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Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 Equivalent citations: 1972 AIR 598, 1972 SCR (2) 632, AIR 1972 SUPREME COURT 598, 1972 JABLJ 206, 1972 2 SCR 632, 1972 MAH LJ 640, 1972 MPLJ 706 Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde PETITIONER: KISHORILAL HANS Vs. RESPONDENT: RAJA RAM SINGH & ORS. DATE OF JUDGMENT30/11/1971 BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. CITATION: 1972 AIR 598 1972 SCR (2) 632 CITATOR INFO : RF 1990 SC 991 (13) ACT: Constitution (Scheduled Castes) Order 1950 and Scheduled Tribes Lists (Modification) Order 1956--Jatav caste not mentioned as Scheduled caste in Datia District of Madhya Pradesh--Election petition--Candidate belonging to Jatav caste seeking to prove that Jatav caste is included in chamar caste which is mentioned in order--Such inquiry not permissible in view of Art. 341 of Constitution. HEADNOTE: Thee appellant was declared elected in February 1967 from the Bhander Assembly constituency in District Datia of the State of Madhya Pradesh a seat which was reserved for a scheduled caste candidate. Under the Constitution (Scheduled Castes) Order 1950 and Scheduled Tribes Lists (Modification) Order 1956 the President of India had Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 1 declared in respect of District Datia the various castes which were to be recognised as Scheduled castes. In items thereof the castes mentioned were : 'Chamar, Ahirwar, Chamar Mangam, Mochi and Raidas.' The respondent, an unsuccessful candidate at the said election filed an election petition inter alia on the ground that the appellant, was a Jatav by caste and therefore not a member of any of the scheduled castes mentioned in the Presidential Order. The appellant contended that the Jatav caste was a sub-caste of the caste chamar mentioned in the order. The High Court decided against the appellant who appealed to this Court. HELD : From the evidence there was little room for doubt that although at one time Jatavs might have been chamars but they became a distinct caste or came to be recognised as a separate caste several years ago. The fact that they were shown separately as a caste in the Madhya Bharat and several others states in the Scheduled Caste or Scheduled Tribes Order (Amendment) Act 1956 shows that the existence of Jatav caste was recognised. [642 C] The evidence in the form of representations made by the members of Jatav community including the returned candidate himself apart from other oral evidence, established the existence if Jatav caste even in Datia district but it so happened that it was not included either in the Act of 1956 or the Presidential Order among the Scheduled Castes. [642 E] If the matter were res-integra there might have been a good deal of difficulty in reconciling with the constitutional provisions the scheme followed in the Presidential Orders by which the same caste has been included in some districts of the same State and excluded in other districts. This Court, however in Bhaiyalal v. Balkishan Singh & Ors. made observa- tions repelling the contention that under Art. 341 of the Constitution the president was not authorised to limit the notification to parts of a State. [644 C] In Bhaiyalal's case it was also held that the plea that though the appellant was not a chamar as such he could claim the same status by reason of the fact that he belonged to the Dohar caste which is a sub-caste of the chamar caste, could not be accepted. An inquiry of that kind was held not be permissible having regard to the provision of Art. 341 of the Constitution. The case of Basavalingappa v. Munichinnappa was referred 633 to. Following these two decisions it must be held that the returned candidate, in the present case, was not entitled to establish that Jatav caste was the same as Chamar. [644 F-H] the appeal must accordingly be dismissed. Bhaiyalal v. Harikishan Singh, [1965] 2 S.C.R. 877 and Basavalingappa v. Munichinnappa, [1965] 1 S.C.R. 316, applied. Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 2 JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2123 and 2237 of 1969. Appeals under S. 116-A of the Representation of the People Act, 1951 from the judgment and, order dated August 29, 1965 of the Madhya Pradesh High Court, Indore Bench in Election Petition No. 18 of 1967. Rameshwar Nath, for the appellant (in C.A. No. 2123 of 1969) and respondent No. 1 (in C.A. No. 2237 of 1969). A. K. Sen, G. L. Sanghi and K. P. Gupta, for respondent No. 1 (in C.A. No. 2123 of 1969) and the appellant: (in C.A. No. 2237 of 1969). The Judgment of the Court was delivered by Grover, J. These are two cross,-,appeals from a judgment of the Madhya Pradesh High Court. We shall give the facts of C.A. No. 2123/69 which arises from an election petition filed by the respondent Rajaram Singh an unsuccessful candidate in the High Court under s. 81 of the Representation of People Act 1951, hereinafter called the 'Act', challenging the election of the appellant who was declared duly elected in February 1967 from the Bhander Assembly Constituency of the State of Madhya Pradesh-a seat which was reserved for a scheduled caste candidate. The last date for filing the nomination papers was January 20, 1967, the date of scrutiny was January 21, 1967. The pool took place on February 20, 1967. The result of the election was declared on February 21, 1967. The appellant obtained 24,549 votes whereas respondent No. 1 obtained 8096 votes. A number of allegations were raised in the election petition and as many as 12 issues were framed with a number of sub-issues. On all the issues the allegations of respondent No. 1 were negatived with the exception of issue No. 1. That issue was as follows :- (1) (a) Whether respondent No. 1 Shri Kishorilal belongs to the Jatav caste as alleged by the petitioner. does not belong to the scheduled caste and, therefore, does not possess the necessary qualifications of a scheduled caste candidate for the Bhander Assembly Constituency in question which is a reserved seat for scheduled caste candidate only, as alleged by the petitioner ? (c) Whether Jatav caste is one of the sub- castes of Chamar as alleged by respondent No. 1 ? (d) Assuming that 'Jatav' is a separate caste then whether 'Jatav' is recorded as scheduled caste for the purpose of Bhander Assembly Constituency in question as alleged by respondent No. 1 ? (e) Whether, therefore, on this ground he was entitled to contest the election as a scheduled caste candidate from the Bhander Assembly Constituency, although he is a permanent resident of village Bargawan within the Seondha Assembly Constituency in which he is recorded as a voter as alleged by him ? Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 3 The High Court found sub-issue (a) in the affirmative and held that the appellant belonged to the 'Jatav' caste. On sub-issue (b) it was held that the appellant did not possess the necessary qualifications and was, therefore, unqualified to fill the @ in question. On sub-issue (c) the court was of the opinion that no inquiry could be made into the question whether the 'jatav' caste, is one of the sub-castes of Chamar. Sub-issue (d) was answered in the affirmative and (e) in the negative. The only question which now survives for consideration is whether the High Court was right in holding that the appellant was not a member of the scheduled caste and was, therefore, disqualified to stand for a seat reserved for a scheduled caste. We may refer to the pleadings of the parties on the point. In the election petition it was alleged in para 6 that the name of the appellant before us, who will hereafter be referred to as the ..returned candidate" was not entered in the electoral roll for legislative assembly constituency no. 2 Seondha, district Datia in part No. 81, village Bargawan on serial No. 154. He was a permanent resident of that village within the aforesaid assembly Constituency. The returned candidate belonged to the 'Jatav' caste which was no,, a scheduled caste declared for the purpose of election for Datia district. He had fraudulently cancelled his jatav caste and represent himself to be a Chamar lie had stood a,, a candidate for the Bhander Assembly Constitution. Under the Constitution (Scheduled Castes) Order 1950 and the Scheduled Caste and Scheduled Tribes Lists (Modification) Order 1956 the President of India had declared in respect of District Datia the various castes which were to be recognised as scheduled caste. Item 3 thereof was as follows :- "Chamar, Ahirwar, Chamar Mangam, Mochi or Riadas". It was asserted that Jatav caste had not been recognised as a scheduled caste by the President in the district of Datia as the social level of development of that unity was of such a high degree that it did not require any such protection or recognition or privilege. It was further added that there were thousands of families of Jatavs in Datia district in the erstwhile State of Vindya Pradesh but Jatav caste was not recognised as a scheduled caste. In his written statement the returned candidate admitted that his name was entered as alleged in the election petition and that he was a resident of village Bargawan, district Datia. It was denied that he belonged to Jatav caste as alleged in the petition. It was claimed that he belonged to the Chamar caste and Jatav caste was one, of the sub-castes of Chamar. It was denied that Chamar caste was not recognised as scheduled caste for the purpose of election to the Bhander Constituency. It was also denied that the returned candidate did not fraudulently conceal his real Jatav caste and represented himself to be a Chamar. Without prejudice to what has been pleaded before us was claimed that even if 'Jatav' was treated as a separate caste and not a sub-caste of the Chamar caste 'Jatav' was recorded as a scheduled caste for the purpose of Bhander assembly constituency from which the returned candidate contested the election. It was immaterial, according to him, whether Jatav as a separate caste was recorded or not in the Datia district in which his name was entered in the electoral roll. Other assertions in the election petition on the point were not admitted. It was ultimately maintained that there was no difference between Jatav and Chamar castes and it was reiterated that Jatav was only a sub-caste of Chamar. Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 4 Accordingly to the Presidential Order Jatav was not one of the castes mentioned in it so far as Datia district of the Madhya Pradesh State was concerned in which the returned candidate was enrolled as an elector. In the area comprising the Bhander Constituency from where the returned candidate stood for election Jatav was one of the castes which was included in the aforesaid Order. But it is not claimed, and rightly so. that fact could be of any avail to the returned candidate. If he was a Jatav by caste and if that caste did not find any mention in the Presidential Order in the Datia district the returned candidate could not be regarded as having the qualifications for offering himself for election in a constituency reserved for a member of the scheduled caste. Before us it has been argued on behalf of the returned candidate that he belonged to the Chamar caste which was admittedly one of the castes included in the Order even for Datia district. It is asserted that he was not a Jatav and that certain section of the Chamars in that district was anxious to be called by the name of Jatav because it had given up the profession of making shoes and did- not wish to be called Chamar since that word smacked of inferior status. In other words, the caste to which the returned candidate belonged was, in fact, the Chamar caste and it did not make any difference if he along with several others from that caste made attempts at various stages to be called by the name of Jatav. The other contention that has been sought to be pressed is that all the Jatavs in Datia district are in fact Chamars ,and therefore the mention of the Chamar caste was sufficient for the purpose of including them in that caste and it was not necessary to mention Jatavs separately. Thirdly it has been submitted that even on the assumption that the returned candidate belonged to the Jatav caste he could not be held to have been disqualified to fill in the seat reserved for a scheduled caste keeping in view the provisions of s. 5 of the Act. The crucial question which must first be determined is whether the returned candidate was a Chamar by caste or he belonged to the Jatav caste if there was such a caste in existence in the Datia district. The High Court considered the oral evidence and relied a good deal on some pamphlets which had been issued by certain organizations of the Jatav caste in which the returned candidate was an office-bearer. Reference may be made, in particular, to three pamphlets Exhs. P. 16, P. 17 and P. 18 which were printed and published. These pamphlets related to Jatav Sammelans which were held in certain places in tehsil Datia etc. In Exh. P. 16 the returned candidate was shown as one of the conveners; in Exh. P. 17 he was shown as one of the conveners. In Exh. P. 18 it was mentioned that the returned candidate, who was the Mantri (Secretary) of the Jatav Sabha Datia was also expected to attend the Jatav Sammelan Barchouli in tehsil Bhander. As noticed by the High Court the substance of these pamphlets Exhs. P. 16 and P. 17 was that a deputation consisting of the representatives of the Provincial Jatav Sabha under the leadership of Atamdas President of that Sabha waited upon the Collector of Datia district on January 12, 1961. One of the grievances which was brought to the notice of the Collector was that some of the officers and the clerical staff did not record the caste of Jatav community as Jatav even though the members of the said community told them that their caste was Jatav. The Collector had issued an order to all his subordinates to record Jatav. as the ,caste of the persons belonging to the Jatav community. By these pamphlets Jatavs were advised to record their true caste i.e. 'Jatav' in the Census operations which were to commence in February 1961. Exh. p. 18 was a pamphlet. The substance of which was that a big Sammelan of the Jatav community and other depressed classes would be held on January 26, 1960 Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 5 -at Mouza Barchouli in which various difficulties which were being experienced by the Jatav community would be considered. As mentioned earlier it was stated in Exh. P. 18 that the returned candidate who was described as the Secretary of the Jatav Sabha, Datia was also expected to attend that Sammelan. Another document Exh. P. 60 which was a resolution passed at a Jatav Sammelan held at Tharet on October 24, 1963 showed that a demand had been made that scholarships should be given to the students belonging to the Jatav community exactly in the same manner as such scholarships were being awarded to students belonging to the scheduled castes. The name of the person who is shown as having seconded this resolution which was proposed by one Lalu Ram Jatav is that of the returned candidate. Certain criminal proceedings were started against- the returned candidate in 1964. From the record of the criminal case it appeared that in the personal bond Exh. P. 10 dated May 6, 1964 the returned candidate had given his caste as Jatav. There were other similar documents i.e. Exh. P. 55 which was a personal bond and the security bond Exh. P. 56. According to the High Court all than documents from 1960 to 1964 showed that the returned candidate was a Jatav by caste and in his capacity as Secretary of Jatav Sabha, district Datia he organised various Jatav Sammelans to get the grievances of the members of the Jatav caste redressed. In none of these documents it was mentioned that he was a Chamar nor was there the remotest indication to show that these Sammelans had been organised by the returned candidate in his capacity as a Chamar. The High Court referred to the oral evidence also but it will be wholly futile to refer to the entire evidence except the statement of the returned candidate himself and of some of the material witnesses produced by both sides, if necessary. There were certain Other documents which had been filed by Hari Narain Ken P.W. 20 who was the General Secretary, Jatav Sabha, Madhya Bharat and the then Madhya Pradesh since 1948. It will be useful at this stage to refer to the original Presidential Order and the changes which were made in it subsequently. According to the Constitution (scheduled Caste) Order 1950 which was Promulgated in. exercise of the powers conferred by clause (1) of Art. 341 of the Constitution soon after it came into force Jatavs were not shown among the scheduled castes in Madhya Pradesh and Madhya Bharat. Among the other castes Chamar was mentioned. Similarly in the Constitution (scheduled Castes) Part C States Order 1951 only Chamar was shown, among the scheduled castes in Vindhya Pradesh. A Bill No. 8 of 1956 was introduced in the Lok Sabha which appeared in Gazette Extra Ordinary of April 6, 1956. This Bill was to provide for the inclusion in and exclusion from the list of scheduled castes and of scheduled tribes of certain castes and tribes. The entries proposed which are relevant for our purposes in the then three States of Madhya Pradesh, Madhya Bharat and Vindhya Pradesh were as follows Madhya Pradesh "Chamar, Chamari, Mochi, Nona, Rohidas, Ramnami Satnami, Surjyabanshi or Surjyaramnami." Madhya Bharat "Chamar, Bairwa, Bhambi, Jatav. Mochi, or Regar." Vindhya Pradesh. "Chamar, Ahirwar, Chamar Mangan, Mochi or Raidas". On September 25, 1956 the Scheduled Castes & Scheduled Tribes Order's Amendment Act 1956 received the assent of the President. The Act followed the same scheme which was to be found in the Bill. In other words in Vindhya Pradesh in entry 3 apart from Chamar, Ahirwar, Chamar Mangam, Mochi or Raidas were included. It is noteworthy that upto this stage Jatav caste was not included in Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 6 the erstwhile States of Madhya Pradesh and Vindhya Pradesh but were included only in Madhya Bharat, After the States Reorganisation Act came to be enacted the Scheduled Castes and Scheduled Tribes List (Modification) Order 1.956 was promulgated pursuant to s. 41 of the said Act. Madhya Bharat and Vindhya Pradesh ceased to be. separate States and the territories of Madhya Bharat with a few exceptions and Vindhya Pradesh became part of the State of Madhya Pradesh. In the district of Bhind etc. in item 9 Jatav was included in the entry beginning with Chamar. However in several other districts Jatavs were not included and in particular in the districts which formerly formed part of Vindhya Pradesh including Datia. It appears that when the Bill referred to before was introduced in the Parliament prior to the enactment of the States Reorganisation Act 1956 a memorial dated July 17, 1956 was sent by the President of the Jatav Sabha to the Government of India. In that memorial Exh. P. 57 a protest was made for not recognizing the Jatav caste as a separate caste and a strong case was, made out for recognizing Jatav as a distinct caste. It was pointed out in that memorial that the Government of India, prior to the coming into force of the Constitution, had regarded Jatav as a depressed class, but the same had been excluded from the list of scheduled castes in some States i.e. Madhya Bharat, Bhopal and Madhya Pradesh etc. without any rhyme or reason. It was further stated : "Now an Amendment Bill of the Scheduled Castes which has been submitted by you in the Lok Sabha on 6th April 1956, therein the Jatav community has been illegal and unjustly proposed to be included in other Scheduled Castes with which we have no endogenously connection. I have the honour to point out here that Jatavs did never wish to leave the fold of the Scheduled Castes. But we desire to remain under a Separate Column as a separate caste in the list of Scheduled castes". Among the demands set out in the memorial were the, following (1) the Jatav caste should be included in the list of scheduled caste in the States of Madhya Pradesh and Vindhya Pradesh. It was added that in Vindhya Pradesh Jatavs were included in the list in the Presidential Order 1950; but it was urged that they should be separately mentioned and not grouped with the other castes. It was pointed out that in the following States Jatavs were included in the list of Scheduled castes but were grouped with Chamar, Reghar or Mochi etc. and that they should be separately mentioned as a scheduled caste : "Madhya Bharat, Bhopal, Uttar Pradesh, Rajasthan, Ajmer, Delhi." It is apparent that repeated attempts were being made by the representatives of the Jatav caste to have their caste included in the list of Scheduled Castes wherever they were not included and to have that caste separated from Chamar, Regar or Mochi etc. and not be grouped with these castes in those areas where they were so shown. It is obvious that after the reorganisation of the States in 1956 when the Scheduled Castes and Scheduled Tribes List (Modification) Order 1956 was promulgated Jatavs were not included among scheduled castes in the districts including Datia which comprised the erstwhile State of Vindhya Pradesh. If the case of the returned candidate had been, right from the beginning, that whatever representations were made to which he was a party the object was to get a certain section of the Chamars who had started followed different avocations designated by the name of Jatavs and included under that name among the scheduled castes the Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 7 position might have been different; but all the pamphlets etc. and the activities of the returned candidate showed that he was a Jatav and that caste was quite different from that of Chamars. Indeed no such case was raised in the written statement and even in his own statement the returned candidate did not make out such a case. He started by saying in examination-in-chief that he was a Chamar by caste but then he proceeded to say that Jatav is a sub-caste of Chamar. He did not explain how he came to be associated with the various activities of the Jatav Organisation where his name was shown prominently as one of the office-bearers, particularly with reference to the branch of the Jatav Organisation in Datia. He denied in cross-examination that he attended any Jatav Sammelan in Pichhor tehsil. He admitted, however, that in Bhander tehsil he visited Jatav Sammelan twice. On one occasion he went to the Sammelan at Mouza Barcholi. It appears that he did not have any clear idea about the caste to which he belonged. The following questions and answers will show the complete confusion in his own mind as to whether Jatavs and Chamars formed one caste or whether Jatav was a sub-caste of Chamar :- " Q. I put it to you whether you are a 'Jatav Chamar'? A. I am a Chamar (Mai Chamar Hoon). Q. Whether 'Jatav' and 'Chamar' is one and the same thing ? A. Yes, Chamar and Jatav is one and the same caste. Q. Whether 'Jatav' is a sub-caste of 'Chamar'? A. It is true that the 'Jatav' is a sub-caste of 'Chamar'. Q. Whether you are a Jatav or not ? A. I am a Chamar. I am not a Jatav. As a Jatav Chamar I did not organise any Sammlan in Bhander and Pichhor tehsils. I did that as a Chamar. Those Sammelans used to be known by the name of 'Jatav' Sammelan". The only attempt which appears to have been made to develop a case that the Chamars of Datia district wanted to be called Jatavs and so included in the list of scheduled was in the cross-examination of Rajaram P.W. 23. The following part of his cross-examination may be reproduced in this connection : "Aherwar, Dohar, Raidas and 'JATAV' are not of 'CHAMAR' caste. They are all separate castes. It is not true that because the word 'CHAMAR' smacks of inferiority complex, therefore they started calling themselves 'JATAVS'. Q. I put it to you that because the Chamars prepare shoes and therefore, this is not liked by people and on this account they to be called 'JATAV'. What have you to say to this ? A. This is not correct. CHAMARS do prepare shoes, but Chamar is a different caste from 'JATAV"'. Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 8 In our judgment it will not be in accord with the correct principles either of the law of pleadings or otherwise to allow the returned candidate to now make out a case for which no proper foundation was laid either in the written statement or even in the evidence. Coming back to the question whether the returned candidate belonged to the Jatav or the Chamar caste it is difficult to disagree with the High Court that he had failed to prove that he was a Chamar and not a Jatav. It is true that right from the beginning all the entries in the revenue records relating to the castes of the ancestors of the returned candidate including his close relations which have been fully referred to by the- High Court showed that these persons were described as belonging to the Chamar caste. The High Court considered the weight of the evidence of these entries and pointed out that the entries had presumptive weight only and the same had been rebutted by the other evidence and, in particular, the various representations which were being made to the authorities concerned that persons belonging to the Jatav community were not being entered as Jatav but were being entered as Chamar. The Collector had, from time to time, passed orders and directed his subordinates to record the caste of these people as Jatav, if they stated that to be their caste. All this shows that in Datia district the members of the Jatav caste in spite of their persistent assertion and claim that they formed a case separate and distinct from that of Chamars was not being entered in the official records by the authorities concerned. It is somewhat difficult to accept as was the evidence of some of the witnesses that Jatav and Chamar were the same castes. Ved Prakash P.W. 19 on whom reliance was placed on behalf of the returned candidate stated that Chamar caste and Jatav caste were one and the same. The evidence of Sham Saxena P.W. 15 was to the same effect. Harinarain Ken P.W. 20 stated that there was an All India Jatav Sabha and he was the Secretary of the Madhya Pradesh Jatav Sabha since 1948. He proved the memorandum to which reference has already been made which was submitted on behalf of the Jatav caste for recognising it as a distinct caste. He was quite certain that Jatav caste did not form part of the Chamar caste. The evidence of Dhani Ram R.W. 1, who is a close relation of the returned candidate, was that Jatav and Chamar was one and the same caste. R.W. 11 an uncle of the returned candidate claimed that he belonged to the Chamar caste but in cross- examination stated that he was a Jatav Chamar. From the entire evidence to which it is unnecessary to refer there seems to be little room for doubt that although at one time Jatavs might have been Chamars but they became a distinct caste or came to be recognised as a separate caste several years ago. The fact that they were shown separately as a caste in the Madhya Bharat and several other States in the Scheduled Caste and Scheduled Tribes Order (Amendment) Act 1956 shows that the existence of Jatav caste was recognised. A caste, it is wellknown, cannot spring up or develop in a short period of time. It is unnecessary to go into the question of the origin of a caste but it cannot be gain said that a caste must be in existence before it can be recognised as such. The fact of recognition of Jatav caste as a caste in the statutory provisions and Orders mentioned be-fore though confined to certain States and parts of those States cannot be ignored. Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 9 It cannot, therefore, be said that Jatav and Chamar was one and the same. The only question is whether there was any Jatav caste in Datia district. The evidence in the form of representations made by the members of Jatav community including the returned candidate himself apart from other oral evidence established the existence of Jatav caste even in Datia district but it so happened that it was not included either in the Act of 1956 or the Presidential Order among the scheduled castes. This position appears to be highly anomalous. Ordinarily if Jatav caste was included so far as the old State of Madhya Bharat was concerned and was also included in the districts which constituted the erstwhile State of Madhya Bharat even after its merger in the Madhya Pradesh after the States Reorganisation Act there seems to be no reason or justification for excluding the Jatavs of Datia District. Their exclusion apparently was due to the fact that in the erstwhile State of Vindhya Pradesh of which Datia district formed a part Jatav caste was not included in the list of scheduled caste. In order to find out why in the Presidential Order issued in 1950 pattern of which was followed in later statutory provisions and Orders certain castes were recognised as scheduled castes in other parts of the same State one has to go back to the Government of India (Scheduled Caste) Order 1936. By certain provisions in the First, Fifth and Sixth Schedules to the Government of India Act 1935, His Majesty in Council was empowered to specify the caste, race or tribe or parts of or groups within the caste, race or tribes which were to be treated as Scheduled caste. Part 11 of the aforesaid Order of 1936 which was issued in exercise of the power conferred by the aforesaid provisions was as follows : - " subject to the provisions of this Order, for the purposes of the First, Fifth and Sixth Schedules to the Government of India Act, 1935, the castes, races or tribes, or parts of or groups within castes, races or tribes, specified in Parts I to IX of the Schedule to this Order shall, in the Provinces to which those Parts respectively relate, be deemed to be scheduled castes so far as regards members thereof resident in the localities specified in relation to them respectively in those Parts of that Schedule". In the Schedule certain castes were mentioned as scheduled caste for the whole of a particular Province or part thereof. While issuing the Presidential Orders under Art. 341 of the Constitution the same pattern was adopted and the scheme was to specify scheduled castes throughout a particular State or the Union territory as well as parts of that State or Union territory, as the case may be, in relation to the locality in which the members of these castes etc. were residing. This test of residence leads to highly anomalous and unjust results which can be illustrated by a simple example. If there are two brothers belonging to Jatav caste who are equally qualified to be employed in a particular service or post in respect of which reservation is provided for the members of the scheduled caste, one living in district A in the State of Madhya Pradesh can avail of that benefit whereas the other who lives in an adjoining district B for which that caste is not included in the Order would be deprived of the benefit of that reservation which is for the whole State even though there may be no difference in the socioeconomic condition of the caste to which the brothers belong in the districts where they reside. Several other anomalies can arise because it is only a member of a Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 10 caste which is included in the statutory provisions or the Orders mentioned before who can take advantage of the benefits conferred by the constitutional provisions. Article 341 of the Constitution provides for specification of caste, race or tribe etc. for the purpose of the Constitution in relation to that State or Union territory, as the case may be. In the Twelfth Report of the Commission for Scheduled Castes and Scheduled Tribes 1962-63 it has been pointed out at page 12 that a person may belong to a caste or tribe declared to be a scheduled caste in his originating State but who may have been residing for a long time in another State (say, for the sake of service or business) where hi,; caste/ tribe is not recognised as a Scheduled Caste/Tribe. In the relevant statutory provisions and Orders such a person would be denied the benefits under the Constitution even though he may actually continue to suffer from the effects of the disabilities resulting from the practice of untouchability. The Commissioner suggested that they should be treated as eligible for benefits made available to the scheduled castes/tribes in the home State etc. If the matter were res-integra we would have felt a good deal of difficulty in reconciling with the constitutional provisions the scheme followed in the statute and the Orders concerned by which the same caste has been included in some districts of the same State and excluded in the other districts. This Court, however, has in Bhaiyalal v. Harikishan Singh & others(1) made observations repelling the contention that under Art. 341 of the Constitution the President was not authorised to limit the notification to parts of a State. The reason given was that while specifying caste, race or tribe the President may well come to the conclusion that not the whole caste, race or tribe but part of or groups within them should be specified. This would be so where the President is satisfied that the examination of the social and educational backwardness of the race, caste or tribe justifies such specification. It would appear from the Tenth Report of the Commissioner for Scheduled Castes and Scheduled Tribes 1960-1961 (page 22) that two factors have been mainly taken into account for including a particular caste, race or tribe in the list of scheduled castes and scheduled tribes i.e. socioeconomic conditions and population figures. In Bhaiyalal's case(1) the appellant's election had been challenged on the ground that he belonged to the Dohar caste which was not recognised as a scheduled caste for the district in question and so his declaration that he belonged to the Chamar caste which was a Scheduled Caste was improperly and illegally accepted by the Returning Officer. It was held that the plea that though the appellant was not a Chamar as such he could claim the same status by reason of the fact that he belonged to Dohar caste which is a sub- caste of the Chamar caste could not be accepted. An inquiry of that kind would not be permissible having regard to the provisions contained in Art. 341 of the Constitution. The case of Basavalingappa v. Munichinnappa(2) was referred to. In that case it was laid down that generally speaking it was not open to any person to lead evidence to establish that his caste includes or is the same as another caste which is notified in the Order. Following these two decisions it must be held that the turned candidate, in the present case, was not entitled to estab- (1) [1965] 2 S.C.R. 877. (2) [1965] I S.C.R. 316. lish that Jatav caste was the same as Chamar. In this view of the matter nothing else survives for consideration or decision. Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 11 In the result the appeal (C.A. 2123/69) fails and is dismissed. The other appeal (C.A. 2237/69) not having been pressed is also dismissed. Taking into consideration the entire circumstances we leave the parties to bear their own costs in this Court. G.C Appeals dismissed. Kishorilal Hans vs Raja Ram Singh & Ors on 30 November, 1971 12 | {
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Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971 Equivalent citations: 1971 AIR 740, 1971 SCR (3) 314, AIR 1971 SUPREME COURT 740 Author: J.C. Shah Bench: J.C. Shah, K.S. Hegde PETITIONER: HAKAM SINGH Vs. RESPONDENT: M/S. GAMMON (INDIA) LTD. DATE OF JUDGMENT08/01/1971 BENCH: SHAH, J.C. (CJ) BENCH: SHAH, J.C. (CJ) HEGDE, K.S. CITATION: 1971 AIR 740 1971 SCR (3) 314 1971 SCC (1) 286 CITATOR INFO : C 1989 SC1239 (18) RF 1992 SC1514 (7) ACT: Contract Act 1872, s. 28-Code of Civil Procedure, 1908, s. 20(a) Explanation 11-Arbitration Act 1940, s. 41-Defendant a company registered under the Indian Companies Act having, its principal place of business at Bombay-Contract providing for arbitration of disputes and further providing that disputes were to be adjudicated only in Bombay Courts- Restriction whether binding or against public policy. HEADNOTE: On October 5, 1960 the appellant agreed to do certain construction work for the respondents company registered under the Indian Companies Act and having its principal place of business at Bombay--On the terms and conditions of a written tender. Clause 12 of the tender provided for Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971 1 arbitration in case of dispute. Clause 13 provided that notwithstanding the place where the work under the contract was to be executed the contract shall be deemed to have been entered into by the parties at Bombay and the court in Bombay alone shall have jurisdiction to adjudicate thereon. On disputes arising between the parties the appellant submitted a petition to the Court at Varanasi for an order under s. 20 of the Arbitration Act, 1940 that the agreement be filed and an order of reference be made to an arbitrator or arbitrators appointed by the court. The respondent contended that in view% of cl. 13 of the arbitration agreement only the courts at Bombay had jurisdiction. The trial court held that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the courts of Bombay which they did not otherwise possess. The High Court at Allahabad in exercise of its revisional jurisdiction held that the courts at Bombay had jurisdiction under the general law and hence could entertain the petition. It further held that in view of cl. 13 of the arbitration agreement the petition could not be entertained at Varanasi. Against the order of the High Court directing the petition to be returned for presentation to the proper court, the appellant appealed to this Court by special leave. The question that fell for consideration were : (i) whether the courts at Bombay alone had jurisdiction over the dispute; (ii) whether Explanation 11 to s. 20(a) of the Code of Civil Procedure refers only to Government corporations and not to companies registered under the. Indian Companies Act. HELD : (i) The Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act by virtue of s. 41 of the latter Act. The jurisdiction of the courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By the terms of s. 20(a) of the Code .of Civil Procedure read with Exp. 11th thereto, the respondent company which had its principal place of business at Bombay, was liable to be sued at Bombay. [316 G] It is not open to the par-ties by agreement to confer jurisdiction on any Court which it did not otherwise possess under the Code. But where two courts have under the Code of Civil Procedure jurisdiction to try a suit of proceeding an agreement between the parties that the dispute between 315 them shall be tried in one of such courts is not contrary to Public Policy Such an agreement does not contravene s. 28 of the Contract Act. [316 H] Since in the present case the courts at Bombay had jurisdiction under the Code of Civil Procedure the agreement between-,the parties that the courts in Bombay alone shall have jurisdiction to try the proceedings relating to arbitration was binding between them. [318 A] (ii) Order 29 of the Code of Civil Procedure deals with Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971 2 suits by or against a corporation and there is nothing in the Code to support the contention that a Corporation referred to under s. 20 means only a statutory corporation and not a company registered under the Indian Companies Act. [317 G-H] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 646 of 1967. Appeal by special leave from the judgment and order dated December 1, 1966 of the Allahabad High Court in Civil Revision No. 721 of 1964. J. P. Goyal and G. S., Chatterjee, for the appellant. V. S. Desai and B. R. Agarwala, for the respondent. The Judgment of the Court was delivered by Shah, C.J. On October 5, 1960 the appellant agreed to do certain construction work for the respondent on the terms and conditions of a "written tender". Clauses 12 & 13 of the tender were : "12. In the event of any dispute, arising out of this sub-contract, the parties hereto agree that the matter shall be referred to arbitration by two Arbitrators under the Arbitration Act of 1940 and such amendments thereto as may be enacted thereafter. 13. Notwithstanding the place where the work under this contract is to be executed, it is mutually understood and agreed by and between the parties hereto that this Contract shall be deemed to have been entered into by the parties concerned in the City of G Bombay and the Court of law in the City of Bombay alone shall have jurisdiction to adjudicate thereon." Disputes arose between the parties and the appellant submitted a petition to the Court of the Subordinate Judge at Varanasi for an order under s. 20 of the Indian Arbitration Act 10 of 1940 that the agreement be filed and an order of reference be made to an Arbitrator or Arbitrators appointed by the Court to settle the dispute between the parties in respect of the construction works done by him. The respondent contended that the Civil Courts in Bombay alone had because of the terms contained in cl. 13 jurisdiction to entertain the petition. The Trial Judge rejected that contention observing that the condition in cl. 13 that "the contract shall be deemed to have been entered into-by the parties concerned in the city of Bombay has no meaning unless the contract is actually entered into in the city of Bombay", and that there was no evidence to establish that it was entered into in the city of Bombay. The Trial Judge concluded that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the Courts at Bombay, which they did not otherwise possess. The High Court of Allahabad in exercise of its revisional jurisdiction set aside the order passed by the Subordinate Judge and declared that the Courts in Bombay had jurisdiction under the general law to entertain the petition, and by virtue of the covenant in the agreement the second branch of cl. 13 was applicable and binding between the parties and since the parties had agreed that the Courts Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971 3 in Bombay alone had jurisdiction to adjudicate upon the contract, the petition to file the arbitration agreement could not be entertained by the Courts at Varanasi. Against the order of the High Court directing that the petition be returned for presentation to the proper Court, the, appellant has appealed to this Court with special leave. Section 41 of the Arbitration Act 1940 provides in so far as it is relevant : "Subject to the provisions of this Act and of rules made thereunder (a) the provisions of the Code of Civil procedure, 1908, shall apply to all proceedings before the court, and to all appeals under this Act." The Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act. The jurisdiction of the Courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By cl. 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the, respondent have their principal office in Bombay and they were liable in respect of a cause of action- arising under the terms of the tender to be sued in the Courts at Bombay. It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the Code. But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts is not contrary to public policy. Such an agreement does not contravene s. 28 of the Contract Act. Counsel for the appellant contended that merely because the respondent carried on business in Bombay the Courts at Bombay were not invested with jurisdiction to entertain any suit or a partition for filing an arbitration agreement. Section 20 of the Code of Civil Procedure provides : "Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction- (a,) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b).................................. (c) the cause of action, wholly or in part, arises. "Explanation II.-A corporation shall be deemed to carry on business at its sole or principal office in India, or, in respect of any cause of action arising at. any place where it has also a subordinate office, at such place." Plainly by the terms of s. 20(a) read with Explanation II, the respondent Company was liable to be sued at Bombay where it had its principal place of business. Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971 4 The argument of counsel for the appellant that the expres- sion "corporation" in Explanation II includes only a statutory corporation and not a company registered under the Indian Companies Act is, in our judgment, without substance. The Code of Civil Procedure uses the expression "corporation" as meaning a legal person and includes a company registered under the Indian Companies Act. Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code of Civil Procedure that a corporation referred to under S. 20 means only a statutory corporation and not a company registered under the Indian Companies Act. Since an application for filing an award in respect of a dispute arising out of the terms of the agreement could be filed in the Courts in the City of Bombay, both because of the terms of cl. 13 of the, agreement and because the respondents had their Head Office where they carry on business at Bombay, the agreement between the parties that the Courts in Bombay alone shall have jurisdiction to try the proceeding relating to arbitration was binding between them. The appeal fails and is dismissed with costs. G.C. Appeal dismissed. Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971 5 | {
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Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 Equivalent citations: 1971 AIR 2463, 1971 SCR 968, AIR 1971 SUPREME COURT 2463, 1971 TAX. L. R. 1756, 1972 (1) SCJ 219, 81 ITR 763, 1972 (1) ITJ 153, ILR 1972 51 PAT 285 Author: K.S. Hegde Bench: K.S. Hegde, A.N. Grover PETITIONER: COMMISSIONER OF WEALTH TAX, BIHAR ANDORISSA Vs. RESPONDENT: KIRPASHANKAR DAYASHANKAR WORAH DATE OF JUDGMENT29/07/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N. CITATION: 1971 AIR 2463 1971 SCR 968 ACT: Wealth Tax Act (27 of 1957), s. 21(1) & (4)-Liability of trustee to be assessed to wealth tax-Scope of s. 21(4). HEADNOTE: The respondent, by means of a trust-deed, transferred certain properties described in the deed unto himself as a trustee for making provision for the maintenance of himself and his wife, for the maintenance, education and marriage expenses of his unmarried daughters, and for the maintenance and education expenses of his minor sons. For the assessment years 1957 to 1961 the Department assessed the respondent to weaith-tax in respect of the trust properties as a trustee under s. 21 of the Wealth Tax Act 1957. The respondent contended that: (1) Since, as a trustee he was only holding the properties for the benefit of the Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 1 beneficiaries and not on behalf of the, beneficiaries as laid down in the section he was not assessable to wealth- tax. and (2) as the share of each of the beneficiaries was not indeterminate, he should not be taxed at the maximum rate. The High Court in reference held that respondent was not assessable to wealth tax. HELD:In appeal to this Court, S.21(1) of the Act specifically refers to trustees. The Legislature is competent, in the absence of any restrictions placed on it by the Constitution, to give its own meaning to the words used by it in a statute. In the Wealth Tax Act , Parliament, while enacting s. 21(1) & (2) of the Act, pro- ceeded on the basis that for the purpose of that Act a trustee is holding the trust property an behalf of beneficiaries. The mere fact that this conception does not accord with the provisions of the Trust Act does not invalidate the section. If the construction contended for on behalf of the respondent is accepted then a part of the section would become otiose. While a taxing provision must be strictly construed by courts and the benefit of any ambiguity must to go the assessee, if the intention of the Legislature is clear and beyond doubt then the fact that the provision could have been more artistically drafted cannot be a ground for treating any part of a provision as otiose. [973B-F] Therefore a trustee is assessable to wealth tax under the Act even as it then stood. [975B] suhashini Karuri v. Wealth Tax Officer, 46 I.T.R. 953, and Trustees of Gordhandas Govindram Family Charity Trust v. Commissioner of income-tax, Bombay, 70 I.T.R. 600, approved. Commissioner of Income-tax v. Puthjya Ponamanichintakam Wakf, 44 I.T.R. 172 (S.C.), Commissioner of Income-tax, v. Kokila Devi, 77 I.T.R. 350 (S.C.), The Commissioner of Income-tax v. Manila Bharti, [1962] Supp. 2 S.C.R. 902 and Commissioner of Income-tax v. Managing Trustees Nagor Durgha, 57 I.T.R. 321 (S.C.), referred to. 969 W.O. Holdsworth v. State of U.P., 33 I.T.R. 472 (S.C.), explained. (2)In the present case, on the relevant dates, the settlor as well as his wife were alive and had a right to be maintained out of the trust properties and they had also a right of residence in a part of the trust property, and two of the sons of the settLor had a right to be maintained and educated. Therefore the shares of the beneficiaries were indeterminate, and hence, the trustee had to be assessed under s. 21(4) of the Act as it then stood. [975H; 976A-B] JUDGMENT: Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 2 CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1478 to 1481 of 1967. Appeals from the judgment and order dated April 13, 1966 of the Patna Court in Misc. Judicial Cases Nos. 552 to 555 of 1964. Jagadish Swarup Solicitor-General, A. N. Kirpal, B. D. Sharma and R. N. Sachthey, for the appellant (in all the appeals). M.C. Setalvad, S. K. Mitra and A. K. Nag, for the respondent in all the appeals). The Judgment of the Court was delivered by Hegde J.-This appeal by certificate arises from the decision ,of the High Court of Patna in a reference under s. 27(1) of the Wealth Tax Act, 1957 (which we shall hereafter refer to as the Act). The question of law arising for decision in these appeals is : "Whether in the facts and circumstances of the case, the trustee under the Trust deed dated 19th July 1949 executed by Kirpashankar D. Worah was assessable to wealth tax under Section 21 of the Wealth Tax Act ?" The tribunal upheld the contention of the Revenue that the trustee is liable to be proceeded against under s. 21 of the Act but the High Court disagreeing with the view taken by the tribunal answered the question referred to it in the negative. Hence this appeal. The facts of the case as set out in the statement of the case submitted to the High Court may now be briefly stated: The respondent Kirpashanker D. Worah by means of a deed of trust dated July 19, 1949 transferred certain shares described in Schedule 7 of the trust deed and certain immovable properties and shares in business described in Schedule 8 of that deed unto him,self as the trustee for making provision for the maintenance of himself, his wife, for the maintenance, education and the marriage expenses of his unmarried daughters and for the maintenance and education expenses of his minor sons. The main purpose of the trust is set out in paragraph 3 of the objects of the trust. That paragraph reads : "To apply the income of the Trust Estate for the maintenance and the joint use and benefit of the Settlor and his wife the said Srimati Kanchan Kunver and also for the maintenance, education and marriage expenses of the said two minor daughters Kumari Kumud Bala and Kumari Jyoti and also for the maintenance and education of the Settlor's minor sons Harsukhari Worah and Chanderakant Worah PROVIDED ALWAYS that if the income of the Trust Estate is insufficient for the purpose of meeting any of the said expenses the Trustee shall have full liberty to dispose of or otherwise apply sufficient portion of the corpus of the Trust Estate for the purpose of discharging the trust contained in this clause." Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 3 Sub-paragraph 4 of the Trust deed provides that in the even of the Settlor predeceasing his wife, the shares and securities mentioned in Schedule 7 was to be made over to his wife to be enjoyed by her as her absolute property, provided that if the Settlor predeceased his wife before the marriages of the two unmarried daughters had been performed. the trustee was to retain out of the shares and securities mentioned in the said Schedule sufficient number of shares for the purpose of meeting the marriage expenses of the said two daughters or either of them as the case may be. Sub- paragraph(5) provides that after the marriages of both the daughters and /or after the death of both of such daughters, whichever happens first and also after the death of the Settlor's wife and the attainment of majority of both the minor sons, the trustee was to hold the Trust Estate for the absolute use and benefit of the two said sons, Harsukhari and Chandrakant. It was further provided that the intention of the Settlor was that subject to the trust thereby created the said two minor sons would take a, vested interest in the trust estate. Under cl. (4) of the said deed provision was made for the residence of the Settlor, his wife and the minor children free of rent in a part of, the trust properties described in Schedule 8 until the determination of the trust as aforesaid. Even before the first valuation date. with which we are concerned in these appeals, both the daughters had been married and the two sons had attained majority. The reference relates to wealth tax assessment of the assessee for the assessment years 1957-58, 1958-59, 1959-60 and 1960-61, the corresponding valuation dates being 2-11-1956, 23-11-1957. 11-11-1958 and 31-10-1959. The department has assessed the respondent in respect of the wealth tax due in respect of the trust properties as a trustee. The question for consideration is whether he is liable to be assessed to wealth tax in respect of the trust properties. The respondent contends that as he is not holding the trust properties on behalf of the beneficiaries, he does not come within the scope of s. 21 of the Act and further as the share of the beneficiaries under the trust is not indeterminate, he cannot be taxed at the maximum rate. We shall first take up the question whether the case of the assessee comes within the scope of s. 21 (1) of the Act. At the material time s. 21 read thus "21(1). In the case of the assets chargeable to tax under this Act which are held by a court of wards or an administrator-general or an official trustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a court to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise including a trustee under a valid, deed of wakf, the wealth tax shall be levied upon and recoverable from the court of wards, administrator-general, official trustee, receiver, manager or trustee, as the case may be in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf the assets are held, and the provision of this Act shall apply accordingly." Leaving out the unnecessary words, section 21 to the extent material for our present purpose can be recast thus : In the case of the assets chargeable to tax under this Act which are held by a trustee appointed under a trust deed by a duly executed instrument in writing, whether testamentary or otherwise, the wealth tax shall be levied upon and recoverable from the trustee in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf the assets are held and the provision of Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 4 this Act shall apply accordingly. It is plain from the language of s. 21 (1) that a trustee is also brought within its scope. But that section proceeds on the basis that a trustee is holding the trust property on behalf of one or more beneficiaries. The High Court has come to the conclusion and that conclu- sion is supported by Mr. M. C. Setalvad, learned counsel for the assessee that it is well established that a trustee does not hold the trust property on behalf of the beneficiaries but he holds it' only for their benefit. Under the Trust Act, it is indisputable that a trustee is the legal owner of the trust property. He holds the trust property on his own right and not on behalf of someone else though he holds it for the benefit of the beneficiaries. The High Court in coming to the conclusion that S. 21(1) is inapplicable to the facts of the case heavily relied on the decision of this Court in W. O. Holdsworth and Ors. v. State of U. P.(,) In that case this Court was considering the scope of S. 11 (1) of the U.P. Agricultural Income-tax Act, 1948. That section reads: "Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom the aggregate of the sums payable as agricultural income-tax by each person on the agricultural income derived from such land and received by him, shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect, of the agricultural income tax so payable by each such person and shall be liable to pay the same." It may be noted that in that provision, there is no reference to trustees. That section speaks of "receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom". While interpreting that clause this Court held that a trustee is not a person who can be equated to a receiver or an administrator inasmuch as those persons hold the property on behalf of other persons whereas a trustee is the legal owner of the trust property. In that decision this Court also observed that there is a fundamental difference between a property being held on behalf of others and property being held for the benefit of others. In our opinion the ratio of that decision does not bear on the point under consideration though certain observations found therein may give some acceptance to the respondent. Section 11 of the U. P. Agricultural Income-tax Act does not refer to trustees at all whereas S. 21 (1) of the Act specifically refers to trustees. It is true that it refers to a trustee as holding a trust property on behalf of other persons. The conception that the trustee ;is holding the trust property on (1) 33 I.T.R. 472. behalf of others may not be in conformity with the legal position as contemplated by the Trust Act but the legislature is competent in the absence of any restrictions placed on it by the Constitution. to give its own meaning to the words used by it in a statute. There can be hardly any doubt that the parliament while enacting s. 21 (2)of the Act proceeded on the basis that for the purpose of that Act Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 5 the trustee is holding the trust property on behalf of the bene- ficiaries. The mere fact that this conception does not accord with the provisions of the Trust Act does not invalidate s. 21(1) As seen earlier s. 21(1) specifically takes in the trustees. It cannot be said and it was not said that the parliament had not specifically brought in the trustee under s. 21(1). What was urged by Mr. Setalvad was that though the parliament intended to bring in the trustees within the scope of that provision, it failed to achieve its purpose because of the inartistic drafting, inasmuch as the section speaks of the "trustee holding the trust property on behalf of others". It is true that a taxing provision must receive a strict construction at the hands of the courts and if there is any ambiguity, the benefit of that ambiguity must go to the assessee. But that is not the same thing as saying that a taxing provision should not receive a reasonable construction. If the intention of the legislature is clear and beyond doubt then the fact that the provision could have been more artistically drafted cannot be a ground to treat any part of a provision as otiose. If the construction contended for on behalf of the respondent is accepted then a part of s. 21 (1) would become otiose. So long as the intention of the legislature is clear and beyond doubt, the court's have to carry out that intention. In our opinion the High Court did not take a proper view of the decision of this Court in Holdworth's case(1). Section 21 (1) of the Act is analogous to s. 41 (1) of the Income-tax Act, 1922. The only difference between the two sections is that whereas the former deals with assets, the latter deals with income. Subject to this difference, the two provisions are identically worded. Hence the decisions rendered under s. 41 (1) of the Indian Income-tax Act, 1922 have bearing on the question arising for decision in this case. In Commissioner of Income-tax Kerala and Coimbatore v. Puthiya Ponamanichintakam Wakf,(2) this Court proceeded on the basis that the income received by a trustee came within the scope of S. 41(1) of the Income-tax Act, 1922. In Commissioner of Income-tax, Calcutta v. Kokila Devi and Ors.,(3) a similar view was taken by this Court. (1) 33 I.T.R. 472. (3) 77 I.T.R. 350. (2) 44 I.T.R. 172. In The Commissioner of Income-tax, Bombay v. Manital Dhanji Bombay,(1) this Court again proceeded on the basis that S. 41 applied to the trustees In Commissioner of Income-tax, Madras v. Managing Trustees, Nagore Durgha,(2) this Court was called upon to interpret the scope of S. 41(1). Therein the question was whether nattamaigars of Nagore Durgha who are considered as trustees in whom the properties of the Durgha vested would come within the scope of s. 41(1) of the Indian Income-tax Act, 1922. This Court answered that question in the affirmative. Therein also it was contended that as the property is vested in the managing trustee and he received the income in his own right and not on behalf of the beneficiaries though for their benefit, the income in the hands of the managing trustee fell outside the scope of s. 41(1) of the Act. Repelling that contention Subba Rao J. (as he then was) speaking for the Court, observed: "There are two answers to this contention. The doctrine of vesting is not germane to this contention. In some of the enumerated persons in the section the property vests and in others it does not vest, but they only manage the property. In general law the Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 6 property does not vest in a receiver or manager but it vests in a trustee, but both trustees and receivers are included in section 41 of the Act. The common thread that passes through all of them is that they function legally or factually for others; they manage the property for the benefit of others. That the technical doctrine of vesting is not imported in the section is apparent from the fact that a trustee appointed under a trust deed is brought under the section though legally the property vests in him.,, In G. T. Rajamannar v. Commissioner of Income-tax, My soree(3) while dealing with the scope of s. 41(1), the High Court of Mysore had to deal with a contention similar to the one advanced in this case. Therein also the assessee relied on the decision of this Court in Holdsworth's case(4). While rejecting the contention of the assessee the High Court 'held that the observations made by this Court in Holdsworth's case must be understood in the light of the provision that this Court was considering in that case, The Court held that s. 41 (1) of the Income-tax Act, 1922 is ap- plicable to a case where income is derived from the trust property even though the trustee does not strictly speaking receive such (1) [1962] Supp. 2 S.C.R. 902. (3) 51 I.T.R. 339. (2) 57 I.T.R. 321. (4) 33 I.T.R. 472. income " on behalf of" the beneficiaries but is the legal owner of that income, the words "on behalf of" in s. 41(1) must be, construed as being equivalent to "for the benefit of and further in the case of a trust where the beneficiaries are indeterminate, the must be assessed at the maximum rate in the hands of the trustee in view of the first proviso to s. 41(1). In the course of that judgment it was observed: "But in the present case it we do not read that ex-pression in the manner I have indicated, then a good portion of section 41(1) and the first proviso thereto becomes otiose. It is not proper to construe that any portion of a provision in a statute is superfluous. Such a construction should be, avoided except in extreme cases. Though as a normal rule the courts should give to the words used in the statute its normal meaning, occasions do arise when it becomes necessary to give a special meaning to a word. For the reasons mentioned above, I interpret the words "on behalf of" found in section 41(1) and the first proviso thereto as equivalent to "for the benefit of". In Suhashini Karuri and anr. v. Wealth Tax Officer, Calcutta and anr.(1) the High Court of Calcutta held that the words "on behalf of" used in s. 21 (1) of the Act are synonymous with the ,expression "for the benefit of". It further held that notwithstanding that the trustees hold property for the benefit of beneficiaries and not on their behalf, s. 21 (1) applies to them and they are liable to wealth tax only "in the like manner and to the extent as it would be leviable upon and recoverable from any Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 7 such beneficiary". The Calcutta High Court distinguished the decision of this Court in Holdsworth's case. The Bombay High Court in Trustees of Gordhandas Govindram Family Charity Trust, Bombay v. Commissioner of Income-tax, Central Bombay(1), disagreeing with the decision under appeal and following the decision of the Calcutta High Court in Suhashini Karuri's case (supra) took the view that a trustee also came within the scope of s. 21 (1) of the Act. The same view was taken by the Allahabad High Court in Chintamani Ghosh Trust v. Commissioner of Wealth Tax, U. P. We think that the view taken by the Calcutta, Bombay and Allahabad High Courts is the correct view. Now coming to the question whether the shares of the bene- ficiaries under the trust deed on the relevant valuation dates are determinate or indeterminate, we have to bear in mind the fact that on those dates the Settlor as well as his wife were alive. (1)-46 I.T.R. 953. (2) 70 I.T.R. 600. They had a right to be maintained out of the income of the trust properties. They had also a right of residence in the house. situate in that property. The two sons of the Settlor had a right to be maintained and educated. That being so, there is no doubt that on the relevant dates, the shares of the beneficiaries were indeterminate. Hence the trustee had to be assessed under s. 21 (4) as it stood at the relevant time. In the result these appeals are allowed and the answer given by the High Court is revoked and in its place we answer that question in the affirmative namely that on the facts and circumstances of the case the trustee under the trust deed dated July 19, 1949 executed by Kirpashanker D. Worah was assessable to, wealth tax under s. 21 of the Wealth Tax Act as it stood at the relevant time. The respondent to pay costs of the department both in this Court and in the High Court-hearing fee one set. V. P. S Appeals allowed. Commissioner Of Wealth Tax, Bihar ... vs Kirpashankar Dayashankar Worah on 29 July, 1971 8 | {
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Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 Equivalent citations: 1971 AIR 2372, 1972 SCR (1) 571, AIR 1971 SUPREME COURT 2372, 1972 MADLW (CRI) 270, 1972 MADLJ(CRI) 201, 1971 SCD 969, 1972 (1) SCJ 253, 1972 (1) SCR 571, 1975 BOM LR 722 Author: J.M. Shelat Bench: J.M. Shelat, I.D. Dua, Subimal Chandra Roy PETITIONER: DARSHAN SINGH RAM KISHAN Vs. RESPONDENT: STATE OF MAHARASHTRA DATE OF JUDGMENT02/09/1971 BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. DUA, I.D. ROY, SUBIMAL CHANDRA CITATION: 1971 AIR 2372 1972 SCR (1) 571 1971 SCC (2) 654 ACT: Code of Criminal Procedure (Act 5 of 1898), s. 1964(2)- Charge sheet by police-No reference to or allegation of criminal conspiracy-Magistrate framing charges for offences including under s. 120-B, I.P.C.Whether prior consent under s. 196A(2), Cr.P.C., necessary. HEADNOTE: The police filed a charge-sheet against the appellant and another for various offences in connection with the fabrication of a British passport. The offences mentioned in the charge-sheet against the appellant were ss. 419/109, 468 and 471, I.P.C., and against the other accused ss. 419 and 471 read with s. 468. The Magistrate did not examine Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 1 any witnesses, but after perusing the charge-sheet and other documents filed before him under s. 173, Cr.P.C., framed charges against the two accused and committed them for trial before the Sessions Court. The charges against the accused included the offence under s. 120B, I.P.C., the object of the conspiracy being, to commit the non-cognizable offence of forging the passport. The appellant filed an application in the High Court for quashing the committal order on the ground that no consent, as required by s. 196A(2), Cr.P.C., having been obtained, the Magistrate had no jurisdiction to take cognizance of the offence of conspiracy. The High Court dismissed the application. Dismissing the appeal to this Court, HELD : (1) Cognizance takes place when the Magistrate takes judicial notice of an offence. Therefore, when a Magistrate takes cognizance of an offence under s. 190, Cr.P.C. upon a police report, prima facie he does so of the offences alleged in the report. [573 H; 574 A] In the present case the charge-sheet did not refer to or charge either of the accused with criminal conspiracy. The cognizance which the Magistrate took was therefore, only, of the offences alleged in the chargesheet, and it was only at the later stage of passing the committal order that he considered that a charge under s. 120B was more appropriate than that of abetment. [574 F-H] (2) Even on the basis that it is not the sections referred to in the charge-sheet that matter, but the offence prima facie disclosed by the allegations, in the present case the offence 'primarily and essentially disclosed in the charge- sheet and other documents was one of abetment of forgery and of the false impersonation. [575 F-H] Therefore, the Magistrate did not take cognizance of the offence under s. 120B, I.P.C., and hence, consent under s. 196A(2) Cr.P.C., was not a condition precedent. [576 B-C] JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 100 of 1969. Appeal by special leave from the judgment and order dated January 8, 1969 of the Bombay High Court in Criminal Application No. 1341 of 1968. C. L. Sareen and J. C. Talwar, for the appellant. P. K. Chatterjee and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by Shelat, J. The appellant and one Bakshi Singh Sunder Singh were accused No. 2 and accused No. 1 respectively in the committal proceedings before the Presidency Magistrate, 28th Court, Greater Bombay. This appeal, by special leave, is directed against the judgment of the High Court of Bombay refusing to quash the order of committal passed by the learned Magistrate. Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 2 The facts relevant to this appeal are few and may first be stated. On October 31, 1963, one Jivansingh Uttam Singh obtained a British passport bearing No. 183459 at Nairobi. On the strength of that passport he was returning to India with his family. On his way he died on board the ship. According to the prosecution that passport came into the hands of the appellant. Bakshi Singh desired to go to the United Kingdom, but had no passport. The appellant agreed to arrange his journey and also for that purpose to obtain a passport for him. The allegation was that the appellant prepared an applica- tion for a visa in the name of Bakshi Singh. It was further alleged that with a view to procure the said visa the photograph of the said deceased Jivansingh was removed from the said passport and that of Bakshi Singh substituted. The visa having in this fashion been obtained, Bakshi Singh journeyed to the United Kingdom having on his way made some intermediate halts. The British authorities suspected that the, passport was a forged document and repatriated Bakshi Singh to India. On his arrival he was handed over to the Special Police, Bombay. The Special Police carried out investigation in the course of which they recorded statements of certain witnesses including that of Tanna Singh, the younger brother of Bakshi Singh. On completion of the investigation, the police filed a charge-sheet before the learned Magistrate. That charge- sheet is not before us. But counsel for the appellant informed us that Bakshi Singh was therein charged under secs. 419 and 471 read with sec. 468, and the appellant was charged under secs. 419/109, 468 and 471 of the Penal Code. Counsel also. informed us- that the Magistrate did not examine any witnesses, during the committal proceedings but on a perusal of the charge-sheet and the documents filed before him under sec. 173 of the Code of Criminal Procedure he framed the charges and committed, by his order dated September 13, 1968, Bakshi Singh and the appellant for trial before the Sessions Court. By that order he directed the said Bakshi Singh to stand his trial under secs. 120B, 419, 467 and 471 read with sec. 467, and the appellant under secs. 120B and 467 of the Penal Code. The offence of criminal conspiracy charged under sec. 120B was that the said Bakshi Singh and the appellant had conspired to forge the said passport for the use of the said Bakshi Singh. In the High Court various contentions were raised on behalf of the appellant in support of his application under sec. 561A of the Code of Criminal Procedure including that under sec. 196A (2). That contention was that no consent as required by sec. 196A(2) having been first obtained, the Magistrate had no jurisdiction to take cognizance of the offence of conspiracy, and therefore, the committal order was without jurisdiction and had to be quashed. In this appeal we are concerned only with that contention as the special leave ranted to the appellant has been limited to that ground alone. Sub-sec. 2 of sec. 196A, which is relevant to the present case, provides that no court shall take cognizance of the offence of criminal conspiracy punishable under sec. 120B of the Penal Code in a case' inter alia where the object of such conspiracy is to commit any non-cognizable offence. There is no doubt that the charge, as framed by the Magistrate and for which he committed the appellant and Bakshi Singh to stand their trial before the Sessions Court, was for criminal conspiracy, the object of Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 3 which was to forge the said passport, a non-cognizable offence. In respect of that offence, sec. 196A(2) would undoubtedly apply. What that section prohibits is taking cognizance of an offence of criminal conspiracy unless consent to the initiation of proceedings against the person charged with it has been first obtained. As provided by sec. 190 of the Code of Criminal Procedure, a Magistrate may take cognizance of an offence either (a) upon receiving a complaint, or (b) upon a police report, or (c) upon information received from a person other than a police officer or even upon his own information or suspicion that such an offence has been committed. As has often been held taking cognizance does not involve any formal action or indeed action of any kind but occurs as soon as a Magistrate applies his mind to the suspected commission of an offence. Cognizance, therefore, takes place at a point when a magistrate first takes judicial notice of an offence. This is the position whether the magistrate takes cognizance of an offence on a complaint or on a police report, or upon information of a person other than a police officer. Therefore, when a magistrate takes cognizance of an offence upon a police report, prima facie he does so of the offence or offences disclosed in such report. It is not in dispute that the charge-sheet submitted by the police officer for the purpose of initiation of proceedings by the magistrate was for offences under sees. 419 and 471 read with sec. 468 against Bakshi Singh and under sees. 419/109, 471 and 468 against the appellant. The charge- sheet admittedly did not refer to or charge either of them with criminal conspiracy under sec. 120B. Prima facie it is not possible to say that at the stage when the police filed the charge-sheet the Magistrate took cognizance of the offence, under sec. 120B, for, that was not the offence alleg ed in the charge-sheet to have been committed by either of the two accused persons. True it is that the Magistrate ultimately drew up charges which included the offence under sec. 120B, the object of which was to forge the passport, an offence under sec. 467. The Magistrate also did not consider it necessary to examine any witnesses and frame the charges on a perusal of the charge-sheet submitted to him by the police, the statement of witnesses recorded by the police during their investigation and such other documents as were filed under sec. 173 of the Code of Criminal Procedure &,fore him. The materials before him, therefore, were the same as were before the police officer who had filed the charge-sheet. But while drawing up the charges and passing his order of committal, the Magistrate considered that though the charge-sheet filed before him alleged the commission of offences under secs. 419/109, 471 and 468, the proper charge on the materials before him, although they were the same as before the police officer, warranted a charge of criminal conspiracy for forging a passport. It is quite clear, however, that the cognizance which he took was of the offences alleged in the charge-sheet because it was in respect of those offences that the police had applied to him to initiate proceedings against Bakshi Singh and the appellant and not for the offence under sec. 120B. It was at a later stage, i.e., at the time of passing the committal order that he considered that a charge under sec. 120B was the more appropriate charge and not a charge under sec. 109 of the Penal Code. That being so, it must be held that the Magistrate took cognizance of the offence of abetment of an offence of forgery and impersonation so far as the appellant was concerned and not of the offence of criminal conspiracy, and therefore, sec. 196A(2) did not apply. Counsel in this connection relied on certain observations made in a minority judgment of S. K. Das, J., in Pramatha Nath Taluqdar v. Saroj Ranjan Sarkar. (1) The question involved there was, whether a second complaint could be entertained by a magistrate who or whose predecessor had on the same Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 4 or similar allegations dismissed a previous complaint, and if so, in what circumstances should such a complaint be entertained. Arising-. out of this question a contention was raised whether on the complaint, as it was framed, the Magistrate had the jurisdiction to, take cognizance of the offences alleged in the complaint in the, absence of a sanction under sec. 196A. The second complaint alleged offences under secs. 467 and 471 read with sec. 109 of the Penal Code. But in para 5 thereof, there was an allegation as to criminal conspiracy and it was on the basis of that allegation that sec. 196A(2) was sought to be involved. It was in this connection that the learned Judge at page 315 of the report, observed : "It would not be proper to decide the, question of sanction me-rely by taking into consideration the offences mentioned in the heading or the use of the expression " criminal conspiracy" in para, 5. The proper test should' be whether the allegations made in the petition of complaint disclosed primarily and essentially an offence or offences for which a consent in writing would be necessary to the initiation of the proceedings within the meaning of s. 196A(2) of the Code of Criminal Procedure. It is from that point of view that the petition of 'complaint must be examined." The learned Judge ultimately held that though the offence of criminal conspiracy was alluded to in para 5 of thesaid complaint, the offence "primarily and essentially" chargedwas abetment by conspiracy under sec. 109 of the Penal Code, and therefore. no consent under sec. 196A(2) was required.In Biroo Sardar v. Ariff (2) the view also taken was that itis not the, sections referred to which matter but the offence prima facie disclosed. Following that decision, the High Court of Bombay in Ramchandra v. Emperor(3) observed that the question whether sanction is necessary or not depends not on the sections referred to in a complaint but the offence prima facie disclosed'. by the facts alleged in it. It is clear from the charge-sheet submitted to the magistratethat the offence of criminal conspiracy was not even referred to. The offence "primarily and essentially" alleged therein was oneof abetment of forgery under secs. 468 and 471 and of false, (1) [1962] Supp. 2 S.C.R. 297. (2) A.I.R. 1925 Cal. 579. (3) A.I.R. 1939 [Bom.] 129. impersonation under sec. 419 read with sec. 109. Assuming that the Magistrate before taking cognizance had persued the statements of witnesses recorded by the police during investigation, it was conceded by counsel, after he himself had gone through them from the record, that none of the witnesses had alleged therein either directly or indirectly of the appellant having entered into a criminal conspiracy with Bakshi Singh for forging the passport. It- cannot be disputed that the charge-sheet also prima facie disclosed the offence of abetment. That being so, it is ,impossible to sustain the argument that the Magistrate took cognizance of the offence under sec. 120B, and therefore, consent under sec. 196A(2) was required as a condition precedent or that the committal order and the proceedings for committal which be took were vitiated for want of such consent. The appeal, therefore, fails and is dismissed. V.P.S. Appeal dismissed. Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 5 Darshan Singh Ram Kishan vs State Of Maharashtra on 2 September, 1971 6 | {
