Act and the learned Judges upheld the view of the Tribunal and disallowed the claim of the appellant to the deduction claimed in regard to the sales turnover of hydrogenated oil. They granted the certificate under article 133 which has enabled the appellant to file an appeal to this Court. The claim of the appellant to the deduction under r. 18(2) on the sales of refined groundnut oil is no longer in dispute. The ground upon which both the Tribunal as well as the High Court decided against the allowance of the deduction in respect of the sales of hydrogenated oil, while upholding the appellants ' case as regards refined oil may be briefly stated thus: The exemption or deduction from the sale turnover under r. 18(2), is on its terms applicable only to the sale of the oil in the form in which it is when extracted 19 out of the kernel. When raw groundnut oil is converted into refined oil, there is no doubt processing, but this consists merely in removing from raw groundnut oil that constituent part of the raw oil which is not really oil. The elements removed in the refining process consist of free fatty acids, phosphotides and unsaponifiable matter. After the removal of this nonoleic matter therefore, the oil continues to be ground. nut oil and nothing more. The matter removed from the raw groundnut oil not being oil cannot be used, after separation, as oil or for any purpose for which oil could be used. In other words, the processing consists in the non oily content of the raw oil being separated and removed, rendering the oily content of the oil 100 per cent. For this reason refined oil continues to be groundnut oil within the meaning of rules 5(1)(k) and 18(2) notwithstanding that such oil does not possess the characteristic colour, or taste, odour, etc. of the raw groundnut oil. But in the case of hydrogenated oil which is prepared from refined oil by the process of passing hydrogen into heated oil in the presence of a catalyst (usually finely powdered nickel), two atoms of hydrogen are absorbed. A portion of the oleic acid which formed a good part of the content of the groundnut oil in its raw state is converted, by the absorption of the hydrogen atoms, into stearic acid and it is this which gives the characteristic appearance as well as the semi solid condition which it attains. In the language of the Chemist, an inter molecular or configurational chemical change takes place which results in the hardening of the oil. Though it continues to be the same edible fat that it was before the hardening, and its nutritional properties continue to be the same, it has acquired new properties in that the tendency to rancidity is greatly removed, is easier to keep and to transport. Both the Tribunal as well as the learned Judges of the High Court held that the hydrogenated oil (or Vanaspati) ceased to be groundnut oil by reason of the chemical changes which took place which resulted in the acquisition of new properties including the loss of its fluidity. In other words, 20 they held that Vanaspati or hydrogenated oil was not " groundnut oil " but a product of groundnut oil, manufactured out of groundnut oil and therefore not entitled to the benefit of the deduction under r. 18(2). The arguments of Mr. Visvanatha Sastri for the appellants were briefly two: (1) The reasons behind the rules 5(k) & 18(2) which were designed to afford relief against what would amount practically to double taxation of the same assessee both when he purchased and when he sold the goods, required that the appellants ' claim should be allowed. (2) Hydrogenated groundnut oil was no less groundnut oil than either refined or even unrefined oil. The fact that the quality of the oil had been improved does not negative its continuing to be oil and the materials before the departmental authorities and the Court established that it continued to be oil and was nothing more. The argument based on the reason of the rule can. not carry the appellant far, since in the present case it is an exemption from tax which he invokes and of which he seeks the benefit. If the words of the rule are insufficient to cover the case, the reason behind the rule cannot be availed of to obtain the relief Nor could it be said to be a case of double taxation of the same goods at the purchase and sale points which is forbidden by section 3(5) of the Act. If the view adopted by the learned Judges of the High Court that hydrogenated groundnut oil is not " groundnut oil " but a product of groundnut oil were correct, learned Coun. sel cannot urge that he would still be entitled to the deduction for which provision is made in r. 18(2). Consequently it is the second of the submissions alone which really requires to be examined. In doing so it would be convenient to consider the reasoning on the basis of which the view ' that hydrogenated oil was not " groundnut oil " was sought to be sustained before us. The learned Advocate General of Andhra Pradesh who appeared for the respondent Commercial Tax Officer sought to support the decision of the High Court by two lines of reasoning. The first was that 21 the exemption applied only to the sale of the oil as it emerged from the presser and that any processing of the oil including refining, in order to remove even ' the impurities and free fatty acids, took it out of the category of " groundnut oil " as used in the rule. In support of this submission he referred us to the Table of Conversion of groundnuts and kernel into oil set out in the Explanation to r. 18(2), extracted earlier, and submitted that the 40 lb. of oil for every 100 lb. of kernel was based on the yield of raw groundnut oil and that this was an indication that nothing other than raw groundnut oil was intended to be covered by the expression " groundnut oil " in the rule. We must however point out that this last submission has no factual basis to support it. It is not known whether the proportion of 40 lb. of oil for every 100 lb. of kernel represents the average weight of oil extractable from different varieties of groundnut kernels or is the average of the different types of oils which may be produced out of different varieties of kernels. In the absence of any definite data in this regard it is impossible to accept the argument that the Table of Conversion justifies any particular construction of what was meant by " groundnut oil " in the main part of the rule. Nor is the learned Advocate General well founded in his submission that the processing of the oil in order to render it more acceptable to the customer by improving its quality would render the oil a commodity other than " groundnut oil " within the meaning of the rule, For instance, if the oil as extracted were kept still in a vessel for a period of time, the sediment normally present in the oil would settle at the bottom leaving a clear liquid to be drawn out. The learned Advocate General cannot go so far as to say, that if this physical process was gone through, the oil that was decanted from the sediment which it contained when it issues out of the expresser, ceased to be di groundnut oil " for the purposes of the rule. If the removal of impurities by a process of sedimentation does not render groundnut oil any the less so, it follows that even the process of refining, by the 22 application of chemical methods for removing impuri ties in the oil, would not detract from the resulting oil being " groundnut oil " for the purpose of the rule. It may be mentioned that processes have been discovered by which even on extraction from the oil mill, the oil issues without any trace of free fatty acids. It could hardly be contended that if such processes were adopted what comes out of the expresser is not groundnut oil. The submission of the learned Advocate General based on a contention that the Tribunal and the learned Judges of the High Court erred in holding that even refined groundnut oil was " groundnut oil " for the purpose of the rule, must be rejected. The next question is whether if beyond the process of refinement of the oil, the oil is hardened, again by the use of chemical processes it is rendered any the less groundnut oil ". In regard to this, the learned Advocate General first laid stress on the fact that while normally oil was a viscous liquid, the hydrogenated oil was semi solid and that this change in its physical state was itself indicative of a substantial modification of the identity of the substance. We are unable to accept this argument. No doubt, several oils are normally viscous fluids, but they do harden and assume semi solid condition on the lowering of the temperature. Though groundnut oil is, at normal temperature, a viscous liquid, it assumes a semi solid condition if kept for a long enough time in a refrigerator. It is therefore not correct to say that a liquid state is an essential characteristic of a vegetable oil and that if the oil is not liquid, it ceases to be oil. Mowrah oil and Dhup oil are instances where vegetable oils assume a semi solid state even at normal temperatures. Neither these, nor cocoanut oil which hardens naturally on even a slight fall in temperature, could be denied the name of oils because of their not being liquid. Other fats like ghee are instances where the physical state does not determine the identity of the commodity. The next submission of the learned Advocate General was that in the course of hydrogenation the oil 23 absorbed two atoms of hydrogen and that there was an inter molecular change in the content of the substance. This however is not decisive of the matter. The question that has still to be answered is whether hydrogenated oil continues even after the change to be " groundnut oil ". If it is, it would be entitled to the benefit of the deduction from the turnover, or to put it slightly differently, the benefit of, the deduction from the turnover cannot be denied, unless the hydrogenated groundnut oil has ceased to be " groundnut oil ". To be groundnut oil, two conditions have to be satisfied. The oil in question must be from groundnut and secondly the commodity must be " oil ". That the hydrogenated oil sold by the appellants was out of groundnut not being in dispute, the only point is whether it continues to be oil even after hydrogenation. Oil is a chemical compound of glycerine with fatty acids or rather a glyceride of a mixture of fatty acids principally oleic, linoleic, stearic and palmitic, the proportion of the particular fat varying in the case of the oil from different oil seeds and it remains a glyceride of fatty acids even after the hardening process, though the relative proportion of the different types of fatty acids undergoes a slight change. In its essential nature therefore no change has occurred and it remains an oil a glyceride of fatty acids that it was when it issued out of the press. In our opinion, the learned Judges of the High Court laid an undue emphasis on the addition by way of the absorption of the hydrogen atoms in the process of hardening and on the consequent inter molecular changes in the oil. The addition of the hydrogen atoms was effected in order to saturate a portion of the oleic and linoleic constituents of the oil and render the oil more stable thus improving its quality and utility. But neither mere absorption of other matter, nor inter molecular changes necessarily affect the identity of a substance as ordinarily understood. Thus for instance there are absorptions of matter and inter molecular changes which deteriorate the quality or utility of the oil and it might be interesting to see if such additions and alterations could be taken to 24 render it any the less " oil ". Groundnut oil when it issues out of the expresser normally contains a large proportion of unsaturated fatty acids oleic and linoleic which with other fatty acids which are saturated are in combination with glycerine to form the glyceride which is oil. The unsaturated fatty acids are unstable, i. e., they are subject to oxidative changes. When raw oil is exposed to air particularly if humid and warm, i.e., in a climate such as obtains in Madras, oxygen from the atmosphere is gradually absorbed by the unsaturated acid to form an unstable peroxide (in other words the change involves the addition of two atoms of oxygen) which in its turn decomposes breaking up into aldehydes. It is this oxidative change and particularly the conversion into aldehydes that is believed to be responsible for the sharp unpleasant odour, and the characteristic taste of rancid oil. If nothing were done to retard the process the rancidity may increase to such extent as to render it unfit for human consumption. The change here is both additive and inter molecular, but yet it could hardly be said that rancid groundnut oil is not groundnut oil. It would undoubtedly be very bad groundnut oil but still it would be groundnut oil and if so it does not seem to accord with logic that when the quality of the oil is improved in that its resistance to the natural processes of deterioration through oxidation is increased, it should be held not to be oil. Both the Tribunal as well as the High Court have pointed out that except for its keeping quality without rancidity and ease of packing and transport without leakage, hydrogenated oil serves the same purpose as a cooking medium and has identical food value as refined groundnut oil. There is no use to which the groundnut oil can be put for which the hydrogenated oil could not be used, nor is there any use to which the hydrogenated oil could be put for which the raw oil could not be used. Similarly we consider that hydrogenated oil still continues to be " groundnut oil " notwithstanding the processing which is merely for the purpose of rendering the oil more stable thus improving its keeping qualities for 25 those who desire to consume groundnut oil. In our opinion the assessee company was entitled to the,, benefit of the deduction of the purchase price of the kernel or groundnut, under r. 18(2), which went into the manufacture of the hydrogenated groundnut oil from the sale turnover of such oil. One other point which is involved in the appeal relates to the claim of the appellant to a deduction in respect of the freight charges included in the price of the commodity. Under r. 5(1)(g) of the Turnover and Assessment Rules, in determining the net turnover of a dealer he is entitled to have deducted from his gross turnover " all amounts falling under the following two heads, when specified and charged for by the dealer separately, without excluding them in the price of the goods sold : (i) freight; (ii). . . . The appellant claimed exemption on a sum of Rs. 3,88,377 13 3 on the ground that it represented the freight in respect of the goods sold by the appellant asserting that they had been charged for separately. The assessing officer rejected the claim and this rejection was upheld by the departmental authorities and by the High Court in Revision. It would be seen that in order to claim the benefit of this exemption the freight should (1) have been specified and charged for by the dealer separately, and (ii) the same should not have been included in the price of the goods sold. The learned Judges of the High Court held that neither of these conditions was satisfied by the bills produced by the appellant. We consider, the decision of the High Court on this point was correct. In the specimen bill which the learned Counsel for the appellants has placed before us, after setting out the quantity sold by weight (23,760 lb.) the price is specified as 15 annas 9 pies per lb. and the total amount of the price is determined at Rs. 23 388 12 0. From this the railway freight of Rs. 1,439 12 0 is deducted and the balance is shown as the sum on which sales tax has been computed. 26 From the contents of this invoice it would be seen that the appellant has charged a price inclusive of the railway freight and would therefore be outside the terms of r. 5(1)(g) which requires that in order to enable a dealer to claim the deduction it should be charged for separately and not included in the price of goods sold. The conditions of the rule not having been complied with, the appellant was not entitled to the deduction in respect of freight. The result therefore is that the appeal is allowed in part and the order of the High Court in so far as it denied to the appellant the benefit of the deduction in the turnover provided by r. 18(2) of the Turnover and Assessment Rules is set aside. In view of the appellant having succeeded only in part, there will be no order as to costs in this appeal. Appeal allowed in part.
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The appellant purchased groundnuts out of which it manu factured groundnut oil ; it also refined the oil and hydrogenated it converting it into Vanaspati.
It sold the oil in all the three states.
Under the Madras General Sales Tax Act, 1939, and the Turnover and Assessment Rules, for determining the taxable turnover the appellant was entitled to deduct the purchase price of the groundnuts from the proceeds of the sale of all groundnut oil.
The High Court held that the appellant was entitled to the deduction in respect of the sales of unrefined and refined groundnut oil but not in respect of the sales of hydrogenated oil on the ground that Vanaspati was not " groundnut oil " but a product of groundnut oil.
Held, that the appellant was entitled to the deduction in respect of the sales of hydrogenated groundnut oil also.
The hydrogenated groundnut oil continued to be " groundnut oil " notwithstanding the processing which was merely for the purpose of rendering the oil more stable.
To be groundnut oil two conditions had to be satisfied it must be from groundnut and it must be " oil ".
The hydrogenated oil was from groundnut and in its essential nature it remained an oil.
It continued to be used for the same purposes as groundnut oil which had not undergone the process.
A liquid state was not an essential characteristic of a vegetable oil ; the mere fact that hydrogenation made it semisolid did not alter its character as an oil.
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The company bought peanuts and used them to make peanut oil. They also cleaned the oil and changed it into a solid form called Vanaspati.
They sold the oil in three states.
According to the Madras General Sales Tax Act (a law about sales tax), the company could subtract the price of the peanuts from the money they made selling the peanut oil, when figuring out how much tax they owed.
The High Court (a court of law) said the company could subtract the cost of peanuts from the sales of regular and cleaned peanut oil, but not from the sales of Vanaspati. They said Vanaspati wasn't "peanut oil," but something made *from* peanut oil.
The court decided that the company *could* subtract the cost of peanuts from the sales of Vanaspati too.
The Vanaspati was still "peanut oil" even after being changed to make it last longer.
To be considered peanut oil, two things have to be true: it must come from peanuts, and it must be "oil."
The Vanaspati came from peanuts, and it was still oil in its basic form.
People used it for the same things as regular peanut oil.
Oil doesn't have to be a liquid. The fact that Vanaspati was semi-solid didn't change the fact that it was still an oil.
| 3,238
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Special Leave Petition (Civil) Nos. 4973/89 and 12763/89. From the Judgment and Order dated 31.1.1989 of the Kerala High Court in O.P. No. 3218/88 and dated 25.3.82 of the Income Tax Appellate Tribunal, Cochin in I.T.A. No. 302/Coch/1977 78. K.K. Venugopal and K.R. Nambiar for the Petitioner. Soli J. Sorabjee, Attorney General, section Ganesh and Ms. A. Subhashini for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, CJ. This is a petition under arti cle 136 of the Constitution for leave to appeal against the orders of the tribunal and the High Court. The High Court vide its order dated 31st January, 1989 had dismissed the application for reference. There is also an order of the tribunal refusing to make a reference under section 256(1) of the Income Tax Act, 1961 (hereinafter called 'the Act '). This petition also seeks leave to appeal directly from the said order of the tribunal. 7 However, in order to appreciate the controversy in this case the facts reiterated by the High court of Kerala in its said judgment and order are important, it had observed as follows: "For the assessment year 1969 70 the petitioner filed a return declaring a total income of Rs.9,571. In completing the assessment the assessing authority proceeded on the basis that the assessee was the owner of the gold seized on 9.11.68 and confiscated by the Customs authorities worth Rs.20 lakhs and accordingly the Income tax Officer treated the sum of Rs.20 lakhs as income from undisclosed source applying the provisions of Section 69 A of the Income tax Act, 1961. On appeal, the Appellate Assistant Commissioner held that the assessee was not the owner of the contraband gold seized by the Central Excise Authority and therefore reduced the assessee 's total income by Rs.20 lakhs. The Revenue filed a second appeal before the Appellate Tribunal, Cochin Bench. After going through the evidence the Tribunal came to the conclusion that the car belonged to the assessee and the special places of concealment had been provided by design in the car. Further the assessee himself was driving the car in which the gold was found. The assessee also has not attributed the ownership to anybody else. The assesee also has not established that the gold was given to him by any third party. In view of all these, the addition of Rs.20 lakhs made by the Incometax Officer but deleted by the Appellate Asstt. Commissioner was restored. The additional ground raised by the Revenue that the appeal is not main tainable before the Appellate Asstt. Commissioner was re jected. The assessee thereafter filed a Miscellaneous Peti tion for rectification of the order of the Tribunal. The rectification sought to be made are : (1) Business loss to the tune of Rs.20,00,000 incurred by the assessee due to investment in gold and the confiscation of the gold by the Customs authorities be allowed for the assessment year 1969 70, in view of the decision of the Supreme Court in CIT vs Piara Singh, decided on 8 5 1980 and reported in , (2) the income tax and special surcharge amounting to Rs. 16, 19,395, Rs.20,00,000 and 8 (3) as the tax has already been collected from the amount of Rs. 20,00,000 no interest was payable. " The High Court noted that the tribunal could not accede to the requests of the petitioner as these could not be considered as mistakes apparent from records. The points had not been raised by way of cross appeal or cross objections. Thereafter, the assessee filed a petition u/s 256 of the Act seeking reference of the following questions of law: "1. Whether the Tribunal is right in law in its view that the right to file an application under Section 254(2) of the Income tax Act, 1961 is open to be exercised only by the applicant and not by the respondent in the appeal before it? 2. Whether the Tribunal is right in law in rejecting the application under Section 254(2) on the ground that the applicant was not the appellant before it and that he had also not filed any memo of Cross objections in the appeal against him? 3. Whether on the facts and in the circumstances of the case the assessee was bound to raise before the Tribunal, at the stage when he was only supporting the order appealed against him, of his case for deduction which he was legally entitled to claim in case of allowance of the appeal against him? 4. Whether on facts and circumstances of the case the Tribu nal was right in law in holding that the claim of loss on account of confiscation of the gold was not the subject matter of the appeal?" The tribunal dismissed the petition holding that none of the questions sought to be raised was decided by the tribu nal and as such did not arise out of the order of the tribu nal. Aggrieved by these two orders, one being refusal by the tribunal to refer the question as aforesaid u/s 256(1) and the other of the High Court directing the tribunal to refer the questions and state the case to the High Court, the petitioner has come up to this Court. We find that it can legitimately be argued in the facts and the circumstances of the case that the question which essentially arose, which had to be borne in mind and which 9 was argued before the tribunal was, whether the sum of Rs.20 lakhs could be subject to taxation in the context as found by the tribunal as the income of the assessee. The asses see 's further contention was that in view of the decision of this Court in C.I.T. Patiala vs Piara Singh, even if Rs.20 lakhs could be treated as the income of the asses see inasmuch as this has been ordered to be confiscated, there was a business loss as held in the said decision of this Court. Therefore, this question should have been gone into which was sought to be raised by a MiscellaneOus Appli cation before the tribunal after disposal of the appeal by the tribunal. The principle by which this should be determined has been fairly laid down by this Court in C.I.T., Bombay vs Scindia Steam Navigation Co. Ltd.; , wherein this Court at page 612 had observed as follows: "Section 56(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, trenching 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 which 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 itself a distinct question for the purpose of section 66(1) of the Act. That was the view taken by this Court in Commissioner of Income tax vs Ogale Glass Works Ltd., and in Zoraster & Co. vs Commissioner of Income tax, , and we agree with it. As the question on which the parties were at issue, which was referred to the court under section 66(1), and decided by it under section 66(5) is whether the sum of Rs.9,26,532 is liable to be included in the taxable income of the respondents, the ground on which the respondents contested their liability before the High Court was one which was within the scope of the question, and the High Court rightly entertained it. 10 It is argued for the appellant that this view would have the effect of doing away with limitations which the Legislature has advisedly imposed on the right of a litigant to require references under section 66(1), as the question might be framed in such general manner as to admit of new questions not argued being raised. It is no doubt true ' that sometimes the questions are framed in such general terms that, construed literally, they might take in questions which were never in issue. In such cases, the true scope of the reference will have to be ascertained and limited by what appears on the statement of the case. In this connec tion, it is necessary to emphasise that, in flaming ques tions, the Tribunal should be precise and indicate the grounds on which the questions of law are raised. Where, however, the question is sufficiently specific, we are unable to see any ground for holding that only those conten tions can be argued in support of it which had been raised before the Tribunal. In our opinion, it is competent to the court in such a case to allow a new contention to be ad vanced, provided it is within the framework of the question as referred." Mr. Venugopal, appearing for the petitioner, drew our attention to the observations of Justice Shah, as the learned Chief Justice then was, at p. 617 which are to the following effect: "The source of the question must be the order of the Tribu nal; but of the question it is not predicated that the Tribunal must have been asked to decide it at the hearing of the appeal. It may very well happen and frequently cases arise in which the question of law arises for the first time out of the order of the Tribunal. The Tribunal may wrongly apply the law, may call in aid a statutory provision which has no application, may even misconceive the question to be decided, or ignore a statutory provision which expressly applies to the facts found. These are only illustrative case: analogous cases may easily be multiplied. It would indeed be perpetrating gross injustice in such cases to restrict the assessee or the Commissioner to the questions which have been raised and argued before the Tribunal and to refuse to take cognisance of question which arise out of the order of the Tribunal, but which were not argued, because they could not (in the absence of any indication as to what the 11 Tribunal was going to decide be argued." As mentioned hereinbefore, this is an application for leave to appeal from the decisions of the tribunal and the High Court under Article 136 of the Constitution. The real and substantial question posed and canvassed before the tribunal in its appellate order and in the appeal, as is manifest from the facts stated before, was, whether a sum of Rs.20 lakhs could in the facts and the circumstances be considered as part of the income of the assessee and as such suffer taxation. Now the question sought to be raised is, whether in view of the decision of this Court in Piara Singh 's case (supra) the amount of Rs.20 lakhs could be treated as legitimate business loss of the assessee. It is possible to take the view that this is substan tially a different question, namely, whether an amount is a business loss even assuming that it was the income. It is possible and conceivable to consider two different ques tions, namely, whether a certain sum of money is the income of the assessee, and secondly, whether even assuming that such was the income, was that income liable to be deducted in view of the provisions of the Act. It is possible to take the view that these are substantially different questions and not merely different aspects of the same question. Considerations which go into determination of whether an amount should be treated as income and the considerations which are relevant to determine whether even assuming that, that was the income the amount was deductible, are differ ent. The question in this form was not canvassed before the tribunal at any point of time in the alternative. It may be reiterated that the Central Excise Officers at Valayar check post seized gold weighing 16,000 gms. from Car No. MYX 9432, which was being driven by the petitioner along with the documents and took the petitioner into custody. The Collector of Central Excise, Madras had confiscated the gold in question and found that the petitioner was in possession of the gold. The assessment of the petitioner for the year in question was originally completed at a total income of Rs. 1,571. Subsequent to the completion of the original assessment, the petitioner filed a return declaring a total income of Rs.9,57 1. The Income Tax Officer issued notice under section 148 of the Act. The Tribunal ultimately had accepted the revenue 's contention, restored the addition of Rs.20 lakhs made by the assessing authority, inter alia, holding that the onus was on the petitioner to prove that the 12 gold was not owned by him which onus the petitioner had failed to discharge. The Tribunal had gone into and adjudi cated the question substantially raised by the petitioner that the confiscated gold could not be treated as the income of the petitioner. The Tribunal rejected the application of the petitioner on the ground that the claim of loss on account of the confiscation of the gold was not the subject matter of the appeal. The principles of law have been discussed by this Court in Scindia Steam Navigation Co. Ltd 's case (supra). In the facts and the circumstances of the case, the Tribunal and the High Courts have taken the view that wheth er certain sum of money can be treated as the income of an assessee and whether that sum of money could be deducted as loss are different question of law and not different aspects of the same question. The Tribunal and the High Court have taken a particular view. They have borne in mind the correct principles that are applicable in the light of the law laid down by this Court in Scindia Steam Navigation 's case (supra). In the background of the facts and the circumstances of the case, as mentioned hereinbefore, if the aforesaid view of the Tribunal and the High Courts is a possible view, we are not inclined to interfere with that view under Article 136 of the Constitution in the light of the facts and the circumstances of this case. We are not prepared to say that injustice has been done to the petitioner. The view taken by the Tribunal and the High Courts is a possible view. The Tribunal and the High Courts have borne in mind the princi ples of law laid down by this Court. In the aforesaid view of the matter, ' in the facts and the circumstances of the case, this application is rejected and accordingly dismissed. R.N.J. Petition dismissed.
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On November 11, 1968 the Petitioner was apprehended carrying contraband gold in a Maruti Car driven by him.
He was taken into custody and the seized gold was confiscated.
For the assessment year 1960 70 the Petitioner had filed a return declaring total income of Rs.9,571.
In finalising the assessment the Income Tax Officer added Rs.20 Lakhs being the price of the confiscated gold as income from undisclosed source.
The Petitioner went in appeal before the Appellate Assistant Commissioner who reduced the income by that amount holding that the assessee was not the owner of the confis cated gold.
On second appeal by the revenue the Tribunal restored the order of the I.T.O.
The Petitioner then moved a Misc.
Application under section 254(1) for amendment for treating Rs.20 Lakhs as business loss which was rejected by the Tribunal.
The Petitioner then moved a Petition u/s 256(1) of the Income Tax Act seeking reference to the High Court raising certain questions, which was turned down by the Tribunal holding that none of the questions sought to be raised was decided by the Tribunal and ' as such did not arise from its order.
The High Court also declined the application to direct the Tribunal to refer the questions and to state the case to it.
Hence this special leave petition directed against both the order of the Tribunal as well as the High Court.
Dis missing the Special Leave Petition, the Court, HELD: The real and substantial question posed and can vassed before the Tribunal in its appellate order and in the appeal was whether the sum of Rs.20 Lakhs be considered as part of the income of the 6 assessee and as such suffer taxation.
The question sought to be raised is whether in view of the decision of the Court in Piara Singh 's case this amount could be treated as legiti mate business loss of the assessee.
It is possible to take the view that this is substantially a different question, family whether an amount is a business loss even assuming that it was he income.
It is possible and conceivable to consider two different questions, namely whether a certain sum of money is the income of the assessee and secondly, whether even assuming that such was the income, was that income liable to be deducted in view of the provisions of the Act.
Considerations which go into determination whether an amount should be treated as income and considerations which are relevant to determine whether even assuming that, that was the income the amount was deductible, are differ ent.
The question in this form was not canvassed before the Tribunal.
The view taken by the Tribunal and the High Court is a possible view and they have borne in mind the princi ples of law laid down by the Court in Scindia Steam Naviga tion 's case.
[1 lB E; 12E] C.I.T., Patiala vs Piara Singh, 2 and C.I.T., Bombay Scindia Steam Navigation Co. Ltd., , referred to.
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On November 11, 1968, the person involved (called the Petitioner) was caught with illegal gold in a Maruti car he was driving.
He was arrested, and the gold was taken away.
For the tax year 1969-70, the Petitioner had filed a tax form saying his total income was about $1,200.
When figuring out the final tax amount, the Income Tax Officer added about $260,000 (Rs. 20 Lakhs) to his income. This was because the officer thought the confiscated gold was income from a secret source.
The Petitioner appealed to the Appellate Assistant Commissioner, who lowered the income by that amount. The Commissioner said the Petitioner didn't own the gold that was taken.
The government then appealed to the Tribunal (a tax court), which said the Income Tax Officer's original decision was correct.
The Petitioner then asked the Tribunal to make a change under section 254(1). He wanted the $260,000 (Rs. 20 Lakhs) to be considered a business loss. The Tribunal said no.
The Petitioner then filed a Petition under section 256(1) of the Income Tax Act. He asked for the case to be sent to the High Court with certain questions. The Tribunal refused, saying it hadn't decided those questions and they didn't come from its decision.
The High Court also refused to order the Tribunal to send the questions and the case to them.
So, the Petitioner filed a special leave petition (a request to appeal) against both the Tribunal's and the High Court's decisions.
The Court dismissed the Special Leave Petition, and HELD: The main question argued before the Tribunal was whether the $260,000 (Rs. 20 Lakhs) should be considered part of the Petitioner's income and taxed.
The question now is whether, based on a previous court case (Piara Singh's case), this amount could be considered a legitimate business loss.
It's possible to see this as a different question: whether an amount is a business loss, even if it was income.
It's possible to consider two separate questions: first, whether a sum of money is someone's income; and second, even if it was income, whether it can be deducted (taken off) based on the tax laws.
The things considered when deciding if an amount is income are different from the things considered when deciding if that income can be deducted.
This question, in this form, was not argued before the Tribunal.
The Tribunal and the High Court took a reasonable view, and they considered the legal principles from a previous court case (Scindia Steam Navigation's case).
[1 lB E; 12E] C.I.T., Patiala vs Piara Singh, 2 and C.I.T., Bombay Scindia Steam Navigation Co. Ltd., , referred to.
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Civil Appeal No. 137 of 1953. Appeal from the judgment and decree dated the November 30, 1951, of the former Pepsu High Court in R. section Appeal No. 49 of 1948 against the judgment and decree dated the May 1, 1948, of the Court of the District Judge, Patiala, in Civil Appeal No. 22 of 1946 47, arising from the judgment and decree dated the April 4, 1947, of the Court of the Sub Judge 11 Class, Bassi in Suit No. 721 of 1945. Achhru Ram and K. L. Mehta, for the appellant. Raghbir Singh and section section Dhillon, for the respondent No. 1. 950 1957. November 15. The following Judgment of the Court was delivered by SARKAR J. The only question for decision in this appeal is whether title had been acquired to certain lands by adverse possession. Ram Ditta was a Hindu Jat of village Bhathal in District Bassi which was originally in Patiala but subsequently came to be included in Patiala & Eastern Punjab States Union. He died in April or May 1920 leaving certain lands which were the subject matter of dispute in the suit out of which this appeal arises. Ram Ditta had a son named Jeona who predeceased him leaving a widow, Harnam Kaur. Harnam Kaur has a daughter, Kirpal Kaur and the latter is the appellant before us. Kirpal Kaur has a son of the name of Satwant Singh. Ram Ditta had certain collateral relations and the dispute was between them on the one hand and Harnam Kaur and Kirpal Kaur on the other. These collaterals are the contesting respondents in this appeal. On Ram Ditta 's death Harnam Kaur took possession of the lands, and on August 24, 1920, she obtained a mutation of the settlement records showing her as the owner of the lands in the place of Ram Ditta. By a deed dated November 27, 1929, she purported to make a gift of half of the lands to Kirpal Kaur on the occasion of the latter 's marriage. Thereafter an attempt was made to obtain a mutation of the settlement records showing Kirpal Kaur as the owner of the lands given to her but on the objection of the collaterals the mutation was refused on May 12, 1930. This gift gave rise to various litigation both civil and criminal between Harnam Kaur and Kirpal Kaur on the one hand and the collaterals on the other. Mutual friends intervened to put an end to this unhappy state of affairs and at their efforts a settlement of the disputes was arrived at. On February 6, 1932, a document was executed by Harnam Kaur whereby she agreed that the lands would belong to her for her life and after her death to Kirpal Kaur for the latter 's life and that none of them would be entitled to sell or mortgage the lands. The document further stated 951 that Harnam Kaur had previously created a mortgage on the lands and that she would have the right to create another mortgage on them to pay off certain specified debts due by her and such mortgage would be binding on the collaterals but after her death there would be no other burden on the collaterals. This document was never registered. In 1936, Harnam Kaur created another mortgage on the lands and this mortgage was subsequently transferred to Satwant Singh, son of Kirpal Kaur. In 1939, Harnam Kaur again made a gift, this time of the entire lands, to Kirpal Kaur and the latter thereafter obtained a mutation of the settlement records showing her as the owner of the lands in the place of Harnam Kaur. This eventually brought about the institution of the suit out of which the present appeal arises. This suit was filed in March 1945, by some of the collaterals against Harnam Kaur, Kirpal Kaur and Satwant Singh impleading certain other collaterals who did not join as plaintiffs, as defendants. It sought a declaration that the gift of the lands by Harnam Kaur to Kirpal Kaur and the mortgage of 1936 were illegal and were not binding on the collaterals who were the then reversionary heirs of Ram Ditta. The suit was contested by Harnam Kaur, Kirpal Kaur and Satwant Singh. The court of first instance framed the following issues for trial: 1. Are the plaintiffs the collaterals of Jeona ? 2. Is the property in dispute ancestral ? 3. Was the mortgage in dispute effected for legal necessity ? 4. Is the gift in dispute valid according to custom ? 5. Is the suit time barred ? 6. Had Harnam Kaur acquired a right to the lands by adverse possession at the time of the gift to Kirpal Kaur ? The first five issues were decided in favour of the plaintiffs, and the sixth against them. With regard to the sixth issue it appears to have been admitted 121 952 before the learned trial Judge by both parties that according to the general custom governing the parties a widow of a pre deceased son, as Harnam Kaur was, was entitled to maintenance only when there were collaterals of the degree that the collaterals in this case are. The learned Judge held that the possession of Harnam Kaur was, therefore, adverse to the collaterals and that as she had admittedly been in possession since 1920 and as the relations between her and the collaterals had been unfriendly, she had acquired at the date of the gift an absolute title to the lands by adverse possession. It was contended before him that the agreement of February 6, 1932, though not admissible in evidence in the absence of registration to prove that Harnam Kaur and Kirpal Kaur had only life estates in the lands, was admissible to show the nature of Harnam Kaur 's possession and that it showed that her possession was not adverse. The learned Judge did not accept this contention. In the above view of issue No. 6 he dismissed the suit. The plaintiffs then took the matter up in appeal to the District Judge of Patiala. Harnam Kaur and her side never took any exception to the issues found against them by the trial Judge. The learned District Judge was therefore only concerned with the sixth issue. It was contended before him on behalf of the plaintiffs that Harnam Kaur 's possession was not adverse to them as she had been in Possession claim ing only a right of maintenance and this was sought to be supported by the Patwari 's report in connection with the mutation of August 24, 1920. The learned District Judge held that the report, a reference to which will be made later, did not show any assertion on the part of Harnam Kaur that she claimed to be the heir of Ram Ditta or that she was in possession in lieu of her maintenance. With regard to the agreement of February 6, 1932, he held that it was of no assistance to the collaterals. In the result he dismissed the appeal. The collaterals then went up in appeal to the High Court of Patiala and Eastern Punjab States 953 Union. The High Court took the view that in coming to the conclusion that Harnam Kaur 's possession was adverse to the collaterals the Courts below had proceeded on the basis that being the widow of Ram Ditta 's predeceased son she was not an heir to him and, therefore, her possession of Ram Ditta 's estate was necessarily adverse to his heirs, the collaterals. The High Court felt that in doing so the Courts below were thinking of Hindu Law under which the widow of a pre deceased son was not an heir but was entitled to maintenance only, and had overlooked the fact that the parties being Punjabi Jats, were governed by custom. The High Court then referred to paragraph 9 of Rattigan 's Digest of Customary Law which is a book of unquestioned authority on Punjab customswhere it is stated that " the widow of a sonless son who predeceases his father, is, in some tribes, permited to succeed to his share " and held that it appeared from the Patwari 's report mentioned earlier that Harnam Kaur was regarded as Ram Ditta 's heir and that was why mutation in her favour had been sanctioned. The High Court then proceeded to hold that it was legitimate to presume from this that the tribe to which Ram Ditta belonged recognised the right of a widow of a predeceased son to succeed her father inlaw in the place of her husband in preference to the collaterals of the deceased. The High Court thought that in view of this custom, which it found was proved in this case, Harnam Kaur was entitled to the possession of the lands and no presumption could therefore &rise that she was holding them adversely to the collaterals. The High Court also held that the agreement of February 6, 1932, was admissible in evidence to prove the nature of Harnam Kaur 's possession of the lands though it was not admissible to prove title as it had not been registered. The High Court was of the view that the agreement showed that since its execution the nature of Harnam Kaur 's possession was permissive and not adverse and as at the date of the agreement she had not been in possession for the requisite period, she never acquired title by adverse possession, whatever may have been the character of 954 her possession prior to it. The High Court lastly held that in any event, Harnam Kaur had entered into possession as heir of her father in law and, therefore, adverse possession by her would be considered as creating only a widow 's estate in her and therefore she had not become an absolute owner and the nature of the estate acquired by her by adverse possession was that of a widow 's estate governed by the customary law with no power of alienation. The High Court, therefore, allowed the appeal and decreed the suit. From this judgment of the High Court the present appeal to us arises. The appeal had been filed by Harnam Kaur and Kirpal Kaur, but later Harnam Kaur abandoned it and she was removed from the record as an appellant. The appeal before us now, therefore, is only by Kirpal Kaur. Learned counsel for the respondents, by which we mean the contesting respondents, contended that Kirpal Kaur alone was not competent to appeal because the alienations challenged had been made by Harnam Kaur. We cannot accept this contention. Kirpal Kaur as the alienee is certainly entitled to prosecute this appeal to protect her rights under the alienation. Her rights in no way depend on whether the alienor chooses to stand by the alienation or not. The points argued before us were the same as were canvassed in the High Court. With regard to the special custom, which the High Court held governed the parties to this case, learned counsel for the appellant contended that no such custom had been pleaded and no issue about it framed, nor indeed any hint of it given at any earlier stage of the proceeding in any of the courts below. We feel that these contentions are justified. In the plaint no mention of the custom is to be found. The plea as to adverse possession was raised by Harnam Kaur and Kirpal Kaur in an amended written statement that they filed. The plaintiffs never filed any replication setting up the special custom alleged by them as they should have done if they wished to rely on it in answer to the case made by the defendants by the amendment. Further. more, as earlier stated, it was admitted by both, 955 parties before the trial Judge, that the custom governing the parties was that the widow of a predeceased son was only entitled to maintenance out of her fatherin law 's estate. As learned counsel for the appellant pointed out, the passage in Rattigan 's Digest makes it clear that the general custom is that the widow of a predeceased son is not an heir of her father in law but that in some tribes a special custom prevails which makes her the heir, and that the onus of proving the special custom lies on those who assert it. It was therefore in this case for the respondents to have pleaded and proved the special custom. As already stated, they neither pleaded the special custom, nor proved it nor even made an attempt to do so. After Harnam Kaur and Kirpal Kaur had closed their case, the respondents were given a chance to produce evidence in rebuttal but even then they did not make any attempt to establish the special custom. In these circumstances, in our view, no question as to the special custom should have been permitted by the High Court to be raised. Furthermore, we are unable to agree with the High Court that there is evidence in this case to prove the special custom. As already stated, the High Court thought that it might be presumed from the Patwari 's report that the special custom governing the tribe to which the parties belonged prevailed. This report of the Patwari is dated June 9, 1920, and was made in connection with the proceedings for the mutation of the name of Ram Ditta to that of Harnam Kaur soon after the former 's death. That report reads as follows: "Sir, Ram Ditta S/o Begha Jat Bhathal died a month back. Harnam Kaur widow of Jeona, who is the real daughter in law of the deceased, is the heir and is in possession of the property. Hence the mutation having been entered is hereby submitted for orders. " Upon this report the following order was made: " The factum was confirmed in the general gathering in presence of Bhana, Arjan Singh and Narain Singh, lambardars and of Mst. Harnam Kaur, the daughter in law of the deceased. Hence the mutation 956 of the holding of Ram Ditta deceased in favour of Mat. Harnam Kaur, widow of Jeons Jat, is hereby sanctioned. Dated. . 24th August, 1920, A.D." The report, no doubt, states that Harnam Kaur was Ram Ditta 's heir. It is said that she could be an heir only under the special custom and hence the special custom must be deemed to have been proved in this case. But the report of the Patwari shows that in his own opinion Harnam Kaur was the heir of Ram Ditta. We do not know, how he came to have such an opinion or whether he had based it on the special custom. The report was not evidence given in court and is not strictly admissible to prove the custom and, in fact, the report was not tendered as evidence of the custom. It is said that the Patwari 's report indicated that there must have been an application by Hamam Kaur claiming the mutation on the basis that the had succeeded to the lands as the heir of Ram Ditta under the special custom. No such application is, however, on the records. We are unable to draw any presumption as to what statement might have been made in the application, if there was one. We do not think that the order of August 24, 1920, carries the matter further. It is said that when the order stated that " the factum was confirmed " it meant that the factum of the custom was confirmed. We cannot accept this contention. The factum referred to may well have been the death of Ram Ditta or that Harnam Kaur was the daughter in law of Ram Ditta. Even if it could be said that the factum confirmed was the special custom, the same difficulty would arise again, namely, that the order would show that it is only the opinion of the lambardars as to the existence of the special custom. Such opinion, for the reasons earlier stated, would not be evidence in this case to prove the custom. Further in the operative part of the order the mutation is not stated to be based on the ground that Harnam Kaur was the "heir" of Ram Ditta. We are, therefore, unable to hold that the Patwari 's report or the order thereon proves that Harnam,Kaur was the customary heir of Ram Ditta and had got into possession in 1920, as such heir and,, 957 therefore, could not have been in adverse possession. It is then said that the agreement of February 6, 1932, showed that since its date her possession was permissive. The High Court has held that the agreement was admissible to prove the nature of her possession. In Varatha Pillai vs Jeevarathnammal (1) it was held that a document which should have been registered but was not, was admissible to explain the nature of the possession of a person. What had happened there was that two widows who were in possession of a property in equal shares, presented a petition to the Collector on October 10, 1895, whereby after reciting that they had on October 8, 1895, given away the property as stridhan to one Duraisani, they prayed that orders might be passed for transferring the villages into her name. On this petition the property was registered in the name of Duraisani and she was put in possession and thereafter continued in possession till her death in 1911. The question was whether Duraisani had acquired title to the property by adverse possession. It was held that though the petition in the absence of registration could not be admitted to prove a gift, it might be referred to for showing that the subsequent possession of Duraisani was as a donee and owner of the land and not as trustee or manager for the two donors and therefore to show that the nature of such possession was adverse to them. We cannot agree that on the authority of Paratha Pillai 's case (1) the agreement of February 6, 1932, can be admitted in evidence in the case in hand to show the nature of Harnam Kaur 's possession of the lands subsequent to its date. In Varatha Pillai 's case (1) Duraisani had got into possession only after the petition and claimed to retain possession only under the gift mentioned in it. The petition was therefore admissible in evidence to show the nature of her possession. In the present case Harnam Kaur had been in possession before the date of the document and to admit it in evidence to show the nature of her possession subsequent to it would be to treat it as operating to destroy the nature of the (1)(1918) 46 I.A. 285. 958 previous possession and to convert what had started as adverse possession into a permissive possession and, therefore, to give effect to the agreement contained in it which admittedly cannot be done for want of registration. To admit it in evidence for the purpose sought would really amount to getting round the statutory bar imposed by section 49 of the . Lastly, the High Court held that as Harnam Kaur had entered into possession as the heir of Ram Ditta she could, at most, be considered to have acquired by adverse possession a widow 's estate in the lands and could not therefore, make a gift of them. The High Court had referred to Bura Mal vs Narain Das (1) as an authority for this proposition. In our view, that case is of no assistance. There a female who was not an heir of the last full owner but was only entitled to maintenance, took possession of the properties in lieu of her maintenance by an arrangement with the heirs of the owner, and in those circumstances it was held that her possession could not be adverse to the heirs. There is no evidence of any such arrangement in this case, nor is it the case of the respondents that such an arrangement had ever been made. The High Court also referred to the case of Pandappa Mahalingappa vs Shivalingappa This case was based on Lajwanti vs Safa Chand and it would be enough to refer to " It was then argued that the widows could only possess for themselves; that the last widow Devi would then acquire a personal title; and that the respondents and not the plaintiffs were the heirs of Devi. This is quite to understand the nature of the widows ' possession. The, Hindu widow ' as often pointed out, is not a life renter, but has a widow 's estate that is to say, a widow 's estate in her deceased husband 's estate. If possessing as widow she possesses adversely to any one as to certain parcels. , she does not acquire the parcels as stridhan, but she makes them good to her husband 's estate. " (1) 102 P. R., 1907. (2) A.I.R. 1946 Bom. (3) (1924) 51 I.A. 71, 176. 959 In order that the authority of this case may apply to the case in hand, it has to be proved that Harnam Kaur entered into possession of lands claiming a widow 's estate therein as an heir of Ram Ditta. We find no evidence to prove that such was her claim. The Patwari 's report earlier referred to cannot be construed as such a claim. It was only the Patwari 's opinion of the situation. It cannot therefore be said in this case that Harnam Kaur was in possession claim ing a widow 's estate in the lands, as the customary heir of her father in law. Furthermore, in Lajwanti 's Case the widows who were found to have acquired title by adverse possession were undoubtedly the heirs of their husband and would have succeeded to his properties if a posthumous son whose existence was assumed by the Judicial Committee, had not been born to him. It was possible for these widows to bold property as heirs of their husband and make them good to his estate. Lajwanti 's Case therefore was concerned with a female who was admittedly an heir. That is not the case here. As we have already stated, the special custom under which alone Harnam Kaur could have become an heir of Ram Ditta has not been proved. On the case as made and the evidence before us, it must be held that Harnam Kaur could never have been the heir of Ram Ditta. That being so, it was impossible for her to have acquired by adverse possession title to property as his heir or to make such observation of the Judicial Committee in sham Koer vs applies to this case " Assuming that Bhau Natli Singh was a member of an undivided Hindu family governed by the Mitakshara law, as the Lower Court found and the High Court assumed, neither his widow nor his son 's widow would be entitled to anything more than maintenance out of his estate. Their possession, therefore, of the three villages in question would be adverse to the reversionary heirs unless it was the result of the arrangement with them. If the possession was (1) (1902) 29 I.A. 132, 135, 136. 1 22 960 adverse, the rights of the reversionary heirs would of course be barred at the expiration of twelve years from the date of Bhau Nath Singh 's death, or the date of the widows ' taking possession, which seems to have been at or shortly after his death. " As there is no evidence of any arrangement with the respondents under which Harnam Kaur can be said to have taken possession of the lands, her possession must be taken to have been adverse to the collaterals. Admittedly such possession commenced in 1920 on the death of Ram Ditta and has continued ever since. So at the date of the mortgage and gift, Harnam Kaur had acquired a title to the lands by adverse possession. The respondents ' claim must fail. We, therefore, allow the appeal with costs throughout. Appeal allowed.