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Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 Bench: S. M. Sikri, G. K. Mitter, C. A. Vaidialingam, P.Jaganmohan Reddy, I. D. Dua PETITIONER: GUMAN SINGH Vs. RESPONDENT: STATE OF RAJASTHAN & ORS. DATE OF JUDGMENT26/07/1971 BENCH: [S. M. SIKRI, C. J., G. K. MITTER, C. A. VAIDIALINGAM, P.JAGANMOHAN REDDY AND I. D. DUA, JJ.] ACT: Rajasthan Administrative Service Rules, 1954, rr. 28B(2) and 32Validity of-Whether violative of Arts. 14 & 16 of Constitution because of absence of guidelines in the matter of selection of candidates by merit-Circular dated August 27, 1966 whether invalid on the ground that the marking system laid down in it went against the Rules in regard to selection by merit-Departmental Promotion Committee taking adverse remarks in confidential report into account without these having been communicated to the officer concerned- Effect. HEADNOTE: The appellant G was a member of the Rajasthan Administrative Service. Aggrieved by the order allotting seniority to him under the Rajasthan Administrative Service Rules, 1954, he filed a writ petition under Art. 226 in the High Court. A single Judge of the court allowed the petition. However in appeal by the State the Division Bench decided against the appellant who by special leave appealed to this Court. Two other members of the Rajasthan Administrative Service, similarly aggrieved filed writ petitions under Art. 32 before this Court. The common questions that fell for consideration in the appeal and writ petitions were; (i) whether rr. 28B(2) and 32 of the Rajasthan Administrative Service Rules were violative of Arts. 14 and 16 of the Constitution because they did not contain any guidelines in the matter of determining the merit of candidates; (ii) Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 1 whether the circular dated August 27, _ 1966 issued by the State Government laying down a system of marking for the purpose of determining the merit of candidates was invalid because it was contrary to the relevant Rules in this regard. The appellant G also complained that adverse remarks in his confidential report which had not been communicated to him had been taken into account against him by the Departmental Promotion Committee. HELD:(i) Rule 32 in essence adopts what is stated in r. 28B. The latter rule provides for two methods of selection one based on merit and the other based on seniority-cum- merit. In other words, the rule provides that the promotion based on merit in contradiction to that based on seniority- cum-merit shall strictly be on the basis of merit. The Selection Committee and the Promotion Committee consist of very responsible and senior officers of the State and being persons of experience they can be trusted to evaluate the merits of a particular officer. No doubt the word merit' is not capable of easy definition, but it can be safely said that merit is a sum total of various questions and attributes of an employee such as his academic qualifications, his distinction in the University, his character, integrity, devotion to duty and the manner in which he discharges his official duties. Allied to this may be various other matters or factors such as his punctuality in work, the quality and out-turn of work done by him and the manner of his dealing with his superiors and subordinate officers and the general public and his rank in the service. The various particulars in the annual confidential reports of an officer is 901 carefully and properly noted, Will also give a very broad and general indication regarding the merit of an officer. Therefore it cannot be stated that rr. 28B and 32 are in any manner vague or do not give any guidelines forassessing the merit of an officer. [921B-F] (ii)(a) The restriction contained in the proviso to sub-r. (2) of r. 28B is quitereasonable. Before an officer in the junior scale can be considered as fit for promotion to the senior scale it is necessary that he should have worked on a post in the service at least for some period of time. As to what the quantum of that period must be is not for this Court to lay down. The Government has fixed this period as six years. It cannot be said that it is an improper restriction. [922A-B] (b)The provisions contained in sub-r. (2) confining the selection to senior-most officers not exceeding 10 times the number of total, vacancies is also reasonable. Such a provision will encourage the members of the service to aspire for promotion for making themselves eligible by increasing their efficiencies in the discharge of their duties. [922B-C] (iii)The object of the impugned circular may be to bring Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 2 about uniformity in the award of marks. But the directions contained therein do offend the rules. This is not a case of the Government filling up the gaps or of giving executive instructions not provided for by or not inconsistent with the rules. No discretion is given to the selection or promotion committee to adopt any method other than that indicated in the circular. According to the principle laid down by this Court in Sant Ram Sharma's case, if the circular dated August 27, 1966 or any part of it gives instructions contrary to or opposed to any of the rules, the circular or that part of the circular to that extent would be invalid. By this test the circular in question was invalid and must be struck down. [928F-929F] Sant Ram Sharma v. State of Rajasthan & Anr., [1968] 1 S.C.R. 111, applied. (iv)Appellant G had made a specific grievance in his writ petition before the High Court about the uncommunicated adverse remarks having been taken into account by the Departmental Promotion Committee. The Division Bench of the High Court was wrong in holding that since the Committee had not been made a party to the proceedings this question could not be gone into. The Government which was the appointing authority was a party before the High Court. It was the duty of the State Government to place before the High Court all the materials available before it to enable the Court to consider whether the grievance of the appellant was justified or not. The appellant's case must therefore be reconsidered in the light of the Rules. [932C-H] JUDGMENT: CIVIL APPELTATE JURISDICTION : Civil Appeal No. 1815 of 1970. Appeal by special leave from the judgment and order dated January 20, 1970 of the Rajasthan High Court in D. B. Special Appeals Nos. 55 and 57 of 1968 and Writ Petitions Nos. 76 and 139 of 1970. Petitions under Art. 32 of the Constitution of India for en- forcement of fundamental rights. R.K. Garg, S. C. Agarwala, D. P. Singh and R. K. Jain, for the appellant (in C. A. No. 1815/1970) and the petitioners (in both the petitions.). Jagadish Swarup, Solicitor-General and K. Baldev, Mehta, for respondent No. 1 (in C. A. No. 1815 of 1970). S. M. Jain, for respondent No. 3 (in C. A. No. 1815 of 1970). B. Sen and K. Baldev Mehta, for respondent No. 1 (in W. P. No. 76 of 1970) K. Baldev Mehta, for respondent Nos. 1, 32 and 33 (in W. P. No. 139/1970.). Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 3 The Judgment of the Court was delivered by Vaidiyalingam.J,-In both the writ petitions under Art. 32 and the civil appeal, by special leave, common questions that arise for consideration relate to the validity of rr. 28B and 32 of the Rajasthan Administrative Service Rules, 1954 (hereinafter to be referred as the Rules) and the Circular No. F. 1. (6) Apptts. D/50 dated August 27, 1966 issued by the Chief Secretary to the Government of Rajasthan as well as the Order of the Government of Rajasthan No. F. 2(24) Apptts. (A-IV)/66 dated January 4, 1967. In the two writ petitions the Order No. F. 2(24) Apptts. (A-IV)/66 dated January 22, 1970 and in Writ Petition No. 139 of 1970 a further Order of the State Government No. F. 27(24)A (A-4)/66 dated February 21, 1970 are also challenged. The nature of the various Orders as well as the Rules and the Circular that are challenged will be referred to later at the appropriate stage. Civil Appeal No. 1815 of 1970 arises out of the Division Bench Judgment of the Rajasthan High Court dated January 20, 1970 in D. B. Special Appeal No. 57 of 1968. The facts leading up to the Civil Appeal may be stated: The appellant is an Arts Graduate having taken his degree in 1947. He took his Law Degree in the year 1961 having been placed in the First Division. He joined the service of the former Jaipur State as Inspector, Customs and Excise, in 1948. On the formation of the United State of Rajasthan, he was appointed in the, service of the State of Rajasthan as Inspector, Customs and Excise. In 1950 the Rajasthan Administrative Service was constituted for the State of Rajasthan and the Rules governing the 'conditions of service of the members therein were framed in 1954 by the Rajpramukh under the proviso to Art. 309 of the Constitution. Under the Rules the Adminisrative Service Cadre has three cadres of pay, namely, Ordinary Time Scale, Senior Scale and Selection Grade. The appointment to the service cadre was by direct recruitment as well as by promotion from other subordinate services in the State of Rajasthan. The appointment to the Senior Scale and Selection Grade was by promotion from amongst the members of the service. According to the appellant ff. 27 and 32 of the Rules, as they stood originally provided for promotion to be made only on the basis of seniority-cum-merit and that sub-rule(2) of r. 27 laid down various criteria to be taken into account in the matter of selection of candidates for promotion. It was his further case that r. 28, as it originally stood, laid down the procedure for recruitment by promotion to the service on the basis of seniority-cum- merit. The appellant was appointed in the year 1957 as member of the Rajasthan Administrative Service as a result of the open competitive examination held by the State Public Service Commission under the provisions of the Rajasthan Administrative Service (Emergency) Rules, 1956. The appellant claimed that his seniority was higher than that of respondents 2 to 5 as is evident from the seniority list published on July 1, 1964. At this stage it may be mentioned that though under the Order dated January 4, 1967 of the State Government fifteen officers in the junior scale were promoted and appointed on an officiating basis to the senior scale of the service, the appellant has made only four of them respondents 2 to 5 as parties in these proceedings on the ground that though they were juniors to him, promotion has been given to them superseding his claims. The other officers so promoted, even according to the appellant were senior to him in service. We may also mention that respondent No. 5 is since dead, but for convenience he will be referred to by the rank occupied by him as respondent. In 1965 the State decided to introduce the system of making promotions to the service on the basis of merit alone in addition to the existing system of making promotions on the basis of seniority-cum-merit. With this end in view there were various amendments made to the Rules by which certain additions were made and certain other provisions deleted. On December 14, 1965, r. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 4 28B was incorporated providing for appointment by promotion to posts in the service on the basis of merit and on the basis of seniority-cum-merit in the proportion of 50:50 and the number of eligible candidates to be considered for promotion is to be 10 times the total number of vacancies to be filled up on the basis of merit as well as seniority-cum-merit. On the same date when r. 28B was incorporated sub-rule (2) of r. 27 was deleted. On January 7, 1966 sub-rules(2) to (6) of r. 28 were also deleted. On December 14, 1965 a Circular was issued by the Chief Secretary to the Government of Rajasthan. According to the appellant the said Circular was a secret one issued without any authority directing the Selection and Promotion Committees and the Appointing authorities to follow the instructions given therein when making selection, promotion or appointment in the service. The said circular prescribed "merit formula for making selection of persons to be appointed on the basis of merit alone and the seniority-cum-merit formula for making selection of persons to be appointed on the basis of seniority-cum-merit." The basis for both the types of promotions was the marking system indicated in the circular. We do not think it necessary to go more elaborately into the details of this circular or the authority under which it was issued because it is seen that this circular was superseded by the circular dated August 27, 1966, which is under severe attack in all these proceedings. The contents of the latter Circular as well as the authority under which it is purported to have been issued will be dealt with by us in due course in the latter part of the judgment. On August 26, 1966 r. 28B was further amended by providing that the proportion of promotion to be made by selection on the basis of merit and seniority merit is to be 1:2 instead of 50:50. On the same day a proviso was also added to sub-rule (2) of r. 28B providing that only officers who have been in service for not less than six years in the lower grade of the cadre will be eligible for being considered for the first promotion in the cadre. On August 27, 1966 the impugned circular was issued by the Chief Secretary to the State Government. It is the case of the appellant that this circular was issued without any authority and it was again a secret circular giving directions in the matter of selection, promotion and appointment to the service to the Committees or the Authorities in charge of the same. The circular again dealt with the merit formula and the seniority-cum-merit formulae on the basis of marking system indicated therein. On September 8, 1966 the State decided to extend the principles of making selections on the basis of merit alone to appointments to senior posts also. For this purpose the original r. 32 was substituted by a new rule providing for appointments to senior scale and selection grade posts on the basis of merit and seniority- cum-merit in the ratio of 1: 2 on the recommendation of the Committee constituted under the said rule. It is the case of the appellant that prior to the notification dated September 8, 1966 though many posts in the senior scale of service had fallen vacant even during the years 1963-64 and 1964-65, those posts were not filled up by making promotion on the basis of the principle of seniority-cum-merit which was in force at the relevant time. By the Order dated January, 1966, the State Government created 26 new posts in the Senior Scale of Service and 14 posts in the Selection Grade with effect from the date of the order. As a result of this creation of new posts, about 44 vacancies became available for being filled up by promotion to the Senior Scale of Service in 1965-66. Nevertheless the vacancies were not filed up by the State. After the new r. 32 was incorporated on September 8, 1966 the Government took steps to fill up the 44 vacancies in the Senior Scale of Service and for this purpose a Departmental Promotion Committee was constituted and the Committee met in the end of September, 1966 for considering the claims of the officers for purposes of promotion. On the basis of the recommendations made by the said Committee, the Government by the Order dated December 7, 1966 promoted 29 officers to the Senior Scale on the Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 5 basis of seniority-cum-merit. Again by the order dated January 4, 1967, which is another order under attack in these proceedings, 15 officers including the respondents Nos. 2 to 5 were promoted to the Senior Scale of Service on the basis of merit alone. According to the appellant by the Orders dated December 7, 1966 and January 4, 1967 promotions had been made quite contrary to rr. 28B and 32 of the Rules. It is the grievance of the appellant that under the Order dated January 4, 1967 a large number of officers who had qualified for promotion on the basis of merit under the merit formula were superseded by the officers junior to them. Though Rules 28B and 32 provided for selection on the basis of merit gave no indication or guidance as to what are the factors to be taken into account in assessing the merit of an officer. The promotions had also been made by the Committee adopting the principle of awarding marks as direc- ted by the Circular dated August 27, 1966 which had been issued without any authority of law. The appellant filed S. B. Writ Petition No. 79 of 1967 in the High Court challenging the vires of rr. 28B and 32 as violative of Arts. 14 and 16. The appellant also challenged the validity and legality of the Circular dated Angus 27, 1966 as well as the order dated January 4, 1967 giving promotions to the respondents Nos. 2 to 5 to the senior Posts, In the writ petition the appellant had alleged that the various amend- ments made to the rules from time to time and the delay in making promotions to Senior Posts were all with a view to show favourtism to the third respondent who was the son-in- law of the Chief Minister of Rajasthan and to the other respondents who are all near relations of persons who were the favourites of the Chief Minister of the State. According to the appellant, the Circular dated August 27, 1966 was issued without any authority and in any event the Government by execution instructions had no power to fetter the powers of the Selection Committees which were functioning under the statutory rules. Even the principles laid down in the Circular regarding the award of marks for assessing the merit were arbitrary and vague. Rules 28B and 32 were challenged as violative of Arts. 14 and 16 inasmuch as the basis of merit had not been defined anywhere in the rules and no principles or guidelines had been laid down in the rules for assessing the merit of an officer. The provisions laying down the criteria for judging the merit of an officer contained in sub-rule (2) of r. 27 as well as the procedure for assessing the said merit contained in cls. 2 to 6 of r. 28 having disappeared by the deletion of those provisions, according to the appellant, arbitrary powers had been conferred by the rules on the Committees to select any person they liked on the ground of merit. Apart from the attack levelled against rr. 28B and 32 that there were no principles laid down for judging the merits of an officer, the appellant also attacked as discriminatory and violative of Arts. 14 and 16, the provisions of r. 28B providing that the number of eligible candidates to be considered was to be 10 times the total number of vacancies to be filled up and that six years service was essential for an officer to be eligible for being considered for first promotion. The Order dated January 4, 1967 was attacked on the ground that the promotions had been made on the basis of illegal rules as well as the directions contained in the invalid Circular dated August 27, 1966. In particular the appellant contended that though his service record for the year 1965- 66 was quite good. nevertheless certain adverse remarks contained in the confidential rolls which were not communicated to him, had been taken into account by the Departmental Promotion Committee, which met in the last week of September, 1966 and hence there has been no proper consideration of Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 6 his claims for being promoted to the Senior post. On all these grounds the appellant attacked rules 28B and 32, the Circular dated August 27, 1966 and the Order dated January 4, 1967. He also alleged mala fide against the State. The respondents Nos. 2 to 5 do not appear to have filed any counter-affidavit. But the State contended that rr. 28B and 32 were not invalid and did not violate the provisions either of Art. 14 or Art. 16. The requirement in the rules regarding promotion to be based on merit was justified as such selection was necessary to achieve efficiency in service. The State controverted the allegations of mala hides made by the appellant. Though it was admitted that the third respondent was the son-in-law of the Chief Minister of the State, it was denied that any favoritism was shown by the State either to that respondent or to the other respondents in the matter giving promotions to them. On the other hand, the Departmental Promotion Committee considered the claims of the appellantand other officers and on assessment of the various claims of the officers promotions were given to the officers mentioned in theOrder dated January 4, 1967 by the State Government on thebasis of the recommendation of the Departmental Promotion Committee which has also recommended respondents 2 to 5. The State further contended that though promotions had not been made to the Senior Scale in the year 1963-64 and 1964-65, it was not with a view to favour any particular officer. Apart from the fact that the State Government had the power either to fill up the posts or keep them vacant, in this particular case the vacancies were not filled up as an amendment of the rules was in contemplation of the State Government. It was urged that the rules contained various principles for assessment of merit of an officer. Regarding the Circular dated August 27, 1966, the State contended that the marking system laid down in the Circular for assessment of merit of an officer was calculated to ensure objectivity of approach on the part of the Selection Committee. As there were as many as 35 sets of service rules governing various services, the Circular was issued to bring about uniformity in the procedure for assessment of merit and for making selections on the basis of seniority- cum-merit. The State claimed that it has ample powers to issue such a Circular. Regarding the validity of the Circular the State contended that the Circular dated August 27, 1966 was issued by the Chief Secretary in his administrative capacity being the Head of the Service in the State. It is within his competence to give guidance for the proper working of any governmental machinery. The circular is not intended to be a piece of legislation nor is it an order of the Government. Regarding the confidential reports of the appellant the plea of the State Government was that the confidential reports of all the officers including that of the appellant were before the Departmental Promotion Committee when it met for making selection in September, 1966 and that there was nothing illegal in the said Committee considering the adverse remarks, if any, made in those reports. The State finally prayed for dismissal of the writ petition. The learned Single Judge who dealt with the writ petition held that rr. 28B and 32 were not violative of either Arts. 14 or 16. The principle of merit embodied in the rules was valid and the Committee charged with the duty under the rules of considering the claims of various officers for promotion was quite competent to take all the relevant factors when assessing the merits of an officer regarding his suitability for promotion. The learned Judge further held that the principle of merit of an officer being considered for promotion embodied in the rules, was really based on the recommendation of the Administrative Reforms Committee. However, the learned Judge held that the provision in sub-rule (2) of r. 28B restricting the number Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 7 of eligible candidates to be considered for promotion to ten times the total number of vacancies, was violative of Art. 16 inasmuch as the claims of various other eligible officers for being considered for promotion was barred. The learned Judge further held that this portion of sub-rule (2) of r. 28B is not easily severable from the remaining portion of sub-rule(2) of r. 28B and in consequence be held that the whole of sub-rule(2) of r. 28B was bad. After considering the relevant portions of the Circular dated August 27, 1966, the learned Judge held that the administrative instructions contained therein had to be adopted and followed by these Committees. The directions contained therein did not leave any choice to the Committees to ignore the same. The administrative directions contained in the said Circular, according to the learned Judge, provided a rigid formula for being adopted in the matter of selection for promotion and the directions contained therein restricted the powers and functions of the Committees functioning under the statutory rules. According to the learned Judge, even on merits, cannot be considered to be reasonable. In this view the circular was held to be bad as being repugnant to the rules. Regarding the promotions made under order dated January 4, 1967, the learned Judge held that the directions contained in the Circular must have been taken into account by the Selection Committee and hence the promotions were not valid. On this reasoning, the learned Judge, by his judgment and order dated November 7, 1968 held that sub-rule (1) of r. 28B and r. 32 were valid and that sub-rule (2) of r. 28B was violative of Art. 16 and hence that sub-rule was bad. The circular dated August 27, 1966 was struck down and the promotions of respondents made under the order dated January 4, 1967 were also struck down. Aggrieved by the judgment and order of the learned Single Judge, the first respondent, the State, filed D. D. Special Appeal No. 57 of 1968 and the respondents Nos. 2 and 3 filed D. B. Special Appeal No. 55 of 1968. The appellant herein filed cross-objections, in the appeal filed by the State challenging the decision of the learned Single Judge upholding the validity of sub-rule (1) or r. 28B and r. 32. The Division Bench by its order and judgment dated January 20, 1970 allowed the two appeals Nos. 55 and 57 of 1968 and dismissed the cross-objections filed by the appellant. The Division Bench held that the view of learned Single Judge that r. 28B(2) was bad was erroneous. On the other hand, the Division Bench held that restricting the eligibility of officers who have put in at least six years of service was quite reasonable and the further provision in r. 28B(2) regarding the field of selection being confined to senior most officers in the Junior Scale not exceeding 10 times the total number of 'Vacancies was also reasonable. Differing from the learned Single Judge, the Division Bench held that no part of r. 28B(2) was invalid. The Division Bench agreed with the views of the learned Single Judge regarding the validity of sub-rule (1) of r. 28B and r. 32. Regarding the Circular dated August 27, 1966, the learned Judges held that the marking system indicated therein was really based upon the previous Circular dated August 31, 1960 under which merit was to be evaluated by allotting marks on the previous record of an officer. The said Circular of 1960 had been in operation in respect of the said services except the Rajasthan Judicial Service or the Rajasthan Higher Judicial Service, which were under the control of the High Court. It is the view of the Division Bench that the Circular of 1966 was very elastic and gave wide discretion to the Committees to assess the merit of an officer. The Circular has done nothing except to lay down broad guidelines for the excercise of discretion by the Promotion Committee. The system of marking indicated in the Circular was quite good as it brought about uniformity in the procedure for assessment of merit. On this reasoning the learned Judges held that the Circular of 1966 was valid and it was in no way repugnant to the rules. Regarding the authority for the Circular, the learned Judges noted that there Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 8 has been some confusion in the stand taken by the State from time to time even when they made applications for amending their counter-affidavit for making it clear that the Circular has been issued not by the Chief Secretary in his individual capacity but by the State Government. Ultimately, the Division Bench held that they had examined the cabinet file produced before them along with the note sheets and that the Court was satisfied that the Circular of 1966, has been issued with the approval of the State Government. The learned Judges rejected the plea of mala fides raised by the appellant herein. Regarding the allegation made by the appellant that the adverse remarks which had not been communicated to him had been taken into account by the Promotion Committee in September, 1966, the learned Judges held that as the Departmental Promotion Committee had not been impleaded as a party, the question whether the adverse remarks made against the appellant had been taken into account by the said Committee cannot be gone into in these proceedings. Regarding the promotions made under the Order dated January 14, 1967, the Division Bench upheld the same as it had already held that rules 28B and 32 as well as the Circular of 1966 were all valid. Civil Appeal No. 1815 of 1970 is against the decision of the Division Bench, reiterating the objections regarding the validity of the rules, the Circular, as well as the promotions made. Writ Petition No. 76 of 1970 is filed by Motilal Kakkar, Apart from challenging rr. 28B and 32 and the Circular of and the promotions made under the order dated January 4, 1967, the writ petitioner challenges also the order dated January 22, 1970 confirming the promotions of respondents 2 to 16 in the Senior Scale. The facts leading up to the writ petition are as follows : The petitioner after obtaining his M. A. Degree in History and the Law Degree from the Lucknow University joined service in the erstwhile State of Jodhpur on August 1, 1943 as a Special Officer (Settlement). He entered the Jodhpur State Civil Service on March 13, 1946 as a result of the competitive examination held by the Public Service Commission of that State. At the time of the formation of the Rajasthan Union, the petitioner was working as Assistant Director, Civil ?Supplies, Jodhpur. Ultimately the petitioner was appointed to the Rajasthan Administrative Service with effect from January 6, 1950. He has been serving in various capacities and he was also sent for higher training to the United States of America by the Government of India during the period March 23, 1958 to September 27, 1958. The petitioner thereafter was sent on deputation to the Municipal Corporation of Delhi as an Assistant Commissioner during the period June 17, 1963 to April 21, 1964. Later on he was on deputation as Principal, Tribal Orientation and Study Centre during the period May 22, 1964 to March 31, 1967. He became the District Manager of Food Corporation of India and was holding that post since July 1, 1968. After giving the history sheet of respondents Nos. 2 to 16, the petitioner claims that he was the senior most amongst them and that his seniority has been so stated in the relevant seniority list. After referring to the rules as originally framed and the amendments made from time to time, the petitioner attacks the validity of rr. 28B and 32 and the Circular dated August 27, 1966 on the same grounds as those mentioned in Civil Appeal No. 1815 of 1970. According to the petitioner respondent Nos. 2 to 16 were all his juniors and on the basis of the illegal rules and the directions given in the Circular, officiating promotions have been given to those Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 9 respondents to the Senior Scale under the Order dated January 4, 1967. The petitioner further states that after the judgment of the Division Bench of the Rajasthan High Court, which is under attack in the Civil Appeal, the State Government passed an order on January 22, 1970 confirming the promotions of respondents Nos. 2 to 16 in the Senior Scale. According to the petitioner as the officiating promotions given to those respondents under the Order dated January 4, 1967 were invalid. the order of confirmation is also equally bad. Therefore, he seeks to get that order; also quashed. The State- Government has filed a very elaborate counter- affidavit. The stand taken by the State in respect of rr. 28B and 32 as well as the Circular of 1966 and the Order dated January 4, 1967 is the same as in the Civil Appeal. The State has further contended that as the rules are valid and the circular is also valid, the officiating promotions given under the Order dated January 4, 1967 are also valid. In consequence the State points out that the order of confirmation dated January 22, 1970 is also valid. The State disputes the allegation of mala fides and has also pointed out that the Departmental Promotion Committee considered the claims of all the respondents including that of the petitioner for promotion. Promotions were made by the Government on the basis of the recommendation of the said Committee. The State finally prays for the dismissal of the writ petition. Coming to Writ Petition No. 139 of 1970, the petitioner challenges the validity of the IT. 28B and 32, the Circular dated August 27, 1966 and the Orders dated January 4, 1967 and January 22, 1970. The officers covered by those orders are respondents Nos. 3 to 17. The petitioner further challenges the order dated February 21, 1970 passed by the State Government promoting and confirming in the Senior Scale the respondents Nos. 18 to 33. The facts leading up to this writ petition may be stated: The petitioner after obtaining the B. Sc. (Hons.) Agricultural Degree in the First Division from the Delhi University and the LL. B. Degree from the Agra University joined service in the Delhi Administration on February 6, 1954 as Extension Officer, Agriculture. On January 12, 1959 he was promoted as Block Development Officer in the Delhi Administration, in which capacity he continued till September 30, 1960. The petitioner joined the Rajasthan Administrative Service on October 1, 1960 after having passed the competitive examination held by the State Public Service Commission. After the probationary period of one year, he was confirmed in the service with effect from October 1, 1961. His rank has been given as Nos. 332 in the Seniority List of the Rajasthan Administrative Officers issued in 1964. The petitioner gives the rank of some of the respondents. After referring to the rules as well as the amendments made from time to time and the Circular of 1966, the petitioner levels the same attack as against them similar to those in the civil appeal. The petitioner then refers to the officiating promotions to the Senior Scale given to the respondents Nos. 3 to 17 by the Order dated January 4, 1967 as well as to the Order dated January 22, 1970, confirming their promotions. According to the petitioner these orders are illegal and invalid for the same reasons urged in the civil appeal. The petitioner further says that several officers were selected on probationary basis and given promotions, but only respondents 91 2 Nos. 18 to 33 were confirmed by the order Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 10 dated February 21, 1 970. These orders, according to the petitioner, are illegal and tile petitioner's claim for promotion has not been properly considered. The stand taken by the State Government in this writ peti- tion is also similar to the stand taken in Writ Petition No. 76 of 1970, which, we have already pointed out, again is similar to the stand taken in the civil appeal. According to the State Government the claim of the petitioner is not sustainable as he was ineligible for consideration for promotion under the rules. The State further contends that the petitioner has not put inthe minimum period of six years of service which is a condition precedent for consideration for promotion to the Senior Scale under r. 32 read with r. 28(2) of the. Rules. The State further contends that the respondents Nos. 18 to 33 were selected by the Promotion Committee for likely vacancies and their selections were in accordance with the Rules. Their promotions were delayed because of the orders of stay granted by the Rajasthan High Court in certain writ petitions filed before it. As soon as stay was vacated, the State Government decided to promote those officers, who had been duly selected. Therefore, according to the State Government the orders dated January 22, and 21st February, 1970 are legal and valid. From the statement of facts mentioned above, it will be seen that the main questions that arises for consideration relate to the validity of rr. 28B and 32 and the Circular dated August 27, 1966. The decision regarding the orders dated January 4, 1967, January 22, 1970 and February 21, 1970 will largely depend upon the opinion expressed on the validity of the Rules and the Circular. We will first take up for consideration the attack levelled against rr. 28B and 32 as being violative of Arts. 14 and 16. We have already referred to the fact that this attack is made on these rules on the ground that there is no criteria laid down in the rules for assessing the merit of the officers concerned when their claims are being considered for promotion to the Senior Scale. The further ground on which this attack is made is that the Rules give arbitrary powers to the Promotion Committees in the matter of assessing the merits of an officer. According to the State, on the other hand, the Rules are valid and the promotions on the basis of merit are also valid. It is now necessary to refer to the relevant rules as they originally stood as well as to the amendments made thereto from time to time. In 1954 the rules were framed by the Rajpramukh under the proviso to Art. 309 of the Constitution to regulate conditions of service of the officers in the Rajasthan Administrative Service. We have already referred to the fact that the Rajasthan Administrative Set-vice was fanned in the year 1950. There were three Grades in the Service : (i)Ordinary Time Scale Rs. 285-800 (herein after to be referred as the Junior Scale); (ii) Senior Scale Rs. 500-1150; (iii)Selection Grade Rs. 900-1500. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 11 In the Civil Appeal and the two writ petitions we are concerned with the promotions from junior scale to the senior scale. Rule 7 relates to the sources of recruitment to the Service. They are, (a) by competitive examination; (b) by promotion of administrative subordinate service, (c) by selection from amongst the prescribed categories of Extension Officers and (d) by special selection from amongst the persons other than the administrative subordinate service in condition with the affairs of the State. Part IV of the Rules deals with the procedure for direct recruitment. The procedure for recruitment by promotion is dealt with in Part V, Rule 27, as originally framed dealing with the criterion for selection was as follows "Rules 27. Criterion for selection : (1) For purposes of recruitment by promotion/selection/special selection shall be. made an the, basis of 'seniority-cummerit' from among all-the administrative subordinates Extension officers and others who are eligible for promolion, selection and special selection respectively under the provisions of the Rules (2)In selecting the candidates for promotion, regard shall be had to their; (a) personality and character; (b) tact and energy (including ability to undertake extensive tours); (c)intelligence and ability to express themselves in English and Hindi clearly, (d) court and other work-, (e) integrity; and (f) previous record of service." 58-1 S. C. India/71 The procedure for promotion was laid down in r. 28 as it onginally stood. Under sub-rule(1) when a decision is taken that a certain number of vacancies in the service are to be filled up by promotion, the Appointment Department has to inform the Board and the latter has to call upon all Collectors to submit their recommendations by a prescribed date. It was further provided that the Appointment Department should also call upon the Heads of the Department concerned to submit their recommendations through their respective Administrative Secretaries by a prescribed date. Sub-rules (2) to (6) dealt with the various details regarding the submission of the list by the District Collector, the various particulars to be mentioned by the Collector, to the Board, scrutinising the list furnished by the Collector and preparing a list in the order of seniority of candidates considered suitable for promotion. Those sub- rules also dealt with the Head of the Department preparing a list of candidates, eligible for promotion in the order of seniority and. recording. this remarks in respect of those officers. Sub-rule (7) provided for the Committee consis- ting of the, officers mentioned therein considering the cases of all the candidates recommended by the Board and the Administrative Secretaries and interviewing them, if necessary. It also provided for the Committee selecting the requisite number of candidates equal to the number of vacancies likely to occur in the Service and to be filled up by promotion and to the list being prepared in the order of seniority. The Committee has also to make another supplementary list in the manner Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 12 mentioned therein in the said sub-rule. Under sub-rule (8) both the lists prepared by the Committee are to be submitted to the Government, who after scrutinising the same have to forward them to the Public Service Commission along with the character rolls, personal files and other particulars relating to the officers mentioned therein. Under sub-rule (9) the names of the candidates considered to be suitable by the Commission are to be reported to the Government for final selection. Under sub-rule (10) it is provided that the final selection is to be made by the Government and against of candidates considered suitable for promotion is to be arranged in the order of their seniority. Rule 32 of the Rules as it originally stood made provision for appointment to the Senior scale in the Cadre and it was as follows "Rule 32, Appointments to Senior Posts: Appointments (including in an officiating/temporary capacity) to senior posts shall be made by the Government from amongst members of the Service on the basis of seniority- cum-merit on the. recommendations of a Committee which shall consist of the following officers : - (1) Chairman, Rajasthan Public service Chairman Commission Or a Member nomi- nated by him. (2)Chairman, Board of Revenue Member (3) Commissioner, Development Depart- Member ment (4) Special Secretary to the Government Member in the Appointments Department Secretary The Committee shall consider the cases of the persons eligi- ble for promotion by examining their confidential rolls and personal files interviewing such of them as they deem necessary and shall select a number of candidates equal to the number of vacancies likely to be filled by promotion. Provided that Government may fill a vacancy in the senior grade temporarily by appointing thereto for a period not exceeding six months in an officiating capacity, any member of the Service who is eligible for such appointment under these Rules." It will be seen by a reference to the rules extracted above that promotion was to be on the basis of seniority-cum- merit. Under sub-rule (7) of r. 28 and r. 32 a committee has been constituted and it is on the basis of the recommendation made by the said Committee that the promotion is ultimately made by the Government. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 13 In 1965 the State Government took a decision to introduce the system of recruitment to the service by promotion on the basis of merit alone. On December 14, 1965 a notification was issued amending the Rules. A new rule 28B dealing with the promotion by selection on the basis of merit was incorporated, The said rule as originally framed was as follows : "28-B Promotion by selection on basis of merit" (1) Appointment by promotion to posts in the Service shall be made by selection strictly on the basis of merit and on the basis of seniority-cum-merit in proportion of 50:50. Provided that if the appointing authority is satisfied that suitable persons are not available for appointment by promotion strictly on the basis of merit in a particular year appointment by promotion on the basis of seniority-cum-merit may be made in the same manner as specified in these rules. (2) Selection strictly on the basis of merit shall be made from amongst persons who are otherwise eligible for promotion under these rules; the number of eligible candidates to be considered for the purpose shall be ten times the total number of vacancies to be filled in on the basis of merit and seniority un-merit provided such number is available; where the number of eligible candidates exceeds ten times the number of vacancies, the requisite number of senior-most persons shall be considered for the purpose. (3) Except as otherwise expressly provided in this rule the procedure prescribed for selection to the post on the basis of seniority-cum-merit shall, so far as may be, be followed in making selection strictly on the basis of merit. (4) The Committee shall prepare a separate list of candidates selected by it on the basis of merit and shall arrange their names in order of preference. (5) Where consultation with the Commission is necessary the list prepared by the Committee shall be forwarded to the Commission by the appointing authority along with the personal files and confidential rolls of all, persons whose names have been considered by the Committee. (6) The Commission shall consider the lists prepared by the Committee along with other documents received from the appointing authority and unless any change is considered necessary, shall approve the lists, and if the Commission considers it necessary to make any change in the lists received from the appointing authority the Commission shall inform the appointing authority of the changes proposed and the appointing authority, after taking into account the commences, if, any, may approve the lists finally with such modifications, as may in his opinion, be just and proper. (7) Appointment shall be made by the appointing authority taking persons out of the list finally approved under the proceeding sub-rule in the order in which they have been placed in the list. (8) Among persons appointed in the same class,. category or grade of posts during the same year, persons appointed on the basis of seniority-cum-merit shall rank senior to those appointed by promotion on the basis of merit; the seniority inter se of persons appointed in the same class, Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 14 category or grade of posts by promotion strictly on merit, shall, without regard to the order of preference, be determined as if such persons had been appointed by promotion on the seniority-cum- merit. (9) The provisions of this rule shall have effect notwithstanding anything to the contrary contained in any other provisions of these rules. Explanation :-For the purpose of determining the number of vacancies to be filled on either basis under sub-rule (1), the following cyclic order shall be followed from year to year. "The first by merit. The next by seniority-cum-merit. The next by merit. The next by one by Seniority-cum-Merit The cycle to be repeated." By the same notification of December 14, 1965 sub-rule (2) of r. 27 was deleted. On January 7, 1966, a further amend- ment was made to the rules by deleting sub-rules (2) to (6) of r. 28. It will be seen that under the new r. 28B, promotion to posts in the service is to be made by selection on the basis of merit and on the basis of seniority-cum- merit in the proportion of 50:50. Sub-rule (2) provided for the manner of selection on the basis of merit. Under sub- rule (3) procedure prescribed for selection to the posts on the basis of seniority-cummerit has to be followed as far as possible in making selection strictly on the-basis of merit. On August 26, 1966 by a notification certain amendments were made in r. 28B. Under subrule (1) of r. 28B, the original proportion of selection on the basis of merit and on the basis of seniority-cum-merit was altered and the proportion was fixed as 1:2. A proviso was also added to sub-rule (2) of r. 28B, which is as follows : "Provided that for the first Promotion in the same cadre (from a lower grade to higher grade) against the merit only such of the persons shall unless a higher period is prescribed elsewhere in these rules be eligible who have put in not less than six years of service in the lower grade of the cadre." On September 8, 1966, the old r. 32 was substituted by a, new rule dealing with the appointment to Senior Posts. The said new rule 32 runs as follows : "32(1) Appointment to senior posts Appointment to Senior scale and selection grade posts shall be made by Government from amongst the members of the service on the basis of merit and seniority-cum-merit in the ratio of 1:2 on the recommendations of a Committee which shall consists of the follow- ing :- "(1) Chairman, Rajasthan Public Service Commission, or a Member nominated by him. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 15 Chairman. (2) Chairman, Board of Revenue Member. (3) Commissioner. Development De- partment. Member. (4) Special Secretary to Government in the Appointments Department. Member. Secretary. (2) Except as provided in this rule, the procedure and the principles for selection by merit, shall, in so far as it may apply, be the same as provided in rule 28B. For selection by seniority-cum-merit, the Com- mittee shall consider the cases of all the persons eligible for promotion by examining their confidential Rolls and Personal files and interviewing such of them as may deem necessary, and shall select a number of candidates equal to the number of vacancies likely to be filled by promotion by seniority- cum-merit: Provided that Government may MI a vacancy in the Senior scale or selection grade posts temporarily by appointment thereto for a period not exceeding six months in an officiating capacity, any member of the service who is eligible for such appointment under the rules." This new rule was also incorporated to give effect to the Government's decision taken in 1965 to introduce the system of recruitment to the service by promotion on the basis of merit, as a result of which r. 28B was earlier incorporated. Rule 32 really deals with appointments to Senior Posts; and under the old rule the promotion was to be on the basis of seniority-cum-merit. That is altered under the new rule to promotion on the basis of merit and seniority-cum-merit and the proportion is also 1:2 as already laid down, by the amendment made on August 26, 1966. Sub-rule (2) of new r. 32, as will be seen, provides for the procedure and the principles for selection by merit being the same as provided in r. 28B. Therefore, it will be seen that the position as it stood at the time when promotions of the various respondents in the appeal and in the writ petitions were made was : (1) the promotions had to be made on the basis of merit and seniority-cum-merit in the ratio of 1:2 as provided by Rule 32 read with r. 28B; (2) under the proviso to sub-rule 2 of r. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 16 28B the minimum period of eligibility for being considered for the first promotion is six years of service in the lower grade of the cadre; (3) under sub-rule 2 of r. 28B the selection for promotion is restricted only to officers eligible for promotion under the rules coming within ten times the total number of vacancies to be filled up on the basis of merit and seniority-cum-merit; (4) under r. 32 appointments to Senior scale and Selection cadre posts are also on the basis of merit and seniority-cum-merit in the ratio of 1:2, and (5) recommendations for appointments and promotions are to be made by the Committees concerned. It is the grievance of the appellant and the writ petitioners that the combined effect of the addition of r. 28B and the deletion of sub-rule (2) of r. 27 and sub-rules (2) to (6) of r. 2B is that although a provision has been made for recruitment to the service by promotion on the basis of "merit alone" no criteria) for assessing the merit and suitability of the candidates have been provided in the rules as they stand. In fact their further contention is that sub-rule (2) of r. 27 had laid down the various criteria for considering the suitability of a candidate and sub-rules (2) to (6) of r. 28 had dealt with the procedure for selection of such candidates. When once these sub-rules have been deleted there is no guidance whatsoever furnished by the rules, as they now stand, for assessing the merit. Further, the restriction placed under r. 28B that only candidates coming within 10 times the number of vacancies that have to be filled up will be considered for selection and the further restriction therein that for the first promotion six years' service is essential, are violative of Arts. 14 and 16. Rule 32, according to Mr. Garg, (toes not also lay down any guidance or principle for assessing the merit of candidates for promotion to Senior posts. We are not inclined to accept these contentions of Mr. Garg. We have already referred to the fact that the learned Single Judge, in the writ petition leading up to the civil appeal, is of the view that rr. 28B and 32 do not offend either Art. 14 or 16. But the learned Judge is of the view that as there is a restriction placed upon the number of officers whose claims could be considered, under sub-rule (2) of r. 28B, that part of the sub-rule was invalid as offending Art. 16. As the said part cannot be separated, according to the learned Judge, from the other parts of the sub-rule, the whole of sub-rule (2) of r. 28B was struck down. The Division Bench, on the other hand, has disagreed with this view of the learned Single Judge and has upheld the validity of the entire subrule (2) of r. 28B. We are in agreement with the views expressed by the Division Bench that rr. 28B and 32 do not offend either Art. 14 or 16. Nor are we impressed with the contention of Mr. Garg that there is no principle laid down in the rules for assessing the merit of an officer especially after the deletion of sub-rule (2) of r. 27 and sub-rules (2) to (6) of r. 28. No doubt sub-rule (2) of r. 27 enumerated certain factors or matters to be taken into account in selecting candidates for promotion. Sub-rules (2) to (6) of r. 28, no doubt also dealt with certain aspects of procedure to be adopted for promotion. The deletion of the sub-rules, in our opinion, does not make the rules 28B and 32 in any manner invalid. We have already extracted the relevant rules and also pointed out that the selection or promotion is to be considered by the Committees referred to therein. It is no doubt argued by Mr. Garg that introduction of the idea of merit in the procedure of promotion brings in an element of personal evaluation and such personal evaluation opens the door to the abuse of nepotism and favouritism. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 17 Hence it is argued that there is a violation of the constitutional guarantee under Arts. 14 and 16. We-are unable to accept this contention. The State Govern- ment has taken a decision in 1965 that selection to the service and promotion have to be on the basis of merit and senioritycum-merit. There can be no controversy that the main object in such matters is to serve public interest and not the personal interest of the members of the official -roup concerned. As stated by Leonard D. White in his Introduction to the Study of Public Administration, 4th Edition p. 380: "The Public interest is best secured when reasonable opportunities for promotion exist for all qualified employees, when really superior civil servants, are enabled to move as rapidly up the promotion ladder as their merits deserve and as vacancies occur, and when selection for promotion is made on the sole basis of merit. For the merit system ought to apply as specifically in making promotions as in original recruitment." The above statement has been quoted with approval by this Court in Sant Ram Sharma v. State of Rajasthan and Another(1) We may also point out that the Administrative Reforms (1) [1968] 1 S. C. R. 1 1 1. Committee has also emphasised that merit should be given adequate weightage in the matter of promotion especially for senior appointments to ensure greater efficiency in government functioning and also to provide adequate incentive to government servants to give their best. Rule 32 in essence adopts what is stated in rule 28B. The latter rule provides for two methods of selection: one based on merit and the other based on seniority-cum-merit. In other words, the rule provides that the promotion based on merit in contradistinction to that based on seniority-cum- merit shall strictly be on the basis of merit. The Selection Committee and the Promotion Committee consist of very responsible and senior officers of the 'State and being persons of experience they can be trusted to evaluate the merits of a particular officer. No doubt the term 'merit' is not capable of an easy definition, but it can be safely said that merit is a sum total of various qualities and attributes of an employee such as his academic qualifications, his distinction in the University, his Character, integrity, devotion to duty and the manner in which he discharges his official duties. Allied to this may be various other matters, or factors such as his punctuality in work, the quality and outturn of work done by him and the manner of his dealings with his superiors and ,subordinate officers and the general public and his rank in the service. We are only indicating some of the broad aspects that may be taken into account in assessing the merits of an officer. In this connection it may be stated that the various particulars in the annual confidential reports of an officer, if carefully and properly noted, will also give a very broad and general indication regarding the merit of an officer. Therefore, it cannot be stated that rr. 28B and 32 are in any manner vague ,or do not give any guide line for assessing the merit of an officer. No doubt sub-rule (2) of r. 27 dealt with certain factors which are to be taken into account for considering the claims for promotion, but when it comes to a, question of merit, not only those factors but also certain additional factors and circumstances will have to be taken into account and such an evaluation of merit has been left under the rules to a Committee consisting of res- ponsible, senior and experienced officers of the State. We are also not impressed with the contention that Rule 28B(2) and its proviso confining the selection to senior- most officers not exceeding ten times the number of total vacancies to be filled up and the further restriction regarding the eligibility of officers who have put in at least six years of service for first promotion offend Art. 16 of the Constitution. In this respect also we agree with the views expressed by the Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 18 Division Bench of the Rajasthan High Court in D. B. Special Appeal No. 57 of 1968, The restriction contained in the proviso to subrule (2) of r. 28B in our opinion, is quite reasonable. Before an officer in the Junior scale can be considered as fit for promotion to the Senior scale, it is necessary that he should have worked on a post in the Service at least for some period of time. As to what quantum of that period must be is not for this Court to lay down. The Government has fixed this period as six years. We are not in a position to say that it is an improper restriction. The provisions contained in sub-rule (2) confining the selection to senior- most officers not exceeding 10 times the number of total vacancies is also, in our opinion, reasonable. Such a provision will encourage the members of the service to aspire for promotion for making themselves eligible by increasing their efficiency in the discharge of their duties. We are of the view that rr. 28B and 32 do not offend either Art. 14 or 16 of the Constitution. Now coming to the Circular dated August 27, 1966, we find it difficult to agree with the view of the Division Bench of the Rajasthan High Court. On the other hand, we are inclined to agree with the decision of the learned Single Judge in Writ Petition No. 79 of 67. The contention of Mr. Gang is that the Circular by executive instructions has abridged or curtailed drastically the exercise of discretion by the Departmental Promotion Committee constituted under the rules. In fact his plea is that the circular has superseded the statutory rules framed under the proviso to Art. 309. On the other hand, it is the contention of the learned Solicitor-General, appearing for the State and of Mr. B. Sen, learned counsel appearing for some of' the respondents, that the Circular has not in any manner inter- fered with the powers of the Committees constituted under the Rules. On the other hand, in order to bring about uniformity in the application of the principles for assessing the merit the marking system which has been in vague from 1960 has been adopted with slight modifications in the Circular of 1966. The instructions contained in the Circular only provide guidance to the Committees concerned and those instructions do not in any way contravene any of the rules. Before we deal with this aspect, we can dispose of a subsi- diary contention that has been raised by Mr. Garg. According to him the circular has been issued by the Chief Secretary as the Head of the Service and it is not an order of the Government. This has been accepted by the State Government. If so, it follows that the Circular is illegal and void. We have already referred to the stand taken by the State Government in this regard. They have specifically taken the stand that the circular has been issued by the Chief Secretary as the Head of the Service. Before the Division Bench in the High Court when this matter was again raised by the appellant, it is seen that an application for amending their counter-affidavit was made by the State to make the position clear that the Circular was issued with the approval of the Government. As pointed out by the Division Bench there is some confusion in this regard. But ultimately the Division Bench has stated that they themselves have gone through the Cabinet file and the notes and satisfied themselves that the Circular has been issued with the approval of the Government. Therefore it follows that the Circular is an order of the Government and not of the Chief Secretary alone. Then the question is whether the Government is competent to issue the said Circular and whether the Circular in any manner effects the discretion and powers of the Committee functioning under the statutory rules. The position is clear, as laid down by this Court in Sant Ram Sharma v. State of Rajasthan and another(1): Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 19 "It is true that the Government cannot amend or supersede statutory rules by administrative instructions, but it the rules are silent on any particular point Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed." Having due regard to the principles stated above, we will now examine the scope and contents of the Circular. The Circular contains administrative instructions and it does not profess to lay down anything else. The Government have issued those instructions "for the guidance of all selection/promotion committee and appointing authorities mentioned in the statutory service Rules. These administrative instructions and the statutory service Rules should together be taken as a complete code on the subject." From the above extract it is clear that in the matter of selection or promotion the Committees concerned are enjoined not only to have regard to the statutory rules under which they function, but also to the administrative instructions given in the Circular. This makes it very clear that it is not open to the Committee concerned to ignore the instructions contained in the Circular or to act contrary to the directions contained therein. Therefore, it will be seen that if the Circular or any part of it gives instructions contrary to or opposed to any of the rules, the Circular or that part of the Circular to that extent will be in-. valid. In particular we may refer to paragraphs 3 and 5 of the Circular. Paragraph 3 deals with the merit formula and is as follows : (1) [1968]1 S. C. R. 111. 3(a) "Merit formula" means that out of 75 marks (marking system has been defined in paragraph 5), a person should get a minimum of 65 marks for consideration of his case for promotion among those who have secured 65 or more marks, the person who gets highest marks will be the first to be promoted, and the person who comes next in the range of marks will be the second to be promoted, and so on. The inter-se seniority of persons had been appointed in the same class, category or grade of posts by promotion strictly on merit shall without regard to the order of preference, be determined as if such persons had been appointed by promotion on the basis of seniority-cum-merit. This is illustrated by the following example Name of the No. of Seniority in the Officer Marks. next below grade. A 75 8 B 73 9 c 70 4 D 69 3 E 65 1 That if there are 5 vacant posts to be filled by promotion on the basis of 'merit' formula the inter-se seniority of these 5 selected persons will be the same as in next below grade, but if only 3 posts are to be filled then those who have secured 75, 73 and 70 marks respectively will be selected and the remaining left out. The inter-se seniority amongst these selected shall be the same as the next below grade. (b)The eligible candidates for promotion on the basis of 'merit' formula shall be 10 times the total number of vacancies to be filled by way of promotion provided such number is available and they Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 20 should be holding the post in the next below cadre in substantive capa- city. As for example, if there are twelve posts to be filled by way of promotion on the basis of both the formula (viz. four posts for merit and eight for seniority-cum-merit) the total number of eligible candidates for promotion on the basis of merit formula shall be 120. If available, if an officer could not secure 65 marks continuously for 5 years he will not be included in this list of eligible candidates. (c) Notwithstanding anything contained in sub-para (b) above, for first promotion by merit, only such of the candidates shall be eligible who have put in six years service in the cadre on the date of selection." Paragraph 4 of the Circular lays down what is "senioritycum- merit" formula. The marking system which is applicable both to the selection based on 'merit' as well as to the selection based on "seniority-cum-merit" is contained in paragraph 5. That paragraph reads as follows : "Para-5 The marking system will be as follows (a)Confidential Rolls for the 5 calendar years immediately 'preceding the date of selection will be examined. 5 marks will be ear-marked for each year's confidential Roll, and the marking will be:-Excellent report-5 marks, Very good report-4 marks; Good report -3 marks; Satisfactory report-2-1/2 marks; Unsatisfactory report-2 marks-, Adverse report-1-1/2 marks; Adverse report with punishment 1 mark. If a person has been awarded either 'Merit Pay' or 'Cash award' by the Government, then the Committee may award him upto 5 more marks in addition to the marks already obtained by him. These additional marks will not be taken into consideration at the time of the next selection. (b)The record of service, which means service book, personal file, and Confidential Rolls other than the Confidential Rolls of the 5 years immediately preceding the selection maintained after the formation of Rajasthan, will be allotted 50 marks, and the marking will be (a) average or satisfactory record 50 marks, and (b) deduction upto 2 marks for each punishment according to gravity may be made (no deduction will be made for mere warning, but where warning has been recorded in Confidential Roll, it should be considered as punishment and marks should be deducted). 'Recorded warning' means censure given by way of punishment under the C.C.A. Rules. If some marks have been deducted for any punishment out of 50 marks in any year of selection, then that deduction should not be repeated or counted in the next selection. Also if some marks have been deducted from the Confidential Roll of a particular year, then that deduction should not be repeated or counted next time. That Confidential Roll should be considered satisfactory, and marks awarded accordingly, with a view to ensure implementation of this, it would be necessary for the promotion Committee to keep a record of such deductions and additional marks as the case may be. (c)On the basis of above marking, only such persons who have secured a minimum of 6-1/2 marks out of the total of 75 marks will be considered for promotion on the basis of 'Seniority-cum-merit' Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 21 formula. Thus, as has been mentioned earlier, even if a junior person secures more than 621 marks, the senior will not be superseded if he has secured 62- 1/2 marks. Under the 'merit' formula those who have secured 65 marks or more will only be considered for promotion." Paragraph 6 dealing with officers, who can be called for interview provides that a person who has secured less than 62-1/2 marks shall be called for interview.. But persons who get less than 61 marks, should not. be called for interview. It further provides that those persons whose confidential Rolls were missing or whose confidential Rolls could not be prepared in their absence for study or training outside India should also be called for interview. Para 7 of the circular lays down that adverse remarks re- corded in the Confidential Rolls should be communicated to the person concerned in time, so that he may get an opportunity to represent his case to the authority concerned. However, if by chance, adverse remarks have not been communicated to him, or if the adverse remarks have been communicated but his representation had not been decided by the appropriate authority, then in that event the person concerned should be called for interview by the selection or the promotion committee and before he is asked to appear for interview adverse remark should be communicated to-him so that he could come prepared with what he has to say in the matter. It was left open to the selection or promotion committee to treat the adverse remarks as expunged and then award marks if it felt that the adverse remarks were not justified. It was clearly emphasised that normally efforts should be made to communicate the adverse remarks and to decide the representations before the selection committee meets. In para 9 of the circular it was pointed out to all selection committees and appointing authorities that the assessment of confidential rolls and the awarding of remarks thereon should be rational, judiciously liberal and objective, the reason being that at times a confidential roll may have been written with a greater sense of responsibility and at other times it may not have been given due care. It was also observed by way of illustration that one officer might be liberal in the assessment of his subordinates while another may be a bit miserly or sometimes indicative. It was, in order to have a balanced approach in the matter it might at time be worthwhile for the selection committee as also for the appointing authority to consider whether the reporting officers themselves enjoyed reputation for efficiency, impartiality and integrity. Finally the circular pointed out that the instructions contained therein should be strictly kept in view while persons are being considered for promotion, the reason being that evaluation and assessment of confidential rolls make or mar the service prospects of ,government employees. One gets a fairly good picture of the nature of the instruc- tions contained in the circular issued by the Government. No doubt a properly evaluated marking system may be helpful for assessing the merit of persons who are already in service. But the instructions given in the circular are so rigid that they are ,opposed to the selection to be made strictly on merit as provided under rr. 28B and 32.- For instance the marking system provides 50 marks for the record prior to 5 years and for the five years preceding the selection the marking of 25 is to be on the basis of confidential rolls. From this it is clear that an officer who has rendered less than five years of service will not be eligible to get a single mark ,out of 50 which is provided for the record for the period preceding five years for the simple reason that he will have no such record. The officer who has put in less than five years of service has been straightaway denied 50 marks out of 75 marks and he has to establish his worth within the small range of 25 marks on the basis of his confidential rolls which will be available for a period of less than five years. This formula of marking is certainly opposed to r. 28B and r. 32, the object of which is to ensure that merit and merit alone is to form the Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 22 basis for promotion, as against the quota fixed for merit, in contradistinction to seniority-cum-merit. Similarly, when one considers the question of first selection, the position is still more anamolous. An officer Who has put in just six years of service will get 50 marks for his record of previous service which just exceeds five years by one year. Another officer will have to face the situation with a longer period of service. There can be no comparison of the claims of the two officers on merits. While the rules give a wide discretion to the Committee for judging merit, paragraphs 3 and 5 of the circular place undue, restrictions and limitations on the exercise of dis- cretion and thus fetter the powers of the Committee. That is opposed to rr. 28B and 32. Similarly, in the matter of giving marks for excellent report, very good report, good report, satisfactory report, unsatisfactory report, adverse report and adverse report with punishment, the circular is arbitrary. It will be seen that an officer who has satisfactory report gets 2-1/2 marks, and another officer with an unsatisfactory report gets 2 marks. The officer with an adverse report gets 1-1\2 marks. , We fail to see any rhyme or reason in this marking system. Again, under the Rules the Committee concerned, has a discretion if it deems necessary to call for interview any person, whose claims are being considered by it. But this exercise of discretion is drastically curtailed by paragraph 6 of the circular laying down the circumstances under which a person, should or should not be called for interview. The Committee under the said paragraph has only to mechanically apply the directions contained therein. This provision is again a serious inroad on the powers conferred on the Committees by the Rules. We are not inclined to accept the view of the learned Judges of the Division Bench that the circular merely gives a broad guidance to the Committees concerned and that the instructions contained therein are elastic. Nor are we inclined to accept their reasoning that the Committees have still got discretion to ignore the directions contained in the circular and assess the merit of an officer by independent evaluation. No such indication is available, so far as we could see, in the circular. On the other hand, the indications axe to the contrary. The circular enjoins the Committees to treat the administrative instructions and the statutory Service Rules together as a complete Code. The object of the circular may be to bring about uniformity in the award of marks. But the directions contained therein do' offend the rules. This is not a case of the government filling up the gaps or of giving executive instructions on matters not provided for by or not inconsistent with the rules. 'Me learned Judges of the Division Bench of the High Court, have by and large, upheld the validity of the marking system as well as the other instructions contained in the circular of 1966 on the ground that the marking system as pointed out by the State has been in vogue from 1960, on the basis of a previous circular, dated August 31, 1960 issued by the State Government. Reliance placed upon this circular of 1960 by the High Court, in our opinion, is not justified. We have gone through the circular of 1960 which is No. F. 1(6) Apptts. (D)160 dated 31-8-1960. That circular was issued by the State to clarify the misapprehension that appears to have been caused in the application, for promotion of the principle of merit-cum-seniority or seniority-cum-merit. For the purpose of having uniformity, the State Government had laid down certain principles in the said circular to be borne in mind by the Promotion Committees. No doubt there is a marking system indicated therein. But there are two features which distinguish the circular of 1960 from that of the 1966 circular. In paragraph 3 of the former circular, it is specifically laid down that the principles mentioned therein Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 23 are only in the nature of executive instructions to be kept in view by the Committees when making promotions. It is made clear that those Committees should, however, exercise their own discretion while applying the above principles in view of the fact that occasionally the Confidential Rolls may not have been written with full sense of responsibility. Moreover, some of the rules permit interview before selection and in such cases the Selection Committee will have to assess suitability of the officer as a result of the interview also." Under the circular of 1966, we have already indicated, no such discretion is left to the Selection or Promotion Committees to adopt any method other than that indicated in the circular. In fact it is emphasised that the statutory service rules and the instructions contained in the circular are to be treated as a complete code by the Committees. Another point to be noted is that in 1960 the question of promotion on the basis of merit alone had no place. That principle was adopted only, as pointed out by us earlier, in1965 which led to the amendment of the rules. Therefore, the principles mentioned in the circular of 1960 cannot be relied on when considering the validity of the present circular, when promotion by merit alone has been recognised by the rules from 1965. We have already indicated that the instructions in the 1966 circular contravene the Rules. Therefore, we are of the opinion that the circular dated 27-8-1966 is bad and accordingly it is struck down. We make it clear that we express no opinion on the validity or otherwise of the cir- cular of 31-8-1960. We have only referred to that circular to show that the High Court has committed an error in placing reliance on the same. Now, coming to the promotions and confirmations made, under the orders dated January 4, 1967, January 22, 1970 and February 21, 1970, we are not inclined to disturb those orders except to the extent indicated below in respect of the promotions of respondents Nos. 2 to 4 in Civil Appeal No. 1815 of 1970 under the first order dated January 4, 1967 and their confirmation, by the second order dated January 22, 1970. Writ Petitions Nos. 76 and 139 of 1970 have been filed in this Court. only after the judgment dated January 20, 1970 of the High Court in D. B. Special Appeal No. 57 of 1968. The petitioners must have been aware that the appellant was challenging only the promotions of four officers in his writ petition 59-1 S.C.R. India/71 in the High Court. Nevertheless, they kept quite and allowed the officiating promotions of all the officers to stand from 1967 and even kept quiet till the government confirmed the promotion of those officers on January 22, 1970. So far as the writ petitioners are concerned, the State must be considered to be justified in passing the order dated January 22,,1970, on which date the High Court's judgment was in its favour. We are entitled to take this circumstance into account for denying the larger reliefs claimed by the writ petitioners when they attack the orders dated January 4, 1970 and January 22, 1970. We have referred earlier to the various orders that are being challenged in these writ petitions, apart from the attack on rr. 28B and 32. Under the order dated January 22, 1970, the officers who had been promoted to officiating posts in the senior scale in January 4, 1967 have been confirmed. We have held earlier that these orders cannot be reopened at the instance of these writ petitions. Another set of officers, who had been selected earlier, were appointed by promotion to the senior scale post by the order dated February 21, 1970. We are holding later that no relief can be granted to the concerned writ petitioner even regarding this order. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 24 So far as respondents Nos. 2 to 4 in the Civil Appeal No. 1815 of 1970 are concerned, we are giving separate directions, regarding the reconsideration of their promotion and confirmation, along with the appellant in the appeal. The fact that the respondents Nos. 2 to 4 in the civil appeal have been confirmed on January 22, 1970 after the decision of the High Court in favour of the State and those officers is of no consequence, so far as the appellant is concerned, if their original officiating promotion on January 4, 1967 requires reconsideration by the Government. Their confirmation will stand or fall depending on the final decision of this Court regarding the order dated January 4, 1967. The appellant in the civil appeal is not challenging the officiating promotions or confirmation made of the officers other than respondents Nos. 2 to 4 in the appeal. Hence the promotions given and confirmations made of the other officers under orders dated January 4, 1967 and January 22, 1970 respectively should be allowed to stand. It is also seen that the order dated February 21, 1970 was passed by the State Government, after the order of stay was vacated by the High Court. The State Government, as pointed out earlier, was justified in passing the order dated January 22, 1970 except regarding respondents Nos. 2 to 4 in the appeal, on the basis of the Division Bench judgment of the High Court which had upheld the validity of the rules and the circular. The same reasoning will apply to the order of February 21, 1970 also. Therefore, the petitioner in writ petition No. 139 of 1970, who alone is challenging this order, will not be entitled to have that order reopened. Thus both the writ petitioners will be only entitled to have a declaration that the circular dated August 27, 1966 is invalid and that it is struck down. They are' not entitled to any further reliefs in the writ petitions. In the civil appeal Guman Singh, the appellant has raised a contention that promotions of respondents Nos. 2 to 4 were made on January 4, 1967 on the basis of illegal rules and invalid circular. He has further contended that the Promotion Committee which met in September, 1966 has taken into account the adverse remarks made against him which were not justified and which were not communicated to him. We have already expressed our views upholding the validity of the rules and the invalidity of the circular. In support of the contention that adverse remarks were taken into consideration by the Committee, he relied upon the following circumstances : The Deputy Commissioner has written a letter dated April 28, 1966 strongly appreciating his services as an officer. While so, it is a matter of surprise that adverse remarks came to be made in September, 1966. The nature of the adverse remarks has been referred to by the Division Bench. It is admitted by the State that the Promotion Committee had met in the end of September, 1966 and made recommendations regarding the officers who are to be promoted. It is also admitted by the State Government that the confidential rolls of all the officers were before the Selection Committees They have not denied that the circular was not taking into account by the Committee. On the other hand, they have impliedly accepted that the circular was before the Committee at the time of considering the promotions. According to the appellant adverse remarks were communicated to him only on May 11, 1967, long after the decision of the Promotion Committee. Hence the Committee has illegally taken into consideration the adverse remarks made against him and has denied him promotion on that account. His contention is that after the adverse remarks were communicated to him, long, afterwards he made representations and the adverse remarks were directed to be expunged. In this connection, learned counsel relied upon the counter-affidavit filed in this Court on behalf of the State in writ petition No. 76 of 1970 to the effect that the adverse entries in the confidential rolls of Shri Guman Singh, the appellant, were expunged on his representations. Therefore, according to the appellant, his claims for promotion have not been properly dealt. with Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 25 by the promotion Committee. The allegation of the appellant in his writ petition that the promotion Committee had taken into consideration the adverse remarks, when it met in September, 1966, does not appear to be unfounded, however, as we are giving directions for reconsideration of the appellant's claims for promotion, if otherwise he is eligible under the Rules, we do not express any opinion on this aspect as facts have to be investigated. The learned Judges of the 'Division Bench have brushed aside the grievance of the appellant regarding This matter by observing that as the Departmental Promotion Committee is not a, party to the proceedings, the question whether the Committee took into account the adverse remarks said to have been made against the appellant, cannot be gone into in these proceedings. This approach made by the learned Judges does not appeal to us. The Government, which is the appointing authority, was a party before the High Court. It must have had before it, when it passed the orders on January 4, 1967, all the records regarding promotion. It was the duty of the State Government to place before the High Court all the materials available before it to enable the Court to consider whether the grievance of the appellant was justified or not. The appellant had made a specific grievance in his writ petition about the uncommunicated adverse remarks having been taken into account by the Committee. The Government could have obtained a report or an affidavit regarding the true facts from a responsible officer of the Committee and placed it before the High Court. Anyhow, as- mentioned earlier, it is not necessary for us to pursue this aspect further except to point out that we do not agree with the reasoning of the High Court in this regard. The High Court has also declined to interfere with the order dated January 4, 1967 as it upheld the validity of rr. 28B and 32 as well as the circular of August 27, 1966. Though we are upholding the validity of the two rifles, we disagree from the High Court's view regarding the validity of the circular. We are also giving separate directions regarding the order dated January 4, 1967. We are, accordingly of the opinion that so far as the appel- lant (in the civil appeal) and respondents Nos. 2 to 4 are concerned, the officiating promotions made of the latter officers on January 4, 1967 as well as their confirmation by order dated January 22, 1970 will have to be reviewed and reconsidered by the Departmental Promotion Committee and the Government. It is needless to state that the circular dated August 27, 1966 should not be taken into consideration. The claims of the appellant and respondents Nos. 2 to 4 in the appeal will have to be considered only on the basis of the Rules. We also make it clear that a reconsideration of the claims of the appellant and respondents Nos. 2 to 4 will be necessary, only if the appellant, is found, in the first instance, to be eligible as per the Rules for being considered for promotion. His eligibility is to be decided with reference to the date when the Departmental promotion Committee met in September, 1966 for considering promotion. This direction becomes necessary as we are upholding the validity of Rules 28B and 32. If ultimately, respondents Nos. 2 to 4 are found eligible for promotion under the rules, they will retain their rank on the basis of promotion given to them on January 4, 1967. If not, suitable alterations will have to be made both in this order as well as in the order of January 22, 1970. Once again we are emphasising that the fact that the respondents Nos. 2 to 4 have been confirmed on January 22, 1970, is of no consequence because if their original promotion on January 4, 1967 is not valid, their confirmation on January 22, 1970 will not have any greater sanctity. Of course, if on reconsideration they are found eligible for promotion, their confirmation and rank given to them win stand. The Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 26 allegations of mala fides made by the appellant against the State have been, in our opinion, rightly rejected by the Division Bench. Mala fides were alleged against the State in amending the Service Rules from time to time and the delay in making promotions on the ground that they were all done with a view to help the son-in-law of the Chief Minister and the other officers who were relations of persons in the good books of the Chief Minister. The same allegations have been repeated in the two writ petitions also. Those allegations have been denied by the State. For the reasons given by the Division Bench, with which we agree, we have no hesitation in rejecting the allegations of mala fides made by the appellant in the appeal and in the writ petitions. In the appeal and the writ petitions we hold that rr. 28B and 32 are valid and that the circular dated August 27, 1966 is struck down as illegal and invalid. In the writ petitions there will be only a declaration that the circular dated August 27, 1966 is invalid and that it is struck down. In other respect both the writ petitions will stand dismissed. There will be no order as to costs. So far as the appeal is concerned there will be a further order at subject to the observations contained in this judgment a direction will issue to the first respondent, the State to instruct the Departmental Promotion Committee to review and reconsider the promotions already given to respondents Nos. 2 to 4 in the appeal under the order dated January 4, 1967 and to decide their claims afresh only on the basis of the Rules. If the appellant is found eligible for being considered for promotion under the Rules, his claim also will have to be considered along with that of the respondents Nos. 2 to 4. No directions are necessary regarding respondent No. 5 as he is already dead. Depending on the fresh recommendations, any, made by the Departmental Promotion Committee, the first respondent, will also make any modifications that may be found necessary in the orders dated January 4, 1967 and January 21, 1970. The modi- fications, if any, will be confirmed only to the appellant and the respondents Nos. 2 to 4 as the appellant is not challenging the promotions given to other officers under the said two orders. If ultimately respondents Nos. 2 to 4 are found eligible for promotion and the appellant is not found eligible, the rank given to those respondents will remain the same as is now due to them as per the orders dated January 4, 1967 and January 21, 1970. Otherwise, suitable alterations will have to be made. Pending the review and reconsideration, ordered as above, and which must be done as expeditiously as possible, and depending upon the result of the same, the promotion already given to respondents Nos. 2 to 4 to the senior scale will continue to be in force. In the result the order and judgment of the Division Bench of the High Court upholding the validity of the circular dated August 27, 1966 and declining to interfere with the order dated January 4, 1967 so far as the appellant and respondents Nos. 2 to 4 are concerned are hereby set aside and the appeal allowed to that extent. Parties will bear their own costs throughout. G. C. Appeal allowed in part. Guman Singh vs State Of Rajasthan & Ors on 26 July, 1971 27 | {
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Commissioner Of Wealth-Tax, West ... vs Sardar Ajaib Singh on 6 September, 1971 Equivalent citations: [1971]82ITR842(SC), (1972)4SCC456 Author: K.S. Hegde Bench: A.N. Grover, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. In these appeals by certificates, filed by the same assessee, only one question arises for decision, viz., whether, on the facts and in the circumstances of the case, in determining the break-up value of the shares held by the assessee in M/s. Indra Singh and Sons Private Ltd. (to be hereinafter referred to as the "company") the estimated tax liability not provided for in the balance-sheet of the company should have been deducted? The Tribunal held against the assessee on that question but at the instance of the assessee it submitted that question along with several other questions to the High Court for its opinion. The High Court answered all the questions referred to it in favour of the department by its judgment dated August 2, 1967. But, thereafter, on an application by the assessee, it amended the answer given by it to question No. 2(i), the question referred to earlier, purporting to follow the decision of this Court in Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax (Central), Calcutta . Aggrieved by the amendment so made, the Commissioner of Wealth-tax, West Bengal, has come up in appeal to this Court. 2. In these appeals we are concerned with the wealth-tax assessment of the assessee for the years 1957-58 and 1958-59 for which the relevant valuation dates are March 31, 1957, and March 31, 1958. The material facts bearing on the point in issue as set out in the statement of case are: The assessee is an individual. On the relevant valuation dates, he was holding 650 ordinary shares of the face value of Rs. 1,000 each in M/s. Indra Singh and Sons Pvt. Ltd. The Wealth-tax Officer valued those shares at Rs. 4,281 per share as on March 31, 1957, and Rs. 3,884 per share as on March 31, 1958. These shares were not being sold in the market. Hence the Wealth-tax Officer valued them on the basis of the assets and liabilities of the company as disclosed in its balance sheets. During the assessment of the wealth-tax for the assessment year 1957-58, the assessee claimed that for determining the value of the shares on the basis of assets and liabilities of the company, the Wealth-tax Officer should take into consideration the tax liability of the company amounting to rupees eight lakhs which had not been shown in the balance-sheet. During the assessment of the wealth-tax for the assessment year Commissioner Of Wealth-Tax, West ... vs Sardar Ajaib Singh on 6 September, 1971 1 1958-59, the assessee claimed that, in computing the value of the shares on the basis of the assets and liabilities of the company, the Wealth-tax Officer should take into consideration the tax liability of Rs. 9,50,000 not shown in the balance-sheet. The Wealth-tax Officer rejected those contentions. He proceeded to assess the assessee in respect of both those years on the basis of the balance-sheets. The Appellate Assistant Commissioner confirmed the order of the Wealth-tax Officer. On a further appeal to the Tribunal, the Tribunal came to the conclusion that the estimated tax liability of the assessee as on the valuation dates should be deducted from the gross value of the assets. But it took the view that if there were any encroachments on the assets of the company for the tax liability, the company certainly would have provided for it in its accounts before presenting the balance-sheet and the profit and loss account to the shareholders and the company did not make any provision for the estimated tax liability because it was satisfied that the existing reserve plus the advance payment made under Section 18A coupled with the refund, the company would get under Section 18(5) of the Income-tax Act on the dividend credited to the profit and loss account would be more than enough to cover the tax liability during the years in question. In other words the finding of the Tribunal was that, though the estimated tax liability of the company was liable to be deducted before arriving at the value of the assets of the company, on the facts of this case, no provision need be made for the same, as several other assets of the company were also not taken into consideration in arriving at the value of the assets. The Tribunal was of the opinion that the existing reserve of the company, the advance tax paid by the company which was to be adjusted towards the tax liability of the company and the refund to which the company was entitled under Section 18(5) of the Income-tax Act were sufficient to cover the tax liability of the company. This was essentially a finding of fact. The assessee did not ask the Tribunal to submit any question to the High Court challenging the correctness of that finding. No arguments were advanced before the High Court to show that that finding of the Tribunal was vitiated in any manner. 3. The question as framed by the Tribunal did not correctly bring out the controversy between the parties. The question relating to the assessment for the year 1957-58 reads : Whether, on the facts and in the circumstances of the case, in determining the break up value of the shares held by the assessee in Messrs. Indra Singh and Sons Pvt. Ltd., the following amounts should have been deducted from the assets shown in the balance-sheet of the said company as on March 31, 1957: (i) Estimated tax liability amounting to Rs. 8,00,000 which was not provided for in the balance-sheet 4. Similar was the question relating to the year 1958-59 excepting the fact that the tax liability was shown as Rs. 9,50,000. Commissioner Of Wealth-Tax, West ... vs Sardar Ajaib Singh on 6 September, 1971 2 5. A superficial reading of this question may give a wrong impression as to its scope. But that question should be understood on the basis of the facts found by the Tribunal. 6. In our opinion, the High Court erroneously came to the conclusion that the afore-mentioned question has to be answered in favour of the assessee in view of the decision of this Court in Kesoram Industries' case . That case merely laid down that "debt owed" within the meaning of Section 2(m) of the Wealth-tax Act, 1957, could be denned as the liability to pay in praesenti or in future an ascertainable sum of money. Herein, the Tribunal has held that the "debt owed" is fully covered by the other assets which had not been taken into consideration in computing the net value of the assets of the company. 7. In this view it is not necessary for us to consider whether it was within the competence of the High Court to amend the answer given by it to the question referred to it. 8. For the reasons mentioned above we allow these appeals, discharge the answer given by the High Court to the question mentioned earlier and answer that question in favour of the department. The assessee to pay costs of the department in those appeals-hearing fee one set. Commissioner Of Wealth-Tax, West ... vs Sardar Ajaib Singh on 6 September, 1971 3 | {
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The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 Equivalent citations: AIR1971SC2417, 1973(0)BLJR685, [1972(24)FLR162], (1971)IILLJ340SC, (1971)2SCC605, [1972]1SCR266, AIR 1971 SUPREME COURT 2417, 1971 LAB. I. C. 1396, 1971 2 LABLJ 340, 1973 BLJR 685, 1972 PATLJR 584, 24 FACLR 162, 40 FJR 160, 1972 (1) SCR 266 Author: G. K. Mitter Bench: C.A. Vaidialingam, G.K. Mitter, P. Jaganmohan Reddy JUDGMENT G. K. Mitter, J. 1. This appeal by special leave arises out of an order of the Patna High Court setting aside the award dated 23rd February, 1962 made by the Presiding Officer of the Labour Court, Ranchi and remitting the matter back to him for making a fresh award in accordance with the observations of the High Court. 2. The facts are as follows. The first respondent, Bishwanath Prasad, a workman of the appellant, made a complaint in writing to the officer in charge of Nirsa Police station on September 19, 1960 stating inter alia that the members of his Union were being harassed repeatedly by the Management of the company and that the labourers had reported on that day that an Assistant Manager, a Labour Welfare Officer and others had broken open the lock of the room of a worker by the name of Kashi Nath Singh and thrown away his belongings when he was actually on duty. The police were requested to take proper action against the said Assistant Manager. After enquiry the officer in charge Nirsa police station submitted a final report on 19th November 1960 to the effect that the complainant Bishwanath Prasad had deliberately brought a false complaint. The Sub-Divisional Officer of the District acting on the final report dismissed the complaint on 12th January 1961. The Management served the respondent Bishwanath Prasad with a charge sheet on 23rd January 1961 to show cause why disciplinary action should not be taken against him for his misconduct subversive of discipline in making serious defamatory allegations against the officers in general and to two of the officers in particular who had been put to great harassment and humiliation at the investigation by the police. The explanation given by Bishwanath Prasad to the charge sheet was that he had made the report to the police after receiving a complaint from Kashinath Singh, a member of his Union with no intention to undermine the prestige of the officers concerned and the discipline in the factory, but simply to pacify the workers who were very much excited owing to the action of the officer. It appears that an enquiry into the matter was fixed by the Management and the respondent The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 1 was asked to appear at the enquiry on 30th January, 1961 but he failed to attend the same and sent a letter "asking for an open enquiry in which representatives of the Labour Department, Dhanbad should be present". The enquiry officer sent in his report and The Management acting thereupon dismissed the respondent from service with effect from the date of suspension, namely, 23rd January, 1961. 3. Quite unconnected with the above matter, there was trouble in the factory on 10th January, 1916 when one group of workers is alleged to have assaulted another group due to inter-Union rivalry. The Company dismissed 10 workmen on the ground of their assaulting two others on 28th January, 1961. 4. On 28th March 1961, the Government of Bihar referred an Industrial Dispute to the Labour Court, Ranchi regarding the dismissal of the 11 workmen including the respondent Bishwanath Prasad. The Labour Court examined the merits of the matter and held that the orders of dismissal meted out by the management to all the workmen would have to be maintained and the workmen were not entitled to any relief. Examining the facts and circumstances in the light of the principles formulated by this Court in the case of Indian Iron and Steel Co. Ltd. v. Their Workmen [1958] S.C.R. 667 at page 685 that: In case of dismissal on misconduct, the Tribunal does not, however, act as a Court of appeal and substitute its own judgment for that of the management. It will interfere (i) when there is a want of good faith, (ii) when there is victimisation or unfair labour practice, (iii) when the management has been guilty of a basic error or violation of a principle of natural justice and (iv) when on the materials the finding is completely baseless or perverse. 5. the Tribunal held that the finding of the Management with regard to the guilt of the 10 workmen other than Bishwanath Prasad was not in any way unwarranted or perverse and the Management was not actuated by bad faith. With regard to Bishwanath Prasad the Tribunal examined the facts and circumstances relied on by the parties and held that the order of dismissal was not vitiated on any of the well-known grounds of interference as laid down in Indian Iron and Steel Co.'s Case [1958] S.C.R. 667. 6. The Tribunal also examined the plea put forward on behalf of the workers that the orders of dismissal should be held to be illegal inasmuch as they were all passed during the pendency of a conciliation proceeding. The Tribunal noted that no evidence had been led to sustain the plea and the Union had only placed on record carbon copies of two letters which were alleged to have been addressed to the Labour Officer, Dhanbad. The Tribunal was not satisfied that the letters had actually been delivered to the Labour Officer and found that there was no evidence to show that the Labour Officer had applied his mind to the matter mentioned in those letters and accordingly took the view that the pendency of a conciliation proceeding at the relevant time had not been established. The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 2 7. The respondent, Bishwanath Prasad, filed a petition under Articles 226 and 227 of the Constitution before the Patna High Court challenging the award inter alia on the ground that the Labour Court had failed to appreciate that the enquiry officer had acted malafide and in violation of the principles of natural justice in holding the enquiry. A complaint was also made that the letters from the conciliation officer Dhanbad were ignored by the Labour Court. The Management filed a counter affidavit justifying its action against the workmen and submitting that the award had been correctly made. 8. Before the High Court one of the main pleas taken on behalf of the respondent was that the order of dismissal against him having been passed in contravention of Section 33 of the Act was invalid and ineffective and on that ground alone he should have been reinstated. It was also contended that in cases where in order of dismissal passed in contravention of Section 33 of the Act was the subject matter of adjudication either by virtue of a reference under Section 10(1) or by reason of a complaint under Section 33A of the Act, the enquiry held by the employer before passing the order of dismissal was of no avail. According to the High Court all the contentions raised on behalf of the petitioner are found on the basic fact that there was contravention of Section 33. Referring to the judgment of this Court in The Punjab National Bank Ltd., v. Its Workmen the High Court took the view that it was necessary for the Labour Court to first go into the question whether or not there was a conciliation proceeding pending at the date when the dismissal order was made with a view to find out whether the plea of the workmen concerned that the impugned order of dismissal was passed in contravention of Section 33(2)(b) was correct or not and if it accepted the petitioner's contention that the order of dismissal contravened Section 33(2)(b) the departmental enquiry would not avail the employer and the whole question would be open. The High Court directed that the petitioner should be afforded an opportunity to place the letters earlier referred to, viz., annexures I and 1-1 and such other relevant evidence in this connection as he might choose before the Labour Court and the Labour Court should come to its own conclusion on the issue before it upon all the evidence adduced before it. Being of the view that in the absence of any determination of the basic question whether or not there was a contravention of Section 33, the High Court did not think it advisable to pronounce upon the merits of the several contentions raised on behalf of the petitioner, set aside the award and remitted the matter back to the Labour Court for making a fresh award in accordance with the court's observations. 9. In our view the High Court did not properly appreciate the true scope of Section 33(2)(b) of the Industrial Disputes Act and the result of the violation thereof. It is undisputed that the order of dismissal of the respondent was made after an enquiry on the basis of a charge sheet submitted to him. In his explanation to the show cause notice the respondent admitted having lodged the complaint before the Nirsa police on 19th September 1960 and the harassment and humiliation of two officers at the investigation by the police. He did not deny that the report made by him was false and contented himself by submitting: It is for the police and the Government authority to take any action against me if my report was at all false. The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 3 10. He was examined before the Labour Court and the only statement relating to conciliation proceedings made by him was that conciliation proceedings were held before the Labour Officer and the Labour Commissioner. In our view, the High Court failed to observe that under the Act pendency of conciliation proceedings at the time when the respondent was discharged could not affect the merits of the question at all. 11. The scope of Sections 33 and 33-A was examined by this Court in several cases to some of which we shall presently refer. Section 33(1) has obviously no application to the facts of this case. Section 33(2) relates to the dismissal, discharge etc. of a workman for any misconduct not connected with an industrial dispute during the pendency of any conciliation proceeding before a conciliation officer or a Board etc. unless he had been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer. Section 33-A enables a workman who has been punished by dismissal or discharge etc. to make a complaint in writing to a Labour Court, Tribunal or National Tribunal when an employer contravenes the provisions of Section 33 during the pendency of proceedings before Labour Court, Tribunal or National Tribunal etc. if such a complaint is made, the Labour Court, Tribunal etc. is to adjudicate upon the complaint as if it were a dispute referred to or pending before it and in accordance with the provisions of the Act submit its award to the appropriate Government. In other words, when the conditions laid down in Section 33-A apply a workman who is punished as mentioned therein does not have to wait for a reference of an industrial dispute by an appropriate authority under Section 10 of the Act for adjudication of the dispute but can himself prefer his complaint which is to be treated in the same way as a dispute under Section 10. These sections do not lend themselves to the construction that as soon as the Labour Court, Tribunal etc. finds that there has been a violation of Section 33 it should award reinstatement. It must go through the proceedings which would have to be taken under Section 10 and it would be the duty of the Labour Court etc. to examine the merits of the case in the light of the principles formulated in the Indian Iron and Steel Co.'s case [1958] S.C.R. 667. 12. It has not been alleged in this case that any conciliation proceedings were pending before a Labour Court, Tribunal or National Tribunal as envisaged in Section 33-A. Assuming for a moment that there was a conciliation proceeding before a labour officer, Section 33-A would not be attracted. In any event it would be open to the complaining workman to take exception to the conduct of the management in ignoring the provisions of Section 33(2)(b). 13. In The Punjab National Bank Ltd.'s case referred to by the High Court for the purpose of remitting the matter back to the Labour Court this Court examined the scope of Section 10, 33 and 33-A of the Industrial Disputes Act and pointed out (at p. 826): ...even if the requisite permission is granted to the employer under Section 33 that would not be the end of the matter. It is not as if the permission granted under Section 33 validates the order of dismissal. It merely removes the ban; and so the validity of the order of dismissal can be made and often is, challenged by the union by raising an industrial dispute in that behalf. The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 4 14. The contention on behalf of the workmen that disregard of a ban imposed by Section 33 of the Act would render the employer's action of dismissal void and inoperative was rejected by this Court. The reason for enactment of Section 33-A was explained at p. 830 of the said report. In that case the impugned orders of dismissal had given rise to an industrial dispute which was referred to a tribunal by the appropriate Government under Section 10 and this Court observed that: There can be no doubt that if under a complaint filed under Section 33A a tribunal has to deal not only with the question of contravention but also with the merits of the order of dismissal, the position cannot be any different when a reference is made to the tribunal like the present under Section 10. What is true about the scope of enquiry under Section 33A is a fortiori true in the case of an enquiry under Section 10. What is referred to the tribunal under Section 10 is the industrial dispute between the Bank and its employees. The alleged contravention by the Bank of Section 33 is no doubt one of the points which the tribunal has to decide; but the decision on this question does not conclude the enquiry. The tribunal would have also to consider whether the impugned orders of dismissal are otherwise justified; and whether, in the light of the relevant circumstances of the case, an order of reinstatement should or should not be passed. It is only after all these aspects have been considered by the tribunal that it can adequately deal with the industrial dispute referred to it and make an appropriate award. 15. The Tribunal in our view rightly refused to go into the question of the pendency of any conciliation proceeding; but, even if there was any such proceeding, it would make no difference to the result in this case. The Tribunal would still have to consider whether the employer's action was justified in the light of the decision in the Indian Iron & Steel Co.'s case [1958] S.C.R. 667. In other words, the Tribunal would have to be satisfied that the allegations, if any, about want of good faith or victimisation or unfair labour practice were baseless section The Tribunal would also have to be satisfied whether any complaint was made on the score that the enquiry was vitiated by basic error or violation of any principle of natural justice and its finding on which the order of dismissal was passed was therefore perverse or without any foundation. 16. The Tribunal came to the conclusion. that there was no justification for the respondent's complaint to the police that the company's officials were in the habit of acting high-handedly and oppressively as alleged by him and further took the view that the respondent's action in defaming two of the officers of the company could not but be pronounced as an act subversive of discipline and undermining the authority of the officers and there by affecting the maintenance of peace and good order in that factory. 17. Reliance was placed on a judgment of this Court in Rodrick v. Karam Chand Thapar & Bros. [1963] 1 L.L.J. 248 at 249 and the observation therein that: It is well settled that if an application is made by an employee under Section 33A and it is shown that the impugned dismissal of the employee has contravened Section 33, it is open to the employer to justify the dismissal on the merits by adducing The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 5 satisfactory evidence before the Tribunal. 18. It was contended that this course was not adopted in this case. The facts in that case as found from the report are that the appellant who was a store keeper of the respondent company had been served with a charge sheet as a result of the checking of the stock in his care; this was followed by an enquiry and an order of dismissal of the appellant. The employee made an application under Section 33A of the Act alleging that Section 33 had been contravened and he was entitled to reinstatement. The Tribunal rejected the preliminary objection of the company that an application under Section 33A was not competent and thereafter proceeded to examine the merits of the case. As a result thereof the Tribunal believed the evidence led by the respondent to hold that the appellant was guilty of misappropriation. 19. To our mind, this case does not help the respondent. The Labour Court had to adjudicate upon the dispute which was referred to it; with regard to the respondent it had to go into the question as to whether he had been properly dismissed. On the material before it, it came to the conclusion that the respondent's action in lodging a false complaint to the police against the conduct of the appellant's officers was subversive of discipline which merited dismissal. The Labour Court had the evidence before it; the lodging of the complaint was not disputed, that the allegations therein were false were not denied and the humiliation of the officers was not contradicted. Not one of the grounds formulated in the Indian Iron and Steel Co.'s case [1958] S.C.R. 667 which could lead the Tribunal to hold that the dismissal was improper was substantiated. 20. In the result, we hold that the order of the High Court remitting the matter back to the Labour Court was not justified. The appeal is therefore allowed and the award of the Labour Court upheld. The order for costs made at the time when special leave was granted an this case will stand. The Hindusthan General Electrical ... vs Bishwanath Prasad And Anr. on 17 August, 1971 6 | {
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Raja Shatrunji vs Mohammad Azmat Azim Khan And Ors. on 21 April, 1971 Equivalent citations: AIR1971SC1474, (1971)2SCC200, [1971]SUPPSCR433, AIR 1971 SUPREME COURT 1474 Bench: A.N. Ray, C.A. Vaidialingam JUDGMENT Ray, J. 1. This appeal is by certificate from the judgment of the Allahabad High Court dated 30 April, 1963. Leave was granted by the Allahabad High Court on 21 February, 1966. 2. The facts are these. On 4 October, 1939 the appellant obtained a decree under the U.P. Encumbered Estates Act, 1934 against Sardar Mujibul Rahman Khan for the sum of Rs. 1,31,040-1-0 with costs and future interest at 3 1/2% p.a. on the basis of a secured debt. Sardar Mujibul Rahman Khan the judgment debtor died on 24 April, 1949. Thereafter the judgment debtor's sons who were brought on record on 21 April, 1953 applied for reduction of the decretal amount under Section 4 of the U.P. Zamindars' Debt Reduction Act, 1952 (Act XV of 1953). The application was rejected by the Special Judge, Kheri on 18 February, 1957. The Special Judge held that unless and until the decree charged the mortgaged property no reduction of debt could be ordered under the U.P. Zamindars' Debt Reduction Act, 1952 and that the decree was not one such. The judgment debtor filed an appeal against the said order of the Special Judge. The appeal was heard on 27 November, 1962 by the Full Bench of the Allahabad High Court upholding the order of the Special Judge and dismissing the appeal which was treated as revision. Shortly after the dismissal of the revision petition the U.P. Zamindars' Debt Reduction Act, 1952 was amended by U.P. Zamindars' Debt Reduction (Amendment) Act, XX of 1962. The Amendment Act of 1962 received the assent of the President on 27 November, 1962 which happened to be the date of the order of the High Court on the revision application. The amendment was published in the Gazette on 4 December, 1962 and came into force on that date. The judgment debtor thereafter on 20 February, 1963 filed an application for review against the order of the Full Bench dated 27th November, 1962. 3. The High Court in accordance with the order of the majority accepted the review application of the judgment debtor and set aside the order of the Special Judge rejecting the judgment debtor's application under Section 4 of file Zamindars' Debt Reduction Act, 1952 and remanded the case to the Special Judge for disposal of the same in accordance with the provisions of the U.P. Zamindars' Debt Reduction Act, 1952 as amended by Act 20 of 1962. Raja Shatrunji vs Mohammad Azmat Azim Khan And Ors. on 21 April, 1971 1 4. Two questions arise in the present appeal. First, whether Section 4 of the U.P. Zamindars' Debt Reduction Act, 1952 could be invoked by the judgment debtor, secondly, whether the High Court could accede to the application of the judgment debtor. 5. Section 4 of the U.P. Zamindars' Debt Reduction Act, 1952 (hereinafter referred to as the 1952 Act) in so far as it is necessary for the purpose of the present appeal is as follows: Powers to reduce debts after passing of decree: (1) Notwithstanding anything in the CPC, 1908 or any other law, the court, which passed a decree to which this Act applies relating to a secured debt, shall on the application either of the decree-holder or judgment-debtor, proceed as hereinafter stated. (2) Where the mortgaged property (charged under the decree) consists exclusively of estate and such estate has been acquired under the provisions of the U.P. Zamindari Abolition and Land Reforms Act. 1950, the court shall- ***** (3) Where the mortgaged property (charged under the decree) consists partly of estate and partly of property other than estate, the court shall- ***** The words 'charged under the decree' are shown in brackets only to indicate that these words were deleted by Amendment Act 20 of 1962. It is because of the amendment that the judgment debtor made an application to the High Court for review of the order dated 27 November, 1962 rejecting the judgment debtor's application under Section 4 of the 1952 Act As to what the Court shall do under Sub-sections (2) and (3) of Section 4 of the 1952 Act are calculation of the amount and reduction of the same in accordance with the provisions of the Act. The working out of these details for calculation and reduction of debt does not arise in the present case. 6. The Amendment Act 20 of of 1962 which deleted the words "charged under the decree" occurring in both Sub-sections (2) and (3) of Section 4 of the 1952 Act immediately after the words "mortgaged property" was made effective as from the date of enforcement of the U.P. Zamindars' Debt Reduction Act, 1952, namely, 25 May, 1953. 7. The reason for this amendment given in the objects and reasons of the U.P. Zamindars' Debt Reduction (Amendment) Act, 1962 was because the High Court of Allahabad in the case of Bannu Mal and Ors. v. Bashir Ahmad Khan and Ors. 1962 A.L.J.R. 88 held that the court was powerless to reduce debts after the passing of the decree unless the mortgaged property was charged under the decree. The effect of the Amendment was to give relief to mortgaged property within the contemplation of the Act. 8. As a result of the amendment first it is to be a decree to which the 1952 Act applies, secondly, it is to be a decree relating to a secured debt and, thirdly, the mortgaged property is to consist of estate which has been acquired under the provisions of the U.P. Zamindari Abolition and Land Reforms Act, 1950. If these tests are satisfied the decree holder or the judgment debtor has the right to apply to the court and the court shall on the application proceed in accordance with the provisions of the Raja Shatrunji vs Mohammad Azmat Azim Khan And Ors. on 21 April, 1971 2 Act The Court under this section is the court of the Special Judge which passed the decree. In the present case, it is indisputable that it is a decree relating to secured debt, and the mortgaged property consists of an estate which has been acquired under the provisions of the U.P. Zamindari Abolition and Land Reforms Act, 1950. 9. The respondents applied under Section 4 of the 1952 Act as it stood prior to its amendment by Act 20 of 1962 on 24/25 August, 1955 in the court of the Special Judge, first-grade, Kheri. The Special Judge held that the decree against the respondents was not one which could be said to be against the mortgaged property charged under the decree. The respondents also lost before the High Court under the order dated 27 November, 1962. The respondents made an application for review of the judgment of the High Court dated 27 November, 1962. 10. The effect of the amendment of the 1952 Act is embodied in Section 2 of the Amendment Act, 1962 which is as follows:- The U.P. Zamindars' Debt Reduction Act, 1952 shall as to the date of this enforcement have effect subject to the amendments made by this Act as if this Act had been in force on all material dates: Provided that nothing in this section shall apply to a debt which has been discharged prior to the date of enactment of this Act. 11. The Amendment Act therefore provided that the amendment took effect as if the Amendment Act had been in force on all material dates. The effect of such a deeming clause was stated by this Court in State of Bombay v. Pandurang Vinayak Chaphalkar and Ors. [1953] S.C.R. 773, 778 as follows:- When a statute enacts that something shall be deemed to have been done, which in fact and truth was not done, the court is entitled to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical conclusion. The statutory fiction was introduced to give full effect to Section 4 of the 1952 Act by conferring on the debtors and creditors the right to apply to the court for calculation and reduction of debt. It was realised that courts always passed simple decrees. It was noticed that mortgaged property was not and could not be charged under the decree. It was therefore appreciated that unless the words "charged under the decree" were deleted the section could never give any relief to any landlord whose estate had been acquired. 12. This Court in the Bombay case referred to the observations of Lord Asquith in East End Dwellings Company Ltd. v. Finsbury Borough Council [1952] A.C. 109 that "If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real to consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it... The statute says that you must Raja Shatrunji vs Mohammad Azmat Azim Khan And Ors. on 21 April, 1971 3 imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs". These observations indicate that the words "charged under the decree" in Section 4(2) of the 1952 Act were never there with the inevitable consequence that the only statutory requirement is whether the mortgaged property consists of estate which has been acquired under the provisions of the U.P. Zamindari Abolition and Land Reforms Act, 1950. 13. On 27 November, 1962 when the matter was heard by the High Court, this amendment did not come into the statute book. That is why the judgment debtor made an application to bring it to the notice of the High Court that the law was that the words "charged under the decree" were always deemed to have been deleted and this law was effective from the date of coming into force of the 1952 Act on 25 May, 1953. The High Court by a majority opinion was of the view that the judgment debtors should be given relief. Under Order 47 of the CPC the principles of review are defined by the Code and the words "any other sufficient reason" in Order 47 of the Code would mean a reason sufficient on grounds analogous to those specified immediately previously in that order. The grounds for review are the discovery of new matters or evidence which, after the exercise of due diligence, was not within his knowledge or could not be produced by him at the time when the decree was passed or order made, or the review is asked for on account of some mistake or error apparent on the face of the record. In Rajah Kotagiri Venkata Subbamma Rao v. Rajah Vellanki Venkatrama Rao 27 I.A. 197. Lord Davey at page 205 of the Report said that "the section does not authorise the review of a decree which was right when it was made on the ground of the happening of some subsequent event". Counsel for the appellant submitted that when the High Court decided the matter, the High Court applied the law as it stood and a subsequent change of law could not be a ground for review. The appellant's contention is not acceptable in the present case for two principal reasons; first, it is not a subsequent law. It is the law which all along was there from 1952. The deeming provision is fully effective and operative as from 25 May, 1953 when the 1952 Act came into force. The result is that the Court is to apply the legal provision as it always stood. It would, therefore, be error on the face of the record. The error would be that the law that was applied was not the law which is applicable. Secondly, Section 4 of the 1952 Act confers power on the court to apply the law notwithstanding any provision contained in the CPC. Therefore the application though intituted an application for review was not be so. The substance and not the form of the application will be decisive. 14. The respondents could not have applied to the Special Judge at Kheri after the decision of the High Court on 27 November, 1962 to apply the law as it stood to the facts and circumstances of of the case. The appeal from the order of the Special Judge, Kheri was heard by the High Court and, therefore, the respondents rightly applied to the High Court. It appears from the record of the case that when the matter was heard before the High Court the respondents' counsel brought to the notice of the High Court that the Act was going to be amended and awaited assent of the President. In the present case, it is a pre-eminent consideration to be kept in the forefront that the 1952 Act was amended to confer benefit on judgment debtors of the type of the respondents. This is a special legislation conferring rights and reliefs within a specially created jurisdiction. The decree is treated like a decree of the Civil Court. The execution of the decree is not within the province of the provisions of the CPC. There are special Acts for execution of decrees of the type in the present Raja Shatrunji vs Mohammad Azmat Azim Khan And Ors. on 21 April, 1971 4 appeal. The Special Courts have been given power to grant remedies or reliefs to the judgment debtor as well as the decree-holder. Section 4 of the 1952 Act conferred right to apply to the court notwithstanding any provision contained in the CPC. The High Court was, therefore, right in making the order as a court could have made at the date on which the appeal was heard. 15. For these reasons the appeal fails and is dismissed. Each party will pay and bear their own costs. Raja Shatrunji vs Mohammad Azmat Azim Khan And Ors. on 21 April, 1971 5 | {
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The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 Equivalent citations: (1971)IILLJ620SC, (1972)4SCC746 Author: C.A. Vaidialingam Bench: C.A. Vaidialingam, P. Jaganmohan Reddy JUDGMENT C.A. Vaidialingam, J. 1. This appeal, by special leave, is directed against the judgment and order dated January 17, 1966 of the High Court of Assam and Nagaland, in Civil Rule No. 201 of 1965 quashing the award dated March 3, 1965 of the Labour Court of Assam in Reference No. 98 of 1961, in and by which the Labour Court had set aside the order dated April 19, 1960 of the management terminating the services of the workman B.N. Thakur. 2. The workman was employed as the head godown clerk in the first respondent's engineering godown in Sadar office. He was mainly responsible for receipts and issue of stores from the engineering godown of the company; and, according to the management, he was holding a position of trust and responsibility. On March 12, 1960 the manager of Rungagora Tea Estate had sent a lorry to Sadar office to collect certain stores for the garden. The said lorry was being driven by a garden lorry driver Jamiruddin. When the driver was collecting stores from the engineering godown, the workman who was at that time the head godown clerk instructed the former to take three used pulleys belonging to the company in the lorry and to drop them at M/s. Sharma and Company at Jorhat. The driver was also informed that the pulleys were being returned to M/s. Sharma and Company as they belonged to the latter. The lorry driver loaded the pulleys in the garden lorry as directed by the workman. But as he forgot to drop them at the depot of M/s. Sharma and Company, the pulleys were taken to Rungagora Tea Estate. On March 16, 1960 the driver of the lorry informed the manager of Rungagora Tea Estate that the three pulleys had been brought to the garden godown by mistake instead of delivering them to M/s. Sharma and Company, as directed by the workman. As there was no challan produced by the driver for clearing the goods from the engineering office, the manager informed the assistant manager of Sadar office on March 18, 1960. On instructions from the Sadar office, the pulleys were returned to the garden office. 3. A preliminary investigation was held by the management regarding the circumstances under which the three pulleys came to be removed from the engineering godown. As the workman was not able to give any satisfactory explanation for the removal of the goods from the engineering godown, a charge-sheet was served on him by the management on March 21, 1960. In the charge-sheet it was The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 1 alleged that the workman' Bhola Nath Thakur had removed three pulleys on March 12, 1960 from the company godown and loaded them in the garden lorry without authority and had instructed the lorry driver to drop them at the godown of M/s. Sharma and Company at Jorhat. It was further stated that the allegations, if proved, would constitute an offence under the standing orders of the company. 4. The workman was called upon within the time specified therein to offer his explanation and also to state why he should not be dismissed or otherwise punished. He was also informed that he would be given a personal hearing on March 22, 1960. The workman sent a reply on March 22, 1960, stating that the pulleys which had been received in the workshop in February, 1960, were found to be unsuitable and had been returned to him by the foreman of the workshop. As the garden lorry was collecting the stores on March 12, 1960 and as the pulleys had to be taken back and kept in the American hospital godown, from where they had been received, they were loaded in the lorry by the workman with instructions to the driver to deliver them at the American hospital godown. The despatch of the pulleys was duly intimated to the assistant company manager. Thereafter a challan was issued to the manager, Rungagora Tea Garden, to return the pulleys. The workman further stated that he did not ask the driver of the garden lorry to deliver the pulleys in the godown of M/s. Sharma and Company, Jorhat, and if the driver got any such idea, it must be due to his misunderstanding the instructions given by the workman. The workman finally pleaded that he was not guilty of any of the allegations mentioned in the charge-sheet. 5. An enquiry appears to have been made by the Sadar office manager and ultimately on April 19, 1960, an order was passed that the charges have been proved to the satisfaction of the management and that the latter has lost confidence in the workman. As such, it was stated that the management considers it unsafe to retain Bhola Nath Thakur in the post of trust and responsibility occupied by him at that time. The order proceeds to state that in the interest of the company, it has been decided to terminate his services with effect from the date of the notice in accordance with Clause 9 of the standing orders of the company. The workman was also informed that he will be paid one month's pay in lieu of notice and the wages due to him as mentioned in the statement attached to the letter. The workman was further informed that he will receive in full not only his provident fund contributions but also the contributions made by the employer together with interest due thereon. The workman was instructed to collect his dues on April 20, 1960. In the statement attached to the order of termination, the workman was informed that the following items will also be paid to him; 1. Full pay and allowances for the period From (sic)-4-60 to 60 to 19-4-60 Rs. 229.24 2. One month's pay and allowances in lieu of notice Rs. 361.95 3. Leave pay for 15 days' earned leave A/c 1959 Rs. 180.98 4. Proportionate leave pay for 5 days for earned leave due up to 19-4-1960 A/c 1960 Rs. 60.33 ____________ Total Rs. 832.50 ____________ 6. On April 28, 1960 the union made a representation to the management that the order terminating the services of Bhola Nath Thakur was not justified and requested the management to reconsider his case and reinstate him in service. On May 6, 1960 the management sent a reply to the union that Bhola Nath Thakur, who was occupying a post of trust and responsibility, had acted in such a manner that resulted in the management losing confidence in the workman. The management The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 2 further stated that the action terminating his services had been taken after having due regard to all the circumstances and that it has acted bona fide and in the best interest of the company. By its letter dated May 24, 1960, the company informed the workman by a statement regarding the provident fund amount standing to his credit which was due to him. The said statement included not only the provident fund contributions made by the workman, but also the contributions made by the management. There appears to have been some further correspondence between the union and the management, the former requesting the latter to cancel the order terminating the services of Bhola Nath Thakur. But the management declined to reconsider its decision. 7. The State Government made a reference on December 18, 1961 for adjudication to the Labour Court, Assam, of the following issues:- (1) Whether the management of Sudder office, Cinnamara are justified in terminating the services of Shri B.N. Thakur? (2) If not, is he entitled to reinstatement, or any other relief in lieu thereof? 8. In its written statement dated March 16, 1962, the union alleged that there has been a miscarriage of justice when the management terminated the services of Bhola Nath Thakur. It criticised the proceedings taken by the management in this regard and averred that the allegations made against the workman have not been proved. In particular, the union pleaded that the management has purposely taken recourse to Clause 9 of the standing orders, to make it appear that the termination of the service was one simpliciter and not by way of any punishment. The union further pointed out that the workman who was in charge of stock worth over six lakhs of rupees was not even suspended during the inquiry held by the management. The action taken by the management on the ground that they have lost confidence in the workman is not the real reason and that, on the other hand, the management has terminated the services of the workman with ulterior motive and that the action is not bona fide. 9. The management in its written statement dated March 20, 1962 affirmed that the workman Bhola Nath Thakur was holding a post of trust, and responsibility in the company's engineering godown. After referring to the circumstances leading to the order of termination being passed, the management pleaded that the conduct of the workman was such that the management lost its trust and confidence in him, and as the head godown clerk, who is the custodian of the company's property, Bhola Nath Thakur must enjoy in full the trust and confidence of the employer. When once he has behaved in a manner prejudicial to the interest of the company, the latter having lost its trust and confidence in him was justified in terminating his services. The management further averred that the action has been taken in accordance with Clause 9 of the standing orders and that he was given not only all the wages due to him, but also the provident fund contributions made by him and by the employer and also the leave salary to his credit for earned leave not availed of by the workman. The management controverted the allegation that the action taken by it was in any way prompted by motive of victimisation or unfair labour practice. The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 3 10. In the additional written statement dated May 2, 1962, the union again alleged that the management has taken action under Clause 9 of the standing orders merely as a cloak to camouflage what really was an order of dismissal. 11. The management again in its additional written statement dated December 21, 1963 averred that no extraneous matters have been taken into account by it in terminating the services of Bhola Nath Thakur and that his services were dispensed with as the management had lost its confidence in him. Under those circumstances, it was averred that there was no justification for the union asking for either the order of termination being cancelled or for the reinstatement of the workman concerned. 12. The labour Court by its award dated March 3, 1965 after considering the pleas of the management and the union has held that the management has taken action against the workman really under Clause 10(a)(2) of the standing orders after conducting an inquiry in which no report was submitted or made available to the workman. Without recording any finding of guilt against the workman, his services had been terminated by the management under cover of Clause 9 of the standing orders to make it appear that it is a termination simpliciter and not one of dismissal, by way of punishment. The actual finding of the Labour Court is:- So the termination of services under Clause 9 of the standing orders appears to be a camouflage, and is not a discharge simpliciter but in fact the termination is a dismissal as a measure of punishment. 13. The Labour Court further held that the domestic inquiry conducted by the management is not valid and that no evidence was also adduced before it by the management to prove the charges against the workman. On this reasoning the Labour Court ultimately held that the management was not justified in terminating the services of the workman B.N. Thakur and as such set aside the orders dated April 19, 1960. In view of this finding, the Labour Court gave a further direction that B.N. Thakur is entitled to be reinstated with full back wages and continuity of service from the date of termination of his services. 