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On the death of R, a Hindu jat, in April or May, 1920, the widow of his pre deceased son, H, took possession of the properties and on August 24, 1920, obtained a mutation of the settlement records showing her as the owner of the lands in the place of R. A gift of half of the properties by H to her daughter K 949 gave rise to disputes between them and the collaterals but the matter was settled on H executing a document on February 6, 1932, whereby, inter alia, she agreed that the lands would belong to her for her life and after her death to her daughter for the latter 's life and that none of them would be entitled to sell or mortgage the lands.
The document, however, was not registered.
In 1939 H made a gift of the entire lands to K who obtained a mutation of the settlement records showing her as the owner of the lands, and in 1945 a suit was filed by the collaterals challenging the transaction as not binding on them as the reversionary heirs of R. Under the general custom governing the parties as admitted by them a widow of a pre deceased son was entitled only to maintenance when there were collaterals, and as H was in possession of the properties since 1920 it was said by her and K that she had, at the date of the gift, acquired an absolute title by adverse possession.
It was contended for the plaintiffs, interalia, that the agreement of February, 1932, though not admissible in evidence to prove that H and K had only life estates in the lands, was admissible to show the nature of H 's possession and that it showed that her possession was not adverse.
Held, that the document dated February 6, 1932, was in admissible in evidence, in view Of section 49 of the Indian , as H had been in possession before the date of the document and to admit it in evidence to show the nature of her possession subsequent to it would be to treat it as operating to destroy the nature of the previous possession and to convert what had started as adverse possession into a permissive possession, and therefore, to give effect to the agreement contained in it.
Varatha Pillai vs jeevarathnammal, (1918) L.R. 46 I. A. 285, distinguished,
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When R, a Hindu man, died in 1920, H, the widow of R's son who had already died, took control of R's property. In August 1920, official records were changed to show H as the owner instead of R. Later, H gave half of the land to her daughter, K.
This caused disagreements with other relatives. To settle things, H signed a paper in February 1932. It said she would own the land for her life, and then her daughter K would own it for her life. Neither of them could sell or borrow money against the land. But, this paper was never officially registered with the government.
In 1939, H gave all the land to K. Official records were changed again to show K as the owner. In 1945, R's relatives sued, saying that H's gift to K wasn't legal. They claimed they were the rightful heirs of R. They said that, according to their traditions, H should have only received support (maintenance) from the property, since there were other relatives. H and K argued that H had been in control of the land since 1920 and therefore owned it completely because she had been there longer than the allowed time. This is called "adverse possession."
The relatives argued that the 1932 agreement, even though not officially registered, showed that H knew she didn't fully own the land. They said it proved H's control of the land wasn't "adverse possession," meaning it wasn't a hostile takeover.
The court decided that the 1932 paper couldn't be used as evidence. Because H was already in control of the land before the paper was signed, using it to change the nature of her control would be illegal. It would be like changing something that started as adverse possession (taking over the land) into permissive possession (being allowed to be there).
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tition (Civil) Nos. 4358 of 1978, 212 213, 760 of 1979 and 6449 of 1980. Under article 32 of the Constitution of India S.N. Kacker and A.T.M. Sampath for the Petitioner in W.P. Nos. 212 213 of 1980. A.K. Sen, A.T.M. Sampath and P.N. Ramalingam for the Petitioner in W.P. No. 760 of 1979. A.T.M. Sampath and P.N. Ramalingam for the Petitioner in W.P. Nos. 4358 of 1978 and 6449 of 1980. S.T. Desai and A.V. Rangam for the Respondent. The Judgment of the Court was delivered by BALAKRISHNA ERADI, J. in these Writ Petitions, the petitioners have challenged the constitutional validity of the provisions of Tamil Nadu Additional Sales Tax Act 1976 (Act 2 of 1976). By the said Act section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 was amended by substituting a new provision in the place of what existed before, section 3 was omitted and section 3A was newly introduced to the Act. As the points raised in all these Writ Petitions are identical, they were heard together and are disposed of by this common judgment. 982 Before we proceed to set out the provisions of the impugned Act, it is necessary to narrate in brief the legislative history that preceded its enactment. The basic statute providing for the levy of Sales tax in the State of Tamil Nadu is the Tamil Nadu General Sales Tax Act, 1959 (hereinafter referred to as "the Act of 1959") In the year 1970, the State Legislature enacted the Tamil Nadu Additional Sales Tax Act Act 14 of 1970 (hereinafter called the 1970 Act) which was brought into force with effect from May 28, 1970. The said Act provides for the levy of an additional tax on the sale or purchase of goods. Section 2 of the Act which is the charging section was in the following terms: "2. Levy of additional tax in the case of certain dealers: (1) The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act of 1959) (thereafter in this section referred to as the said Act), shall in the case of a dealer whose total turnover for a year exceeds ten lakhs of rupees, be increased by an additional tax at the rate of (ten per cent) of the tax payable by that dealer for that year and the provision of the said Act shall apply in relation to the said additional tax as they apply in relation to the said tax payable under the said Act. Provided that where in respect of declared goods as defending clause (h) of section of the said Act, the tax payable by such dealer under the said Act together with the additional tax payable under this sub section, exceeds (four percent) of the sale or purchase price thereof, the rate of additional tax in respect of such goods shall be reduced to such an extent that the tax and the additional tax together shall not exceed (four per cent) of the sale or purchase price of such goods. " It will be noticed that the scheme of this section was to levy the additional tax by the process of increasing the tax payable under the Act of 1959 by ten per cent the said increase representing the quantum of the additional tax. The proviso to the section stipulates for a concessional treatment in respect of the declared goods. It is unnecessary for us to deal with the said proviso or with section 3 of the said Act as these provisions have no relevance to the determination of the point raised in the cases now before us. 983 In September, 1971, the State Legislature enacted the Tamil Nadu Sales Tax (Surcharge) Act, 1971 with retrospective effect from June, 1971. Under section 3 of that Act, every dealer liable to pay tax under the Act of 1959 was subjected to a further liability to pay a surcharge at the rate of five per cent of such tax. The first proviso to the said section states that in the city of Madras the rate of surcharge shall be ten per cent for the period commencing on the June 19, 1971 and ending with the June 28, 1971. The second proviso extended certain concessions in the rate of surcharge in respect of declared goods. Thereafter followed the impugned statute namely, the Tamil Nadu Additional Sales Tax (Act 2) of 1976, which was brought into force with effect from 1.4.1976. Section 2 of the said Act amended section 2 of the Tamil Nadu Additional Sales Tax Act, 1970 by substituting the following provision in replacement of the original section: "2. Levy of additional tax in the case of certain dealers 1. (a) The tax payable under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act I of 1959) (hereinafter in this section referred to as the said Act), shall, in the case of a dealer whose taxable turnover for a year exceeds three lakhs of rupees, be increased by an additional tax calculated at the following rates, namely: Rate of tax (i) Where the taxable turnover exceeds 0.4 per cent of three lakhs of rupees but does the taxable not exceed five lakhs of rupees. turnover. (ii) Where the taxable turnover exceeds 0.5 percent five lakhs of rupees but does not of the tax exceed seven lakhs of rupees. able turnover. (iii)Where the taxable turnover exceeds 0.6 percent seven lakhs of rupees but does not of the exceed ten lakhs of rupees. taxable turnover. (iv) Where the taxable turnover exceeds 0.7 percent ten lakhs of rupees of the taxable turnover. 984 Provided that where in respect of declared goods as defined in clause (h) of section 2 of the said Act, the tax payable by such dealer under this said Act, together with the additional tax payable under this sub section, exceeds four per cent of the sale or purchase price thereof, the rate of additional tax in respect of such goods shall be reduced to such an extent that the tax and the additional tax together shall not exceed four per cent of the sale or purchase price of such goods. (b) The provisions of the said Act Shall apply in relation to the additional tax payable under clause (a) as they apply in relation to the tax payable under the said Act. (2) Notwithstanding anything contained in the said Act no dealer referred to in sub section (1) shall be entitled to collect the additional tax payable under the said sub section. (3) Any dealer who collects the additional tax payable under sub section (1) in contravention of the provisions of sub section (2) shall be punishable with fine which may extend to one thousand rupees, and no Court below the rank of a Presidency Magistrate or a Magistrate of the First Class shall try any such offence. " While under the provisions of section 2 as they stood prior to the amendment, the additional sales tax was to be calculated and levied at a certain percentage of the tax assessed on the dealer under the Act of 1959, the scheme of the amended section is to adopt the taxable turnover of the dealer as the base for the levy of the additional tax, the rate or percentage to be applied for calculation of the additional tax depending upon the quantum of the taxable turnover and the slab into which the case of a particular dealer will fall on the basis of the specification of the slab limits indicated in the section. On receipt of notices of demand issued consequent upon assessments to additional sales tax under the provisions of the section as amended by the impugned Act the petitioners have 985 come up to this Court challenging the constitutional validity of the impugned Act of 1976 and seeking to quash the assessment orders and the notices of demand issued to them. The first contention urged on behalf of the petitioners is that since the State Legislature had already provided for the levy of a tax on sales by the Act of 1959 and had also enacted a further statute authorising the levy and collection of a surcharge which is in truth and substance the imposition of an additional sales tax, it could not legally go on legislating further enactments providing again for levy of additional sales tax. On this basis it is contended that the provisions of the impugned Act, 1976 are ultra vires and devoid of legislative competence. We see no substance in this contention. The impugned enactment has merely amended the 1970 Act. It has not introduced a new tax; what it has done is only to amend the 1970 Act by providing for a different method of computation of the additional tax leviable under that Act. The validity of the 1970 Act has been upheld by a Constitution Bench of this Court in the case of section Kodar vs State of Kerala. Hence there is no longer any scope for the petitioners to contend that the State Legislature had no competence to provide for the levy of additional sales tax. The nature and identity of the additional sales tax imposed by the 1970 Act have not been in any way altered by the impugned Act. As already pointed out what has been done by the impugned Act is only to provide for a different mode of computation of the additional sales tax by linking the rate of levy to the taxable turnover instead of to the amount of tax assessed under the Act of 1959. The constitutional validity of the levy of additional tax is not in any manner affected by the said change brought about in the mode of levy and computation as a result of the amendments affected by the impugned Act. It was strongly contended on behalf of the petitioners that the prescription of different rates of additional sales tax depending upon the quantum of turnover of the different assessees is totally repugnant to the concept of levy of tax on sales. Another argument advanced by Counsel for the petitioners was that since under the amended provisions of section 2, two dealers selling the same commodity will be liable to pay additional tax at different rates depending upon their respective annual turnovers, there is a clear violation of Article 14 of the Constitution as dissimilar treatment similarly situated. A further contention 986 urged on behalf of the petitioners was that the levy in its present from is really a tax on 'gross income ' and not a tax on 'sales ' and hence it is ultra vires the State Legislature as it has no competence to levy a tax on income other than agriculture income. Another ground of attack pressed by Counsel was that the levy of additional sales tax under the impugned Act is confiscatory in nature, that it impose unreasonable restrictions on the petitioners right to carry on business and offends Article 19 of the Constitution, particularly in view of the prohibition contained in sub section (2) of section 2 against collection of additional tax from the consumers. Yet another point taken in the Writ Petitions but not very seriously urged at the time of hearing is that the levy of additional tax under the impugned Act offends Article 301 of the Constitution since the imposition of the additional liability would seriously affect the business of the petitioners and on account of their inability to bear the heavy burden their right to carry on freely trade, commerce and intercourse within the territory of India will be adversely affected. We are spared the necessity of dealing with any of the aforesaid points in depth because everyone of them is fully covered by pronouncement of a Constitution Bench of this Court in section Kodar vs State of Kerala afore cited. The contention that the additional sales tax levied under the Tamil Nadu Additional Sales Tax Act, 1970 was not a tax on sales but was in reality a tax on the income of the dealers was rejected by the Constitution Bench which observed thus: " As regards the contention that the State Legislature has no power to pass the measures, we are of the view that additional tax is really a tax on the sale of goods. The object of the Act, as is clear from its provisions, is to increase the tax on the sale or purchase of goods imposed by Tamil Nadu General Sales Tax Act, 1959 and the fact that quantum of the additional tax is determined with reference to the sales tax imposed would not alter its character it may be noted that additional tax is to be imposed only if the turnover of a dealer exceeds Rs. 10 lakhs. It is in reality a tax on the aggregate of sales effected by a dealer during a year. The additional tax, there 987 fore, is an enhancement in the rate of the sales tax when the turnover of a dealer exceeds Rs. 10 lakhs a year and it is a tax on the aggregate of the sales affected by the dealer during the year. The decision in Ernakulam Radio Company vs State of Kerala which was affirmed by a Division Bench of the Kerala High Court in Kiliker vs Sales Tax Officer took that view. The same view was taken by the Andhra Pradesh High Court in A.S. Ramachandra Rao vs State of Andra Pradesh. This is the correct view. Entry 54 in List II authorises the state legislature to impose a tax on the sale or purchase of goods. So, the contention of the appellants that the additional sales tax is not a tax on sales but on the income of the dealer is without any basis. The further plea that the levy of additional tax also was confiscatory in nature and the prohibition against passing on the burden to the consumers was an unreasonable restriction was also negatived by this Court by stating: "As regards the second contention that the provisions of the Act are violative of the fundamental rights of the appellants under article 19 (1) (f) and 19 (1) (g), as the tax is upon the sale of goods and is not shown to be confiscatory, it cannot be said that the provisions of the Act impose any unreasonable restrictions upon the appellants ' right to carry on trade. It is, no doubt, true that every tax imposes some restriction upon the right to carry on a business; but it would not follow that the imposition of the tax in question is an unreasonable restriction upon the appellants fundamental right to carry on trade. Generally speaking, the amount or rate of a tax is a matter exclusively within the legislative judgment and as long as a tax retains its avowed character and does not confiscate property to the State under the guise of tax, its reasonableness is outside the judicial ken. But it was contended that as the dealer is prohibited from passing on the incidence of tax to the purchaser, 988 the additional tax, unlike sales tax, is a tax on income of the dealer which he must pay whether he makes any pro fit or not and is, therefore, an unreasonable restriction on his fundamental rights under article 19 (1) (g). The legal incidence of tax on sale of goods under the Tamil Nadu General Sales Tax, 1959 falls squarely on the dealer. It may be that he can add the tax to the price of the goods sold and thus pass it on to the purchaser. But it is not necessary that the dealer should be enabled to pass on the incidence of the tax on sale to the purchaser in order that it might be a tax on sales of goods. In J. K. lute Mills Co. vs State of U.P. this Court said, although it is true that sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation, it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, not is the power of the legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. In Konduri Buchirajalingam vs State of Hyderabad this Court said: "It is then said that the sales tax is essentially an indirect tax and therefore it cannot be demanded of the appellant without allowing him to recoup himself by collecting the amount of the tax from the persons with whom he deals. This Court has already decided in the case of Tata Iron and Steel Co. Limited vs State of Bihar (1958) 9 S.T.C. 267 that in law a sales tax need not be an indirect tax and that a tax can be a sales tax though the primary liability for it is put upon a person without giving him any power to recoup the amount of the tax pay able, from any other party. " 989 As we said, the additional tax is a tax upon sales of goods and not upon the income of a dealer and so long as it is not made out that the tax is confiscatory, it is not possible to accept the contention that because the dealer is disabled from passing on the incidence of tax to the purchaser, the provisions of the Act impose an unreason able restriction upon the fundamental rights of the appellants under article 19 (1) (g) or 19 (1) (f). Dealing with the contention that since the provisions of the Act imposed different rates of tax on different dealers depending upon their turnover there was a violation of Article 14 of the Constitution, Mathew J. who spoke for the Court observed: "The last contention namely that the provisions of the Act impose different rates of tax upon different dealers depending upon their turnover which in effect means that the rate of tax on the sale of goods would vary with the volume of the turnover of a dealer and are, therefore, violative of article 14 is also without any basis. Classification of dealers on the basis of their respective turnover for the purpose of graded imposition so long as it is based on differential criteria relevant to the legislative object to be achieved is not unconstitutional. A classification, depending upon the quantum of turnover for the purpose of exemption from tax has been upheld in several decided cases. By parity of reasoning, it can be said that a legislative classification making the burden of the tax heavier in proportion to the increase in turnover would be reasonable. The basis is that just as in taxes upon income or upon transfers at death, so also in imposts upon business, the little man, by reason of inferior capacity to pay, should bear a lighter load of taxes, relatively as well as absolutely, than is borne by the big one. The flat rate is thought to be less efficient than the graded one as an instrument of social justice. The large dealer occupies a position of economic superiority by reason of his greater volume of his business. And to make his tax heavier, both absolutely and relatively, is not arbitrary discrimination, but an attempt to proportion the payment to capacity to pay and thus to arrive in the end at a more genuine equality. The economic wisdom of a tax is within the exclusive province. 990 of legislature. The only question for the court to consider is whether there is rationality in the belief the legislature that capacity to pay the tax increases, by and large, with an increase of receipts. "Certain it is that merchants have faith in such a correspondence and act upon that faith. If experience did not teach that economic advantage goes along with larger sales, there would be an end to the hot pursuit for wide and wider markets . .In brief, there is a relation of correspondence between capacity to pay and the amount of business done. Exceptions, of course, there are. The law builds upon the probables, and shapes the measure of the tax accordingly. At the very least, an increase of gross sales carries with it an increase of opportunity for profit, which supplies a rational basis for division into classes, at all events when coupled with evidence of a high degree of probability that the opportunity will be fruitful". (See the dissenting judgment of Justice Cardozo. Justice Brandeis and Justice Stone) The reasoning of the minority in that case appeals to us as more in consonance with social justice in an egalitarian state than that of the majority. As we said, large dealer occupies a position of economic superiority by reason of his volume of business and to make the tax heavier on him both absolutely and relatively is not arbitrary discrimination but an attempt to proportion the payment to capacity to pay and thus arrive in the end at a more genuine equality. The capacity of a dealer, in particular circumstances, to pay tax is not an irrelevant factor in fixing the rate of tax and one index of capacity is the quantum of turnover. The argument that while a dealer beyond certain limit is obliged to pay higher tax, when others bear a less tax, and it is consequently discriminatory, really misses the point namely that the former kind of dealers are in a position of economic superiority by reason of their volume of business and form a class by 991 themselves. They cannot be treated as on a part with comparatively small dealers. An attempt to proportion the payment to capacity to pay and thus bring about a real and factual equality cannot be ruled out as irrelevant in levy of tax on the sale or purchase of goods. The object of a tax is not only to raise revenue but also to regulate the economic life of the society". The same principles have been recently reiterated by a Three Judge Bench of this Court in the case of M/s Pharma Associates and others vs State of Bihar and Ors. In the light of the aforesaid pronouncements, it is manifest that the contention put forward by the petitioners that the impugned enactment is devoid of legislative competence inasmuch as it imposes not a tax on sales but a tax on income, that the adoption of a slab system for determining tax liability is alien to the concept of sales tax and that the levy of additional tax under the impugned enactment violates Articles 14 and 19 of the Constitution are all totally devoid of merit. We do not also see any substance in the plea raised in the Writ Petitions that the provisions of the impugned Act are violative of Article 301 of the Constitution. In the result, all these Writ Petitions fail and are dismissed with costs. S.R. Petition dismissed.
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In Tamil Nadu the levy of the Sales Tax is regulated by the Tamil Nadu General Sales Tax Act, 1959.
In the year 1970 the State Legislature enacted the Tamil Nadu Additional Sales Tax Act, (Act XIV of 1970) with effect from May 28, 1970.
The scheme of section 2 of the Act was to levy the Additional Tax by the process of increasing the tax payable under the Act of 1959 by 10 percent the said increase representing the quantum of the Additional Tax.
The proviso to Section stipulates for a concessional treatment in respect of the declared goods.
In September, 1971 the State Legislature enacted the Tamil Nadu Sales Tax (Surcharge) Act, 1971.
with retrospective effect from June, 1971.
Under Section 3 of that Act every dealer liable to pay tax under the Act of 1959 was subjected to a further liability to pay surcharge at the rate of 5 per cent of such tax.
In 1976 the Tamil Nadu Additional Sales Tax (Act II) of 1976 was passed amending and substituting Section 2 of the earlier Act providing for graded rates with a super added condition that the Additional Tax payable cannot be collected from the consumers, a contravention of which would attract penal action.
On receipt of notices of demand issued consequent upon the assessment to Additional Sales Tax under the provisions of the Section as amended by the 1976 Act the petitioners have come up to the Court challenging the constitutional validity of the Act, 1976 and seeking to quash the assessment orders and the notices of demand issued to them.
Dismissing the Writ Petitions, the Court ^ HELD: 1 The contentions that the amended Section 2 of the Tamil Nadu Additional Sales Tax Act 2 of 1976 is devoid of legislative competence in as much as it imposes not a tax on sales but a tax on income, that the adoption 981 of slab system for determining tax liability is alien to the concept of Sales Tax that the levy of Additional Tax under the impugned enactment violates Articles 14 and 19 of the Constitution and that the provisions of the Act are violative of Article 301 of the Constitution are all totally devoid of merit.
[991C D] M/s Pharma Associates and others vs State of Bihar, ; section Kodar vs State of Kerala followed.
The constitutional validity of the levy of Additional Tax is not in any manner affected by the change brought about in the mode of levy and as a result of the amendments effected by the impugned Act.
The impugned enactment has merely amended the 1970 Act.
It has not introduced a new tax; what it has done is only to amend the 1970 Act by providing for different method of computation of the Additional Tax leviable under that Act by linking the rate of levy to the taxable turnover instead or to the amount of tax assessed under the Act of 1959.
The nature and identity of the Additional Sales Tax imposed by the 1970 Act have not been in any way altered by the impugned Act.
[985F;C;E;D] section Kodar vs State of Kerala, referred to.
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In Tamil Nadu, the Tamil Nadu General Sales Tax Act of 1959 controls how sales tax is collected.
In 1970, the state government passed the Tamil Nadu Additional Sales Tax Act, which started on May 28, 1970.
Section 2 of this law said the Additional Tax would be figured out by adding 10 percent to the tax already owed under the 1959 law. This extra 10 percent was the Additional Tax.
However, there was a rule that gave special treatment to certain goods that were officially declared as important.
In September 1971, the state government passed the Tamil Nadu Sales Tax (Surcharge) Act, which went back to June 1971.
Under Section 3 of that law, every seller who had to pay tax under the 1959 law also had to pay an extra charge, called a surcharge. This surcharge was 5 percent of the tax they already owed.
In 1976, the Tamil Nadu Additional Sales Tax (Act II) of 1976 changed Section 2 of the earlier law. It set up different tax rates based on how much a seller sold. It also said that sellers could not collect the Additional Tax from customers. If they did, they would be punished.
After getting notices that they had to pay Additional Sales Tax under the changed law, the sellers went to court. They argued that the 1976 law was against the Constitution and asked the court to cancel the tax assessments and the notices they received.
The Court said NO and stated: 1. The arguments that the changed Section 2 of the Tamil Nadu Additional Sales Tax Act 2 of 1976 was not a legal tax on sales but actually a tax on income, that using different tax rates based on sales volume was not a proper way to calculate sales tax, that the Additional Tax violated people's rights under Articles 14 and 19 of the Constitution, and that the law violated Article 301 of the Constitution, were all wrong.
The court cited the cases of M/s Pharma Associates and others vs State of Bihar, and section Kodar vs State of Kerala to support its decision.
The changes made to how the Additional Tax was collected did not make it unconstitutional.
The 1976 law only changed the 1970 law.
It did not create a new tax. It only changed how the Additional Tax was calculated under the 1970 law. Instead of basing it on the tax owed under the 1959 law, it based it on the amount of sales.
The basic nature of the Additional Sales Tax created by the 1970 law was not changed by the 1976 law.
The court referred to the case of section Kodar vs State of Kerala.