14. The management challenged the award of the Labour Court by a writ petition Civil Rule No. 209 of 1965 filed before the High Court of Assam and Nagaland under Article 226 of the Constitution. In the" writ petition the management, after setting out the circumstances leading to the passing of the order dated April 19, 1960 categorically averred that the services of the workman were terminated under Clause 9 of the standing orders of the company and that it was a termination of service simpliciter under the terms of contract and not an order of dismissal. The management further averred that in view of the conduct of B.N. Thakur, it had lost its trust and confidence in him and hence his services were terminated. The workman was paid all amounts that were due to him, namely, wages including wages for the earned leave not availed of by him and provident fund amount. The management characterised as perverse the finding of the Labour Court that the order of termination is a camouflage adopted by the management to cover up what really is an order of dismissal. It was particularly emphasised that the Labour Court had no jurisdiction to set aside the order of termination, especially when it has not accepted the plea of the union regarding lack of bona fides, unfair labour practice and victimisation. The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 4 15. We do not find from the record that any counter-affidavit was filed on the side of the workman before the High Court. Before the High Court, it is seen, the counsel appearing for the union and the workman represented that he was not placing any reliance on the statement contained in the award that the order of termination is a camouflage adopted by the management to cover up what really is an order of dismissal. It is further seen that it was conceded by the same counsel that the use of the expression "camouflage" by the union has no value in the circumstances of the case. But the counsel for the workman appears to have taken up the stand that he will be able to sustain the order of the Labour Court on the ground that the termination of the services is really one by way of dismissal. 16. In view of the concession made on behalf of the union and the workman, quitenaturally, the High Court has eliminated these observations contained in the award regarding any motives that could be attributed to the management. The High Court further noted that the Labour Court has not accepted the allegation of the union that the action of the management was not bona fide or was passed by way of victimisation and amounted to an unfair labour practice. In view of all these circumstances, the issue before the High Court became a quite straight and simple one, namely, whether it is an order terminating the services of the workman simpliciter in terms of the contract of service on the ground that the employer has lost its confidence or whether the order of termination is really one dismissing the employee from service as and by way of punishment. The High Court considered the question from this point of view and ultimately held that the award of the Labour Court that the order is one of dismissal is erroneous. On the other hand, the High Court held that the order dated April 19, 1960 is one of terminating the services simpliciter, which the management was entitled to do under Clause 9 of the standing orders of the company. In this view the High Court allowed the writ petition filed by the management and set aside the award of the Labour Court. 17. Dr. C.B. Agarwala, learned Counsel for the appellant workman, has urged that the view of the High Court that the order dated April 19, 1960 is one terminating the services of the workman simpliciter under Clause 9 of the standing orders is erroneous and that the High Court was not justified in interfering with the findings recorded by the Labour Court in favour of the workman. The counsel pointed out that the specific plea of the management was that it has terminated the services of the workman after framing a charge and holding an inquiry, in which the workman was found guilty. Quite naturally, the learned Counsel relied on the charge framed by the management on March 21, 1960 as well as the order of termination dated April 19, 1960 in support of his contention that the management has itself proceeded on the basis that the workman was charged with misconduct and action was being taken against him on the ground that the misconduct has been proved. Having due regard to the stand taken by the management, the counsel pointed out that the management has purported to act under Clause 9 of the standing orders to make it appear that it is not an order of dismissal for misconduct and hence the Labour Court was justified in holding that the order is only a cloak or a camouflage to cover up the real purport of the order, namely, of dismissal. The counsel further urged that the High Court has exceeded its jurisdiction under Article 226 when it interfered with the direction given in the award by the Labour Court. The counsel finally urged that as the order of termination of service should be held to be one of dismissal for punishment for misconduct, there are no circumstances in this case, not to give effect to the normal rule of reinstatement with full back wages. The fact that the order has been passed in I960 and reinstatement is to be given effect now, after lapse of about 11 years, is by itself no ground for The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 5 refusing that relief to the workman. For the latter proposition the counsel relied on the recent judgment of this Court reported in The Management of Panitole Tea Estate v. The Workmen 1971-I L.L. J. 233. 18. On the other hand, Mr. Chagla, learned Counsel for the management has urged that in the various proceedings right from the letter dated March 20, 1960, though called a charge-sheet, the management has consistently taken up the position that it has lost its trust and confidence in the employee who was holding a very responsible post in the company. Even according to the union, the workman was in charge of the company's goods of nearly six lakhs of rupees and the conduct of the workman in attempting to send away the pulleys which belonged to the company was really a betrayal of the trust and confidence that was absolutely necessary in the case of a person holding such a responsible post. The counsel further pointed out that when once there has been no finding by the Labour Court of any victimisation, unfair labour practice or mala fides, and when the finding regarding the order being a camouflage recorded by the Labour Court was given up by the counsel for the workman, the High Court was justified in considering the question which was a simple one, namely, whether the order is one of termination simpliciter or by way of punishment. If all other circumstances are eliminated, it was quite clear, according to the High Court, that the management was justified in passing the order under Clause 9 of the standing orders of the company. The workman as the order dated April 19, 1960, itself shows was being paid all the amounts mentioned therein which will not be available to him if he was being dismissed by way of punishment for misconduct. The counsel further urged that even assuming that the order is one of dismissal, in the particular circumstances of this case, when the employer has lost his trust and confidence in the workman concerned, reinstatement should not be ordered and relief, if any, could be given to the workman by way of award of compensation. The counsel referred us in this connection to the decision of this Court reported in Assam Oil Co. v. Its Workmen 1960-I L.L. J. 587, Ruby General Insurance Company Ltd. v. Chopra (P.P. ) 1970-I L.L. J. 631 and Hindustan Steels Ltd., Rourkela v. Roy (A.K.) and Ors. 1970-I L.L. J. 228, in support of his propositions that on an examination of all the circumstances of this case, if the apprehension of the employer that he has lost trust and confidence in the employee and as such it is not in the interest of the company to retain the workman in its service is accepted as genuine and honest, a case should be considered to have been properly made out by the employer against reinstatement and that it is a case when compensation would meet the ends of justice. 19. Before we consider the contentions of the learned Counsel on both sides, it is necessary to refer to Clause 9 of the standing orders of the company. Clause 9 of the standing orders is as follows: (9). Termination of employment and notice thereof to be given by the employer and workmen. Notice of termination of employment, whether by manager or by worker, shall be given equal to the wage-period of the worker concerned. Provided that The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 6 (a) the manager may terminate the employment of a worker forthwith and pay his wages for the wage period (equivalent to his average earnings over the preceding period of three months) in lieu of notice. (b) Notice of termination of employment shall be necessary only in case of permanent workers and not in the case of outside or temporary workers except in so far as is laid down in any agreement entered into between the manager and such outside or temporary workers. (c) The manager may dismiss without notice any worker who is guilty of gross misconduct but such worker must be informed in writing of the alleged misconduct and be given an opportunity to explain the circumstances alleged against him. (d) Where employment of any worker is terminated the wages earned by him and other dues, if any, shall be paid before the expiry of the second working day on which his employment is terminated. (e) The manager may, when a worker is charged with misconduct, direct that such worker be suspended pending investigation by the management into the charge of misconduct and during the period of suspension the worker shall be entitled to receive an allowance of not less than one-half of his wages provided that if the charge of misconduct is not proved the worker shall be entitled to receive the full wage for the period of suspension. 20. Clause 10 enumerates the acts or omissions which constitute misconduct. As the Labour Court has held that the misconduct alleged against the workman will come under Clause 10(a)(2), we will refer only to that particular sub-clause: (10) Acts or omissions which constitute misconduct. (a) The following acts and omissions shall constitute gross misconduct:- * * * (2) Theft, fraud or dishonesty in connection with the company's business or property. 21. From a perusal of Clause 9, it is seen that there is a power in the management to terminate under Sub-clause (a) the employment of a workman forthwith by paying the amount of wages mentioned therein in lieu of notice. Notice of termination is mandatory only in cases of persons enumerated in Sub-clause (b). Sub-clause (d) provides that the employer is bound to pay the wages earned by the work man and any other dues within the period mentioned therein. Sub-clauses (a), (b) and (d) will have to be read together. Sub-clause (c), on the other hand, deals with the power of the management to dismiss without any notice any workman who is guilty of gross misconduct. The said Sub-clause also lays down the procedure to be adopted before an order of dismissal is passed. Sub-clause (e) gives power to the management when a workman is charged with misconduct to place him under suspension pen ding inquiry. It also, provides for payment of allowances during the period of suspension and for payment of full wages, if misconduct is not proved. Sub-clauses (c) and (e) deal with disciplinary action taken against an employee resulting in punishment awarded by way of The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 7 dismissal. The acts or omissions which constitute misconduct are also enumerated in Clause 10 of the standing orders. According to the Labour Court, in this case, it must be considered that the workman has been found guilty of dishonesty in connection with the company's property, the three pulleys, and it will constitute misconduct under Clause 10(a)(2) of the standing orders. It is on that basis that the Labour Court has come to the conclusion that the order of termination is really one of dismissal for misconduct. 22. Dr. Agarwala referred us to the various decisions regarding the ingredients of a proper domestic inquiry held by the management as well as the jurisdiction of the Industrial Court to consider whether an order which purports to be one of termination of service simpliciter is really such an order or one of dismissal for misconduct. There is no controversy about those principles, namely, that if a workman is charged for misconduct and a domestic inquiry is held by the management, that inquiry must be bona fide and it should have been held without violating the principles of natural justice and after giving a reasonable opportunity to the workman to defend himself, that is, it must be a proper inquiry without any mala fides or victimisation or unfair labour practice. 23. It is needless to point out that it has been held by this Court in The Chartered Bunk, Bombay v. The Chartered Bank Employees' Union 1960-II L.L. J. 222, that if the termination of service is a colourable exercise of the power vested in the management or as a result of victimisation or unfair labour practice, the Industrial Tribunal would have jurisdiction to intervene and set aside such a termination. In order to find out whether the order of termination is one of the termination simpliciter under the provisions of contract or of standing orders, the Tribunal has ample jurisdiction to go into all the circumstances which led to the termination simpliciter. The form of the order of termination, is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of dismissal for misconduct. It is, therefore, open to the Tribunal to go behind the form of the order and look at the substance. If the Tribunal comes to the conclusion that though in form the order amounts to termination simpliciter but in reality cloaks a dismissal for misconduct, it will be open to it to set aside the order as a colourable exercise of power by the management. 24. Principles to the same effect have also been reiterated in the later decision of this Court in Tata Oil Mills Co. Ltd v. Workmen and Anr. 1964-II L.L. J. 113 or 1963-11 L.L. J. 78, where the Court observed as follows: The true legal position about the Industrial Court's justification and authority in dealing with cases of this kind is no longer in doubt. It is true that in several cases, contract of employment or provisions in standing orders authorise an industrial employer to terminate the service of his employees after giving notice for one month or paying salary for one month in lieu of notice, and normally, an employer may, in a proper case, be entitled to exercise the said power. But where an order of discharge passed by an ' employer gives rise to an industrial dispute, the form of the order by which the employee's services are terminated would not be decisive; industrial adjudication would be entitled to examine the substance of the matter and decide whether the termination is in fact discharge simpliciter or it amounts to dismissal The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 8 which has put on the cloak of discharge simpliciter. If the Industrial Court is satisfied that the order of discharge is punitive, that it is mala fide, or that it amounts to victimisation or unfair labour practice, it is competent to the Industrial Court to set aside the order and, in a proper case, direct the reinstatement of the employee. 25. We will now proceed to consider whether the order of termination in the case before us is one of simpliciter under the provisions of the standing orders or whether it is really an order of dismissal for misconduct. We will be emphasising in due course that even the Labour Court which held in favour of the workman has not recorded any finding that the action of the management in terminating the services of the workman was mala fide or amounted to unfair labour practice or was a case of victimisation. Though prima facie it may appear that the management in this case was charging the workman in respect of a matter which may be a misconduct under the standing orders, ultimately we are satisfied that the management has passed the order of termination simpliciter and the order docs not amount to one of dismissal as and by way of punishment. 26. It is no doubt true that a charge-sheet was given to the workman wherein it was stated that if the allegations therein are proved, they will constitute an offence under the standing orders. But it must be noted that the said letter itself called upon the workman to explain why he should not be dismissed or otherwise punished. The workman gave his explanation by his letter dated March 22, 1960. Though some sort of investigation has been made by the management, which is loosely called the inquiry, the actual order passed on April 19, 1960 clearly shows that the management has not chosen to dismiss the workman on the ground that he is guilty of one or other of the misconduct enumerated in Clause 10 of the standing orders. On the other hand, the order clearly shows that in view of the conduct of the workman, the management has lost confidence in him and that it considers it unsafe to retain him in his present position of trust and responsibility. At this stage it may be mentioned that even according to the union in its written statement it is stated that the workman is entrusted with stores of the value of six lakhs of rupees and this has also been referred to by the Labour Court. The order finally says that in the interest of the company, it has been decided to terminate the services of the workman under Clause 9 of the standing orders in force. It is rather significant to note that the management did not place the workman under suspension as it is entitled to under Sub-clause (e) of Clause 9. Such an action would have been taken if the management was really inquiring into an allegation of misconduct as enumerated in Clause 10. It has also to be noted that the order dated April 19, 1960 clearly informs the workman that he is entitled to one month's pay in lieu of notice and also the provident fund contributions made by him as well as by the employer together with interest. The same order further gives particulars of the full pay and allowances and other earned leave allowances which are also payable to the workman. If it is really a case of dismissal of an employee for misconduct, he would not be entitled to payment of the various items referred to in the order dated April 20,1960, particularly one month's pay in lieu of notice, the employer's contribution to the provident fund as well as the earned leave salary amount. The fact that the management paid all those amounts clearly shows that the action taken by the management cannot be said to be one by way of dismissal and that it is a case of termination of service simpliciter. The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 9 27. Dr. Agarwala referred us to the various averments made by the management in its written statement before the Labour Court that action has been taken against the workman on the basis of the findings arrived at in the inquiry conducted by the management. No doubt there are some averments to that effect, but the sum and substance of the stand taken by the management is that the investigation or inquiry that was conducted by it related to the circumstances under which the pulleys were removed from the engineering godown. It was not conducting any inquiry as it is normally understood when disciplinary proceedings are intended to be taken against a workman for misconduct. On the other hand from the very beginning in the order of termination it has stated that it has lost its confidence in the workman. In the letter to the union, the management has stated that it has lost confidence in the workman. Again in the written statement dated March 20, 1962, before the Labour Court, the management has categorically stated that the termination of the services of the workman was because the management lost its confidence and trust in the workman. 28. It was the stand taken by the management that it has lost confidence in the workman and that action was taken under Clause 9 of the standing orders by terminating the services simpliciter. That was challenged by the union that the order has been so worded as to camouflage the real intention of the management, namely to dismiss the employee for misconduct. The Labour Court, no doubt, held that the action must have been taken under Clause 10(a)(2) of the standing orders for misconduct which resulted in the passing of the order under the cloak of Clause 9 of the standing orders, and that Clause 9 has been invoked only as a camouflage. If this finding of the Labour Court was supported by the union and the workman before the High Court, and accepted by the High Court, the position would have been entirely different. On the other hand, before the High Court, the counsel for the workman quite clearly conceded that he is not placing reliance on the finding of the Labour Court that Clause 9 has been invoked only as a camoullage. 29. Added to this there is the other crucial circumstance, namely, the Labour Court not having accepted the plea of the union that the management was prompted by mala fides, victimisation and unfair labour practice, when it passed the order of termination. Therefore, before the High Court all the other surrounding circumstances, namely, camouflage, victimisation, unfair labour practice and mala fides had to be eschewed from consideration. Then the question was a very simple one whether the order is one of dismissal for misconduct or one by way of termination of the services simpliciter on the basis of the contractual obligation contained in Clause 9 of the standing orders. The High Court having due regard to the various circumstances, referred to by us earlier, has come to the conclusion that the order is not one by way of dismissal but only an order of termination simpliciter on the ground that the management had lost confidence and trust in the workman. No doubt the standing order does not say that the services of a workman can be terminated when the employer loses its trust and confidence, but absence of such a provision, in our opinion, is inconsequential. There is no controversy that the workman Bhola Nath Thakur was the head clerk at the relevant time in the company's engineering godown and he was responsible for the maintenance of stores belonging to the company of the value of about six lakhs of rupees. This has been accepted by the union itself and if that is so, the workman was holding a very responsible post where integrity and honesty are quite essential. The management could have, no doubt, taken disciplinary action against the workman concerned, according to law. But it has not done so in this case. On the other hand, when the circumstances showed that the company can no longer place its trust and confidence in the The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 10 workman, the management terminated his services by making available to him all amounts that he will be entitled to in case of termination simpliciter under Clause 9 of the standing orders. The entire basis of the Labour Court's award for holding that the order is one of dismissal is its view that the management has invoked Clause 9 to camouflage its action. When that approach has been given up on behalf of the workman before the High Court, the reasoning of the Labour Court falls to the ground and the High Court has acted within its jurisdiction under Article 226 when it set aside the order of the Labour Court especially when there has been no finding of victimisation, unfair labour practice or mala fides recorded against the management. To conclude,, we are satisfied that the High Court was justified in setting aside the order of the Labour Court. 30. As we agree with the view of the High Court that the order is one terminating the services of the workman simpliciter, it is unnecessary for us to refer to the various decisions relating to the circumstances under which the Labour Court or an Industrial Tribunal can interfere with the findings recorded in a domestic inquiry. Nor is it necessary to consider the decisions referred to us relating to the circumstances under which a reinstatement need not be ordered even if it is held that the order of termination of service or dismissal cannot be justified. 31. Before we conclude we have to record a statement made before us by Mr. Chagla, learned Counsel for the management, that his clients are also prepared to pay as ex gratia six months' salary to the workman concerned. This will be over and above the amount that may have been paid or still remains to be paid on the basis that the order of termination is one of simpliciter as held by us. In the order dated April 19, 1960, it is stated that one month's pay and allowances in lieu of notice are Rs. 361.95P. Six months' wages now agreed to be paid by Mr. Chagla will be worked out on this basis. The amount will be paid to the workman within three months from today. 32. In the result, the judgment and order of the High Court dated January 17, 1966 arc confirmed and this appeal will stand dismissed. There will be no order as to costs. The Workmen Of Sudder Office, Cinnamara vs Management Of Sudder Office And Anr. on 22 September, 1971 11 | {
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Alloy Steel Project vs The Workmen on 2 February, 1971 Author: J. M. Shelat Bench: J. M. Shelat PETITIONER: ALLOY STEEL PROJECT Vs. RESPONDENT: THE WORKMEN DATE OF JUDGMENT02/02/1971 BENCH: [J. M. SHELAT, V. BHARGAWA C.A. VAIDIALINGAM, J.J.] ACT: Payment of Bonus Act 21 of 1965-Exemption under s. 16(1) to new establishments-Alloy Steel Project controlled and managed by Hindustan Steel Ltd. whether an 'establishing'- Word 'establishment whether synonymous with company'-A department or undertaking of an establishment is separate establishment for computation of bonus under the proviso to s. 3 if separate accounts are maintained as in case of Alloy Steel Section 16(2) comes in way only if bonus is distributed on basis of consolidated accounts which was never done in the case of Hindustan Steel. HEADNOTE: The Alloy Steel Project was an undertaking controlled and managed by a government company, namely, the Hindustan Steel Ltd. Alloy Steel was started in 1961 and went into production in 1964-65. No profit was earned up to 1967-68. The workmen claimed bonus at the minimum rate prescribed under the Payment of Bonus Act, 21 of 1965 in respect of the year 1965-66. On behalf of the Alloy Steel Project exemption from payment of bonus was claimed under s. 16(1) of the Act on the ground that it was a new establishment and had not made profits. The Industrial Tribunal to which reference was made held that Alloy Steel could not be treated as a separate establishment because under the Act a company is itself an establishment so that all units of a company like Hindustan Steel Ltd. will constitute one Alloy Steel Project vs The Workmen on 2 February, 1971 1 establishment. However, since Alloy Steel had not been earning profits the Tribunal directed payment of bonus at the minimum rate of 4% of wages as prescribed by the Act. Aggrieved by this Award of the Tribunal the company appealed. HELD : The Tribunal erred in holding the word 'establishment' to be synonymous with 'company'. In doing so it ignored the indications which are manifest from the language of the Act. The significant words are those contained in s. 2(16) which show that an establishment in a public sector has to be owned, controlled or managed by a Government company or by a corporation of the nature described in the clause. Obviously therefore an 'establishment in private sector'-defined in s. 2(15) to mean an establishment not in the public sector-would be one which is owned, controlled or managed by a person or body other than a Government company or a corporation of the nature described in s. 2(16). In this view an establishment cannot be identified with a company. It would be absurd to say that a company is owned, controlled or managed by a Government company or corporation Obviously, the word 'establishment' is intended to indicate something different from a company as defined in the Companies Act. [631 F-632 D] (ii) Alloy Steel was a separate establishment by virtue of the proviso to s. 3 of the Act because for each of the undertakings of Hindustan Steel Ltd. including Alloy Steel separate accounts were kept though for the purpose of compliance with the provisions of the Companies Act a consolidated balance-sheet and profit and loss account were also prepared. There was no substance in the contention that the proviso to s. 3 applies only to departments undertaking or branches controlled and managed by persons 630 other than companies. It would be a strange method of construction of language to hold that the establishment referred to in the main part of s. 3 will include all different departments undertakings and branches of a company, while it will not do so in the proviso to the same section. There is no reason for interpreting the proviso to s. 3 in this manner simply because in the case of separate departments, undertakings or branches of the establishment of a company, it may not be possible to make a deduction @ 8.5% of the paid up equity share capital. [635 C-D; 633 G- 634 H] (iii) Sub-Section (1) of s. 16 grants exemption from payment of bonus to establishments newly set up for a period of six years following ,the accounting year in which the goods produced or manufactured are sold for the first time and, in the alternative; upto the year when the new establishment results in profit, whichever is earlier. If the Alloy Steel Project was treated as an establishment newly set up for the purposes of s. 16(1) the exemption Alloy Steel Project vs The Workmen on 2 February, 1971 2 claimed would be fully justified. Section 16(2) of the Act makes it clear that the provisions of sub-s. (1) are to apply even to new departments, undertakings, or branches set up by existing establishment. Consequently, even if Alloy Steel Project was treated as a new undertaking set up by the existing establishments of Hindustan Steel Ltd. the exemption under s. 16(1) would be available to it. [637 D-E] The proviso to Sub-s. (2) of s. 16 only comes in the way if bonus is paid in any year to the employees of all the units on the basis of the consolidated accounts. That had never been done in the case of the Hindustan Steel Ltd. Consequently the Alloy Steel Project should have been treated as a separate establishment newly set up in the year 1961. , It went into production in 1964-65 and did not earn any profits at all till 1967-68. Therefore no bonus was payable to the workmen of this undertaking for the year 1965-66 in view of the provisions of s. 16(1) of the Act. [638 A-B] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2128 of 1969. Appeal by special leave from the Award dated July 19, 1969 of the Ninth Industrial Tribunal, West Bengal, Calcutta in case No. VIII-396 of 1968. C. K. Daphtarv. Santosh Chatterjee and D. N. Mukherjee, for the appellant. S. C. Gupta, Manju Gupta and S. C. Agarwala, for the respondents. The Judgment of the Court was delivered by Bhargava, J. The appellant, Messrs Alloy Steel Project, is an undertaking owned, controlled and managed by a Government Company, viz., Messrs Hindustan Steel Ltd. Alloy Steel Project was started in the year 1961 and it went into production in the year 1964-65. No profit was earned at least right up to the year '1967-68. The workmen, however, claimed bonus at the minimum rate prescribed under the Payment of Bonus Act No. 21 of 1965 (hereinafter referred to as "the Act") in respect of the year 1965- 1966 on' the plea that this Alloy Steel Project was a / part of the Hindustan Steel Ltd. and could not be treated as a new establishment for purposes of section 16 of the Act. Hindustan Steel Ltd. was itself an establishment which had been in existence for a long period and had been even earning profits, so that exemption could not be granted to this Company in respect of payment of bonus under s. 16 of the Act. This claim of the workmen was resisted, by the Company on the plea that Alloy Steel Project was a separate establishment in respect of which separate balance-sheets and profit and loss accounts were maintained, so that no bonus was payable until either this Project itself earned profits, or from the sixth accounting year following the year 1964-65 when this Project went into production. The dispute between the work-men and the Company. could not be resolved amicably and, consequently, a reference was made under the Industrial Disputes Act, 1947 which came up before the Ninth Industrial Tribunal, West Bengal. The Tribunal held that Alloy Steel Project could not be Alloy Steel Project vs The Workmen on 2 February, 1971 3 treated as a separate establishment because, under the Act, a Company is itself an establishment, so that all units of a Company like Hindustan Steel Ltd. will constitute one establishment. Since this Project had not been earning any profits the Tribunal directed payment of bonus at the minimum rate of 4 per cent of wages prescribed by the Act. Aggrieved by this award of the Tribunal, the Company has come up in this appeal to this Court by special leave, though the name of the appellant is shown as Alloy Steel Project, because it was under this name that the reference was dealt with by the Tribunal. The main basis of the decision of the Tribunal is that 'the word establishment' has been used in this Act to indicate a "Company" as called in common parlance." It was on this view that the Tribunal further Proceeded to consider whether this Alloy Steel Project could be held to be an establishment separate from Hindustan Steel Ltd., or it had to be treated as a part of the parent establishment, viz., Hindustan Steel Ltd. In this approach, it is clear that the Tribunal committed an obvious error, as it ignored the indications which are manifest from the language used in the Act. In section 2, sub-section (15) and (16), establishments have been divided into two classes and their meaning has been defined. In clause (16), "establishment in public sector' is defined as meaning an establishment owned, controlled or managed by- (a) a Government company as defined in section 617 of the Companies Act, 1956; (b) a corporation in which not less than forty per cent of its capital is held (whether singly or taken together) by- (i) the Government; or (ii) the Reserve Bank of India; or (iii) a corporation owned by the Government or' the Reserve Bank of India. In clause (15) of S. 2, "establishment in private sector" is defined to mean any establishment other than an establishment in public sector. Thus, between these two clauses, all establishments are covered. If an establishment is in public sector, it is covered by the definition in clause (16). If the establishment is not in public sector, it will be covered by the definition of "establishment in private sector" in clause (15). The significant words are those contained in clause (16) which show that an establishment in a public sector hag to be owned, controlled or managed by a Government company, or by a corporation of the nature described in that clause. Obviously, therefore, an establishment in a private sector would be one which is owned, controlled or managed by a person or body other than a Government company or a corpora- tion of the nature described in clause (16). In this view, an establishment cannot be identified with a company. It would be absurd to say that a company is owned, controlled or managed by a Government company or a corporation. Obviously, the word "establishment" is intended to indicate something different from a company as defined in the Companies Act. This is further clarify by the provisions of sub-s. (3) of section I which lays down the applicability of the Act. The Act has been made applicable to every factory and every other establishment in which twenty or more persons are employed on any day during an accounting year. Alloy Steel Project vs The Workmen on 2 February, 1971 4 Supposing a company has a factory in one premises and has another workshop entirely distinct and separate from that factory, in which the number of persons employed is less than 20. The Act itself will apply to the factory, but will not apply to the other establishment in which the number of employees is less than 20. This applicability of the Act will be independent of the other provisions of the Act. Learned counsel for the respondent-workmen relied on section 3 of the Act to urge that even the establishment employing less than 20 persons will be a part of the parent establishment consisting of the factory. Section 3 is as follows :- "3. Where an establishment consists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of computation of bonus under this Act 633. Provided that where for any accounting year a separate balance-sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of computation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the commencement of that accounting year treated as part of the establishment for the purpose of computation of bonus." It is to be noted that the principal part of section 3 lays down that different departments or undertakings or branches of an establishment are to be treated as part of the same establishment only for the purpose of computation of bonus under the Act. They cannot be treated as part of one establishment for purposes of subsection (3) of section 1 of the Act. In fact, section 3 cannot be, resorted to at all when the Act itself is inapplicable in view of the provision contained in section 1, sub-s. (3). It is, thus, quite clear that the Tribunal went entirely wrong in holding that simply because Alloy Steel Project is owned, controlled and managed by Hindustan Steel Ltd., it has to be treated as a part of Hindustan Steel Ltd. which is itself an establishment. Hindustan Steel Ltd. cannot be described as an establishment. The facts appearing on the record show that Hindustan Steel Ltd. has a number of. establishments. These include Alloy Steel Project besides the Head Office, Rourkela Steel Plant, Bhilai Steel Plant, Durgapur Steel Plant, Coal Washeries Project and Bokaro Steel Project. The Company, Hindustan Steel Ltd., cannot be equated with any one of these units. They are all separate undertakings, departments or branches owned, controlled and managed by one single Company and, consequently,. the point raised has to be decided on the basis whether, under the proviso to section 3 the Alloy Steel Project is to be treated as a separate establishment, or is to be treated as part of the main establishment owned by Hindustan Steel Ltd. Learned counsel for the respondent-workmen, however, advanced a new argument which was not put forward before the Tribunal. His submission was that, if an establishment of a Company consists of a number of departments, undertakings or branches, the principal part of section 3 will apply and all such departments, undertakings or branches must be treated as parts of one single establishment for purposes of computation of bonus under the Act, but the proviso to section 3 will not apply in such a case. According to him, the proviso to section 3 will apply to establishments consisting of different departments, undertakings or branches which are owned, controlled or managed by persons other Alloy Steel Project vs The Workmen on 2 February, 1971 5 than companies. This argument was based on the reasoning that, in order to calculate available surplus for distribution of bonus in the case of a company the Act lays down in section, 6 (d) read with the Third Schedule that the deductions to be made from net _profits will also include dividends payable on , preference share ,capital, and 8.5 per cent of its paid up equity share, capital as at the commencement of the accounting year. This provision cannot be given effect to in respect of separate units of a Company, .because the paid up capital or the preference share capital is not ,allocated between different units. In the case of the present Company, viz., Hindustan Steel Ltd., the entire paid up capital is shown in the accounts of the Head Office. The money needed for working of the various units, including the Alloy Steel Project, is shown as remittance received from the Head Office and not as. paid up capital of the Alloy Steel Project etc. The result is that, if Alloy :Steel Project or other units of the Hindustan Steel Ltd. are treated as separate establishments and available surplus is calculated separately for each unit, there will be no deduction @ 8.5 per cent ,of the paid up equity share capital as envisaged by section, 6(d) ,and the Third Schedule of the Act. We do not think that there is any force in this argument. First, it would be a strange method of construction of language to hold that the establishment referred to in the main part of section 3 will include all different departments, undertakings and "branches of a company, while it will not do so in the proviso to 'the same section. Such different meanings in the same section in respect of the same words or expression cannot be accepted. Secondly, it seems to us that no difficulty of the nature pointed out by learned counsel can arise in calculating available surplus. 'Wherever the Act lays down that certain deductions are to be made, it is obvious that those deductions will only be effective if, in fact, circumstances do exist justifying such deductions. In the 'Third Schedule itself, the first' deduction envisaged is dividend payable on preference share capital. A number of companies do not have preference share capital. In such cases, clearly, no ,occasion would arise for making such a deduction. Very similar is the position with regard to certain other deductions which are permissible under the Second Schedule which principally lays down the method of calculation of available surplus.- There is, therefore, no reason for interpreting the proviso to section 3 in the manner urged by learned counsel simply because, in the case of separate departments, undertakings or branches of the establishment of a company, it may not be possible to make a deduction @ 8.5 per cent of the paid up equity share capital. In the present case, there is very clear evidence that, though the Company, Hindustan Steel Ltd., has a number of undertakings, Separate accounts are kept for each separate undertaking. The annual reports for three years were produced before the Tribunal. They clearly indicate that separate balance-sheet was prepared for each unit and separate profit and loss account was worked out for each unit, except that, for the Head Office, though a separate balance-sheet was-prepared, the profit and loss was worked out on the basis of the consolidated accounts. The Tribunal, in support of its view that Alloy Steel Project is a part of the establishment constituted by the Company, Hindustan Steel Ltd., relied on the circumstance that a consolidated balance-sheet is prepared for the Company in respect of all its units and after such consolidation, profit and loss is also worked out for all the establishments together so as to find out the actual profit and loss earned or incurred by the Company itself. From this, the tribunal sought to infer that there were no separate accounts in respect of each unit as are required to be maintained before they can be treated as separate establishments under the proviso to section 3. The Tribunal has obviously gone wrong in ignoring Alloy Steel Project vs The Workmen on 2 February, 1971 6 the fact that separate balance sheets and profit and loss accounts are in fact maintained for each separate unit and the consolidated accounts are prepared only for the purpose of complying with the requirements of the companies Act. The Companies Act does lay down the requirement that a consolidated balance- sheet and profit and loss account for all the units of the Company must be prepared and, for, that purpose, quarterly statements of accounts have to be sent by each unit to the Head Office. There is, however, no provision even in the Companies Act containing a prohibition to maintenance of separate balance-sheets and separate profit and loss statements for each unit for purposes of the Act. That accounts are separately maintained for each unit is not only established from the various annual reports filed before the Tribunal and the evidence of, the Company's witness Umapada Chakraborty, but is also admitted by Suprakash Kanjilal, the only witness examined on behalf of the workmen. The latter also admitted that separate bonus calculation is made in respect of each unit and bonus was declared separately in each unit. No bonus was, however, declared in respect of the Alloy Steel Project. That declaration was not made because of the claim that Alloy Steel Project was exempt from payment of bonus under section 16 of the Act. Section 16 runs as follows:- "16. (1) Where an establishment is newly set up, whether before or after the commencement of this Act, ,the employees of such establishment shall be entitled to be paid bonus under this Act only- (a) from the accounting year in which the employer derives profit from such establishment; or 918Sup CI/71 (b) from the sixth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, whichever is earlier Provided that in the case of any such establishment the employees thereof shall not, save as otherwise provided in section 33, be entitled to be paid bonus under this Act in respect of any accounting year prior to the accounting year commencing on any day in the year 1964. Explanation I.-For the purpose of this section, an establishment shall not be deemed to be newly set up merely by reason of a change in its location, management, name or ownership. Explanation II.-For the purpose of clause (a), an employer shall not be deemed to have derived profit in any accounting year unless- (a) he has made provision for that year's depreciation to which he is entitled under the Income-tax Act or, as the case may be, under the agricultural income-tax law; and (b) the arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits. Explanation III.-For the purpose of clause Alloy Steel Project vs The Workmen on 2 February, 1971 7 (b), sale of the goods produced or manufactured during the course of the trial run of any factory or of the prospecting stage of any mine or an oil-field shall not be taken into consideration and where any question arises with regard to such production or manufacture, the decision of the appropriate Government, made after giving the parties a reasonable opportunity of representing the case, shall be final and shall not be called in question by any court or other authority. (2) The provisions of sub-section (1) shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments 6 3 7 Provided that if an employer in relation to an existing establishment consisting of different departments or undertakings or branches (whether or not in the same industry) set up, at different periods has, before the 29th May, 1965, been paying bonus_to the employees of all such departments or undertakings or branches irrespective of the date on which such departments or undertakings or branches were set up, on the basis of the consolidated profits computed in respect of all such departments or undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this Act to the employees of all such departments or undertakings or branches (whether set up before or after that date) on the basis of consolidated profits computed as aforesaid." Sub-section (1) of section 16 grants exemption from payment of bonus to establishments newly set up for a period of six years, following the accounting year in which the goods produced or manufactured are sold for the first time and, in the alternative, up, to the year when the new establishment results in profit, whichever is earlier. If the Alloy Steel Project is treated as an establishment newly set up for purposes of s. 16(1), the exemption claimed would be fully justified. Section 16(2) of the Act makes it clear that the provisions of sub-section (1) are to apply even to new departments, undertakings or branches set up by existing establishments. Consequently, even if Alloy Steel Project is treated as a new undertaking set up by the-existing establishments of Hindustan Steel Ltd., the exemption under section 16(1) would be avail-able to it. The proviso to sub-s. (2) of section 16 also does not stand in the way of this claim, because there is no evidence at all that in any year, after Alloy Steel Project was set up bonus was paid to the employees of all the units on the basis of consolidated profits of all such units. The only exception has been in the case, of workmen of the Head Office where no separate profit and loss was worked out and the bonus was paid on the basis of the consolidated Profits of all the units belonging to Hindustan Steel Ltd. That, of course, was fully justified, because the Head Office was working for all the units, though as a separate unit. It was in the accounts of the Head Office that the entire paid up capital was credited and advances were made by the Head Office to the various units out of this capital or out of loans taken by the Head Office. In the case of the Head Office, therefore, the calculation of bonus on the basis of consolidated accounts was Justified; but that does not affect the principle to be applied to the separate units for which separate accounts, separate balance-sheets and separate profit and loss statements are maintained. The proviso to sub-- section (2) of section 16 only comes in the way it bonus is paid in any year to the employees of all the units on the basis of consolidated accounts. That has never been done in the case of the Hindustan Steel Ltd. Consequently, the Alloy Steel Project should have been treated as a separate establishment newly set up in the year 1961. It went into production in 1964-65 and did not, earn any profits at all till 1967-68. Therefore, no bonus was payable, to, the workmen of this undertaking for the year 1965-66 in view ,of the provisions of section 16(1) of the Act. The appeal is allowed, the order of the Tribunal is set aside, and the reference of the dispute is answered accordingly. In the circumstances of this case, we direct parties to bear their own ,costs of the appeal. Alloy Steel Project vs The Workmen on 2 February, 1971 8 G.C. Appeal allowed. Alloy Steel Project vs The Workmen on 2 February, 1971 9 | {
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Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 Equivalent citations: 1971 AIR 1844, 1971 SCR 466, AIR 1971 SUPREME COURT 1844, 1973 MADLW (CRI) 81, 73 PUN LR 581, ILR 1974 2 DELHI (SC) 95, 1971 SCD 643, 1971 CRI APP R (SC) 437 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, S.M. Sikri, A.N. Ray PETITIONER: DWARKA NATH & ANR. Vs. RESPONDENT: MUNICIPAL CORPORATION OF DELHI DATE OF JUDGMENT23/04/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. SIKRI, S.M. (CJ) RAY, A.N. CITATION: 1971 AIR 1844 1971 SCR 466 1971 SCC (2) 314 ACT: The Prevention of Food Adulteration Act (37 of 1954), s. 23(1) (c), (d), and (g), and Rules made thereunder r. 32(b) and (e)-If within rule making power. HEADNOTE: The appellants were carrying on business in ghee. On the labels of the tins of ghee the name of the business premises of the appellants and the postal division were given but the number of premises and the locality where the premises was situate were not given. On the ground that the label did not conform to the packing and labeling rules as required under r. 32(b) and (e) of the rules made under s. 23(1) of the Prevention of Food Adulteration Act, 1954, the Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 1 appellants were prosecuted and were convicted, and a token fine of Re. 1 was imposed on them. The judgment of the High Court emphasised upon the violation of r. 32(e). Rule 32(e) provides that every label should specify the batch number or code number either in Hindi or English numerical or alphabets or in combination, and r. 32(b) requires the name and address of the manufacturer or importer or vendor or packer to be given on every label. The first proviso to r. 32 excludes the operation of cls. (a) to (e) of the said rule in respect of food packages weighing not more than 60 grams. On the question whether sub-rr. 32(b) and (e) were within the rule making power under s. 23(1) cls. (c), (d), (f), and (g). HELD:(1) The sub-rules could not have been made under cl. (c). That clause deals with provisions for imposing rigorous control over production, distribution and sale of any article or class of articles of food notified by the Central Government in the Official Gazette. But no such notification regarding ghee had been issued by the Central Government. [474B] (2)Clause (f) relates to prohibiting the sale or defining the conditions of sale of any substance injurious to health when used as food. This clause also has no application because ghee is not a substance injurious to health when used as food. [474C] (3)Clause (g) will have no application because one of the essential requirements therein is that the rules made under it should be related to the interest of public health. Any rule made under this clause must be of universal application because it is in the interest of public health. The requirement regarding compliance with any such rule cannot depend upon the quantity of food packed in any container. Therefore, the fact that food packages not weighing more than 60 grams are excluded under the proviso to the rule is an indication that r. 32 is not framed under s. 23(1) (g) of the Act. [474D-F] (4)The object of a rule framed under s. 23(1) (d) must be with a view to preventing the public or the purchaser being deceived or misled as to the character, quality or quantity of the article. The giving of the 467 batch number or code number alone without giving any further particulars such as the date of manufacture of the article and the period within which the said article has to be used or consumed and the quantity of the article in the container will not prevent the public or a purchaser from being deceived or misled as to the character, quality or quantity of the article. [474G-H; 475A.-B] In the present case there was no obligation to specify on the label the date of packing and manufacture of the article of food or the period within which the article of food has Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 2 to be used or consumed. In the :absence of any such obligation there is no rational or even a remote connection between the batch or code number artificially given by a packer and the public or purchaser being prevented from being deceived or misled as to the character, quality or quantity of the article contained in a sealed tin. [475C-E] Therefore r. 32(e) is beyond the rule making power even under s. 23 (1) (d) of the Act. Since r. 32(e) is invalid the appellants could not have been convicted for its violation. [475E-F] (5)But r. 32(b) is within the rule making power under s. 23(1) (d), because, it is well known that in many cases in business the name and address of a manufacturer or importer or vendor or packer has become associated with the character quality or quantity of the article. [476B] In the present case, there is a substantial compliance with the rule by the appellants, but according to the requirement of the rule, some more particulars will have to be given, namely, the number of the premises and the locality or the area where the premises was situate. There was thus a technical breach of r. 32(b). [476B-D] [But since there was no indication from the judgments of the lower courts that the appellant would have been convicted for such a technical breach if there was no charge under r. 32(e) also, the appellants were acquitted.] [476E-F] JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 264 of 1968. Appeal by special leave from the judgment and order dated November 7, 1967 of the Delhi High Court in Criminal Revision. No. 371-D of 1965. S.C. Manchanda, M. L. Aggarwal and N. K. Agarwala, for the appellants. B. P. Maheshwari, for the respondent. V. A. Sayid Muhammad and S. P. Nayar, for the Union of India. The Judgment of the Court was delivered by Vaidialingam, J.-The short question that arises for conside- ration in this appeal by the accused, by special leave, is whether Rule 32(b) and (e) of the Prevention of Food Adulteration Rules, 1955 (hereinafter to be referred as the Rules) is ultra vires as being beyond the rule making power under S. 23 of the Prevention of Food Adulteration Act, 1954 (hereinafter to be referred as the Act). As the Rules have been framed by the Central Government, notice had been issued by this Court to the Attorney General. Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 3 The first appellant is a partner of the second appellant M/s. Mohan Ghee Laboratories carrying on business in Pure Deshi Ghee, in Gurdwara Road, New Delhi-5. On December 29, 1962 at about 12 50 p. m. five Food Inspectors of the respondent visited the Laboratories of the appellants at Gurdwara Road, and all of them purchased ghee from different containers on payment of price. After going through the necessary formalities as required by the Act and the Rules, the samples of ghee purchased by the Food Inspectors were sent to the Public Analysts for Delhi Municipal Corporation for analysis. The Public Analyst tested the sample on January 3, 1963 and reported that all the five samples taken by the five Food Inspectors and sent to him conformed to standard. It is also to be noted that on December 29, 1962, the Food Inspectors had also seized the labelled tins from which samples of ghee had been taken. On August 31, 1963, the respondent filed five complaints in the Court of the Magistrate, 1st Class, Delhi against the appellants under Section 7/16 of the Act read with Rule 32(b) and (e) of the Rules. As all the complaints are on the same pattern, we will just refer to one of those complaints, filed on the basis of the report of the Food Inspector Lekh Raj Bhutt. The averments are that the said Food Inspector on December 29, 1962 at about 12.55 p. m. took a sample of pure ghee from the appellants from one of the sealed tins of pure ghee exhibited for sale at the sale counter after due observance of the Rules. One sealed bottle was given to the appellants at the spot. The labelled tin of pure ghee from which the sample was taken was also seized by the Food Inspector in the presence of witnesses and the said tin is produced as an exhibit. The complaint further proceeds to state that the sample of pure ghee taken from the appellants conformed to the standard of pure ghee. According to the report of the Public Analysts, the sealed tin of pure ghee from which the sample was taken had a label, but itdid not conform to the packing and labelling Rules under the Act inasmuch as the name and business address of the manufacturer or packer or vendor and batch or Code numbers had not been specified on the label as required under Rule 32(b) and (e) of the Rules ; and that the appellants are guilty for non-obserance of the Labelling Rules. The respondent ultimately prayed that the appellants may be punished, according to law, for contravention of Rule 32(b) and (e) of the Rules. Similarly, the charge framed in each of the five cases was also on the same pattern. The charge after referring to the substance of the complaint and after referring to the fact that the sample of ghee taken from the shop of the appellants conformed to the standard alleged : "But complete address, Batch or Code No. etc. were not written on the ghee tins seized by the Food Inspectors. Therefore, you are to show-cause, why you should not be punished under section 7/16 PFA Act 1954, read with rule 32(b) and (e) of PFA Rules, 1955." The appellants pleaded not guilty to the charge. One of the Food Inspectors, Dina Nath has given evidence as P. W. 1. We will only refer to that part of his evidence which has a bearing on the point for consideration before us. In chief examination he has stated that when he examined the tin from which the sample of ghee had been taken, he found Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 4 that the tin did not bear the batch number, the code number and that the address given therein was incomplete. In cross-examination he has stated that the address given on the label was Mohan Ghee Laboratories, New Delhi-5 and there was also a further writing "Pure Ghee". He was not able to say whether the address referred to above and found on the tin was incomplete. He has further stated that though he has been working as Food Inspector from about 1949, he does not remember if he had seen the premises number written on any packing., He has further stated that "Batch Number can start from any serial number. I am saying about serial number by commonsense......... Code No. and Batch number is the same." We will refer to the question put to the first appellant when he was examined under section 342 and to his answer in respect of the labelling and packing. "Q. There is an allegation against you that labelling and packing of the Ghee tins taken in possession, was defective, since they do not bear the complete address of your shop, Code number and Batch number. What have you to say ? A.It is incorrect. Labelling and packing were in order, address was also correct.......... The appellants had also examined some of their employees. We will refer to the material part of the evidence of D.W. 2. who was incharge of supervising the packing of the ghee. He has referred to the fact that the address of the shop of the appellants is Mohan Ghee Laboratories, New Delhi-5 and that they receive letters, addressed as above. He has further stated that the appellants purchase ghee from outsiders in small tins and utensils and then pack them in their premises. In cross-examination he has stated that the premises of the appellants is situated in 37 Nai Wallan, Gurdwara Road, Karol Bagh. The Trial Magistrate has rather elaborately gone into the question whether the samples of ghee seized from the appellants conform to the standard and criticises without any basis the evidence of the defence witnesses on the ground that the appellants should not have printed on the label "Pure Ghee" when they could not have known the quality of ghee stored in the containers. This discussion is totally irrelevant because, even according to the res- pondent, the Public Analysts had certified that the samples conformed to the standard and the appellants were not being tried for adulteration of ghee. Regarding the requirement regarding the Batch number or Code number, the Magistrate after reference to Rule 32(e) holds that the provision is mandatory and the object of giving those particulars is to indicate the serial order in which the particular article of food was packed and thereby to indicate the period for which it could remain fit for human consumption. We are not able to appreciate wherefrom the Magistrate got all these indications, because the relevant Rule does not provide for giving any particulars regarding the period for which the article of food could Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 5 remain fit for human consumption. Ultimately the Magistrate found the appellants guilty for contravening Rule 32(b) and (e) and sentenced them to pay a token fine of Re. 1 in each of the five cases. The appellants challenged their conviction before the learned Additional Sessions Judge Delhi. The Sessions Judge, by his order dated October 18, 1965 agreed with the Trial Magistrate that the appellants are guilty of breach of Rule 32(b) and (e). However, the Sessions Judge was of the opinion that five separate complaints and five separate convictions were not legal and therefore, he made a recommendation to the High Court that the conviction of the appellants is to be set aside in respect of four complaints and that it should be maintained only in one case. According to the learned Sessions Judge, the appellants have not complied with the requirement of sub-rule (b) of Rule 32 as they have given on the label the address as "Mohan Ghee Laboratories, New Delhi-5." without giving the number of the premises and the locality where the premises is situate. Similarly, the learned Sessions Judge is of the view that the object of specification of Batch number and Code number is to track down all the samples of food stuff that were packed out of a particular lot if the authorities found the sample to be defective. This will enable the authorities to at once withdraw from the market all the containers of a particular Batch number. In this view the learned Session Judge held that the appellants have committed breach of Rule 32(e). The learned Chief Justice of the Delhi High Court, in the order under attack, has held that it is enough if the appellants are convicted in one case and accordingly the reference made by the Additional Sessions Judge in this regard was accepted. But on the main question as to whether Rule 32 (b) and (e) was within the rule making power under Section 23 of the Act, the learned Chief Justice has held that the said rule is intra vires and comes within the rule making power conferred under Section 23(1) (d). According to the High Court the Batch number and Code number would serve to provide a reassuring factor to the purchaser inas- much as it would indicate to some extent the time when the commodity was manufactured or packed. The High Court has further held that the display of Batch number or Code number would seem to be a relevant factor for assuring the public or the purchaser that they are getting from the market an article which is fresh enough to suit their purpose and requirement. Ultimately, the High Court confirmed the conviction of the appellants as well as the levy of fine of Re. 1 in one case for breach of Rule 32(b) and (e). Mr. S. C. Manchanda, learned counsel for the appellants con tended that Rule 32 (b) and (e) is beyond the rule making power conferred under Section 23 (1) (d) of the Act. The learned counsel further pointed out that the reasons given by the High Court are not warranted by the provisions of either the Act or the Rules. Dr. V. A. Syed Mohammad, appearing for the learned Attorney General, contended that the impugned rule could be sustained under clauses (c), (d) and (g) of Section 23( (1). In particular he supported in full the reasons given by the High Court that the Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 6 impugned rule is within the ambit of the rule making power under Section 23 (1) (d). Mr. B. P. Maheshwari, learned counsel for the respondent, urged that apart from the clauses referred to on behalf of the Attorney-General, the rule could be sustained even under Section 23(1)(f). In order to appreciate the contentions urged before us, it is necessary to refer to the material part of Section 23 as well as the relevant rules. Section 23(1) gives power, to the Central Government to make rules. We have already referred to the clauses on which reliance is placed on behalf of the Attorney- General and by the respondent, namely, clauses (c), (d) (f) and (g). Section 23 (1) with those clauses reads as follows : "23(1) Power of the Central Government to make rules: The Central Government may, after consultation with the Committee and subject to the condition of previous publication, make rules- * * * (c) laying down special provisions for imposing rigorous control over the production, distribution and sale of any article or class of articles of food which the Central Government may, by notification in the Official Gazette. specify in this behalf including registration of the premises where they are manufactured, maintenance of the premises in a sanitary condition and maintenance of the healthy state of human beings associated with the production, distribution and sale of such article or class of articles. (d) restricting the packing and labelling of any article of food and the design of any such package or label with a view to preventing the public or the purchaser being deceived or misled as to the character, quality or quantity of the article * * * (f) prohibiting the sale or defining the conditions of sale of any substance which may be injurious to health when used as food or restricting in any manner its use as an ingradient in the manufacture of any article of food or regulating by the issue of licences the manufacture or sale of any article of food ; (g) defining the conditions of sale or conditions for licence of sale of any article of food in the interest of public health." The Rules have been framed by the Central Government in exercise of the powers conferred by sub-section (2) of Section 4 and sub-section (1) of Section 23 of the Act. The Rules framed under sub-section (2) of Section 4 relate to the functions of the Central Food Laboratory and allied matters. We are not concerned with those rules. Part VII of the Rules relates to the "packing and labelling of foods". Rule 32 relating to the "contents of the label" is in this part. Rule 32 with material clauses Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 7 (b) and (e) and the first proviso as well as the Explanation reads as follows : "Rule 32 : Contents of the label-Unless otherwise provided in these rules there shall be specified on every label:- * * * (b) the name and business address of the manufacturer or importer or vendor or packer, * * * (e) a batch number or code number either in Hindi or English numericals or alphabets or in combination : Provided that in the case of food package weighing not more than 60 grams particulars including the statement under any clause need not be specified. Explanation.-The term 'label' means a display of written, printed, perforated, stencilled, embossed or stamped matter upon the container, cover lid and/ or crown cork of any food package." Admittedly there is no definition of the expressions "Batch number" or "Code number" either in the Act or in the Rules. Nor has any affidavit been filed on behalf of the respondent or by the Attorney General of any expert whether these expressions have any technical meaning in the trade and if so what that is. The material available on record is only the evidence of Dina Nath, one of the Food Inspectors, who has given evidence as P. W. 1 in one of the complaints. We have already adverted to his evidence which is to the effect that Batch number can start from ;any serial number and that what he says about serial number is only by commonsense. Further, according to him Code number and Batch number is the same. From this evidence it is clear that there is no specific meaning attached to these two expressions either in the Act or in the Rules and even the Food Inspectors are ,not very clear as to what those expressions mean. He has also stated that in the label on the container, the :address of the appellants had been given as "Mohan Ghee Laboratories, New Delhi-5". According to him the said address is incomplete because it does not give the details about the door number of the premises, as well as the locality where the premises is situate. He has also stated that he does not remember to have seen the premises number on any packing. We have now to see whether any of the clauses in Section 23 (1) on which reliance is placed on behalf of the Attorney- General and the respondent will sustain the provisions contained in Clauses (b) and (e) of Rule 32. We are not able to find anything in Clauses (c), (f) and (g) of Section 23 (1) of the Act, which will give power to the Central Government to frame rules requiring the name and business address of manufacturer or vendor being given ; or for Batch Number or Code number being given on the labels. Clause, (c) deals, with provisions for imposing rigorous control over pro-- duction, distribution and sale of any article or class of articles. of food notified by the Central Government in the Official Gazette. No notification issued by the Central Government in this behalf Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 8 regarding ghee has been brought to our notice and, therefore,. clause (c) does not apply. Clause (f) relates to prohibiting the sale or defining the conditions of sale of any substance injurious to health when used as food. This clause has also no application, because it is not the case of the respondent that the article of food, with which we are concerned, namely, ghee, is a substance which is injurious to health when used as food. Clause (g) again will have no application because one of the essential requirements, therein is that the rule should be related to the interest of public health. Any rule made under this clause, must be of universal application because it is in the interest of public health. The requirement regarding compliance with any such rule, cannot depend upon the quantity or food packed in any container. That Clause (g) of Section 23(1) will stand eliminated is clearly seen by a reference to the first proviso to Rule 32. The said proviso indicates that if the food package weighs not more than 60 grams, the particulars mentioned in clauses (a) to (e) of the Rule need not be specified. If a requirement has to be in the interest of public health, as is mandatory under Clause (g), the very fact that the first proviso to Rule32 excludes the operation of clauses (a) to (e) of the said rule in respect of food package weighing not more than 60 grams, is an indication that Rule 32 is not framed under Clause (g) of Section 23(1) of the Act. From the above discussion it is clear that under Clauses (c), (f) and (g) of Section 23(1) of the Act, the rules contained in clauses (b) and (c) of Rule 32, could not be framed." This leaves us for consideration the question whether Rule 32 (b) and (e) fall within the ambit of rule making power under Clause (d) of Section 23(1). We will first take up for consideration the vires of Clause (e) of Rule 32. There cannot be any controversy that the object of a rule framed under clause (d) must be with a view to preventing the public or the purchaser being deceived or misled as to the character, quality or quantity of the article. We have already pointed out that in this case the label contained the words "pure ghee" and on analysis of the, sample it has been found to conform to the standard. It is difficult for us to appreciate how the giving of the batch number or the code number alone without giving any further particulars such as date of manufacture of the article of food and the period within which the said article has to be utilised, used or consumed and the quantity of the article in a container, will prevent the public or the purchaser being deceived or misled as to the character, quality or quantity of the article. No attempt has been made by the respondent to establish any relation between the giving of the batch number or the code number with the public or the purchaser being prevented from being deceived or misled in respect of the matters referred to in Clause (d). We are not able to find any rational or even a remote connection between the batch or code number artificially given by a packer and the public or the purchaser being prevented from being deceived or misled as to the character, quality or quantity of the article, contained in a sealed tin. There is no definition of the expression "batch number" or "code number" either in the Act or the Rules. It is also admitted that even assuming that the batch or code number has to be given, there is no further obligation to specify in the label the date of packing and manufacture of the article of food Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 9 or the period within which the article of food has to be utilised, used or consumed. In the absence, of any obligation to give the particulars mentioned by us above, the public or the purchaser will not be able to find out even the freshness of the contents of a container. Therefore, it follows that merely giving an artificial batch number or code number will not be of any use to the public or to the purchaser. In view of all these circumstances we are of the opinion that rule 32(e) is beyond the rule making power even under Section 23 (1) (d) of the Act. The appellants could not be convicted for any violation of Clause (e) of Rule 32 as the said provision, as pointed out above, is invalid. We will now consider the question regarding the validity of Clause (b) of Rule 32. That clause is also challenged as being beyond the rule making power under Section 23 (1) (d) of the Act. Clause (b) of Rule 32 requires that the name and business address of the manufacturer, or importer, or vendor or packer be given on every label. According to Mr. Manchanda, this clause has also no relation to the purpose for which the rules can be framed under Section 23 (1) (d) of the Act. According to Mr. Manchanda, mere giving of name and business address will not give any indication to the public or the purchaser regarding the character, quality or quantity of the article. Even assuming that Clause (b) of Rule 32 is-valid, he pointed out, that in this case, his clients have complied with the requirement by stating on the label "Mohan Ghee Laboratories New Delhi-5." According to him there has been at any rare substantial compliance with the requirement of the rule and therefore his clients could not be convicted for any violation of this clause. We are not inclined to accept the contention of Mr. Man- chanda that Clause (b) of Rule 32 is beyond the rule making power of the Central Government under Section 23 (1) (d) of the Act. It is well known that in many cases in business the name and address of a manufacturer, or importer, or vendor or packer has become associated with the character, quality or quantity of the article and as such we are of the opinion that Clause (b) of Rule 32 is a valid rule. In this case, as pointed out by Mr. Manchanda there has been a substantial compliance with that rule by the appellants giv- ing in the label the address as "Mohan Ghee Laboratories, New Delhi-5." But according to the requirement of the rule, some more particulars will have to be given, namely, the number of the premises and the locality or the area where the premises is situate. This is the evidence adduced on behalf of the prosecution also. Therefore, it can be said that there is a technical breach of Clause (b) of Rule 32 inasmuch as full particulars, referred to above, have not been given by the appellants in the label. No doubt, the appellants have been convicted for breach of Clauses (b) and (e) of Rule 32 and a fine of Re. 1 has been imposed. We have already held that Clause (e) of Rule 32 is invalid and the appellants cannot be convicted for non-compliance of the same. Though there is a technical breach of Rule 32(b), there is no indication available from the judgments of the High Court and the subordinate courts that the appellants would have been convicted for a technical breach of Rule 32(b) if there was no charge under Clause (e) of Rule 32 also. On the other hand, more prominence is given in the judgments to the violation of Rule 32 (e) and the inference is that the conviction is substantially for a violation of the said rule. In the circumstances of this case, we are of the view, that the appellants could not be convicted for a technical breach of Rule 32(b) alone. Therefore, the conviction of the appellants for offences, under Rule 32(b) and (e) as well as the fine imposed in the sum of Re. 1 for the said offence, are both set aside. In the result, the appeal is accordingly allowed and the judgment and order of the Delhi High Court in Criminal Revision No. 371-D of 1965 are set aside. The fine, if collected, will be refunded. Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 10 V.P.S. Appeal allowed. Dwarka Nath & Anr vs Municipal Corporation Of Delhi on 23 April, 1971 11 | {