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Civil Appeal No. 44 of 1950. Appeal from a judgment and decree of the High Court of Bombay (Sen and Dixit JJ.) dated 21st February, 1947, in First Appeal No. 64 of 1943. C.K. Daphtary, Solicitor General (section B. Jutbar, with him) for the appellant. N.C. Chatterjee (N. K. Gamadia, with him) for the respondents. October 5. The Judgment of Kania CJ. , Das and Bose JJ. was read by Das J. Patanjali Sastri and Chandrasekhara Aiyar JJ. delivered separate Judgments. 45 DAS J. This is an appeal from the judgment of a Bench of the Bombay High Court (Sen and Dixit JJ.) delivered on February 2, 1947, in an appeal filed under section 18 of the Bombay City Land Revenue Act 11 of 1876 against the judgment of the Revenue Judge at Bombay delivered on October 27, 1942, in a suit filed by the respondents, the Municipal Corporation of the City of Bombay, and Madusudan Damodar Bhat, the then Municipal Commissioner for the City of Bom bay, against the Collector of Bombay. There is no substantial dispute as to the facts leading up to this litigation and they may be shortly stated. In 1865, the Government of Bombay, having decided to construct an Eastern Boulevard, called upon the Corporation of Jus tices of the Peace for the City of Bombay, the predecessor in title of the respondent Corporation, to remove its then existing fish and vegetable markets from the site required for the construction of the Boulevard. The then Municipal Commissioner Mr. Arthur Crawford, after whom the present municipal market was named, applied for the site set aside for the exhibition buildings on the Esplanades for the pur pose of constructing new markets as the existing markets could not be removed until new markets had been provided. On December 5, 1865, the Architectural Improvement Committee informed the Government that it had no objection to the proposed she measuring about 7 acres being "rented to the Municipal Commissioner" and suggested that "the annual charge of one pie per square yard be levied in consideration of the expense of filling in the ground. " Computed at this rate, the annual rental would have amounted to about Rs. 176. On December 19, 1865, the Government passed the fol lowing resolution : "(1) Government approve of the site and authorise its grant. (2) The plans should be submitted for approval; but Government do not consider any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community. " 46 Pursuant to the aforesaid Resolution, possession of the site was made over to the then Municipal Commis sioner, but no formal grant was executed as required by Statute 22 & 23 Vic. C. 41. It has nowhere been contended that even if the statutory formalities had been complied with the grant upon the terms mentioned in the Resolution would nevertheless have been invalid being in excess of the powers of the Government. The Municipal Com missioner had the site filled up and leveled at the expense of the Corporation. The plans were approved by the Govern ment and the market buildings were erected by the Corpora tion at considerable expense. The respondent Corporation was incorporated in 1888 as the successor of the Corporation of the Justices of the Peace for the City of Bombay and it continued in possession of the land and the buildings with out paying any rent to the Government according to the Government Resolution of 1865. Indeed, it is pleaded in paragraph 7 of the plaint and it is not denied in the writ ten statement that acting upon the said grant contained in the Resolution and the terms contained therein the respond ent Corporation and its predecessor spent considerable sums of money in building and improving the market and have been in possession of the land and the buildings thereon for over 70 years in accordance with the terms of the Resolution and that no land revenue or rent had been paid to the Government ever since the grant was made. It is in evidence that besides giving up the sites on which the old markets had been situate, a total sum of Rs. 17,65,980 12 1 has been spent by the Corporation up to March 31,1940, in filling up and leveling the site and erecting and maintaining the new market buildings on this site. In 1911, a portion of the market site was acquired by the Government for the widening of the Palton Road. Upon the Collector of Bombay being called upon to put in ,his claim, if any, to any part of the compensation money awarded by the Land Acquisition Officer, the Superintendent,, City Survey, on behalf of the Collec tor, replied that Government had no claim in respect of the said land. The respondent 47 Corporation, therefore, received the whole of the compen sation money and it continued in possession of the rest of the land and the buildings thereon without payment of any rent. On March 18, 1938, the appellant Collector of Bombay informed the respondent Municipal Commissioner that it was proposed to assess the land occupied by the Crawford Market under section 8 of the Bombay City Land Revenue Act II of 1876 and asked for certain information to enable him to do so. In his reply, the Municipal Commissioner wrote to say that the site of the market had been given to the Municipal ity as a gift for the construction of the market and that, therefore the question of assessment did not arise. The appellant Collector of Bombay having insisted that in spite of the Government Resolution of 1865 the Government had the right to assess the site, the Mayor of Bombay on March 23, 1939, wrote a letter to the Government stating, inter alia, as follows : "The Corporation have been advised that there can be no doubt that it was the intention of Government to make a permanent grant of the land to the Municipality, and, fur ther, that it was also the intention that permanent grant should be free from rent and from assessment to land revenue. I am to point out that the word 'rent ' was used in official documents with the greatest frequency with refer ence to the land revenue leviable by the East India Company and later by Government in the City of Bombay and in the Presidency. It is, therefore, clear that it was the inten tion of Government in 1865 that this grant should be free from any form of rent or assessment. The Corporation were put into possession for a period of over 70 years, during which period the land has without interruption been devoted to the purpose for which the grant was made. Throughout this long period there has been no suggestion from Govern ment that the grant was other than a permanent one, free of revenue, or that the terms of the grant were in any way subject to revision," 48 The above contentions were repudiated by the Govern ment in its letter of January 1, 1940, in the following terms: " As regards the contention that the land has been held by the Municipality uninterruptedly for over 70 years with out any suggestion from Government that it was liable to assessment, I am to state the right to levy the assessment is the prerogative of the Crown and a mere non user of this prerogative cannot destroy it. Besides, conditions have considerably altered since the land was originally allotted to the Municipality without charging any ground rent or assessment; the Municipality has been recovering substantial rents by letting out stalls in the market and should now be in a position to pay the assessment. Under the circum stances, the levy of assessment in this case can no longer be foregone or postponed. " On January 31, 1940, the appellant Collector assessed the land under section 8 of the Bombay Act II of 1876 with a guarantee of 50 years as under : "Assessment Rs. 7,500 per annum for the first 10 years from 1st April, 1940. Assessment Rs. 15,000 per annum for the next 10 years. Assessment Rs. 30,000 per annum for the remaining 30 years. " The assessment was to begin to run from I st April, 1940, and the first payment of the assessment was to become due on 1st April, 1941. The present suit was thereupon filed in the Court of the Revenue Judge in accordance with the provisions of the Bombay City Land Revenue Act, 1876, for the following reliefs, inter alia : "(a) that it may be declared that there is a right on the part of the plaintiff Corporation in limitation of the right of Government to assess the said land and that the plaintiff Corporation is entitled to hold the said land for ever without payment of any assessment and that the Govern ment has no right to assess the said premises, 49 (b) That the said assessment may be declared ultra vires, invalid and may be ordered to be set aside. " By his judgment dated October 27, 1942, the learned Revenue Judge dismissed the suit with costs. The Corporation appealed to the High Court. Before the High Court, as before us, two of the learned Revenue Judge 's conclusions were not challenged namely, (1) that the Government Resolu tion of 1865 was bad in law either as a grant or even as a contract and could not by itself operate to give any inter est in the land to the respondent Corporation because of the non compliance with the formalities required to be observed by Statute 22 & 23 Vic. C. 41 in the matter of disposition of all real and personal estate vested in the Crown under Statute 21 & 22 Vic. C. 106, and (2) that the Crown 's right to levy assessment on property was a prerogative right to which the ordinary presumption that rights to property which had not been asserted or exercised for a long period of years had been granted away did not apply What was urged before and accepted by the High Court was that the right of the Government to levy any assessment on the land in ques tion had been lost and could not be asserted or exercised by the Government by reason of the equity arising on the facts and circumstances of the case in favour of the respondent Corporation on the principle established by the decision in Ramsden vs Dyson(1) which was adopted by Jenkins C.J. in The Municipal Corporation of the City of Bombay vs The Secretary of State(2) and which equity was, on the authorities, bind ing on the Crown. After dealing with the cases of Dadoba Janardhan vs The Collector of Bombay(3) and Jethabhoy Rut tonsey vs The Collector of Bombay(4) the High Court observed : "We think, on a reading of the language of the Govern ment Resolution dated the 19th December, 1865, that we should be justified in holding (within the meaning of the rule in Ramsden vs Dyson) that an expectation was created or encouraged by the landlord that the Municipality was to get possession of the land rent free and that the latter took possession of the land with the consent of the landlord, and upon such expectation, with the knowledge of the landlord and without objection by him, laid out money upon the land." According to the High Court the rule of equity enunciated in Ramsden vs Dyson (supra) was not, as pointed out by Jenkins C.J. in Municipal Corporation of the City of Bombay vs The Secretary of State (supra), dependent on the validity of the disposition and could be asserted even where the statutory formalities relating to the disposition of the property had not been observed and performed, and that this equity constituted a right on the part of the respondent Corporation in limitation of the right of the Government in consequence of a specific limit to assessment having been established and preserved within the meaning of section 8 of the Act II of 1876 so as to disentitle the Government from assessing the land in question. The High Court relied on the decision in Kamalavahooji Maharaj vs The Collector of Bombay(1) in support of their view that section 8 of the Bombay Act II of 1876 would apply even where the specific limit was nil. In the result, the High Court reversed the decision of the learned Revenue Judge, allowed the appeal and passed a decree declaring the rights of the respondent Corporation and awarding to it the costs in both Courts. The Collector of Bombay appealed to the Federal Court and the appeal has now come up for hearing before us. There has been considerable discussion before us as to the precise scope and effect of the principle of equity enunciated in Ramsden vs Dyson (supra), as to whether such principle should be extended to the facts of the present case, whether the facts 'of this case attract the applica tion of the equity established in Ramsden vs Dyson (supra)or attract the equity established in Maddison vs Alderson (2) and Walsh vs Lonsdale(3) and finally as to whether, in view of the decision (1) (3) (2) 51 of the Privy Council in Ariff vs Jadunath(1), the equity in Ramsden vs Dyson (supra) can prevail against the requirement of formalities laid down in the Victorian Statute referred to above any more than the equity in Maddison vs Alderson (supra)can do against the requirements of the Transfer of Property Act and whether the decision in The Municipal Corporation of the City of Bombay vs The Secretary of State(2) requires reconsideration in the light of the deci sion in Ariff 's case (supra). In the view we have taken, it is not necessary to go into, and to express any opinion on, any of these questions, for this appeal can, in our opinion, be disposed of on a narrower and shorter ground. The Government claims to assess the lands in terms of section 8 of the Bombay Act II of 1876 which runs thus : "8.It shall be the duty of the Collector, subject to the orders of the Provincial Government, to fix and to levy the assessment for land revenue. Where there is no right on the part of the superior holder in limitation of the right of the Provincial Govern ment to assess, the assessment shall be fixed at the discre tion of the Collector subject to the control of the Provin cial Government. When there is a right on the part of the superior holder in limitation of the right of the Provincial Government, in consequence of a specific limit to assessment having been established and preserved, the assessment shall not exceed such specific limit. " The sole question for our consideration is whether, on the facts of this case, the respondent Corporation has succeeded in establishing in itself a right in limitation of the right of the Government to assess the land in conse quence of a specific limit to assessment having been estab lished and preserved. There is no dispute that by reason of the non compliance with the statutory formalities the Gov ernment Resolution of 1865 is not an effectual grant passing title in the land to the respondent Corporation and is not also an enforceable contract. On the other hand, there is no doubt as to the existence of an intention on the part of the Government to make and on the part of the Corporation to take a grant of the land in terms of the Resolution of 1865 including an undertaking by the Government not to charge any rent. Both parties acted on the basis of that Resolution and the prede cessor in title of the respondent Corporation went into possession of the land in question pursuant to the Govern ment Resolution of 1865 and, acting upon the said Resolution and the terms contained therein, the respondent Corporation and its predecessor in title spent considerable sums of money in leveling the site and erecting and maintaining the market buildings and have been in possession of the land for over 70 years. What, in the circumstances was the legal position of the respondent Corporation and its predecessor in title in relation to the land in question? They were in possession of the land to which they had no legal title at all. Therefore, the position of the respondent Corporation and its predecessor in title was that of a person having no legal title but nevertheless holding possession of the land under color of an invalid grant of the land in perpetuity and free from rent for the purpose of a market. Such pos session not being referable to any legal title it was prima facie adverse to the legal title of the Government as owner of the land from the very moment the predecessor in title of the respondent Corporation took possession of the land under the invalid grant. This possession has continued openly, as of right and uninterruptedly for over 70 years and the respondent Corporation has acquired the limited title it and its predecessor in title had been prescribing for during all this period, that is to say, the right to hold the land in perpetuity free from rent but only for the purposes of a market in terms of the Government Resolution of 1865. The immunity from the liability to pay rent is just as much an integral part or an inseverable incident of the title so acquired as is the obligation to hold the land for the purposes of a market and for no other purpose. There is no question 53 of acquisition by adverse possession of the Government 's prerogative right to levy assessment. What the respondent Corporation has acquired is the legal right to hold the land in perpetuity free of rent for the specific purpose of erecting and maintaining a market upon the terms of the Government Resolution as if a legal grant had been made to it. The right thus acquired includes, as part of it, an immunity from payment of rent which must necessarily consti tute a right in limitation of the Government 's right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of section 8 of the Bombay Act II of 1876. It is true, as pointed out by the Privy Council in Karnalavahooji Maharaj vs Collector of Bombay (supra) that the words of the section would appear to apply rather to the case of a limitation on the right to assess than to the case of a complete exemption from assessment but such a construction would not protect the cases of total exemption which, as conceded in that very case, did in fact exist and were recognised and protected by virtue of the words of section 8 of the Bombay Act II of 1876. It has not been suggested before us that there are no cases of total exemption or that those cases are protected by any provision of law other than that of this very section. There is, therefore, no escape from the conclusion arrived at by the High Court, with which we concur, that the words of section 8 would apply to a case where total exemp tion from assessment was granted. In other words, specific limit may be nil for the purposes of section 8 of the Act. It was sought to be argued that even if the Government be precluded from enhancing the "rent" in view of the terms of the Government Resolution, it cannot be held to have disentitled itself from its prerogative right to assess "land revenue". This contention is sought to be rounded on a distinction between "rent" and" land revenue". This contention, however, was not raised in the written statement and was not made the subjectmatter of any issue on which the parties went to trial and was never put forward before either of the Courts 54 below. Indeed, in the letter of the Mayor of Bombay dated March 22, 1939, to which reference has been made, it was clearly alleged that the word "rent" was used in official documents with the greatest frequency with reference to the land revenue leviable by the East India Company and later by the Government in the City of Bombay and in the Presidency. " In the Government 's reply dated January 24, 1940, also quoted above this assertion was never repudiated or denied. In the premises, the appellant cannot be permit ted at this stage to raise this contention rounded on the supposed distinction, if any, between "rent" and "land revenue" and for the purpose of this case we must proceed on the basis that the word "rent" in the Government Resolution of 1865 was synonymous with or included" land revenue. " In our opinion, for reasons stated above, the actual decision of the High Court was correct and this appeal should be dismissed with costs, and we order accordingly. PATANJALI SASTRI j. I am of opinion that this appeal should be allowed and I will briefly indicate my reasons without recapitulating the facts which have been fully stated in the judgment of my learned brother Das which I have had the advantage of reading. The appeal concerns a claim by the Provincial Govern ment of Bombay to charge land revenue on a plot of land on which the predecessors of the respondent Municipality erect ed the buildings known as the Crawford Market in the City of Bombay. It is common ground that the land in question would be assessable to land revenue under section 8 of the Bombay City Land Revenue Act (No. II of 1876) unless the respondent established "a right in limitation of the right of the Provincial Government in consequence of a specific limit to assessment having been established and preserved", in which case, the assessment must not exceed such specific limit. It has been held, and it is not now disputed, that the words quoted above cover 55 a right of total exemption from assessment, the "specific limit" in such a case being nil (see Goswamini Shri Kamala vahooji vs Collector of Bombay (1). The only question, therefore, is whether the respondent has established a right to such exemption. The resolution of the Government dated 19th December, 1865, authorising the grant of the land without "any rent being charged to the Municipality as the market will be like other buildings for the benefit of the whole community" did not by itself purport to pass title to the land in question or to confer on the Municipality a right to exemp tion from land revenue. Admittedly no formal instrument was executed either granting the land or exempting it from assessment. Nor could the resolution be regarded as a valid disposition of property or an enforceable contract not to charge revenue on the land, as it did not comply with the requirements of the statute 22& 23 Vic. C. 41 which pre scribed certain formalities to be observed for such transactions. As pointed out by Jenkins C.J. in Municipal Corpora tion of the City of Bombay vs The Secretary of State (2) all land in British India having been vested in the Crown by 21 & 22 Vic. C. 106, the Governor in Council in Bombay could not dispose of property or enter into a contract on behalf of the Crown except in exercise of the power bestowed on them for the purpose under 22 & 23 Vic. C. 41, and that power could be exercised only by observing the formalities prescribed by that statute. The learned Judges of the High Court, while recognising this difficulty in the way of the respondent establishing a legal right to exemption from assessment, held that the conduct of the Provincial Govern ment in allowing and, indeed, encouraging the respondent to erect the buildings at great cost on the faith of the prom ise not to charge land revenue contained in the Resolution of 19th December, 1865, precluded the respondent on the equitable principle recognised in Ramsden vs Dyson from assessing the land in question, and that this equity was a "right" in limitation of the right of the Provincial Government to assess. I am unable to share that view. There is, in my opin ion, no room here for the application of the principle of Ramsden vs Dyson(1). That decision has been explained by the Privy Council in Ariff vs Jadunath(2) as based on the equitable doctrine of part performance which, their Lord ships held, could not be applied so as to nullify the ex press provisions of the Transfer of Property Act relating to the creation of leases. They observed : Whether an English equitable doctrine should, in any case, be applied so as to modify the effect of an Indian statute may well be doubted; but that an English equitable doctrine, affecting the provisions of an English statute relating to the right to sue upon a contract, should be applied, by analogy, to such a statute as the Transfer of Property Act and with such a result as to create without any writing an interest which the statute says can only be created by means of a registered instrument, appears to their Lordships, in the absence of some binding authority to that effect, to be impossible." After quoting the well known passage in the judgment of Lord Kingsdown, their Lordships commented thus : "It will be noticed that Lord Kingsdown is dealing with the case of express verbal contract or something 'which amounts to the same thing. ' He nowhere puts the case of estoppel; the word is not mentioned. He would appear to be dealing simply with the equitable doctrine of part performance. His reference to Gregory vs Mighall [(1811) 18 Ves.3281 confirms this view, for that case was simply an earlier instance of the application of the doctrine. Even if Lord Kingsdown 's language was intended to cover something beyond the equitable doctrine of part performance in relation to the Statute of Frauds, and was intended to refer to circum stances in which a court of equity will enforce a title to land against the person who at law is the owner thereof, the title must, nevertheless, in their Lordships ' view, be based either upon contract express or implied, or upon some statement of fact grounding an estoppel. In the later decision in Mian Pir Bux vs Sardar Ma horned(1) their Lordships reiterated the same view and held that English equitable doctrines did not afford in India a valid defence to an action in ejectment based on title. After these decisions of the Privy Council elucidating the principles underlying Ramsden vs Dyson(2) and Maddison vs Alderson(3), it seems to me clear that they have no application to the facts of the present case. They can no more prevail against the statutory provisions regarding the disposition of property or the making of contracts by Gov ernment than against the provisions of the Transfer of Property Act requiring registered instruments for effecting certain classes of transactions. No question of estoppel by representation arises, for the Government made no represen tation of fact which it now seeks to deny. Nor can any case of estoppel by acquiescence be rounded on the facts of the case. Both parties knew the facts and neither was misled. There was no lying by and letting another run into a trap [per Cotton L.J. in Russell vs Watts(4)]. The conduct of the parties was referable to the express agreement evidenced by the Government Resolution of 19th December, 1865, to make a grant of the land free of rent (which, in such context, means and includes revenue). No question, therefore, of any implied contract could arise. Unfortunately for the respond ent, the express agreement was unenforceable owing to non observance of the prescribed statutory formalities, though it was acted upon by both sides. No question arises here as to the respondent 's title to the land which apparently has been perfected by lapse of time. But it is clear that no right of exemption has been established either on the basis of express or implied contract or on the basis of the equitable principles of part performance or estoppel by acquiescence. It was next contended that, on the analogy of the line of cases holding that a limited interest in land could be acquired by adverse possession for over the statutory peri od, the respondent 's possession of the land in dispute without payment of any quit rent or revenue for over 70 years to the knowledge of the Government perfected its title to hold the land free from liability to pay land revenue. It is difficult to appreciate the argument so far as the claim to exemption is concerned. There is no question here of acquisition of a limited interest in land by adverse possession. The respondent was asserting full ownership and a right of exemption from assessment and the Government agreed with that view as shown by their letter dated 26th June, 1921, to the Land Acquisition Officer for the City of Bombay wherein they stated that "no Government claim in respect of the land under acquisition (a portion of the land here in question) in the above mentioned case is made as the land vests in the Municipality. " Be it noted that the Government made no claim even to a portion of the compensa tion on the basis of any right of resumption reserved to them, the Resolution of 1865 having made no such reserva tion. The position then was that throughout the period of adverse possession, the respondent Municipality regarded itself and was regarded by the Government as absolute owner of the land with the additional right of exemption from assessment to land revenue with the result that the Govern ment 's "right to such property" (the subject of adverse possession) was "extinguished" under section 28 of the Limitation Act. But the right to levy land revenue was no part of the Government 's right to the property. It is a prerogative right of the Crown which was placed ' on a statu tory basis under the Bombay City Land Revenue Act of 1876, and could be exercised in respect of a land only on the footing that it belonged to another, the "superior holder", for, the claim to levy assessment itself implies a recogni tion of ownership in 59 another. It is, therefore, difficult to see how adverse possession of the land could entitle the respondent to exemption from assessment of land revenue. It was said that the Government having intended to grant the land on the terms that it was to be held free of quit rent or revenue and the respondent having held the land on such terms claiming it to be exempt from assessment, a title to hold it on those terms was perfected by the adverse possession, the covenant for exemption from assessment forming part and parcel of the title. In other words, the respondent should be placed in the same position as if the Government had made a valid revenue free grant. The argument is, to my mind, fallacious. If the Government had given effect to their expressed intention by executing an instru ment in writing observing the due formalities, the respond ent would, no doubt, have secured a valid title to the property with a contract binding the Government not to charge revenue, supported as it was by consideration. But, as already stated, the Government 's promise not to charge land revenue was unenforceable from the inception, and the respondent 's adverse possession of the land, though accompa nied by a claim to exemption from revenue, could not destroy the Crown 's prerogative right to impose assessment on the land. A somewhat analogous question arose in Goswamini Shri Kamala Vahooji vs Collector of Bombay(1). The Government admitted that no land revenue had ever been charged in respect of the land which was enjoyed by the holders for more than a century without payment of revenue and it was urged that in virtue of such a long enjoyment a lost grant of the land on the terms that it should be held free from liability to pay revenue must be presumed. Rejecting that contention, their Lordships observed : "The appellant submits that in the circumstances a lost grant should be presumed, and that this lost grant should be presumed to have contained an exemption from land revenue or a 'right in limitation of the right of Government to assess the property. The law may presume the existence of a grant which has been lost where it is sought to disturb a person in the enjoyment of right which he and his predecessors have immemorially enjoyed, but it is a different thing to seek to presume that the Crown has by some lost grant deprived 'itself of the prerogative power to tax the property of its subjects, and their Lordships are of opinion that this plea is untenable." (italics mine). The decision shows that exemption from land revenue does not form part and parcel of the title to land but is collateral to it. If a presumed lost grant could not cover it neither could title by adverse possession. I would allow the appeal but make no order as to costs. I had the advantage of reading the judgment prepared by my learned brother; Mr. Justice Das, and 1 agree in the conclusion he has reached; but i wish to add a few words of my own on some of the points that have been discussed during the course of the hearing. In the first place, there can be little doubt that the word "rent" in paragraph 2 of the Government Resolution of the 19th December 1865, means "assessment ". It is true that this word is used generally in cases of landlord and tenant, but when it is remembered that here the Govern ment was parting with the land vested in the Crown in favour of the Municipal Corporation of Bombay, it can safely be assumed or presumed that they were thinking not merely of their rights as landlord but also of their prerogative right as well. That the land was going to be used for the build ing of markets for the benefit of the whole community and, therefore, should not be charged with rent is a considera tion more relevant and appropriate to the prerogative right to assess than to a right to collect rent in respect of a transaction of lease. Moreover, it is well known that when ever we speak of 61 a rent free grant of an inam by the Government, what is meant is land revenue or assessment. The Resolution in question authorized the grant of the site. There is apparently no grant in writing, conforming to the formalities prescribed by the law then in force. Part of the site was wanted for the erection of stables and the question of title to that portion was considered and decided in The Municipal Corporation of the City of Bombay vs The Secretary of State for India in Council (1), where the Government gave the Municipality notice to quit and brought a suit for rent on the alleged determination of the tenancy. It is part of the same transaction with which we are concerned now, and it seems to me that there was no valid grant. The grant having been authorized, the Corpora tion went into possession and it is not denied that they have built the Crawford Market at enormous cost. Though the grant was invalid, the Corporation has now acquired a title by adverse possession to the site; this, however, is not the case with reference to the stable site covered by the afore said Bombay decision. There the question was brought before the Court, well within the 60 years ' period. The Crawford Market site has been in the possession of the Municipal Corporation for over 60 years under an invalid grant, a term of which was that no rent should be charged. We are not concerned now with any question of ejectment or determination of tenancy. Could it be said that the right to levy assessment on the land, enjoyed without any payment of any kind so far, was lost by adverse possession ? I find it difficult to give an affirmative answer. Before a right could be said to be acquired or lost by adverse possession, it must have been the subject of possession by a man without title as against the person with the rightful title. Right to levy assessment is a prerogative right of the Government and it is hard to conceive of a case where it could be said to be lost by adverse possession. True, there can be adverse possession of a limited right like that of a mortgagee or a lessee or even a perma nent tenant, but still a right must have been enjoyed by the possessor adversely to the claim of the true owner. It is unnecessary to go into the wider question whether the denial of the right to levy assessment and possession of property coupled with this denial for over a period of 60 years will negative that right; it is sufficient to say that no right to levy assessment was exercised in the case before us before March, 1938, and the denial was only afterwards. This, however, does not determine the case in favour of the appellant, as there is a question of equity to con sider and on which the appellant failed in the court below. In fact, it is the crucial point for determination. When the Architectural Improvement Committee proposed to levy a nominal rent, the Government stated that no rent need be charged, as the markets to be built were for the benefit of the whole community. This was a representation made by the Government when the site was given and possession was taken. How far this representation was taken into consideration when the Corporation of Bombay took possession of the site under the grant is not necessary to be considered at any great length. It is just possible that they would have taken the site even with the nominal rent, but it is equally possible that had they known that the rent was in the nature of assessment and liable to enhancement from time to time or periodically, they would have insisted on getting a site free from assessment in consideration of the sites they gave up for forming the eastern Boulevard. The allegation in.paragraph 7 of the plaint that the Corporation acted on the faith of the terms contained in the grant has not been denied by the Government. The accident that the grant was invalid does not wipe out the existence of the representation of the fact that it was acted upon by the Corporation. Even if the suit had been brought within 60 years for ejectment and the Corporation had no answer to such a claim, the right to levy assessment might have conceivably stood on a different footing. In any event, 63 there can be no doubt that it would have been competent for a Court of equity to give compensation for the expenditure and protect the possession in the meantime. Lord Kingsdown refers to this aspect of the matter in Ramsden vs Dyson (1). In the present case, the Corporation stands on much firmer ground. They have acquired a title to the land which the Government cannot upset or challenge. This acquisition of title is as a result of the law of limitation. It has nothing to do with any conduct on the part of the Corpora tion which can be said to have rendered the representation about non liability to assessment of no legal effect or consequence. The invalidity of the grant does not lead to the obliteration of the representation. Can the Government be now allowed to go back on the representation, and ,if we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must pre vent being committed? If the resolution can be read as meaning that the grant was of rent free land, the case would come strictly within the doctrine of estoppel enunciated in section 115 of the Indian Evidence Act. But even otherwise, that is, if there was merely the holding out of a promise that no rent will be charged in the future, the Government must be deemed in the circumstances of this case to have bound themselves to fulfil it. Whether it is the equity recognised in Ramsden 's case(1), or it is some other form of equity, is not of much importance. Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power. As pointed out by Jenkins C.J. in Dadoba Janardhan 's case (2), a different conclusion would be "opposed to what is reasonable, to what is probable, and to what is fair. " I am of the opinion that the decision of the Privy Council in Ariff vs Jadunath (3) is not applicable to the facts before us, as the doctrine of part performance (1) (2) Dadoba Janardan vs The Collector of Bombay (1901) I.L.R,.25 Born.(3) (1931) 58 I.A. 91.64 is not being invoked here as in that case, to clothe a person with title which he cannot acquire except by the pursuit of or in conformity with certain legal forms. Here, as pointed out already, the Corporation became the full and absolute owner of the site on the lapse of SO years from the date of the grant. Appeal dismissed.
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In 1865, the Government of Bombay called upon the prede cessor in title of the Corporation of Bombay to remove some markets from a certain site and vacate it, and on the appli cation of the then Municipal Commissioner the Government passed a resolution approving and authorising the grant of another site to the Municipality.
The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be, like other public buildings, for the benefit of the whole community.
" The Corporation gave up the sites on which the old markets were situated and spent a sum of over 17 lacs in erecting and maintaining markets on the new site.
In 1940 the Collector of Bombay, overruling the objection of the Corporation, assessed the new site under section 8 of the Bombay City Land Revenue Act to land revenue rising from Rs. 7,500 to Rs. 30,000 in 50 years.
The Corporation sued for a declaration that the order of assessment was ultra vires and that it was entitled to hold the land for ever without payment of any assessment.
The High Court of Bombay held applying the principle of Ramsden vs Dyson(1) that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the Corporation and there was thus a limitation on the right of the Government to assess under section 8 of the said Act: Held per KANIA C.J., DAS, CHANDRASEKHARA AIYAR and BOsE JJ.
(PATANJALI SASTRI J. dissenting) that the Govern ment was not, under the circumstances of the case, entitled to assess land revenue on the land in question.
Per KANIA C.J., DAS and Bose JJ.
Though there was no effectual grant by the Government passing title in the land to the Corporation by reason of non compliance with the statutory formalities, yet, inasmuch as the Corporation had never the less taken possession of the land in terms of the Government resolution and continued in such possession openly, uninterruptedly and as of right for over 70 years, the Corporation had acquired the (1) (1866)L.R. 44 limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent, but only for the purposes of a market and for no other purposes.
The right acquired included as part of it an immunity from payment of rent which constituted a right in limitation of the Government 's right to assess in excess of the specific limit established and preserved by the Government Resolution within the meaning of section 8 of the Bombay City Land Revenue Act (II of 1876) there being for the purposes of this case no distinction between rent and revenue.
Per CHANDRASEKHARA AIYAR J.
If the Resolution of 1865 can be read as meaning that the grant was of rent free land the case would come strictly within the doctrine of estoppel enunciated in section 115 of the Indian Evidence Act.
Even otherwise, if there was merely the holding out of a promise that no rent will be charged in the future the Government must be deemed to have bound themselves to fulfil it.
The right to levy assessment is a prerogative right of the Government and it is hard to conceive of a ease where it could be said to be lost by adverse possession.
A court of equity must prevent the perpetration of a legal fraud.
PATANJALI SASTRI J. (contra) The principle of Ramsden vs Dyson cannot prevail against statutory requirements regarding disposition of property or making of contracts by Government.
No question of estoppel by representation arises, as the Government made no representation of fact which it now seeks to deny.
Nor can any case of estoppel by acquiescence be rounded on the facts of the case as there was no lying by and letting another run into a trap.
No right of exemption has been established either on the basis of express or implied contract or on the basis of equitable principles of part performance or estoppel by acquiescence.
The right to levy land revenue is no part of the Govern ment 's right to property but a prerogative of the Crown and adverse possession of the land could not destroy the Crown 's prerogative to impose assessment on the land.
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In 1865, the government of Bombay told the company that later became the Corporation of Bombay to move some markets from a piece of land and leave it empty. The city official asked the government to approve giving another piece of land to the city. The government agreed.
The government also said that the city didn't have to pay rent for the new land. They said the markets, like other public buildings, would help everyone in the city. The Corporation gave up the old land and spent a lot of money building and taking care of the markets on the new land.
In 1940, a government official in Bombay said the Corporation had to pay taxes on the new land, based on a law called the Bombay City Land Revenue Act. The taxes started at a certain amount and would increase over 50 years. The Corporation disagreed.
The Corporation sued, saying the tax order was illegal. They said they should be able to keep the land forever without paying taxes. The High Court of Bombay agreed with the Corporation. They used a legal idea from a case called Ramsden vs Dyson, saying the government lost its right to tax the land because it was unfair to the Corporation. So, the government couldn't tax the land under the law.
The judges mostly agreed that the government couldn't tax the land. Even though the government didn't officially give the land to the Corporation in the correct way, the Corporation took control of the land and used it openly for over 70 years. So, the Corporation had the right to keep the land forever without paying rent, but only for use as a market.
This right included not having to pay rent, which limited the government's right to tax the land beyond a certain amount. This limit was set by the government's original agreement. Rent and tax were basically the same thing in this case.
One of the judges said that if the government's agreement in 1865 meant the land was rent-free, then the government couldn't go back on its promise. This idea comes from a law called the Indian Evidence Act. Even if the government just promised no rent in the future, it had to keep that promise.
The judge also said that the government has a special right to tax land, but it's hard to imagine that right being lost just because someone else used the land for a long time. Courts should stop legal unfairness.
One judge disagreed. He said the legal idea from Ramsden vs Dyson doesn't apply when there are laws about how the government gives away property or makes agreements. The government didn't lie or try to deny something it said before. Also, the Corporation didn't fall into a trap.
The judge also said the Corporation didn't prove it should be exempt from taxes, based on a contract or fairness. The government's right to tax land isn't part of its property rights, but a special power. Someone using the land for a long time doesn't take away the government's power to tax it.
| 5,042
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ition No. 631 of 1980. Under Article 32 of the Constitution.) Ram Jethmalani, M. M. Lodha and Harjinder, Singh for the Petitioner. R. B. Datar, R. N. Sachthey and M. N. Shroff for the Respondents. FAZAL ALI, J. (Vacation Judge) The detenu was detained under sub Section (t) of Section 3 of The Conservation of Foreign Exchange and Prevention of Smuggling Activities (in short COFEPOSA) by the Government of Gujarat by its order dated January 30, 1980. The order was passed by Mr. P. M. Shah, Deputy Secretary to the Government of Gujarat who authenticated the said order on behalf of the State Government. The detenu while making a representation to the State Government also prayed for supply of documents to him in order to make a more effective representation. These documents however were supplied on March 27, 1980 although the order of detention was itself confirmed on March 21, 1980. In the representation sent to the Government, the detenu had made a specific prayer that his representation should be forwarded to the Central Government for being considered. In support of the rule, Mr. Ram Jethmalani, counsel appearing for the detenu raised two points before this Court. In the first place it was submitted that the counsel on behalf of the detenu has expressly pleaded that the grounds of detention were couched in English, a language which the detenu did not understand at all and these grounds were not explained to him. A specific ground on this aspect of the matter has been taken in ground No. XIII at page 21 of the petition which may be extracted thus: "That the detenu does not know English. The grounds of detention and the order of detention were in English. No vernacular translation of the grounds was given nor they were explained to detenu in a language known to him." This allegation seems to have been denied by the respondents in para 14 of the affidavit of Mr. P. M. Shah, on behalf of the detaining authority, where he stated that the grounds were explained to the detenu in the language known to him. It was averred in para 5 that one Mr. A. K. Sharma, Police Inspector, C.I.D. (Crime Branch), Ahmedabad had explained to the detenu the order of detention and the grounds communicated to him on January 30, 1980. This affidavit, in my opinion, is wholly inadmissible in evidence. If it was 14O0 a fact that Mr. Sharma had personally explained the grounds to the detenu then the respondents should have filed an affidavit of Mr. Sharma himself to show that he had actually explained the contents of the grounds to the detenu by translating the same in the language which he understood. No such affidavit is forthcoming. No Contemporaneous record has been produced to show that Mr. Sharma had actually explained or translated the grounds to the detenu. The service of the ground of detention on the detenu is a very precious constitutional right and where the grounds are couched in a language which is not known to the detenu, unless the contents of the grounds are fully explained and translated to the detenu, it will tantamount to not serving the grounds of detention to the detenu and would thus vitiate the detention ex facie. In case of Hadibandhu Das vs District Magistrate, Cuttak & Anr. ; , it was clearly held that merely oral explanation of an order without supplying him a translation in a script or language which the detenu understood amounted to a denial of right of being communicated the grounds. Tn the instant case, it is not even alleged in the affidavit of Mr. Shah that any translation or translated script of the grounds was furnished to the detenu. In case of Hadibandhu Das vs District Magistrate, Cuttack & ground alone. I would however like to observe that in cases where the detaining authority is satisfied that the grounds are couched in a language which is not known to the detenu, it must see to it that the grounds are explained to the detenu, a translated script is given to him and the grounds bear some sort of a certificate to show that the grounds have been explained to the detenu in the language which he understands. A bare denial at the stage when Habeas Corpus petition is filed in the court by the detaining authority that these formalities were observed would be of no consequence particularly when it is not supported by any document or by any affidavit of the person who had done the job of explaining or translation. We have pointed out in several cases that courts frown on detention without trial and insist on the strict compliance of the constitutional safeguards enshrined in Article 22(5) to the letter of the law, because a non compliance of these safeguards would itself be sufficient to vitiate the order of detention. Despite our repeated observations, unfortunately, however the detaining authority continues to pass orders of detention in a casual or cavalier fashion with the result that the courts are compelled to release the detenus. We hope an trust that in future the detaining authorities should fully apply their mind so as to result in a strict compliance of the constitutional safeguards contained in the Constitution more particularly because the liberty of the subject is. in peril. 14O1 Another ground taken by Mr. Ram Jethmalani in support of the rule is that although the detenu had made a specific prayer in his representation to the State Government that his representation should he forwarded to the Central Government for consideration under section 11 of the Act, yet the detaining authority did not choose to forward the representation to the Central Government at all. This position is admitted and the defence taken is that as the detenu had himself sent a copy to the Central Government, the detaining authority did not think it necessary to forward the representation to the Central Government. This defence is wholly unacceptable. Section l l of the Act confers a constitutional right on the detenu to have his representation considered by the Central Government. It is true that the Central Government has a discretion to revoke or confirm the detention but the detenu has undoubtedly a right that his representation should be considered by the Central Government for whatever worth it is. The mere fact that the detenu had sent a copy to the Central Government does not absolve the detaining authority from the statutory duty of forwarding the representation of the detenu to the Central Government. For these reasons therefore I am satisfied that the continued detention of the detenu in this case is legally invalid. I therefore allow this application and direct that the detenu be released forthwith. As the detenu has now been transferred to Bhavnagar, the order be sent to the Jailor at Bhavnagar. S.R. Petition allowed.
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Allowing the petition, the Court ^ HELD: 1.
Where the detaining authority is satisfied that the grounds are couched in a language which is not known to the detenu, it must see to it that the grounds are explained to the detenu, a translated script is given to him and the grounds bear some sort of a certificate to show that the grounds have been explained to the detenu in the language, which he understands.
[14O0 D E] A bare denial at the stage when the Habeas Corpus petition is filed in the court by the detaining authority that those formalities were observed would be of no consequence particularly when it is not supported by any document or by any affidavit of the person who had done the job of explaining or translation.
[14O0 E F] Hadibandhu Das vs District Magistrate, Cuttack and Anr. ; followed.
Courts frown on detention without trial and insist on the strict compliance of the constitutional safeguards enshrined in Article 22(5) to She letter of the law, because a non compliance of these safeguards would itself be sufficient to vitiate the order of detention.
[14O0 F G] 3.
Section ll of COFEPOSA confers a constitutional right on the detenu to have his representation considered by the Central Government.
It is true that the Central Government has a discretion to revoke or confirm the detention but the detenu has undoubtedly a right that his representation should be considered by the Central Government for whatever worth it is.
The mere fact that the detenu had sent a copy to the Central Government does not absolve the detaining authority from the statutory duty of forwarding the representation to the Central Government.
[14O1 B D] [The Court expressed the hope that in future the detaining authorities should fully apply their mind so as to result in a strict compliance of the constitutional safeguards contained in the Constitution, more particularly, be cause the liberty of the subject is in peril.]
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The Court agreed with the petition.
The Court said that if the person holding someone knows that the reasons for holding them are written in a language the person doesn't understand, then they must make sure the reasons are explained. They need to give the person a written translation and proof that the explanation was done in a language the person understands.
If the person holding them just says in court (when the person being held asks for release) that they did these things, it doesn't mean much, especially if they don't have papers or a sworn statement from the person who did the explaining or translating.
The Court followed the case of Hadibandhu Das vs. District Magistrate.
Courts don't like it when someone is held without a trial. They want the rules in Article 22(5) of the Constitution (which protect people's rights) to be followed exactly. If these rules aren't followed, the order to hold someone is invalid.
Section 11 of COFEPOSA (a law) gives the person being held the right to have their case considered by the Central Government.
The Central Government can choose to cancel or keep the detention, but the person being held definitely has the right to have the Central Government consider their side of the story.
Just because the person being held sent a copy of their case to the Central Government doesn't mean the person holding them doesn't have to send the case to the Central Government as required by law.
The Court hoped that in the future, those holding people will think carefully and follow the Constitution's rules strictly. This is especially important because a person's freedom is at risk.
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Appeal No. 456 of 1958. Appeal by special leave from the judgment and order dated May 10, 1957, of the Rajasthan High Court (Jaipur Bench) at Jaipur in D. B. Civil Reference No. 17 of 1956. WITH PETITION No. 87 of 1961. Petition under article 32 of the Constitution of India for enforcement of Fundamental rights. Bishan Narain, and Govind Saran Singh, for the appellant/petitioner. N. section Bindra and T. M. Sen, for the respondents. April 25. The Judgment of the Court was delivered by 373 DAS GUPTA, J. On April 1, 1950, the Deputy Custodian, Jaipur, made an order in proceedings instituted under section 19 of the Administration of Evacuee Property Ordinance declaring the appellant Dr. Mohammad Saeed a medical practitioner of Jaipur to be an intending evacuee. By the same order a notice was directed to be issued to the respondent to show cause why he should not be declared to be an evacuee under section 2(d)(i) and section 2(d)(iii) of the Ordinance. When thereafter the (Act XXXI of 1950), came into force ano ther notice was issued on the appellant under section 22(b) of the Act to show cause why his property should not be declared evacuee property on the ground that he had transferred a substantial portion of his assets to Pakistan. On November 16, 1951, the Deputy Custodian, Jaipur held Dr. Mohammad Saeed to be an evacuee under section 2(d)(iii) of the Administration of Evacuee Property Ordinance, 1949. He also held Dr. Mohammad Saeed 's property to be evacuee property under section 7 of the Ordinance and also under section 22(b) of the . On appeal the District Judge, Jaipur, set aside this declaration of the appellant as an evacuee under section 2(d)(iii) of the Ordinance and remanded the case for a fresh decision in the light of the observations made by him. As regards the order under section 22(b) the learned District Judge agreed with the Deputy Custodian that Dr. Mohammed Saeed had transferred a substantial portion of his assets to Pakistan between November 1947 and September 1948. Being of opinion however that not only this act of transfer which took place before the 18th day of October, 1949, but other circumstances including the appellant 's conduct after October 18, 1949, have to be, taken into consideration before action under section 22(b) can be taken, he found that it was difficult to say that the appellant had been making preparations for his migration to Pakistan. Accordingly he set aside the order made by the Deputy Custodian under section 22(b). The 48 374 Custodian of Evacuee Property, Rajasthan, moved the Custodian General of Evacuee Property for revision of this order. The Deputy Custodian General of Evacuee Property who heard this petition in revision was unable to agree with the District Judge 's findings on the question as regards the order under section 22(b) and accordingly made a reference under section 27(2) of the , to the High Court of Rajasthan. The High Court rejected the contention raised on behalf of this appellant that the circumstances as to the transfer of a substantial portion of his assets should relate to an act done by any person, after, he was declared as an intending evacuee. It further held that the fact that Dr. Mohammad Saeed had during the period from August 14, 1947 to October 18, 1949, transferred a substantial portion of his assets in India to Pakistan constituted under the law a preparation for his migration to Pakistan and that this justified a declaration by the Custodian of his property situated in Rajasthan in which Dr. Mohammad Saeed has a right or interest, to be evacuee property. Accordingly, the High Court set aside the decision of the District Judge in respect of Deputy Custodian General 's orders under section 22(b) and directed the Custodian General or the Deputy Custodian General, if authorised to deal with it, to dispose of the proceedings in accordance with the decision of the High Court. In accordance with this direction the Deputy Custodian General on August 10, 1957, held that the property of the petitioner was rightly declared to be evacuee property under section 22(b) by the Deputy Custodian. The appeal has been filed against this decision by special leave granted by this Court. After the appeal was heard in part on January 23, 1961, the hearing was adjourned to enable the appellant to make a writ petition. A petition under article 32 of the Constitution was then filed on February 14, 1961, praying for a writ of certiorari and/or mandamus or direction to quash the order made under section 22(b). The appeal and the petition have come up for hearing together. 375 As the writ petition challenges the validity of the law as enacted in section 22(b) it will be proper and convenient to take up that petition for decision first. Of the several grounds urged in the petition against the validity of section 22(b) only one, viz., that section 22(b) contravenes article 14 of the Constitution has been pressed before us. While however in the grounds as stated in the petition the attack was that discrimination had been made between persons declared as intending evacuee in respect of whose property proceedings had been started before the commencement of the Act and those in respect of whose property no such proceedings had yet been started and further that article 14 was contravened because a person declared to be an intending evacuee who had done one of the acts prescribed as constituting a preparation for migration to Pakistan, was denied the right to show that he had, in fact, no intention so to migrate and had made no preparation for the purpose and by imposing upon him a very grave penalty, neither of those contentions were urged at the hearing. The only argument on the question of contravention of article 14 which Mr. Bishan Narain urged on behalf of the petitioner was that in two matters there was discrimination between an intending evacuee whose property was declared evacuee property under section 22(b) and an evacuee whose property might be declared to be an evacuee property, where the evacuee had done practically the same thing for which another person has been declared as an intending evacuee. Learned Counsel has pointed out that under section 2(d)(iv) of the , as it stood after its amendment by Act 11 of 1953, a person who has after the 18th day of October, 1949, transferred to Pakistan without the previous approval of the Custodian his assets or any part of his assets situated in any part of the territories to which the Act extends is an evacuee; so that any property of such a person is evacuee property within the meaning of the Act. When in respect of property of such a person an order has been made under section 7 of the Act declaring it to be evacuee property the evacuee or his heir will be entitled to make 376 an application for restoration of the property under section 16 of the Act, and after due inquiry the Central Government may, subject to the conditions specified in the section make an order restoring the property to the applicant. Another benefit which a person who is an evacuee within the meaning of section 2(d)(iv) is entitled to, along with other evacuees, is that of section 13 of the Displaced Persons (Compensation and Rehabilitation) Act (XLIV of 1954), under which when any property of an evacuee has been acquired under section 12 there shall be paid to an evacuee compensation in respect of his property. . . . in accordance with such principles and in such manner as may be agreed upon between the Governments of India and Pakistan. Take however the case of a person, like the present petitioner who after the 14th day of August, 1947, and before the 18th day of October, 1949, transferred his assets or any portion thereof to Pakistan. He would be an "intending evacuee" within the meaning of section 2(e)(i) of the Act and once a declaration had been made under section 19 that he was an intending evacuee his property would be liable to be declared evacuee property under section 22(b). Even so however he would not get the benefit of section 16 of Act XXXI of 1950 or of section 13 of the . The result of the several provisions of law of the , after it was amended in 1953 therefore is that if a person transferred his assets or any part of his assets to Pakistan without the previous approval of the Custodian after the 18th day of October, 1949, he would be an evacuee in law and his property will be liable to be declared an evacuee property, but he will still be entitled to restoration of the property under section 16 of the , and also to the benefit of section 13 of the (XLIV of 1954); but if a person transferred his assets or part of his assets to Pakistan between the 14th day of August, 1947, and the 18th day of October, 1949, he was liable 377 to be declared an intending evacuee at any date before the Amended Act of 1953 came into force and if that has happened, any property belonging to him was liable to be declared evacuee property under section 22 of the Act at any time before Chapter IV of that Act was repealed by the 1953 Act and even after that date if any proceeding under section 22 was pending on the ' date of the commencement of the 1953 Act. But such a person would not be entitled to the benefit of either section 16 of the , or compensation under section 13 of the (XLIV of 1954). This denial of benefits under section 16 of the 1950 Act and section 13 of the 1954 Act to one who has been declared an intending evacuee on the ground of transfer of assets to Pakistan amounts, it is urged by the learned counsel, to be a denial of equal protection of laws and it is contended that section 22(b) of the as it stood before the section war, repealed along with other sec tions of Chapter IV should be held to be void. In our judgment, this contention is not well founded. In the first place it is to be pointed out that a person who transferred assets between the 14th August, 1947, and the 18th October, 1949, and a person who transferred such assets after the 18th October, 1949, cannot properly be considered to be similarly circumstanced. It has to be borne in mind that political relations between India and Pakistan were in a fluid and disturbed state immediately after the 14th August, 1947, but the position improved to a considerable extent by the 18th October, 1949, which it may be noticed was the date when the Administration of Evacuee Property Ordinance, 1949, was made. Persons who had transferred assets between the 14th August, 1947, and the 18th October, 1949, may therefore reasonably have been considered by the legislature to form a class distinct in respect of the application of the law to their property from those who transferred assets after the 18th October, 1949. We are not however concerned with the reasons or the wisdom of the policy which underlay the denial of the 378 benefits of section 16 of the and section 13 of the (XLIV of 1954) to those persons who had been declared intending evacuees because of having transferred assets between the 14th August, 1947, and the 18th October, 1949, while granting these benefits to those who were evacuees under the law as amended in 1953, because of transfer of assets to Pakistan after the 18th October, 1949. What is clear is that the two groups of persons are not similarly circumstanced and so the denial of equal benefits to the two groups is not an infringement of the guarantee of equal protection of laws. Next it is important to note that this differenceviz., that one group of persons is entitled to the benefits of the sections mentioned above while another group is not does not flow directly or necessarily from section 22(b). What is characterised as discrimination between an evacuee and an intending evacuee is the consequence of the legislature 's omission to extend to the intending evacuees the benefits of section 16 of the 1950 Act and section 13 of the 1954 Act as mentioned above and not of the provisions under section 22(b) that under certain circumstances as specified therein the Custodian may declare the property of an intending evacuee to be evacuee property. We do not think that it is possible to say therefore that section 22(b) of the contravenes article 14 of the Constitution. The petition under article 32 of the Constitution therefore fails and is dismissed with costs. The appeal raises the question of the effect of the application of section 22(b) of the Act to the facts of the present case. Section 22(b), substituting therein for the words "he had done any of the acts specified in sub clauses (i) and (iii) of clause (e) of section 2" the words of only cluse 2(e)(i), reads thus: "If the Custodian is satisfied, after such enquiry as may be prescribed, that the circumstances relating to any person, in respect of whom a declaration has been so made on the ground that after the 14th 379 day of August, 1947, and before the 18th day of October, 1949, he has transferred to Pakistan his assets or any part thereof situated in any part of the territories to which this Act extends are such as may be prescribed as constituting a preparation for his migration to Pakistan, the Custodian may declare any property situated in the State in which such person has any right or interest to be evacuee property and on the issue of such notification any property specified in the notification shall be deemed to be evacuee property which has vested in the Custodian within the meaning of this Act. " It is important to notice the explanation to the section which runs thus: "Explanation: The following shall be deemed to be some of the circumstances prescribed under clause (b), namely (i) the transfer to Pakistan by any person referred to in that clause of a substantial portion of his assets situated in any part of the territories to which this Act extends, or (ii) the acquisition of, or the declaration of an intention to acquire, Pakistan nationality by any such person. " It need only be mentioned that a declaration has been "so made" means that a declaration has been made under section 19 of the Act that he is an intending evacuee. It is no longer in dispute that Dr. Mohammad Saeed had, before the order appealed from was made, transferred to Pakistan a substantial portion of his assets situated in Jaipur which is part of the territories to which this Act extends. It is further not in dispute that this transfer was made before he was declared an intending evacuee. The first contention raised on behalf of the appellant was that this transfer having been made before the declaration was made is not available for consideration for the purpose of an order under section 22(b). The contention is clearly unwarranted. On a normal grammatical construction of the words used by the legislature it is abundantly clear that the transfer to 380 Pakistan of a substantial portion of the assets shall be deemed to be one of the circumstances prescribed under clause (b) irrespective of whether the transfer took place before the declaration as intending evacuee was made or after such declaration. What is necessary is that the circumstance must relate to any person in respect of whom a declaration that he is an intending evacuee has been made. There is nothing to justify the conclusion that the circumstances in order that they may be taken into consideration must also come into existence after the declaration was made. Indeed the scheme of the legislation appears to be that the fact that any portion of a person 's assets has been transferred to Pakistan is sufficient to make him liable to a declaration that he is an intending evacuee; but he becomes liable to the further declaration that his property is evacuee property, where it appears that what was transferred forms a substantial portion of his assets. In some cases it may happen that what was transferred before his declaration as an intending evacuee formed a small part of his assets. In such a case if later on other portions of his assets were transferred to Pakistan and the two transfers together amount to a transfer of a substantial portion of his assets, his property will be liable to be declared as evacuee property: It will be difficult to find any logic in the argument that when what was transferred before his declaration as intending evacuee was itself a substantial portion of his assets, such liability should not fasten. Quite apart however from the question of logic or reasonableness it is quite clear from the language used in the section that the legislature in. tended such circumstance of transfer of a substantial portion of assets to be available for consideration for the purpose of an order under section 22(b) whether or not the transfer took place before the person was declared as an intending evacuee or afterwards. It was next urged that in any case it would be proper for the Custodian to take other circumstances including the later conduct of the intending evacuee to decide whether or not he should declare his property to be evacuee property. It is unnecessary for 381 us to consider whether it is open to the Custodian to consider such other circumstances. The section however gives a Custodian the authority to declare the property of a person who has been declared an intending evacuee to be evacuee property whenever the existence of any of the circumstances prescribed as constituting a preparation for his migrating to Pakistan is established. Where, as in the present case, a Custodian in exercise of such authority has given such a declaration there is no reason for saying that the declaration has been improperly made. In our opinion, the High Court was right in setting aside the order of the District Judge and in directing the Custodian General or the Deputy Custodian General to dispose of the matter in accordance with the views expressed by the High Court that on the facts proved in the case the order made by the Deputy Custodian declaring Dr. Mohammad Saeed 's property as evacuee property was right. The order made by the Deputy Custodian General in compliance with the directions given by the High Court cannot therefore be assailed. The appeal is accordingly dismissed with costs. Appeal dismissed.