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Commissioner Of Income-Tax, Bihar And ... vs Banwari Lal Agarwal on 18 January, 1971 Equivalent citations: [1971]80ITR326(SC), (1972)4SCC80, AIRONLINE 1971 SC 32 Author: J.C. Shah Bench: J.C. Shah, A.N. Grover, K.S. Hegde JUDGMENT J.C. Shah, C.J. 1. In proceedings for assessment of income-tax for the years l947-48 and 1948-49, the Income-tax Officer, Ranchi, held that Banwari Lal Agarwal, hereinafter called "the assessee", had invested Rs. 17,425 in the year of account relating to the assessment year 1947-48, and Rs. 35,500 in the year of account relevant to the assessment year 1948-49, in Indian Woollen and Silk Stores, Ranchi, of which the assessee was a partner. The Income-tax Officer included those sums as the income from undisclosed sources in the assessment of the Hindu undivided family styled M/s. Narmal Ramkumar of which the, assessee was a member in the two respective assessment years. The Hindu undivided family appealed against that order. The Appellate Tribunal held in respect of the appeal for the assessment year 1947-48 that a sum of Rs. 17,425 represented the income from from undisclosed sources but it could not be assessed in the hands of the Hindu undivided family. But in respect of the appeal for the year 1948-49, following the decision of the Tribunal in the appeal relating to the assessment year 1947-48, the Appellate Assistant Commissioner directed that the sum of Rs. 35,500 be removed from the assessment of the Hindu undivided family and that it be assessed in the hands of the assessee. 2. The Income-tax Officer then commenced a proceeding for assessment of the income of the assessee for the year 1948-49, under Section 34(1)(a) after obtaining the sanction of the Commissioner of Income-tax. The Commissioner's sanction was specifically given on the direction given by the Appellate Assistant Commissioner. In proceedings for assessment before the Income-tax Officer it was contended by the assessee that the proceeding under Section 34(1)(a) was barred by limitation, as it was initiated more than eight years after the expiry of the assessment year. The Income-tax 'Officer rejected the contention and assessed the sum of Rs. 35,500 as the income of the assessee from undisclosed sources. The appeal filed by the assessee to the Appellate Assistant Commissioner did not succeed. The Appellate Tribunal, following the judgment of the Bombay High Court in Hiralal Amritlal Shah v. K.C. Thomas 1st. Income-tax Officer, M-Ward, Bombay ., held that the proceeding under Section 34(1)(a) had become barred and was therefore invalid. At the instance Commissioner Of Income-Tax, Bihar And ... vs Banwari Lal Agarwal on 18 January, 1971 1 of the Commissioner of "Income-tax, the Tribunal referred the following question to the High Court of Patna: Whether, on the facts and circumstances of the case, the Appellant Tribunal was right in holding that proceedings under Section 34(1)(a) of the Income-tax Act for the assessment year 1948-49 in the case of the assessee was invalid ? 3. The High Court answered the question in the affirmative. Against that order the Commissioner of Income-tax has appealed to this Court. 4. The principal argument advanced in the appeal is that the judgment of the Bombay High, Court in Hiralal Amritlal Shah's case . on which reliance was placed by the Tribunal was overruled by this Court ill K. C. Thomas, 1st Income-tax Officer, Market Ward, Bombay v. Vasant Hiralal Shah . and on that account the answer to the question referred be recorded in the negative. This Court held in K.C. Thomas's case . that the second proviso to Section 34(3) in the form in which it stood on the date of the issue of the notice of assessment would govern the whole of Section 34(1) and would, consequently, apply even to an assessment of escaped incomes with respect to which limitation is provided in clause (ii) of the first provision to Section 34(1). In that case, bar of limitation was held not to apply when an. order to reassess the income of the appellant was made. 5. Before an assessment can be said to be validly made under Section 34 two distinct conditions relating to limitation must be satisfied: under Sub-section (1) a notice for initiating proceedings for assessment or reassessment must be served within the period prescribed by Clauses (a) and (b) ; and assessment and reassessment must be completed within the period of limitation prescribed in Sub-section (3). 6. Notice to the assessee of assessment under Section 34(1)(a) was issued on July 24, 1957, i.e. , after the expiry of eight years prescribed by sec-Ron 34(1)(a). Sub-section (3) of Section 34 as it stood in 1957 when the notice of assessment was served provided (in so far as it is relevant) that: "No order of assessment or reassessment, other than an order of assess-KgDt under Section 23 to which clause (c) of Sub-section (1) of Section 28 applies or an order of assessment or reassessment in cases falling . within Clause (a) of Sub-section (1) ... of this section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable .... 7. Provided further that nothing contained in this section... shall apply to... an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under Section 31, Section 33, Section 33A, Section 33B, Section 66 Section 66A." 8. It was held by this Court in K.C. Thomas's case ; ., that proviso (ii) to section (3) was an exception to the entire section. Therefore, to an order of assessment or reassessment of the income of the assessee or any person in consequence of or to give effect to any finding or direction contained, inter alia, in an order of the Appellate Assistant Commissioner or the Tribunal, the periods of limitation contained in Sub-section (1) and Sub-section (3) shall not apply, i.e. , the requirements as to service Commissioner Of Income-Tax, Bihar And ... vs Banwari Lal Agarwal on 18 January, 1971 2 of notice within the period of limitation prescribed under Sub-section (1) shall not apply nor shall the assessment be required to be completed within the period prescribed in the substantive part of Sub-section (3). 9. In the present case the Appellate Assistant Commissioner gave direction for assessment of the income of the assessee which had escaped assessment. Sanction of the Commissioner was also obtained in that behalf. But the assessee was not a party to the assessment proceeding. He was a person other than the assessee. Whereas, in K.C. Thomas's case . an order or reassessment of income was made against the original assessee, in the case in hand assessment is directed against a person other than the assessee in appeal in which the direction was made. If under Sub-section (3) of Section 34 the assessment has to be completed within the period prescribed thereby and the time is not extended, competence to issue the notice under Section 34(1)(a) will not save the order of assessment; Before the Tribunal and the High Court this question was not raised. The Tribunal and the High Court followed the judgment in Hiralal Amritlal Shah's case . and held that a notice of assessment or reassessment under Section 34(1)(a) cannot be served against the assessee beyond the period of eight years from the last day of the year of assessment This Court took a different view holding that the second proviso to Section 34(3) applied to notices under Section 34(1)(a) as well. 10. This Court in S.C. Prashar v. Vasantsen Dwarkadas that the second proviso to Section 34(3) of the Income-tax Act, 1922, in so far as authorises the assessment or reassessment of any person other than the assessee after the expiry of the periods of limitation specified in Section 34 consequence of or to give effect to a finding or direction given in an appeal revision or reference arising out of proceedings in relation to the assessee violates Article 14 of the Constitution of India and is invalid to that extent In Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das . this Court observed that the expressions "finding" and "direction" in the second proviso to Section 34(3) mean, respectively, a finding necessary for giving relief in respect of the assessment for the year in question, and at direction which the appellate or revisional authority, as the case may be is empowered to give under the sections mentioned in that proviso. The court observed that the expression "any person" in the second proviso to Section 34(3) referred to one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. In Murlidhar Bhagwan Das's case . no reference was made by the majority of the judges to the judgment in S.C. Prashar case . In the Estate of Late Rangalal Jajodia v. Commissioner of Income-tax this Court held that the expression "any person'' in Section 34(3), proviso is a person intimately connected with "the assessment. The court in that case cited with approval the observations in Murlidhar Bhagwan Das case C. As. Nos. 2332-2335 of 1966, decided, on Nov. 19, 1970-. 11. The real dispute between the assessee and the department in this case is not whether the notice under Section 34(1)(a) was valid, but whether it is open to the Income-tax Officer to commence a proceeding for assessment pursuant to a direction given by the Appellate Assistant Commissioner after expiry of the period of limitation prescribed by Sub-section (3). On that part of the case, no question is raised. Counsel for the Commissioner has fairly conceded that the question referred does not bring out the only plea on a favourable decision on which the department may bring to tax the income which had escaped assessment. Counsel conceded that the question whether by virtue of the Commissioner Of Income-Tax, Bihar And ... vs Banwari Lal Agarwal on 18 January, 1971 3 second proviso to Sub-section (3) of Section 34 the assessment could, in the circumstances of the case, be completed outside the bar of that Sub-section was not argued and not even raised before the Tribunal or before the High Court. We do not, therefore, deem it necessary to record our answer to the question raised. 12. The appeal fails and is dismissed. There will be no order as to costs Commissioner Of Income-Tax, Bihar And ... vs Banwari Lal Agarwal on 18 January, 1971 4 | {
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Mahendra Singh vs State Of Rajasthan on 26 October, 1971 Equivalent citations: AIR1971SC2593, 1972CRILJ34, (1972)4SCC715, 1971(4)WLN101, AIR 1971 SUPREME COURT 2593, 1972 4 SCC 715, 1972 MADLJ(CRI) 161, 1972 (1) SCJ 237, ILR (1972) CUT 869 Author: D.G. Palekar Bench: A.N. Ray, D.G. Palekar JUDGMENT D.G. Palekar, J. 1.These are appeals by Special leave by one Mahendra Singh from an order of conviction under Sections 419 and 471 both read with Sections 109 and 466, I.P.C. recorded by the learned Additional Sessions Judge, Jodhpur confirmed in appeal by the High Court of Rajasthan so far as Sections 466 and 471 read with Section 109, I.P.C. are concerned. The sentences of imprisonment imposed by the learned Additional Sessions Judge were reduced by the High Court to the period already undergone. 2. The facts, so far as the appellant is concerned, are that the appellant at the relevant time was working as a Cargo Clerk in the Indian Air Lines at Delhi On 23rd January, 1954, three persons namely Pakhar Singh, Mehar Singh and Niranjan Singh went to Jodhpur Airport with Passports for boarding in the plane go ing to Karachi from where they were to proceed to Great Britain. After (examining the luggage and passports, they were allowed to board the plane but the Officer, Shri Sukhdeo Muni, entertained some suspicion about them and so before the plane left, he went inside the plane, examined the passports more closely and on interrogation realised that the passports were forged. He, therefore, made these three persons alight from the plane and took them to the Police Station. The passport in the possession of Pakhar Singh which is Ext P-5A though it bore the photograph of Pakhar Singh had been issued in the name of one Shiv Singh. The passport Ext P-15A which was carried by Mehar Singh had been issued in the name of one Hamam Singh though the photograph thereon was of Mehar Singh. The passport Ext. P-11A which was carried by Niranjan Singh had been issued to one Kanan Singh though it bore the photograph of Niranjan Singh. The first one was originally valid for India and Philippines; the second for Singapore and Indonesia and the third for Uganda Protectorate via Kenya. The subsequent endorsements,however, purporting to be made by the Home Secretary, Delhi State Govt., Delhi were found to be made on some dates in 1953 validating them for some of the western countries including Great Britain, Egypt, Iraq, Iran etc., These endorsements, as also the signature of the Home Secretary and the seals affixed thereon are said to be forged. 3.On further investigation, the following facts came to notice. Mahendra Singh vs State Of Rajasthan on 26 October, 1971 1 4. One Karam Singh from Punjab made it a business to procure forged passports for money consideration. He obtained Ext. P-5A from Shiv Singh, Ext P-15A from one Kahan Singh and Ext. P-11A from Harnam Singh and had them forged for the benefit of Pakhar Singh, Mehar Singh and Niranjan Singh respectively. The allegation is that the endorsements on all these three passports validating them for the western countries were in the handwriting of the appellant, Mahendra Singh. Karam Singh purchased rail tickets from Phagwara to Jodhpur for Pakhar Singh. Mehar Singh and Niranjan Singh and saw them off at. Phagwara Railway Station assuring them that they will get their passports and other documents at Jodhpur. 5. After the trio got down at the Jodhpur Railway Station they were met by one Kartar Singh. Being 'Sikhs' they were keeping beard but Kartar Singh arranged for shaving the beards and to give them a proper hair cut. Kartar Singh then took them to a local photographer, and in the meantime, lodged them in a part of the house of one Manohar Singh - the same having been hired by the appellant a few days earlier. Kartar Singh obtained the photographs and, thereafter, delivered the passports and the travel documents to the customers and himself took them to the Airport in a Taxi. We have already referred to the fact that after Pakhar Singh, Mehar Singh and Niranjan Singh had boarded the plane, they were removed from it by Mr. Sukhdeo Muni. 6. After the investigation was over the Police sent in one Charge-sheet against Pakhar Singh, Mehar Singh, Niranjan Singh, Karam Singh, Kartar Singh and the appellant Mahendra Singh. Out of the three genuine passport holders namely Shiv Singh, Kahan Singh and Harnam Singh, the first and the third were also included in the Charge-sheet. The case in the Charge-sheet was that there was a passport racket and the accused had been engaged in a criminal conspiracy. So they were all charged under Section 120B, I.P.C. Since the three travellers Pakhar Singh, Mehar Singh and Niranjan Singh had impersonated other persons and had either forged the passports or used them as genuine, they were charged under Sections 419, 465, 466 and Section 471, I.P.C. The genuine owners of the passports, namely, Shiv Singh and Harnam Singh were charged for the abetment of the above offences. Similar were the charges against Karam Singh, Kartar Singh and the appellant Mahendra Singh except that the appellant instead of being charged for the abetment of the offence under Section 466, I.P.C. was charged for the substantive offence under Section 466. I.P.C. 7. The learned Magistrate who committed these accused to the Court of Session dropped the charge under Section 120B, I.P.C. He split up the charges - each case being confined to one forged passport. The learned Additional Sessions Judge does not appear to have given any thought to the dropping of the charge under Section 120B and proceeded to try the accused in three separate cases. Passport Ext. P-5A was the subject-matter of Sessions Case No. 15 of 1961. Passport Ext. P-15A was the subject-matter matter of Sessions Case No-16 of 1961 and passport Ext. P-11A was the subject-matter of Sessions case No. 17 of 1961. 8. In Sessions Case No. 15 of 1961 the accused were (1) Pakhar Singh (2) Shiv Singh (3) Kartar Singh (4) Karam Singh and (5) Mahendra Singh, In Sessions Case No. 16 of 1961 the accused were (1) Mehar Singh (2) Kartar Singh (3) Karam Singh and (4) Mahendra Singh. In Sessions Case No. 17 of 1961 the accused were (1) Niranjan Singh (2) Harnam Singh (3) Karam Singh (4) Kartar Singh and (5) Mahendra Singh. Niranjan Singh, however, was not available at the time of trial as he had. in the Mahendra Singh vs State Of Rajasthan on 26 October, 1971 2 meantime, absconded. 9. The learned Additional Sessions Judge convicted all the accused before the Court on almost all the charges. The convicted accused therefore, filed separate appeals which were, in all, ten in number. All of them were heard together by the High Court. The conviction of Pakhar Singh and Mehar Singh. The forged passport holders - under Sections 419 and 471 was confirmed - the owners of the passports namely Shiv Singh and Harnam Singh were acquitted. Kartar Singh who was alleged to have helped at Jodhpur was given the benefit of doubt and acquitted. Karam Singh was acquitted in the first two cases but his conviction under Sections 419 and 471 both read with Section 109 was maintained. The conviction of Mahendra Singh under Section 419 read with Section 109 I.P.C. was set aside but his conviction under Sections 466 and 471 read with Section 109, I.P.C. was confirmed. 10. We have before us only Mahendra Singh, the appellant, and we have to see whether his conviction under Sections 466 and 471 read with Section 109, I.P.C. is justified. The case against him is that he in his own 'handwriting made the endorsements marked 'A-B' in the three passports. In the passport Ext. P-5A the endorsement reads at page 7 as follows: No. 1002 Date 20th June 1953. Also valid for. All countries in Europe, Italy, Egypt, Iraq, Iran and all countries in Commonwealth. In the passport Ext. P-15A the endorsement is at page 15 and is marked A-B which reads as follows: No. 2860 Date 23rd December, 1954. Also valid for United Kingdom Prance, Switzerland. Italy, Iraq, Iran and Pakistan In the passport Ext. P-11A the endorsement is at page 7 and reads as follows: No. 2909 Date 30th December, 1953. Also valid for All countries in Europe, Great Britain, Egypt. Iraq, Iran and Pakistan. (The words underlined above are stamped in the originals.) These endorsements, it will be seen, had been made with a view to enable the passport holders to travel to some western countries although they were not entitled to do so. It is not disputed that they have been forged and, therefore, an offence under Section 466, I.P.C. has been committed. There can also be no doubt that the person or persons who committed the offence under Section 466 must have known that he or they were making these forged endorsements with a view to enable somebody to make use of them as genuine passports and hence the offence under Section 471 read with Section 109, I.P.C. also has been committed. Mr. Mukherjee, appearing for the appellant, argued faintly that since the appellant was acquitted under Section 419 read with Section 109, I.P.C. the conviction under Section 471 read with Section 109 I.P.C. cannot survive. We are unable to accept that proposition, whosoever made the endorsements extending the passports to countries to which the passport holders were not entitled to travel, could not have made the endorsements innocently. When the endorsements were made, the passports must have borne either the photograph Mahendra Singh vs State Of Rajasthan on 26 October, 1971 3 of the genuine passport holder or the impersonator. In either case, the endorsements had been made with a view to help the person having his photograph on the passport to travel to countries to which he was not entitled to travel. The endorsements were obviously made dishonestly and fraudulently and, therefore, the offence under Section 471 read with Section 109, I.P.C. must be deemed to have been committed. 11. It was next contended by Mr. Mukherjee that there was really no evidence in the case for a conviction. According to him. there was no charge under Section 120B, I.P.C. Therefore, the prosecution had to rely only on those pieces of evidence which directly implicated the appellant. No doubt the High Court has referred to five circumstances as having been proved against the appellant, but, according to Mr. Mukherjee, the first four cannot be regarded as incriminating and the evidence about the last was thoroughly unsatisfactory. Mr. Mukherjee submitted that the last circumstance was really the most important circumstance in the case and if it was satisfactorily proved, the conviction would be unchallengeable, the other four circumstances serving merely to support the conclusion. On the other hand, however, if the last circumstance was not proved, the first four circumstances would fall far short of proving the guilt of the appellant. 12. The High Court has held the following five circumstances as proved: (1) That Mahendra Singh visited Jodhpur on 9th January, 1954; (2) That he took on rent a house belonging to Manohar Singh; (3) That 13 air tickets were purchased through him for 13 different persons from Karachi to London. (4) That he had a talk on telephone from Jodhpur with Raj Sachdev for the cancellation of four tickets; and (5) That the endorsement between A and B on all the passports was in the handwriting of the appellant. 13. We agree with the High Court that out of these five pieces of circumstantial evidence the first four circumstances have been established. The appellant was employed as a car go Clerk in the Indian Air Lines Corporation at Delhi. He applied for leave on the ground of illness on 8-1-1954 and was absent from duty on the next three days. Ext. 64 is his application. According to the prosecution, the appellant utilized this leave for going over to Jodhpur where he hired part of the house of one Manohar Singh, P.W. 2. Manohar Singh has turned hostile but there is evidence including that of P.W. 1 Dhwaja Singh, the other tenant in the house of Manohar Singh, who has clearly proved that the appellant was present at Jodhpur on the 9th. In this connection the evidence of Raj Sachdev P.W. 30 is also important. This witness is the proprietor of a Travelling Agency named the Globe Travels Company and it was through him that the appellant had booked 13 seats by the BOAC company from Karachi to London. Out of these 13 tickets, four were to be utilized on 13th January, 1954. But the same were cancelled by the appellant on the telephone on January 11, 1954. Sachdev says that on 11th January, 1954 he received the telephone call of the appellant from Jodhpur instructing him to cancel the four tickets and to phone him back to the telephone No. 123 at Jodhpur confirming the cancellation. Sachdev says that he called the appellant on phone No. 123 and informed him that he had cancelled the four tickets. There is no doubt, therefore, that the Mahendra Singh vs State Of Rajasthan on 26 October, 1971 4 appellant was at Jodhpur between 9th and 11th. As an employee of the Indian Air Lines, it was against the rules for the appellant to book tickets for his customers for a commission. The fact that he acted against the rules, however, is not an incriminating circumstance because we have nothing to do in this case with these 13 tickets or the cancelled four tickets. It must however, be noted that Pakhar Singh, Mehar Singh and Niranjan Singh were lodged in the house hired by the appellant before they emplaned at Jodhpur. So the circumstances referred to by the High Court establish no more than that the appellant had hired part of the house of Manohar Singh at Jodhpur on or about 9th of January, 1954 and some 10 days later, the forged passport holders had been lodged in this house before they emplaned at Jodhpur. The appellant himself had not accompanied these passport holders nor is there any evidence to show that he had any direct communication with them. The prosecution case is that it was Kartar Singh who had brought these travellers to this house and it was Kartar Singh who arranged for taking them to the Airport. Kartar Singh's connection with the appellant is not established. We do not know how Kartar Singh came into possession of the passports and how he delivered the same to the three travellers. In fact Kartar Singh has been given the benefit of doubt and acquitted. In these circumstances, it would not be possible to say on the evidence that these three travellers were lodging in Manohar Singh's house at the instance of the appellant or with his consent. 14. In the result we are left with only one circumstance namely that the endorsements on the passports already referred to were in the handwriting of the appellant. The High Court has held that these endorsements were in the handwriting of the appellant and, as already pointed out, if that finding is correct, the conviction will have to be upheld. 15. It is the submission of Mr. Mukherjee that the High Court had no good evidence at all on which to proceed to hold that these endorsements were in the appellant's handwritings. On behalf of the prosecution a handwriting expert named K.R. Lal was examined. At the time of the trial, this expert had died but his statement in the Committing Court was taken on record. According to this expert, the endorsements were in the handwriting of the appellant and that opinion, was given by him on the basis of comparison with two admitted writings of the appellant The admitted writings are Exts. 64 and 49. The first one is the leave application already referred to and the second one is a letter written by the appellant on 5-2-1954 to Globe Travels for the refund on one of the four tickets of January 13, 1954 which had been already cancelled. As usual with experts, several reasons have been given by Lal for his opinion that the challenged writings in the three passports were in the handwriting of the appellant. To counter this opinion, the appellant examined his own expert one Yog Raj and this expert has sworn that the challenged writings are not in the handwriting of the appellant He has also given several reasons for holding that opinion. The learned Trial Judge does not seem to have attached importance to the opinions of these two experts because the experts cancelled each other's findings. The other evidence on which the prosecution relied was the evidence of one B. M. Puri who was at the relevant time Superintendent in the Indian Air Lines and was the official superior of the appellant. As against Puri's evidence, the appellant examined a colleague Franklin who had greater opportunity to see the appellant write and sign. According to Franklin the challenged writings are not in the handwriting of the appellant In this stage of the evidence the learned Judge who dealt with this appeal in the High Court examined for himself the challenged writings and compared them with the admitted writings and came to the conclusion that the expert Mahendra Singh vs State Of Rajasthan on 26 October, 1971 5 Lal's opinion deserved to be accepted. Mr. Mukherjee submits that the learned Judge was in error in preferring Lal's evidence because the comparison made by the learned Judge with the help of Lal's opinion was wholly insufficient to come to a conclusion adverse to the appellant The learned Judge thought that he had discovered some peculiar idiosyncrasy in the manner of writing the two letters 'b' and 'g' and since the letter 'b' and 'g' found in the challenged writings, bore the same characteristics as 'b' and 'g' found in the admitted writings Exts. 64 and 49, he was persuaded to hold that the challenged writings must have been in the handwriting of the appellant. The letter 'b' is found twice in the three challenged endorsements and that is in the word 'December' in Ext. P-11A and Ext. P-15A. On the other hand, the letter 'b' is to be found in several places in Exts. P-64 and P-49. The learned Judge seems to be in agreement with Expert Lal that the letter 'b' in the word 'December' had a very "individualising feature" in that it disclosed an uncommon way of adding an oval to the preceding staff which is just a vertical stroke. The learned Judge also found that there was great similarity in the letter 'g' in the disputed writings and the letter 'g' wherever it was found in Exts. 64 and 49. It is submitted by Mr. Mukherjee that, in the first place, it was a futile exercise to compare one single letter in the disputed writings with that letter wherever it was found in admitted writings and secondly that on a scrutiny of the disputed writings for that purpose, it would be impossible to say that the letters 'b' and 'g' found in the admitted writings have any characteristics peculiar to the disputed letters 'b' and 'g'. It appears to us that there is force in Mr. Mukherjee's submission. The letter 'b' occurs in the word 'December' and before one can say that that letter has any peculiarities of its own, one would like to see 'b' In the disputed writings more often than once. If a peculiarity in the writing had been established on a comparison of a few more 'b's in the disputed writings themselves, one would have something to go by. The second stage would come thereafter of comparing any peculiarities so discovered with the peculiarities discovered in the admitted writings. In Ext. 64 we have 'b' in the words 'beg', 'submit', 'be', 'oblige' and 'better' In Ext. 49, we have this 'b' in the words 'Globe', 'been', 'bought' and 'obliged'. When, all these 'b's in the admitted writings are compared, one undoubtedly sees that there is some peculiarity about them. Pictorially they look like 'h' though in some places the vertical strokes lean to the right and in some others to the left. We must frankly confess that pictorially the letter 'b' to be found in 'December' in the disputed writings does not give us the same impression as the 'b' gives in the admitted writings. For one thing the vertical stroke looks shortish and the oval attached to the preceding stroke goes above more than half the stroke at least in Ext P-11A. In any case it will be unfair to compare just one letter 'b' with the admitted writings, because in our view in order that any peculiar idiosyncrasy may be discovered, we should have that letter more than once in the disputed writings themselves and also in combination with different letters. So far as 'g' is concerned, we have that letter in the word 'Egypt' in Exts. P-5A and P-11A and also in the word 'Kingdom in Ext. P-15A. Out of these, the letter 'g' in the word 'Kingdom' has some resemblance with 'g' wherever found in Exts. 64 and 49. But the 'g' in 'Egypt' does not create the same impression. In other words, the material in the disputed writings is too scanty for a proper comparison and, therefore, we think that the learned Judge was not justified in holding, on his own comparison of the letters 'b' and 'g' in the disputed writings that they disclosed the same characteristics as those in the admitted writings. 16. Nor are we satisfied with the evidence of B.M. Purl. He has stated that the writings in the endorsements are the writings of the appellant. It is quite clear from his evidence that he was hesitant in giving his opinion and we are far from satisfied that Puri had such ample opportunity to Mahendra Singh vs State Of Rajasthan on 26 October, 1971 6 see the appellant's handwriting as to be quite conversant with it. We have tried hard to see if the experts shed any significant light on the problem before us. But on our own scrutiny of, the writings, we do not think that we can accept the reasoning of the learned Judge in this respect. The opinion of the expert examined by the appellant cannot also be excluded from consideration. 17. Since the conviction of the appellant is principally based on the finding that the disputed endorsements were in his handwriting, the same will have to be set aside on 'the view we have taken. The appeals are, therefore, allowed and the appellant acquitted. His sentence is set aside Mahendra Singh vs State Of Rajasthan on 26 October, 1971 7 | {
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Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 Equivalent citations: 1971 AIR 1210, 1971 SCR 299, AIR 1971 SUPREME COURT 1210 Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde PETITIONER: BANK OF BIHAR Vs. RESPONDENT: STATE OF BIHAR & ORS. DATE OF JUDGMENT01/04/1971 BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. CITATION: 1971 AIR 1210 1971 SCR 299 CITATOR INFO : R 1985 SC 520 (33) D 1992 SC1740 (23) ACT: Contract Act, 1872, ss. 172, 173, 176, 180 and 181-Pledge- Special property of pawnor-Pawnee's rights whether can be extinguished by lawful seizure of pawned goods by Government to satisfy its claims against pawnor. HEADNOTE: Certain sugar was pledged with the plaintiff bank (appellant herein) by Defendant No. 2 under a cash credit agreement. Part of the said sugar was seized under the Public Demands Recovery Act in connection with a demand of sugar cess by the Cane Commissioner. The sugar was sold and the sale proceeds were attached towards the payment of cess. No payment was made to the plaintiff bank, which thereupon filed the present suit to enforce its claim. The trial court granted a decree against the State of Bihar for the Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 1 price of the sugar. The High Court however held that no decree could be granted against the State as the seizure was lawful. HELD:The pawnee had special property and a lien which was not of ordinary nature on the goods and so long as his claim was not satisfied no other creditor of the pawnor had any right to take away the goods or its price. After the, goods had been seized by the Government it was bound to pay the amount due to the plaintiff and the balance could have been made available to satisfy the claim of other creditor of the pawnor. But by a mere act of lawful seizure the Government could not deprive the plaintiff of the amount which was secured by the pledge of the goods to it. As the act of the Government resulted in deprivation of the amount to which the plaintiff was entitled it was bound to reimburse the plaintiff for such amount which the plaintiff in ordinary course would have realized by sale of the goods pledged with it on the pawnor making a default in the payment of debt. [303E-G] The trial court was right in holding that the plaintiff's right as a pawnee could not be extinguished by the seizure of the goods in its possession inasmuch as the pledge of the goods was not meant to replace the liability under the cash credit agreement. It was intended to give the plaintiff a primary right to sell the goods in satisfaction of the liability of the pawnor. The Cane Commissioner who was an unsecured creditor could not have any higher rights than the pawnor and was entitled only to the surplus money after satisfaction of the plaintiffs dues. [303G-304B] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1942 of 1966. Appeal from the Judgment and decree dated April 23, 1963 of the Patna High Court in First Appeal No. 420 of 1955. Sarjoo Prasad and R. C. Prasad, for the appellant. U. P. Singh, for respondent No. 8. The Judgment of the Court was delivered by Grover, J.-This is an appeal by certificate from a decree of the Patna High Court in a suit instituted by the appellant against the State of Bihar which was impleaded as defendant No. 1, the other defendants being the Jagdishpur Zamindari Co. Ltd. (defendant No. 2) and some of its directors defendants 3 to 5. According to the allegations in the plaint one of the methods of making advances followed by the plaintiff Bank was that the constituents pledged their merchandise on a cash credit system with the Bank and took advances on the pledged goods. The Bank held the goods as security for the advances made and ,'be constituents either provided the Bank with godown or the Bank kept the pledged goods in godowns of its own and charged rents from the constituents. The defendant No. 2 entered into a cash credit system agreement with the plaintiff's Arrah Branch, the arrangement being that the sugar would be pledged under the cash credit system. On December 16, 1946 the advance made Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 2 to defendant No. 2 stood at Rs. 3,20,486-2-0 and the Bank held 6239 bags of different varieties of sugar as security. These bags were kept in godowns provided by defendant No. 2. The key of the lock of each godown was in the custody of the Bank. It was alleged that in December 1949 under cover of an illegal seizure order issued by defendant No. 1 the Rationing Officer and the District Magistrate, Patna, got the locks of the godown broken open and forcibly and illegally removed 1818 bags of 27D quality of sugar. They total quantity removed weighed about 5,000 maunds. No payment was made to the plaintiff Bank which held the bags of sugar as pledgee under the cash credit agreement. It is unnecessary to refer to other facts stated in the plaint except to mention that according to the plaintiff it was entitled to recover the sugar which had been seized illegally or to recover the price of that sugar as per schedule 2 of the plaint which the plaintiff would have got if the quantity of sugar which had been seized had been sold in the market on the material day. The plaintiff prayed for a decree for the return of 1818 bags of 27D quality sugar and, alternatively for re- covery of Rs. 1,81,700-9-3 with interest by way of damages for illegal removal and detention of sugar or. price thereof. Alternatively a decree for Rs. 93,910-10-9 was claimed against defendant No. 2 and the other defendants. The suit was resisted by defendant No. 1 on the ground that the seizure had been effected pursuant to lawful orders which had been made and that the sale proceeds of about 5000 mds. of sugar were included in the sum of Rs. 1,50,039-10-9 which was deposited in the treasury but which was later on attached under the orders of Certificate Officer, Patna, under the Public Demands Recovery Act on account of arrears of sugar cess amounting to Rs. 2 lakhs due from the Bhita Sugar Factory with which defendant No. 2 had entered into an arrangement pursuant to which the entire quantity of sugar including 5000 maunds which had been seized had come into possession of defendant No. 2. The other defendant also resisted the suit on various grounds. A number of issues were framed on the pleadings of the parties. We may only mention issue No. 6(a) which will be material for determination of the points which we have been called upon to decide "Was the sugar seized by the government in possession of the Bank as a pledgee at the time of the seizure and have the rights of the Bank as such pledgee been determined by the seizure in question?" The trial court held that the order of seizure in respect of the stock of sugar was valid. It was further held that the plaintiff's right as a pledgee could not be extinguished by seizure of the sugar in its possession and though the attachment order of the Certificate Officer was legal and binding on defendant No. 2 it was not binding on the Bank (plaintiff) and it could be effective only in respect of that portion of the price which was not necessary for the liquidation of the dues of the plaintiff from defendant No. 2. A decree was passed in favour of the plaintiff against defendant No. 1 only for Rs. 93,910-10-9 with interest at 6% per annum from the date of the suit till realisation. Defendant No. 1 (State of Bihar) filed an appeal to the High Court. The High Court was of the view that in the presence of the finding that the plaintiff had not been wrongfully deprived of the sugar on account of the lawful seizure or its price owing to the certificate proceedings started by the Cane Commissioner the plaintiff was not entitled to any decree against the State. But it was entitled to a decree against defendant No. 2 and the other defendants. Consequently a decree against defendant No. 1 was set aside and instead of decree was granted against the other defendants. Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 3 Now it is common ground that the plaintiff (which is the appellant before us) held the sugar which was seized from its custody as security for payment of the debts or advances made to defendant No. 2 in its cash credit account. There were arrears of certain cess due from defendant No. 2. As stated before, the Cane Commissioner took proceedings under the Public Demands Recovery Act and attached the price of the sugar which had been deposited by the appropriate authorities in the Government Treasury instead of being paid to the plaintiff. The Cane Commissioner indisputably did not have any right of priority over the other creditors of defendant No. 2 and, in particular, the secured creditors. Section 172 of the Contract Act defines a pledge to mean the bailment of goods as security for payment of debt or performance of a promise. The bailor is called the "pawnor" and the bailee is called the "pawnee". Section 173 of that Act provides that the pawnee may retain the goods pledged not only for the payment of the debt or performance of the promise but also for the interest of the debt etc. Section 176 is in the following terms : "If the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawner upon the debt or promise, and retain the goods pledged as a collateral security ; or he may sell the thing pledged, on giving the pawnor reasonable notice of the sale." If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor." Section 180 is to the effect that if a third person wrongfully deprives the bailee of the use of the possession of the goods bailed or does him any injury the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury. According to Section 181 whatever is obtained by way of relief or compensation in any such suit shall, as between the bailor and bailee. be dealt with according to their respective interests. Relying on the above two sections the High Court came to the conclusion that a pawnee has merely the possession of the goods coupled with a power to sell them on default by the pawnor but the latter retains the ownership subject to a lien to the extent of the debt enforceable by exercise of the power of sale. In the present case the sugar had been seized and then sold. The sale proceeds would have been available to defendants 2 to 5 subject to the claim of the plaintiff against them but it ceased to have any lien on the pledged property or the sale proceeds against any third party including the State as soon as it was legally deprived of the possession of the pledged goods. According to the Statement in Halsbury's Laws of England "Pawn" has been described as a security where by contract a deposit of goods is made a security for a debt and the right to the property vests in the pledgee so far as is necessary to secure the debt; in this sense it is intermediate between a simple lien and a mortgage which wholy passed the property in the thing conveyed(1). "The Pawnee hag a special property or special interest in the thing pledged, while the general property therein continues in the owner. That special property or interest exists so that the Pawnee can compel payment of the debt or can sell the goods when the right to do so arises. This special property or Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 4 interest is to be distinguished from the mere right of detention which the holder of a lien possesses, in that it is transferable in the sense that a Pawnee may assign or pledge his special property or interest in the goods (2) "where judgment has been obtained against the pawnor-of goods and execution has issued thereon, the sheriff cannotseize the goods pawned unless he satisfied the claim of the pawnee". (based mainly on Rogers v. Kennay(3). "On the bankruptcy of the pawnor the Pawnee is a secured creditor in the bankruptcy with respect to things pledged before the date of the receiving order and without notice of a prior available act of bankruptcy. (4) It has not been shown how the law in India is in any way different from the English law relating to the rights of the Pawnee vis-a-vis other unsecured creditors of the pawnor. In our judgment the High Court is in error in considering that the rights of the Pawnee who had parted with money in favour of the pawnor on the security of the goods can be defeated by the goods being lawfully seized by the Government and the money being made available to other creditors of the pawnor without the claim of the Pawnee being fully satisfied. The Pawnee has special property and a lien which is not of ordinary nature on the goods and so long as his claim is not satisfied no other creditor of the pawnor has any right to take away the goods or its price. After the goods had been seized by the Government it was bound to pay the amount due to the plaintiff and the balance could have been made available to satisfy the claim of other creditors of the pawner. But by a mere act of lawful seizure the Government could not deprive the plaintiff of the amount which was secured by the pledge of the goods to it. As the act of the Government resulted in deprivation of the amount to which the plaintiff was entitled it was bound to reimburse the plaintiff for such amount which the plaintiff in ordinary course would have realized by sale of the goods pledged with it on the pawnor making a default in payment of debt. The approach of the trial court was unexceptionable. The plaintiff's right as a Pawnee could not be extinguished by the seizure of the goods in its possession inasmuch as the pledge of the (1) 3rd Edn. Vol. 29 page 211. (2) Halsbury's Laws of England 3rd Ed. Vol. 29 p. 218-219. (3) [1846] 9 Q. B. 592. (4) Halsbury's Laws of England 3rd Ed. Vol. 29 p. 222. goods was not meant to replace the liability under the cash credit agreement. It was intended to give the plaintiff a primary right to sell the goods in satisfaction of the liability of the pawnor. The Cane Commissioner who was an unsecured creditor could not have any higher rights than the pawnor and was entitled only to the surplus money after satisfaction of the plaintiff's dues. Defendants 3 to 5 did not file any appeal against the judgment of the High Court. The decree passed by the High Court against them would, therefore, stand. In the view that we have taken the appeal is allowed, the judgment and decree of the High Court dismissing the suit against the State, of Bihar is hereby set aside and a decree is granted against the State of Bihar in the same terms as was granted by the trial court. The appellant will be entitled to costs throughout. G.C. Appeal allowed. Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 5 Bank Of Bihar vs State Of Bihar & Ors on 1 April, 1971 6 | {
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Madan Lal Puri vs Sain Das Berry on 27 July, 1971 Equivalent citations: 1973 AIR 585, 1971 SCR 935, AIR 1973 SUPREME COURT 585, 1971 2 SCC 269, 1971 RENCR 747, 1972 2 SCJ 535, 1971 2 SCC 509, 1971 SCWR 747 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, A.N. Ray, D.G. Palekar PETITIONER: MADAN LAL PURI Vs. RESPONDENT: SAIN DAS BERRY DATE OF JUDGMENT27/07/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. RAY, A.N. PALEKAR, D.G. CITATION: 1973 AIR 585 1971 SCR 935 1971 SCC (2) 535 CITATOR INFO : RF 1976 SC2229 (14) RF 1980 SC1253 (4) ACT: Delhi Rent Control Act, 1958, ss. 14(1)(e) and 39(2)- Jurisdiction of High Court. HEADNOTE: The respondent, who was the landlord of certain premises, filed an application under s. 14(1)(e) of the Delhi Rent Control Act, 1958, for the eviction of the appellant, who was the lessee, on the ground inter alia, that the respondent required the premises bonafide for his occupation as a residence for himself and his family members. The Rent Controller found that the requirement of the landlord was not bonafide and dismissed the application. The order was Madan Lal Puri vs Sain Das Berry on 27 July, 1971 1 confirmed in appeal by the Rent Control Tribunal. The respondent filed an appeal to the High Court under s. 39(2) of the Act. Before the High Court both parties agreed that the case should be remanded to the Tribunal for a finding on the question whether the premises available with the respondent could be considered to be 'reasonably suitable residential accommodation' as contemplated by s. 14(1)(e). On remand, the Tribunal reported that the premises in the occupation of the respondent were not reasonably sufficient for the respondent and his family. The appellant however contended before the High Court, ignoring this finding of the Tribunal that on the concurrent findings of the two sub- ordinate authorities that the landlord's requirement was not bonafide, there was no question of law involved and so the High Court had no jurisdiction under s. 39(2) to consider the correctness of those findings. The High Court rejected the contention and held, that, in view of the finding on remand the decision of the subordinate authorities dismissing the respondent's application was erroneous. In appeal to this Court, HELD:This Court in Kamla Soni v. Rup Lal Mehra, C.A. No. 2150 of 1966 dated 26-9-1969 held that a finding on the issue whether the requirement of a landlord is bonafide is a finding on mixed questions of law and fact and not on facts only. Therefore, it was open to the High Court, when exercising jurisdiction under s. 39(2), to consider in proper cases the correctness of such a finding. [939E-G] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 848 of 1971. Appeal by special leave from the judgment and order dated December 7, 1970 of the Delhi High Court in S.A.O. No. 110-D of 1966, Hardev Singh, K. P. Kapur and H. L. Kapur, for the appel- lant. S.K. Mehta, K. L. Mehta and K. R. Nagaraja, for the res- pondent. The Judgment of the Court was delivered by Vaidialingam, J.-In this appeal, Mr. Hardev Singh, learned counsel on behalf of the tenant-appellant, challenges the judgment and order dated December 7, 1970 of the Delhi High Court in S.A.O. No. 110-D of 1966. Special leave has been granted by this Court limited to the question whether the High Court was justified, in view of S. 39(2) of the Delhi Rent Control Act, 1958 (hereinafter called the Act) in setting aside the decisions of the two subordinate authorities, dismissing the application filed by the respondent-landlord for evicting the appellant. The facts leading up to this appeal may be briefly stated. The appellant took on lease, the first floor of the premises in question from the respondent on January 22, 1964 on a monthly rent of Rs. 250. The respondent who was the owner of the entire premises was then occupying the ground floor. The landlord filed an application, before the Rent Controller on November 26.1964 for eviction of the appellant from the portion in his occupation as lessee, on two Madan Lal Puri vs Sain Das Berry on 27 July, 1971 2 grounds; (a) that the tenant has sub-let a part of the premises, and (b) that he required the premises bona fide for his occupation as a residence himself and his family members. The latter claim was based under cl. (e) of the proviso to sub-section (1) of S. 14 of the Act, which is as follows:- "that the premises let for residential purposes are required bona fide by the landlord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accommodation;" The tenant opposed the claim of the landlord on both the grounds. He denied the allegation of sub-letting. He also contended that the landlord's requirement for his occupation was not bonafide. The tenant's plea was that the portion of the premises in his occupation was sufficient for his purpose. The Rent Controller accepted the plea of the tenant that there was no subletting. He also accepted his plea that the requirement of the landlord for his occupation was not bona fide. On these findings, the landlord's application was dismissed. These two findings were also confirmed in the appeal filed by the landlord before the Rent Control Tribunal. The question. regarding sub-letting, having been decided against the landlord by both the Tribunals, no longer survives and it was also not agitated before the High Court. It may be stated at this stage that the findings of both the tribunals on the question of bonafide requirement were recorded against the landlord, on the sole ground that the landlord must have foreseen his requirement for additional accommodation even at the time when he let out a part of the premises on January 22, 1964 to the appellant and therefore he was not entitled to ask for eviction under cl. (e) of the proviso to sub-section (1) of s. 14 of the Act. It is the view of both the Tribunals that when eviction is asked for within about I I months of the letting, the claim of the landlord cannot be considered to be bonafide. The landlord carried the matter in appeal before the High Court under s. 39 of the Act. That section runs as follows :- "39(1) Subject to the provisions of sub- section (2), an appeal shall lie to the High Court from an order made by the Tribunal within sixty days from the date of such order ; Provided that the High Court may entertain the appeal after the expiry of the said period of sixty days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. (2)No appeal shall lie under sub-section (1), unless the appeal involves some substantial question of law. Before the High Court, counsel for both parties made a representation that the Rent Control Tribunal has not recorded a finding on the question whether the premises avaiable with the landlord can be considered to be "reasonably suitable residential accommodation" as contemplated by cl. Madan Lal Puri vs Sain Das Berry on 27 July, 1971 3 (e) of the proviso to s. 14 (1). Hence they made a joint request to remand the case to the Tribunal for a finding on the said question on the basis of the evidence already on record. Accepting this joint request, the learned Judge remanded the case to the Tribunal. The latter, after a consideration of the materials on record as well as the extent of the premises in the occupation of the landlord and also having due regard to the number of family members living with the latter, held, in his report dated May 4, 1970, that the portion of the premises in the occupation of the landlord was not reaso- nably sufficient for a family consisting of the landlord, his wife, his son, son's wife and their children. On this basis, he recorded a finding that the premises in the occupation of the respondent were not reasonably suitable for his residence. So far as we could see, the correctness of these findings recorded by the Rent Control Tribunal, in favour of the landlord, do not appear to have been challenged by the tenant before the High Court when the appeal came up for final hearing. On the other band, we find that the same contentions that were raised regarding the bonafide requirement of the landlord and which found acceptance at the hands of the Rent Controller and the Tribunal before remand were again raised by the tenant-appellant before the High Court. That is, in short, the appellant herein was contesting before the High Court, the appeal of the landlord, ignoring the findings of the Tribunal dated May 4, 1970. The main point that was urged by the appellant before the High Court was that as the two subordinate Tribunals have recorded concurrent findings negativing the claim of the landlord regarding his bonafide requirement of the premises, the appeal filed by the landlord did not involve any substantial question of law. On this basis the appellant pressed for the dismissal of the landlord's appeal. On the other hand, the respondent urged that both the subordinate Tribunals have not properly considered the question of the landlord's requirement; and that the findings recorded against him were on irrelevant consideration. According to the landlord the various material factors which have to be taken into account for adjudicating upon such a claim, have not been properly borne in mind by both the Tribunals. Quite naturally the landlord placed considerable reliance on the findings recorded on May 4, 1970 in his favour by the Tribunal. The High Court rejected the contention of the appellant that it has no jurisdiction to consider the correctness of the findings. recorded by the two subordinate authorities especially when the relevant matters to be taken into account for deciding such a question have not been borne in mind by those authorities. The High Court is of the view that the rejection by the Rent Controller and the Tribunal of the claim of the landlord on the sole ground that he should have anticipated his requirement for the, next 10 or II months when he let out the premises on lease on January 22, 1964, was erroneous. The High Court has further observed that none of the subordinate authorities have held that after letting out the premises on January 22, 1964 and before filing the application for eviction on November 26, 1964, the landlord has made any demand from the tenant for payment of higher rent. Finally, the High Court having due regard to the above circumstances and the size of the family of the landlord and the findings recorded by the Tribunal on May 4, 1970 held that the, decision of the two subordinate authorities dismissing the landlord's application was erroneous. On the other hand, the learned Judge held that the landlord has made out his claim under cl. (e) of the proviso to S. 14(1) of the Act. On this reasoning the learned Judge reversed the decision of the Rent Controller and the Tribunal and allowed the application of the landlord for eviction of the appellant. The appellant was given six months' time for vacating the premises. Madan Lal Puri vs Sain Das Berry on 27 July, 1971 4 Mr. Hardev Singh, learned counsel for the appellant, has very strenously urged that in view of the concurrent findings" recorded by the two subordinate tribunals, there was no question of law, much less a substantial question of law arising for consideration before the High Court in the appeal filed by the landlord. Hence he urged that the interference by the High Court with the concurrent findings so recorded was not justified. Learned counsel further pointed out that the landlord has not made out his claim under cl. (e) of the proviso to s. 14(1) of the Act. Mr. Hardev Singh referred us to certain decisions of this Court dealing with the question, under what circumstances it can be con- sidered that a substantial question of law arises. We do not think it necessary, in the circumstances of this case, to refer to those decisions, as in our opinion they have no bearing on the short question that arises for consideration before us, namely, the power of the High Court under s. 39, to consider the correctness of a finding regarding bonafide requirement under cl. (e) of the proviso to s. 14(1) of the Act. As we have already pointed out, the sole question that has to be decided by us is whether the High Court in reversing the decisions of the Rent Controller and the Tribunal, in the circumstances of this case, can be considered to have exceeded its jurisdiction under s. 39(2). We are satisfied that the High Court has not exceeded its jurisdiction in any manner. The argument of Mr. Hardev Singh that the High Court has exceeded its jurisdiction under s. 39(2) of the Act when it reversed the finding of the two subordinate authorities on the question of bonafide requirement has, in our opinion, no substance. In Smt. Kamla Soni v. Rup Lal Mehra(1), this Court observed as follows: "...... Whether on the facts proved the requirement of the landlord is bona fide, within the meaning of s. 14(1)(e) is a finding on a mixed question of law and fact........ From the above observations it is clear that an inference drawn by the subordinate authorities that the requirement of the respondent was not bonafide, could not be regarded as conclusive. The High Court, in proper cases, has ample jurisdiction to interfere with that finding and record its own conclusions on the basis of the materials on record. We may also point out that in the case before us the position is made worse for the appellant in view of the finding recorded by the Tribunal in favour of the landlord on May 4, 1970. We have already pointed out the circumstances under which a finding was called for by the High, Court. The High Court has accepted those findings and held in favour of the landlord that he has (1) C. A. No. 2150 of 1966 decided on 26-9-1969. made out a case under cl. (e) of the proviso to S. 14(1) of the Act. Mr. Hardev Singh referred us to the decision of this Court reported in Bhagwan Dass and another v. S. Rajdev Singh and another(1), wherein it has been observed : Madan Lal Puri vs Sain Das Berry on 27 July, 1971 5 "A second appeal lies to the High Court against the decision of the Rent Control Tribunal under Section 39(2) of the Delhi Rent Control Act, 1958, only if the appeal involves some substantial question of law. The Rent Controller and the Rent Control Tribunal, on a consideration of the relevant terms of the agreement and oral evidence and the circumstances found that a clear case of sub- letting was established. On that finding no question of law, much less a substantial question of law, arose." The first part of the above extract lays down the nature of the jurisdiction exercised by the High Court under s. 39(2) of the Act. In that decision, on facts, it was found both by the Rent Controller and the Tribunal, on a relevant consideration of the materials on record, that a case of sub-letting was established. On such a finding concurrently arrived at by both the authorities, it was held by this Court that no question of law, much less a substantial question of law arose for consideration before the High Court. But the facts in the case before us are entirely different. We have already pointed out that the question that fell to be considered by the High Court was whether the claim made by the landlord under cl. (e) of the proviso to s. 14(1) of the Act was bonafide. As already pointed out, this Court, in Smt. Kamla Soni v. Rup Lal Mehra(1), has held that a finding on such an issue is not one of fact alone but is a finding of mixed question of law and fact, and that it was open to the High Court when exercising its jurisdiction under s. 39(2) of the Act, to consider the correctness or otherwise of such, a finding. The findings recorded on such an issue by the subordinate tribunals are not conclusive. From the above discussion, it follows that the High Court has not exceeded its jurisdiction under s. 39(2) of the Act. In consequence, the appeal fails and is dismissed. In the circumstances of the case, parties will bear their own costs. V.P.S. Appeal dismissed. (1) A. I. R. 1970 S. C. 986. (2) C. A. No 2150 of 1966 decided on 26-9-1969. 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Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971 Equivalent citations: 1971 AIR 1361, 1971 SCR 521, AIR 1971 SUPREME COURT 1361, 1971 TAX. L. R. 747 Author: G.K. Mitter Bench: G.K. Mitter, S.M. Sikri, C.A. Vaidyialingam, P. Jaganmohan Reddy, I.D. Dua PETITIONER: COMMISSIONER OF INCOME-TAX, MYSORE, BANGALORE Vs. RESPONDENT: THE MYSORE ELECTRICAL INDUSTRIES LTD. DATE OF JUDGMENT27/04/1971 BENCH: MITTER, G.K. BENCH: MITTER, G.K. SIKRI, S.M. (CJ) VAIDYIALINGAM, C.A. REDDY, P. JAGANMOHAN DUA, I.D. CITATION: 1971 AIR 1361 1971 SCR 521 CITATOR INFO : RF 1981 SC2105 (42,43) ACT: Companies (Profits) Surtax Act, 1964-Second Schedule, r. 1- Sums appropriated by towards reserves not on the first day of the year but later Should be treated as effective from the earlier date since division of undistributed profits became effective from that day. HEADNOTE: On the question whether three several sums appropriated by the Directors of the respondent-company towards reserves on the 8th August, 1963 out of the profits of the year ending Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971 1 31st March, 1963, should be added to other items for computation of the capital of the respondent as on the 1st day of April, 1963 in terms of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964, HELD: The fact that the directors were unable to appropriate the SUMS to reserves of different kinds cannot make any difference to the nature or quality of the appropriation of the profits to reserves as determined by the directors after 1st April, 1963. Their determination to appropriate the sums mentioned to the three separate classes of reserves on the 8th of August, 1963 must be related to the 1st of April, 1963 i.e. the beginning of the accounts for the new year and must be treated as effective from that day. [524D] Commissioner of Income-tax, Delhi v. Aryodya Ginning & Manufacturing Co. Ltd., 31 I.T.R. 145 and Commissioner of Income-tax v. Vasantha Mills Ltd., 32 I.T.R. 237, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1794 of 1970. Appeal from the judgment and order dated October 28, 1969 of the Mysore High Court in Tax Referred Case No. 12 of 1967. Jagdish Swarup, Solicitor-General, A. N. Kirpal and B. D. Sharma, for the appellant. M. K. Ramamurthi, J. Ramamurthy and Vineet Kumar, for the respondent. S. Swaminathan and R. Gopalakrishnan, for the intervener. The Judgment of the Court was delivered by Miter, J.-The question involved in this appeal is, whether three several sums appropriated by the Directors of the respondent towards reserves on the 8th August 1963 Gut of the profits of the year ending 31st March, 1963 should be added to other items for computation of the capital of the respondent as on the 1st day of April, 1963 in terms of rule 1 of the Second Schedule to the Companies (Profits) Surtax Act, 1964 hereinafter referred to as the 'Act'. The Act which received the assent of the President on 2nd May, 1964 is an Act to impose a special tax on the profits of certain companies. Under section 4 of the Act a tax known as surtax become chargeable on every company for every assessment year commencing on and from the 1st day of April 1964 in respect of so much of its chargeable profits of the previous year as exceeded the statutory deduction, at the rates specified in the Third Schedule. Under S. 2(3) "assessment year" means the period of twelve months commencing on the 1st day of April of every year. "Chargeable profits" is defined in S. 2(5) as the total income of an assessee computed under the Income-tax Act, 1961 for any previous year or years, as the case may be, and adjusted in accordance with the provisions of the First Schedule. "Statutory deductions", ignoring the provisos, means in terms of S. 2(8) an amount equal to 10 per cent of the capital of the company as computed in accordance with the provisions Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971 2 of the Second Schedule or an amount of Rs. 2,00,000/- whichever is greater. The Second Schedule to the Act contains the rules for computing the capital of a company for the purposes of surtax. Rule 1 of the Second' Schedule with which alone we are concerned in this section reads: "Subject to the other provisions contained in this Schedule, the capital of a company shall be the aggregate of the amounts, as on the first day of the previous year relevant to the assessment year, of- (i) its paid-up share capital; (ii) its reserves, if any created under the proviso (b) to clause (vi-b) of sub- section (2) of section 10 of the Indian Income-tax Act, 1922 (XI of 1922), or under subsection (3) of section 34 of the Income-tax Act, 1961 (LXIII of 1961); (iii) its other reserves as reduced by the amounts credited to such reserves as have been allowed as a deduction in computing the income of the company for the purposes of the Indian income-tax Act, 1922 ( XI of 1922), or the Income-tax Act, 1961 (XLIII of 1961); (iv) its debentures, if any; and (v) any moneys borrowed by it from Government or the Industrial Finance Corporation of India or the Industrial Credit and Finance Corporation of India or any other financial institution which the Central Government may notify in this behalf in the Official Gazette or any banking institution (not being a financial institution notified as aforesaid) or any person in a country outside India : Provided that such moneys are borrowed for the creation of a capital asset in India and the agreement under which such moneys are borrowed provides for the repayment thereof during a period of not less than seven years. Explanation.-For the removal of doubts it is hereby declared that any amount standing to the credit of any account in the books of a company as on the first day of the previous year relevant to the assessment year which is of the nature of item (5) or item (6) or item (7) under the heading "RESERVES AND SURPLUS" or of any item under the heading "CURRENT LIABILITIES AND PROVISIONS" in the column relating to "Liabilities" in the "Form of Balance-sheet" given in Part I of Schedule VI to the Companies Act, 1956 (1 of 1956), shall not be regarded as a reserve for the purposes of computation of the capital of a company under the provisions of this Schedule." In terms of s. 4 of the Act the first assessment year for the purpose of the Act in respect of the company was that commencing on and from the first day of April, 1964. The previous year in respect Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971 3 of which the chargeable profits had to be ascertained commenced on the first of April 1963 and ended on the 31 st March, 1964. The capital of. the company in terms of rule 1 of the Second Schedule would be its paid- up share capital and inter alia reserves as would come under clauses (ii) and (iii) of rule 1 to the Second Schedule. The reserves in this case to which exception is being taken by the appellant as components of the capital of the company are the following three sums: (1) Rs. 2,56,000 as plant modernisation and rehabilitation reserve; (2) Rs. 1,00,000 as loan redemption reserve, and (3) Rs. 89,557/- as development rebate reserve. These are three of the items of reserve which the directors of the respondent in their report to the general body of the shareholders proposed as appropriations out of the profits of the year ending on 31st March, 1963. The sole contention on behalf of the appellant is that these appropriations having been made on the 8th August, 1963 could not be treated as components of capital "as on the first day of the previous year" i.e. 1-4-1963, in terms of rule 1 to the Second Schedule. The learned Solicitor-General submitted that these could only be taken into consideration in the subsequent year commencing on the 1st of April 1964 on the ground that on the 1st of April 1963 they only formed a part of the mass of undistributed profits, no portion of which had been earmarked or set apart for any particular purpose. In our view, this is not the correct way of appreciation of the action of the directors. It is well known that the accounts of the company have to be made up for a year up to a particular day. In this case that day was the 31st March, 1963. If it was reasonably practicable to make up the accounts up to the 31st March 1963 and present the same to the directors of the respondent on April 1, 1963 they could have made up their minds on that day and declared their intention of appropriating the said and other sums to reserves of different kinds. But the fact that they could not do so for the simple reason that the calculation and collection of figures of all the items of income, expenditure of the company for the year ending March 31, 1963 was bound to take some time cannot make any difference to the nature or quality of the appropriation of the profits to reserves as determined by the directors after the first of April, 1963. Their determination to appropriate the sums mentioned to the three separate classes of reserves on the 8th August 1963 must be related to the 1st of April 1963 i.e. the beginning of the accounts for the new year and must be treated as effective from that day. A case very similar to the one before us came up for consi- deration before the Bombay High Court in Commissioner of In- come-tax, Delhi v. Aryodya Ginning & Manufacturing Co. Ltd. (1) In that case the profits of the company for the year ended 31st December 1948 were shown as Rs. 28,56,997-14-2. The directors made certain appropriations which included Rs. 11,08,000 to reserve fund and Rs. 1,50,000 to dividend reserve fund. The report of the directors was made on April 27, 1949 and a general meeting of the shareholders held on 27th June 1949 adopted the report and recommendation of the directors. The company was assessed to business profits tax chargeable under the Business Profits Tax Act for the accounting period 1st January to 31st March 1949 and the question which arose was: what was the capital of the com- pany for the accounting period. The company contended that its paid-up capital should be increased by the amount of reserves constituted by the recommendation made by the directors and accepted by the share-holders. The Commissioner of Income-tax went up to the High Court on a reference contending that as the reserve was not sanctioned till 27th June 1949 it could not be looked (1) 31 I.T.R. 145. Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971 4 at or considered as reserves on a day prior thereto. The learned Judges of the Bombay High Court were of the view that the resolution of 27th June, 1949 had a retrospective effect inasmuch as it referred to the profits of the year ending on 31st December, 1948, the appropriations to be made in the balance-sheet as of that date and the reserves which should be constituted and shown in the balance sheet as on 31st December 1948. The High Court observed that when one looked at the balance sheet of the year ended 31st December 1948 the amounts mentioned were shown respectively in the reserve fund and the dividend reserve fund and the shareholders by passing a resolution on 27th June, 1949 did not decide that these amounts should constitute reserves as from that date but they accepted the recommendation of the directors that these amounts should constitute reserves as of 31st December, 1948. The learned Solicitor-General referred to a judgment of the Madras High Court in Commissioner of Income-tax v. Vasantha Mills Ltd. (1) where the Madras High Court dissented from the view expressed by the Bombay High Court on the ground that there could be no reserve until there was allocation in fact by a person having the requisite authority to order that allocation. In our view, although such allocation was factually not possible on the very first day of a year but allocation on a later day should be treated as effective from that day in view of the fact that the division of undistributed profits became effective from that day. In this view of the matter, we are of opinion that the High Court had come to the correct conclusion and the appeal should be dismissed. The appellant will pay the costs of the respondent. K.B.N. Appeal dismissed. (1) 32 I.T.R. 237. Commissioner Of Income-Tax, Mysore, ... vs The Mysore Electrical Industries Ltd on 27 April, 1971 5 | {