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The appellant was held to be an evacuee under section 2(d)(iii) of the Administration of Evacuee Property Ordinance, 1949, and his property was declared to be evacuee property under section 22 (b) of the Administration of Evacuee Property Act, 950, on the ground that he had transferred a substantial portion of his assets to Pakistan.
The relevant portion of section 22(b) runs thus: 372 "If the Custodian is satisfied, after such enquiry as may be prescribed, that the circumstances relating to any person, in respect of whom a declaration has been made on the ground that after the 14th day of August, 1947, and before the 18th day of October, 1949, he has transferred to Pakistan his assets or any part thereof situated in any part of the territories to which this Act extends, are such as may be prescribed as constituting a preparation for his migration to Pakistan, the Custodian may declare any property situated in the State in which such person has any right or interest to be evacuee property. . " The contentions, inter alia, of the appellant were that (1) section 22(b) contravened article 14 of the Constitution and (2) that the circumstances as to the transfer of a substantial portion of his assets should relate to an act done after he was declared as an intending evacuee.
Held, that the two groups of persons who transferred their assets between the 14th August, 1947, and the 18th October, 1949 and persons who transferred their assets after the 18th October, 1949 were not similarly circumstanced and the denial of equal benefits to the two groups was not an infringement of equal protection of laws under article 14 of the Constitution.
The circumstance of transfer of a substantial portion of assets was available for consideration for the purpose of an order under S, 22(b) whether or not the transfer took place before the person was declared as an intending evacuee or afterwards.
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The person appealing the case was considered an evacuee (someone who left) under a certain law. Because he moved a lot of his belongings to Pakistan, his property was declared "evacuee property" under another law.
The part of the law that matters says: If the Custodian (the person in charge of evacuee property) is sure that someone moved their belongings to Pakistan between August 14, 1947, and October 18, 1949, and that this looks like they were getting ready to move to Pakistan, the Custodian can declare any property that person owns in the State as evacuee property. The person appealing argued that (1) this law breaks a rule in the Constitution about equality and (2) that the act of moving a lot of belongings should have happened after he was labeled as someone planning to evacuate.
The court decided that people who moved their belongings between August 14, 1947, and October 18, 1949, are not the same as people who moved their belongings after October 18, 1949. So, giving different benefits to these two groups doesn't break the Constitution's rule about equal protection under the law.
The fact that someone moved a lot of their belongings could be considered when deciding if their property is evacuee property, even if the move happened before they were officially labeled as someone planning to evacuate, or after.
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Appeal No. 1854 of 1992. From the Judgment and Order dated 18.12.1990 of the Kerala High Court in M.F.A. No. 800 of 1990. M.L. Verma, V.J. Francis, V. Subramanian and Padmakumar for the Appellant. P.S. Poti and R. Sasiprabhu for the Respondent. The Judgment of the Court was delivered by MOHAN, J. This appeal by special leave is directed against i.e. judgment of the High Court of Kerala in M.F.A. No. 800/90 dated 18.12.90. The short facts leading to this appeal are as under: The respondent Hotel is situated in Kaloor, Cochin 17. It is a commercial establishment. In July, 1985 this establishment obtained a Bar licence whereupon a Bar was started. After running the business for some time it was closed down with effect from 31.3.88. The Insurance Inspectors of the appellant verified the records of the respondent establishment on 29.9.87, 9.10.87 and 19.10 87. It was reported that the employment strength of the respondent establishment including Chembaka Restaurant and Mayuri Bar was more than 19 as on 17.7.85. Therefore, it was treated as covered under the (hereinafter referred to as the Act) with effect from 11.7.85 provisionally. The fact of coverage was intimated to the respondent by notice dated 21.3.88. Since the final date of coverage could be decided only after verifying all the records pertaining to the date of functioning of the establishment, the respondent was requested to produce all the records such as attendance register, wage register, ledgers etc. from the date of starting of the establishment. The respondent was also called upon to start 222 compliance under the Act with effect from 11.7.85. But there was no compliance. Hence, a notice was issued in Form C 18 dated 26.3.88 along with a draft order for contribution amount of Rs. 49,399.75 which was assessed under section 45 A of the Act for the period 11.7.85 to 313.88. Though the respondent was afforded an opportunity to appear before the officer, it was not availed of However, a letter dated 13.7.88 was received but the explanations were not acceptable to the appellant. Subsequently, a detailed order dated 3.8.88 under section 45 A of the Act was passed calling upon the respondent to pay a contribution of Rs. 49,399.75 together with interest at 6 per cent, failing which it would be covered as an arrears of land revenue. Again, reminder was sent on 22.9.88. No reply was received. Hence, in order to recover the contribution under section 45 A of the Act, a claim in Form 19 was sent to the District Collector, Ernakulam on 31.10.88 requesting to recover the contribution for the period from 11.7.85 to 31.3.88. Challenging these proceedings the respondent filed an application under section 75 of the Act before the Employees ' Insurance Court, Alleppey. Inter alia it was contended that the applicant (respondent in this appeal) at no time employed 20 or more persons during the relevant time. The order was illegal because under section 45 A of the Act the respondent was entitled to a reasonable opportunity of being heard. That was not afforded. These contentions were refuted by the appellant. It was incorrect to state that on no occasion the respondent employed 20 or more workmen since the inspection report dated 8.12.86 clearly established to the contrary. The contention that no opportunity had been afforded before initiating the revenue recovery proceedings, was also denied in view of Form C 18 dated 23.6.88, show cause notice dated 3.8.88 and reminder dated 22.9.88. By its order dated 6th June, 1990 the Employees ' Insurance Court, Alleppey came to the following conclusion: "In the result, I can only uphold the assessment made by the ESI Corporation. But when the question of recovery is considered, certain other aspects cannot be ignored. The adhoc assessment itself was made by the opposite party after the 223 closure of the entire establishment. All the employees working in the establishment had left by that time after accepting the termination of their services. In respect of those employees who had already left, the ESI Corporation is now trying to recover contribution. Now the position emerges is that despite the collection of contribution it will be impossible to bring under coverage those employees, because, they are not at all available for coverage and for enjoying the benefits under the scheme. Therefore, even if the proceedings initiated earlier were sus tainable, so long as the employees are not available for the purpose of coverage, there is no meaning in collecting contribution alone. In these circumstances, I can only hold that the applicant had failed to comply with provisions of the ESI Act at the appropriate time. Therefore, according to me, after the closing of the establishment such recovery steps are not justified but only the prosecution as contemplated under sec. 85 of the ESI Act is attracted. Therefore, it is upto the ESI Corporation to decide whether any prosecution should be launched against the applicant for the contravention or noncompliance of the requirements of the ESI Act and Rules. ' Aggrieved by the same the appellant Corporation preferred an appeal in M.F.A. No. 800 of 1990. A Division Bench of the Kerala High Court by its order dated 18th December, 1990 posed the question for determination as to whether the appellant could proceed against respondent for realisation of contribution under the ESI scheme, after the closure of establishment. The High Court upheld the finding of Insurance Court that the respondent had failed to comply with the provisions of the Act at the appropriate time. However, it proceeded to hold that the respondent establishment was closed on 31.3.88. P3 notice calling upon the respondent to pay the contribution was only on 23.6.88. Since the scheme was made after the closure of the establishment, the appellant was not justified in proceeding against the respondent. In this view, it dismissed the appeal. It is under these circumstances, the ESI Corporation has come up by way of special leave to appeal. Mr; M.L. Verma, learned senior counsel for the appellant urges the 224 following: 1. The closure of the respondent establishment was on 31.3.88 but the liability with reference to contribution arose earlier. The demand is for the period 11.7.85 to 31.3.88. So long as the establishment is covered by the provisions of the Act it is not open to the respondent to circumvent its liability by contending that before actual recovery proceedings it had closed down. If the finding of the High Court is accepted it would be the easiest way to evade the provisions of the Act. In R.M. Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, This Court has held that it is a beneficial piece of social security legislation in the interest of labour. Further, the provisions of the Act will have to be construed with that end in view in order to promote the scheme and avoid the mischief. Under section 26 of the Act all contributions are paid into a common fund. Such a fund will have to be administered for the purposes of the Act as indicated under section 28. Therefore, the employer cannot contend that he did not collect the employees ' contribution and hence, he cannot be called upon to pay. Thus the impugned judgment is wrong and is liable to be set aside. Per contra, Mr. P. Surbramanian Poti, learned senior counsel for the respondent would argue that the contention of the respondent throughout was that at no time it engaged 20 or more employees. Therefore, it was under the belief that the Act would not be applicable. In that belief the employer did not recover from the employees any contribution. Nor was the employer called upon during that relevant time to comply with the provisions of the Act. It was entirely due to the fault of the Officers of the appellant, the respondent did not make the contribution. In any event, the establishment had been closed down on 31.3.88. It will be unjust to enforce the provisions of the Act and to seek to recover contribution after the closure, more so, when the employees have settled their claims and have gone away. Certainly, such a situation is not con templated under the Act. From this point of view the judgment of the High Court is right and does not call for any interference. In order to appreciate the rival contentions, it would be useful to set 225 out the necessary legal background. The is an act for certain benefits to employees in cases of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto. Section 1(4) makes it applicable to all factories, in the first instance ' Under sub section (5) of the said section, the Government may, by a Notification, extend the provisions of the Act to any other establishment or class of establishment; industrial, commercial, agricultural or otherwise. Admittedly, in this case, the hotel industry like that of the respondent has been notified under the Act. Under section 26, a fund called Employees ' State Insurance Fund is created by all the contributions paid under this Act, the purposes, for which it may be expended, are cataloged under section 28. Section 38 requires all employees in factories or establishments shall be insured. Section 39 talks of contribution. In respect of an employee it shall comprise of contribution payable by the employer (employer 's con tribution) and contribution payable by the employee. It is this contribution which has to be paid to the Corporation. Section 40 imposes the liability to pay contributions, in the first instance, on the principal employer. After such contribution the employee 's contribution could be deducted from his wages. Sub section (4) of section 40 is important. That says as follows: "(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted." (Emphasis supplied) Therefore, this sub section puts the matter beyond doubt that there is an entrustment. In other words, the employer is a trustee. Under section 44 there is an obligation on the employer to furnish returns and maintain registers. The benefits available to the insured persons are stated in section 46: 1. Sickness 2. Maternity 3. Disablement 226 4. Injury 5. Medical treatment for and attendance on insured persons. Lastly, there is power to prosecute under section 85 which includes punishment for failure to pay contributions as well as for contravention of or non compliance with any of the requirements of the Act. In the above legal background we may analyse the factual situation. Two facts stare at us. The liability to contribution of the respondent employer relates to a period between 11.7.85 to 31.3.88. 2. The respondent establishment was closed on 31.3.88. The contention of the respondent that at no time there were 20 or more employees in his establishment has to be rejected because at no point of time the respondent sought an adjudication on this aspect. On the contrary, the inspections made by the officials of the appellant on 8.12.86, September 87 and October 87 state to the contrary. Therefore, we have to proceed on the basis that the provisions of the Act are applicable to the respondent establishment, since (i) it is a notified industry, (ii) in the establishment more than 20 employees were working at the relevant time. From the above provisions it is clear that from the date of his commencement of business, namely, 11.7.85, there was a liability to contribute. It has already been seen under section 40 the primary liability is his, to pay, not only the employer 's contribution but also the employee 's contribution. Therefore, he cannot be heard to contend that since he had not deducted the employee 's contribution on the wages of the employees, he could not be made liable for the same. The object of making a deeming entrustment sub section (4) of section 40 will be altogether rendered nugatory if such a contention were to be accepted. After all, when he makes employee 's contribution he is entitled to deduct from the wages. Therefore, by force of the application of the statutory provisions, the liability to contribute, during this relevant period, namely, 11.7.85 to 31.3.88, arose. There is no gain saying in that. Hence, we reject the arguments of Mr. Subramanian Poti, learned senior counsel for the respondent. From the above statutory provisions, it would be clear that from out 227 of the common fund maintained under section 26, the employees derive various benefits like sickness, maternity, disablement, injury, medical treatment for and attendance on insured persons. Therefore, it is a beneficial piece of social security legislation. As a matter of fact, this Court had occasion to consider the same in B.M. Lakshmanamurthy 's case (supra). At page 370, paragraph 16 it was held : "The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments. Provisions of the Act will have to be construed with that end in view to promote the scheme and avoid the mischief." Mr. M.L. Verma, learned senior counsel for the appellant is right in his submissions in this regard. The Insurance Court as well as the High Court have correctly upheld the demand for contribution. But it is rather strange to conclude that the demand could not be enforced against a closed business. If this finding were to be accepted it would not promote the scheme and avoid the mischief. On the contrary, it would perpetrate the mischief. Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery. That certainly is not the indentment of the Act. To hold, as the High Court has done, would set at naught all these beneficial provisions. It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute. It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure. The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put. We cannot also accept the finding of the High Court that because Ext. P3 notice was issued on 23.6.88 after the closure of the respondent establishment on 31.3.88, the appellant was not justified in proceeding against the respondent. The proceeding for the recovery is of the dues of contribution which arose prior to the closure on 31.3 88. Therefore, it matters little when notice was issued, calling upon to pay the contribution. 228 In our considered view, such a notice is only a reminder to the employer to discharge his statutory obligation. For all these reasons, we have little hesitation in setting aside the impugned judgment of the High Court which in turn upholds the order of Employees ' State Insurance Court. The appellant will be entitled to proceed with the recovery proceedings in accordance with law. Accordingly, the appeal will stand allowed with costs. G.N. Appeal allowed.
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The Respondent Hotel which was also running a Bar for sometime, closed down its business after several years.
Th Inspectors of the appellant Corporation verified the records of the establishment and reported that at certain point of time the employment strength of the establishment including the bar was more than 19.
Therefore, the establishment was treated as covered provisionally under the Employees State Insurance (ESI) Act, 1948.
Since the final date of coverage could be decided only after verifying all the records, the Respondent was asked to produce them.
The Respondent did not avail the opportunity afforded to it Though the Respondent sent Its explanation, It was not acceptable to the appellant Corporation and so it passed a detailed order under S.45 A calling upon the Respondent to pay the contribution with interest at 6% failing which It would be recovered as arrears of land revenue.
Since this order and the reminder thereto, did not evoke any response from the Respondent, the appellant sent a claim in Form 19 to the District Collector requesting him to recover the said amount The Respondent challenged the proceedings by filling an application under S.75 of the Act before the ESI Court, which upheld the assessment made by the appellant Corporation, but stated that recovery steps were not justified after the closure of the establishment, and only prosecution as contemplated section 85 of the Act was attracted.
The appellant Corporation preferred an appeal against the said decision of ESI Court The High Court dismissed the appeal and held that since the scheme was made after the closure of the establishment, the 219 220 appellant was not justified in proceeding against the Respondent Being aggrieved by the judgment of the High Court, the appellant Corporation preferred the present appeal contending that so long as the establishment was covered by the provisions of the Act, the Respondent could not circumvent its liability by claiming that before actual recovery proceedings, it had closed down the establishment.
Allowing the appeal, this Court, HELD: 1.1.
Admittedly the hotel industry like that of the respondent has been notified by the Government thus extending the provisions of the to hotel industry.
Therefore, on the date of commencement of its business, namely, 11.7.85, there was a liability on the Respondent to contribute to the ESI fund.
Under section 40 the primary liability is on the employer to pay, not only his contribution but also the employees contribution.
As such the employer can not plead that since he had not deducted the employees ' contribution from their wages, he could not be made liable for the same.
After all when he makes employees ' contribution he is entitled to deduct from the wages.
Thus by force of the application of the statutory provisions, the liability to contribute during the relevant period, namely, 11.7.85 to 31.3.88, arose.
[226E G] 1.2.
The Insurance Court as well as the High Court have correctly upheld the demand for contribution.
But it is rather strange to conclude that the demand could not be enforced against a closed business.
If this finding were to be accepted it would not promote the scheme and avoid the mischief.
On the contrary, it would perpetrate the mischief.
Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery.
That certainly is not the indentment of the Act.
It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute.
It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure.
The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put.
[227D F] R.M.
Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, , relied on.
221 2.
The proceeding for the recovery is in respect of the dues of contribution which arose prior to the closure on 31.3.88.
Therefore, it matters little when notice was issued calling upon the establishment to pay the contribution.
Such a notice is only a reminder to the employer to discharge his statutory obligation.
The appellant corporation is thus entitled to proceed with the recovery proceedings in accordance with law.
[227H, 228A]
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A hotel that also had a bar closed after running the business for a while.
Inspectors from the Employees State Insurance (ESI) Corporation looked at the hotel's records. They found that at one point, the hotel and bar together had more than 19 employees.
Because of this, the hotel was considered to be covered under the ESI Act of 1948. This law helps protect workers.
The exact date when the hotel was covered by the ESI Act couldn't be decided until all the records were checked. So, the hotel was asked to show them.
The hotel didn't do this. It sent an explanation, but the ESI Corporation didn't accept it. The ESI Corporation then made an order under Section 45A of the ESI Act. This order said the hotel had to pay money to the ESI fund, plus 6% interest. If the hotel didn't pay, the money would be taken like unpaid property taxes.
The hotel didn't respond to this order or reminders. So, the ESI Corporation asked the District Collector to get the money.
The hotel then challenged the order by filing a request under Section 75 of the ESI Act in the ESI Court. The ESI Court agreed with the ESI Corporation's calculation of how much the hotel owed. But the court said that the ESI Corporation couldn't try to collect the money after the hotel closed. The court said the ESI Corporation could only start a legal case against the hotel under Section 85 of the ESI Act.
The ESI Corporation disagreed with the ESI Court's decision and appealed. The High Court turned down the appeal. It said that because the ESI plan was made after the hotel closed, the ESI Corporation couldn't take action against the hotel.
The ESI Corporation disagreed with the High Court's decision and appealed again. They argued that as long as the hotel was covered by the ESI Act, it couldn't avoid paying just by closing down before the money was collected.
The court agreed with the ESI Corporation and made the following points:
1.1.
The government has said that the ESI Act applies to hotels like this one.
So, when the hotel opened on July 11, 1985, it had to pay into the ESI fund.
Under Section 40 of the ESI Act, the employer (the hotel) is responsible for paying both its share and the employees' share.
The hotel can't argue that it didn't take the employees' share out of their paychecks, so it shouldn't have to pay it now.
The employer can take the employees' share out of their paychecks.
So, because of the law, the hotel had to pay into the ESI fund from July 11, 1985, to March 31, 1988.
1.2.
Both the ESI Court and the High Court were right to say that the hotel had to pay into the ESI fund.
But it doesn't make sense to say that the money can't be collected from a business that has closed.
If that were true, it would hurt the purpose of the ESI plan.
Businesses could easily avoid paying what they owe by closing down before the money is collected.
That's not what the ESI Act is meant to do.
It's also wrong to say that the hotel doesn't have to pay because the employees are gone.
The hotel had to pay from the day it opened until the day it closed.
The ESI Act creates a fund for all employees, and that purpose would be ruined if the hotel didn't have to pay.
2.
The money being collected is for payments that were due before the hotel closed on March 31, 1988.
So, it doesn't matter when the notice was sent to the hotel asking it to pay.
The notice was just a reminder to the hotel to pay what it owed.
The ESI Corporation has the right to collect the money according to the law.
| 1,695
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: Criminal Appeal 227 of 1977. Appeal by Special Leave from the Judgment and order dated 17 2 1977 of the Gujarat High Court in Special Criminal Application No. 1 of 1977. M.F. Thakkar and section section Khanduja for the Appellant. B.V. Patel, section P. Nayar and M. N. Shroff for the Respondent. The Judgment of the Court was delivered by TULZAPURKAR, J. This appeal by special leave is directed against the judgment and order of the; Gujarat High Court dated February 17, 1977 in Special Criminal Application No. 1 of 1977 filed under Articles 140 226 and 227 of the Constitution whereby the High Court reversed the order of the learned Sessions Judge, Broach in Criminal Appeal No. 39 of 1975 and sent the matter back to the learned Sessions Judge for passing an appropriate order in regard to the question as to whether the entire seized stock of exercise books of the appellant or part thereof should be confiscated under section 6A of the . The question raised in the appeal is whether exercise books are covered by the item "paper" occurring in section 2(a) (vii) of that Act as also in Entry 13 of Schedule I to the Gujarat Essential Articles Dealers ' (Regulation) order, 1971 ? The question arises in these circumstances: The appellant Maharaja Book Depot is a partnership firm dealing in books and stationery articles at Rajpipla, District Broach. Its shop was inspected and searched by the Mamlatdar of Rajpipla on July 4, 1975 when certain alleged irregularities came to light. During the search 78 gross exercise books of controlled variety and 97 gross exercise books of non controled variety were seized on the ground that the appellant had committed breaches of Clauses 3, 9 and 11 of the Gujarat Essential Articles Dealers ' (Regulation) order 1971 (hereinafter referred to as "the Regulation order"), in that the appellant (a) did not display at any conspicuous part of the premises the opening stock of the exercise books, (b) did not write the names of the customers on the bills issued to them for the sale of the exercise books and (c) did not keep a register showing the stock of controlled and non controlled exercise books. A notice under section 6B of the (hereinafter referred to as 'the Act ') was served by the Collector, Broach, calling upon the appellant to show cause why the seized stock of exercise books should not be confiscated and after taking into consideration the explanation offered by the appellant the Collector by his order dated September 17, 1975 held that the appellant firm was guilty of the breaches of Clauses 3, 9 and 11 of the, Regulation order and directed that the entire seized stock be confiscated to the State Government under section 6A of the Act. The appellant preferred an appeal to the Sessions Court at Broach being Criminal Appeal No. 39 of 1975 and the learned Sessions Judge by his judgment and order dated October 16, 1976 allowed the appeal and set aside the order of confiscation on the ground that the Act and the Regulation order did not apply to the exercise books inasmuch as an exercise book which is a distinct commodity did not fall within the item "paper" enlisted as an essential commodity in section 2(a) (vii) of the Act and in Entry 13 of Schedule I to the Regulation order. This order was challenged by the State of Gujarat in Special Criminal Application No. 1 of 1977 under article 227 of the Constitution. The High Court by its judgment and order dated February 17, 1977 took the view that the 141 item "paper" as enlisted both in section 2(i) (vii) of the Act and Entry 13 A in Schedule I to the Regulation order was wide enough to cover an exercise book which was nothing but collection of papers stitched together by a piece of string or pinned with pins of stappler and quashed the order of the learned Sessions Judge but instead of straightaway confirming the Collector 's confiscation order it remanded the appeal back to the Sessions Judge for passing an appropriate order after deciding the question as to whether the entire seized stock or a part thereof should be confiscated under section 6A of the Act. The appellant has challenged the legality and or validity of the view taken by the High Court in this appeal. In order to appreciate properly the submissions of counsel for the appellant on the construction of the expression "paper" occurring in the concerned legislations it will be necessary to set out the purpose and the relevant provisions thereof. The Act was put on the Statute Book, as its preamble will show, with a view to provide, in the interests of the general public, for the, control of production, supply and distribution of, and trade and commerce in certain commodities defined and enlisted as "essential commodities" in section 2, which enlistment has been enlarged from time to time by Central Government Notifications. In other words, the obvious purpose of the enactment is to control the production, supply and distribution of certain commodities which are essential for the society at large with a view to ensure that the common man gets them at fair prices without let or hindrance on the part of the trade. Section 3 confers powers on the Central Government to regulate or prohibit the production,, supply and distribution of essential commodities and trade and commerce therein by issuance of orders in that behalf for maintaining or increasing supplies of such commodities or for securing their equitable distribution and availability at fair prices etc. while under section 5 the Central Government can delegate its powers in that behalf to an officer or authority subordinate to it or to any State Government. It appears that on December 8, 1971 in exercise of the powers conferred by sub section (1) read with cls. (d), (e), (i) and (j) of sub section (2) of section 3 of the Act read with the order of the Government of India, Ministry of Commerce No. so 1844 dated June 18, 1966, and the order of that Government in the Ministry of Food, Agriculture, Community Development and Co operation (Department of Food) No. G.S.R. 1111 dated July 24, 1971, the State of Gujarat passed its order called "The Gujarat Essential Articles Dealers (Regulation) order, 1971", for the purpose of maintaining supplies of essential articles and for securing their equitable distribution and availability at fair prices. Now, the Act as also the Regulation Order contain an enlistment of items which are regarded as 'essential commodities ' or '. essential articles '; section 2(a) of the 142 Act defines 'essential commodity ' as meaning any of the classes of commodities enlisted in its various sub clauses and sub cl. (vii) refers to the item "paper" while cl. (v) of the Regulation order defines 'essential article ' as meaning any of the articles specified in Schedule I and item 13 in that Schedule relates to "paper" but at both the places the item has been described in identical manner, viz: "Paper, including newsprint, paper board and strawboard". It seems that the enlistment of the item "paper" in the above manner in section 2(a) (vii) of the Act has not been amended, altered or changed but its enlistment in the Regulation order has undergone a change, for by a Notification dated July 10, 1975, the Schedule I of the Regulation order was recast and more items were added. Schedule I so amended by the said Notification now includes the item "paper" at sl. No. 14 which runs thus: "14. Paper" including news print, paper board, straw board and exercise note books. " In other words, by the Notification dated July 10, 1975 exercise note books have come to be specifically added to the item "paper". The main question is whether exercise books are covered by the item "paper" as described in section 2 (a) (vii) of the Act and in Item 13 in Schedule I to the Regulation order as it stood before its amendment by the Notification dated July 10, 1975. Counsel for the appellant raised two or three contentions before us in support of this appeal. He emphasized the fact that on July 4. 1975 when the stock of exercise books was seized from the appellant 's shop by the Mamlatdar both in section 2(a) (vii) of the Act as well as under Entry 13 in Schedule I to the Regulation order the item "paper" as an essential commodity was described in a particular manner without the addition of "exercise note books" which was made in the Regulation order after the seizure had been effected. On construction of the item "paper" he first contended that the expression "paper" ordinarily means a sheet or sheets of paper and an exercise book being a distinct commodity was excluded from that item. Secondly, he urged that this would be. so because even while providing for an inclusive description of the item the legislation has included only news prints, paper boards and straw boards within it but not exercise books and, therefore, the expression "paper" should be construed as excluding exercise books. Thirdly, he urged that so far as the Gujarat Regulation order is concerned the very fact that by Notification dated July 10, 1975 Item 14 in Schedule I was enlarged so as to include specifically exercise note books within the expression "paper" clearly shows that 143 the legislative intent was to exclude exercise books from the expression "paper" under Item 13 in Schedule I as it stood prior to that date. Lastly, he urged that since the provisions of the Act as well as the Regulation order were penal in character, the item "paper" should be construed narrowly in favour of the person proceeded against and as such the view taken by the learned Sessions Judge should be upheld. In support of these submissions counsel relied upon a decision of this Court in State of Bihar vs Bhagirath Sharma and Another,(1) where this Court, having regard to the legislative history and penal character of the concerned order took the view that the item like "component parts and accessories of automobile", though of wide import did not cover tyres and tubes of motor cars and motor cycles. According to him, therefore, the learned Sessions Judge was right in his view that the expression "paper" did not cover exercise book and that the seized exercise books were not liable to be confiscated under section 6A of the Act. The question thus centres round the proper construction of the item "paper" as described in section 2(a) (vii) of the Act and item No. 13 of Schedule I to the Regulation order. On this question the object or purpose of the Act and the Regulation order as well as the manner in which 'essential commodity ' or 'essential article has been defined therein will have considerable bearing. As stated earlier, the object or purpose of both the pieces of legislation is to control the production, supply and distribution of essential commodities or essential articles with view to ensure that the common man gets them at fair prices without any let or hindrance on the part of the trade and it is with this object that the item "paper" has been enlisted as an essential commodity or essential article in the Act and take Regulation order. Further though section 2(a) of the Act and Cl. 2(v) of the Regulation order purport to define 'essential commodity ' or 'essential article ' that expression has no meaning of its own and in substance both under section 2 (a) (vii) of the Act and Cl. 2 (v) of the Regulation order an enumeration or enlistment has been made of several items as constituting essential commodities or essential articles for the purposes of the Act and the Regulation Order and it will appear clear that items have been enumerated or enlisted under broad general heads and some of the items are stated to include certain things which may not in ordinary parlance fall within the broad general head. The item 'paper" will have to be considered in the light of this position which emerges clearly on a consideration of several items enlisted as essential commodities or essential articles. The item "paper" is described thus: "Paper including news print, paper board and straw board". (1) ; 144 According to the Concise Oxford Dictionary paper means "A substance used for writing, printing, drawing, etc. made of interlaced fibres of rags, straw, wood, etc. " In Webster 's New World Dictionary (1962 Edn.) the meaning of the word "paper" is given as follows: "Paper thin flexible material in sheets or leaves, made from rags, wood pulp., or other fibrous decorate etc." In Black 's Law Dictionary (Revised Fourth Edition 1968) the expression "paper" is explained thus: "Paper a manufactured substance composed of fibres (whether vegetable or animal) adhering together in forms consisting of sheets of various sizes and of different thicknesses, used for writing or printing or other purposes to which flexible sheets are applicable." In substance, therefore, paper, whether lined or blank, means a material on which writing, printing, drawing etc. can be done. In light of this meaning of the expression "paper" the question is whether an exercise book would be covered by that expression or not ? It cannot be disputed that an exercise book is nothing but a collection of sheets of paper (blank or lined) stitched together by a piece of string or pinned together with pins of a stappler and is a substance used for writing and, therefore, would clearly fall within the item "paper". The test would be whether because of stitching or pinning them together such a collection of sheets looses its identity as paper ? The answer must be in the negative. Looked at from this angle it is difficult to accept the contention that an exercise book is a distinct commodity other than paper. It is true that an inclusive description has been given of the item "paper" in section 2(a) (vii) of the Act and Item 13 in Schedule I to the Regulation order, but if the inclusive part is carefully scrutinised it will appear clear that the things mentioned in the inclusive part may not ordinarily be regarded as paper and, therefore, by the inclusive part an extended meaning or description is given to the expression "paper". Since an exercise book (which is nothing but a collection of sheets of paper intended to be used for writing) squarely falls within the dictionary meaning of the word "paper" there was no necessity to mention it in the inclusive part of the description. On a true and proper construction, therefore, we are clearly of the view that within its normal dictionary meaning the item "paper" as described in section 2(a) (vii) of the Act and Item 13 in Schedule I to the Regulation order covers an exercise book. 145 Moreover, such a construction would be in consonance with and carry out effectively the object or purpose of the Act and the Regulation order. Counsel for the appellant undoubtedly relied upon the fact that so far as the Gujarat Regulation order is concerned it was by notification dated July 10, 1975 that the description of item "paper" (being item No. 14 in the recast Schedule I) was enlarged so as to include specifically 'exercise notebooks ' and, according to counsel, this clearly shows that initially the legislative intent was to exclude exercise book from the expression "paper" under Item 13 in Schedule I to the said order as it originally stood. It is not possible to infer such legislative intent from the mere fact that the item "paper" has been amended and enlarged so as to include within it exercise books by means of the subsequent Notification. In fact, as discussed earlier, since an exercise book squarely falls within the dictionary meaning of the expression "paper" we have held that it was unnecessary to mention it in the inclusive part of the description as it originally stood and in that inclusive part such things had been mentioned as could not in ordinary parlance be regarded as "paper". In our view the amendment and enlargement of the item "paper" so as to include specifically exercise books was made ex majore cautela to make things abundantly clear and, therefore, no inference as regards the initial legislative intent of the type suggested can be drawn. Counsel also contended that since the Act as well as the Regulation order contain penal provisions, the item "paper" should he construed strictly and narrowly in favour of the appellant firm which was being proceeded against under the said pieces of legislation. The true rule of construction in that behalf has been set out in Maxwell on Interpretation of Statutes (12th Edn.) at page 246 where the following passage occurs: "The effect of the rule of strict construction might be sum med up by saying that, where an equivocal word or ambiguous sentence leaves a reasonable doubt of its meaning which the canons of interpretation fail to solve, the benefit of the doubt should be given to the subject and against the legislature which has failed to explain itself. If there is no ambiguity, and the act or omission in question falls clearly within the mischief of the statute, the construction of a penal statute differs little, if at all, from that of any other. " It would thus appear clear that it is only when there is some equivocation or ambiguity about a word or provision that the rule of strict construction or narrow construction in favour of the subject is to be applied 146 but if there is no ambiguity and the act or omission falls clearly within the mischief of statute then the construction of a penal statute will not differ from that of any other. Applying this principle to the facts of the present case it is clear that there is no ambiguity or equivocation of the item "paper ' occurring in section 2(a) (vii) of the Act and Item 13 of Schedule I of the Regulation order and since an exercise book squarely falls within the dictionary meaning of "paper" as used in the said provisions, there will be no question of construing that item narrowly so as to exclude exercise book therefrom and in favour of the appellant firm. That takes us to the decision of this Court in State of Bihar vs Bhagirath Sharma and Anr. (supra) on which the appellant firm strongly relied. In that case the question was whether Motor Tyres and Motor Tubes were covered by the item "Component parts and accessories of automobiles" occuring in Item No. 1 in Schedule I to the Bihar Essential Commodities Act other than Foodgrains Prices and Stocks (Display and Control) order 1947 and this Court undoubtedly took the view that though the said item I was widely worded it did not include Motor Tyres or Motor Tubes and that no interference was called for in the order passed by the High Court acquitting the respondents of the charge that they had failed to display the price list and the stock position of the Motor Tyres anywhere in their shop in contravention of Cl. (4) of the said order. In our view, the decision is clearly distinguishable on the ground that the drafting precedents furnished by several Notifications that obtained there warranted such a conclusion. From the inception along with Item 1 (component parts and accessories of automobiles) there was in the concerned Prices and Stocks (Display and Control) order, 1947 another item being Item 5 which ran thus: "Cycle tyres and tubes (including cycle rickshaw tyres and tubes)" which suggested that where "Tyres and Tubes" were intended to be included as the Item in the Schedule these had actually been expressly so stated as distinct from the "component parts and accessories or automobiles"; further, by a Gazette Notification (No. GSR 82) dated September 18, 1970 published in the Bihar Government Gazette (Extra ordinary) four items were added, one of them being Item No. 11, Which ran thus: "Tyres and tubes of cars, buses, jeeps, vans, trucks automobiles of any category whatsoever, tractors and tractor trollies. ", even the Central Government had issued three Notifications a Notification dated 11 January, 1968 (No. S.O. 218) issued by the Ministry of Commerce, in which "Tyres and Tubes of Scooters" were expressly mentioned as essential commodities distinct from the component parts and accessories of automobiles; a Notification dated 22 August, 1968 (No. s o. 2878) in which "Tyres and Tubes of Cars etc." were. 147 specifically mentioned as essential commodity and a Notification dated A 3rd January, 1969 (No. S.O. 25) in which "Tyres and Tubes of Cars " were mentioned in the manner almost similar to the one found in the Bihar Government Gazette Notification No. GSR 82 dated 18 September, 1970. It was in the back ground of these drafting precedents furnished by such Notifications that this Court took the view that the draftsman did not intend the scheduled item No. 1 in the Order as in force in May, 1969 to cover "Tyres and Tubes of Motor cars". In the instant case before us there are no such drafting precedents of the type which obtained in the aforementioned case. As stated earlier, the Item "paper" in s.2 (a) (vii) in the Act has all along remained the same without any modification, alteration or enlargement and it is only the item No. 13 in the Schedule to the Regulation order (a subordinate piece of legislation) that has undergone a change and the item has been amended so as to include specifically "exercise notebooks". We have no doubt in our minds that the said amendment to the item "paper" is declaratory or clarificatory in nature. In the circumstances, in our view, the High Court was right in coming to the conclusion that the exercise books of the appellant firm that were seized were liable to confiscation and the remand order made by the High Court was proper. The appeal is accordingly dismissed. N.V.K. Appeal dismissed.
|
The term "paper" is described as "paper", including newsprint, paper board and strawboard" in section 2(a) (vii) of the as well as in Item 13 in Schedule I to the Gujarat Essential Articles Dealers (Regulation) order 1971.