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Commissioner Of Income Tax, Assam ... vs Shri G. Hyatt on 21 January, 1971 Equivalent citations: 1971 AIR 725, 1971 SCR (3) 438, AIR 1971 SUPREME COURT 725, 1971 TAX. L. R. 193 Author: K.S. Hegde Bench: K.S. Hegde, J.C. Shah, A.N. Grover PETITIONER: COMMISSIONER OF INCOME TAX, ASSAM ANDNAGALAND ETC. Vs. RESPONDENT: SHRI G. HYATT DATE OF JUDGMENT21/01/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. SHAH, J.C. (CJ) GROVER, A.N. CITATION: 1971 AIR 725 1971 SCR (3) 438 1971 SCC (1) 466 CITATOR INFO : R 1972 SC 149 (227) ACT: Income-tax Act 1961, ss. 17 and 560-Contribution to unrecognised provident fund-Interest thereon-Whether taxable under s. 56. HEADNOTE: On the question whether an amount representing the interest on the amount of the assessee's own contributions to an unrecognised provident fund was assessable under the residuary s. 56 of the Income-tax Act, 1961, HELD : The amount was liable to be assessed. The receipt of an interest of any investment is a gain made by the investor and therefore the same is 'income'. Commissioner Of Income Tax, Assam ... vs Shri G. Hyatt on 21 January, 1971 1 In view of s. 17 ( 1) (iv), all receipts of profits in lieu of salary have to be considered as salary. In defining the expression 'profits in lieu of salary', the legislature excluded from the scope of that expression any payments received by the assessee from a provident fund, his own con- tribution,; to the fund or any interest on such contributions. Therefore this receipt cannot be considered as salary, though undoubtedly that is an income. As the income in question is not salary and the same cannot be said to be either interest on the securities; income from house property, profits and gains of business of profession or capital gains, it has to be considered as 'income from other sources' and brought to tax under s. 56 . Section 56(1) provides that income of every kind which is not to be ex- cluded from the total income under the Act shall be chargeable to Incometax under any of the heads specified in s.; 14 item "A" to "E". [43 9 C-G] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1174 of 1967. Appeal from the judgment and order dated August 22, 1966 of the Assam & Nagaland High Court in income-tax Reference No. 3 of 1966. Jagadish Swarup, Solicitor-General, G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the appellant. T. A. Ramachandran, for the respondent. The Judgment of the Court was delivered by Hegde, J. The Commissioner of Income-tax, Assam and Nagaland has brought these appeal by certificate. The assessment with which we are concerned in this appeal is for the assessment year 1963-64, the relevant accounting year is the financial year 1962-63. The assessee was the manager of a Tea Estate under the managing agency of M/s. Gillanders Arbuthnot & Co. Ltd. The said Co. had a Provident Fund scheme for its employees. But that provident fund was not a recognised one. The assessee retired during the previous year relevant to assessment year 1963-64 and received out of this provident fund an amount of Rs. 27,948/- which represented the interest on the amount of his own contribution to the fund. The Income-tax Officer assessed this amount as the assessee's income from other sources. That order was confirmed in appeal by the Appellate Assistant Commissioner. But on further appeal to the tribunal 'by the assessee, the tribunal came to the conclusion that the receipt in question being profits 'in lieu of salary', the same was his salary as defined in s. 17 of the Income-tax Act, 1961 (to be hereinafter referred to as the Act); the same having not been assessed as his salary, the assessment order relating to that item of receipt was not legal. At the instance of the-Commissioner, the tribunal referred the following question of law to the High Court of Assam and Nagaland for its opinion: "Whether on the facts and circumstances of the case and having regard to the provisions of section 17 (3) (ii) of the Income-tax Act, 1961 the amount Rs. 27,948/- representing the interest on the amount of the assessee's own contributions to an Commissioner Of Income Tax, Assam ... vs Shri G. Hyatt on 21 January, 1971 2 unrecognised provident fund was assessable under the residuary section 56 of the said Act?" The High Court answered that question in the negative and in favour of the assessee. While it came to the conclusion that the, receipt in question cannot be considered as salary as defined in s. 17, in its view the same was exempt from payment of tax in view of s. 17(3) (ii). The Commissioner is challenging the above conclusion. The receipt of Rs. 27,948/- is undoubtedly an income as defined by s. 2(24). The receipt of an interest on any investment is a gain made by the investor and therefore the same is "income". The next question is whether the said income is exempt from tax or if it is not exempt under what head the same has to be brought to tax? Section 14 of the Act gives the heads of income. They are (A) Salaries; (B) Interest on securities; (C) Income from house property; (D) Profits and gains of business or profession; (E) Capital gains and (F) Income from other sources. The salaries are 'brought to tax under s. 15 and "the income from other sources" is brought to tax under s. 56. In this appeal we are not concerned with the other heads of income The salary is defined in s. 17 as including any "profits in lieu of or in addition to any salary or wages" [s. 17(1)(iv)]. Subsection (3) of s. 17 says : profits in lieu of salary" includes.- (ii) any payment........ due to or received by an assessee from an employer or a former employer or from a provident or other fund (not being an approved superannuation fund) to the extent to which it does not consist of contribution by the assessee or interest on such contributions." The contributions to recognised provident funds are dealt with by other provisions of the Act. Herein we are concerned with the contribution to an unrecognised provident fund. The learned judges of the High Court opined that the receipt by the assessee with which we are concerned is exempt from the payment of tax in view of s. 17 (3) (ii). In our opinion they were clearly in error in arriving at that conclusion. Deductions from salaries are dealt with by s. 16. In view of s. 17 ( I ) (iv), all receipts of profits in lieu of salary have to be considered as salary. But then the question is what is meant by "profits in lieu of salary". In defining the expression "Profits in lieu of salary", the legislature excluded from the scope of that expression any payments received by the assessee from a provident fund, his own contributions to the fund or any interest on such contributions. From that it follows that the receipt of Rs. 27,948/- by the assessee in the relevant accounting year cannot be considered as salary though undoubtedly that is an income. Section 17 has nothing to do either with deductions or with exemptions. It is merely a provision defining the expression "salary". As the income in question is not salary and the same cannot be said to be either interest on the securities; income from house pro- perty; profits and gains of business or profession or capital gains. it has to be considered as "income from other sources" and brought to tax under s. 56. Section 56 (I) provides Commissioner Of Income Tax, Assam ... vs Shri G. Hyatt on 21 January, 1971 3 that income of every kind which is not to be excluded from the total income under the Act shall be chargeable to income-tax under the head income "from other sources" if it is not chargeable to income-tax under any of the heads specified in S. 1.4 items 'A' to 'E'. In our opinion the meaning of s. 17(3) (ii) is plain and unambiguous. Hence there is no need to call into aid any of the rules of construction as was sought to be done by the High Court. The respondent was not represented before this Court. We are obliged to Mr. T. A. Ramachandran for acceding to our request to appear on his behalf an amicus curiae and assist us at the time of hearing of the appeal. For the reasons mentioned above we allow this appeal, dis- charge the answer given by the High Court and answer the question referred to the High Court in the affirmative and in- favour of the Department. Under the circumstances of the case we make no order as to costs. Y.P. Appeal allowed.. Commissioner Of Income Tax, Assam ... vs Shri G. Hyatt on 21 January, 1971 4 | {
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Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 Equivalent citations: AIR 1971 SUPREME COURT 733 Bench: G.K. Mitter, K.S. Hegde, A.N. Grover, A.N. Ray CASE NO.: Writ Petition (civil) 159-163 of 1969 PETITIONER: TRILOCHAN MISHRA ETC. RESPONDENT: STATE OF ORISSA & ORS. DATE OF JUDGMENT: 21/01/1971 BENCH: J.C. SHAH (CJ) & G.K. MITTER & K.S. HEGDE & A.N. GROVER & A.N. RAY JUDGMENT: JUDGMENT 1971 AIR (SC) 733 = 1971 (3) SCC 153 The Judgment was delivered by MITTER, J. : MITTER, J. for the The petitioners in all these petitions under Article 32 of the Constitution pray for a declaration that Sections 3(2)(a), Section 8(1) and Rule 5-B(6), (7), (8), (9) and (16) and Rule 6(3) and Rule 7(1) of the Orissa Kendu Leaves (Control of Trade) Act, 1961, as amended and the rules framed thereunder are violative of the fundamental rights of the petitioners guaranteed under Articles 14, 15 and 19(1) of the Constitution, for a declaration that the "revised policy" as enjoined by the said Orissa Kendu Leaves (Control of Trade) Amendment Act, 1969 and rules framed is arbitrary, discriminatory and mala fide and for a writ or direction in the nature of a mandamus quashing the appointment of Respondents 2 to 108 as purchasers. 2. To appreciate the grievances of the petitioners it is necessary to note in brief how the trade in Kendu leaves has been taken over by the State of Orissa by successive legislation and two decisions of this Court bearing thereupon. Kendu leaves appear to have formed a lucrative source of revenue for the State of Orissa for many years past. After the merger of the Indian States with the Province of Orissa the Government of Orissa passed an order in exercise of the powers under Section 3(1) of the Orissa Essential Articles Control and Requisitioning (Temporary Powers) Act, 1947 by which the Kendu leaves growing areas in the State were divided into units and licences were issued to persons entitled to trade in such leaves. The District Magistrate fixed the minimum rates from time to time and the Order provided that the licensees were bound to purchase Kendu leaves from the pluckers Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 1 or owners of private trees and forests at rates not below the minimum prescribed. The licensees were however not fettered in the matter of the sales of the leaves after purchase. This was followed by the Orissa Kendu Leaves Control Order, 1960, which effected some changes in the scheme previously adopted. In 1961 Orissa Kendu Leaves (Control of Trade) Act was passed with the object of creating a State monopoly in the trade of these leaves. Section 3(1) of that Act provided that no person other than the Government, an officer of Goverment authorised in that behalf or an agent in respect of the unit in which the leaves are grown shall purchase or transport Kendu leaves. Sub-section (2) provided for transport of leaves from one place to another within the unit wherein such leaves have grown to any other place in that unit. By sub-section (3) any person desiring to sell Kendu leaves was at liberty to sell them to the aforesaid Government officer or agent at any depot situated within the said unit. Under Section 4 the Government was to fix the price at which the leaves were to be purchased by them or by any Officer or agent from the growers after consultation with the Advisory Committee. Section 5 enabled the Government to divide each district into such number of units as they thought fit. Under Section 7 the Government or their authorised officer or agent were bound to purchase at the price fixed under Section 4 the leaves which were offered to them for sale at the depots. Under Section 3(1) Government was authorised to appoint agents on their behalf in respect of different units for the purpose of purchase of and trade in Kendu leaves in respect of different units and any such agent might be appointed in respect of more than one unit. Under Section 10 Kendu leaves purchased by Government or their officers or agents under the Act were to be sold or otherwise disposed of in such manner as the Government might direct. 3. The whole Act and the notification thereunder were challenged in this Court, particularly Sections 3 and 4, on the ground that they were in conflict with Articles 19(1)(f) and (g) and 19(6) of the Constitution in Akadasi Pradhan v. State of Orissa. (1963 (2) SCR Supp 691 SC 1047 : 1964 (2) SCR 37.) It was held therein by this Court that the Act was a valid piece of legislation although it created a State monopoly. The validity of Section 3 was upheld as the persons specified in sub-clauses (b) and (c) were intended to work as agents of the Government and all their actions and dealings in pursuance of the provisions of the Act were to be actions and dealings on behalf of the Government and for the benefit of the Government. The validity of Section 4 was also upheld but Rule 7(5) promulgated under the Act was held to be bad because it left in to the sweet will and pleasure of the officer concerned to fix any terms and conditions regarding agents on an ad hoc basis on the ground that the agency permitted under Article 19(6)(ii) of the Constitution had to be an agency in the strict and narrow sense of the term and could only include agents who could be said to carry on the monopoly at every stage on behalf of the State for its benefit and not for their own benefit at all. 4. In effect this Court upheld the creation of a State monopoly and the employment of agents for carrying on the monopoly business by the State but Rule 7(5) was held to be invalid for the reasons indicated. According to the petitioner after the judgment of this Court the form of the agreement for agents known as the 'G' form was introduced under the rules and two sets of persons were employed to carry on the business of the State monopoly, one set known as the 'agents' and the other 'purchasers'. The agents were to purchase and collect Kendu leaves on behalf of the Government and the purchasers were to purchase from the Government, the rates of purchase and the price of sale being fixed by the authorities. On this basis auctions of Kendu leaves were held for the years 1966 and 1967. Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 2 5. It appears that early in 1968 letters were addressed to certain traders by the authorities intimating them that it had been decided by the Government of Orissa to renew leases of Kendu leaves held by them for the year 1968 if they accepted the terms set out therein. Under this scheme the Government offered to those licensees who in their view had worked satisfactorily in the previous year and had paid the amounts due from them regularly to continue their licences with the added provision that the agents with whom they had been working in 1967 would also work during 1968. A petition was moved before the Orissa High Court challenging this action of the Government in January 1968. Government withdrew the offers to renew the previous licences and informed the licensees that it had been decided to invite offers for advances purchase from persons who had purchased Kendu leaves from individual units during the year 1967 and had not committed default in payment of the dues. Other writ petitions were filed challenging the legality of the new method adopted by the State Government of offering to enter into agreements for advance purchase of Kendu leaves by private offers in preference to open competition. It was urged on behalf of the petitioners that by entering into agreements of advance purchase contracts for Kendu leaves by private negotiation the State Government sought to support their party interests in preference to public benefit envisaged by a proper scheme of State monopoly. In appeal from the orders of the High Court (Rashbehari Panda v. State of Orissa ( 1969 (3) SCR 74 : 1969 (1) SCC 414.) this Court held the State monopoly could only be administered for the benefit of the general public and any arrangement used as a cloak for conferring private benefit upon a limited class of persons by carrying on business on their own behalf was invalid. The Court also observed : "... in so far as the right to make tenders for the purchase of Kendu leaves was restricted to those persons who had obtained contracts in the previous year the scheme was open to the same objection. The right to make offers being open to a limited clsdd of persons it effectively shut out all other persons carrying on trade in Kendu leaves and also new entrants into that business. It was ex facie discriminatory and imposed unreasonable restrictions upon the right of persons other than existing contractors to carry on business." The Court found that no explanation had been attempted on behalf of the State as to why an offer made by well-known manufacturer of Bidis interested in the trade to purchase the entire crop of Kendu leaves for the year 1968 for three crores of rupees was turned down. The plea put forward on behalf of the Government that its action was bona fide was held not to be an effective answer to a claim made by a citizen that his fundamental rights were infringed, by the action of the Government. It however appeared to this Court that during the pendency of the proceedings the entire year for which the contracts were given had expired and the persons to whom the contracts were given were not before the Court. In these circumstances counsel for the appellants agreed that "it would be sufficient if it was directed that the tenders for purchase of Kendu leaves be invited by the Government in the next season from all persons interested in that trade" . Acting upon this suggestion the Court directed that the State Government would act in the interest of the general public and not of any class of traders so that in the next season the State might get the entire benefit of the monopoly in the trade in Kendu Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 3 leaves and no disproportionate share thereof might be diverted to any private agency. 6. The petitioners' case in this series of petitions is as follows. They claim to be growers of Kendu leaves (which form the wrapper of tobacco smoked as Bidi) in certain districts of the State of Orissa. They also claim to be traders and businessmen by vocation dealing primarily in such leaves. The petitioner in Petition No. 159 of 1969 claims to be a purchaser since 1965 for unit No. 60 in Bolangir Division and claims to have been working as such till the year 1968. He participated in the tender for appointment of purchasers for 1962 and had furnished solvency certificate worth Rs. 75, 000/- had deposited earnest money and complied with all the terms and conditions required under the provisions of the Act and the rules for making a valid tender. His complaint is that although his tender was the highest, i.e., Rs. 213-50 per quintal, it was settled in favour of one A. K. Guha, a respondent, at the rate of Rs. 200/- only per quintal, a rate below that offered by the petitioner. His main grievance is that he was refused the appointment as purchaser as he was neither willing nor able to pay contribution at Rs. 10/- per bag which amounted approximately to Rs. 15, 000/- for his area to the political fund of the Swatantra Party which happened to be at the relevant time the major partner in the Coalition Cabinet of Orissa. His case is that a suggestion was made to him for such contribution by a member of the Legislative Assembly of the Swatantra Party, Radha Mohan Mishra and also by Murari Prasad Mishra, Minister for Forest belonging to the same party and he was given to understand that his tender would not be considered if he was not prepared to make the payment. According to the petitioner the Government of Orissa tried to wriggle out of the findings of this Court in Rashbehari Panda's case (supra) by subterfuges in order to implement their policy of conferring the benefit of the trade on a chosen few for political and selfish financial ends of the party in power. It was alleged that as a preliminary to this they amended the Act and the rules framed thereunder. The main attack in the petition is directed against the addition of a provision to Section 3(2) by which a registered grower might be permitted to transport his leaves from any place within the unit wherein such leaves were grown to any other place outside the unit for the purpose of sale to the Government or any agent in respect of the unit for the authorised to purchase the same from him. Complaint was also made about the amendment of Section 8(1) relating to the appointment of agents by the addition of the proviso : "that the Government may for the purpose of purchase of leaves from the registered growers, appoint an additional agent in respect of one or more units" . Challenge was also made to several clauses in Rule 5-B which provide for disposal of Kendu leaves. These clauses are (6), (7), (8), (9) and (16) which run thus : Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 4 "(6) At the time of opening of the tenders, the tenderers shall produce a certificate of solvency for at least one-fourth of the total annual purchase price according to the rate quoted by him, granted by a Revenue Officer not below the rank of a Sub-divisional Officer if the tenderer has landed property at a place, wherein the Orissa Public Demand Recovery Act, 1962, is in force or a Bank guarantee for an equal amount. (7) Government may accept or reject all or any of the tenders so received for any unit without assigning any reason therefor. The earnest money deposit shall, in case of an unsuccessful tenderer be refunded to him and in case of a successful tenderer, it shall, subject to the provisions of sub-rule (11), be adjusted towards payment of security deposit required by sub-rule (12) : Provided that in rejecting a tender Government shall take into consideration the following among other grounds : 1. Inadequacy of price offered, 2. Speculative offers, 3. Past conduct of parties in the trade, 4. Transport facilities at the command of the offerer, 5. Solvency of the offerer, 6. Experience in the trade. (8) If the tenders received for a unit are not considered acceptable, the Government may select as purchaser or purchasers for such unit or units any person or party of persons or parties on such terms and conditions as may be mutually agreed and such unit or units. All the rules applicable to a successful tenderer shall apply mutatis mutandis to persons or parties selected as purchasers under his sub-rule.(9) Notwithstanding anything contained in the foregoing provisions Government may sell or otherwise dispose of Kendu leaves collected by purchase or otherwise by Government or by their officers or agents in such manner as Government may deem proper. X X X (16) Notwithstanding anything contained in the foregoing provisions, the purchaser who is selected to purchase the Kendu leaves procured through the additional agent of any unit by the Government, shall on selection as such execute an agreement in Form J." Besides the above the petitioner also challenged the validity of sub-rule (3) of Rule 6 and the new Rule 7 substituting the old rule. Rule 6(3) enabled a registered grower who wished to transport his leaves outside the unit in which he was registered for sale to an additional agent, if any, of the said unit appointed under the proviso to Section 8(1) on an application for a transport permit in Form D to be granted by the Divisional Forest Officer. 7. The above rule is really a complement to the proviso to Section 8(1) in order to allow additional agents to function. Rule 7 in effect provided as follows. Under clause (1) Government was empowered to appoint agents for a unit or units under sub-section (1) of Section 8 and to publish a notice in the Official Gazette and in such other manner as was thought fit, giving terms and conditions of agency and inviting any applications for such agency, provided that no application need by invited for appointment of the additional agent referred to under the provisions of Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 5 sub-section (1) of Section 8 and such additional agent might be appointed directly by Government subject to such terms and conditions as might be decided upon, the additional agent having to execute an agreement in Form I. By clause (2) the application for agency was to be in Form E and was to be submitted to such authority by such date and in such manner as may be specified in the notice. Under clause (3) every application was to be accompanied by a treasury challan showing a cash deposit of Rs. 500/- in the name of the Divisional Forest Officer as advance security deposit. The applicant was also to furnish a certificate of solvency for a sum calculated at the rate of Rs. 10/- per bag for the stipulated number of bags for the respective unit, granted by a Revenue Officer not below the rank of a Sub-divisional Officer if the agent had landed property at a place wherein the Orissa Public Demand Recovery Act, 1962, was in force, or a bank guarantee for an equivalent amount. Clause (4) enabled the Government to accept or reject any application without assigning any reason therefor. Under clause (5) Government was empowered in case it was not possible to select suitable agents for the purpose out of those who had applied for appointment as agents, to call for fresh applications, or if the time at their disposal was not sufficient, to appoint a person or party as agent who in the opinion of the Government was suitable for the work. Under clause (6) an agent or party appointed in terms of clause (5) had to execute an agreement in Form G within 15 days of the order of appointment failing which the appointment was liable to be cancelled. Under clause (8) the agent was to maintain registers and accounts as might from time to time be directed by the Government which were to be submitted when called for. Under clause (9) the agent was to furnish a list of persons employed by him within the unit and any such person so appointed if objected to was to be forthwith removed from employment by the agent. Under clause (10) Government was at liberty to grant to the agent renewal of his agency for such period not exceeding one year at a time if it was found during the period of his agency that he had duly observed and performed the terms and conditions to the satisfaction of the Government.The petitioner alleged that - (a) As a result of the judgment in Akadasi Pradhan's case (supra) the profit which could go to the agents was greatly reduced and they could have little interest in the scheme. The purchasers therefore set up their own men as agents and the pretended dichotomy between agents and purchasers was a mere eyewash. The agents were not really agents of the Government. A table shown as Annexure B to the petition purported to show how the agents were related to the purchasers. (b) By virtue of the verious amendments to the Act and Rules and by the conduct of the Government no outsider or no one other than the existing purchasers could and did submit tenders. (c) The provisions relating to the solvency certificate and the provision for appointment of additional agents and additional purchasers at the discretion of the Government and the power to authorise registered growers to transport their leaves outside the unit in which they were grown were all aimed at confining the business in the hands of a chosen few completely ousting others. (d) No principle was followed in accepting tenders. The claims of highest bidders were ignored to accommodate favourites of authorities. Appointments were in some cases made of persons whose tenders were lower than the highest ones offered. In some cases areas were settled with persons who had never submitted any tender for the area and in others settlement was made with a non-tenderer Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 6 at a lower price. 8. Before us, learned counsel for the petitioners limited himself to the following objections - 1. Agents could not be allowed to be nominees of purchasers. They ought to be independent contractors. 2. The provision for appointment of additional agents under the proviso to Section 8 and Rule 7(1) were unreasonable and arbitrary. 3. The appointment of purchasers who were not the highest tenderers was also arbitrary and mala fide. Rule 5-B(7) which allowed the Government to accept or reject all or any of the tenders without assigning any reason therefor was gravely objectionable in that it permitted the Government to make discrimination in favour of men of their choice and allowed the extraction of money for party funds. The demand for production from tenderers of a certificate of solvency for at least 1/4th of the total annual purchase price from a Subdivisional Officer if the tenderer had landed property in Orissa or a bank guarantee in the case of others was also discriminatory. It was said that the power to appoint additional agents and additional purchasers after the auction had been held was for the purpose of Government benefiting anyone it liked to the detriment of the interest of the general public and the interest of the State. 9. Our attention was drawn to the special forms which had been incorporated in the rules and the differences between them, as for instance, Forms G and H which applied in the case of an agent and purchaser and Forms I and J which applied to the cases of additional agents and additional purchasers. 10. It was submitted that the scheme as envisaged after the amendment of the Act in 1969 was not really in aid of establishing a State monopoly and it left loopholes for patronage by the party in power in Government of their own favourites by the extraction of money for party funds and otherwise. further submitted that agents if they were nominees or relations of purchasers, were really not bona fide agents of the Government. He drew our attention to the activities of the agents before the leaves were sold to show that a good deal of money had to be invested and quite a number of operations performed before the leaves could be put up for auction and it was submitted that if they were the nominees of the purchasers they really acted in the latter's interest and not that of the Government. Under the terms of the agreement in Form G the agents had to open depots and storage godowns at such centres within the unit as directed by the Sub-divisional Officer and he could transport his leaves from the collection depot to the storage godowns. They were also prevented except with the permission of the Divisional Forest Officer from moving the Kendu leaves to places outside the unit. 11. We are not satisfied that there can be any legitimate grievance against the amendment of the Act and the promulgation of new rules set forth above. They all appear to be necessary to enable the Government to control the business in Kendu leaves effectively. Nothing was shown to us as to how any of these provisions of Form G for the appointment of agents and Form I for the appointment of Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 7 additional agents worked against the interest of the Government working a monopoly business. The provision for appointment of additional agents and additional purchasers are not per se bad. The exigency of business may require such appointments. Further we find ourselves unable to appreciate the points sought to be made on the basis that some of the agents were nominees or relations of the purchasers. We do not see how this can affect the scheme of State monopoly. An agent had to purchase Kendu leaves from growers at prices fixed by the Government under Section 4(1) and he had to deliver processed Kendu leaves to such persons as were to be directed by the Forest Officers. He was to be entitled to verious charges including - (1) a fixed sum per bag of processed leaves towards costs incurred for collecting the leaves, storage, transport, packing and other charges, and (2) remuneration at the rate fixed for each bag of processed leaves which he secured by selection or purchase. He had also to pay collection charges to persons for collecting the leaves from Government forests and lands as may be specified in writing by the Government. It may be that on the actual rates fixed by Government the agents could not secure much profit. It is also possible that purchasers would rather deal with agents who carried out the processing and storing business in a manner which was conducive to production of good finished products than with strangers whose business methods were not known to them. But by itself such a course of dealing could not affect the interest of a Government running the monopoly business. 12. In the counter-affidavits filed herein there is a denial by the Minister concerned and by Radha Mohan Mishra that any suggestion was ever made to any of the petitioners that they would have to pay Rs. 10/- for each bag if they wanted their tenders accepted. On the face of this we are not in a position to hold that the grievance of the petitioners as regards choice of persons as purchasers who were willing to contribute to party funds has been proved. 13. With regard to the appointment of additional agents, the counteraffidavits show that only the State Forest Corporation had been appointed such an agent. It goes without saying that the appointment of such a corporation as an additional agent can in no way detract from Government monopoly. The counter-affidavits also show that no additional purchasers had been appointed. 14. With regard to the grievance that in some cases the bids of persons making the highest tenders were not accepted, the facts are that persons who had made lower bids were asked to raise bids to the highest offered before the same were accepted. Thus there was no loss to Government and merely because the Government preferred one tenderer to another no complaint can be entertained. Government certainly has a right to enter into a contract with a person well known to it and specially one who has faithfully performed his contracts in the past in preference to an undesirable or unsuitable or untried person. Moreover, Government is not bound to accept the highest tender but may accept a lower one in case it thinks that the person offering the lower tender is on an overall consideration to be preferred to the higher tenderer. 15. We may in this connection refer to the manner in which the contracts current at the time of the filing of the petition had been settled. The counter-affidavit on behalf of the State of Orissa shows Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 8 that forest and other lands producing Kendu leaves were divided into 180 units for the years 1969, 1970 and 1971. Three units out of these were reserved for the Orissa Forest Corporation; the remaining 177 units for the public tender. Out of these 167 units were settled at the highest prices offered. 139 out of 167 were settled in favour of persons who actually made the highest tenders. 29 units were settled at the highest prices offered but in favour of other tenderers on consideration such as past experience, clean past records etc. One unit was settled by negotiation at a price higher than the highest tender received. In the case of 5 units persons who had offered inflated and speculative prices did not turn up and the units were settled with the next best tenderers. In the case of one unit on the highest tenderer withdrawing his tender it was settled in favour of another tenderer who was to pay the next highest price. In the case of another unit the highest tenderer who had been a defaulter in the previous year had his tender rejected and the unit was settled in favour of the tenderer who had offered the next highest price. In the case of one unit on the highest tenderer failing to furnish bank guarantee it was settled in facour of the next highest tendere. In the case of still another unit the claims of the sole tenderer who had filed a forged bank guarantee was not considered and the unit was settled by negotiation at the highest available price. Lastly in the case of six units no tenders had been received and these were settled by negotiation at the best available prices. The five writ petitions concerned only seven units in respect of which tendetrs which tenders of the petitioners had not been accepted. 16. In our view, the counter affidavit showing the manner in which the units were disposed of completely demolishes suggestions of fraudulent preference of one tenderer to another. As the petitioners have not been able to satisfy us that the amendments effected in 1969 either in the Act or in the rules are against the exercise of a monopoly in the business of Kendu leaves by the Government of Orissa and as they have further failed to make out any case of arbitrary or mala fide action on the part of the State authorities, the petitions must be dismissed with costs. Trilochan Mishra Etc vs State Of Orissa & Ors on 21 January, 1971 9 | {
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Master Lal Mohd. Sabir vs State Of Jammu And Kashmir And Ors. on 7 May, 1971 Equivalent citations: AIR1971SC1713, 1971CRILJ1271, (1972)4SCC558, 1971(III)UJ710(SC), AIR 1971 SUPREME COURT 1713, 1972 4 SCC 558, 1971 LAB. I. C. 1108, 11971 SCD 843, 1971 UJ (SC) 710, 1971 SERVLR 888, 1971 SCD 843 Author: S.M. Sikri Bench: S.M. Sikri, I.D. Dua JUDGMENT S.M. Sikri, C.J. 1. This is a petition under Article 32 of the Constitution challenging the detention of the petitioner by Order No. 50/PDA/70 dated August 3, 1970 passed by Syed Mohammad Shaffi Andrabi, I.A.S., District Magistrate, Poonch, Under Section 3(2) read with Section 5 of the Jammu and Kashmir Preventive Detention Act 1964 In this order it is stated that the District Magistrate is satisfied that with a view to preventing Lal Mohd. son of Fazal-ud-Din, resident of Arri P.S Mendhar District Poonch, from acting in a manner prejudicial to the security of State, it was necessary to detain him. By another order dated August 3, 1970, the said District Magistrate considered it against the public interest to disclose the grounds of detention to Lal Mohd and he therefore directed in pursuance of Section 8 read with Section 13-A of the Act that the said Lal Mohd. be informed that it was against the security of the State to disclose to him the grounds on which his detention order was made. On August 24, 1970, the Government having considered the order of detention along with the report of the District Magistrate and the grounds on which the order had been made and other particulars having bearing on the matter, approved the said detention order. 2. To the writ petition, 5 parties have been made respondents, (1) Jammu & Kashmir State, (2) Deputy Commissioner (D M. Poonch), (3) Darshan Singh, D.S.P.C.I.D. Poonch, (4) Sumitter Singh, Officer Incharge Interrogation center, Jammu and (5) Captain Baljore Singh Q, M. 18th Bn. The Sikh Regiment, C/o 56 A.P.O Tne first four respondents have filed affidavits in reply to the allegations made in the writ petition The detenu has appeared in person and he has raised a number of points; (1) that the detention was mala fide, (2) that the detention was illegal, and (3) that the affidavits filed on behalf of the respondents were defective.The case of the petitioner as far as the first point is concerned, is that he was a permanent school teacher and he was a faithful government employee. In 1965, the petitioner used to help the Indian Military under the guidance of one Captain Baljore Singh of Indian Army Intelligence and his subordinates. Captain Baljore Singh is respondent Master Lal Mohd. Sabir vs State Of Jammu And Kashmir And Ors. on 7 May, 1971 1 No 5 in the writ petition The petitioner stated that he was kidnapped by the Pakistan Gureillas. because he had made inflammatory speeches against them After being kidnapped from India, he was interrogated in Pakistan and tortured in inhuman and barbarous methods. The petitioner further started that he remained in the grip of enemy for more than four years till he was released by the High Court of the so called Azad Kashmir. He was expelled from Pakistan after his release and reached India and he was reinstated in service on the basis of the reports of the Police authorities. He further alleged that it was Darshan Singh, D.S.P. who wanted bribe in order to enable the petitioner to be treated on duty for the whole period of his arrest and detention in the Pakistan Jails. As the petitioner refused to do so, he was threatened by Darshan Singh and he complained against Darshan Singh to one Mohd. Aslam, M.L.A. On this, Darshan Singh threatened him He alleged that Darshan Singh was a habitual bribe taker and he earned thousands of rupees from the returning migrants of Tehsil Mendhar and Havali. He further alleged that one Mohd. Bashir, Head Constable, C.I.D. had personal grudge against him, and the detention orders have been passed due to the efforts of Darshan, D.S.P., Mohd. Bashir Head Constable, C.I.D. Mendhar and cunning and prejudicious men of Rajput community. The respondents have denied all these allegations. The State has filed two detailed affidavits. The affidavits have been sworn to by Mr. A.R. Khajuria, the Deputy Secretary to the Government, Home Department, Jammu and Kashmir Government. We have gone through the affidavits and it is quite clear that if what is stated in the affidavits is true, and there cannot be any question of mala fides. We cannot go into the merits whether the facts stated in the affidavits are correct or not, but we can see that on these facts, no charge of mala fides can be made out. The case of the State is that he was not kidnapped as alleged by the petitioner, but he had some relations namely Mohd. Sharif posted as Captain (Nephew) and Mohd. Hussain Havaldar of Pakistan Razakars (brother-in-law) who were posted on behalf of the Government of Pakistan at the border post Kanet District Mirpur. According to the State, the petitioner was supplying information to the said officers till August 1965 when the Razakars entered into Mendhar and actively collaborated with Razakars in attacking the security post at Dhirana where grave damage to the life and properly was done. It is further stated that the petitioner had crossed over to Pakistan after cease-fire in October, 1965 along with the raiders, and his relations referred to above were at the border post and it had been reliably reported that they were giving to the petitioner intensive training for spying and had sent him back in Mendhar area in June 1970. During the period from January, 1970 upto August, 1970, his activities were watched and it was reported that he was working as a Pakistan agent and was securing information about the deployment of the security force from Mandhar area and supplied the said information to his relations It is further stated that the various reports collected in this manner were brought to the notice of the District Magistrate who after having satisfied about the necessary detention of the petitioner, passed the order of detention against the petitioner. The reinstatement of the petitioner was explained on the ground that it was made without any consultation with the Counter-Intelligence Branch of the State Government. 3. It appears that while in Pakistan, the petitioner passed his B.A. examination from the Punjab University, Lahore, as shown by the certificate which was produced at the time of the reinstatement showed. It is urged in the affidavit that this was inconsistent with the petitioner's story that he was detained by the Pakistan authorities. The Government submits that the petitioner went over to Pakistan side of his own accord in 1965 and pursued his studies besides preparing himself to do Master Lal Mohd. Sabir vs State Of Jammu And Kashmir And Ors. on 7 May, 1971 2 such activities which were prejudicial to the security of the State. Darshan Singh, D.S.P. in his affidavit has denied all the allegations made against him. It is not necessary to refer to them in detail. Sumiter Singh, Deputy Superintendent of Police, C.I.D has also filed an affidavit. He denied that there was any illegal arrest of the petitioner in June 1970. He states that the petitioner was arrested on that date in case No. FIR No. 7/70 Under Section 2/3A E.I.M.G.O. (Engress & Internal Movement Control Older) and Under Section 4. E.O A. by Mendher Police on 13-70-1970 and was remanded to police custody for a week. On July 20, 1970, after the expiry of the remand, further remind for one week was taken from Magistrate, Jammu. He further states that the petitioner remained in police custody, Jammu from 18-7-1970 to 27-7-1970 and it was during this period of investigations that it was confirmed that he was a regular Pakistan Agent and Pakistan Spy since 1965. The State has also filed a letter indicating that the military authorities were of opinion that they suspended that the petitioner was a planted agent of Pakistan. On these facts it is impossible to say that the order of detention has been passed mala fide. 4. The petitioner has raised certain objections as to the form of the affidavits of the Deputy Secretary. The Deputy Secretary obviously can only swear the affidavit as to facts appearing from the record. He cannot possibly swear the affidavit based on his personal knowledge unless the fact is in his personal knowledge. 6. The next point taken by the petitioner was that it was a case of mistaken identity of the petitioner.He submitted that the detention order does not mention that he is a teacher, and there are a number of people with the same name whose father bear the same name. But from the affidavits filed we are unable to say that there was any mistaken identity. He also controverted certain statements in the affidavit of the D.S.P. that land was allotted to him from Village Arri Tehsil Mendhar. We are not concerned with this fact as it does not bear on the question of identity. 6. Coming to the question of the illegality of the second order dated August 3, 1970 of the District Magistrate, Poonch, the petitioner attacked that part of the order were it is stated that it is against the public interest to disclose the grounds of detention. He referred to the second para of the said order which reads as under : Now, therefore, in pursuance of Section 8 read with Section 13-A of the said Act, I hereby direct that the said Lal Mohd. be informed it is against the security of the State to disclose to him the grounds on which his detention order was made. 7. The petitioner said that be because the words "against the security of the State" instead of against the public interest have been used in the second para. the order is illegal. We are unable to see any force in this contention. 8. Section 8(2) of the Jammu and Kashmir Preventive Detention Act 1964 provides that : Nothing in Sub-section (1) shall require the authority disclose facts which it considers to be against the public interest to disclose. Master Lal Mohd. Sabir vs State Of Jammu And Kashmir And Ors. on 7 May, 1971 3 9. The District Magistrate first stated that he considered it against the public interest to disclose the grounds of detention; then in the second para; he chose to describe the particular public interest as security of the State. We see nothing wrong in the form used by the District Magistrate. If a thing is not disclosed because to would be against the security of State it is tantamount to saying that it would be against the public interest not to disclose it. The petitioner further submitted that the words "security of the State" do not exist in the Constitution. We referred him to Article 19(2) of the Constitution in that connection. 10. The petitioner further submitted that the detention order does not mention that the Act was amended in 1967. There is nothing in this point, because when the Kashmir Preventive Detention Act, 1664 is mentioned in the Detention order it means the Act as existing on that date, including the amendments. In the result, the petition fails and is dismissed. Master Lal Mohd. Sabir vs State Of Jammu And Kashmir And Ors. on 7 May, 1971 4 | {
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Sri Venkateswara Rice, Ginning & ... vs State Of Andhra Pradesh & Ors on 23 August, 1971 Equivalent citations: 1972 AIR 51, 1972 SCR (1) 346 Author: K.S. Hegde Bench: K.S. Hegde, A.N. Grover PETITIONER: SRI VENKATESWARA RICE, GINNING & GROUNDNUTOIL MILL CONTRACTO Vs. RESPONDENT: STATE OF ANDHRA PRADESH & ORS. DATE OF JUDGMENT23/08/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N. CITATION: 1972 AIR 51 1972 SCR (1) 346 1971 SCC (2) 630 CITATOR INFO : F 1972 SC2227 (4) ACT: Andhra Pradesh General Sales Tax Act, 1956, Sch. III, item 6, and Central Sales Tax Act (74 of 1956), ss. 14 and 15- Purchase of groundnut by millers-Used for extracting oil and re-sale-Liability to purchase tax. Practice and Procedure-Division Bench of High Court ignoring earlier decision of another Division Bench-Propriety. HEADNOTE: Under ss. 14 and 15 of the Central Sales Tax Act, 1956 , groundnut is one of the declared goods' and a State is not empowered to levy purchase tax of more than 3% on the turnover, and further the tax cannot be levied at more than one stage. Under s.. 6 of the Andhra Pradesh General Sales Tax Act, 1956, the sales or purchases of 'declared good,&' by a dealer shall be liable to tax at the rate, and at the Sri Venkateswara Rice, Ginning & ... vs State Of Andhra Pradesh & Ors on 23 August, 1971 1 point of sale or purchase specified in the III Schedule to the Act. Item 6 of the III Schedule provides, that with respect to groundnut, the point of levy is, when purchased by a miller other than a decorticating miller in the State, at the point of purchase by such miller, and in all other cases, at the point of purchase by the last dealer who buys in the State. The assesseeswere millers but not decorticating millers and they were registered dealersunder the Act. Groundnut was purchased by them not for sale, but waseither used by them entirely for extracting oil or partly for extracting oil and the rest sold to others. On the question whether the event that gave rise to tax liability was (a) the purchase by the assessees, or (b) the crushing of the groundnut purchased by the assessees, or (c) the last purchase by a purchaser in the State, the High Court, in revision, held that the purchase tax should be levied when the assessees purchased the groundnut. Dismissing the appeals to this Court, HELD : (1) Under the sales-tax laws the charge in respect of a sale or purchase becomes effective as soon as the sale in the case of sales-tax and purchase in the case of purchase- tax is made, though, the liability of the dealer is computed only at the end of the year., Hence, the turnover relating to the purchases, in the present case, became charged with the liability to pay tax as soon as those purchases were made by the assesseemillers. That is to say, as soon as a first miller purchased groundnut, the turnover relating to that purchase-any question of exemption apart became liable to tax. [348 H; 349 A-C] (2)This interpretation would not make subsequent purchases by other millersof the same groundnut eligible to tax, because, in view of ss. 14 and 15of the General Sales Tax Act and s. 6 of Andhra Pradesh Act, purchase of groundnut can be taxed only at one stage. Once a particular quantity of groundnut has beer subjected to tax the State's power in respect of those goods is exhausted. [349 D-E] 3 4 7 (3)The language of item 6 of the III Schedule shows that it is only the first purchase that becomes exigible to tax., Therefore, there was no need, for the Legislature to say 'when purchased by the first miller' and the interpretation does not involve the adding of any word into that item. [349 E-F] (4)The event which attracted the tax in the present case is the purchase of groundnut by an assessee and not his act of crushing the groundnut purchased or dealing with the groundnut in any other manner, because, his subsequent dealings in those goods is irrelevant. Hence, it could not be said that the assessees should be taxed only in respect of that part of the turnover which related to groundnut crushed for extracting oil; and that with respect to the remaining part it was the last dealer who purchased it, that Sri Venkateswara Rice, Ginning & ... vs State Of Andhra Pradesh & Ors on 23 August, 1971 2 should be taxed. [349 G-H] (5)A Division Bench of a High Court is bound by an earlier decision of a co-ordinate Bench of the same High Court. If the Judges felt that the earlier decision should be reconsidered they should have referred the question to a larger Bench and should not have ignored the earlier deci- sion. [350 C-D] M. Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes) Anantpur, 27 S.T.C. 18, overruled. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1809 to 1812 of 1968. Appeals from the judgment and order dated April 20, 1967 of the Andhra Pradesh High Court in T.R.C. Nos. 48, 43, 49 and 74 of 1966. M. C. Chagla, C. A. Kanyaka Prasad, R. Gopalakrishnan and D. P., Mahanty, for the appellants (in all the appeals). P.Ram Reddy and G. S. Rama Rao, for the respondents (in all the appeals). The Judgment of the Court was delivered by Hegde, J. In these.appeals by certificate a common question of law arises for decision viz., on the facts and circumstances of, these cases what is the point of levy of purchase tax in respect of certain transactions relating to purchase of , ground nut or groundnut kernel by the assessees-appellants under the Andhra Pradesh General Sales Tax Act, 1956 in brief 'the Act') ? The Commercial Tax Officer came to the -conclusion that a critical event took place when the assessees. purchased the groundnut with which we are concerned in these appeals. In appeal the Assistant Commissioner upheld the order of the Commercial Tax Officer. On a further appeal by the assessees, the Sales Tax Appellate Tribunal disagreeing with the conclusion reached by the. Commercial Tax Officer as well as the Assistant Commissioner came to the conclusion that the turnovers relating to the purchases of groundnut in question became exigible to tax either when the groundnut purchased was crushed by the millers or when the 3 48 same was purchased by the last purchasers. But when the matter was taken up in revision to the High Court, the High Court reversed the decision of the Tribunal and restored the order of the Commercial Tax Officer. In all these appeals, the assessees are admittedly millers. They are registered dealers under the Act. The groundnut purchased by them was either entirely used by them for extracting oil or partly used for extracting oil and partly sold to others. The levy with which we are concerned in these appeals in purchase tax. The question for decision, as mentioned earlier, is which were the events that gave rise to tax liability-first purchase', the crushing ,of the groundnut purchased or the 'last purchase' ? The Ground is one of the "declared goods" (to be of special importance in inter-state trade or commerce under S. 14 of the Central Sales Tax Act, 1956, and therefore in view of S. 15(a) of that Act, the State is not empowered to levy purchase tax of more than three percent on the turnover in respect of those Sri Venkateswara Rice, Ginning & ... vs State Of Andhra Pradesh & Ors on 23 August, 1971 3 purchases and further the tax cannot be levied at more than one stage. Herein we are not concerned with inter-state sales or purchases. Now turning to the Act, S. 2(f) defines "declared goods" as meaning goods declared under S. 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) to be of special importance in inter-state trade or commerce. In compliance with the mandate of ss. 14 and 15 of the Central Sales Tax Act, 1956. Section 6 of the Act provides that notwithstanding anything contained in S. 5(the charging section), the sales or purchases of declared goods by a dealer shall be liable to tax at the rate, and only at the point of sale or purchase specified against each in the Third Schedule on his turnover of such sales or purchases for each year irrespective of the quantum of his turnover in such goods; and the tax shall beassessed, levied and collected in such manner as may be prescribed. Here again we need not refer to that part of S. 6 which deals with inter-state trade. The only other provision which we have to notice is item 6 of the Third Schedule which deals with groundnut. 'Me point of levy in respect of that item is when purchased by a miller other than a decorticating miller in the State, at the point of purchase by such miller and in all other cases at the point of purchase by the last dealer who buys in the State. The rate of tax is 2 paise in the rupee. None of the assessees before us is a decorticating miller, Hence we have to see whether the purchases of groundnut made by them did not become taxable as soon as they made those purchases. It is now well settled that even under the Sales Tax laws, the charge in respect of a sale or purchase becomes effective as soon as the sale in the case of sales tax and purchase in the case of purchase tax is made, though the liability of the dealer can be computed only at the end of the year. The incurring of the charge is one thing and its computation is a totally different thing. Hence the turnover relating to the purchases with which we are concerned in these appeals became charged with the liability to pay tax as soon as those purchases were made by the assessee-millers. To restate the position, whenever a miller purchases groundnut, the turnover relating to that purchase becomes exigible to tax subject to such exemptions as may be given under the Act. This means that as soon as a first miller purchases groundnut, the turnover relating to that purchase, the question of exemption apart-becomes liable to tax. This is also the view taken by the High Court. It was urged on behalf of the assessees that if we place that interpretation then even the turnovers relating to subsequent purchases of the same groundnut made by the other millers would become exigible to tax despite the fact that only a single point purchase tax is leviable under the Act. It was further urged that we should not read into item 6 of the Third Schedule the word "first" before the word "Miller" under column 2 thereof. We see no merit in these contentions. Quite clearly in view of s. 14 and s. 15 of the Central Sales Tax Act and s. 6 of the Act, purchase of groun dnut can be taxed only at one stage. Once a particular quantity of groundnut has been subjected to payment of tax, the State's power to tax in respect of those goods gets exhausted and any further dealing in those goods cannot be brought to tax. This is clear from the scheme of the Act. There was no need for the legislature to say "when purchased by first miller" in column 2 of item 6 of the Third Schedule, because from the language employ Ada therein, it is clear that the first purchase becomes eligible to tax and in view of s. 6 of the Act, the subsequent purchases of the same goods cannot be subjected to tax. Therefore there is no question of adding- any word into that item, as contended by Mr. M. C. Chagla on behalf of the assessees. The next argument advanced on behalf of the assessees is that in Sri Venkateswara Rice, Ginning & ... vs State Of Andhra Pradesh & Ors on 23 August, 1971 4 the case of some of the assessees a part of the groundnut purchased had been sold to other millers; hence in those cases, the assessees must be taxed only in respect of that part of the turnover which relates to groundnut which they had crushed for extracting oil and in the case of remaining part, it is the last dealer who purchased the same should be taxed. This contention again is unacceptable. As mentioned earlier the event which attracted tax is the act of the miller purchasing groundnut and not his act of crushing the groundnut purchased or dealing with that groundnut in any other manner. We have earlier mentioned that the very act of purchase by a miller attracts the liability to pay tax under s. 5 read with Schedule 3 item 6. His subsequent dealings in those 4-Ll340 SupCI/71 goods becomes irrelevant. In none of the cases before us it was shown that any of the assessees had purchased groundnut with a view to sell them. Hence we need not go into the question as to what would be the position in law where a miller purchases some groundnut for milling and the rest for sale. Our approach to the question before us is similar to that adopted by the High Court in the decision under appeal. We are in entire agreement with the reasoning of the High Court. But our attention was invited to a later decision of the same High Court in M. Madar Khan & Co. v. Assistant Commissioner (Commercial Taxes) Anantpur and ors.(1) which took a view contrary to that taken in the decision under appeal. It is strange that a co-ordinate Bench of the same High Court should have tried to sit on judgment over a decision of another Bench of that court. It is regrettable that the learned judges who decided the later case overlooked the fact that they were bound by the earlier decision. If they wanted that the earlier decision should be reconsidered, they should have referred the question in issue to a larger bench and not to ignore the earlier decision. For the reasons mentioned above, these appeals fail and they are dismissed with costs. V.P.S. Appeals dismissed. (1) 27 S.T.C. 18. 3 5 1 Sri Venkateswara Rice, Ginning & ... vs State Of Andhra Pradesh & Ors on 23 August, 1971 5 | {
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Bharat Barrel And Drum Mfg. Co. (P) Ltd. vs The Collector Of Customs, Bombay And ... on 6 January, 1971 Equivalent citations: AIR1971SC704, (1971)3SCC170, AIR 1971 SUPREME COURT 704 Bench: J.C. Shah, A.N. Grover, K.S. Hegde JUDGMENT J.C. Shah, C.J, 1. These six appeals arise out of orders passed by the Central Government in a group of revision applications against the orders passed by the Collector of Customs, Bombay, and confirmed by the Central Board of Excise and Customs subject to certain modifications. 2. The appellant is a private limited company which carries on the business of manufacturing drums and barrels. For its manufacturing programme the appellant obtained in June, 1962 two licences for importing steel sheets. Under the first licence the appellant was authorised to import "Mild Steel Item - 18G Black Plain Sheets Drum Quality for manufacturing drums and containers," subject to the terms and conditions detailed in the annexures thereto. The total C. I. F. value of the licence was Rs. 40,00,000/-. The second licence was for "Steel Drum Sheets for Lubricating Oil Packing" of the total C. I. F. value of Rs. 50,30,000/-. 3. The appellant placed orders for import of steel sheets with a firm of manufacturers in the United States of America. The goods under the two licences reached the Bombay Port in twelve separate consignments. On arrival of the consignments, the appellant filed Bills of Entry for consumption of the goods. The Chief Customs Appraiser at Bombay did not allow clearance of the goods for the following reasons recorded by him: (a) That under the Import Licence the appellants were entitled to import only prime quality sheets and no other sheets; (b) that the quality of the sheets Imported by the appellants appeared to be industrial scrap (sheet cuttings); (c) that the sizes of the Steel Sheets appeared to be odd and not regular; and (d) that the value of the invoices was not according to the prevailing prices for steel sheets in prime quality. To avoid liability for heavy demurrage the appellant Company applied for and obtained an order for clearance of the goods lying in dock. A show cause notice was issued by the Collector of Customs Bharat Barrel And Drum Mfg. Co. (P) Ltd. vs The Collector Of Customs, Bombay And ... on 6 January, 1971 1 requiring the appellant to show cause why the sheets imported be not forfeited. The appellant Company represented that it was engaged in the manufacture of drums and containers of various sizes and that although the sizes of steel sheets appeared to be odd, these were suitable for its manufacturing purposes. The Company also pleaded that the sizes of sheets imported were not Industrial Scrap (sheet cutting) in terms of the definition of Industrial Scrap in the Iron and Steel Controller's Circular No. SIB/1/67/AS/60, dated July 15, 1963, and that in any event the licence did not lay down any definite quality of steel sheets to be imported. 4. The Collector rejected the representation made by the appellants. In his view the licence issued in the case was for "Prime Quality" sheets and the term "Prime Quality" meant that the sheets were of standard sizes and lengths, with uniform dimensions and without surface defects, but in the sheets imported there was "a percentage of defective sheets with clipped edges, surface grooves, sheering imperfections, etc.. and the bulk of the sheets were of varying sizes and dimensions". On that account the sheets were not of "Prime quality", that the explanation of the Company was not satisfactory, and since the importers had no valid licence for importing the sheets actually imported, the importation was in contravention of the Import Control Order No. 17/55 of December 7, 1955 issued under Section 3 of the Imports and Exports (Control) Act, 1947, and punishable under Section 112 of the Customs Act, 1962. The Collector on that view passed an order imposing penalties for different amounts in respect of each of the consignments. The Company preferred appeals to the Central Board of Excise and Customs against the order passed by the Collector imposing penalties for importing twelve consignments. The Board held that only those sheets could be imported against the licences which fulfilled two conditions - (1) the sheets were suitable for manufacturing drums and (2) they were of "prime quality" material. The Board did not agree with the argument advanced on behalf of the appellant Company that the sheets were of drum quality and were permitted to be imported against the two import licences. The Board observed that the sheets imported varied in sizes and gauges in some packages; that while "certain sheets were of uniform size (i.e. , length and width at both ends) the other sheets were of irregular shapes"; that gauges of sheets in some of the consignments varied between 11 and 13 and in others they varied between 18 and 24; that defects such as clipped edges, surface grooves and sheering imperfections were noticed in some sheets and that the examination report indicated that not only the sheets were not of "prime quality" but they were also unsuitable for the manufacture of drums, specialty those which were of 11, 12 and 13 gauges. The Board rejected the contention of counsel for the appellants that the percentage of sheets of odd sizes and gauges 11, 12 and 13 was negligible and the presence of a small percentage of the consignment was "not representative of the nature" of the entirety of the sheets imported, and observed that even allowing "tolerances generally allowed in measurement of the sheets", all the sheets cannot be considered as of standard sizes, and in any case the fact remained that the sheets imported were not of uniform dimensions in "each skid" and on that account not of "prime quality", and not suitable for manufacturing drums. The Board accordingly upheld the action of the Collector in confiscating the goods but they reduced the fine in some cases. 5. Interrupting the narrative, it is necessary to point out at this stage two important matters: (1) that the difference in the conditions of the two licences was apparently not noticed by the Collector of Customs and by the Board and (2) that the condition that the goods should be of "prime quality" was not a condition of either licence. Under the first licence the sheets were to be of 18 gauge quality; Bharat Barrel And Drum Mfg. Co. (P) Ltd. vs The Collector Of Customs, Bombay And ... on 6 January, 1971 2 under the second licence there was no such condition relating to thickness of the sheets. There was again no evidence that any part of the consignment was not fit for use in the manufacture of drums and barrels. By importing sheets of 11, 12 and 13 gauge or of gauges varying between 18 and 24 no breach of the conditions of the second licence was committed. The condition that the sheets imported must be of "prime quality" was imposed for the first time by the Iron and Steel Controller's Public Notice No. I/I-S/62, dated December 6, 1962 and could not obviously apply to the sheets imported under the two licences which were issued earlier. But the Collector as well as the Central Board of Excise and Customs decided the cases principally on the ground that the goods were not of "prime quality". The Collector of Customs and the Central Board of Excise and Customs also did not keep the facts in respect of the twelve consignments distinct and decided them together as if there was no difference between the conditions of the two licences. 6. The revision applications filed before the Government of India were consolidated for the purpose of hearing and a single order was passed. The Officer who heard the revision applications on behalf of the Central Government was of the view, and rightly, that the Public Notice No. I/I-S/62, dated December 6, 1962 of the Iron and Steel Controller had no retrospective operation and the condition of "prime quality" could not be applied to the sheets imported under the licences issued before that date. But in his view, one of the two licences e. g., licence dated June 13, 1962, covering the consignments was issued specifically for 18 gauge sheets, while sheets of different sizes, including 18 (gauge) were imported against that licence and on that account consignments covered by that licence "had to be treated as unauthorised". He then proceeded to observe that the fine in lieu of confiscation of the goods covered by the Collector of Customs, Bombay Orders Nos. S/10-530/63LC, S/10-531/63LC, S/10-532/63LC S/10-533/63LC, S/10-534/63LC and S/10-535/ 63LC all dated November 30, 1963 be remitted in full; that in respect of four consignments covered by the Collector's Orders Nos. S/10-443/63LC, S/10-444/63LC, S/10-445/63LC and S/10-446/63LC all dated October 5, 1963 the fine be reduced by half; and that the fines reduced by the Board in the cases covered by the Collector's Orders Nos. S/10-22/64LC and S/10-71/64LC both dated March 2, 1964 be further reduced as decided by them. 7. These six appeals relate to the orders made by the Government of India in respect of those consignments covered by the order in which the fines were not remitted in full. The order of the Collector of Customs proceeded principally upon the ground that the sheets imported were not of "prime quality". Whether the sheets imported were not according to the conditions of the licence because they did not comply with the condition as to the size and gauge subject to the permissible tolerance was apparently not investigated by the Collector. The Board also did not investigate that question. In four orders passed by the Collector Nos. S/10-443/63LC, S/10-444/63LC, S/10-445/63LC and S/10-446/63LC dated October 5, 1963 the only ground given is that the goods were not of "prime quality" That conclusion was reached by him because "the materials were not of standard size, the dimensions were not uniform, the sheets were with surface defects and that a percentage of defective sheets had not only clipped edges, surface grooves, sheering imperfections but that the bulk of the sheets were of varying sizes and dimensions". All the defects in the view of the Collector justified the opinion that the sheets were not of "prime quality". We did not consider whether the goods imported were of 18 gauge size. Since the condition as to "prime quality" was imposed for the first time on December 6, 1962 the orders of the Collector were not sustainable. Bharat Barrel And Drum Mfg. Co. (P) Ltd. vs The Collector Of Customs, Bombay And ... on 6 January, 1971 3 8. In respect of the Order No. S/10-22/64LC and S/10-71/64LC dated March 2, 1964 the Collector observed that on examination of the goods in question the sheets were in random sizes of 19 & 20 gauge not permissible under the licence. He also observed that the licence issued in this case was valid for the "prime quality" sheets of 18 gauge only, and since the sheets imported were of varying sizes, with surface defects and of different gauges, the sheets were not of "prime quality" and were, therefore, not covered by the licence obtained by the Company. The basis of the judgment of the Collector in these cases was, that the goods were not of "prime quality" 9. The Central Board of Excise and Customs also did not deal with the different consignments separately and did not apparently consider whether on the ground that some sheets were not of the permitted gauge under the first licence the import may be regarded as unauthorised. 10. We are of the view that there was no proper investigation of the dispute by the Collector of Customs and the Central Board of Excise & Customs. We are also of the view that in view of the infirmities disclosed in the orders made by the departmental authorities the Central Government in revision should have proceeded to consider the merits of the appeals relating to the six consignments in respect of which fine was not remitted in full. The Government should have given to the appellants adequate opportunity to prove that there had been no substantial deviation from the terms of the licence or for other reasons on which they claimed that the fine may be remitted in full. 11. On behalf of the Company it was urged that since the order of the Collector and the Central Board of Excise and Customs proceeded solely upon the finding that the consignments imported were not of "prime quality" and on no other ground in respect of four consignments we should not remand the cases dealt with under order dated October 5, 1963 and that we should set aside the order of the Central Government in respect of those four consignments and remit the fine in its entirety, leaving the Central Government free to hold an inquiry only with regard to the remaining two consignments covered by the Collector's Orders Nos. S/10-22/64LC and S/10-71/64LC dated March 2, 1964. For reasons already set out we do not feel justified in accepting that contention. 12. We set aside the order passed by the Central Government in respect of the six orders passed by the Collector, where fine has not been remitted in its entirety and direct that the Central Government do consider the revision applications on their merit. If the appellant desire to lead additional evidence to prove that the goods or a substantial part of the goods imported under the various consignments were subject to "the permissible tolerance" according to the, terms of the licence, or for any other reason, the Central Government will give it an opportunity to do so. The inquiry will, however, be restricted to the question whether the consignments in respect of which fine has been imposed did or did not comply with the condition in the licence of the specification "subject to the permissible tolerance" relating to 18 gauge. 13. The order passed by the Central Government is set aside in these six appeals and the cases are remanded for disposal according to law. There will be no order as to costs in these appeals. Bharat Barrel And Drum Mfg. Co. (P) Ltd. vs The Collector Of Customs, Bombay And ... on 6 January, 1971 4 | {