By a notification dated July 10, 1975, the Schedule 1 of the Regulation order was recast and more items were added.
Item No. 13 of the Regulation order after it was recast by the amendment of 1975 and renumbered as section No. 14 read as follows: "14.
Paper including newsprint, paper, strawboard and exercise note books.
" The appellant is a firm dealing in books and stationery articles.
On a surprise inspection and search of the appellant 's shop it was found that in regard to exercise books the appellant committed breach of the Regulation order, in that he did not display the stock; thereof that he did not write the names of customers on the bills issued to them and that he did not maintain the stock registers properly and thereof a sizable quantity of exercise books were seized.
The Collector found that the appellant was guilty of breach of the Regulation order and directed that the seized stocks of exercise books be confiscated under section 6A of the Act.
In appeal the Sessions Judge set aside the Collector 's order on the ground that exercise books did not fall within the item "paper" as envisaged in the Act and the Regulation order.
In proceedings under article 227, the High Court book the view that the term "paper" was wide enough to cover exercise books, which was nothing but a collection of papers, stitched together by a piece of string or pinned with pins of stappler, and quashed the order of the Sessions Judge.
Dismissing the appeal to this Court: ^ HELD: (1) On a true and proper construction, within its normal dictionary meaning the item "paper" as described in section 2(a)(vii) of the Act and Item 13 in Schedule I to the Regulation order covers an exercise book Such a construction would be in consonance with and carry out effectively the object or purpose of the Act and the Regulation order.
[144H 145A] 139 Black 's Law Dictionary (Revised Fourth Edn. 1968).
Webster 's New World Dictionary (1962 Edn.); Concise oxford Dictionary, referred to.
(2) 'Though section 2(a) of the Act and cl.
2(v) of the Regulation order purport to define 'essential article ' that expression has no meaning of its own and what follows is an enumeration of articles regarded as essential for the purposes of the Act and the order.
[143 F] (3) An inclusive description has been given to the item "paper" in the Act and the Regulation order, but the inclusive part refers to things that may not ordinarily be regarded as paper and, therefore, an extended meaning or description is given to the expression "paper".
Since an exercise book (which is nothing but a collection of sheets of paper intended to be used for writing), squarely t`falls within the dictionary meaning of the word "paper" there was no necessity to mention it in the inclusive part of the description.
[144 F H] (4) The amendment and enlargement of the item ' 'paper ' ' so as to include specifically exercise books was made ex majore cautela to make things abundantly clear and, therefore, no inference as regards the initial legislative intent that it was to exclude exercise books from the expression "paper" under item 13 in Schedule I to the said order as it originally stood can be drawn.
[145 D] (5) It is only when there is some equivocation or ambiguity about a word or provision in a penal statue that the rule of strict or narrow construction in favour of the subject is to be applied but if there is no ambiguity and the act or omission falls clearly within the mischief of the statute then the construction of a penal statute will not differ from that of any other.
[145 H 146A] Maxwell on interpretation of Statutes (12th Edn.) p. 246 referred to.
(6) In the instant case there is no ambiguity or equivocation of the item 'paper" and an exercise book squarely falls within the dictionary meaning of "paper".
[146 B] State of Bihar vs Bhagirath Sharma & Anr., ; distinguished.
|
The word "paper" includes things like newsprint, paper board, and strawboard. This is stated in section 2(a)(vii) of the Act, as well as in Item 13 in Schedule I of the Gujarat Essential Articles Dealers (Regulation) order of 1971.
On July 10, 1975, the rules were changed, and more items were added to Schedule 1 of the Regulation order.
After the 1975 change, Item No. 13 of the Regulation order was renamed section No. 14. It now reads: "14. Paper including newsprint, paper, strawboard, and exercise notebooks."
The appellant (the one appealing the case) is a company that sells books and stationery.
When the appellant's shop was inspected, it was found that they broke the rules about exercise books. They didn't display their stock, they didn't write customer names on receipts, and they didn't keep proper stock records. Because of this, a lot of exercise books were taken as evidence.
The Collector (a government official) decided the appellant broke the rules and ordered the seized exercise books to be taken away permanently under section 6A of the Act.
The Sessions Judge (a judge in a higher court) disagreed. They said exercise books are not "paper" as described in the Act and the Regulation order.
In a hearing under article 227, the High Court (a higher court) said that "paper" is a broad term that includes exercise books. An exercise book is just papers held together by string, pins, or staples. They canceled the Sessions Judge's decision.
The appeal to this Court was rejected. The Court's decision was:
(1) When we look at the normal dictionary meaning, "paper" as described in section 2(a)(vii) of the Act and Item 13 in Schedule I of the Regulation order includes an exercise book. This interpretation makes sense and helps achieve the purpose of the Act and the Regulation order.
(2) Section 2(a) of the Act and cl. 2(v) of the Regulation order try to define "essential article." But this phrase doesn't have a specific meaning on its own. It's just a list of items considered essential for the Act and the order.
(3) The description of "paper" in the Act and the Regulation order includes things that might not normally be considered paper. This gives the word "paper" a broader meaning. Because an exercise book (sheets of paper for writing) fits the dictionary meaning of "paper," it didn't need to be specifically mentioned.
(4) The change to include exercise books specifically was done to be extra careful and make things very clear. It doesn't mean that the original intention was to exclude exercise books from the meaning of "paper" in item 13 of Schedule I.
(5) A strict interpretation (favoring the defendant) is only used when a word or rule in a criminal law is unclear. If there is no confusion and the action clearly violates the law, then the criminal law is interpreted like any other law.
(6) In this case, there is no confusion about the meaning of "paper." An exercise book clearly fits the dictionary definition of "paper."
| 5,341
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Civil Appeal No. 1985 of 1975. Appeal by Special Leave from the Judgment and order dated the 28th November 1975 of the Andhra Pradesh High Court in Writ Appeal No. 1038 of 1973. M. N. Phadke and B. Kantarao, for the Appellant. V. section Desai K. R. Chaudhury, section L. Setia and Mrs. V. Khanna, for Respondent No. 1. The Judgment of the Court was delivered by KRISHNA IYER, J. Counsel for the appellant a jolted transport operator has assertively argued for an untenable position, heedless of the true nature of 'transport permit ' jurisprudence. The sole issue on which limited leave has been granted to him by this Court under article 136 lends itself to straight forward resolution, once we grasp the . public character of the litigation and public purpose of the jurisdiction where per nits regulating the plying of stage carriages are awarded or refused. The conscience of this branch of public law is justice to the public, although, in the process of adjudication, private claims to carry on transport business through permits are comparatively evaluated. Public interest is the paramount consideration, while private rights, fundamental though, apparently constitute the quasi lis for decision. The touchstone of better merit is solely the ability to serve the public, and the hierarchy of transport tribunals, bearing true faith and allegiance to section 47 of the Motor Vehicles Act, 1948 (for short, the Act) have the duty and, therefore, the power to consider as factors pertinent to the larger scheme of efficient public transport. To equate and thereby hamstring this jurisdiction and processual law with what governs a civil proceeding under the Civil Procedure Code, is to miss the policing policy of the law and maim the amplitude of the power duty complete. In other words, the duplex scheme of the statute is the holding of a public enquiry to determine who will serve public interest best but ordinarily activated into that enquiry by private applicants for permits. The pro bono publico character of the hearing cannot be scuttled in the name of competitive individual rights and narrow procedural trappings. The minimal facts. The appellant and the 1st respondent, among others, applied for permits to ply a stage carriage on a specified route in the Krishna District, Andhra Pradesh. Although there were two permits for issuance, one was given to R2 and that has become final. We are now concerned only with the other permit which had been granted by the Regional Transport Authority (acronymically, RTA) to the appellant but was switched over to the 1st respondent by the 1034 State Transport Appellate Tribunal (STAT) or taking into consideration a fresh ground and supporting evidence to the effect that the appellant was guilty of a transport tax violation and had compounded that offence under section 60(3) of the Act. The power in this behalf was stated to be based on section 15 of the Andhra Pradesh State Transports Appellate Tribunal Rules, 1971 (hereinafter referred to as the Appellate rules), which reads: "15. Additional Evidence (i) The parties to the appeal 9 or application shall not be entitled to produce additional evidence whether oral or documentary before the Tribunal but, (a) if the authority from whose order the appeal or application is preferred has refused to admit evidence which ought to have been admitted, or (b) if the party seeking to adduce additional evidence satisfies the Tribunal that such evidence, notwithstanding the exercise of due diligence was not within his knowledge or could not be produced by him at or before the time when the order under appeal was passed; or (c) if the Tribunal requires any documents to be produced or any witnesses to be examined to enable it to pass just orders, or (d) for any other sufficient reason, the Tribunal may allow such evidence or documents to be produced or witnesses examined: Provided that where such evidence is received the other party shall be entitled, to produce rebutting evidence, if any. (ii) If the Tribunal is of opinion that any witness should be examined in connection with any case before it, it may instead of examining him before itself, issue a commission to the concerned Regional Transport Authorities or the State Transport Authority as. the case may be, or to an Advocate or such other suitable person as it may deem fit, in the circumstances of the case. " The vires of this rule was challenged before us and we will examine the contention. But, to continue the narrative" when the appellate authority deprived the appellant of his permit he attacked the order without avail, before the High Court at both tiers. Undaunted he has carried the appeal to this Court where the controversy is confined to the validity of section 15, although we have heard arguments on a wider basis to appreciate the point made by counsel. The argument of ultra vires urged before us rests on The scope of sections 57(4) and 64 of the Motor Vehicles Act and the fitment of section 15 into the purpose and text of these provisions. Having heard counsel on both sides, we are disinclined to accede to the submission of Shri Phadke for the appellant. Why ? We will proceed to answer. 1035 Rulings galore, of this Court and the High Courts, have focussed A on section 47 of the Act to emphasize that the quasi judicial bodies entrust ed with the work of issuing stage carriage permits must be conscious of the brooding presence of public interest, in the midst of the sparring contest of private applicants. A casual perusal of that provision brings home this juristic under pinning of the jurisdiction. Against this background, we may notice the meaning of the clauses which broaden the nature of the enquiry and mark it off from a traditional civil litigation. Passengers ' associations, police officers, local authorities and existing operators who may have nothing directly to do with the rivalry for a permit have a place in the scheme and may make representations on a variety of matters. So also, in an appeal, the RTA itself may be heard. Thus, the considerations going into the judicial verdict are dominated by public interest; non parties who have only to present points germane to public interest are allowed to represent their point of view. Why? Because the object of thus regulatory statute is to promote smooth public transport and subject to the weighty factors bearing thereon set down in section 47(1) of the Act and, indeed, with a view to serve the public the better, applicants are chosen in recognition of their fundamental right under article 19 canalised by reasonable restrictions in public interest. To imprison such an enquiry into the familiar mould of a civil proceeding in ordinary courts is to be pathological, if one may say so. A freer, healthier, approach is the prescription. Of course, Shri Phadke is right in that any representation, ground or evidence presented by anyone prejudicing the right of an applicant has to be considered only subject to the canons of natural justice and in the discretion of quasi judicial authority. Justice to the public and the parties can and must be harmonised. Such is the simplistic statement of the law. A few more facts and some more law are necessary. As stated earlier, the appellant got the permit from the RTA although both the contestants before us were equally qualified, having obtained equal marks on the basis of the Andhra Pradesh Motor Vehicles Rules (for short, the MV rules). The appellate result went against the appellant because another applicant who had filed an appeal before the STAT produced, at that stage, a certificate from the concerned authority to prove that the present appellant had used a contract carriage as a stage carriage on a trip to Tirupati and had compounded this offence by payment of a fee of Rs. 2,340/ . This circumstance was regarded by the STAT as a blot on the history sheet of the appellant, although inadvertently omitted from the history sheet prepared officially for the consideration of the RTA. It is admitted on all hands that this semi punishment had not been mentioned in the representations of any party under section 57(3) of the MV Act. Therefore, an objection was raised before the STAT that this ground was new, although the episode which formed its basis existed prior to the disposal of the applications by the RTA. It was further urged that such new grounds could not be heard from an objector who had not included it in his representation made within the time limited by section 57(4) of the Act. However, the STAT over ruled these objections and proceeded on the footing that this was material information 1036 A relevant to section 47(1) and used it, after giving a fair opportunity to the affected appellant to meet it. Consequentially, he upset the award of the permit to the appellant since this factor tilted the scales against the appellant. We cannot, in this Court, and especially on a limited leave, look into the evaluation. These foundational facts are common ground, but the divergence rises on the exercise of the power under s.15 of the Appellate Rules. Shri Phadke contended that a representationist, under section 57(3) & (4), had to abide by the time limit discipline of the provision and could not transgress it by making an additional representation at the appellate stage beyond the time limited by section 57(4). If section 15 permitted such a course, it violated the substantive provision of the Act. Since a stream cannot rise above its source and rules cannot go beyond the sections of the Act, this Court must hold the said rule avoid. Any way, if section 57(3) & (4) had a more spacious connotation than was attributed to it by Shri Phadke, section 15 could have full play and be accommodated within the parent provision in the Act regulating procedure. This was the counter contention of Shri V. section Desai for the contesting respondent. Before proceeding further, it is useful to extract section 57(3) and (4) and test whether the rule making power has exceeded the ambit of section 57 or gone counter to it in framing section 15 (earlier extracted): "57. Procedure in applying for and granting permits. x x x x (3) on receipt of an application for stage carriage permit or a public carrier 's permit, the Regional Trans port Authority shall make the application available for inspection at the office of the authority and shall publish the application or the substance thereof in the prescribed manner together with a notice of the date before which representations in connect`ion therewith may be submitted and the date, not being less than thirty days from such publication, on which and the time and place at which, the application and any representations received, will be considered: Provided that, if the grant of any permit in accordance with the application or with modifications would have the effect of increasing the number of vehicles operating in the region, or in any area or on any route within the region, under the class of permits to which the applications relate, beyond the limit filed in that behalf under sub section (3) of Section 47 or sub section (2) of Section 55, as the case may be, the Regional Transport Authority may summarily refuse the application without following the procedure laid down in this sub section. (4) No representation in connection with an application referred to in sub section (3) shall be considered 1037 by the Regional Transport Authority unless it is made in writing before the appointed date and unless a copy thereof is furnished simultaneously to the applicant by the person making such representation. " We unhesitatingly agree with Shri Phadke that natural justice that J fine facet of judicial ethos must broadly inform exercise of power by administrative tribunals. This obligates such bodies to give an 'a affected party a fair opportunity to meet any evidence obnoxious to his case if it is to be pressed into service against him. In the pre sent instance, it is not disputed, as the High Court has noted, that the canons of natural justice have been conformed to. The surviving issue therefore is as to whether there is any soundness in the submission that section 57(3) & (4) read with section 47 builds barricades against receiving any information by the STAT from any representator beyond the time filed in the above sub sections of section 57. Administrative law a growing branch of Indian jurisprudence has a mission. Where the trellis work of technical procedures and rules of evidence usually applicable to ordinary courts under the Code contains too many taboos regarding pleadings and too many prescriptions regarding trials, administrative bodies, manned by lay and legal men, charged with duties which are wider than decision of individual disputes between specific parties and operating quasi judicially at the public interest level, have to enjoy more liberal powers and less formal and more flexible processes if they are to fulfil the statutory behest efficaciously. To over judicialize is to undermine. In the construction of statutes establishing administrative agencies and r defining their powers, there is little scope for the deep rooted shibboleth that into the statute must be, read, by lawyer 's instinct, the requirements of the trial of a civil suit or the hearing of an appeal by the ordinary courts of the land. This may result in defeating their obvious purpose. We will therefore briefly examine the legislative goal of the statute under construction, the general policy of the legislature in enacting the relevant sections and the definition of the sources from which information or evidence may be sought by the tribunal working within the framework of the Act. Mr Justice Frankfurter has aptly stated that 'the answers to the problem of an art are in its exercise ' and John Chipman had paid that the process of statutory construction is a practical art (See: Extrinsic Aid in the Construction of Statutes by V. section Deshpande Journal of Indian Law Institute Vol. II, April June 1969, p. 123, 126). Thus, the true test of the amplitude and correct interpretation of section 57(3) & (4) is to be found in a study of its area and its exercise, as intended by its makers. The oft quoted saying of Mr. Justice Holmes that 'the meaning of a sentence it to be felt rather than to be proved ' also helps us to feel our way through the public law area sketched by section 57(3) & (4) understood in the background of section 47 and the conspectus of other provisions. We have to shake off from our minds that the type of litigation contemplated by section 57 is the thrust and parry in a civil suit or appeal. With these observations we may take a bird 's eye view of the relevant provisions of the Act to give us a hang of the subject and help us interpret adequately. 1038 Section 42 of the Act insists on a permit being taken by every transport operator. Section 44 lays down how the RTA is to be constituted. It has a mixed composition of lay aud judicially trained me, the reason being that the process of adjudication is not purely legal pugilis but a broader search taking note of public considerations which may not be brought to its notice by contenders for permits. The nature of the enquiry is reflected in the very structure of the body. Section 46 speaks of applications for stage carriage permits. When we reach section 47, we have to take a close up of that provision. Properly understood, section 47 enjoins upon the RTA to have regard to the presiding idea of public interest generally and in its ramifications as set out in section 47(1) (a) to (f). In addition, the RTA shall also receive representations as mentioned therein and take them into the reckoning. It is not as if the sole source of decision making materials consists of the representations made under section 57(3) within the time stipulated in section 57(4). The primary channel, it , looks, is the information that the RTA may gather, bearing on matters touched upon in section 47(1) (a) to (f), supplemented by facts stated in representations referred to in section 57(3). Once we grasp this essential truth, the resolution of the conflict raised in this case is easy. The focus is not on who, as between A and B, has the title to the permit, but on who, as between A and B, should be preferred to better sene the public interest. We may, as a result of the above discussion, set down the following five propositions: 1. Stage carriage permits are granted for providing an F. efficient public transport system. The adjudicatory content has dual elements public interest in the best stage carriage service and private title to better sene the public. The procedure is flexible, free from the rigidly of court trials, and this flexibility flows from the duty of the tribunal charged with the task of picking out him who has the best plus points for playing a good bus service, to discharge it properly. A people conscious power cannot be pared down in a self defeating manner. An activist tribunal (RTA, and, in exceptional case, even the STAT) may even collect useful information bearing on considerations set out in section 47 and, after public exposure of such information at the hearing and reasonable opportunity to meet it, if anyone is adversely affected, put it into the crucible of judgment. The antithesis is not between the right of representation within the time limited by section 57(4) and beyond it but between representations by statutorily authorised entities under sections 47 and 57 and receipt of relevant 1039 evidence or information from any source whatsoever at any stage whatsoever but subject to the wholesome rules of natural justice. These fivefold guidelines squarely accommodate section 15 within the framework of sections 47, 57 and 54 of the Act and there is no spill over breaching the banks of the provisions. The rule merely gives effect to what the sections intend and is not therefore ultra vires. Here the certificate of payment of compounding fees was filed by one of the appellants before the STAT and was received not as a representation under section 57(4) but as some information the STAT regarded had a bearing on matters falling under section 47. It is important to note that section 15 does not entitle parties to the appeal or application to produce additional evidence but clothes the tribunal with discretionary power to allow such evidence. What is received is not qua representation under section 57(4) but qua evidence with public interest flavor. The rule is good and covers familiar ground to enable just orders being passed. A reference to order XLI, rule 27 C.P.C. and section 540 Crl. P.C. proves this point. Justice to the public is the keynote of sections 47, 57 and section 15. We are not lobbying for unconventional procedures of quasi judicial tribunals but interpreting the relevant provisions according to well established canons. We must listen to the signature tune of quasi judicial justice to appreciate the note. We may also highlight the basic principle that subject to statutory regulations, each tribunal has its inherent power to device its own procedure. Novelty, if it improves purposeful efficiency, is not anathema. But caution must be exercised in going against time tried procedures lest processual law prove a charter for chaos. Like wise, it is necessary to mention that while a 'representator ' under section 47, read with section 57, has a right to make representations and be heard, subject to the limitations written into those provisions, those who fall under it or outside it have no right to bring in evidence or urge grounds as and when they please or at all unless the tribunal, in its discretion, chooses to accept such extra information. The first is a right of the 'representator ' the second is the power of the tribunal. F We are strengthened in our general approach and particular construction by a ruling of this Court in New Prakash Transport(l) and two rulings of the High Courts, one of a Full Bench of the Madras High Court (AIR 1965 Madras 79) and the other a Division Bench of the Patna High Court to which one of us (Untwalia, J.) was a party (AIR 1964 Patna 154). In United Motor Works(2), the Patna Case, the Court observed: "It was also pointed out by the Supreme Court in that case that the Motor Vehicles Act and the rules framed thereunder do not contemplate anything like a regular hearing in a Court of Justice and no elaborate procedure has been prescribed as to how the parties interested have to be heard either before the Regional Transport Authority or 1040 before the Appellate Transport Authority. The principle is well established that in the absence of any such prescribed procedure the appellate authority may adopt any procedure which it thinks best for hearing the appeal provide always that the rules of natural justice are observed. The matter has been clearly put by Lord Loreburn in the course of his speech in Board of Education vs Rice as follows: "Comparatively recent statutes have extended, if they have not originated, the practice of imposing upon departments or officers of State the duty of deciding or determining questions of various kinds. In the present instance, as in many others, what comes for determination is sometimes a matter to be settled by discretion, involving no law. It will, I suppose, usually be of an administrative kind; but sometimes it will involve a matter of law as well as a matter of fact, or even depend upon matter of law alone. In such cases the Board of Education will have to ascertain the law and also to ascertain the facts. I need not add that ill doing either they must act in good faith and fairly listen to both sides, for that is a duty lying upon every one who decides anything. But I do not think they are bound to treat such a question as though it were a trial. They have no power to administer an oath, and need not examine witnesses. They can obtain information in any way they think best, always giving a fair opportunity to those who are parties in the controversy for correcting or contradieting any relevant statement prejudicial to their view." Ramaswami C. J., (as he then was) also laid down: "It is. manifest that the power of the appellate authority is co extensive with the power of the Regional ' Transport Authority in this respect, and there is no reason why the appellate authority should not take these matters into consideration in deciding the appeal under section 64 of the Act" It is trite that an appeal is a re hearing and ordinarily appellate power is as wide as original power. The facts of the Patna case (supra) bear a close parallel to our case. Another point with which we are not concerned and also decided in the Patna judgment (one of the two writ petitions heard together) was challenged in the Supreme Court and reversed. That bears upon the interstate routes which does not arise in the instant appeal before us. In Cumbum Roadways(1) Kailsam J. (as he then was), speaking for the Full Bench, stressed the same view. The head note in the Report is sufficiently explicit and we quote: "The representator, who makes the representation other wise than under section 57(4) will not have a right to have his 1041 objection heard and considered, but there is no prohibition against the authority taking the information furnished by the objector and acting on it after giving an opportunity to the affected party, to prove that the information is false or that it should not be acted upon. The jurisdiction of the Regional Transport Authority or the Appellate Tribunal to act upon any information, whether it was brought to its notice by the objector or by the Transport Authority cannot be questioned. But it is within the discretion of the Regional Transport Authority or the Appellate Tribunal to accept the information taking into account the relevant circumstances under which the information was brought before it. If the authority decides to accept, it is bound to ` give a reasonable opportunity to the affected person to show cause as to why the information should not be acted upon. r When the authority is acting on the information, but not as a representation by the objector, the person affected can not object to the authority considering the information on the ground that it was brought to its notice by one of the objectors without including the information in the representation made by the objector. The right of the representer as such is no doubt limited, for, he has no right to insist that any representation made otherwise than under section 57(4) should be considered in the manner prescribed under section 57(5). But that does not in any way debar the authority under section 47(1) of the Act from taking the information into account for deciding to whom the permit should be given in the interests of the public. " The decision of the Assam High Court (AIR 1959 Assam 183) brought to our notice by Shri Phadke does not really consider the issue from the position we have delineated and turns on approach which is not quite correct. Our conclusion therefore is that section 15 is intra vires and, further that the said rule merely makes patent what is otherwise latent in the statutory provisions. The appeal accordingly, fails and is dismissed with costs. P.B.R Appeal dismissed.
|
Tribunal If had power to admit evidence beyond the time limited by 57(4).
Rule 15 of the Andhra Pradesh State Transport Appellate Tribunal Rule 1971, states that parties to the appeal or application shall not be entitled to produce additional evidence, whether oral or documentary, before the Tribunal except in cases stated therein but it empowers the Tribunal to allow evidence or documents to be produced or witnesses to be examined for any other sufficient reason.
The Regional Transport Authority granted a stage carriage permit to the appellant.
Before the State Transport Appellate Tribunal another applicant produced certain information against the appellant which was not mentioned either in his history sheet or in the representations of any party under section 57(3) of the Act.
Rejecting the appellant 's objection that such new grounds could not be heard from an rejector at the stage of appeal, the State Transport Appellate Tribunal cancelled the appellant 's permit and gave it to respondent On appeal it was contended that a representation under section 57(4) could not be made at the appellate stage beyond the time limited by that section and if rule IS permitted it, it violated the substantive provisions of the Act.
Dismissing the appeal, ^ HELD: Rule 15 is intra vires and it merely makes patent what is otherwise latent in the statutory provisions.
Rule 15 does not entitle parries to the appeal or application to produce additional evidence but clothes the Tribunal with dn creationary power to allow such evidence.
What is received is not qua representation under 8.
57(4) but qua evidence with public interest flavor.
[1041F 1039C] United Motor Works, A.l.
R. 1964 Pat.
154 and Cumbum Roadways, A.I.R. 1965 Mad.
79, approved.
(a) Public interest is the paramount consideration in transport business while private rights apparently constitute a quasi lis for decision.
The touchstone of better merit is solely the ability to serve the public and the hierarchy of transport tribunals, bearing true faith and allegiance to section 47 of the Motor Vehicles Act.
1948 have the duty and, therefore, the power to consider all factors pertinent to the larger scheme of efficient public transport.
The duplex scheme of the statute is the holding of a public enquiry to determine who will serve public interest best but ordinarily activated into that enquiry by private applicants for permits.
The pro bono publico character of the hearing cannot be scuttled in the name of competitive individual rights and narrow procedural trappings.
[1033E G] (b) Section 47 enjoins upon the Regional Transport Authority to have regard to the presiding idea of public interest generally and in ib ramification as set out in section 47(1)(a) to (f).
In addition, the RTA shall also receive representations as mentioned therein and take them into the reckoning.
It is not as if the sole source of decision making materials consists of the representations made under section 57(3) within the time stipulated in section 57(4).
The primary channel the information that the RTA may gather bearing on matters touched upon in 47(1)(a) to (f) supplemented by facts stated in representation referred to In 1033 section 57(3).
Under section 47 passengers ' associations, police officers, local authorities and existing operators who may have nothing directly to do with the rivalry for A a permit have a place in the scheme and may make representation on a variety of matters.
So also, in an appeal, the RTA itself may be heard.
Thus the consideration going into the judicial verdict are dominated by public interest.
non parties who have Only to present points germane to public interest are allowed to represent their point of view.
[1038C; 1035B C]
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A court, called a Tribunal, might have the power to accept evidence even if it's given after the deadline.
Rule 15 of the Andhra Pradesh State Transport Appellate Tribunal Rule 1971 says that those involved in an appeal or application can't usually present new evidence (oral or written) to the Tribunal. However, the Tribunal can allow new evidence, documents, or witnesses if there's a good reason.
The Regional Transport Authority (RTA) gave a permit to the appellant (the person appealing).
Before the State Transport Appellate Tribunal, another applicant showed information against the appellant. This information wasn't in the appellant's record or in any statements made under section 57(3) of the law.
The appellant argued that the Tribunal shouldn't consider these new arguments from someone who was against the permit. However, the State Transport Appellate Tribunal disagreed, canceled the appellant's permit, and gave it to the respondent (the other party). The appellant then appealed, arguing that section 57(4) says representations can't be made at the appeal stage after a certain time. They also argued that if Rule 15 allows this, it goes against the law.
The appeal was dismissed. The court HELD: Rule 15 is valid and simply clarifies what the law already implies.
Rule 15 doesn't give parties the right to present new evidence, but it gives the Tribunal the power to allow it if needed.
The evidence isn't received as a representation under section 57(4), but as evidence that affects the public good.
The court approved the decisions in United Motor Works, A.l.R. 1964 Pat. 154 and Cumbum Roadways, A.I.R. 1965 Mad. 79.
(a) Public interest is most important in the transportation business. While private rights seem like a dispute for decision, the ability to serve the public is key. Transport tribunals must follow section 47 of the Motor Vehicles Act of 1948 and consider all factors related to good public transportation. The law involves a public inquiry to decide who will best serve the public, usually started by private applicants seeking permits. The public good of the hearing can't be ruined by focusing on individual rights and strict procedures.
(b) Section 47 tells the Regional Transport Authority (RTA) to consider public interest, as outlined in section 47(1)(a) to (f). The RTA must also consider representations made to them. Decisions aren't based only on representations made under section 57(3) within the time limit of section 57(4). The RTA can gather information related to 47(1)(a) to (f), along with facts from representations under section 57(3). Under section 47, passenger groups, police, local authorities, and existing operators (who may not be directly involved in the permit application) can make representations on different topics. The RTA itself can also be heard in an appeal. Therefore, public interest is the main factor in the decision. Non-parties can present points relevant to public interest.
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Special Leave Petition (Civil) No. 2545 of 1988. From the Judgment and Order dated 2.2.1988 of the Bombay High Court in Arbitration Petition No. 234 of 1987. G. Ramaswamy, Additional Solicitor General, K.V. Kini, section Bharthari and P.H. Parekh for the Petitioner. K.S. Cooper, D. Karkali, R. Karanjawala and Mrs. M. Karanjawala for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. After hearing the parties fully we had by our order dated 10th March, 1988 dismissed the special leave petition under Article 136 of the Constitution. We stated therein that we would indicate the reasons by a separate judgment later. We do so by this judgment. This is a petition for leave to appeal under Article 136 of the Constitution from the judgment and order of the learned Judge of the High Court of Bombay dated 2nd February, 1988. By the impugned judgment the learned Judge has rejected the application for revocation of the authority of respondent No. 1, Shri K.D. Bali, sole arbitrator under sections 5 and 11 of the (hereinafter called 'the Act '). In order to appreciate the contentions raised, it may be stated that the International Airport Authority of India which was the petitioner in the High Court and is the petitioner herein had invited tenders for the work of construction of terminal building of new international passenger complex (Phase II) at the Bombay Airport at 375 Sahar, Bombay. Respondent No. 2, M/s. Mohinder Singh and Company, a partnership firm having registered office at Delhi and carrying on business in Bombay submitted a tender and it was accepted for the value of Rs.7,26,31,325. A formal agreement followed on 22nd January, 1982. It is not necessary to refer to the clauses of the agreement for the present purposes. It may be reiterated, however, that there was provision in the agreement for settlement of disputes through appointment of sole arbitrator under clause 25 of the Conditions of Contract by the competent authority. Certain disputes arose in which the petitioner sought claims amounting to Rs.85 lakhs. Respondent No. 2 contractor approached the petitioner by letter dated 22nd February, 1985 to refer the disputes with regard to claims amounting to Rs.85 lakhs to the arbitration. One Shri K.K. Sud, the Chief Engineer of the petitioner by his letter appointed respondent No. 1 as the arbitrator and made the reference with regard to the claim of Rs. 85 lakhs on 23rd February, 1985. On 8th March, 1985, it appears from the narration of the events in the judgment impugned that the arbitrator gave directions to the parties regarding submission of pleadings. Respondent No. 2 filed pleadings within time, but the petitioner filed its pleadings after a delay of two and a half months. On 17th March, 1986 respondent No. 2 addressed a letter to the Chief Engineer asking for reference of further disputes to the arbitration and accordingly on 16th May, 1986 a second reference was made referring 11 further points of dispute. A third reference was sought by respondent No. 2 on 22nd May, 1986 in respect of seven more claims but the petitioner informed on June 12, 1986 that the third reference was premature. It appears that in respect of the second and third references the assertion of the petitioner was that these disputes were not referable to the arbitrator. The arbitrator had directed the parties to submit their statements in respect of second reference and though respondent No. 2 submitted its claim within the stipulated period, the petitioner had again delayed doing so according to the learned Judge and according to the assertions of respondent No. 2 for a period of three months. On 16th May, 1986 the Chief Engineer made reference No. 2 with regard to claims amounting to Rs.1.17 crores to the arbitrator. On 23rd December, 1986 the Chief Engineer of the petitioner made another reference being reference No. 3 to the arbitrator with regard to claims amounting to Rs.5.81 crore. The petitioner by its applications of 8th and 9th June, 1987 expressed its objections to the references Nos. 2 and 3 made by the Chief Engineer as according to the petitioner the said references were null and void as these were irregularly made. On 26th June, 1987 the petitioner by its written submissions took preliminary objection before the arbitrator 376 to the said arbitration proceedings, being lack of jurisdiction of the arbitrator on account of the fact that he was not validly appointed as far as references Nos. 2 and 3 were concerned. The petitioner by its application dated 3rd August, 1985 noted that respondent No. 1 had not noted the minutes of the meeting dated 10th of June, 1985 correctly. The petitioner by its application on 15th of June, 1987 requested respondent No. 1 not to proceed with the arbitration proceedings till its preliminary objections regarding jurisdictional aspects were decided and also made it clear that it was appearing under protest in the proceedings before him. The petitioner on 17th June, 1987 made oral submissions before respondent No. 1 with regard to its preliminary objections. Respondent No. 1 directed the petitioner to submit the rest of its submission by way of written submissions. The petitioner by its applications dated 22nd and 25th June, 1987, respectively objected to respondent No. 1 directing it to make submissions by way of written submissions and thus hurrying up the proceedings. On 26th June, 1987 the petitioner submitted written submissions to respondent No. 1. Respondent No. 1 by his order dated 27th June, 1987 directed that further proceedings would be undertaken only after the extension of time. Respondent No. 2 applied for enlargement of time and the same was granted by the High Court. On 7th August, 1987 application under section 13(b) of the Act was made before the arbitrator with a request to state the matter before it as Special Case for the opinion of the Court. The arbitrator by his order dated 3rd October, 1987 rejected the said application of the petitioner and also rejected the preliminary objections of the petitioner at the same time. On 14th October, 1987 the petitioner by its letter noted the fact that it has sent the minutes of the meeting with regard to the proceedings held on 28th and 29th September, 1987 to the arbitrator as directed by him. In the said letter the petitioner also protested against the arbitrator 's decision of changing the venue of the proceedings and also the inconvenient dates being fixed by him. The petitioner by its letter dated 11th October, 1987 conveyed its concern to the arbitrator that he has been rushing through the proceedings. On 16th December, 1987 the petitioner alleging apprehension that respondent No. 1 had formed his own opinion regarding the matters in issue. The petitioner approached the High Court with the instant application. This application was rejected by the High Court. The learned Judge changed the date fixed for hearing of the application for extension of time by enlarging the time to make the award by 15th February, 1988. 377 The main contention for the revocation of the authority of the arbitrator was about the alleged apprehension in the mind of the petitioner about bias of the sole arbitrator. The learned Judge of the High Court was unable to accept any ground for alleged apprehension. It is apparent as the learned Judge noted that respondent No. 2 had complied with the directions of the arbitrator about the conduct of the proceedings but the petitioner went on seeking adjournments after adjournments. Respondent No. 2 complained to the arbitrator on 4th May, 1987 about the delaying tactics adopted by the petitioner and thereupon the arbitrator directed that the hearing would take place on 8th and 9th June, 1987 and no further adjournment would be granted. After this direction was given by the arbitrator, the petitioner addressed a letter dated 25th May, 1987 to the arbitrator objecting to the jurisdiction in respect of the second and third references. The objections to the jurisdiction raised by the petitioner were, that the claim made in the second and third references were barred by principles analogous to Order II Rule 2 of the Code of Civil Procedure, the Chief Engineer had no authority to refer the disputes to the arbitration, the claims made by respondent No. 2 were beyond the stipulated period of 90 days and therefore were not arbitrable and the time for declaring the award having expired, the Arbitrator could not continue with the arbitration proceedings. On 8th June, 1987 as mentioned hereinbefore the learned advocate for the petitioner orally made submissions on the issue of jurisdiction and thereafter sought adjournment till June 9, 1987 for filing written submissions. On 9th June, 1987 apart from filing written submissions further oral arguments were advanced and thereafter an adjournment was sought beyond June 1987. This adjournment was sought because the time to declare the award was expiring by June, 1987. The hearing was adjourned till June 17, 1987 and again the petitioner 's advocate argued on preliminary objections about jurisdiction. The arguments were advanced on the next adjourned dates, that is, June 26 and June 27, 1987. It further appeared that as the time for making the award had expired and the petitioner did not consent to the extension of time, respondent No. 2 filed petition to the High Court of Bombay for extension of time on June 21, 1987. Thereafter the petitioner made an application before the arbitrator under section 13(b) of the Act calling upon the arbitrator to state special case for the opinion of the High Court on certain alleged legal objections. In the meanwhile the petition for extension of time filed in the Bombay High Court was granted and the time for declaring the award was extended till January 15, 1988. Thereafter the arbitrator fixed the hearing on September 28, 1987 and the advocate for the petitioner again reiterated the preliminary objections to the jurisdiction of the arbitrator and 378 insisted upon the arbitrator, passing an order on the application under section 13(b) of the Act. The arbitrator rejected the preliminary objections by his order dated 3rd October, 1987 and also the application for stating special case to the High Court under section 13(b) of the Act. The Petitioner 's advocate thereupon sought adjournment of the hearing and accordingly hearing was adjourned on several dates. Ultimately, the arbitrator fixed the hearings on 30th October, 1987 and 31st October, 1987. The hearing was postponed to 2nd November, 1987 and on that day the petitioner 's advocate remained absent. Thereafter the hearing proceeded on 6th November and 11th November, 1987 as well as on 13th, 18th and 19th November, 1987. Respondent No. 2 concluded arguments, while the arguments on behalf of the petitioner were advanced on December 3, 1987. The arguments further proceeded on December 8 and 9, 1987. Thereafter on December 17, 1987 the present petition was filed for revocation of the appointment of respondent No. 1 as the sole arbitrator. In our opinion, the above narration gives a glimpse how a party can try to prolong a proceeding. Several points were taken in support of the application for revocation. It was sought to be urged that the petitioner had lost confidence in the sole arbitrator and was apprehensive that the arbitrator was biased against the petitioner. It is necessary to reiterate before proceeding further what are the parameters by which an appointed arbitrator on the application of a party can be removed. It is well settled that there must be purity in the administration of justice as well as in administration of quasi justice as are involved in the adjudicatory process before the arbitrators. It is well said that once the arbitrator enters in an arbitration, the arbitrator must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness. It is not a question of the effect which misconduct on his part had in fact upon the result of the proceeding, but of what effect it might possibly have produced. It is not enough to show that, even if there was misconduct on his part, the award was unaffected by it, and was in reality just; arbitrator must not do anything which is not in itself fair and impartial. See Russell on Arbitration, 18th Edition page 378 and observations of Justice Boyd in Re Brien and Brien, at p. 89. Lord O 'Brien in The King (De Vesci) vs The Justices of Queen 's Country, observed as follows: "By bias I understand a real likelihood of an operative prejudice, whether conscious or unconscious. There must in my opinion be reasonable evidence to satisfy us that there was a real likelihood of bias. I do not think that their 379 vague suspicions of whimsical capricious and unreasonable people should be made a standard to regulate our action here. It might be a different matter if suspicion rested on reasonable grounds was reasonably generated and but certainly mere flimsy grounds elusively generated and morbid suspicions should not be permitted to form a ground of decision. " (Emphasis supplied) See The Queen vs Rand and others, ; Ramnath vs Collector, Darbhanga, I.L.R. 34 Pat. 254; The Queen vs Meyer and others, and Eckersley and others vs The Mersey Docks and Harbour Board, In the words of Lord O 'Brien, LCJ there must be a real likelihood of bias. It is well settled that there must be a real likelihood of bias and not mere suspicion of bias before the proceedings can be quashed on the ground that the person conducting the proceedings is disqualified by interest. See in this connection Gullapalli Nageswara Rao vs The State of Andhra Pradesh; , and Mineral Development Ltd. vs State of Bihar, Recently this Court in a slightly different context in Ranjit Thakur vs Union of India and others, A.I.R. 1987 S.C. 2386 had occasion to consider the test of bias of the Judge. But there must be reasonableness of the apprehension of bias in the mind of the party. The purity of administration requires that the party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party. But we agree with the learned Judge of the High Court that it is equally true that it is not every suspicion felt by a party which must lead to the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged from a healthy, reasonable and average point of view and not on mere apprehension of any whimsical person. While on this point we reiterate that learned counsel appearing for the petitioner in his submissions made a strong plea that his client was hurt and had apprehension because the arbitrator being the appointee of his client was not acceding to the request of his client which the petitioner considered to be reasonable. We have heard this submission with certain amount of discomfiture because it cannot be and we hope it should never be in a judicial or a quasi judicial proceeding a party who is a party to the appointment could seek the removal of an appointed authority or arbitrator on the ground that appointee being his nominee had not acceded to his 380 prayer about the conduct of the proceeding. It will be a sad day in the administration of justice if such be the state of law. Fortunately, it is not so. Vague suspicions of whimsical, capricious and unreasonable people are not our standard to regulate our vision. It is the reasonableness and the apprehension of an average honest man that must be taken note of. In the aforesaid light, if the alleged grounds of apprehension of bias are examined, we find no substance in them. It may be mentioned that the arbitrator was appointed by the Chief Engineer of the petitioner, who is in the service of the petitioner. The learned Judge had examined the five circumstances advanced before him. The first was that the arbitrator did not record the minutes of the meetings after September 29, 1987. The learned Judge found that there was no merit in this complaint. After 29th September, 1987 the petitioner 's advocate orally made submissions that the arbitrator had no jurisdiction to entertain the dispute. The advocate for the petitioner also desired to file written arguments and the arbitrator did not object to the same. In spite of it, the petitioner insisted that the arbitrator should record the minutes setting out the entire oral arguments advanced on behalf of the petitioner. This in our opinion was not a reasonable request to make and the arbitrator had rightly declined to do so. This is no basis of any reasonable apprehension of bias. The next circumstance urged was that the preliminary objections raised by the petitioner were rejected without a speaking order. It was not necessary for the arbitrator to record a long reasoned order on the preliminary objections and indeed the law does not demand writing such a long order. In any case, it will be open to the petitioner to file any petition in the Court under section 33 of the Act, if the petitioner felt that the arbitrator had no jurisdiction to entertain the reference, but the petitioner did not choose to adopt that course and proceeded to argue for a considerable length of time, the issue of jurisdiction before the arbitrator. The arbitrator was not bound to give a reasoned order at every stage of the proceedings. The arbitration proceedings would then never come to an end. It was not in dispute that the terms of reference required the arbitrator to give reasons for the award to be declared. It would be, therefore, always open for the petitioner to challenge the award to be declared by the arbitrator including on the ground of jurisdiction. The learned Single Judge of the High Court has so held and we are in agreement with him on this point. 381 The third circumstances was that the petitioner had filed application under section 13(b) of the Act calling upon the arbitrator to state a special case for the opinion of the Court on the question of law and the failure of the arbitrator to raise this question of law was indicative of the bias. We are unable to accept this argument. Section 13(b) confers power on the arbitrator to state special case but it does not make it obligatory on the part of the arbitrator to state a special case as soon as the party desires to do so. In the instant case the petitioner itself agitated issue of jurisdiction before the arbitrator and by its conduct submitted the question of jurisdiction and other questions of law for determination of the arbitrator. Once having done so, it was not proper for the petitioner to ask the arbitrator to state a special case. This, in our opinion, is no ground for bias. The fourth ground was that the first reference, where the claim involved was Rs.85 lakhs, was heard for a considerable time, while the arguments in respect of second and third references, which covered the claim of Rs.1.17 crores and Rs.5.81 crores were concluded by respondent No. 2 within one and one fourth of a day. The length of the time taken is no indication either of speeding up or of any abuse of the proceedings. We agree with the learned Judge that there is no rule which requires that the length of argument should depend upon the magnitude of the claim made. The other point sought to be urged by the petitioner was that the venue of the arbitration was changed from conference room at Santacruz Airport, Bombay, to the conference room at Indian Merchants Chambers at Churchgate, Bombay. It is the claim of the petitioner that this change of venue was without the consent of the petitioner. It appears from the affidavit filed before the High Court that the venue was changed because of disturbance at the conference room at Santacruz and this fact was known to the petitioner all along. Change of venue in no manner would indicate that the arbitrator was prejudiced against the petitioner and no prayer was made to the arbitrator not to change the venue. This is solely a fallacious ground to make out a case of alleged bias. The other ground was that the petitioner and respondent No. 2 used to share the costs of the air ticket of the arbitrator from Delhi to Bombay and back. It was submitted that since 9th June, 1987 the petitioner has not paid for the ticket and also not provided for residential accommodation at Santacruz Airport. It was further submitted that respondent No. 2 must be providing the air ticket and also hotel accommodation to the arbitrator and the receipt of these facilities was enough, according to the petitioner, to 382 establish that the arbitration was likely to be biased. It is said that the petitioner made these allegations because the petitioner declined to contribute for the costs of the air ticket and providing for the accommodation. The petitioner obstructed at all stages of the proceedings of arbitration, what the arbitrator did he did openly to the knowledge of the respondents. As the learned Judge has rightly pointed out the petitioner after 9th June, 1987 seems to have decided that the arbitrator should not proceed to hear the reference and in order to frustrate the arbitration proceedings started raising all sorts of frivolous and unsustainable contentions. Having failed and realised that respondent No. 1 was not willing to submit to the dictates of the petitioner, the petitioner declined to contribute for the air ticket and providing for accommodation. No party should be allowed to throw out the arbitration proceeding by such tactics and if the arbitrator has not surrendered to pressure in our opinion, the arbitrator cannot be faulted on that score nor the proceedings of the arbitrator be allowed to be defeated by such method. There was another ground sought to be made before us that there was a loss of confidence. We find no reasonable ground for such loss of confidence. Every fancy of a party cannot be a ground for removal of the arbitrator. It was alleged that there were counter claims made by the respondents. These counter claims have not yet been dealt with by the arbitrator. Our attention was drawn to page 188 of Volume II of the paper book where a counter claim had been referred to. It appears that the petitioner has separately treated these counter claims. These counter claims have not yet been considered by the arbitrator. That is no ground for any apprehension of bias. An affidavit was filed before us that on 6th March, 1988 a letter was served indicating the dates for hearing as 7th to 10th March, 1988. It appears that the matter was adjourned thereafter but by merely making an application for adjournment and refusing to attend the arbitration proceeding, a party cannot forestall arbitration proceeding. We are in agreement with the learned Judge of the High Court expressing unhappiness as to the manner in which attempts had been made to delay the proceeding. There is a great deal of legitimate protest at the delay in judicial and quasi judicial proceeding. As a matter of fact delay in litigation in courts has reached such proportion that people are losing faith in the adjudicatory process. Having given our anxious consideration to the grounds alleged in this application, 383 we find no ground to conclude that there could be any ground for reasonable apprehension in the mind of the petitioner for revocation of the authority of the arbitrator appointed by the petitioner itself. While endorsing and fully maintaining the integrity of the principle 'justice should not only be done, but should manifestly be seen to be done ', it is important to remember that the principle should not be led to the erroneous impression that justice should appear to be done that it should in fact be done. See the observations of Slade, J. in R. vs Cambore Justices Ex parte Pearce, at 855. We are satisfied from the facts mentioned hereinbefore that there is no reasonable ground of any suspicion in the mind of the reasonable man of bias of the arbitrator. Instances of cases where bias can be found in Commercial Arbitration by Mustill and Boyd, 1982 Edn. The conduct of the present arbitrator does not fall within the examples given and the principles enunciated therein. The petition for leave to appeal, therefore, fails and it is accordingly dismissed. S.L. Appeal dismissed.
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% This petition for special leave was against the judgment and order of the High Court of Bombay, rejecting the application for revocation of the authority of the respondent No. 1, the sole arbitrator under sections 5 and 11 of the ( 'The Act ').
The petitioner invited tenders for the construction of the terminal building of a new international passenger complex (Phase II) at the Bombay Airport.
The respondent No. 2, a partnership firm, submitted a tender which was accepted and a formal agreement followed, with a provision in the agreement for settlement of disputes through a sole arbitrator appointed under clause 25 of the conditions of contract by the competent authority.
Certain disputes arose in which the petitioner sought claims amounting to Rs.85 lakhs.
The respondent No. 2 the contractor approached the petitioner to refer the disputes to arbitration.
The Chief Engineer of the petitioner appointed respondent No. 1 as the arbitrator and made a reference with regard to the claim of Rs.85 lakhs.
The respondent No. 2 asked the Chief Engineer to refer further disputes to the arbitrator and, accordingly, on 16th May, 1986, a second reference was made with regard to 11 further points of dispute with claims amounting to Rs.1.17 crores.
On 23rd December, 1986, the Chief Engineer made reference No. 3 to the Arbitrator with regard to claim amounting to Rs.5.81 crore.
Thereafter, by applications of 8th and 9th June, 1987, the petitioner expressed objections to the references Nos. 2 and 3 made by the Chief Engineer contending that the references were null and void, being irregularly made, and took preliminary objections before the arbitrator to the arbitration proceedings, being lack of jurisdiction of the arbitrator on the ground that he was not validly appointed so far as references Nos. 2 and 3 were concerned.
On 7th 371 August, 1987, the petitioner made an application before the arbitrator under section 13(b) of the Act with the request to state the matter before him for the opinion of the Court as special case.
The arbitrator by his order dt.
3rd October, 1987, rejected the said application and the preliminary objections of the petitioner.
Thereafter, the petitioner alleging that the arbitrator had formed his own opinion regarding the matters in issue, filed an appliction before the High Court for the revocation of the authority of the arbitrator on the ground of apprehension in the petitioner 's mind about bias of the arbitrator.
The High Court by its judgment and order dt.
2nd February, 1988, rejected the application of the petitioner.
The petitioner then moved this Court for relief by special leave.
Dismissing the petition for special leave, the Court, ^ HELD: It was necessary to reiterate first what are the parameters by which an appointed arbitrator can be removed on the appliction of a party.
It is well settled that there must be purity in the administration of justice as well as quasi justice involved in the adjudicatory process before the arbitrator.
Once the arbitrator enters on an arbitration, he must not be guilty of any act which can possibly be construed as indicative of partiality or unfairness.
It is not a question of the effect which a misconduct on his part had in fact upon the result of the proceeding, but of what effect it might possibly have produced.
It is not enough to show that even if there was misconduct on his part, the award was unaffected by it and was in reality just; the arbitrator must not do anything which is not in itself fair and impartial.
In the words of Lord O 'Brien, L.C.J, there must be a real likelihood of bias and not a mere suspicion of bias before proceedings can be quashed on the ground that the person conducting the proceedings is disqualified by interest.
The purity of administration requires that the party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party, but it is equally true that it is not every suspicion felt by a party which must lead to the conclusion that the authority hearing the proceedings is biased, as held by the High Court.
The apprehension must be judged from a healthy, reasonable and average point of view and not on a mere apprehension of any whimsical person.
It cannot be and should never be in a judicial or quasi judicial proceeding that a party who is a party to the appointment could seek the removal of an appointed authority or an arbitrator on the ground that the appointee being his nominee had not acceded to his prayer about conduct of the proceedings.
It is the reasonableness and apprehension 372 of an average honest man that must be taken note of.
There was no substance found in the alleged grounds of apprehension of bias, examined in this light.
[378D G; 379D H; 380A B] The High Court had examined five circumstances advanced before it.
The first was that the arbitrator did not record the minutes of the meetings after September 29, 1987.
The petitioner insisted that the arbitrator should record the minutes setting out the entire oral arguments advanced on behalf of the petitioner.
This was not a reasonable request and the arbitrator rightly declined to do that.
This was no basis of any reasonable apprehension of bias.
[380C E] The next circumstance urged was that the preliminary objections raised by the petitioner were rejected without a speaking order.
It was not necessary for the arbitrator to record a long reasoned order on the preliminary objections, and indeed the law does not demand writing such a long order.
In any case, it would be open to the petitioner to file a petition under section 33 of the Act if the petitioner felt that the arbitrator had no jurisdiction to entertain the reference.
It would be open to the petitioner to challenge the award to be declared by the arbitrator, including on ground of jurisdiction.
[380E H] The third circumstance was that the petitioner had filed an application under section 13(b) of the Act calling upon the arbitrator to state a special case for the opinion of the Court and the failure of the arbitrator to raise the question of law was indicative of bias.
This argument could not be accepted.
Section 13(b) confers power on the arbitrator to state a special case but it does not make it obligatory on the part of the arbitrator to state a special case as soon as the party desires it.
In this case, the petitioner itself agitated the issue of jurisdiction and other questions of law before the arbitrator.
Once having done so, it was not proper for the petitioner to ask the arbitrator to state a special case.
This was no ground for bias.
[381A C] The fourth ground was that the first reference, involving a claim for Rs.85 lakhs, was heard for a considerable time, while the arguments in respect of the second and third references covering claims of Rs.1.17 crores and Rs.5.81 crores were concluded by the respondent No. 2 within one and one fourth of a day.
The length of the time taken is no indication of either speeding up or any abuse of the proceedings.
The Court agreed with the High Court that there is no rule which requires that the length of the argument should depend upon the magnitude of the claim made.
[381D] 373 The other point urged by the petitioner was that the venue of arbitration was changed and this change was without the consent of the petitioner.
Change of venue would in no manner indicate that the arbitrator was prejudiced against the petitioner.
This was solely a fallacious ground to make out a case of alleged bias.
[381E G] The other ground was that as, since 9th June, 1987, the petitioner had not paid for the air ticket of the arbitrator from Delhi to Bombay and for his residential accommodation, the respondent No. 2 must be providing for the air ticket and the hotel accommodation for the arbitrator, and the arbitration was likely to be biased.
As rightly pointed out by the High Court, the petitioner, after the 9th June, 1987, seemed to have decided that the arbitrator should not proceed with the reference and in order to frustrate the arbitration proceedings, started raising all sorts of frivolous and unsustainable contentions.
Having realised that the arbitrator was not willing to submit to its dictates, the petitioner declined to contribute for the air ticket, etc.
No party should be allowed to throw out the arbitration proceedings by such tactics, and if the arbitrator did not surrender to the pressure, he could not be faulted nor could the proceedings of the arbitrator be allowed to be defeated by such a method.
[381G H; 382B D] Another ground made was that there was a loss of confidence.
There was no reasonable ground for such a loss of confidence.
Every fancy of a party cannot be a ground for removal of the arbitrator.
[382D] The Court was in agreement with the learned Judge of the High Court expressing unhappiness over the manner in which attempts had been made to delay the proceedings.
[382G] The Court found no ground to conclude that there could be any ground for reasonable apprehension in the mind of the petitioner for revocation of the authority of the arbitrator appointed by the petitioner itself.
While endorsing and fully maintaining the integrity of the principle 'justice should not only be done, but should manifestly be seen to be done ', it is important to remember that the principle should not be led to the erroneous impression that justice should appear to be done than it should in fact be done.
There was no reasonable ground of any suspicion of bias of the arbitrator.
The conduct of the arbitrator did not fall within the examples given and principles enunciated in the instances of cases where bias could be found in the Commercial Arbitration by Mustill and Boyd, 1982, Edn.
[383A C] 374 Russell on Arbitration, 18th Edition, page 378, Re Brion and Brien, , 89; The King (De Vesci) vs The Justices of Queen 's Country, ; The Queen vs Rand & Ors., [1986] 1 Q.B. 230; Ramnath vs Collector, Darbhanga, ILR 34 Pat. 254; The Queen vs Meyer and Ors., ; Ekersley and Ors.
vs The Messey Docks and Harbour Board, ; Gallapalli Nageswara Rao vs The State of Andhra Pradesh, ; ; Mineral Development Ltd. vs State of Bihar, ; Ranjit Thakur vs Union of India & Ors., ; and R.V. Camborne Justices Ex parte Pearce, , 855 referred to.
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This request for special permission to appeal was against a decision by the Bombay High Court. The High Court had refused to cancel the power of the first respondent, who was the only arbitrator (like a judge in this case). The application to cancel the arbitrator's power was made under sections 5 and 11 of a law called "The Act."
The petitioner (the one appealing) had asked for bids to build a new terminal at the Bombay Airport.
The second respondent, a partnership (a type of business), submitted a bid that was accepted. They signed an agreement that included a way to solve disagreements. If there were problems, a single arbitrator would be chosen by a certain person, as stated in clause 25 of the contract.
Problems did occur. The petitioner claimed they were owed 85 lakhs (a large sum of money).
The second respondent (the contractor) asked the petitioner to send the problems to arbitration (a way to solve disputes outside of court).
The petitioner's Chief Engineer chose the first respondent as the arbitrator. He sent the claim for 85 lakhs to the arbitrator.
The second respondent asked the Chief Engineer to send more problems to the arbitrator. So, on May 16, 1986, a second set of 11 problems, with claims of 1.17 crores (another large sum), were sent.
On December 23, 1986, the Chief Engineer sent a third set of problems to the Arbitrator, this time for 5.81 crore.
Later, on June 8 and 9, 1987, the petitioner objected to the second and third sets of problems. They said these sets were not valid because they were sent incorrectly. They argued before the arbitrator that he did not have the power to decide on the second and third sets of problems, because his appointment was not valid for those.
On August 7, 1987, the petitioner asked the arbitrator to get an opinion from the Court on the matter. This request was made under section 13(b) of "The Act."
The arbitrator rejected the request and the petitioner's objections on October 3, 1987.
After that, the petitioner claimed that the arbitrator had already made up his mind about the issues. They asked the High Court to cancel the arbitrator's power because they were worried he might be biased (unfair).
The High Court rejected the petitioner's request on February 2, 1988.
The petitioner then asked the Court for relief through a special permission to appeal.
The Court dismissed the request. It stated that it needed to repeat the rules for removing an arbitrator who has already been chosen. This can only happen if a party asks for it.
It is agreed that the arbitration process must be fair and unbiased.
Once an arbitrator starts working on a case, they must not do anything that could seem like they are being unfair.
It is not about whether the arbitrator's unfairness actually affected the outcome. It is about whether it *could* have affected the outcome.
It is not enough to say that even if the arbitrator was unfair, the decision was still correct. The arbitrator must not do anything that is not fair and impartial.
As Lord O'Brien said, there must be a real chance of bias, not just a suspicion of bias. Only then can the proceedings be stopped because the person in charge is not qualified due to their interest in the matter.
Fairness requires that the parties involved do not worry that the decision-maker is biased and will decide against them. However, it is also true that not every suspicion a party has means that the decision-maker is biased. This is what the High Court said.
The worry about bias must be judged from a reasonable and normal point of view, not from the worries of someone who is being overly sensitive.
A party who helped choose an arbitrator cannot later try to remove that arbitrator just because the arbitrator, who was their choice, did not agree with them about how the case should be handled. This should not happen in a legal or similar proceeding.
The key is whether an average, honest person would reasonably worry about bias.
The Court found no real reason to believe there was a bias, after examining the claims.
The High Court looked at five reasons that were given.
First, the arbitrator did not keep records of the meetings after September 29, 1987.
The petitioner wanted the arbitrator to write down all the oral arguments made by the petitioner.
This was not a reasonable request, and the arbitrator was right to refuse. This was not a reason to reasonably worry about bias.
Next, the petitioner argued that the arbitrator rejected their initial objections without giving a written explanation.
The arbitrator did not need to write a long, detailed explanation for rejecting the objections. The law does not require such a long explanation.
In any case, the petitioner could file a request under section 33 of "The Act" if they believed the arbitrator did not have the power to hear the case.
The petitioner could also challenge the arbitrator's final decision, including arguing that the arbitrator did not have the power to decide the case.
Third, the petitioner had asked the arbitrator to get a legal opinion from the Court, but the arbitrator did not. The petitioner argued that this showed bias.
This argument was rejected.
Section 13(b) gives the arbitrator the power to get a legal opinion, but it does not require them to do so just because a party asks.
In this case, the petitioner themselves raised the issue of the arbitrator's power and other legal questions before the arbitrator.
Having done that, it was not right for the petitioner to then ask the arbitrator to get a legal opinion. This was not a reason for bias.
Fourth, the first set of problems, involving a claim for 85 lakhs, was discussed for a long time. However, the arguments for the second and third sets of problems, covering claims of 1.17 crores and 5.81 crores, were finished by the second respondent in just one and a quarter days.
The amount of time taken is not a sign of rushing or abusing the process.
The Court agreed with the High Court that there is no rule that says the length of the argument should depend on the size of the claim.
The petitioner also argued that the location of the arbitration was changed without their permission.
Changing the location does not show that the arbitrator was prejudiced against the petitioner.
This was simply a false reason to try to make a case for bias.
Another argument was that since June 9, 1987, the petitioner had not paid for the arbitrator's plane ticket from Delhi to Bombay or for his hotel. The petitioner claimed that the second respondent must be paying for these things, and that the arbitration was therefore likely to be biased.
The High Court correctly pointed out that after June 9, 1987, the petitioner seemed to have decided that the arbitrator should not continue with the case. They started raising all sorts of weak and unsustainable arguments in order to stop the arbitration.
The petitioner realized that the arbitrator was not going to give in to their demands. So, they refused to pay for the plane ticket, etc.
No party should be allowed to disrupt the arbitration process with such tactics. If the arbitrator did not give in to the pressure, he could not be blamed. The arbitration proceedings should not be defeated by such a method.
Another argument was that there was a loss of confidence.
There was no reasonable reason for such a loss of confidence.
Every little concern a party has cannot be a reason to remove the arbitrator.
The Court agreed with the High Court judge, who was unhappy with the attempts to delay the proceedings.
The Court found no reason to believe that the petitioner had any reasonable reason to worry about the arbitrator's bias. The petitioner themselves had chosen the arbitrator.
While it is important to maintain the principle that "justice should not only be done, but should manifestly be seen to be done," it is also important to remember that this principle should not be twisted to mean that the appearance of justice is more important than actual justice.
There was no reasonable reason to suspect the arbitrator of bias.
The arbitrator's conduct did not match the examples and principles in the books and cases that describe when bias can be found.
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Civil Appeal No. 1376 of 1978. (Appeal by special leave from the judgment and order dated the 1st February, 1978 of the Kerala High Court in M.F.A. No. 53 of 1977) L.N. Sinha, Attorney General, J. M. Joseph, K John and Shri Narain for the Appellant. D C.S. Vaidlyanathan, (A.C.), for the Respondent. The Judgment of the Court was delivered by CHANDRACHUD, C.J. The question which arises in this appeal by special leave is whether a debt owed by the respondent, an agriculturist, to the appellant The State Bank of Travancore falls within the purview of the Kerala Agriculturists ' Debt Relief Act, 11 of 1970, hereinafter called 'the Act '. The respondent had an overdraft Account with the Erattupetta Branch of the Kottayam Orient Bank Ltd., at the foot of which he owed a sum of over Rs. 3000/ to the Bank. The said Bank which was a 'Banking Company ' as defined in the Banking Regulation Act, 1949, was amalgamated with the appellant Bank with effect from June 17, 1961 in pursuance of a scheme of amalgamation prepared by the Reserve Bank of India in exercise of the powers conferred by section 45 (4) of the Banking Regulation Act and sanctioned by the Central Government under sub section (7) of section 45. Upon the amalgamation, all assets and liabilities of the Kottayam Orient Bank stood transferred to the appellant Bank. The notification containing the scheme of amalgamation was 342 published in the Gazette of India Extra ordinary dated May 16, 1961 . The appellant filed a suit (O.S. No. 28 of 1963) in the Sub Court, Meenachil, against the respondent for recovery of the amount due from him in the overdraft Account with the Kottayam Orient Bank, the right to recover which had come to be vested in the appellant as a result of the aforesaid scheme of amalgamation. That suit was decreed in favour of the appellant, but when it took out execution proceedings in the Sub Court, Kottayam, the respondent filed a petition under section 8 of the Act seeking amendment of the decree in terms of the provisions of the Act. The respondent claimed that he was an agriculturist within the meaning of the Act and was therefore entitled to the benefit of its provisions, including those relating to the scaling down of debts. The learned Subordinate Judge assumed, what was evidently not controverted, that the respondent was an agriculturist. But the learned Judge held that the respondent was not entitled to the benefit of the provision regarding scaling down of the debt because the debt, having been once owed by him to the Kottayam Orient Bank Ltd., which was a 'Banking Company as defined in the Banking Regulation Act, 1949, was outside the purview of section 5 of the Act which provided for the scaling down of debts owed by agriculturists. According to the learned Judge, the respondent was only entitled to the benefit of the proviso to section 2 (4) (l) of the Act under which the amount could be repaid in eight half yearly instalments. Since the relief which the respondent had asked for was that his debt should be scaled down and since he was held not entitled to that relief, his application was dismissed by the learned Judge. The respondent preferred an appeal to the High Court of Kerala, the maintainability of which was challenged by the appellant on the ground that no appeal lay against the order passed by the Subordinate Judge on the application filed by the respondent under section 8 of the Act. The High Court accepted the preliminary objection but granted permission to the respondent to convert the appeal into a Civil Revision Application and dealt with it as such. In view of the general importance of the questions involved in the matter, the revision application was referred by a Division Bench to the Full Bench. It was contended in the High Court on behalf of the appellant, Bank that the debt owed to it by the respondent was excluded 343 from the operation of the Act by reason of section 2 (4) (a) (ii) and section 2 (4) (1) of the Act. By its judgment dated February 1, 1978 the High Court rejected that contention, allowed the Revision Application and held that the respondent was entitled to all the relevant benefits of the Act, including the benefit scaling down of the debt. The Bank questions the correctness of that judgment in this appeal. Section 8 of the Act provides, in so far as is material, that where, before the commencement of the Act, a court has passed a decree for, the repayment of a debt, it shall, on the application of a judgment debtor, who is an agriculturist, apply the provisions of the Act to such a decree and shall amend the decree accordingly. It is in pursuance of this section that the respondent applied to the executing Court for amendment of the decree. Section 4(1) of the Act provides that notwithstanding anything contained hl any law or contract or in a decree of any court, but subject to the provisions of sub section (5), an agriculturist may discharge his debts in the manner specified in sub sections (2) and (3). Sub section (2) of section 4 provides that if any debt is repaid in seventeen equal half yearly instalments together with interest at the rates specified in section 5, the whole debt shall be deemed to be discharged. Sub section (3) specifies the period within which the instalments have to be paid. The respondent claims the benefit of the provision contained in section 4 (1) of the Act. In order to decide whether the respondent is entitled to the relief claimed by him, it would be necessary to consider the provisions of sections 2 (1) and 2 (4) of the Act. The short title of the Act shows that it was passed in order to give relief to indebted agriculturists in the State of Kerala. The State Legislature felt the necessity of passing the Act because, the Kerala Agriculturists ' Debt Relief Act, 31 of 1958, conferred benefits on agricultural debtors in respect of debts incurred by them before July 14, 1958 only. The Statement of objects and Reasons of the Act slows that the agricultural indebtedness amongst the poorer sections of the community showed an upward trend after July 14, 1958 owing to various economic factors. A more comprehensive legislation was therefore introduced by the State Legislature in the shape of the present Act in substitution of the Act of 1958. The Act came into force on July 14, 1970. Section 2 (1) of the Act which defines an "agriculturist" need not be reproduced because it was common ground at all stages bet 344 ween the parties that the respondent is an agriculturist within the meaning of the definition in section 2 (1). Section 2 (4) of the Act, in so far as is material for our purposes, reads thus: "Section 2 (4):"debt" means any liability in cash or kind, whether secured or unsecured, due from or incurred by an agriculturist on or before the commencement of this Act, whether payable under a contract, or under a decree or order of any court, or otherwise, but does not include: (a) any sum payable to: (i) the Government of Kerala or the Government of India or the Government of any other State or Union territory or any local authority; or (ii) the Reserve Bank of India or the State Bank of India or any subsidiary bank within the meaning of clause (k) of section 2 of the State Bank of India (Subsidiary Act, 1959, or the Travancore Credit Bank (in liquidation) constituted under the Travancore Credit Bank Act, IV of 1113: Provided that the right of the bank to recover the sum did not arise by reason of: (A) any assignment made or (B) any transfer effected by operation of law, subsequent to the 1st day of July, 1957". As stated above, the respondent is admittedly an agriculturist and he owes a sum of money to the appellant Bank under a decree passed in its favour by the Sub Court, Meenacil, in O.S. No. 28 of 1963. The liability which the respondent owes to the appellant Bank is therefore a "debt" within the meaning of section 2 (4) of the Act. But certain liabilities are excluded from the ambit of the definition of "Debt". The liabilities which are thus excluded from the definition of debt are specified in clauses (a) to (n) of section 2 (4). We are concerned in this appeal with the liabilities specified in clause (a) (ii) and clause (1) of section 2 (4), which are excluded from 345 the operation of clause 2 (4). We will first consider the implications of the exclusion provided for in sub clause (ii) of clause (a) of section 2 (4). Under the aforesaid sub clause, any sum payable to a subsidiary bank within the meaning of section 2 (k) of the , is excluded from the definition of "debt". Section 2 (k) of the Act of 1959 defines a "subsidiary bank" to mean any new bank, including the Hyderabad Bank and the Saurashtra Bank. The expression "new bank" is defined in section 2 (f) of the Act of 1959 to mean any of the banks constituted under section 3. Section 3 provides that with effect from such date, as the Central Government may specify, there shall be constituted the new banks specified in the section. Clause (f) of section 3 mentions the State Bank of Travancore amongst the new banks which may be constituted under section 3. It is thus clear that the appellant Bank, namely, the State Bank of Travancore, is a subsidiary bank as contemplated by sub clause (ii) of clause (a) of section 2 (4) of the Act. If the matter were to rest there, the decretal amount payable by the respondent to the appellant Bank will not be a debt within the meaning of section 2 (4) of the Act, since the appellant is a subsidiary bank within the meaning of section 2 (k) of the . But by reason of clause (B) of the proviso to section 2 (4) (a) (ii) of the Act, the amount payable to a subsidiary bank is not to be regarded as a debt within the meaning of the Act, only if the right of the subsidiary bank to recover the amount did not arise by reason of any transfer effected by operation of law subsequent to July 1, 1957. The proviso is thus in the nature of an exception to the exceptions contained in section 2 (4) (a) (ii) of the Act. The respondent initially owed a sum exceeding Rs. 3000/ to the Erattupetta Branch of the Kottayam Orient Bank Ltd. which was amalgamated with the appellant Bank with effect from June 17, 1961 pursuant to an amalgamation scheme prepared by the Reserve Bank of India. All the rights, assets and liabilities of the Kottayam Orient Bank were transferred to the appellant Bank as a result of the amalgamation. The notification containing the scheme of amalgamation was published on May 16, 1961. Thus, the right of the appellant Bank, though it is a subsidiary Bank, to recover the amount from the respondent arose by reason of a transfer effected by operation of law, namely, the scheme of amalgamation, which came into effect after July 1, 1957. Since clause (B) of the proviso to section 2 (4) (a) (ii) is attracted, the appellant Bank will not be entitled to the benefit of the exclusion contained in section 2 (4) (a) 346 (ii) of the Act and the respondents claim to the benefits of the Act will remain unaffected by that provision. That makes it necessary to consider the question whether the appellant Bank can get the advantage of any of the other exclusionary clauses (a) to (n) of section 2 (4) of the Act. The only other clause of section 2 (4) which is relied upon by the appellant in this behalf is clause (1), according to which the word 'debt ' as defined in section 2 (4) will not include: "any debt exceeding three thousand rupees borrowed under a single transaction and due before the commencement of this Act to any banking company; (emphasis supplied) Provided that in the case of any debt exceeding three thousand rupees borrowed under a single transaction and due before the commencement of this Act to any banking company, any agriculturist debtor shall be entitled to repay such debt in eight equal half yearly instalments as provided in sub section (3) of section 4, but the provisions of section 5 shall not apply to such debt. " The question for consideration is whether the amount which the respondent is liable to pay under the decree was "due before the commencement of the Act to any Banking Company". Turning first to the question whether the appellant Bank is a banking company, the learned Subordinate Judge assumed that it is, but no attempt was made to sustain that finding in the High Court. Shri Abdul Khader, who appears on behalf of the appellant conceded before us that it is not a banking company. The concession is rightly made, since according to section 2(2) of the Act, 'Banking Company ' means a banking company as defined in the Banking Regulation Act, 1949. Section S(c) of the Act of 1949 defines a banking company to mean any Company which transacts the business of banking in India (subject to the provision contained in the Explanation to the section). Thus, in order that a bank may be a banking company, it is in the first place necessary that it must be a "company". The State Bank of Travancore, which is the appellant before us, is not a 'company ' properly so called. It is a subsidiary bank which falls within the definition of section 2(k) of the . It was established by the Central Government in accordance with the Act of 1959 and is not a 'company ' and 347 therefore, not a banking company. It must follow that the decretal debt which the respondent is liable to pay to the appellant is not owed to a banking company. It was indeed not owed to any banking company at all on July 14, 1970, being the date on which the Act came into force. It may be recalled that the respondent owed a certain sum exceeding three thousand rupees to the Kottayam Orient Bank Ltd., a banking company, on an overdraft account. That Bank was amalgamated with the appellant Bank with effect from May 16, 1961, as a result of which the latter acquired the right to recover the amount from the respondent. It filed Suit No. 28 of 1963 to recover that amount and obtained a decree against the respondent. lt is precisely this small conspectus of facts, namely, that the amount was at one time owed to a banking company but was not owed to a banking company at the commencement of the Act, which raises the question as regards the true interpretation of clause (1) of section 2 (4). The fact that the amount which the respondent owes to the appellant was not owed to a banking company on the date on which the Act came into force, the appellant not being a banking company, does not provide a final solution to the problem under consideration. The reason for this is that clause (1) of section 2(4) speaks of a debt "due before the commencement" of the Act to any banking company, thereby purporting to make the state of affairs existing before the commencement of the Act decisive of the application of that clause. The contention of the learned Attorney General, who led the argument on behalf of the appellant, is that the respondent owed the debt before the commencement of the Act to a banking company and, therefore, the appellant is entitled to claim the benefit of the exclusion provided for in clause (1). The argument is that, for the purposes of clause (1), it does not matter to whom the debt is owed on the date of the commencement of the Act: what matters is to whom the debt was owed before the commencement of the Act. The learned Attorney General is apparently justified in making this submission which rests on the plain language of clause (1) of section 2(4), the plain, grammatical meaning of the words of the statute being generally a safe guide to their interpretation. But having considered the submission in its diverse implications, we find ourselves unable to accept it. 348 In order to judge the validity of the submission made by the Attorney General, one must of necessity have regard to the object and purpose of the Act. The object of the Act is to relieve agricultural indebtedness. In order to achieve that object, the legislature conferred certain benefits on agricultural debtors but, while doing so, it excluded a class of debts from the operation of the Act, namely, debts of the description mentioned in clauses (a) to (n) of section 2(4). One class of debts taken out from the operation of the Act is debts owed to banking companies, as specified in clause (1). The reason for this exception is obvious. It is notorious that money lenders exploit needy agriculturists and impose upon them harsh and onerous terms while granting loans to them. But that charge does not hold true in the case of representative institutions, like banks and banking companies. They are governed by their rules and regulations which do not change from debtor to debtor and which, if any thing, are intended to benefit the weaker sections of society. It is for this reason that debts owing to such creditors are excepted from the operation of the Act. A necessary implication and an inevitable consequence of the Attorney General 's argument is that in order to attract the application of clause (1) of section 2 (4), it is enough to show that the debt was, at some time before the commencement of the Act, owed to a banking company; it does not matter whether it was in its inception owed to a private money lender and, equally so, whether it was owed to such a money lender on the date of the commencement of the Act. This argument, if accepted, will defeat the very object of the Act. The sole test which assumes relevance according to that argument is whether the debt was owed, at any time before the commencement of the Act, to a banking company. It means that it is enough for the purpose of attracting clause (1) that, at some time in the past, may be in a chain of transfers, the right to recover the debt was vested in a banking company. A simple illustration will elucidate the point. If a private money lender had initially granted a loan to an agricultural debtor on usurious terms but the right to recover that debt came to be vested in a banking company some time before the commencement of the Act, the debtor will not be able to avail himself of the benefit of the provisions of the Act because, at some point of time before the commencement of the Act, the debt was owed to a banking company. And this would be so irrespective of whether the banking company continues to be entitled to recover the debt on the date of the commencement of the Act. Even if it assigns its 349 right to a private individual, the debtor will be debarred from claiming the benefit of the Act because, what is of decisive importance, according to the Attorney General 's argument is the fact whether, some time before the commencement of the Act, the debt was due to a banking company. We do not think the Legislature could have intended to produce such a startling result. The plain language of the clause, if interpreted so plainly, will frustrate rather than further the object of the Act. Relief to agricultural debtors, who have suffered the oppression of private moneylenders, has to be the guiding star which must illumine and inform the interpretation of the beneficent provisions of the Act. When clause (1) speaks of a debt due "before the commencement" of the Act to a banking company, it does undoubtedly mean what it says, namely, that the debt must have been due to a banking company before the commencement of the Act. But it means something more: that the debt must also be due to a banking company at the commencement of the Act. We quite see that we are reading into the clause the word "at" which is not there because, whereas it speaks of a debt due "before" the commencement of the Act, we are reading the clause as relating to a debt which was due "at" and "before" the commencement of the Act to any banking company. We would have normally hesitated to fashion the clause by so restructuring it but we see no escape from that course, since that is the only rational manner by which we can give meaning and content to it, so as to further the object of the Act. There is one more aspect of the matter which needs to be amplified and it is this: When clause (1) speaks of a debt due before the commencement of the Act, what it truly means to convey is not that the debt should have been due to a banking company at some point of time before the commencement of the Act, but that it must be a debt which was incurred from a banking company before the commencement of the Act. Thus, the application of clause (1) is subject to these conditions: (i) The debt must have been incurred from a banking company; (ii) the debt must have been so incurred before the commencement of the Act, and (iii) the debt must be due to a banking company on the date of the commencement of the Act. These are cumulative conditions and unless each one of them is satisfied, clause (1) will not be attracted and the exclusion provided for there 350 in will not be available as an answer to the relief sought by the debtor in terms of the Act. Our attention was drawn by the Attorney General to the provisions of sections 2 (4) and 2 (4) (j) of the Act the former using the expression "on or before the commencement" of the Act and the latter "at the commencement" of the Act. Relying upon the different phraseology used in these two provisions and in clause (1) inter se, he urged that the legislature has chosen its words carefully and that when it intended to make the state of affairs existing "at" the commencement of the Act relevant, it has said so. We are not impressed by this submission. Section 2 (4) which defines a "debt" had to provide that debt means a liability due from or incurred by an agriculturist "on or before the commencement" of the Act. It could not be that liabilities incurred before the commencement of the Act would be "debts" even though they are not due on the date of commencement of the Act. The words "on or before the commencement" of the Act are used in the context of liabilities "due from or incurred" by an agriculturist. For similar reasons, clause (j) had to use the expression "at the commencement" of the Act, the subject matter of that clause being debts due to widows. The benefit of the exclusion provided for in clause (j) could only be given to widows to whom debts were due "at the commencement" of the Act. The legislature could not have given that benefit in respect of debts which were due before but not at the commencement of the Act. Thus, the language used in the two provisionals on which the learned Attorney General relies is suited to the particular subject matter with which those provisions deal and is apposite to the context in which that language is used. We have given to the provision of clause (1) an interpretation which, while giving effect to the intention of the legislature in the light of the object of the Act, brings out the true meaning of the provision contained in that clause. The literal construction will create an anomalous situation and lead to absurdidities and injustice. That construction has therefore to be avoided. Any other interpretation of clause (1) will make it vulnerable to a constitutional challenge on the ground of infraction of the guarantee of equality. The object of the Act being to confer certain benefits on agricultural debtors, the legislature would be under an obligation, while excepting a certain category of debts from the operation of the Act, to make a classification which will answer the test of article 14. Debts incurred from banking companies and due to such companies at the commencement of the Act would fall into 351 a separate and distinct class, the classification bearing a nexus with A the object of the Act. If debts incurred from private money lenders are brought within the terms of clause (1) on the theory that the right to recover the debt had passed on to a banking company sometime before the commencement of the Act, the clause would be unconstitutional for the reason that it accords a different treatment to a category of debts without a valid basis and without the classification having a nexus with the object of the Act. In State of Rajasthan vs Mukanchand section 2 (e) of Jagirdar 's Debt Reduction Act, 1937 was held invalid on the ground that it infringed Article 14 of the Constitution. The object of that Act was to reduce the debts secured on jagir lands which had been resumed under the provisions of the Rajasthan Land Reforms and Resumption of Jagirs Act. The Jagirdar 's capacity to pay debts had been reduced by the resumption of his lands and the object of the Act was to ameliorate his condition. It was held that no intelligible principle underlies the exempted category of debts mentioned in section 2(e) since the fact that the debts were owed to a government or to a local authority or similar other bodies, had no real relationship with the object sought to be achieved by the Act. In Fatehand Himmatlal vs Slate of Maharashtra, in which the constitutionality of the Maharashtra Debt Relief Act, 1976 was challenged, it was held by this Court that the exemption granted by the statute to credit institutions and banks was reasonable because liabilities due to Government, local authorities and other credit institutions were not tainted by the view of the debtor 's exploitation. Fatehchand would be an authority for the proposition that clause (1), in the manner interpreted by us, does not violate Article 14 of the Constitution. Shri Vaidyanathan, who appears on behalf of the respondent, contended that the claim made by the appellant Bank falls squarely under section 2 (4) (a) (ii) of the Act and that if the appellant is not entitled to the benefit of the specific provision contained therein, it is impermissible to consider whether it can claim the benefit of some other exclusionary clause like clause (1). Counsel is right to the extent that the appellant is not entitled to claim the benefit of the provision contained in section 2 (4)(a)(ii) because of Proviso B to that 352 section. The simple reason in support of this conclusion is that the right of the appellant to recover the debt arose by reason of a transfer effected by operation of law subsequent to July 1, 1957. We have already dealt with that aspect of the matter. But we are not inclined to accept the submission that if a particular case falls under a specific clause of section 2 (4) which is found to be inapplicable, the creditor is debarred from claiming the benefit of any of the other clauses (a) to (n). The object of the exclusionary clauses is to take category of debts from out of the operation of the Act and there is no reason why, if a specific clause is inapplicable, the creditor cannot seek the benefit of the other clauses. The exclusionary clauses, together, are certainly exhaustive of the categories of excepted debts but to make those clauses mutually exclusive will be to impair unduly the efficacy of the very object of taking away a certain class of debts from the operation of the Act. We are not therefore, inclined to accept the submission made by the learned counsel that section 2 (4) (a) (ii) is exhaustive of all circumstances in which a subsidiary bank can claim the benefit of the exceptions to section 2 (4). For these reasons we affirm the view of the High Court that the exclusion provided for in clause (1) of section 2 (4) of the Act can be availed of if the debt is due to a banking company at the time of the commencement of the Act. We have already indicated that the other condition which must be satisfied in order that clause (1) may apply is that the debt must have been incurred from a banking company before the commencement of the Act. For these reasons we dismiss the appeal. Appellant will pay the costs of the respondent throughout. S.R. Appeal dismissed.