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Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 Equivalent citations: 1972 AIR 277, 1972 SCR (1) 490, AIR 1972 SUPREME COURT 277, 1972 LAB. I. C. 157, 1971 2 LABLJ 505, 24 FACLR 216, 40 FJR 223, 1972 (1) SCR 490, 1972 2 SCJ 484 Author: P. Jaganmohan Reddy Bench: P. Jaganmohan Reddy, G.K. Mitter, C.A. Vaidyialingam PETITIONER: ORIENTAL TEXTILE FINISHING MILLS, AMRITSAR Vs. RESPONDENT: LABOUR COURT, JULLUNDUR & ORS. DATE OF JUDGMENT31/08/1971 BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN MITTER, G.K. VAIDYIALINGAM, C.A. CITATION: 1972 AIR 277 1972 SCR (1) 490 1971 SCC (3) 646 CITATOR INFO : F 1975 SC1689 (11) RF 1980 SC1896 (136) ACT: Industrial Dispute-Discharge of workmen without domestic inquiry Misconduct of discharged workmen proved before Labour Court-Propriety of termination of set-vices. HEADNOTE: While a reference was pending before the Labour Court the respondent workmen went on strike because some workmen were suspended. The Labour Officer as well as the management tried to persuade the workers to rejoin duty, but the respondents, made it a condition of their joining duty that Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 1 the suspended workmen should also be taken back. The management thereafter gave the respondents notices on different dates asking them to join duty by a date specified in the notices and subsequently, by another letter, called upon them to justify their absence, failing which. the respondents were informed, that their names would be struck off from the muster roll. Notwithstanding those notices and the willingness of management to take them back the respondents gave no reply but continued the strike and they were informed by letters that their names were removed from the muster roll. No domestic inquiry however, was held into the misconduct of the respondents. The Labour Court, to which the dispute was referred directed reinstatement of the respondents. In appeal to this Court, on the: question whether the termination of the employment of the respondents, in the circumstances of the case, without an inquiry, was justified. HELD : (1) It is an accepted principle of industrial adjudication that workmen can resort to strike in order to press for their demands without snapping the relationship of employer and employee., Equally, the management have the right to carry on work, in furtherance of which, they could employ other workmen and justify their action on merits in any adjudication of the dispute arising therefrom. [497 C-E] (2) Merely because workmen go on strike, even where the strike is illegal, it does not justify the management in terminating their services without a domestic inquiry. [497 C] (3) In the case of a domestic inquiry where misconduct is held to he proved, the industrial tribunal or labour court can only interfere with that order if there is mala fide, or want of good faith or there was victimisation or unfair labour practice or the management has been guilty of basic errors or violation of principles of natural justice or if on the materials, the finding is completely baseless or perverse. If, however, the management does not hold an inquiry, or the inquiry is, due to some omission or defi- ciency, not valid, the management can nonetheless support the order of discharge, termination or dismissal when the matter is referred for industrial adjudication by producing satisfactory evidence and proving misconduct of the concerned workmen. The evidence to substantiate and justify the action taken against the workmen is not as stringent as that 491 which is required in a court of law, but should be such as would satisfy the tribunal that the order of termination was proper. In such a case, there is no difference between a reference under s. 10 of the Industrial Disputes Act and a dispute raised under s. 33A of the Act, and, no distinction can be made between cases where the domestic inquiry is invalid and those where no inquiry has, in fact, been ,held. Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 2 That is, the management can justify and substantiate its action on evidence duty place before the Tribunal. [498 E-G; 499 E-F; 500 C-D; 501 A-B] (4) In the present case, there were no Standing Orders applicable to the appellant-company. A domestic inquiry should have been held in order to entitle the management to dispense with the services of its workmen on the ground of misconduct. [498 A-B] (5) But the management had proved before the Labour Court that there was persistent and obdurate refusal by the workmen to join duty notwithstanding the fact that the management had done everything possible to persuade them and gave them opportunities to come back to work; and that the respondents had, without any sufficient cause refused to do. The strike was illegal and it was not necessary for the management to prove that the respondents were guilty of overt acts of intimidation, incitement or violence. There, is nothing to justify the allegation that the management wanted to terminate to their services under some pretext with a view to recruit them afresh and deprive them of accrued benefits., The notices clearly mentioned that the workmen would be free to join duty by a certain date, and it was only after that date the management was willing to entertain them only as new entrants. Therefore, though no domestic, inquiry was held, the management had proved the misconduct of the respondents before the Labour Court and hence the termination of their services was not improper, and there was no justification for directing their reinstatement. [501 C-G] Express Newspapers (P) Ltd. v. Michael Mark & Anr., [1963] 3 S.C.R. 405, India General Navigation & Railway Co. Ltd. v. Their Workmen, [1960] 2 S.C.R., 1, Punjab National Bank Ltd. v. Its Workmen [1960] 1 S.C.R. 806, Workmen of Motipur Sugar Factory (P) . Ltd. v. Motipur Sugar Factory, [1965] 3 S.C.R. 588 and Hindustan General Electrical Corporation Ltd. v. Bishwanath Prasad & Anr. C.A. No. 2167/66 dt. 17-8-71, followed. JUDGMENT: CIVIL APPELLATE JURISDICTION:-Civil Appeal No. 1071 of 1966. Appeal by special leave from the Award dated September 10, 1965, of the Labour Court, Jullundur in Reference No. 157 of 1959. A. B. Sinha, and B. P. Maheshwari, for the appellant.. Hardev Singh, for respondents Nos. 2 to 24. The Judgment of the Court was delivered by P. Jaganmohan Reddy, J While reference No 150 of 1958 was pending in respect of an Industrial dispute between the appellant and its workmen relating to bonus, casual leave and sick leave etc., and. after the management had suspended six of its workmen on certain charges of misconduct for having refused to ,operate some machines, Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 3 another worker Shri Darshan Singh, a Helper of a Blowing Machine also refused on 25-1-59 when called upon by the management to work the machine in tile absence ,of Shri Daulat Ram, Machineman and was accordingly suspended the same day. On hearing this news the workmen went to see one of the partners of the appellant and demanded that the order of suspension passed against Shri Darshan Singh should be cancelled and he be reinstated as a Helper. As the management was not agreeable to reinstate the Helper workman, the workers went on a lightening strike. Since the workmen came on strike con- ciliation efforts were made but in spite of the persuasion of the Labour Officer, M.W. 2, the Labour Inspector M.W. 4 and by the management, Respondents 2 to 24 along with other did not report for duty although it is stated the Appellant was willing to employ them. Certain charge-sheets were served on the working on towards the end of January to which replies were given. Thereafter notices were sent to the Respondents 2 to 15 and 17 to 24 asking them to resume work by certain specified dates and when they did not resume work other notices were sent requiring the said Respondents to show why their names should not be struck,off and asked them to submit their reply by a certain date. In so far as Respondent 16 is concerned a notice was served oil him ,on 4-3-59 in which it was mentioned that he was absent since 13-2-59 without any leave and that he should resume duty by 6-3-59. He was further asked to explain by 8-3-59 why his name should not be struck off. None of the Respondents Nos. 2 to 24 either acknowledged these notices nor sent a reply. The management thereafter by letters dated 23-2-59, 4-3-59 and 17-3-59 informed the aforesaid Respondents that since they were no longer interested in the employment their names were struck off from the muster rolls. It is alleged that from 25-1-59 till their names were struck off from the muster rolls, the Respondents sat outside the Mill gate and in spite of persuasion by the Labour Officer as well as by the management were genuinely desirous of their resuming work, they did not join duty and as a consequence the management was compelled to employ others in order to keep the mill going. It is also stated that during this period those workmen who wanted to join duty were permitted to do so and their services were entertained. It is also the case of the management that the strike fizzled out after the striking-workmen failed to get rations and thereafter they had abandoned the service. On 19-3-59 a demand notice on behalf of the workmen was served on the management as a result of which the conciliation proceedings commenced. But even then according to the report of the Conciliation Officer while the management was willing to employ the workmen, the Respondents were, not willing to resume work till the suspended workmen were also 'allowed to resume duty. Ultimately on 26-8-59 the matter was referred to the Labour Court at Jullundur under Sec. 10 of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act'), to determine whether the termination of services of 31 workmen whose names were mentioned therein was justified. It may be mentioned here that out of these 31 workmen 8 workmen had resumed their duties and were no longer interested in the proceedings. The Labour Court after receiving the statement of claim and recording the evidence on behalf of both the management and the workmen. passed an Award on 31-10-61 which was published in the Gazette of 8-12-61. By this Award the claim of the workmen was rejected on the ground inter-alia :- (a) that they had resorted to illegal strike; Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 4 (b) that the management did not in fact terminate the services of the workmen concerned in the case and never meant to take action against them for having gone on strike. On the other hand management was always prepare to take them back and was requesting them through the Labour Inspector and the Labour Officer to end the strike and to resume duty but the workers went on insisting that the suspension orders passed on their co- workmen should first be cancelled; (c) that the workmen were adamant and as such there was no alternative for the management except to terminate their services and take fresh hands who are still continuing in its service; and (d) that no evidence was produced by the workmen to prove that any of them ever requested the, management to resume duty or that the management had turned down any such request. Against this Award of the Labour Court a Writ Petition was filed by the Respondents in the High Court of Punjab. A Single Bench of that Court by its Judgment dated 6-12-64 held that in law the plea that the workers had abandoned the services of the Appellant could not be sustained, but on the other hand it was the management which had terminated their services. In this view the case was remanded to the Labour Court for a fresh decision. A Letters Patent Appeal was filed by the management against this decision but later it was dismissed as withdrawn. On remand the Labour Court by an Award dated 10-9-65 which was published in the Gazette on 1-10-65 held that the plea of the -L 1340 Sup CI/71 workmen that there was a lock out by the management was not substantiated, on the other hand it was they who had gone on strike; that the strike was illegal because of the proceedings pending before the Labour Court in Reference No. 150 of 1958; that the question as to whether the management had terminated the services of the concerned workmen or not was not a matter which was res-integra in view of ,the judgment of the Punjab High Court in the Writ Petition referred to above; and in the alternative as the termination took place by virtue of letters dated 23-2-59, 4-3-59 and 17-3-59 without holding an enquiry, it was not valid. In the result the Labour Court directed reinstatement of Respondents 2 to 24. In so far as Surat Singh Respondent No. 16 was concerned, it was found that there were no standing orders in force applicable to the Appellant, as such it was not justified in dismissing him for absence without leave. It was also held that the Respondents were not entitled to wages from 25-1-59 to 17-3-59. They would however only be entitled to half the back wages from 18-3-59 to the date on which the Award would become enforceable and from that date till the date of their reinstatement, Respondents Nos. 2 to 24 would be given full back wages. Against the said Award this 'A peal has been filed by Special Leave. The short question for our consideration is whether the ter- mination of employment of the Respondents in the circumstances of the case without an enquiry was justified. There is no doubt that it has been conceded at the very outset that there being no ,standing orders applicable to the Appellant, the termination of the services of Shri Surat Singh, Respondent No. 16 is not valid and Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 5 the Award pertaining to his reinstatement cannot be assailed. In so far as the validity of the action of the management in terminating the employment of the other Respondents is concerned a great deal would depend on whether the management was able to justify its action before the Tribunal. It would be useful to set ,out at the outset certain undisputed facts namely : (1) that the Respondents went on a strike on 25-1-59; (2) that as there was a reference pending before the Labour Court that strike would be illegal, under Chapter V of the Industrial Disputes Act 1947; (3) that both the Labour Officers as well as the management tried to persuade the workers to join duty and after the demand notice dated 19-3-59 conciliation efforts were made but they did not resume work and made it a condition of their joining duty that the suspended workmen also should be taken back; (4) that the management gave workers on strike notices on different dates asking them to join duty by a date specified therein and subsequently by another letter called upon them to justify their absence failing which they were informed that their names would be struck off from the muster roll; (5) that notwithstanding those notices and the willingness of the management to take them back the Respondent gave no reply and continued the strike till they were informed by letters dated 25-2-59, 4-3-59 and 17-3-59 that their names were removed from muster roll; and (6) that no domestic enquiry was held into the misconduct of the Respondents. On these admitted facts it is sought to be contended on behalf of the Appellant that the Management took every possible step to get the workmen back into their factory but they were adamant in continuing the strike. In these circumstances they could do nothing else but to terminate their services and take in fresh hands in order to keep the factory going. It may be mentioned that the management immediately after the strike served charge-sheets calling upon them to show cause why proper legal action should not be taken against them. In those charge-sheets they had al- leged that the Respondents had indulged in intimidation, unjustified slogan mongering and inciting the workers to remain on strike. The workmen by their letters denied the allegations against them. Thereafter the management seem to have dropped these charges and tried to persuade them to join work. It would be useful to examine the correspondence of a typical case. On 5-2-59 by Ex. A3 the management served a notice and wrote to Amar Nath son of Brijlal, as follows : "Please take notice that from the afternoon of 25-1-59 you are on strike, which is illegal due to the pendency of proceedings before the Punjab Labour Court, Amritsar in reference No. 150 of 1958. This Strike of yours is wholly unjustified. In spite of the various persuasive attempts by the management and the Labour Department, Amritsar, you have failed to resume work. If you will not come to duty on 8th Feb. 59 the management would employ fresh hand in your stead as the management can Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 6 ill-afford to keep the work at a standstill. You will have in that event no claim to any reinstatement or compensation. Management is however prepared to consider you as one of the new entrants, should you be selected for appointment. This application should reach in writing by 9th Feb. '59". A copy of this letter was given to the Labour Commissioner, Ambala Cantt. as well as Labour Inspector and Labour Officer, Amritsar. When this Workman did not join his duty the management by Ex. A4 wrote another letter to him on 21- 2-59.It said : "You were served with a registered notice on 5-2-59 that you since the afternoon of 25th Jan. '59 are on illegal and unjustified strike along with other workers You were given an opportunity to report for duty upto 8-2-59. But uptil today you did not report yourself for duty by which it is clearly patent that you do not want to work in the factory. Therefore show cause as to why your name be not struck off from the muster roll of the factory. The factory management also gave you a chance that you can join on new services. but you did not do even that, which clearly shows that your stand is totally illegal and baseless. Factory cannot be closed in any event, thus your coming on duty was necessary. If you will not give any satisfactory reply then your name will be struck off from the muster roll of the factory. Your repl y should reach upto 25-2-59". Copies of this letter were also given to the Labour Officer referred to above.- When no reply was received to this letter the management terminated the services by Ex. A7 dated 4-3-59 which is as follows: "For your continued absence since the afternoon of 25-1-59 and in spite of repeated requests to come and join duty you have failed to resume work. You have also failed to show cause in pursuance to our letter dt. 21-2-59 as already intimated for your abandonment of service and/or illegal strike. In view of your these illegal activities the management has struck off your name from the muster roll of the Mills w.e.f. 4-3-59". The Respondent's advocate while not denying these letters as above contends that the earlier letters had charged them with incitement and stay in strike and intimidation etc. but the management gave the go by to it and have terminated the service for merely going on a peaceful strike and by subsequent letters it was made clear that the object of the management was to employ the workmen afresh and deprive them of the past benefits which had accrued to them. He further submits that merely because workmen have gone on a strike which is a weapon for obtaining their redress, the relationship of employer and employee does not come to an end and if the workmen have behaved in a violent manner or incited or intimidated other workmen, even then the management cannot terminate their services without holding an enquiry into the alleged misconduct but as no such enquiry was held the termination is illegal. Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 7 The question however would be whether before the services of the workmen, who are on strike, are terminated, is an enquiry into their misconduct obligatory and would an omission to comply with this requirement, make the order of termination illegal? It appears to us that merely because workmen go on strike it does not justify the management, in terminating their services. In any case if allegations of misconduct have been made against them those allegations have to be enquired into by charging them with specific acts of misconduct and giving them an opportunity to defend themselves at the enquiry. Even where a strike is illegal it does not justify the management from terminating their services merely on that ground, though if it can be shown on an enquiry that the conduct of the workmen amounted to misconduct it can do so. While it is an accepted principle of industrial adjudication that workmen can resort to strike in order to press for their demands without snapping the relationship of employer and employee, it is equally a well accepted principle that the work of the factory cannot be paralysed and brought to a standstill by an illegal strike, in spite of legal steps being taken by the management to resolve the conflict. The management have the right in those circumstances to carry on the work of the factory in furtherance of which it could employ other workmen and justify its action on merits in any adjudication of the dispute arising thereform. In Express Newspapers (P) Ltd. v. Michael Mark & Anr.,(1) where certain' employees who had indulged in ill--gal strike did not join their duty in spite of notices given by the management and their places were filled up by others, applied for relief under the Payment of Wages Act but the, application was dismissed. The workers moved the High Court under Art. 226 and their Writ Petitions were allowed. This Court in Appeal held that the Standing Orders contemplated termination of employment by the employer and in those cases there could be no doubt that the Appellant had terminated the employment, ,of the Respondents by removing their names from the muster roll without giving them any notice of such removal. It was also held that if employees absent themselves from work because of strike in enforcement of their demands, there can be no question of abandonment of employment by them and that if the strike was in fact illegal, the Appellant could take disciplinary action against the employees under the Standing Order and dismiss them. (1) [1963] 3 S.C.R, 405. This case merely illustrates what has been stated by us that even where the strike is illegal a domestic enquiry must be held. In the case before us admittedly there were no Standing Orders applicable to the appellant. Nonetheless a domestic enquiry should have been held in order to entitle the management to dispense with the services of its workmen on the ground of misconduct. This view of ours is also supported by another case of this Court in India General Navigation &- Railway Co. Ltd. v. Their Workmen(1) where it was held that mere taking part in an illegal strike without anything further would not necessarily justify the dismissal of all the workers taking part in the strike and that if the employer, before dismissing a workman, gives him sufficient opportunity of explaining his conduct and no question of mala-fides or vicitimisation arises, it is not for the Tribunal in adjudicating the propriety of such dismissal, to look into the sufficiency or otherwise of the evidence led before the 'enquiring officer or insist on the same degree of proof as is required in a Court of Law, as if it was sitting in appeal over the decision of the employer., It may be mentioned that in the case of a domestic enquiry where misconduct is held to be proved the Tribunal can only Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 8 interfere with that order if there is mala fides or want of good faith, there was victimisation or unfair labour practice or the management has been guilty of basic error or violation of the principles of natural justice or on the materials the finding is completely baseless or perverse. If however the management does not hold such an enquiry or the enquiry is due to some omission or deficiency not valid it can nonetheless support its order of discharge, termination or dismissal when the matter is referred for Industrial adjudication by producing satisfactory evidence and proving misconduct. Even in such cases the evidence which is produced to substantiate and justify the action taken against the workmen is not as stringent as that which is required in a Court of Law. At any rate the evidence should be such as would satisfy the Tribunal that the order of termination is proper. The Appellant before us on the evidence produced before the Tribunal seeks to justify its order removing the names of the Respondents from the muster roll. In the Punjab National Bank Ltd. v. Its Workmen,(2) though there was no enquiry held by the management it sought to justify the action of termination of services of its employees before the Industrial Tribunal. The employees of the Appellant Bank had commenced pen down strikes which were followed by general strike Pending arbitration of an industrial dispute between them. On the intervention of the Govt. the Bank reinstated all the employees (1) [1960] 2 S.C.R. 1. (2) [1960] S.C.R. 806. except 150 against whom it had positive objection and it is in respect of those workmen that a dispute was referred under Section 10 of the Act for adjudication. One of the two issues that was referred to the Tribunal was whether 150 employees had been wrongly dismissed. The Tribunal did not hear any evidence and by its final award held that the strike was illegal, the Bank, was, on that ground alone, justified in dismissing the employees. On Appeal the Labour Appellate Tribunal held that even though the strikes were illegal under Sec. 23(b) read with 24(1) of the Act, the Bank had by entering into, the agreement with the Govt. of India, waived its right to take penal action against its employees for joining the illegal strikes and that therefore, an enquiry should be held on additional evidence to decide the disputes on merits. Against this interlocutory order the Bank appealed to this Court which held that while the strikes were no doubt illegal under Sec. 23 (b) of the Act, the orders of dismissal passed by the Bank were no less so under See. 33 of the Act and it dismissed the Appeal. The Appellate Tribunal thereafter, heard the cases on merits, directed the reinstatement of 136 of the said employees, but refused to reinstate the rest whom it found guilty of issuing posters and circulars subversive of the credit of the Bank. Both the Bank and the workers appealed to this Court. It was held that under Sec. 33A of the Act as construed by this Court the jurisdiction of the Tribunal was not limited to an enquiry as to the contravention of Sec. 33 of the Act. Even if such contravention was proved, the employer could still justify the impugned dismissal on merits and there was no difference in this regard between a reference under Sec. 10 of the Act and a dispute raised under Sec. 33A of the Act. In Workmen of Motipur Sugar Factory (P) Ltd., v. Motipur Sugar Factory,(1) the workers of the Respondent started a go slow in its Sugar Factory. Therefore the Respondent issued a general notice to those workmen and individually to each workman notifying-that unless he recorded his willingness to discharge his duties faithfully and diligently so as to give a certain minimum output, he will be no longer employed and the willingness he was required to record was to be done within a certain time failing which he was notified that he would Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 9 be discharged without further notice. Respondents held no enquiry as required by the Standing Orders before dispensing with the services of the Appellant. A general strike followed resulting in a joint application by both the parties to the Govt. and the Govt. referred the question to the Tribunal. In the notice given by the Respondents it was stated that the go slow tactics was likely to injure the (1) [1965] 3 S.C.R. 588. factory resulting in a major breakdown of the machinery. The Tribunal came to the conclusion that there was go slow during ,the period and consequently held that the discharge of the workmen was fully justified. It was contended before this Court that what the Tribunal had to concern itself was whether the discharge of the workmen for not giving an undertaking was justified or not and that it was no part of its duty to decide that there was go slow which would justify the order of discharge and ,that since the Respondents held no enquiry as required by the .Standing Orders it could not justify the discharge before the Tribunal. It was pointed out in that case that the Court had consistently held that if the domestic enquiry is irregular, invalid or improper the Tribunal may give an opportunity to the employer to prove his case and in doing so the Tribunal tries the merits itself and that no distinction can be made between cases where the domestic enquiry is invalid and those where no enquiry has in fact been held. It was observed at page 603: "Looking at the matter in this broad way-and that is all that we are prepared to do, for we are examining a finding of fact of the tribunal-we cannot say that its conclusion that there was go-slow between November 27 and December 15 is not justified .... But as we have already indicated, the charge in the notice ,of December 15 was that the workmen had been going slow from November 27 and they were asked to give an undertaking to improve and the respondent was apparently willing to overlook the earlier lapse. Even assuming that the demand of an undertaking was un- justified, it does appear that the attitude of the workmen was that they would do no better; and in those circumstances they were discharged on December 17, 1960, on the basis of misconduct consisting of go-slow between November 27 and December 16, 1960. That misconduct has been held proved by the Tribunal and in our opinion that decision of the Tribunal cannot be said to be wrong. In the circumstances the Tribunal was justified in coming to the conclusion that the discharge was fully justified." In a recent case-the Hindustan General Electrical Corporation Ltd. v. Bishwanath Prasad & Anr.,(1) while considering this aspect of the matter we had held that even though no enquiry was held or there was contravention of the provisions of Sec. 33 ,of the Act, in a dispute referred under Sec. 10 the Labour Court had to adjudicate upon the dispute which was referred to it with regard to the Respondent and had to go into the question (1) Civil Appeal No. 2167 of 1966-Judgment delivered on 17- 8-71, as to whether he had been properly dismissed. In other words the management can justify and substantiate its action on evidence duly placed before the Tribunal. The learned Advocate for the Respondents however urges that even where the strike is illegal in order to justify the dismissal or the order terminating the services of workmen on the ground of misconduct the management must prove that they were guilty of some overt-acts such as intimidation, incitement or violence. We do not think that in every case the proof of such overt acts are necessary prerequisite. Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 10 In this case there is a persistent and obdurate refusal by the workmen to join duty notwithstanding the fact that the management has done everything possible to persuade them and give them opportunities to come back to work but they have without any sufficient cause refused, which in our view would constitute misconduct and justify the termination of their services. The workmen as spoken to by the Labour Officers and also as, is evidenced by the documentary evidence to which we have referred, were unwilling to join duty till the workmen who were suspended were also taken back. There is nothing to justify the allegation that the management wanted to terminate their services under some pretext with a view to recruit them afresh and deprive them of accrued benefits. The notices clearly mention that the workmen would be free to join duty by a certain date and only after that date ,the management was prepared to entertain them a, new entrants if they were to apply by the date specified in the notices. It appears to us therefore that management has proved misconduct and the stand taken by it was reasonable. There was nothing that it could do further in view of the unjustified attitude taken by the workers by staying away from work particularly after they were given over a month's time within which to commence work. In the view we take the order terminating their services was not improper. The Tribunal was not justified in directing their reinstatement and payment of wages merely on the round that no domestic enquiry was held. The appeal is accordingly allowed except for the Award in respect of Surat Singh, which is maintained. Having regard to the circumstances of the case there will be no order as to costs. V.P.S. Appeal allowed. Oriental Textile Finishing Mills, ... vs Labour Court, Jullundur & Ors on 31 August, 1971 11 | {
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Delhi Administration vs Bal Krishan And Ors. on 15 October, 1971 Equivalent citations: AIR1972SC3, 1972CRILJ1, (1972)4SCC659, 1972(4)UJ103(SC) Author: D.G. Palekar Bench: A.N. Ray, D.G. Palekar JUDGMENT D.G. Palekar, J. 1. These criminal appeals are by special leave filed by the Delhi Administration against Bal Krishan, Hukam Singh and Ram Singh respectively from an order of acquittal passed by the Delhi High Court. Five persons were put up for trial before the Additional Sessions, Judge, Delhi on charges under Section 395 r/w Section 397, 396 and 170 I.P.C. Of these, two were acquitted. The other three namely Hukam Singh, Ram Singh and Bal Krishan who were accused Nos. 1 to 3, were convicted of the offences' with which they were charged and were sentenced to several terms of imprisonment and also to pay a fine. They went in appeal to the High Court against the conviction and sentence and have been acquitted. The Delhi Administration has, therefore, come to this Court in appeal by special leave. 2. It is not in dispute that at about 2.30 A.M. on 1-10-1965 there was a dacoity in the house of one Mohd. Yusuf (P.W. 4) in the locality known as Khureji in Gandhi Nagar area, Delhi. There were four rooms in that house. One of the rooms was occupied by Mohd. Yusuf and his mother Batolan (P.W. 5). In the other room Hakim Uddin lived with his wife Shah Jahan (P.W. 3) and his children Hakim Uddin's father Bundu {P.W. 6) was also living with him. In the other two rooms Mohd Yusuf's brother Toshi with his wife and children lived as also one Rahim Ullah. In front of the house, there was a courtyard with a chapter on it. Mohd. Yusul and Bundu were sleeping in the courtyard while the rest of them were sleeping in the rooms. At about 2.30 A.M. a man was seen scaling down the wall in the court yard He unbolted the door and three or four persons rushed into the courtyard. They had torches. Two of them stood near Mohd. Yusuf and Bundu and told Mohd. Yusuf that they were police men who had come to search his home as they had information that illicit distillation of liquor was carried on in the house. The persons who entered the house of Mohd. Yusuf were armed with lathis. Three of them went to the room in which Batolan was sleeping and removed three trunks from that room. When they went into the room of Hakim Uddin and Hakim Uddin got up, they told him that he indulged in distilling illicit liquor. Hakim Uddin denied the charge whereupon he was abused, dragged out and beaten with a sticks. He was also given a blow with a "phaura", on Delhi Administration vs Bal Krishan And Ors. on 15 October, 1971 1 receiving which Hakim Uddin fell on the ground unconscious. When Bundu stepped forward to save his son, he was also beaten by the dacoits Mohd, Yusuf ran out of the house and brought a lathi from the house of his neighbour. But he was also surrounded and beaten. Thereafter the dacoits ran-sacked the house, looted property and left. 3. Sub-Inspector Harbans Lal (P.W. 43) happened to pass by the side of the house at about 4.30. A.M to 5.00 A.M. in the course of his night round. He heard the alarm and went to the house of Mohd. Yusuf. He saw injuries sustained by the victims and Hakim Uddin lying unconcious. The Sub-Inspector recorded the statement of Buolan and sent the same to the Police station Gandhi Nagar, for the registration of the offence. Hakim Uddain was removed to the hospital. He succumbed to his injuries in the hospital. 4. A search was made for the dacoits but was not successful for about a month. On some secret information received, Inspector Bhim Singh (P.W. 8) went to the Delhi Main Railway Station with a raiding party on the night between 30th and 31st October, 19(35 and caught Hukam Singh, Ram Singh and Bal Krishan. As they were to be put up for identification, they were instructed to keep their identity concealed. They were remanded to judicial custody on 1-11-1965 to facilitate the test identification parade. Mr. Grover, the Magistrate fixed 6-11-1965 for the test identification parade When everything was ready for the test, Hukam Singh, Ram Singh and Bal Krishan refused to participate in the identification parade on the ground that there was no use participating in the parade as they had already been shown to the several witnesses. Thus there was no test identification parade. On 11-11-1965, all of them were remanded to police custody for further investigation. It is the case of the prosecution that all these three accused made certain disclosure statements in consequence of which some articles stolen in the dacoity were recovered. Hukam Singh further made a confessional statement an on this material, these three accused, along with two others, were put up for trial. The evidence added by the prosecution consisted of (i) the identification of the accused in court by the inmates of the house; (ii} the recovery of stolen property in consequence of the disclosure statements made by the accused and (iii) the confessional statement made by Hukam Singh. The confessional statement was rejected by both the courts and no reliance is placed on it before us. While the Trial Judge accepted the evidence of identification and recovery of stolen property, the High Court, in appeal, did not feel that the evidence was satisfactory. Hence the acquittal in appeal. 5. It was contended by Mr. Khanna on behalf of the Slate that the appreciation of the evidence by the learned Judge, who heard the appeal in the High Court, was wholly coloured by his erroneous assumption in law firstly, that the evidence of recovery of property in consequence of a confessional statement made by the accused was inadmissible in evidence and secondly that the recovery also was illegal as it had been made in violation of the mandatory provisions of Section 103 of the Criminal Procedure Code relating to searches. It is true that certain portions of the judgment lend themselves to the above criticism. But on a careful consideration of the evidence, we are not inclined to agree with the contention of Mr. Khanna that the alleged erroneous assumption with regard to the true legal position had affected the consideration on merits of the evidence of the relevant witnesses. Delhi Administration vs Bal Krishan And Ors. on 15 October, 1971 2 6. First, we shall deal with the identification of the accused by the witnesses. As already stated, the dacoity took place on the night of 30th Sept., 1965 and the appellants were arrested a month late". There was no test identification. The prosecution blames the accused for not participating in the test identification parade, but the fact remains that there was no test identification parade which would have gone a long way to corroborate the evidence of the witnesses when they purported to identify the accused at the trial which alone is the substantive evidence in the case. The trial commenced in December, 1966 i.e. nearly 14 months after the alleged dacoity. The accused were unknown, persons, and according to the prosecution witnesses, namely Mohd. Yusuf (P.W. 4, Shah Jahan (P.W. 3), Batolan (P.W. 5) and Bundu (P.W. 6) who purported to identify the accused in court, they had been the accused for the first time on that night in the course of the dacoity. The prosecution case was that there were two lanterns burning in the two rooms which were looted ; that the accused had torches which they flashed all round during the course of looting and assault ; that the looting operation had gone on for half an hour to 45 minutes and thus the witnesses had ample opportunity to see and remember the faces of the accused. Therefore, it was contended there could be no possible mistake when they purported to identify the accused in court. Indeed it cannot be laid down as a proposition of law that after the lapse of a long period, witnesses would, in no case, be able to identify the dacoits they had seen in the course of a dacoity committed during the night. However, the courts will have to be extremely cautious when such evidence is before them. According to the learned Judge, it was a dark night and there was no sufficient light. The estimate of the witnesses that looting was going on for more than half an hour was exaggerated because the actual operation could not have taken more than a few minutes. The very fact that the inmates of the other two rooms in the same house had not come out to resist or prevent the dacoity would indicate that the operation was swift. Moreover, it was elicited in the cross examination of Shah Jahan (P.W. 3) and Mohd. Yusuf (P.W. 4) that the accused had been brought to their house during the course of the investigaiion. Indeed, according to these witnesses, this was about two to two and half months after the dacoity. But the learned Judge was not sufficiently impressed by this latter statement. It was not explained by the Investigating Officer why and when it was found necessary by him to bring the accused to the house where the dacoity had been committed. The learned Judge entertained, therefore, a strong suspicion that the accused may have been brought to the house before the test identification parade was arranged, thus affording justification to the complaint made by the accused before the Magistrate that they had already been shown to the witnesses and, therefore, there was no point in their participating in the test identification parade. In these circumstances, if the learned Judge felt unable to accept the evidence of identification in court as satisfactory, this Court would not be justified in taking a different view. Therefore, the evidence with regard to identification must be left out of consideration. 7. The only evidence which remains is the evidence of the disclosure statement, made by the accused to the Police Officers in the presence of Punch witnesses and the alleged recovery of stolen property in consequence of the disclosure atatements. Section 27 of the Evidence Act permits proof of so much of the information which is given by persons accused of an offence when in the custody of a Police Officer as relates distinctly to the fact thereby discovered, irrespective of whether such information amounts to a confession or not. Under Sections 25 and 26 of the Evidence Act, no confession made to a Police Officer whether in custody or not can be proved as against the accused. But Section 27 is by way of confession, which distinctly relates to the fact discovered is admissible as Delhi Administration vs Bal Krishan And Ors. on 15 October, 1971 3 evidence against the accused in the circumstances stated in Section 27. Accused Hukam Singh is alleged to have made a disclosure statement while in police custody on 16-11-1965 as per Ext. PGG. In consequence of that information the police party and the panchas are supposed to have gone to village Dadri where Hukam Singh pointed a place in the hut of one Babulal which, when dug up, revealed a bundle containing a piece of gold, necklace, a pair of pajeb, a silver armlet and one gold ring; all of which have been identified as stolen property. These articles had been tied in a coloured handkerchief. So far as the recovery of these articles is concerned, the prosecution examined, besides members of the police force, two panchas Nathu Singh (P.W. 38] and Mohan Lal (P.W. 19). The evidence of both these panchas has been rejected by the learned Judge as unreliable. The evidence of Nathu Singh has been considered at some length by the learned Judge and we agree with him that he cannot be considered a reliable witness. The other panch Mohan Lal (P.W. 19) did not state that Hukam Singh pointed out the hut or the place in the hut or that he dug out the bundle from the place where it was buried. The case is that the place from where the bundle was taken out was inside the hut close to the wall But constable Rameshwar Dayal (P.W. 34) who was a member of the party stated in his evidence that the handkerchief with the Article tied in it was recovered from a place two to three ft. behind the hut. In this state of the evidence the alleged recovery in consequence of information given by Hukam Singh becomes extremely suspicious and it cannot, therelore, be said that the learned Judge was not justified in rejecting this evidence about the recovery. 8. As regards accused Ram Singh, he is supposed to have made a disclosure statement EXT.PR on 22-11-1965 and in consequence of that statement one 'Khes' Ext. P. 4, identified as stolen property was recovered from the house of Ram Singh in village Girwari. There were three panch witnesses for this recovery namely. Krishan Singh (P.W. 14) Sunder Lal (P.W. 35) and one Dal Chand. The two panchas examined for the prosecution turned hostile and the third panch Dal Chand was not examined. In these circumstances, inspite of the police witnesses giving evidence with regard to this recovery, the learned Judge was not inclined to act upon that evidence and we cannot say that the learned Judge was wrong in doing so. 9. The last accused with whom we are concerned is Bal Krishan. He is supposed to have made a disclosure statement as per Ext. PC on 16-11-1965 and in consequence of that statement recovery was made of two articles. a woolen coat Ext. P. 3 and a pair of lachhas Ext. P 7 from a trunk in the house of Bal Krishan in village Salarpur. This recovery was made on 17-11-1965. The recovery memo is Ext. PQ and is attested by 3 panchas Rati Ram, Raghu Raj and Ghisa Ram. Out of these, only Ghisa Ram was examined at the trial and he is P.W. 10. The evidence of Ghisa Ram was rightly criticised by the learned Judge and we find no difficulty in agreeing with him that this witness who is from Delhi may not have been present at all at the time of recovery. The gap it) the evidence was sought to be filled up by the evidence of Nathu Singh (P.W. 38) who, though not an attesting witness on the recovery mem. Ext. PZ, is supposed to have accompanied the party to Salarpur 38 miles away. The learned Judge held that Nathu Singh was no unreliable witness and we have agreed with him. In this connection reference may be made to only one piece of criticism. NathuSingh along with LahiriSingh (P.W. 28) had attested the disclosure memo Ex PQ, of 16 11-1965. According to Nathusingh though they did not attest the recovery Memo. Ext. PQ they had both gone with the party to Salarpur to witness the recovery. On the other hand P.W 28) Lahirisingh has suggested in Delhi Administration vs Bal Krishan And Ors. on 15 October, 1971 4 his evidence that he had not gone to Salarpur for the purpose of recovery. Having regard to the fact that Nathusingh is not a witness who attested the recovery memo Ext. PQ, there is considerable force in the contention that his evidence with regard to recovery is unreliable. In the result, there is no independent evidence with regard to the alleged recovery of stolen articles made in consequence of a statement by Bal Krisban, and we are in agreement with the learned Judge that it would not have been safe, in the circumstances of the case, to rely only on the evidence of police officers. 10. It would thus be seen that the evidence with regard to the recovery of stolen articles in consequence of statements made by accused is not satisfactory and the learned Judge was right in rejecting it. 11. In the result on the evidence before the court, it could not have been reasonably possible to connect the respondents with the dacoity in the house of Mohd Yusuf and, therefore, the acquittal was correct. The appeals fail and are dismissed. Delhi Administration vs Bal Krishan And Ors. on 15 October, 1971 5 | {
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Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 Equivalent citations: 1971 AIR 1158, 1971 SCR (3) 784, AIR 1971 SUPREME COURT 1158 Author: I.D. Dua Bench: I.D. Dua PETITIONER: SUKHNANDAN SINGH ETC. Vs. RESPONDENT: JAMIAT SINGH & ORS. DATE OF JUDGMENT18/02/1971 BENCH: DUA, I.D. BENCH: DUA, I.D. BHARGAVA, VISHISHTHA CITATION: 1971 AIR 1158 1971 SCR (3) 784 1971 SCC (1) 707 ACT: Pre-emption Suit for-Collusion-Suit by sons of Vendors for pre-emption-Plaintiffs and vendors residing and messing together and expenses of litigation being paid by vendors-If sufficient to establish collusion. Limitation Act 1908-Article 10-Suit for Pre-emption- Limitation-Parr of the land sold in the hands of tenants- Starting point of Iimitation-"Physical possession", meaning. HEADNOTE: In a suit for pre-emption by the sons of the vendors of certain land the vendees pleaded collusive nature of the suit and limitation. The trial ,court found that the vendors and the plaintiffs resided and messed together and the expenses of the litigation were paid by the vendors. From this it was concluded that the suit had been filled by Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 1 the plaintiffs at the instance of and in collusion with the vendors and therefore the plaintiffs were held 'to he estopped from exercising their right of pre-emption. On the question of limitation the trial court held that the vendors, and not their tenants. were in possession of the land sold, that possession of the land was delivered to the vendees on the date of the sale and therefore the suit was barred by limitation. The first appellate Court reversed the finding of the trial court on both the pleas. In regard to the plea of limitation it held that a part of the land sold was in possession of tenants and, therefore, it did not admit of physical possession which meant immediate personal possession. In that view of the matter, under Section 10 of the Limitation Act, 1908 the terminus a quo was the date of registration of the ,ale deed and therefore within the one year limitation under Article 10. The High Court affirmed this decision. In appeal to this Court, HELD : dismissing the appeal, (i) On the facts of. the present case there was absolutely no material on which the plaintiffs could be held to have lost their right of preemption on the ground of collusion. Merely because the vendors. the fathers of the plaintiffs, were helping their sons to exercise the statutory right con- ferred on the sons could not without more, deprive them of the right to be substituted for the vendees in exercise of their right of pre-emption. '[788 F] (ii) On the finding of the District Judge and the High Court physical possession of the whole of the property sold was not taken by the vendees on the date of sale. Therefore the first part of Article 10 of the Limitation Act does not apply. The second part of Article 10 covers cases where the subject of the sale, which means the whole of the property Sold,does not admit of physical possession and that would be so where a part of the land in the possession of tenants. The argument that use of the expression "subject to the sale" suggests that this Article would apply only if the entire and not only a part of the land is in the possession of the tenants is not acceptable. [789 C] In the present case the properties in the hands of tenants have to he held to be incapable of "Physical possession" which means personal and immediate possession. 785 Botul Begam v. Mansur Ali Khan, I.L.R. 24 All-17 and Ghulam Mustafa v. Shahabuddin, 49 P.R. 11908, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1729 of 1967. Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 2 Appeal by special leave from the judgment and decree dated October 17, 1967, of the Punjab and Haryana High Court in Regular Second Appeal No. 822 of 1965. K. L. Gosain and Naunit Lal, for the appellants. Purushottam Chatterjee and D. D. Sharma, for the respondents. The Judgment of the Court was delivered by Dua, J. In this appeal by special leave from the judgment and decree of a learned single Judge of the Punjab and Haryana High Court arising out of a pre-emption suit only two questions were raised by the learned counsel for the appellants who were vendees-defendants in the trial court. The suit was instituted by the three sons of three vendors who were real brothers, and the two points canvassed in this Court challenge the decisions of the High Court and of the court of the District Judge on issues 6 and 7. Those issues are "6. Is the Stilt collusive ? If so, its effect. 7. Is the suit within time Both these issues were decided by the trial court against the plaintiffs but the District Judge on appeal reversed the decision of the trial court on both the issues and the High Court on second appeal affirmed the decision of the first appellate court. The relevant facts may now be stated in brief. Kartar Singh, Bachan Singh and Sardara Singh, sons of Sohel Singh, claiming to be co-sharers, agreed on September 19, 1961, to sell 193 kanals and 15 marlas of land to Sukhnandan Singh, Sukhminder Singh and Balkar Singh sons Gurdev Singh in equal shares. 1/3rd share, Gurminder Singh and Gurpakh Singh sons of Teja Singh in equal shares, 1/3rd- share, Gurdas Singh son of Angrez Singh. 1/3rd share at the rate of Rs. 840/- per bigha. A sum of Rs. 7,000/- was received in cash as earnest money. On December 6, 1961 a formal sale deed was- executed with some variations in shares and also with addition of Smt. Chand Kaur, wife of Sardar Inder Singh as one more co-vendee. The sale price was stated to be Rs. 32,550/-. Possession of the land sold was stated to have been delivered and it was also recited that consolidation proceedings under s. 21 (1) of the Consolidation Act had been completed but further proceedings in favour of the vendees would be taken after the proceedings which might be taken under s. 21(2). This sale deed was duly registered on March 9, 1962. The suit for pre-emption by the three sons of three vendors was instituted on March 6, 1963. It was contested by the vendees. The pleadings of the parties gave rise to several issues but we are only concerned with the issues relating to the pleas of collusive nature of the suit and limitation. The trial court disposed of the issues nos. 5 and 6, relating respectively to waiver of the right of pre-emption by the plaintiffs and to the collusive nature of the suit by dealing with them together., Photographs showing the plaintiffs and the vendors being together along with the plaintiffs' counsel in the court compound during the course of this litigation were produced as evidence in the case. Exhibit p-2 a certified copy of the Register of Consolidation Proceedings, produced by the plaintiffs in evidence showed that this copy had been prepared at the instance of Kartar Singh, one of the vendors and father of Jamiat Singh, plaintiff. According to the trial court there was also evidence that the plaintiffs and the vendors resided and messed together. On consideration of this material the trial court held that the vendors and the pre- emptors resided and messed together and the expenses of the litigation were paid by the vendors. From this it concluded that the suit had been filed by the Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 3 plaintiffs. at the instance of and in collusion with the vendors. The right of pre-emption being a priratical right, according to the trial court, to quote its own words "it is necessary that the pre- emptors must not act in collusion with vendors or act in bad faith." The plaintiffs were on this reasoning held to be estopped from exercising their right of pre-emption. On the question of limitation the trial court held that the vendors' and not their tenants were in possession of he land sold, which had been allotted to them in the consolidation proceedings and the possession of that land was delivered to the vendees on the date of the sale. The suit was accordingly held to be barred by time. The suit was dismissed for all these reasons. On appeal by the plaintiffs the District Judge reversed the conclusion of the trial court both on the point of estoppel or collusion and of limitation. According to that court in order to prove collusion the defendant has to prove that the suit was being-fought for the vendor's benefit, the normal presumption being that the plaintiff sues for his own benefit. In support of this view several decisions were relied upon by the District Judge. In the present case, according to the learned District Judge, the plaintiff Jamiat Singh had clearly stated that he was pre-empting the present sale with his own earnings and the learned District Judge found no rebuttal to this assertion. Neither the fact that Ex. P-2 had been obtained by one of the vendors nor the fact that the vendors were present in the court compound with the plaintiffs and their counsel during the course of litigation indicated that the present suit had necessarily been instituted for the benefit of the vendors. this reasoning the decision on the collusive nature of the suit which must result in its dismissal was reversed. In regard to the limitation also the learned District Judge concluded, in disagreement with the trial court, that a part of the land sold was in possession of tenants, and, therefore, it did not admit of physical possession, which means immediate personal possession. In that view of the matter under Art. 10 of the Indian Limitation Act, 1908 the terminus a quo was 'the date of registration of the sale deed. The suit was thus held to have been instituted within one year from the date of registration and, therefore, within limitation under Art. 10. The judgment and decree of the trial court was reversed and the suit decreed. On second appeal a learned single Judge of the Punjab and Haryana High Court held that there was no clear and reliable evidence that the vendor and their son were united in mess and estate. The other two circumstances, namely, that the vendors and the plaintiffs along with their counsel were seen together in court compound and that Ex. P-2 had been obtained by one of the vendors one day before the institution of the suit, were not considered sufficient to establish the collusive nature of the suit. In regard to the statement of Jamiat Singh the High Court undoubtedly felt unimpressed by his statement but we do not thinking was open to that court on second appeal to appraise the credi- bility of the testimony which was believed by the final court of fact when there' was no illegality in the appraisal of the testimony by the District Judge and it was open to him to take the view 'he did. Jamiat Singh had stated that he was separated from his father since about three years and that he was spending on the litigation from what little amount he earned. The matter was not pursued in cross- examination as to what was the source of his earnings. Even after feeling unimpressed 'by the statement of Jamiat Singh, the High Court came to the conclusion that it was for the vendees to establish the collusive nature of the plaintiffs' suit' On the evidence produced the District Judge having come to the conclusion that they had failed to discharge this onus this conclusion was one of fact and not being vitiated by and error of law it was held binding on second appeal. Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 4 The contention that the District Judge was wrong in holding that a part of the land sold- Was in possession of the tenant at the time of the sale was also reppled. The conclusion of the District Judge that field no. 24/21 out of the suit land was under the cultivation of Bahadur Singh a tenant at will, as was clear Ex. X-4, a copy of Khasra Girdwari relating to Rabi 1962 and Kharif 1962 was also held to be a finding of fact binding on second appeal. This document was not shown to have been misread by the first appellate court, On this finding Art, 10 of the- Indian Limitation Act, 1908, and not S. 30 of the Punjab Pre-emption Act, was held applicable and the suit, was thus considered to) be within limitation. For this view reliance was placed on two decisions of the Punjab Chief Court and a Bench decision of the Nagpur High Court. The appeal was, however, partly accepted by raising the pre-emption money by an additional sum; of Rs. 4, 133.50. In this Court again the learned counsel for the appellant,- vendees pressed the points of collusion and limitation. We, are, however, unable to find merit in either of them' So far as the question of collusion is concern it was not clarified by the learned counsel how the plaintiffs could be held to have lost their right of pre-emption merely because their fathers either came to the court with them, which they did openly, or allowed their sons as plaintiffs to use in court, copy of a public document procured by the father of one of the plaintiffs. Collusion in judicial proceedings is normally associated with secret arrangement between two persons that the one should institute a suit against the: other in order to obtain the, decision of a judicial tribunal',for some sinister purpose., In such a proceeding the claim put forward is fictitious, the contest-feigned or unreal and the final adjudication a mask designed to give false appearance of, a genuine judicial determination, and this is generally done with the- object of confounding third parties. In such a proceeding the contest- is a mere sham. In the case of pre-emption it is open to the plaintiff to find financial aid from any source he likes. He has a statutory right to preempt the sale and it is no concern of the vendees whether the borrows money from someone or otherwise arranges for finances for preempting the sale. It is true that it is a personal right 'and is not capable of being transferred. And the right of pre- emption being A right of substitution the vendor also cannot in the garb of a benamidar pre-empt his own sale-.' But merely because the vendors who are the fathers of the plaintiff preemptors 'are helping their sons to exercise the statutory right conferred on the sons cannot, without more deprive them of the right to be substituted for the vendees in exercise of their right- of pre-emption. The property pre-empted, if they were, successful, will belong to them and not to their fathers who were-the vendors. Even, in the wider sense of the word "collusion", which suggests a deceitful agreement or compact between two or more persons to do some act in order to prejudice a third Persons or for some improper purpose would not apply to the present case so as to operate as estoppel against the plaintiffs. Whether or not a preeptor-plaintiff who is a benamidar for the vendors or some other party losses his right because of being a benamidar is a question which does not concern us in this case and we express no opinion thereon.On the facts of the present case there is absolutely no material on which the plaintiffs can be held to have lost their right of pre-emption on the ground of collusion. The next point relates Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 5 to the plea of limitation. Article 10 of the Second Schedule of the' India Limitation Act provides a period of one year to enforce a right of pre- emption whether founded on law or general usage or on special contract, 'the terminus a quo being the date when the purchaser takes under the sale, sought to be preempted, physical possession of the whole of the property sold or where the subject of the sale does not admit of physical possession, the date when the instrument of, sale is registered. Section 30 of the Punhjab Pre-Emption Act applies only when the cases does not fall within Art. 10. On the finding of the District Judge and of the High Court it is obvious that physical possession of the whole of the property sold was not taken, by the vendees, on the date of sale. Therefore, the first part of article does not apply. According to the appellants' counsel the land sold does admit of physical possession and if a part of the land has been taken into possession by the vendees then Art. 10 would be inapplicable and S. 30 of the Punjab Pre-emption Act would be attracted. In that case the terminus a quo according to Shri Gosain would be the date on which the vendees took under the sale physical possession of any part of such land. The argument in our view in misconceived. The second part of Art. 10, in our opinion, covers cases where the subject of the sale, which means the whole of the property sold, does not admit of physical possession and that would be so when a part of the land is in the possession of the tenants. The argument that use of the expression "subject of the sale" suggests that this article would apply only if the entire and not only a part of the land is in the possession of the tenants is not acceptable. The expression "physical possession" came up for construction before the Privy Council in Batut Begam v. Mansur Ali Khan(1) Lord Robertson speaking for the Judicial Committee said "What has to be considered is as the High Court accurately formulated, the question, does the property admit of physical possession ? The word "physical" is of itself a strong word, highly restrictive of the kind of possession indicated; and when it is found as is pointed out by the High Court, that the Legislature has in successive enactments about the limitation of such suits gone on strengthening the language used,-first in 1859 prescribing "possession" then in 1871 requiring "actual possession" and finally in 1877 substituting the,word "physical" and "actual", it is seen that that word has (1) I.L.R.C4 All. 17 been very deliberately chosen and for a restrictive purpose. Their Lordships are of opinion that tile high Courts are right in the conclusion' they have stated., their Lordships consider that the expression used by Stuart, C.J., in regard to the words "actual possession is applicable with still more certainty to the words "physical possession " and that what is meant is a "personal and immediate" possession." This view has ever since then been followed by the High Courts in India. No decision holding to the contrary was brought to our notice. Indeed, Shri Gosain virtually conceded that there was none to his knowledge. The properties in possession of tenants have on this reasoning to be held to be incapable of physical possession which means personal and immediate possession. It was so held in Ghulam Mustafa v. Shahabuddin(1). In that case the Full Bench of the Punjab Chief Court approved of some of its earlier decision overruling the dictum is one of the earlier decisions of that Court. This view has consistently held the fold in the Punjab and we do not find any cogent reason for disagreeing and upsetting it. If the date of registration of the sale deed be the terminus a quo then indisputably the suit must be held to be within limitation. These being the only two points agitated before us this appeal must fail and is dismised with costs. R.K.P.S. Appeal dismissed. Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 6 (1) 49 P.R. 1908 (F.B.). Sukhnandan Singh Etc vs Jamiat Singh & Ors on 18 February, 1971 7 | {