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The respondent had an overdraft account with the Erattupetta Branch of the Kottayam orient Bank Ltd. at the foot of which he owed a sum of over Rs. 3000/ to the Bank.
The said Bank which was a 'Banking Company ' as defined in the Banking Regulation Act, 1949, was amalgamated with the appellant Bank with effect from June 17, 1961.
The appellant Bank filed a suit (O,S, 28 of 1963) in the Sub Court, Meenachil, against the respondent for recovery of the amount due from him in the overdraft Account with the Kottayam orient Bank, the right to recover which had come to be vested in the appellant as a result of the scheme of amalgamation.
The suit was decreed in favour of the appellant but when it took out execution proceedings in the Sub Court, Kottayam, the respondent filed an application under section 8 of the Kerala Agriculturists ' Debt Relief Act claiming that being an agriculturist within the meaning of that Act, he was entitled to the benefit of its provisions including those relating to the scaling down of debts.
The learned Subordinate Judge dismissed the application holding: (i) that the respondent was not entitled to the benefit of the provisions regarding scaling down of the debt because the debt, having been once owed by him to the Kottayam orient Bank Ltd. which was a Banking Company as defined in the Banking Regulation Act, 1949, was outside the purview of section S of the Act which provided for the scaling down of debts owed by agriculturists; and (ii) that he was only entitled to the benefit of the proviso to section 2(4) (l) of the Act under which the amount could be repaid in eight half yearly instalments The Revision Application preferred by the respondent was referred to the Full Bench of the High Court.
It was contended on behalf of the appellant Bank that the debt owed to it by the respondent was excluded from the operation of the Act by reason of section 2 (4) (a) (ii) and section 2 (4) (1) of the Act.
By its judgment dated February 1, 1978 the High Court rejected that contention, allowed the Revision Application and held that the respondent was entitled to all the relevant benefits of the Act, including the benefit of scaling down of the debt and hence the appeal by special leave.
339 Dismissing the appeal, the Court ^ HELD: 1:1.
The appellant Bank will not be entitled to the benefit of the exclusion contained in section 2 (4) (a) (ii) of the Kerala Agriculturists ' Debt Relief Act, 1970 in view of clause (B) of the proviso to the section and the respondent 's claim to the benefits of the Act will remain unaffected by that provision.
[345H, 346 A] 1: 2.
The respondent is admittedly an agriculturist and he owes a sum of money to the appellant Bank under a decree passed in its favour by the Sub Court, Meenachil, in O.S. No. 28 of 1963.
The liability which the respondent owes to the appellant Bank is, therefore a "debt" within the meaning of section 2 (4) of the Act.
[344 F G] However, since the appellant Bank, namely, the State Bank of Travancore, .
is a subsidiary bank within the meaning of section 2 (k) of the and also as contemplated by sub clause (ii) of clause (a) of section 2(4) of the Act, the decretal amount payable by the respondent to the appellant Bank will not be a debt within the meaning of section 2(4) of the Act.
[345 C D] 1: 3.
By reason of clause (B) of the proviso to section 2 (4) (a) (ii) of the Act, which proviso is in the nature of an exception to the exceptions contained in the said section the amount payable to a subsidiary bank is not to be regarded as a debt within the meaning of the Act, only if the right of the subsidiary bank to recover the amount did not arise by reason of any transfer effected by operation of law subsequent to July 1, 1957.
Here, the notification containing the scheme of amalgamation was published on May 16.
Thus, the right of the appellant Bank, though is a subsidiary Bank, to recover the amount from the respondent arose by reason of a transfer effected by operation of law, namely, the scheme of amalgamation, which came into effect after July 1, 1957.
[345 D E, G] 2: l.
The State Bank of Travancore, is not a 'company ' properly so called.
It is a subsidiary bank.
It was established by the Central Government in accordance with The Act of 1959 and is not a 'company and, therefore not a banking company.
Therefore, the decretal debt which the respondent is liable to pay to the appellant is not owed to a "banking company".
It was indeed not owed to any "banking company" at all on July 14, 1970 being the date on which the Act came into force.
[346 G H, 347 A] 3: 1.
The exclusion provided for in clause (I) of section 2 (4) of the Act can be availed of, if the debt is due to a banking company at the time of the commencement of the Act.
[352 D E] 3: 2.
The object of the Act is to relieve agricultural indebtedness.
In order to achieve that object, the legislature conferred certain benefits on agricultural debtors but, while doing so, it excluded a class of debts from the operation of the Act, namely, debts of the description mentioned in clauses (a) to (n) of section 2 (4).
One class of debts taken out from the operation of the Act is debts owed to banking companies, as specified in clause (1).
The reason for this exception being that, unlike money lenders who 340 exploit needy agriculturists and impose upon them harsh and onerous terms while granting loans to them, representative institutions, like banks and banking companies, are governed be their rules and regulations which do not change from debtor to debtor and which, if anything, are intended to benefit the weaker sections of society.
[348 A C] 3: 3.
Relief to agricultural debtors who have suffered the oppression of private money lenders, has to be the guiding star which must illumine and inform the interpretation of the beneficient provisions of the Act.
When clause (1) speaks of a debt due "before the commencement" of the Act to a banking company, it does undoubtedly mean what it says, namely, that the debt must have been due to a banking company before the commencement of the Act.
But it means something more: that the debt must also be due to a banking company at the commencement of the Act.
Reading into the clause the word "at" which is not there, is the only rational manner by which meaning and content could be given to it, so as to further the object of the Act.
[349 B E] Further clause (I) speaks of a debt due before the commencement of the Act, what it truly means to convey is not that the debt should have been due to a banking company at some point of time before the commencement of the Act, but that it must be a debt which was incurred from a banking company before the commencement of the Act.
[349 E F] Thus, the application of clause (I) is subject to these conditions: (i) The debt must have been incurred from a banking company; (ii) the debt must have been so incurred before the commencement of the Act; and (iii) the debt must be due to a banking company on the date of the commencement of the Act.
These are cumulative conditions and unless each one of them is satisfied, clause (I) will not be attracted and the exclusion provided for therein will not be available as an answer to the relief sought by the debtor in terms of the Act.
[349G H, 350 A] 3: 4.
Section 2 (4) which defines a "debt" had to provide that debt means a liability due from or incurred by an agriculturist "on or before the commencement" of the Act.
It could not be that liabilities incurred before the commencement of the Act would be "debts" even though they are not due on the date of commencement of the Act.
The words "on or before the commencement" of the Act are used in the context of liabilities "due from or incurred" by an agrieculturist.
For similar reasons, clause (j) had to use the expression "at the commencement" of the Act, the subject matter of that clause being debts due to widows.
The benefit of the exclusion provided for in clause (j) could only be given to widows to whom debts were due "at the commencement" of the Act.
The legislature could not have given that benefit in respect of debts which were due before but not at the commencement of the Act.
Thus, the language used in the two provisions is suited to the particular subject matter with which those provisions deal and is apposite to the context in which that language is used.
[350 C F] 3:5.
The object of the Act being to confer certain benefits on agricultural debtors, the legislature would be under an obligation, while excepting a certain category of debts from the operation of the Act, to make a classification which will answer the test of article 14.
Debts incurred from banking companies and 341 due to such companies at the commencement of the Act would fall into a separate and distinct class, the classification bearing a nexus with the object of the Act.
If debts incurred from private money lenders are brought within the terms of clause (I) on the theory that the right to recover the debt had passed on to a banking company sometime before the commencement of the Act, the clause would be unconstitutional for the reason that it accords a different treatment to a category of debts without a valid basis and without the classification having a nexus with the object of the Act.
[350G H, 357A B] State of Rajasthan vs Mukanchand ; ; Fatehchand Himmatlal vs State of Maharashtra, ; , applied.
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The person in this case had an overdraft (borrowed money) account with the Erattupetta Branch of the Kottayam orient Bank Ltd. They owed the bank over 3000 rupees.
This bank was a "Banking Company" as defined by the Banking Regulation Act of 1949. It joined together (amalgamated) with the appellant Bank starting June 17, 1961.
The appellant Bank filed a lawsuit in the Sub Court of Meenachil against the person to get back the money owed from the overdraft account with the Kottayam orient Bank. The appellant Bank had the right to get this money because of the joining together of the banks.
The court ruled in favor of the appellant Bank. But, when the appellant Bank started the process to get the money, the person filed a request under section 8 of the Kerala Agriculturists' Debt Relief Act. They claimed that because they were a farmer ("agriculturist" in legal terms) as defined by that law, they should get the benefits of the law. This included having their debts reduced.
The judge in the lower court rejected the request. They said: (i) the person could not have their debt reduced because the debt was originally owed to the Kottayam orient Bank Ltd., which was a Banking Company under the Banking Regulation Act of 1949. Section S of the Act, which allows for debt reduction for farmers, did not apply to debts owed to Banking Companies; and (ii) the person could only pay back the money in eight installments every six months as per section 2(4)(l) of the Act. The person then asked a higher court (High Court) to review this decision.
The appellant Bank argued that section 2 (4) (a) (ii) and section 2 (4) (1) of the Act said the debt owed to them by the person should not be covered by the Act.
The High Court rejected this argument on February 1, 1978. They allowed the person's request and said they were entitled to all the benefits of the Act, including having their debt reduced. The appellant Bank then appealed this decision.
The Court dismissed the appeal and HELD: 1:1.
The appellant Bank cannot use the rule in section 2 (4) (a) (ii) of the Kerala Agriculturists' Debt Relief Act, 1970, to exclude the debt because of clause (B) of that section. The person's right to the benefits of the Act remains.
[345H, 346 A] 1: 2.
The person is a farmer and owes money to the appellant Bank under a court order (decree) from the Sub Court of Meenachil.
The money owed by the person to the appellant Bank is therefore a "debt" as defined in section 2 (4) of the Act.
[344 F G] However, because the appellant Bank, the State Bank of Travancore, is a subsidiary bank (a bank controlled by another bank) as defined in section 2 (k) of the Act and section 2(4)(a)(ii) of the Act, the money owed to the appellant Bank is technically not a "debt" under section 2(4) of the Act.
[345 C D] 1: 3.
Clause (B) of section 2 (4) (a) (ii) of the Act says that if a subsidiary bank's right to get the money came about because of a transfer made by law after July 1, 1957, then it is still considered a debt under the Act.
Here, the announcement about the joining of the banks was made on May 16.
So, even though the appellant Bank is a subsidiary bank, its right to get the money from the person came about because of a transfer made by law (the joining of the banks) that happened after July 1, 1957.
[345 D E, G] 2: l.
The State Bank of Travancore is not a "company" in the normal sense.
It is a subsidiary bank.
It was created by the Central Government under the Act of 1959 and is not a "company" and therefore not a banking company.
Therefore, the debt that the person has to pay to the appellant Bank is not owed to a "banking company".
It was not owed to any "banking company" on July 14, 1970, when the Act came into effect.
[346 G H, 347 A] 3: 1.
The exclusion in section 2 (4) (I) of the Act only applies if the debt is owed to a banking company when the Act starts.
[352 D E] 3: 2.
The goal of the Act is to help farmers who are in debt.
To do this, the law gives farmers certain benefits. But, it also excludes some types of debts, like the ones listed in clauses (a) to (n) of section 2 (4).
One type of debt that is excluded is debt owed to banking companies, as specified in clause (1).
The reason for this is that banks and banking companies have rules that are fair to everyone, unlike some lenders who take advantage of farmers and charge them unfair terms. Banks' rules are meant to help those who are less fortunate.
[348 A C] 3: 3.
The main idea behind this law is to help farmers who have been treated unfairly by private lenders. This should guide how we understand the law.
When clause (1) talks about a debt owed "before the start" of the Act to a banking company, it means what it says: the debt must have been owed to a banking company before the Act started.
But it also means that the debt must still be owed to a banking company when the Act starts.
Adding the word "at" which is not there, is the only way to make sense of the clause and help achieve the goal of the Act.
[349 B E] Also, when clause (I) talks about a debt owed before the start of the Act, it means that the debt must have been taken out from a banking company before the Act started.
[349 E F] So, clause (I) only applies if these conditions are met: (i) The debt must have been taken out from a banking company; (ii) the debt must have been taken out before the Act started; and (iii) the debt must be owed to a banking company when the Act starts.
These conditions must all be met. If not, clause (I) does not apply, and the farmer can still get the benefits of the Act.
[349G H, 350 A] 3: 4.
Section 2 (4), which defines "debt", says that a debt is a liability owed by a farmer "on or before the start" of the Act.
It cannot be that liabilities taken on before the start of the Act would be "debts" even if they are not owed when the Act starts.
The words "on or before the start" of the Act are used when talking about liabilities "owed or taken on" by a farmer.
For similar reasons, clause (j) uses the expression "at the start" of the Act, because that clause deals with debts owed to widows.
The benefit of the exclusion in clause (j) can only be given to widows to whom debts were owed "at the start" of the Act.
The law could not have given that benefit for debts that were owed before but not at the start of the Act.
So, the language used in these two sections is appropriate for the specific topic they are dealing with and the context in which it is used.
[350 C F] 3:5.
Because the goal of the Act is to give benefits to farmers in debt, the law must make a fair distinction when excluding certain types of debts. This is required by article 14 of the Constitution.
Debts taken out from banking companies and owed to those companies when the Act starts would fall into a separate and distinct class. This distinction is related to the goal of the Act.
If debts taken out from private lenders are brought under clause (I) because the right to get the debt was transferred to a banking company sometime before the Act started, the clause would be unconstitutional. This is because it would be treating similar debts differently without a good reason and without the distinction being related to the goal of the Act.
[350G H, 357A B] State of Rajasthan vs Mukanchand ; ; Fatehchand Himmatlal vs State of Maharashtra, ; , applied.
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Civil Appeal No. 1194 of 1984. Appeal by Special leave from the Judgment and order dated the Ist and 3rd March, 1982 of the Punjab and Haryana High Court in 901 L.P.A No. 188 of 1982 Frank Anthony and Susheel Kumar for the Appellant M.S. Gujaral and S.K. Bagga for the Respondent The Judgment of the Court was delivered by MISRA, J. The main question for consideration in this appeal by special leave is whether a person selected by the Subordinate Service Selection Board for direct appointment to the post of Assistant Sub inspector of Police has got an unfettered right to be appointed on the basis of the recommendation made by the said Board. The material facts to bring out the point in controversy are as follows. On 31st of March, 1978 the Inspector General of Police, Punjab, respondent No. 2, sent a requisition to the Subordinate Service Selection Board (for short, the Board), respondent No. 3, to select and recommend 7 suitable pensions for the post of Assistant Sub Inspectors of Police. While the matter was pending consideration 50 more posts of Assistant Sub Inspectors of Police became available and, therefore, the Board was requested to recommend 57 suitable persons for these posts. The appellants along with many others were interviewed and physically tested on various dates ranging from 24th of October 1978 to 6th of February, 1979. Later on after the interviews were over but before the select list could be finalised by the Board the Inspector General of Police vide his letter dated 31st of August, 1979 requested the Board to recommend 170 more persons in addition to 57 already under consideration in anticipation of further vacancies likely to occur as a result of expected reorganisation of the Police force. In that connection a proposal for the disbandment of the Punjab Armed Police Battalion and instead creation of some additional posts for the District Police, had already been submitted. Thus, in all 277 candidates were to be recruited by the Board for the post of Assistant Sub Inspectors of Police. The Board however, recommended a panel of 144 candidates on 22nd of December, 1979. It appears that the proposal for disbandment of the Punjab Armed Police Battalion and creation of additional posts in the districts referred to above was turned down by the Government and, therefore, the anticipated 170 temporary vacancies of Assistant Sub Inspectors against direct recruitment quota could not be available. Out of the earlier 57 posts, however, 9 were offered to the wards of 902 the deceased police officers in accordance with the Punjab Government instructions regarding priority appointments issued vide letter No. 80 (GOI) SII (3)/73 12092 dated 18th April, 1973. The remaining 48 posts were offered to the candidates recommended by the Board in order of merit determined by the Board. Since the remaining candidates recommended by the Board pursuant to the latter requisition were not appointed as there were no vacancies, the disgruntled candidates filed two petitions under article 226 of the Constitution before the High Court. The stand of the petitioners in the two petitions was: (a) that the vacancies had already been communicated to the Board and it was on that basis that the Board had recommended their names for appointment and the State was bound to appoint them on the basis of the recommendation of the Board; (b) that the State was bound to follow the Punjab Police Rules and under rule 12. 3 twenty five per cent of the posts in the rank of Assistant Sub Inspectors are to be filled in by direct recruitment and the remaining seventy five per cent are to be filled by promotion; (c) that the State adopted a device of making ad hoc appointment of the Assistant Sub Inspectors by posting Head Constables as Assistant Sub Inspectors and the whole action was mala fide as the State Government intended to select and appoint its own favourites, (d) that the action of the Government in not appointing them pursuant to the recommendation of the Board is violative of articles 14 and 16 of the Constitution; (e) that even after the abolition of the Board the candidates recommended by it could not be refused appointment on the ground that the Board later on became functus officio; and (f) that even after the expiry of six months fixed by the Government instructions the petitioners could be appointed on the basis of recommendation of the Board. 903 The petitions were resisted by the State Government on the ground inter alia that by 7th of January, 1980 only 57 posts in the direct recruitment quota became available and appointments were made. As regards the remaining vacancies of 170 temporary posts of Assistant Sub Inspectors, proposal for disbandment of the Punjab Armed Police Battalion and instead creation of some additional posts for the District Police was eventually turned down by the State Government and so no additional vacancies became available and the petitioners could not be appointed. In any case the petitioners could not claim appointment as of right merely because the Board had recommended their names. It was further pleaded that according to the Government instructions issued vide letter No.1673 C II 56 dated 22nd March, 1957 a time limit of six months had been prescribed for filling up the vacancies by persons recommended by the Board and after the expiry of six months a fresh reference had to be made to the Board. As six months prescribed had already expired the petitioners could not be appointed on the basis of the recommendation of the Board. They also denied the allegation of mala fides in the ad hoc appointment of other persons and further pleaded that the refusal of the Government to appoint them was not hit by Articles 14 and 16 of the Constitution. On a consideration of the material on the record the learned Single Judge came to the conclusion that there was neither any vacancy in the quota of direct recruits of Assistant Sub Inspectors nor a single post meant for direct recruits is manned by an ad hoc employee, that no case of mala fides or favouritism has been made out, and that there was no violation of Articles 14 and 16 of the Constitution. A letters patent appeal preferred by the petitioners before the High Court was also dismissed. The petitioners in the writ petition feeling aggrieved have filed the present appeal by special leave. The petitioners before this Court in appeal categorically stated on oath that 500 promotions had been made by the State of Punjab and that the petitioners were entitled to 25 percent of those posts according to quota rule. They also alleged that 250 vacancies of Assistant Sub Inspectors were available in the C.I.D. wing alone in the Punjab Police and 250 persons had been promoted against those vacancies on ad hoc basis. This Court by its order dated 9th January, 1984 directed the State to supply detailed information to the petitioners of the names and designations of the Head Constables 904 promoted as Assistant Sub Inspectors between the period from 1979 to 1983. Pursuant to that order the State gave full details of the various promotions made by them during the period 1979 to 1983. rt revealed that the promotions made in various ranges totalled 646 and according to the State during 1979 1983, 576 vacancies of Assistant Sub Inspectors in promotee quota became available on account of promotion of 576 Assistant Sub Inspectors to the rank of Offg. Sub Inspectors, 5 against retirement of such officers, 13 due to death, 2 due to dismissal and 4 due to reversion of promotee Assistant Sub Inspectors. In addition, a total of 60 additional temporary posts of Assistant Sub Inspectors were sanctioned by the Government c, during the period against which such promotions were made. Thus, out of the total 660 vacancies of promotee quota during the aforesaid period 646 promotions had been made and on 31 December, 1983 there were 14 vacancies in the rank of Assistant Sub Inspectors Against promotee quota. Before we deal with the points raised by Mr. Frank Anthony in support of the appellants we must record our disapproval of the inconsistent pleas taken by it at various stages. To start with, it took up the plea that there Were no ad hoc appointments of Assistant Sub Inspectors from 1979 but later on it went back upon its previous statement and admitted that there were ad hoc appointments made but explained the position by subsequent affidavits wherein it was stated that the C.I.D. has no cadre strength of its own and all the posts, except language Stenographer, are filled in by taking officers on deputation from other units of the Police department and no ad hoc appointments were made in the rank of Assistant Sub Inspectors and that the petitioners could not be appointed as no posts for the petitioners were available with the department, but it is not necessary to refer to those explanations in any detail. Be that as it may, the fact remains that in anticipation of the proposal for disbandment of the Punjab Armed Police Battalion and instead creation of some additional posts for the district police a requisition was made for selecting 170 more candidates for direct appointment to the post of Assistant Sub Inspectors. But the proposal having been turned down by the Government there were no vacancies and, therefore, the question arises whether the petitioners have got an unfettered right to be appointed even though the aforesaid proposal had not been accepted and consequently there were no vacancies. 905 We now take up the contentions raised by Mr. Frank Anthony counsel for the appellants, that they have a right to be appointed to the post of Assistant Sub Inspectors on the basis of the selection made by the Board Article 320 of the Constitution enumerates the duties to be performed by the Union or the State Public Service Commissions: (i) to conduct examinations for appointments to the services of the Union and the services of the State respectively; (ii) if requested by any two or more States so to do, to assist those States in framing and operating schemes of joint recruitment for any services for which candidates possessing special qualifications are required; (iii)to advise on matters enumerated under cl. (3) of Article 320; and (iv) to advise on any matters so referred to them and any other matter which the President, or as the case may be, the Governor of the State may refer to them. The fact that there is no provision in the Constitution which makes the acceptance of the advice tendered by the Commission, when consulted, obligatory renders the provisions of article 320(3) only directory and not mandatory. The establishment of an independent body like Public Service Commission is to ensure selection of best available persons for appointment in a post to avoid arbitrariness and nepotism in the matter of appointment. It is constituted by reasons of high ability varied experience and of undisputed integrity and further assisted by experts on the subject. It Is true that they are appointed by Government but once they are appointed their independence is secured by various provisions of the Constitution. Whenever the Government is required to make an appointment to a higher public office it is required to consult the Public Service Commission. The selection has to be made by the commission and the Government has to fill up the posts by appointing those selected and recommended by the Commission adhering to the order of merit in the list of candidates sent by the Public Service Commission. The selection by the Commission, however, is only a recommendation of the Commission and the final authority for appointment is the Government. The Government may 906 accept the recommendation or may decline to accept the same. But if it chooses not to accept the recommendation of the Commission the Constitution enjoins the Government to place on the table of the Legislative Assembly its reasons and report for doing so. Thus, the Government is made answerable to the House for any departure vide Article 323 of the Constitution, This, however, does not clothe the appellants with any such right. They cannot claim as of right that the Government must accept the recommendation of the Commission. If, however, vacancy is to be filled up, the Government has to make appointment strictly adhering to the order of merit as recommended by the Public Service Commission. It cannot disturb the order of merit according to its own sweet will expect for other good reasons viz., bad conduct or character. The Government also cannot appoint a persons whose names does not appear in the list. But it is open to the Government to decide how many appointments will be made. The process for selection and selection for the purpose of recruitment against anticipated vacancies does not create a right to be appointed to the post which can be enforced by a mandamus. We are supported in our view by the two earlier decisions of this Court in A.N.D. Silva vs Union of India and State of Haryana vs Subash Chander Marwaha & Ors. The contention of Mr. Anthony to the contrary cannot be accepted. It was next contended for the appellants that the Punjab and Haryana High Court itself had taken a different view in G.S. Kalkat vs State of Punjab and Ors. from the one taken in the instant case and a copy of the judgment in that case has been filed. We have perused the judgment but find that the facts of the case were materially different from the facts of the case in hand. The next contention raised on behalf of the appellants was that the action of the Government in not appointing them in spite of the fact that they were selected and their names were recommended by the Board for appointment, was mala fide. The allegations about mala fides are more easily made than made out. There are no materials before us to warrant the conclusion that the action of the State Government in not appointing them was mala fide especially when the posts in anticipation where of the Board was asked to select more 907 candidates came to an end. There was no question of their appointment against those vacancies. Likewise, the contention that the action of the Government is hit by article 14 and 16 of the Constitution has no substance. The case of the appellants is not identical with those of the persons who were appointed as against 57 vacancies for which original requisition was made to the Board for selecting them. An argument of desperation was further advanced about promissory estoppel stopping the State Government from acting in the manner it did in not appointing the appellants although their names had been recommended. The notification issued by the Board in this case was only an invitation to candidates possessing specified qualifications to apply for selection for recruitment for certain posts. It did not hold out any promise that the selection would be made or if it was made the selected candidates would be appointed. The candidates did not acquire any right merely by applying for selection or for appointment after selection. When the proposal for disbandment of the Punjab Armed Police Battalion and instead creation of additional posts for the district police was turned down by the State Government, the appellants were duly informed of the situation and there was no question of any promissory estoppel against the State. It was further contended by Mr. Anthony that the recommendation made by the Board would remain effective even after the body had become defunct. It is not necessary to go into detail in this contention in as much as the fate of the case depends upon whether the appellants had a right to get appointed on the basis of the selection and recommendation made by the Board. The appellants came to Court to vindicate their right but if they had no right there was no question of enforcing that right. For the foregoing discussion the appeal has no force and therefore, it must fail. It is accordingly dismissed but in the circumstances of the case the parties should bear their own costs.
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Pursuant to a requisition of the Inspector General of Police Punjab to select and recommend suitable persons for the post of Assistant Sub Inspectors of Police against 57 available vacancies And 170 anticipated vacancies likely to occur as a result of expected re organisation of the Police Force by disbandment of the Punjab Armed Police Battalion, the appellant along with many others were interviewed and physically tested on various dates and the Board recommended panel of 144 candidates on 22nd December, 1979.
The proposal for disbandment of the Punjab Armed Police Battalion and creation instead of additional posts in the Districts was turned down by the Government with the result that there were only 57 posts out of which 9 were offered to The wards or the deceased police officers in accordance with the Punjab Government Instructions regarding priority appointments issued vide the letter No. 80(GOI) SII(3)/73/ 12092 dated 18th April, 1973 and the remaining 48 posts were offered to the candidates recommended by the Board in order of merit determined by the Board.
Since remaining candidates recommended by the Board pursuant to the requisition against anticipated vacancies were not appointed as there were no vacancies the disgruntled candidates filed two petitions under Article 226 of the Constitution before the High Court.
The petitions having been dismissed, two appeals were preferred under the Letters Patent which were also dismissed Hence the appeals by Special Leave.
Dismissing the appeals, the Court ^ HELD: 1.
The fact that there is no provision in the Constitution which makes the acceptance of the advice tendered by the Public Service Commission when consulted, obligatory renders the provisions of Article 320(3) only directory and not mandatory.
[905 E] 2.
The establishment of an independent body like Public Service Commission is to ensure selection of best available persons for appointment to the post to avoid arbitrariness and nepotism in the matter of appointment.
The selection by tho Commission, however, is only a recommendation of the Com 900 mission and the final authority for appointment is the Government.
The Government may accept the recommendation or may decline to accept the same.
But if it chooses not to accept the recommendations of the Commission the Constitution enjoins the Government to place on the table of the Legislative Assembly its reason and report for doing so.
Thus the Government is made answerable to the l louse for any departure vide Article 323 of the Constitution.
This, however, does not clothe the appellants with any such right in the instant case.
l hey cannot claim as of right that the Government must except the recommendation of the Commission.
If, however, the vacancy is to be filled up, the Government has to make appointment strictly adhering to the order merit as recommended by the Public Service Commission, it cannot disturb the order of merit according to its own sweet will except for other good reasons namely bad conduct or character.
The Government cannot appoint person whose name does not appear in the list.
But it is open to the (Government to decide how many appointments will be made.
The process for selection and selection for the purpose of recruitment against anticipated vacancies does not create a right to be appointed to the post which can be enforced by a Mandamus.
[905 F H; 906 A D] A.N.D. ' Silva vs Union of India, [1962] Supp I S.C.R. 968; State of Haryana vs Subash Chander Marwaha & Ors., [1974]] I SCR 165: applied.
G.S. Kalkat vs State of Punjab & Ors.
(Punjab and Haryana decided on 15th July, 1980; held inapplicable.
The allegation about the mala fides are more easily made than made out.
In the instant case, there are no materials to warrant the conclusion that the action of The State Government in not appointing the appellants was mala fide especially when the post in anticipation whereof the Board was asked to select more candidates came to an end.
There was no question of their appointment against these vacancies [906 G; 907 A] 3:2.
The action of the Government is not hit by Articles 14 and 16 of the Constitution and the case of the appellants is not identical with those of the persons who were appointed as against 57 vacancies for which original requisition was made to the Board for selecting them [907 B] 3:3.
The notification issued by the Selection Board in this case was only an invitation to candidates possessing specified qualifications to apply for selection for recruitment for certain posts.
It did not hold out any promise that the selection would be made or if it was made the selected candidates would be appointed.
The candidates did not acquire any right merely by applying for selection or for appointment after selection When the proposal for disbandment or the Punjab Armed Police Battalion and instead creation of additional posts for the district police was turned down by the State Government, the appellants were only informed of the situation and there was no question of any promissory estoppel against the State.
[907 C D]
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The Inspector General of Police in Punjab wanted to find people for Assistant Sub Inspector jobs. There were 57 open jobs and 170 more expected because the Punjab Armed Police Battalion might be shut down. The person making this appeal, along with others, had interviews and physical tests. A board recommended 144 people on December 22, 1979.
The government decided not to shut down the Punjab Armed Police Battalion or add more jobs in the districts. So, there were only 57 jobs. Of those, 9 were for family members of police officers who died or were hurt, following the Punjab Government's rules from a letter dated April 18, 1973. The other 48 jobs went to the people the board recommended, based on how well they did.
Some people the board recommended didn't get jobs because there weren't enough openings. They were unhappy and filed two petitions in the High Court under Article 226 of the Constitution. Article 226 allows people to ask the High Court to enforce their rights.
The High Court dismissed the petitions. Then, the people who didn't get jobs appealed under the Letters Patent, but those appeals were also dismissed. So, they appealed again using a special permission.
The Court dismissed the appeals, and said: 1. The Constitution doesn't force the government to accept the advice of the Public Service Commission (PSC). Article 320(3), which talks about the PSC, is just a suggestion, not a requirement.
2. The PSC is there to make sure the best people get chosen for jobs, and to prevent unfairness or favoritism. However, the PSC only makes recommendations. The government has the final say on who gets hired. The government can accept or reject the PSC's choices. But, if the government doesn't accept the PSC's recommendations, it must explain why to the Legislative Assembly, as required by Article 323 of the Constitution. This makes the government responsible to the Assembly.
This doesn't give the people appealing any special rights. They can't demand that the government accept the PSC's recommendations. However, if the government fills a job, it must follow the order of merit recommended by the PSC. It can't change the order unless there's a good reason, like bad behavior. The government can't hire someone who isn't on the list. But, the government can decide how many jobs to fill. Being selected for a job that was expected to open up doesn't guarantee you'll get the job, and you can't force the government to hire you.
The court referred to some previous cases: A.N.D. 'Silva vs Union of India and State of Haryana vs Subash Chander Marwaha & Ors., and applied their principles. G.S. Kalkat vs State of Punjab & Ors. was found to be not relevant.
Saying that something was done in bad faith is easy, but proving it is hard. In this case, there's no proof that the government acted unfairly by not hiring the people appealing. This is especially true because the expected jobs that the board was asked to find candidates for never opened up. There was no reason to hire them for those jobs.
3:2. The government's actions didn't violate Articles 14 and 16 of the Constitution, which guarantee equality. The people appealing are not in the same situation as those who were hired for the original 57 jobs.
3:3. The Selection Board's announcement was just an invitation for qualified people to apply for the jobs. It didn't promise that anyone would be selected or hired. Applying or being selected didn't give the candidates any guaranteed right to a job. When the government decided not to shut down the Punjab Armed Police Battalion and create new jobs, the people appealing were informed. There was no broken promise by the government.
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Civil Appeal No. 89 of 1953. 132 Appeal from the Judgment and Decree dated the 28th day of March, 1949, of the High Court of Judicature at Madras in Appeal No. 654 of 1945, arising out of the Judgment and Decree dated the 23rd day of July, 1945, of the Court of the District Judge, Bellary, in Original Suit No. 17 of 1944. K. section Krishnaswami Iyengar (K. R. Chowdhury, D. Gundu Rao, A. Rama Rao and Rajinder Narain, with him) for the appellant. B.Somayya (M. V. Ganapathi and Ganpat Rai, with him) for respondent No. 1. 1954. April 15. The Judgment of the Court was delivered by MUKHERJEA J. This appeal arises out of a suit, commenced by the plaintiff respondent, in the Court of the District Judge of Bellary, being Original Suit No. 17 of 1944, for establishment of his title to one half share of the land described in the schedule to the plaint and for recovery of possession of the same after partition with defendant No. 1, who is the appellant before us. The suit was dismissed by the trial Judge by his judgment dated the 23rd of July, 1945. On an appeal being taken against that decision by the plaintiff to the High Court of Madras, a Division Bench of the High Court by its judgment dated the 28th of March, 1949, allowed the appeal and reversed the judgment of the trial Court. , The defendant No. 1 has now come up on appeal to this Court on the strength of a certificate granted by the High Court under article 133 of the Constitution read with sections 109 and 1 10 of the Civil Procedure Code. To appreciate the contentions that have been raised before us it may be necessary to give a short resume of the material facts. The land in suit, which has an area of a little over 9 acres, was admittedly the property of one Basappa who died some time before 1918, leaving three daughters, to wit Paramma, Pompamma and Hampamma. Under a settlement entered into with the immediate reversioner of Basappa which is evidenced by two registered deeds Exhibits P 2 and P 3 executed respectively in the years 1918 and 1919, the three sisters got about 15 to 16 acres of wet land 133 in absolute right. Hampamma subsequently took away her one third share in these lands and we are not concerned with her any further in this litigation. Paramma and Pompamma continued to enjoy the remaining two thirds share of the property and it is this two thirds ,share comprising 9 acres 49 cents of wet land which forms the subject matter of the present suit. Pompamma married one Nagana Gowd and after giving birth to two sons to wit Siddalingana and Chenabasa vana, she died in the year 1923. It is not disputed that her share in the lands mentioned above devolved upon these two sons. After Pompamma 's death, Nagana married again and stayed with his second wife in his ancestral village, while these two infant sons of Pompamma remained at village Kampli with Paramma, their mother 's sister, who reared them up as her own sons. On the 22nd June, 1923, Paramma executed a deed of gift in favour of the two sons of her sister by which she conveyed to the latter her own share in the. suit property. The result was that the two sons of Pompamma got the entirety of the 9 acres 49 cents of land which as owned jointly by their mother and their mother 's sister Paramma. Shortly after this gift was made, Siddalingana, the elder son of Pompamma, died in the year 1924 and the plaintiff 's case is that his half share in the disputed property devolved upon his father Nagkna under the Hindu law of inheritance. It is admitted however that Paramma continued to possess the entirety of the land on behalf of the younger son Chenabasavana who is defendant No. 1 in the suit On the 25th August, 1946, there was a lease deed Exhibit D 1, and its counter part Exhibit D 2, executed by and between Paramma on the one hand and Nagana as the father and guardian of the infant Chenabasavana on the other by which the infant represented by his father purported to grant a lease of the entire property to Paramma for a period of 12 years at a rental of Rs. 500 a year. Two rent receipts passed by Nagana to Paramma in token of the receipt of rents, reserved by this lease, on behalf of Chenabasavana have been proved in this case, Exhibits D 4 and D4 1, and they are of the years 1927 and 1932 respectively. 134 It appears that in 1934 Nagana instituted a suit as guardian of his infant son Chenabasavana in the Munsif 's Court at Hospet to recover a sum of Rs. 500 as rent from Paramma on the basis of the lease mentioned above. The suit was decreed ex parte and the decree was discharged later on by a document Exhibit D 3, dated the 14th of November, 1934, executed by Nagana, which contains a recital that as Paramma had borrowed much money to purchase lands for the minor, all future rents payable under the lease were also to be considered as fully paid. It is in evidence and not disputed, that near about this time Nagana became financially involved and on the 27th of August, 1935, he executed a deed of mortgage by conditional sale in respect of half share of the disputed land in favour of defendant No. 2 to secure an advance of Rs. 3,000. The document recites that the half share of the land which was kept as. security devolved upon the mortgagor on the death of his son Siddalingana and "that he was in possession of the same. On the 16th July, 1936, Nagana sold the mortgaged property by,a deed of sale (Exhibit P 6) to the mortgagee himself: or a consideration of Rs. 3,000 which was the principal sum due under the mortgage. It is admitted that the purchaser did not and could not obtain possession of the property at any time since then and on the 2nd May, 1944, he sold the property to the 'plaintiff by a conveyance which is Exhibit P 1. On the 18th July, 1944, the plaintiff brought the present suit against Chenabasavana as defendant No. I for recovery of a demarcated half share of the disputed property after partition with the latter on the strength of the purchase mentioned above and his own vendor was impleaded as defendant No. 2 in the suit. The suit was contested by defendant No. 1 and a number of pleas were taken by him in his written statement. The substantial defence put forward was of a two fold character. It was contended in the first place that under the deed of gift executed by Paramma in favour of defendant No. I and his deceased brother Siddalingana, the donees became joint tenants with rights of survivorship Consequently on the death of 135 Siddalingana his interest devolved upon defendant No. 1 and not on his father. The other and the more material defence raised was that the plaintiff 's suit was barred, as he was never in possession of the property and the defendant No. 1 acquired a good title by adverse possession. Both these points were decided against the plaintiff by the learned District Judge who tried the suit. It was held that the deed of gift executed by Paramma conferred no right on Nagana as the heir of his son and such rights if any were specifically disclaimed by Nagana by the lease deed and also by the receipts which he granted to Paramma as the guardian of his minor son. It was held further that the plaintiff 's suit was bound to fail as he or his predecessors were never in possession of the property within 12 years from the date of the suit. The plaintiff indeed was an alienee of a co tenant but it was held that the ordinary rule of one co owner being presumed to hold on behalf of the others could not apply to the present case. , as Nagana disclaimed his rights as a co owner and purported to act only on behalf of his infant son Chenabasavana whose exclusive title to the lands he definitely acknowledged. In view of these findings the trial Judge dismissed the plaintiff 's suit. Thereupon the plaintiff took an appeal against this decision to the High Court of Madras and the appeal was heard by a Division Bench consisting of Rajamannar C.J. and Balakrishna Ayyar J. The learned Judges held, differing from the trial Court, that the two sons of Pompamma took their shares in their mother 's property which devolved upon them by inheritance, its well as in the property which they obtained under the deed of gift executed in their favour by Paramma, as tenants in common and not as joint tenants and consequently on the death of Siddalingana his interest vested in his father Nagana and not in his brother, the defendant No. I. On the other question the High Court held that though. Nagana by his acts and conduct in connection with the execution of the lease deed did exhibit an animus to hold the property solely on behalf of Chenabasavana to the exclusion of himself, yet this animus did not last beyond 1935 when he 136 asserted his own right as a co sharer to half shire of the plaint property by executing the mortgage deed in favour of defendant No. 2. In these circumstances it was held that the defendant No. 1 did not acquire title by adverse possession and the plaintiff was entitled to succeed. The defendant No. 1 has now come up on appeal to this Court. Mr. Ayyangar appearing in support of the appeal has not pressed before us the contention that was raised on behalf of his client in the Courts below, that as the two brothers took the property as joint tenants and not as tenants in common, the interest of Siddalingana passed on his death to his brother, the defendant No. 1, and not to Nagana. We must take it therefore that after the death of Siddalingana, Nagana became a co owner of the disputed property with his minor son Chenabasavana. As the plaintiff purports to derive his title from Nagana, he can be said to have established his title as a co owner with defendant No. I and this being the position, the presumption of law would be that the possession of one co owner was on behalf of the other also unless actual ouster was proved. To defeat the claims of the plaintiff therefore it is incumbent upon defendant No. I to prove that he held the property adversely to his co owner for the statutory period. The peculiarity of the present cage is that here the joint owners of the property were the father and his infant son, of whom the father himself was the guardian and th e infant could not act in law except through the guardian. It is conceded on behalf of the appellant that the mere fact that the father did not participate in the profits of the property which was left to the management of Paramrna on behalf of the infant could not by itself make the possession of the son adverse to his father. But the acts and conduct of the father in connection with the lease deed of 1926 and the subsequent granting of receipts in terms thereof undoubtedly point to something more than mere non participation in the enjoyment of profits of the property on absence of objection to the exclusive enjoyment there of by Paramma on behalf of the infant, In granting the 137 lease on behalf of the infant the father definitely asserted the exclusive title of his son to the property and by implication denied his own rights as a co owner thereto. In law the possession of the lessee is the possession of the lessor and consequently ever since 1926 when Paramma began to possess the property as a lessee in terms of the ease deed, her possession in law was the possession of the infant alone to the exclusion of Nagana, the father. The fact that Nagana consented to such exclusion is immaterial. There can be in law, under certain circumstances, adverse possession with the consent of the true owner. A common illustration of this rule is furnished 'by the class of cases where the legal owner of a property transfers the same to another without the requisite legal formalities and though the transferee does not acquire a legal title to it by the transfer, yet if he gets possession of the property though with the consent of the transferor that possession becomes adverse to the owner and if continued for the statutory period creates a title in him. We are not satisfied from the materials in this case that Nagana was ignorant of his rights as heir of his deceased son when he executed the lease in the year 1926. , But even if he was, as the exclusive possession of the infant was exercised with the full knowledge and consent of the father who openly acknowledged the title of his son, such possession could not but be adverse to the father. The learned Judges of the High Court seem to be of the opinion that the possession of the minor could be regarded as adverse from the date of the execution of the lease, as the father by being a party to the said document, did exhibit an animus to possess the common property on behalf of the minor alone to the exclusion of himself. But according to the learned Judges this animus ceased as soon as Nagana executed the mortgage deed in 1935, asserting his right as, joint owner of the property in dispute and the adverse possession of the son forthwith came to an end. With this view we are unable to agree. Once it is held that the, possession of a co sharer has become adverse to the other co sharer as a result of ouster, the mere assertion of his joint title by the 138 dispossessed co sharer would not interrupt the running of adverse possession. He must actually and effectively break up the exclusive possession of his co sharer by re entry upon the property or by resuming possession in such manner as it was possible to do. It may also check the running of time if the co sharer who is in exclusive possession acknowledges the title of his coowner or discontinues his exclusive possession of the property. On the materials on the record, none of these things seems to have been proved in the present case. Resumption of physical possession or re entry upon the property was absolutely out of the question, as the property was in the possession of a lessee. The lease, it should be noted, was executed in 1926 and we have two rent receipts of the years 1927 and 1932 respectively by v which Nagana acknowledged receipt of rents on behalf of his infant son in terms of the lease deed. The rent suit in 1934 was also brought by him in his capacity as guardian of defendant No. 1 and the document Exhibit D 3 by which the decree in that suit was discharged and a receipt was given in advance for all the subsequent rents point definitely to the conclusion that the entire rent for the whole period of 12 years was paid to and was accepted on behalf of Chenabasavana and Nagana neither received any por tion of it nor laid any claim to the same. During the whole period of the lease and up to the present day the minor is admittedly in possession of the property and no act or conduct on his part has been proved either within the period of limitation or even after that which might be regarded as an acknowledgment of the title of his father as co owner. In our opinion the fact that the father who had allowed himself to be dispossessed by his son exhibited later on his animus to treat the property as the joint property of himself and his son cannot arrest the running of adverse possession in favour of the son. A mere mental act on the part of the person dispossessed unaccompanied by any change of possession cannot affect the continuity of adverse possession of the deseizor. The view taken by the High Court probably rests on the supposition that as, it was the father, who, acting 139 on behalf of his son, asserted the exclusive title of the son to the property in denial of his own rights, it was open to the father again if he so chose to resile from that position and make a fresh declaration that property was not the sole property of the son but belonged to him as well; and this subsequent act would annul the consequences of his previous act. This reasoning does not appear to us to be sound. The father 's acts in connection with the lease were entirely in his capacity as guardian of his son. In the eye of the law they were the acts of the son, but the creation of the mortage in 1935 was not the act of the father on behalf of his son, it was the personal act of the father himself qua co proprietor of the son and the interest of one being adverse to the other such acts could not be held to be acts of the son performed through the father. It is extremely doubtful whether qua guardian the father could make such declaration at all. Any change of intention on the part of the guardian can be brought home to the minor through the guardian alone and the minor can react to it again only through the guardian. It may be proper in such cases for the father to renounce his guardianship before he could assert any right of his own against his ward; but it is not necessary for us to go into that question, as the mortgage in this case was made by the father no I t as guardian of the minor at all. It was no more than a declaration, by a person who was dispossessed by his co sharer, of his joint title to the property and as has been already pointed out, as it did not involve any change of possession it did not affect the adverse possession of the deseizor. In our opinion therefore the view taken by the learned Judges of the High Court is not proper and cannot be sustained. The result is that the appeal is allowed; the ,judgment and decree of the High Court are set aside and those of the District Judge restored. The appellant will have his costs in all the Courts. Appeal allowed.
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Once it is hold that a possession of a co sharer has become adverse to the other co sharer as a result of ouster, the mere assertion of his joint title by the dispossessed co sharer would not interrupt the running of adverse possession.
He must actually and effectively break up the exclusive possession of his co sharer by re entry upon the property or by resuming possession in such manner as it was possible to do.
It may also check the running of time if the co sharer who is in exclusive possession acknowledges the title of his co owner or discontinues his exclusive possession of the property.
The fact that one co sharer who bad allowed himself to be dispossessed by another co sharer as a result of ouster exhibited later on his animus to treat the property as the joint property of himself and his co sharer cannot arrest the running of adverse possession in favour of the co sharer.
A mere mental act on the part of the person dispossessed unaccompanied by any change of possession cannot affect the continuity of adverse possession of the deseizor.
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If one co-owner's possession of a property becomes hostile to another co-owner because they've been kicked out (ouster), simply claiming joint ownership won't stop the clock on adverse possession.
The co-owner who was kicked out must really disrupt the other's exclusive control by re-entering the property or taking back possession in a clear way.
The clock can also stop if the co-owner who has exclusive possession admits the other co-owner's ownership or ends their exclusive control of the property.
If a co-owner allows another co-owner to take exclusive control through ouster, the fact that the first co-owner later wants to treat the property as jointly owned doesn't stop the other co-owner from gaining ownership through adverse possession.
Just thinking about treating the property as jointly owned, without any actual change in who controls the property, won't affect the ongoing adverse possession of the person who took control.
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ition (Criminal) Nos. 64 to 70 of 1983. Under article 32 of the Constitution of India Mrs. Urmila Sirur, Sanjeev Puri and Amerdeep Jaiswal for the Petitioners. Harbans Singh and S.K. Bagga for the Respondent. The Judgment of the Court was delivered by TULZAPURKAR, J. In the context of the right of the 'lifers ' (prisoners sentenced to life imprisonment prior to 18th December, 743 1978 being the date of coming into force of sec. 433A, Cr.P.C.) to have their cases considered for pre mature release under the Punjab Jail Manual two contentions were urged by counsel appearing for the lifers before us in the above matters. First, it was contended that such lifers were entitled to have their cases for pre mature release considered by the concerned authorities on completion of ten years of sentence inclusive of remissions in the case of a female prisoner or a male prisoner of under 20 years of age at the date of the commission of the offence or completion of 14 years of sentence inclusive of remissions in the case of adult prisoners under Para 516 B of the Punjab Jail Manual but since November, 1971 the authorities concerned are not submitting their cases for such consideration until actual substantive imprisonment has been undergone for 6 years in case of female prisoners and prisoners below 20 years at the date of the commission of the offence and 8 years in case of adult prisoners and in that behalf certain executive instructions issued by the Punjab Government on 6th August, 1971 are being relied upon but according to the counsel for the lifers such executive instructions issued in 1971 cannot affect the right conferred upon the lifers under Para 516 B which has the force of a statutory rule and Statutory Rules cannot be amended or altered by any executive instructions; hence the lifers concerned in these matters are entitled to have their cases considered for pre mature release since they satisfy the requirements of Para 516 B of the Punjab Jail Manual. In this behalf counsel relied upon the Punjab High Court 's decision dated 9.11.1982 in Naranjan Singh 's case (which decision is subject. matter of challenge in Criminal Appeal arising from leave being granted in SLP (Crl. No. 499/1983). In other words, counsel canvassed for acceptance of the Punjab High Court 's view in the aforesaid case by this Court. Secondly, counsel for the lifers urged that the State of Punjab has been erroneously making a distinction between cases of Prisoners who have been sentenced to death but whose sentences, on mercy petitions, have been commuted to life imprisonment and prisoners who have been straightaway sentenced to life imprisonment in the matter of consideration of their cases for pre mature release in that, in the case of the former completion of 14 years of actual sentence is insisted upon while in the case of the latter only 8 years of actual sentence is regarded as sufficient for such consideration, the case of Tapinder Singh s/o Manjit Singh, the petitioner in Writ Petition (Crl. ) No. 68 of 1983 being in point. According to counsel the State Government in this behalf has been relying upon certain 744 executive instructions issued on 30th of January, 1976 but counsel pointed out that in the case of Mehar Singh vs State of Punjab(1) a Single Judge of the Punjab High Court held that those instructions will not be applicable to cases of prisoners convicted earlier to that date and Special Leave Petition (Crl.) No. 2142 of 1982 preferred by the State of Punjab against that decision was dismissed by this Court on 18th of February, 1983 and, therefore, it is not open to the State Government to rely upon those executive instructions issued on 30th January, 1976 for making the distinction and postponing the consideration of the cases of prisoners falling within the former category until 14 years of actual imprisonment has been suffered by them. Paragraph 516 B of the Punjab Jail Manual runs thus: 516 B. (a) With the exception of females and of males who were under 20 years of age at the time of commission of offence, the cases of every convicted prisoner sentenced to: (i) Imprisonment for life. (ii) Imprisonment/s for life and term/s of imprisonment. (iii) Cumulative Periods of Rigorous imprisonment aggregating of more than 14 years. (iv) a single sentence of more than 20 years.: (a) who has undergone a period of detention in jail amounting together with remission earned to 14 years, shall be submitted through the Inspectors General of Prisons, Punjab for the orders of the State Government. (b) the case of a female prisoner and of a male prisoner under 20 years of age at the time of commission of offence, who is undergoing (i) Imprisonment/s for life. (ii) Imprisonment/s for life and a term/s of imprisonment. 745 (iii) Cumulative periods of Rigorous imprisonment aggregating to more than 10 years. or; (iv) A single sentence of more than 20 years shall be submitted through the Inspector General of Prisons, Punjab, for the orders of the State Government when the prisoner has undergone a period of detention in jail amounting together with remission earned to 10 years. (v) Notwithstanding anything contained above, a Superintendent, Jail may, in his discretion, refer at any time, for the orders of the State Government through the Inspector General of Prisoners, Punjab, the case of any prisoner sentenced to imprisonment for life whose sentence might in the Superintendent 's opinion be suitably commuted into a term of imprisonment. " It appears that from time to time the State Government had been examining the question of, and the procedure for, submission of Roles for pre mature release of prisoners as contained in the aforesaid Para 516 B of the Manual and after considerable deliberation the State Government took a policy decision in 1971 and issued instructions (hereinafter called 'the 1971 Instructions ') providing that a period of actual sentence of 8 years in the case of adult lifers and 6 years in the case of female prisoners and those below 20 years of age at the time of the commission of the offence should be regarded as the qualifying period for consideration of their cases for pre mature release and in this behalf a Memorandum No. 133116JJ 71/39656 dated 10th of November, 1971 containing the aforesaid instructions was issued by the State Government to the Inspector General of Prisons, Punjab and it was clarified that all cases of prisoners should be sent for consideration of their pre mature release in the light of said policy decision with effect from 2nd of November, 1971. It further appears that the question of releasing pre maturely life convicts whose death sentence has been commuted was again considered by the State Government and it took a policy decision in January, 1976 that cases of such life convicts should be considered for pre mature release only after completion 14 years of actual imprisonment and in that behalf a Memorandum No. 403 6JJ 76/3456 dated 30th January, 1976 containing the necessary instructions (hereinafter called 'the 1976 Instructions ') was issued by the State Government to the Inspector General of Prisons, Punjab with a 746 request to direct the Superintendents of Jails to submit cases of such life convicts for pre mature release accordingly. (Copies of the Memoranda dated 10th of November, 1971 and 30th January, 1976 have been annexed as Annexures and to the Affidavit of Shri C.L. Goel in support of the SLP No 499/1983 filed by the State of Punjab in Naranjan Singh 's case. (Proceedings of SLP No. 499/83 were made available to us at the hearing.) It may be stated that these 1971 Instructions and 1976 Instructions though not incorporated in the Punjab Jail Manual as yet, are being followed and implemented and it appears that relying on these Instructions the Jail Authorities are not submitting cases of the concerned lifers to the State Government for pre mature release though they may have suffered the qualifying punishment under para 516 B of the Manual. Hence Counsel for the petitioners herein has raised the two contentions mentioned above. In our view, for the reasons which we are indicating presently, there is no substance in either of these contentions. It is well settled as result of the Privy Council decision in Pandit KishoriLal 's (1) case and this Court 's decisions in Gopal Godse 's (2) case, Maru Ram 's (3) case and Kartar Singh 's (4) case that a sentence of imprisonment for life is a sentence for the remainder of the natural life of the convict and there is no question releasing such a convict earlier in the absence of a formal order of commutation passed by the State Government either under sec. 55, IPC. or sec, 433 (b) of Cr. P.C. 1973 and that even the Remission Rules, though statutory, cannot over ride the statutory provisions contained in the Penal Code. In other words, unlike the cases of prisoners sentenced to terms of imprisonment, in the case of lifers even the Remission Rules though statutory are of no avail in the absence of a formal order of commutation either under sec. 55, IPC. or sec. 433 (b) of Cr. P.C. 1973. Admittedly, in the case of none of the petitioners before us has any order of commutation been passed by the State Government under either of the said provisions and the petitioners are merely relying upon para 516 B of the Punjab Jail Manual for contending that they are entitled to have their cases considered for pre mature release since they have undergone the requisite period of punishment 14 years/10 years inclusive of remissions as per the provisions of the said para and the contention is 747 that since Para 516 B has the force of statutory rule the subsequent executive instructions (the 1971 Instructions or the 1976 Instructions) issued by the State Government cannot adversely affect their said right in as much as the effect of a statutory rule cannot be whittled down by executive instructions. On the other hand counsel for the State contended that the provisions contained in Para 516 B were themselves executive instructions and not a statutory rule and as such these could be amended or altered from time to time by fresh executive instructions issued by the State Government and therefore the petitioners ' cases were not submitted to the concerned authorities for consideration of their pre mature release because of the subsequent executive instructions issued in 1971 and 1976. We find ample material on record which supports the contention of counsel for the State. In the first place, it may be stated that the marginal note against Para 516 B of the Punjab Jail Manual (1975 edition) clearly shows that the provisions thereof are based on a Government of India Resolution No. 159 167 dated 6th September, 1905, copy whereof was produced before us and the contents of the Resolution clearly show that various questions such as the places where transported prisoners should be kept, the nature of their punishment, remission of sentences, pre mature releases, etc. had engaged the attention of Government of India and decisions were taken on those questions. In particular the Resolution records that the majority of the authorities consulted were in favour of the proposal of the U.P. Government that when the term of imprisonment undergone together with any remission earned under the rules amounted to 14 years the question of remitting the remainder of the imprisonment should be raised and the Governor General in Council was accordingly pleased to direct that such a rule "shall be ordinarily adopted in future, though he would not, however, lay down that such prisoners must always be released at the end of the 14 years and it would still be open to, and indeed incumbent on, the Local Government to take into consideration, when deciding on the remission to be granted, circumstances of each, case, the character of the convict, his conduct in prison and the probability of his reverting to criminal habits or instigating others to commit crimes". What is more copies of the Resolution were forwarded to various State Government "for information and guidance. " This clearly shows that the contents of Government 's Resolution dated 6th September, 1905, on which para 516 B of the Punjab Jail Manual is based, were in the nature of executive instructions by way of guidance and not any hard and fast rule, 748 must less a statutory rule. Secondly, this position has been sufficiently clarified at two places in the Punjab Jail Manual (1975 edition) itself. In the preface to that edition it has been clearly stated that the Paragraphs of the Manual against which a black line (side line) appears are in substance, either quotations from the Law or from the Rules having the force of the law while the portions of the Manual without a black line (side line) are executive instruction which have from time to time been issued by the Government of India, Local Government or the Inspector General with the sanction and approval from the Local Government and para 516 B is not side lined by any black line. Again, Chapter XX which deals with remission system contains Para 631 to 650 which comprise what in terms are called 'remission rules ' presumably having statutory force since these paras are all side lined, but what is of importance is that at the foot of para 631 there is a Note which is nothing but a reproduction of para 516 B and at the end of Remission Rules (foot of para 650) there is a Nota bene which says that the Note to para 631 should not be regarded as part of the Statutory Rules but the same has been inserted for convenience of reference and with the object of assisting officers to interpret the rules. It is thus clear that para 516 B of the Manual itself contained executive instructions and had no force of a statutory rule. If that be so it would always be open to the State Government from time to time to alter or amend or even withdraw such executive instructions by issuing fresh instruction. In other words any existing executive instructions could be substituted by issuing fresh executive instructions for processing the cases of lifers for premature release but once issued these must be uniformly and invariably applied to all cases of lifers so as to avoid the charge of discrimination under article 14. Reliance by Counsel for the petitioners on the Punjab High Court 's decision in Naranjan Singh 's case would be of no avail However, we would like to observe that in that case the fact that the State Government had issued the 1971 Instructions which substituted para 516 B of the Manual was not properly placed before it and in the absence of such proper material the High Court took the view that the convict 's case for per mature release was required to be considered in the light of the provisions of para 516 B. The view of the Punjab High Court cannot obviously be accepted. The first contention urged by counsel therefore has to be rejected. 749 The second contention also must fail in view of the admitted position that cases of prisoners who have been sentenced to death but whose sentence on mercy petitions has been commuted to life imprisonment (who constitute a distinct class) will now be governed by the 1976 Instructions. Here also the view of the Punjab High Court in the case of Mehar Singh (supra) that the 1976 Instructions issued on 30th of January, 1976 will not be applicable to cases of prisoners convicted earlier to that date is not tenable. Clearly existing cases of life convicts falling within that category will be governed by those instructions. It is true that SLP (Crl) No. 2142/1982 preferred by State of Punjab against that decision was dismissed by this Court on 18th February, 1983 but the dismissal order passed by this Court itself indicates that this Court did so not because it approved the view of the Punjab High Court but that it "did not consider this to be a proper cases for interference in view of the peculiar facts of that case". This Court did not desire on the facts of that case to interfere with the direction given that the case of the convict should be submitted for consideration of his premature release. Having regard to the above discussion it is clear there is no entitlement on the part of the petitioners other than Jang Singh and Mukhtiar Singh to have their cases considered for pre mature release immediately in view of 1971/1976 Instruction. Their Writ Petitions are therefore dismissed. So far as Jang Singh s/o Bagga Singh and Mukhtiar Singh s/o Harnam Singh are concerned even the Counter Affidavit of Shri K.C. Mahajan shows that in accordance with the 1971 Instruction they have undergone more than 8 years of actual imprisonment and as such they have the entitlement. We therefore issue a writ of Mandamus that their cases be submitted for consideration of premature release forth with without any delay. H.S.K. Two petitions allowed and five petitions dismissed.
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Paragraph 516 B of the Punjab Jail Manual provided inter alia that after a person sentenced to life imprisonment had undergone detention for the period specified in that paragraph together with remission earned, his case should be submitted to the State Government for consideration of his pre mature release.
In 1971 the State Government issued instructions laying down certain minimum period of actual detention to be undergone by a person sentenced to life imprisonment before his case for pre mature release could be considered by the State Government.
In 1976 the State Government issued further instructions that cases of life convicts whose death sentence had been commuted to life imprisonment should be considered for premature release only after completion of 14 years of actual imprisonment.
The petitioners, who claimed to have satisfied the requirements of para 516 B and thus become entitled to be considered for pre mature release under that paragraph, alleged that following the 1971 and 1976 instructions the jail authorities were not submitting their cases to the State Government for consideration of their pre mature release.
The petitioners contended that para 516 B was a statutory rule and the subsequent executive instructions issued in 1971 and 1976 could not amend or alter the statutory rule thereby adversely affecting their rights under Para 516 B. Dismissing the five petitions and allowing two petitions, ^ HELD: A sentence of imprisonment for life is a sentence for the remainder of the natural life of the convict and there is no question releasing such a convict earlier in the absence of a formal order of commutation passed by the State Government either under sec.
55, IPC.
or sec.
433 (b) of Cr.
P.C. 1973 and that even the Remission Rules, though statutory, cannot over ride the statutory provisions contained in the Penal Code.
Admittedly, in the case of none of the petitioners before the Court has any order of commutation been passed by the State Government under either of the said provisions.
[746E F] 742 Pandit Kishori Lal AIR 1945 PC.
64; Gopal Godse ; ; Maru Ram; , and Kartor singh ; ; referred to.
Para 516.B of the manual itself contained executive instructions and had no force of a statutory rule.
If that be so it would always be open to the State Government from time to time to alter or amend or even withdraw such executive instructions by issuing fresh instructions.
But once fresh instructions for processing the cases for lifers for pre mature release are issued these must be uniformly and invariably applied to all cases of lifers so as to avoid the charge of discrimination under article 14 of the Constitution.
[748E F] In Naranjan Singh 's case (which decision is subject matter of challenge in criminal appeal arising from leave being granted in SLP (Crl.) No. 499 of 1983) the fact that the State Government had issued the 1971 instruction which substituted Para 516 B of the manual was not properly placed before the High Court and in the absence of such proper material the High Court took the view that the convict 's case for pre mature release was required to be considered in the light of the provisions of Para 516 B.
The view of the High Court cannot obviously be accepted.
[748G H] The contention of the petitioners that the State had been erroneously making a distinction between cases of prisoners who had been sentenced to death but whose sentences, on mercy petitions, had been commuted to life imprisonment and prisoners who had been straightaway sentenced to life imprisonment in the matter of consideration of their cases for pre mature release, must fail in view of the admitted position that cases of prisoners who have been sentenced to death but whose sentence on mercy petitions has been commuted to life imprisonment (who constitute a distinct class) will now be governed by the 1976 Instructions.
The view of the High Court in the case of Mehar Singh vs State of Punjab (not reported) that the 1976 instructions will not be applicable to cases of prisoners convicted earlier to that date is not tenable.
Clearly existing cases of life convict 's falling within that category will be governed by those instructions.
[749A C]
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Paragraph 516 B of the Punjab Jail Manual said that if a person with a life sentence served a certain amount of time, plus any time taken off for good behavior, their case should go to the government. The government would then decide if they could be released early.
In 1971, the government made rules about the minimum amount of actual prison time a person with a life sentence had to serve before the government would consider letting them out early.
In 1976, the government made more rules. These said that if someone's death sentence was changed to a life sentence, they could only be considered for early release after serving at least 14 years in prison.
Some prisoners said they met the requirements of paragraph 516 B and should have their cases sent to the government for early release consideration. They claimed that because of the 1971 and 1976 rules, jail officials weren't sending their cases to the government.
The prisoners argued that paragraph 516 B was a legal rule. They said the 1971 and 1976 rules from the government could not change the legal rule and take away their rights under paragraph 516 B. The court dismissed five petitions and allowed two, saying: A life sentence means a person stays in prison for the rest of their life. They can't be released early unless the government formally changes the sentence, as allowed by Section 55 of the Indian Penal Code (IPC) or Section 433 (b) of the Criminal Procedure Code (Cr.P.C.) of 1973. Even the Remission Rules (rules about reducing sentences for good behavior), even if they are legal rules, can't go against what the Penal Code says. None of the prisoners in this case had their sentences changed by the government under these laws.
[746E F] 742 Pandit Kishori Lal AIR 1945 PC.
64; Gopal Godse ; ; Maru Ram; , and Kartor singh ; ; referred to.
Paragraph 516.B of the manual was just instructions from the government, not a legal rule.
Because of that, the government can change or even cancel those instructions at any time by making new ones.
But, when the government makes new instructions for dealing with early release for people with life sentences, they must apply them to everyone equally. This is to avoid discrimination, which is against Article 14 of the Constitution. [748E F]
In Naranjan Singh's case (which is being challenged in a criminal appeal), the High Court didn't have all the information. The government had made the 1971 rule, which replaced paragraph 516 B of the manual, but the High Court didn't know that. Because of that, the High Court thought the prisoner's case should be considered under paragraph 516 B.
The High Court's decision can't be accepted. [748G H]
The prisoners argued that the government was unfairly treating people whose death sentences were changed to life sentences differently from people who were originally sentenced to life in prison, when deciding about early release. This argument fails, because people whose death sentences were changed to life sentences (who are a special group) will now be dealt with under the 1976 rules.
The High Court's view in the case of Mehar Singh vs State of Punjab (not reported) was that the 1976 rules don't apply to prisoners convicted before that date. This is wrong. Existing cases of prisoners with life sentences in that group will be dealt with under those rules. [749A C]
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Appeal No. 556 of 1964. Appeal from the judgment and order dated March, 24, 1961 of the Assam and Nagaland High Court in M. A. (F) No. 29 of 1956. B. Sen and D. N. Mukherjee for the appellant. section G. Patwardhan and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Assam High Court and arises in the following circums tances. The appellant had obtained a money decree against Thakur Prosad Joyaswal and others in 1947. As the decree remained unsatisfied it was transferred from Calcutta to Gauhati for execution. On May 2, 1953, an application was made for execution in the court at Gauhati by attachment under 0. XXI, r. 46 of the Code of Civil Procedure of certain movable property of the judgment debtors which was said to be in the possession of the Sub Divisional Officer, Military Engineering Service, Pandu. Consequently an order was issued under O.XXI r. 46 (1)(c)(iii) prohibiting the Sub Divisional Officer from parting with 208 the property of the judgment debtors. It may be mentioned that the Sub Divisional Officer is subordinate to the Garrison Engineer, Shillong. Though certain applications were put in on behalf of the Sub Divisional Officer before the court, it was only on February 1, 1954 that the Acting Garrison Engineer, Shillong stated before the court that the movable property in question (i.e. 41 R.S. joists) had been sold and delivered as far back as November 22, 1951 to Messrs. Ghunilal Kanhaiyalal of Palasbari. This objection was considered by the execution court and it held on September 25, 1964 that this belated statement that the property in question had been sold as far back as November 22, 1951 could not be believed. The execution court therefore dismissed the objection and ordered execution to proceed. Thereafter orders were issued for the production of the joists but they were not produced. Thereupon the appellant applied that the Union of India should be considered to be the principal judgment debtor and execution should be levied against the Union of India. The Union of India objected to this and on April 21, 1956 the objection of the Union of India was dismissed and the execution court held that the Union of India be treated as the principal judgment debtor and be made liable to the extent of the proceeds of the attached joists. Later on the same day, a further legal argument was raised on behalf of the Union of India to the effect that as there was no surety bond the Union of India could not be treated as the principal judgment debtor. This objection was heard and finally the court ordered on April 28, 1956 that even though there was no surety bond executed on behalf of the Union ,of India it was liable as a surety. Thereupon the Union of India appealed to the High Court against the order of April 28, 1956. The High Court allowed the appeal and set aside the order ,of the execution court holding that no action could be taken against the Union of India under section 145 of the Code of Civil Procedure upon which the execution court had apparently relied. Thereupon the appellant asked for and obtained a certificate from the High Court, and that is how the matter has come before us. We are of opinion that there is no force in this appeal. Order XXI r. 46(i) provides that in the case of other movable property not in the possession of the judgment debtor, except property deposited in or in the custody of any court, the attachment shall be made by a written order prohibiting the person in possession of the same from giving it over to the judgment debtor. The necessary prohibitory order had been issued by the execution court in this case with respect to 41 joists and had been received by the Sub Divisional Officer. Such a prohibitory order is sufficient for the purpose of attachment, though the 20 9 property mentioned therein is not actually taken in possession by the Court. After attachment has been made in the manner provided by r. 46 the next step that the court has to take is to order sale of the property attached. Then comes O.XXI r. 79 which provides that where the property sold is movable property of which actual seizure has been made, it shall be delivered to the purchaser [see r. 79(1)]. But where the property sold is movable property in the possession of some person other than the judgment debtor, the delivery thereof to the purchaser shall be made by giving notice to the person in possession prohibiting him from delivering possession of the property to any person except the purchaser [see r. 79 (2)]. In the present case there was no actual seizure of the property but attachment had been made under O.XXI r. 46 (1). The proper procedure for the court to follow was to sell the property under O.XXI r. 64 and then pass an order under O.XXI r. 79 (2) for its delivery in the manner provided therein. The court however went on asking the Sub Divisional Officer to produce the property and when it was not produced it proceeded under section 145 of the Code. We agree with the High Court that section 145 has no application in the present case. Section 145 runs thus : "Where any person has become liable as surety (a) for the performance of any decree or any part thereof, or (b) for the restitution of any property taken in execution of a decree, or (c) for the payment of any money, or for the fulfilment of any condition imposed on any person, under an order of the court in any suit or in any proceeding consequent thereon, the decree or order may be executed against him, to the extent to which he has rendered himself personally liable in the manner therein provided for the execution of the decrees and such person shall, for the purposes of appeal be deemed a party within the meaning of section 47: Provided that such notice as the court in each case thinks sufficient has been given to the surety. " A bare perusal of section 145 shows that it applies when a person has become liable as surety. Now the mere fact that an attachment was made of 41 joists said to be lying with the Sub Divisional Officer by the issue of the prohibitory order under O.XXI r. 46 does not make the Sub Divisional Officer or the Union of India a surety for the performance of the decree which was in execution. There was no surety bond taken from the Sub Divisional Officer and the joists 2 1 0 were not actually seized by the court and handed over to the Sub Divisional Officer as suparddar on the basis of a surety bond. If that had been done some question may have arisen whether the Sub Divisional Officer did become a surety for the performance of the decree or part thereof. But where merely a prohibitory order is issued under 0. XXI r. 46(1) and attachment is made in that manner, there can be no question of the person to whom the prohibitory order is issued becoming a surety for the performance of the decree. We therefore agree with the High Court that section 145 of the Code was not applicable to this case and the execution court was completely wrong in holding that the Sub Divisional Officer became a surety simply because attachment had been made in the manner provided in O.XXI r. 46 (1),. The appeal fails and is hereby dismissed with costs to the Union of India. V.P.S. Appeal dismissed.
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The appellant, who was the decree holder, applied for the execution of the decree.
The Sub Divisional Officer, Military Engineering Service, was in possession of some movable property of the judgment debtor.
The Court ordered attachment under 0.
XXI, r. 46(1), Civil Procedure Code by prohibiting the Sub divisional Officer from handing over the property to the judgment debtor.
Thereafter, in stead of following the proper price(lure which was to sell the property under O.XXI, r. 64 and then pass an order for its delivery under O.XXI, r. 79(2), the Court ordered the Sub divisional Officer to produce the property, and, when it was not produced, proceeded under section 145 of the Code treating the Union of India as the principal judgment debtor.
HELD: Section 145 of the Code was not applicable to the cage.
That section only applies when a person becomes liable as a surety and the execution Court was wrong in holding that the Sub divisional Officer became a surety simply because attachment had been made by the prohibitory order under O.XXI, r. 46(1).
[209 H, 210 B C]
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The person who won the case (the appellant) asked the court to enforce the court order.
The Sub Divisional Officer, who worked for the Military Engineering Service, had some property belonging to the person who lost the case (the judgment debtor).
The court ordered that the Sub Divisional Officer could not give the property to the judgment debtor. This was done according to a specific rule in the Civil Procedure Code. This is called an attachment.
Instead of selling the property as the rules said they should, the court told the Sub Divisional Officer to bring the property to them. When the officer didn't bring the property, the court treated the Union of India as if they were the main person who lost the case. They did this under section 145 of the Code.
The court decided that section 145 of the Code did not apply here. That section only applies when someone promises to pay if the losing party doesn’t. The court was wrong to think the Sub Divisional Officer became someone who promised to pay just because the court had said he couldn’t give the property to the judgment debtor.
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