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Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 Equivalent citations: 1971 AIR 2280, 1971 SCR (3) 357 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, J.M. Shelat PETITIONER: NAVINCHANDRA CHHOTELAL Vs. RESPONDENT: CENTRAL BOARD OF EXCISE AND CUSTOMS & ORS. DATE OF JUDGMENT13/01/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. SHELAT, J.M. CITATION: 1971 AIR 2280 1971 SCR (3) 357 ACT: Customs Act (32 of 1962), ss. 128 and 129(1) and proviso- Scope of. HEADNOTE: The Collector of Customs and Excise confiscated certain smuggled goods. and levied a personal penalty of Rs. 20,0,00 on the appellant under s. 112 of the Customs Act, 1962. He filed an appeal under s. 128 before the first respondent and pleaded that the deposit of penalty as required by s. 129 may be waived. The first respondent, after hearing him on the preliminary point regarding waiver of deposit of penalty ordered that the appeal would be heard on merits if a sum of Rs. 10,000 out of the total penalty was deposited by the appellant; but, since the appellant failed to deposit even the amount of Rs. 10,000 within the prescribed period, the appeal was rejected. The appellant carried the matter in revision to the Government. He was given a further opportunity to deposit the sum of Rs. 10,000 but as he again Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 1 failed to do so, the revision petition was rejected. A writ petition to quash the orders of the first respondent and the Government was dismissed by the High Court. In appeal to this Court, HELD : (1) Section 129(1) makes it obligatory on the person faling an appeal to deposit the penalty levied pending the disposal of the appeal on merits. The proviso to the section gives power to the Appellate Authority, in appropriate cases, to dispense with such deposit unconditionally or subject to such conditions as it may deem fit. Even though the section, does not expressly provide for the rejection of the appeal for non-compliance with the requirements regarding deposit or with any order that may be passed under the proviso, the Appellate Authority is competent to reject the appeal in those circumstances. Otherwise, the appeal will have to be kept on file and such retention will serve no purpose, because, the Appellate Authority cannot dispose of the appeal on merits when the requirements of s. 129(1) are not complied with. [362 F-G; 364 A-C] (2) The rejection of the appeal and revision would mean that the appellant was bound by the order of the Collector, but that result was brought about only by the appellant's default. [364 D-E] JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 105 of 1967. Appeal by special leave from the order dated August 24, 1966 of the Punjab High Court, Circuit Bench at Delhi in Civil Writ No. 666-D of 1966. U. M. Trivedi, Swaranjit Sodhi and S. S. Shukla, for the appellant. L. M. Singhvi and S. P. Nayar, for the respondents. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, against the judgment and order dated August 24, 1966 of the Circuit Bench of the Punjab High Court at New Delhi dismissing in limine Civil Writ No. 666-D of 1966 filed by the appellant to quash the orders of the first and second respondents dated December 7, 1965 and April 23, 1966 respectively. The main question that arises for consideration in this appeal is whether the order of the first respondent, Central Board of Excise and Customs, New Delhi, rejecting the' appeal filed by the appellant for non-compliance with the provisions of s.129 of the Customs Act, 1962 (Act 32 of 1962) (hereinafter to be referred as the Act) was justified. The point lies within a very narrow compass and hence it is not necessary to state elaborately the allegations made against the appellant for taking action under the Act read with the material provisions of the Import and Export Control Act, 1947. The appellant was called upon by the third respondent, Collector of Customs and Excise, Cochin, to show cause why he should not be penalised under s. 112(b) of the Act and why he should not be prosecuted Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 2 under s. 135(b) of the Act. Similarly another notice was issued against one Rodrigues, with whom we are not concerned in these proceedings. The appellant made representations against the show cause notice and he was also given an opportunity to contest the allegations made against him. The third respondent by his order dated July 18, 1964 held that the ruby stone in question was smuggled into India by Rodrigues at the instance of the appellant and in pursuance of an agreement entered into between them and that the ruby stone was handed over to Rodrigues by the brother of the appellant at Rangoon. By the said order the third respondent confiscated the ruby stone and levied a personal penalty of Rs. 20,000/- on the appellant under s. 112 of the Act on the ,-round that he was the prime mover behind the smuggling of the ruby stone. A personal penalty was also imposed on Rodrigues who had carried the ruby stone. It was specifically stated in the order that the penalties imposed were without prejudice to institution of any action under s. 135 of the Act. The appellant filed an appeal on October 7, 1964 before the first respondent under s. 128. After raising his contentions in the memorandum of appeal on merits, he pleaded that it will not be possible for him to deposit the penalty amount of Rs. 20,000/as was necessary under s. 129 of the Act. on the ground that he was innocent and that compliance with the requirement of deposit will result in undue hardship. He further pleaded that it was beyond his means to deposit such a large amount. Accordingly, he requested the first respondent to exempt him from making the deposit of the penalty imposed as a preliminary requirement for hearing the appeal. (Vaidialingam, j.) The first respondent by his order dated December 7, 1965, rejected the appeal for non-compliance with the provisions of S. 129 of the Act. From the order it is seen that as the appeal had been filed without depositing the penalty levied by the third respondent, the appellant was called upon on November 23, 1964 to deposit the same within 15 days and he was also further informed that his failure to deposit the penalty amount would render his appeal liable to be rejected for non-compliance with the provisions of s. 129. The appeal was heard on this preliminary point regarding waiver of the deposit under the said section. After considering the various grounds that appear to have been pressed on behalf of the appellant, the order of the first respondent proceeds to state that it agreed to consider the appeal on merits- provided a sum of Rs. 10,000/- out of the total penalty levied was deposited. The appellant was informed on August 17, 1965 about this requirement by registered letter and was called upon to deposit the same within 14 days. As the registered letter was returned unserved, a communication was sent to the appellant's lawyer, who was on record and it was acknowledged on October 18, 1965. But as the amount of Rs. 10,000/- was not deposited, the appeal was rejected for non-compliance with the provisions of S. 129 of the Act. The appellant carried the matter in revision before the second respondent under S. 130 of the Act. The appellant was given a further opportunity by the second respondent to deposit the sum of Rs. 10,000/- as required by the first respondent. As the appellant again failed to avail himself of this Opportunity, the second respondent by its order dated April. 23, 1966 rejected the revision petition holding that the matter cannot be considered on merits and that the Government of India saw no reason to interfere with the decision of the Central Board of Excise and Customs. The writ petition filed by the appellant to quash the orders of the first and second respondents was dismissed in limine by the High Court and it is the said order that is challenged before us. Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 3 It may be mentioned at this stage that the appellant was prosecuted under s. 135(a) and (b) of the Act, before the District Magistrate, Ernakulam. The District Magistrate by his judgment dated February 28, 1966 found the appellant and Rodrigues not guilty of the offence with which they were charged and acquitted them under s. 258 of the Code of Criminal Produre. Various grounds of attack against the legality of the demand notice for depositing the penalty under s. 129(1) of the Act have been taken, both before the High Court in the writ petition as also in the petition filed in this Court for special leave. But only two contentions were urged before us by Mr. U. N. Trevedi. learned counsel for the appellant, namely, (i) section 129 of the Act does not give any power to the first respondent to dismiss the appeal for non-compliance with the requirements regarding the deposit of the penalty amount; and (ii) by rejecting the appeal, the first respondent has approved the order of the third respondent levying penalty against the appellant. It will be noted that the validity of s. 129 of the Act is not challenged. Dr. L. M. Singhvi, learned counsel for the respondents, on the other hand, urged that the first respondent has acted strictly according to law when it passed the order rejecting the appeal for non-compliance with s. 129. If the appellant, who was given an opportunity not only by the first respondent but also by the second respondent to deposit the half amount of penalty, did not avail himself of the said opportunity, he was entirely to blame for bringing on him the consequences of the rejection of his ,appeal. In view of the contentions taken before us on behalf of the appellant, it is unnecessary for us to consider in great detail the decisions referred to by Mr. Trevedi. In Hoosein Kasam Dada (India) Ltd. v. The State of Madhya Pradesh and others(1) the question that arose for consi- deration was whether s. 22(1) of the Central Provinces and Berar Sales Tax Act, 1947, requiring the deposit of the penalty along with the appeal applied to an appeal filed against an order ,of assessment on the basis of return filed on date when the original s. 22 (1 ) was in force. This Court held that it was only s. 22 (1 ) as it stood on the date of filing of the return that applied and not the amended section. In Himmatlal Harilal Mehta v. The State of Madhya Pradesh and others(1) the question related to the right of a party to approach the High Court under Art. 226 of the Constitution without availing himself of the other remedies provided under the Central Provinces and Berar Sales Tax Act, 1947. This Court held that by the mere fact that a remedy was available under the said Act, an assessee was not disentitled to relief under Art. 226 when he comes with an allegation that his fundamental right is sought to be infringed. In Collector of Customs and Excise, Cochin and others V. A. S. Bava (3) the point that arose for consideration was whether s. 129 of the Act governed an appeal filed under the Central Excise and Salt Act, 1944, by virtue of the notification dated (1) [1953]S.C.R.987. (2) [1954] S.C.R. 1122. (3) [1968]1S.C.R.82. (Vaidialingam, J.) May 4, 1963 issued by the Central Government under S. 12 of the said Act. This Court held that S. 129 of the Act was not attracted. Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 4 None of the above decisions have any bearing on the conten- tions raised by Mr. Trevedi. In order to appreciate the contentions of the learned counsel for the appellant, it is now necessary to refer to ss. 128 and 129 relating to appeals and deposit of penalty or duty pending appeal. "128(1) Any person aggrieved by any decision or order passed under this Act may, within three months from the date of the communication to him of such decision or order- (a) where the decision or order has been passed by a Collector of Customs, appeal to the Board; (b) where the decision or order has been passed by an officer of customs lower in rank than a Collector of Customs, appeal to the Appellate Collector of Customs; Provided that the Appellate Authority may, if it is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months. (2) The Appellate Authority may, after giving an opportunity to the appellant to be heard, if he so desires, and making such further inquiry as may be necessary, pass such order as it thinks fit, confirming, modifying or annulling the decisions or order appealed against : Provided that an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value shall not be passed- (a) by an Appellate Collector of Customs; (b) by the Board unless the appellant has been given a reasonable opportunity of showing cause against the proposed order; Provided further that where the Appellate Authority is of opinion that any duty of customs has been short levied, no order enhancing the duty shall be passed unless the appellant is given notice within the time- limit specified in section 128 to show cause against the proposed order. 129(1) Where the decision or order appealed against related to any duty demanded in respect of goods which are not under the control of customs authorities or any penalty levied under this Act. any person desirous, of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied; Provided that where in any particular case the appellate authority is of opinion that the deposit of duty demanded or penalty levied will cause undue hardship to the appellant, it may in its discretion dispense with such deposit, either unconditionally or subject to such conditions as it may deem fit. Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 5 (2) If upon any such appeal it is decided that the whole or any portion of such duty or penalty was not leviable, the proper officer shall return to the appellant such amount of duty or penalty as was not leviable." From the provisions extracted above it is to be seen that s. 128 gives a right of appeal against the decision or order passed by the authorities mentioned therein. It also specifies the authorities to whom and the period within which the appeal is to be filed. The proviso to sub-section (1) of s. 128 gives power to the Appellate Authority on sufficient cause being shown to extend the period for filing the appeal by a further period not exceeding three months. Sub-section (2) provides for an opportunity being given to the appellant to be heard, if he so desires, and the Appellate Authorities passing such orders by way of confirming, modifying or annulling the decision or order appealed against, subject to two provisos contained therein. Section 129(1) makes it obligatory on the person filing an appeal to deposit, pending the appeal, with the proper officer the duty demanded or penalty levied where the order or decision appealed against relates to any duty demanded in respect of goods, which are not under the control of Custom Authorities or of penalty levied under the Act. The proviso gives power to the Appellate Authority in particular cases to dispense with such deposit either unconditionally or subject to such conditions, as it may deem fit, when it is of the opinion that the deposit of duty demanded or penalty levied will cause undue hardship to the appellant. Under s. 129 (1 ) the appellant, in this case, when he filed the appeal to-the first respondent against the order of the Collector of Customs levying penalty had to normally deposit the entire amount of penalty, namely, Rs. 20,000/-, but as the appellant had made a request for dispensing with such deposit, the first respondent heard him on that point and ultimately. as mentioned earlier, reduced the amount of penalty to be deposit- 3 63 (Vaidialingam, J.) ed to Rs. 10,000/-. But as the appellant did not comply with the said requirement, his appeal was rejected without going into merits for non-compliance of S. 129. The second respondent also when it was moved in revision gave the appellant further time to deposit the sum of Rs. 10,000/-, but as the appellant failed to avail himself of that opportunity, the Government of India declined to interfere with the order of the first respondent. Section 128 no doubt gives a right of appeal. But it is followed by S. 129 (1 ) regarding making of deposit pending the appeal. It must also be noted that so far as the deposit of duty is concerned, the requirement regarding the deposit will come into force only if the goods in respect of which duty is demanded are not under the control of Customs Authorities. Though subsection (1) of S. 129 may appear to make it necessary that an appellant should deposit the duty or, penalty before his appeal could be heard on merits, the proviso whittles down the rigour of sub-section (1). In this connection it is to be noted that under s. 189 of the Sea Customs Act, 1878, it was obligatory on the part of an appellant to deposit the duty or penalty pending the appeal. There was no provision therein by which the appellate authority could waive the requirement regarding the deposit of the entire amount of duty or penalty. But in the Act by the proviso to subsection (1 ) of S. 129, which has been quoted above, discretion has been given to the appellate authority to either waive the deposit of the entire amount of penalty or duty or reduce the quantum to be so deposited if the appellate authority is of the opinion that the requirement regarding the deposit of the full amount of penalty or duty will cause undue hardship to an appellant. We have already pointed out that the appellant did make a Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 6 request to the first respondent to exempt him from the requirement regarding the deposit of the penalty levied against him. The ,(,rounds pleaded by him in this behalf were he was innocent and that it was not possible for him to deposit the penalty amount. The appellant was heard initially on his request for exempting him from depositing the penalty and having regard to the representations made by him, the first respondent reduced the amount of penalty to be deposited to Rs. 10,000/- that is half the amount of the penalty levied by the Collector. The appellant did not comply with this requirement and therefore his appeal was rejected for non-compliance with the provisions of s. 129 (1). The appellant availed himself of his right to challenge this order in revision under S. 130 of the Act, before the second respondent. The appellant was given a further opportunity to deposit the sum of Rs. 10,000/-, but he failed to avail himself of this further opportunity afforded to him by the second respondent and hence his revision was rejected. No doubt S. 129 does not expressly provide for the rejection ,of the appeal for non-compliance with the requirement regarding the deposit of penalty or duty, but when sub- section (1) of s. 129 makes it obligatory on an appellant to deposit the duty or penalty _pending the appeal and if a party does not comply either with the main sub-section or with any order that may be passed under the proviso, the appellate authority is fully competent to reject the appeal for non-compliance with the provisions of S. 129(1). That is exactly what the first respondent has done in this case. Accepting the, contention of Mr. Trevedi will mean that the appeal will have to be kept on file for ever even when the requirement of s. 129(1) has not been complied with. Retention of such an .appeal on file will serve no purpose whatsoever because unless section 129(1) is complied with, the appellate authority cannot proceed to hear an appeal on merits. Therefore, the logical consequence of failure to comply with s. 129(1) is the rejection of appeal on that ground. No doubt, the rejection of the appeal by the first respondent will mean that the appellant is bound by the order of the third respondent levying penalty. Such a result has been brought about ,only by the default of the appellant in complying with the order of the first respondent to deposit half the amount of penalty. Therefore, it follows that the rejection of the appeal by the first respondent was legal and the order of the High Court dismissing the writ petition is valid. In the result the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed. Navinchandra Chhotelal vs Central Board Of Excise And Customs & Ors on 13 January, 1971 7 | {
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Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 Equivalent citations: 1971 AIR 2577, 1972 SCR (1) 525, AIR 1971 SUPREME COURT 2577, 1971 LAB. I. C. 1516, 1971 2 LABLJ 513, 24 FACLR 56, 40 FJR 258, 1 SCR 525, 1972 (1) SCJ 269 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, G.K. Mitter, P. Jaganmohan Reddy PETITIONER: UNION OF INDIA & ANR. Vs. RESPONDENT: OGALE GLASS WORKS DATE OF JUDGMENT01/09/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. MITTER, G.K. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 2577 1972 SCR (1) 525 1971 SCC (2) 678 ACT: Employees' Provident Fund Act, 1952-Scope of s. 19A of the Act-Whether decision under s. 19A of the Act by the Central Government is final in the facts and circumstances of the case. HEADNOTE: The respondent company was manufacturing various articles including. Lantern and Safety Stoves etc. In November 1952, Employees Provident Fund Act, was passed and the company was making regular contributions to the Provident Fund for all employees. After sometime, another establishment which was carrying on similar business, filed a writ petition in Bombay High Court Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 1 contesting the claim of the Regional Provident Fund Commissioner, that the Act applied to all sections of the glass works. The Bombay High Court held that the Act and the scheme applied only to such sections of the company as were covered by Sch. 1 of the Act and not to all sections. Against this decision, an appeal was preferred before this Court and the Court reversed the decision of the High Court and held that the Act and the scheme applied to all employees working under the said glass works. Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandra, [1962] Supp. 3 S.C.R. 815. The respondent, although was making contributions in respect of all its employees, discontinued to do so after the decision of the High Court in the above matter, except for those employees who were working in the Lantern and Stove Sections. Thereafter, the employees raised a dispute, and the dispute was referred to the Industrial Tribunal, Maharashtra and the Industrial Tribunal gave its award against the management but exempted the respondent company from contributing for certain years. After the decision of this Court in Shree Krishna Metal Co.'s case, the Regional Provident Fund Commissioner, called upon the respondent to make contributions but the respondent pleaded that there has been already a decision by the Central Government under s. 19A of the Act holding that the Act and the scheme applied only to the Lantern and Stove Sections and therefore the respondent asked for refund of the contributions made for employees of other sections and maintained that the Department was not entitled to call upon the company to make contributions for the years in question. The Department threatened to take coercive steps and in consequence, respondent filed a writ petition in the Nagpur Bench of the Bombay High Court challenging the demand made by the Regional Provident Fund Commissioner and sought relief. The High Court held that in view of the Central Governments decision under s. 19A of the Act, the appellants have no right to reopen the question of liability of the respondent. On appeal, the following questions arose for consideration : (i) Whether there has been a decision of the Central Government under s. 19A of the Act. (ii) the effect of the Award passed by the Industrial Tribunal exempting the company from contributing for certain years; (iii) whether the company is liable to pay the administrative charges for the exempted periods. Allowing the appeal, -1340 Sup. CI/71 526 HELD : (1) From the evidence it is clear that there has been no ,final decision by the Central Government under s. 19A of the Act. it was only a limited decision not to apply the Act and the scheme in view ,of the judgment of the Bombay High Court and till the final decision of the appeal by this Court. After the matter is finally disposed of by this Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 2 Court, the appellants are perfectly justified in demanding contributions for all employees from the respondent in terms of the demand notice. [545 E] Although the Award passed by the Industrial Tribunal exempted the management from contributing for a certain number of years, it is not relevant for the purpose of applying the Act arid the scheme. Moreover, the appellants were not parties to the award. Since the Act and the scheme applies to all sections of the respondent, the respondent is liable to make contributions at the rate specified in the Act. The rate specified by the Industrial Tribunal is not in accordance with the Act. Therefore, the award of the Industrial Tribunal does not stand in the way of the appellant's demand for the period in question. [545 G-546 C] (3)Once the employer is held liable for payment of its share of Provident Fund contribution for the period in question, it will also be liable to pay the administrative charges. [546 B] JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2591 of 1966. Appeal from the judgment award order dated September 17, 1965 the Bombay High Court in Special Civil Application No. 380 of 1964. R. H. Dhebar, Ram Panjwani, S. P. Nayar and P. R. Ram Asish,for the appellants. V. M. Tarkunde and K. R. Chaudhuri, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal on certificate, by the Union of India and the Regional Provident Fund Commissioner., Maharashtra State, is directed against the judgment and order dated September 17, 1965 of the Bombay High Court allowinG Special Civil Application No. 380 of 1964 filed by the respondent company under Art. 226 of the Constitution and quashing the notice of demand dated May 22, 1963 issued by the Regional Provident Fund Commissioner. The circumstances under which the writ petition was filed by the respondent may be stated : The respondent a limited company having its Head Office at Ogalawadi in Satara District was manufacturing at the relevant time Glassware, Stoves, Lanterns and Enamel wares. It had several sections in its factory, namely, (1) Glass Manufacturing Section, (2) Lantern and Safety Stoves Section, (3) Enamel Section, (4) General Section and (5) Canteen Section. In or about 1946 the Company had introduced a Provident Fund Scheme for its workers under which it paid 12 pies in a rupee as the employer's contribution towards the said fund. In 1951 the Provident Fund Scheme was amended and the Company agreed to make contributions to the. fund only if it made profits. On November 1, 1952, The Employees' Provident Fund Act, 1952, Act No. XIX of 1952 (hereinafter to be referred to as the Act), came into force and it made applicable to certain scheduled industries. There is no controversy that the Act was made applicable to the respondent on October 6, 1952 and Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 3 the Company had been paying its contribution to the Employees Provident Fund from November 1, 1952. For the purpose of the Fund, a scheme had been framed under the Act. According to the Regional Provident Fund Commissioner, the Act and the Scheme framed thereunder applied to the entire body of employees working under the respondent. Though the Company then raised objections on the ground that only the employees in the Lantern and Stoves Section were covered by the Scheme and that it was bound to make contributions only in respect of those employees, nevertheless, the Company continued to make its share of contribution to the Provident Fund even in respect of other employees working in other sections. In the mean while, another establishment in the area, the Nagpur Glass Works, which was carrying on a business similar to that of the respondent company filed a writ petition before the Nagpur Bench of the Bombay High Court under Art. 226 of the Constitution, being Miscellaneous Petition No. 122 of 1956 contesting the claim of the Regional Provident Fund Commissioner that the Act applied to all sections of the Glass Works. In the said writ petition the contention was that the Act and the Scheme will apply only to the Lantern and Stove Section. Though this claim was contested by the Department, a Division Bench of the, Bombay High Court, by its decision dated March 7, 1957 reported in The Nagpur Glass Works Ltd., v. Regional Provident Fund Commis- sioner(1) upheld the contentions of the Nagpur Glass Works that the Act and the Scheme applied only to such sections or departments of the Company as were covered by Schedule The respondent before us continued to make its contribution in respect of All the employees. There was some correspondence between the Company and the Department, to which we will refer later. The Department had challenged the decision of the Bombay High Court before this Court. The decision of the Bombay High Court was reversed by this Court on March 14, 1962 in the decision reported in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara(2). This Court after referring to the relevant Provisions of the Act including s. 2A which had been introduced by an amendment in 1960 held that the Act applied to composite factories and that the Glass (1) 1. L. R. [1958] Boni. 444. (2) [1962] Supp. 3 S. C. R. 815, 5 28 Works therein was commercially engaged in a Scheduled industry among others and hence the Act was applicable to it. On this basis, this Court held that all the employees working under the said Glass Works were covered by the Act and the Scheme. To resume the narrative, after the decision of the Bombay High Court, the respondent began to discontinue making contributions in respect of the employees, other than those working in the Lantern and Stoves Section. The employees raised a dispute regarding the discontinuance of the Provident Fund Scheme and in consequence the State Government referred the dispute to the Industrial Tribunal, Maharashtra, being Reference No. I.D. 29 of 1960. The Industrial Tribunal, by its award dated June 24, 1960, after considering the financial position of the Company, held that for the years, 1951, 1957, 1958 and 1959, the Company should make contributions to the Provident fund at the rate of 8- 1/3 per cent of the basic wages to the workers uncovered by the Scheme under the Act and that the Company need not make any contributions for the years 1950 and 1952 to 1956, as during those years they have suffered loses. It gave a further direction that from March 1, 1960 the Company is to make contribution at 6-1/4` per cent of the wages and Dearness Allowance. The Reference also related to the claim for Dearness Allowance and the Tribunal had adjudicated on that Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 4 aspect also. After the decision of this Court, referred to above, rendered on March 14, 1962, the Regional Provident Fund Commissioner, by his letter dated March 22, 1963 called upon the respondent to make its share of the Provident Fund contributions at the statutory rate for the period November 1, 1952 to December 31, 1960 together with administrative charges for the said period. The Company made representations protesting against the demand made, by the Regional Provident Fund Commissioner. In particular, they pleaded that there has been already a decision by the Central Government under S. 19A of the Act holding that the Act and the Scheme apply only to the Lantern and Stoves Section and on the basis of that decision the contributions made by them, under protest, with regard to the employees working in the other sections had been refunded and therefore the department was not entitled to call upon the Company to make contributions for the years in question. They further contested the claim of the department on the ground that the question regarding the liability of the Company to make contributions to the provident fund was the subject of adjudication under the Award of the Industrial Tribunal dated June 24, 1960 and this Award precluded the department from 'Claiming contributions for the identical period. The Company raised a further objection that even on the basis of the decision of this Court, the Act does not apply to its other sections. These objections raised by the Company were negatived by the department which threatened to take coercive steps to collect the contributions if the demand, under the order dated May 22, 1963 was not complied with. The respondent, in consequence filed the writ petition in the Nagpur Bench of the Bombay High Court challenging the demand made by the Regional Provident Fund Commissioner by his order dated May 22, 1963 and sought relief for restraining the officers concerned from enforcing the demand and for quashing the said order. The appellant contested the writ petition on various grounds, but it is only necessary to note that their main plea was that there has been no decision of the Central Government under S. 19A of the Act to the effect that the Act and the Scheme apply only to the Lantern and Stove Section of the respondent. On the other hand, their plea was that the Act and the Scheme had been made applicable to the entire establishment of the respondent comprising all its sections and covering the entire body of workmen employed in the said establishment. The respondent has been making contributions as per the scheme framed under the Act. But i n view of the decision of the Bombay High Court, which they had to respect and obey, they had provisionally decided that the contributions will be collected from the respondent only in respect of those sections, which have been held by the High Court to be governed by the Act. This decision was a purely provisional and tentative one pending the adjudication by this Court regarding the correctness of the decision of the Bombay High Court, which was being challenged by the appellants. It was in view of the Bombay High Court's judgment that the amounts by way of contributions collected from the respondent in respect of the workmen who were held not to be governed by the Act, were either refunded or adjusted towards his future contributions in respect of those workmen to whom the Act applied. In this connection the appellants relied on the correspondence that passed between them and the respondent as well as the correspondence that the appellant had with the employees' Union. But after the decision of this Court holding that the Act applies even to a composite establishment, the Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 5 appellants necessarily had to take up the matter from the stage at which it was left because of the Bombay High Court's decision and in consequence made demands on the respondent to comply with the provisions of the Act and the Scheme. The appellants further pleaded that the award of the Industrial Tribunal had no relevancy in considering the statutory liability of the respondent under the Act. Further, it was pointed out by them that the principles on which the adjudication was given were not at all in conformity with the Act. Finally, the appellants pleaded that they, having a duty to enforce the provisions of the Act, which was a benevolent measure in the interest of the workmen, issued the demand 5 30 dated May 22, 1963 which is in conformity with the decision of this Court. The High Court, by its judgment and order under appeal, has held that the letter dated August 19, 1959 sent by the Central Provident Fund Commissioner, New Delhi, to the Regional Provident Fund Commissioner read with the letter dated September 21, 1959 sent by the latter to the respondent clearly shows that there has been a decision under s. 19A of the Act that only the Lantern and Stoves as well as Enamel Sections of the respondent Company would be covered by the provisions of the Act and that the order of the Central Government having become final, the appellants have no right to have the question of liability of the respondent in respect of the other sections reopened. In this view, the High Court did not consider it necessary to go into the question whether the decision of the Central Government as contained in the two letters referred to above, was inconsistent with the provisions of the Act, nor did it think it necessary to consider the effect of the award in I.D. No. 29 of 1960. The High Court rejected the claim of the appellants that the decision not to enforce the Act in respect of the other sections was only a tentative one pending adjudication by this Court regarding the correctness of the Bombay High Court's judgment. Though it was contended by the respondent that even on the basis of the decision of this Court, the Act and the Scheme will not apply to all sections of its establishment, the High Court rejected that contention on the ground that the manufacture of glass wares, the enamel wares and the lantern and stoves was the industrial activity of the respondent and that to such a case the decision of this Court will apply and that the respondent Company will be governed by the provisions of the Act and the Scheme. Ultimately, the High Court quashed the demand made under the order dated May 22, 1963 and gave directions to the appellants not to enforce the said demand. On behalf of the appellants Mr. R. H. Dhebar, learned coun- sel, very strenuously urged that the High Court has committed a very serious error in construing the letters dated August 19, 1959 and September 21, 1959 as indicating that there has been a decision by the Central Government under s. 19A, accepting the contentions of the respondent. The counsel pointed out that the entire correspondence clearly shows that in view of the decision of the Bombay Hi- gh Court, the respondent's claim for adjustment of the amount paid by them was provisionally accepted pending the appellants' appeal in this Court challenging the decision of the Bombay High Court. The counsel further urged that the award of the Industrial Tribunal has no relevancy or bearing in considering the statutory liability of the respondent under the Act. The appellants were not parties to the award and they have got a statutory duty to enforce the provisions of the Act in the interest of the employees. On facts, the counsel urged, there can be no controversy regarding the application of the Act to all the activities of the respondent. Therefore, he pointed out that the demand made by the Regional Provident Fund Commissioner on May 22, 1963 was justified and the demand in any event are for the periods not covered by the industrial adjudication. Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 6 Mr. V. M. Tarkunde, learned counsel for the respondent, has supported the judgment of the High Court in full as also the reasons given by the High Court for holding, that there has been a decision by the Central Government under S. 19A. In this connection he referred to certain passages contained in the communications that passed between the appellants and the respondent. The counsel further urged that when the Central Government took a decision under S. 19A, as is evidenced by the letters dated August 19, 1959 and September 21, 1959, that decision was not in any manner inconsistent with the provisions of the Act. The said decision by the Central Government was not a provisional one to abide the adjudication by this Court regarding the Bombay High Court's judgment. On the other hand, the said decision was a totally independent one taken under s. 19A by the Central Government in respect of the respondent's establishment in view of the contentions raised by it before the appropriate authorities. The counsel further urged that the liability of the respondent for the period now covered by the demand dated May 22, 1963 was the subject of adjudication by the Industrial Tribunal on a dispute raised by the employees. The award has considered all aspects. and has exempted the respondent from making any contribution for certain years. That decision is binding on the workmen and the award is still in force. The claim made by the appellants is really an attempt made by the employees indirectly to circumvent the decision in I.D. No. 29 of 1960. Finally, the counsel urged that even on the principles laid down by this Court regarding the applicability of the Act, the respondent's objections regarding their liability in respect of certain sections are valid. We can straightaway dispose of the last point urged by Mr. Tarkunde that the Act does not apply to all sections of the respondent's establishment. We have already referred to the decision of the High Court rejecting the contentions of the respondent in this regard and holding that the manufacture of glass material, enamel and lantern and stoves, was the industrial activity of the respondent and that the decision of this Court squarely applies which, in consequence, makes the Act and the Scheme applicable to all sections of the respondent. That is a decision recorded by the High Court on facts and we see no error in this conclusion reached by the High Court.' Mr. Tarkunde, however, contended that this Court in the case of The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara(1) has held that the Act and the Scheme apply to all the sections of the glass works on the basis of s. 2A, which was inserted in the Act, with effect from December 31, 1960 by the Employees Provident Fund (Amendment) Act, 1960 (Act 46 of 1960). Section 2A is as follows "2A Establishment to include all departments and branches: For the removal of doubts, it is hereby declared that where an establishment consists of different departments or has branches, whether situate in the same place or in different, places, all such departments or branches shall be treated as parts of the same." As the said section takes effect only from December 31, 1960, the counsel argued, that the decision of this Court does not apply to the respondent for the years in respect of which the demand is made. We are not inclined to accept this contention of the learned counsel. This Court has elaborately considered the various provisions of the Act, and having due regard to the activities of the Company with which they were dealing held that the Act applies to a composite factory. No doubt this Court has also Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 7 referred to s. 2A, which has been added by the Amendment Act 46 of 1960 only for the purpose of emphasising that the said provision makes it clear that an establishment may consist of different departments or may have different branches, whether situated in the same place or in different places and yet all such departments or branches shall be treated as parts of the same establishment. Reference to this Section has been made only for the purpose of giving an additional reason for negativing the contention that the establishment under s.. 1(3) (a) does not contemplate a composite factory. Therefore, it follows that the Act and the Scheme fully apply to a composite establishment like that of the respondent, as held by this Court, in the decision referred to above. Two questions now fall, to be considered in this appeal, namely, (i) whether there has been a decision of the Central Government under S. 19A of the Act as contended by the respondent, and (ii) the effect of the award in I.T. No. 29 of 1960. In ,order to appreciate the contentions of the learned counsel on both sides, it is necessary to refer to the material provisions of the Act and also to the correspondence that passed between the appellants and the respondent. The Act, as its preamble shows is to provide for the institution ,of provident fund for the employees in factories and other establishments. Sub-section 3 of S. 1 provides for the applicability (1) [1962] Supp. 3 S.C.R. 815. of the Act to the establishments referred to therein. There is no controversy that the Act has been made applicable to the respondent Company on October 6, 1952 and the Company has been paying its share of contribution to the employees provident fund from November 1, 1952. Section 2 defines the various expressions. In particular four expressions require to be noticed, namely, "contribution" "scheme" ,'member' 'and "fund". Under s. 2(c) "contribution" means a contribution payable in respect of a member under a Scheme. Under s. 2(1) "Scheme" means a Scheme framed under the Act. Under s. 2(j) "member" means a member of the fund and under s. 2(h) "Fund" means the provident fund established under a Scheme. We have already pointed out that s. 2A. has also been referred to by this Court in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara(1) for holding that the Act applies to a composite establishment. Section 5 deals with the framing of a Scheme by the Central Government called "Employees Provident Fund Scheme". Under sub-s. 2 of s. 5, a scheme framed under sub-section (1) can provide that any of the provisions shall take effect either prospectively or retrospectively from such date as may be specified in this behalf in the Scheme. Sections 5A to 5C deal with the constitution of the Central Board, the State Board and treating the Board of Trustees a body corporate, Section 5D(i) empowers the Central Government to appoint a Central Provident Fund Commissioner who is to be the Chief Executive Officer of the Central Board and to work subject to the general control and superintendence of the Central Board. Sub-section (2) of s. 5D similarly empowers the Central Government to appoint Provident Fund Commissioners, Regional Provident Fund Commissioners Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 8 and other officers to assist the Central Provident Fund Commissioner in the discharge of his duties. Section 5E provides for the Central Board, with the prior approval of the Central Government and a State Board with the prior approval of the State Government to delegate to its Chairman or any of its officers such of its powers and functions under the Act as are necessary for the efficient administration of the Scheme. Section 6 deals with the contributions to be paid by the employer to the fund. It is to be at 6-1/4% of the basic wages and Dearness Allowance and Returning Allowance, if any, for the time being payable to the employees. It also provides for the employees contribution to be equal to the contribution payable by the employer. At this stage it may be mentioned that during the period for which the demand has been made contribution is to be (1) [1962] Supp. 3 S.C.R.815. made at 6-1/4% of the basic wages including Dearness Allowance, though the expression "Basic Wages" under S. 2B excludes Dearness Allowance. In I.T. No. 29 of 1960 the Tribunal, even for the years for which the contribution has been directed to be made, has fixed it only on the basic wages excluding Dearness Allowance. Under s. 7A the officers mentioned therein have been em- powered to determine the amount due from any employer under any provision of the Act or of the Scheme. Section 8 deals with the manner of recovery of the amount due from the employer. Section 19 provides for the appropriate government delegating any power, authority or jurisdiction exercisable by it under the Act or the Scheme to the appropriate offices mentioned therein. Section 19A, under which, according to the respondent, a decision has been taken by the Central Government regarding non-applicability of the Act to some of its sections, disputed by it, runs as follows: "19A. Power to remove difficulties: If any difficulty arises in giving effect to the provisions of this Act, and in particular, if any doubt arises as to: (i) whether an establishment which is a factory is engaged in any industry specified in Schedule 1; (ii)whether any particular establishment is an establishment falling within the class of establishments to which this Act applies by virtue of notification under clause (b) of sub-section 3 of section 1; (iii)the number of persons employed in an establishment; (iv)the number of years which have elapsed from the date on which an establishment has been set up; or Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 9 (v) whether the total quantum of benefits to which an employee is entitled has been reduced by the employer, the Central Government may, by order, make such provision or give such direction, not inconsistent with the provisions of this Act, as appear to it to be necessary or expedient for the removal of the doubt or difficulty; and the order of the Central Government, in such cases, shall be final." It may also be stated that according to the respondent a controversy arose whether its establishment is one falling within the class of establishment to which the Act applies by virtue of noti- fication under cl. (b) of sub-section (3) of s. 1 and it is in view, of that controversy that the Central Government took a decision. accepting the respondent's contention. Such a dispute raised by the respondent squarely comes under cl. (2) of s. 19A, and that decision has become final. It is not necessary to refer to the, Scheme as there is no dispute that if the Act applies, the Scheme framed thereunder does not violate any provision of the Act. From a review of the sections, it will be seen that the Act is essentially a measure for the welfare of the employees; and if the Act applies and a Scheme has been framed for an establishment, the employer is bound to make the contributions as provided for tinder s. 6. There is a statutory liability on an employer to pay the contribution at the rate mentioned in s. 6. Stringent provisions have been made for non compliance with the requirement of the statute and very drastic powers have been given to the authorities to recover the contribution due from an employer. Though there is a hierarchy of officials, nevertheless, it is only the Central Government that has been given power under s. 19A to give a direction not inconsistent with the provisions of the Act, if any doubt arises regarding one or other matters referred to in Cls. (i) to (v); and that power is to be exercised when any difficulty or doubt arises in giving effect to the provisions of the Act. While the contention of the respondent is that the letter dated August 19, 1959 read with letter dated September 21, 1959 constitutes a direction given by the Central Government under s. 19A, according to the appellants no such direction has been given because the Central Government had no occasion to consider the matters mentioned under cl. (ii) of s. 19A. Now the question arises whether there was any occasion for the Central Government to give a direction under s. 19A in the, case of the respondent. In order to understand the context in which the letters dated August 19, 1959 and September 21, 1959 relied on by the respondent came to be written and to understand' their full implication, it is necessary to refer to the correspondence that passed between the appellants and the respondent, both prior and subsequent to August 19, 1959. The judgment of the Bombay High Court in the Nagpur Glass Works' case(1) was rendered on March 7, 1957. The respondent in its letter dated December 10, 1957 addressed to the Regional Provident Fund Commissioner, Bombay, after referring to the Act having been made applicable to its establishment, gave a list of its activities, as well as the number of the employees working in the various sections. The number of employees to whom the Provident Fund Scheme under the Act applied has also been stated. The respondent then refers to a representation made to the Regional Provident Fund. Commissioner stating that the Act applied only to, (1) I. L R. [1958] Rom. 444. Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 10 some of its sections, but this representation was rejected by the officer concerned as early as March 31, 1953. The Company then states that the view of the Regional Provident Fund Commissioner as expressed in his letter dated March 31, 1953 that the Act applies to all sections of the establishment is erroneous in view of the decision of the Bombay High Court rendered on March 7, 1957 in the case of Nagpur Glass Works(1). After referring to the material part of the judgment of the High Court, the respondent states that in view of the said decision, the Act, which has been made applicable to all the employees working under the res- pondent can be made applicable legally only to those employees engaged in the manufacture of Hurricane Lanterns and non pressure stoves. On this basis, the Company further makes a request to the Regional Provident Fund Commissioner to reconsider his previous view expressed in the letter of March 31, 1953 and grant suitable relief to. The Company winds up the letter by making a request to the Officer that the contributions made by it all along even in respect of the employees not covered by the Act as per the Bombay High Court decision, may either be refunded ,or adjusted towards future contributions payable by them in respect of employees to whom the Act will apply under the said decision. Two circumstances emerge from this letter of the Company (i) that from the very beginning the Act has been applied to all the employees of the respondent working in all its sections and that a representation made by it to revise the Scheme was not accepted by the Department even as early as March 31, 1953 and the Company has been making provident fund contributions for all its employees; and (ii) the letter dated December 10, 1957 is necessaciated, as expressly mentioned therein because of the judgment of the Bombay High Court dated March 7, 1957 and it is on the basis of that judgment that the Department was being asked to reconsider its previous view regarding the applicability of the Act to all the employees of the Company. Therefore, even the very earlier letter written by the Company asking for modification of the Scheme is really rested on the judgment of the Bombay High 'Court. On November 28, 1958 the Regional Provident Fund Commissioner, Bombay wrote a letter to the Company. In that letter he referred to the Company's letter of September 1, 1958 where the latter appears to have stated that it "would be justified in withholding the payment of employer's share till final decision from Supreme Court is obtained "The officer then refers to the ,General Secretary for the employee's Union having met him and repre sented that the respondent was recovering the employees share ,of provident fund contribution every month. On inquiry, the officer states, that the said amount is not being remitted or credited towards the employees' share for the months for which the (I) I.L.R. [1958] Bom.444. amounts have been collected by the respondent. The officer makes a request to the respondent to remit the amounts collected by it as early as possible. This letter of the Regional Provident Fund Commissioner again indicates that the respondent itself has been taking up the position that it will be justified in not making contribution to the provident fund till a final decision is given by the Supreme Court. That clearly indicates that the Department had taken up in appeal the judgment of the Bombay High Court to this Court and the respondent was fully aware of the same. This letter further shows that it was not as if the employer, the respondent, was totally denying its liability under all circumstances. It limits it only till a final decision regarding the correctness of the Bombay High Court's view is given by this Court. On December 22, 1958, the respondent again sends a letter to the Regional Provident Fund Commissioner stating that they nave never disputed their liability to pay the workers and Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 11 Company's contribution so far as the Lantern and Glass Departments were concerned. However the Company affirms that they are disputing their liability to contribute in respect of the workers in the Glass, Enamel and, other Departments. The Company gave an account of the total amount contributed by it from November 1, 1952, the date when the Act was made applicable to the Company, till October 31, 1958. The Company further says : "We have so far remitted to you Rs. 7,06,914.87 np. i.e. we, have paid you in excess a sum of Rs. 1,11,940/since employees in Glass, Enamel and other Departments are not covered by the Act according to the decision of the High Court and the matter is now under consideration of the Supreme Court of India." The Company makes a request to the Officer to adjust, what according to them, were excess payments. The Company further states : "The excess amount of Rs. 1,11,940/- after adjusting all dues upto 31-10-58 may be retained with you till the Supreme Court finally decides the matter." This letter further emphasises that the respondent was raising a dispute regarding their non-liability to contribute in respect of certain sections mainly on the basis of the Bombay High Court decision. They also specifically referred to the appeal against the decision of the Bombay High Court pending in this Court. It is on this basis that the respondent states that the excess amounts that have been paid by them may be retained till this Court finally decides the matter. Therefore, the non-liability pleaded by the respondent is again based upon the judgment of the Bombay High Court and the period during which the non-liability is sought to be extended is till this Court finally adjudicates upon the matter. Then we come to the two crucial letters dated August 19, 1959 and _September 21, 1959. The first is a letter written by the Central Provident Fund Commissioner, New Delhi to the Regional Provident Fund Commissioner, Bombay. Obviously, after the judgment of the Bombay High Court, some correspondence seems to have taken place between the officers concerned and the Regional Provident Fund Commissioner sought clarification from the Central Provident Fund Commissioner. The Central Provident Fund Commissioner in this letter states : "We have since been advised by the Government of India that the "enamel" and "lanterns and stoves" sections of the Ogale Glass Works Ltd., will continue to be covered under the Employees Provident Fund Act, 1952. The Provident Fund contributions deposited by the management in respect of the remaining sections of the factory viz., (i) general, (ii) glass, and (iii) canteen may be refunded to them." Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 12 .lm0 The second letter dated September 21, 1 959 was addressed to ,the respondent by the Regional Provident Fund Commissioner after getting clarification from the Central Provident Fund Commissioner. In this letter it is stated that the Act and the Scame framed thereunder has been made applicable to Enamel and Latern and Stoves sections of the respondent's factory and that the amounts deposited by them in respect of the other sections, namely, (i) general, (ii) glass, and (iii) canteen are to be refunded. The respondent was desired to submit a list as on August 31. 1959, giving the account numbers and the names of the employees who will be uncovered by the Act and also put in a claim for the excess amount paid by it. Prima facie if these two letters of August 19, 1959 and September 21, 1959 are read each by itself and in isolation without having any regard to what has passed between the parties and the Department, both prior and subsequent, the matters mentioned in these two letters may appear to 'Support the contentions of the respondent that the Central Government hasgiven a direction that the Act and the Scheme will apply ,only to the Enamel and Lantern and Stoves Sections of the respondent. That is what is stated in the letter of the Central Provident Fund Commissioner to the Regional Provident Fund Commissioner. On the basis of the letter dated August 19, 1959, the Regional Provident Fund Commissioner also informs the respondent that the Act and the Scheme will apply only to those sections and the excess contributions will be refunded. The High Court, in our opinion. has laid undue emphasis oil the use of the expression "We have since been advised by the Government of India" occurring in the letter of August 19, 1959. According to the High 'Court some doubt must have been raised by the Regional Provident Fund Commissioner regarding the applicability of the Act to all the sections of the establishment of the respondent and these doubts must in turn have been referred to by the Central Provident Fund Commissioner to the Central Government for resolving the doubts. The Central Government, according to the High Court, can be moved only under s. 19A of the Act, and it must have given a direction, as indicated in the letter of August 19, 1959. There fore, it is the view of the High Court that a final direction has been given under S. 19A by the competent authority, the Central Government, regarding non-applicability of the Act and the Scheme to (i) general, (ii) glass, and (iii) canteen sections of the respondent establishment. The advice that is referred to in +he letter of the August 19, 1959 is really a direction of the Central ,Government. The High Court finds further support for this conclusion in the letter of September 21, 1959. This letter, according to the High Court, makes the position very clear that the decision of the Central Government regarding the non- applicability of the Act to the (i) general, (ii) glass; and (iii) canteen sections has been communicated to the respondent and in addition the Department has also undertaken to refund the excess payments made by the respondent in respect of the employees working in these three sections. According to the High Court the contentions of the respondent in this regard have been accepted by the Central Government and a decision, which has become final, has been given in favour of the respondent under s. 19A. Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 13 We are not inclined to agree with this reasoning of the learned Judges of the High Court in the interpretation placed on these two letters. They have not given due weight to the earlier letters already referred to by us, where it has been categorically stated, even by the respondent, that its claim regarding non-applicability of the Act in respect of the three sections is exclusively based on the decision of the Bombay High Court and it wants the excess payment made by it to be kept to its credit till the matter is finally adjudicated upon by this Court. The Department also in its replies specifically refers to the matter pending in this Court in appeal. The High Court has ignored all these factors when it held that there has been a decision taken under S. 19A by the Central Government. The further view of the High Court is that there is nothing in the letters of August 19, 1959 and September 21, 1959 that the decision of the Central Government was only a tentative or provisional one, which could be taken up for reconsideration depending upon the judgment that may be given by this Court. Even here the view of the High Court is wrong. If the two letters are properly understood in the context of the previous correspondence, the position that there has been no decision by the Central Government under S. 19A and that any order for refund of the excess amount that may have been passed was purely provisional or tentative pending the decision by this Court, is made clearer by the subsequent letters to which we will make a reference immediately. On October 14, 1959 the Central Provident Fund Commissioner addressed a letter to the General Secretary of the Employees' Union that the Central Government has decided, at the instance of the respondent, that the coverage of (i) general, (ii) glass, and (iii) canteen sections be discontinued and that the pro- vident fund amounts deposited be refunded. The letter proceed, to say : "This decision is due to the judgment of the Bombay High Court in the cases of Oudh Sugar Mills Ltd., etc. You will agree that the decision of the Bombay High Court, had to be given effect to till the appeal preferred by us in those cases is favorably decided by the Supreme Court of India. It will take some more time for getting the Supreme Court's decision and you will appreciate that it is not in our hands to expedite the decision." The officer then refers to a suggestion made by the Union for amending the Act and states that it is not acceptable to the Government of India. Finally, the officer winds up the letter by saying that nothing can be done till a favorable decision is obtained from this Court in the appeal filed by the Department against the Bombay High Court judgment. The Union appears to have been distressed at the decision of the Bombay High Court and representations appear to have been made to the authorities. The Union is pacified by the officer that the decision taken regarding the respondent being a limited one and that such a decision was inevitable in view of the Bombay High Court's judgment and that the position will continue to be the same till the final adjudication by this Court in appeal. Therefore, here again it is seen that the Department is putting in the forefront the Bombay High Court judgment as an obstacle to enforce the provisions of the Act in respect of all the sections of the Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 14 respondent and is waiting the judgment of this Court. On October 17, 1959, the Union through its Secretary again addressed a letter to the Regional Provident Fund Commissioner regarding the decision of the respondent to discontinue its contribution under the Act in view of the letter of the Regional Provident Fund Commissioner dated September 21, 1959. The Union takes objections to the Department having taken a decision like that in favour of the Management when the matter is pending appeal before this Court. The Union expressed its resentment that the Department has not waited till the decision was given by this Court. On November 20, 1959 the respondent wrote a letter to the Regional Provident Fund Commissioner giving. a statement of accounts of the deposits made by them and stating the excess amount that is refundable to them being the contributions made in respect of the employees not covered by the Act. The respondent makes a request for refund of the amount. On April 20, 1960 the Regional Provident Fund Commissioner informed the respondent about the refund of the amount of all the employees who are not covered by the Act. It appears that in view of the fact that the respondent stopped making the contributions in respect of the employees in the three sections concerned, the Union raised a dispute and the Government accordingly referred the said matter for adjudication to the Industrial Tribunal, Maharashtra. The Tribunal has made an award on June 24, 1960 in I.T. No. 29 of 1960, which will be referred to by us when dealing with the second contention. At this stage it is enough to note that there was a reference regarding the provident fund and there was an award on June 24, 1960. This Court delivered its judgment on March 14, 1962 reversing the decision of the Bombay High Court. In view of the decision of this Court, which was favorable to the employees, the Union on March 28, 1962, addressed a letter to the Central Provident Fund Commissioner drawing his urgent attention to the decision of this Court wherein it has been held that the Act applies to all composite units. The letter then refers to' the discontinuance of contributions by the respondent, in view of the letter dated September 21, 1959 of the Regional Provident Fund Commissioner. The Union reiterates that in view of the decision of this Court, the respondent is liable to pay the provident fund amount according to the Act and the Scheme. The officer is requested by the Union to take, the necessary steps to realise the amounts from the employer, the respondent. On January 3, 1963 the Central Provident Fund Commissioner addressed a letter to the Secretary, Government of India, Ministry of Labour and Employment. In the said letter the officer states that the applicability of the Act to the respondent has to be reconsidered in the light of the decision of this Court overruling the decision of the Bombay High Court. The officer proceeds to state that the respondent who was originally making the contributions stopped doing so after the decision of the Bombay High Court and the excess payment made between November, 1952 to December, 1960 were adjusted in view of the advice given by the Central Government. The Central Provident Fund Commissioner finally requested the Government to reconsider the case of the respondent and to direct the same to pay the 6-L I 340SupCI/71 contributions as per the Act and the Scheme in the light of the decision of this Court from November, 1952 to December, 1960 at the statutory rate. On January 21, 1963, the Union again wrote a letter to the ,Central Provident Fund Commissioner. After a reference to the various matters regarding the Bombay High Courts' judgment ,and the Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 15 contributions being stopped by the respondent and the decision of this Court as well as the award of the Industrial Tribunal in Reference 1. T. No. 29 of 1960, it requested the officer to collect the provident fund contributions from the respondent from 1952 to 1959 in respect of general, glass and canteen sections. On May 22, 1963, the order impugned by the respondent in its writ petition in the High Court was passed by the Regional Provident Fund Commissioner calling upon therespondent to pay its share of provident fund contribution at thestatutory rates for the period November 1, 1952 to December 31,1960 together with the administrative charges for the said period. It is stated that the demand is made as per the directions-issued by the Government of India. The respondent made a representation by its letter dated May 27, 1963 disputing its liability to pay the amount and relied on the award of the Industrial Tribunal in I.T. No. 29 of 1960. The Company also made a request for being furnished with a copy of the Government's directions. The Regional Provident Fund Commissioner sent a reply dated August 31, 1963 decli ning to furnish a copy of the Government's directions as they were all contained in the Departments files. It is further stated that the respondent has to pay the employer's share of provident fund contributions at the statutory rates from November 1, 1952 to December 31, 1960 in view of the decision of this Court making the Act and the Scheme applicable to a composite factory and the officer rejected the plea of the respondent that they are not liable to pay the amount. On October 5, 1963, the respondent sent a further communi- cation to the Regional Provident Fund Commissioner. In that letter after setting out all the previous matters, the Company took up the stand that there has been a decision by the Central Government under S. 19A of the Act and that the said decision is final and binding on the parties and that it is not open to the Department to go behind those directions. The Company refers to the letter written by the, Regional Provident Fund Commissioner on September 21, 1959 regarding the decision of the Central Government about non-applicability of the Act to the three sections of the respondent. Ultimately, the respondent ,disputed its liability to pay the demand made on May 22, 1963 and has further stated that if the, demand is pursued the respondent will seek relief in a Court of law. On January 22, 1964 the Regional Provident Fund Commissioner sent a reply stating that the claim made by the respondent about its non-liability is rejected. The officer in turn called upon the respondent to pay its share of the provident fund dues and administrative charges immediately as demanded by the letter dated May 22, 1963. On receipt of this communication the respondent filed the writ petition. From the letters referred to above, which have passed between the respondent and the Department as well as the latter and the Union concerned subsequent to September 21,. 1959, it is clear that the Department has been taking up the position consistently that the original decision of the Central Government not to apply the Act and the Scheme to the three sections of the respondent was a purely tentative and provisional one and that decision was passed because of the decision of the Bombay High Court. The correspondence referred to above leaves no room for doubt that any decision taken by the Central Government-if it can be called a decision-was a purely tentative one subject to the final adjudication that is to be made by this Court. Under those circumstances it is idle for the respondent to contend that when the authorities informed them that the Act has been made applicable only to some sections of its establishment, an irrevocable decision has been taken in favour of the Company. On the other hand, it is very clear from the stand taken by the officers, as well as the respondent itself, that it was only a tentative decision taken by the Government by which it advised the officers not to enforce the Act to the three sections of the establishment of the Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 16 respondent, in view of the decision of the Bombay High Court. Immediately after the decision of this Court was given on March 14, 1962, the employees' Union of the respondent promptly on March 28, 1962 moved the officers to apply the provisions of the Act as per the decision of this Court. It was only at that very late stage that the respondent took up the plea that there has been originally a decision by the Central Government under S. 19A of the Act and that the said decision having become final is binding on the Company and the Department. From the entire corres- pondence it is clear that there has been no final decision taken by the Central Government under S. 1.9A of the Act regarding non-applicability of the Act and the Scheme in respect of the, three sections of the respondents establishment. At the most, a decision was taken to suspend the applicability of the Act during the pendency of the appeal in this Court. Once the decision of the Bombay High Court was set aside by this Court, the Department was within its right in making the demand made under the letter dated May 22, 1963. Under sub- s. (2) of S. 3 of the Act, we have already pointed out that a scheme framed under sub-section (1) may provide that any of its provisions shall take effect either prospectively or retrospectively. In fact there is no question of any claim being made in this case retrospectively. The position is that the amounts that were originally paid but later on adjusted or refunded in view of the Bombay High Court's judgment are being asked to be paid back for the same period in view of the judgment of this Court. Therefore,-,, the demand made on May 22, 1963 to pay the amount from 1952 is, in our opinion, justified. The matter may be considered from another point of view also. It is the case of the respondent that there has been a direction given by the Central Government under S. 19A by letters dated August19, 1959 and September 21, 1959. The matters referred to inthese letters have already been referred to by us. The judgmentof the Bombay High Court was given on March 7, 1957. If so, after the decision given by the High Court interpreting the Act in a particular manner, we fail to see how an occasion will arise for the Central Government giving a direction under s. 19A on the ground that a difficulty has arisen in giving effect to the provisions of the Act and that doubt has arisen regarding the matters mentioned in cls. (i) to (v). After a decision has been given by a court on a particular aspect relating to the Act and the Scheme, in our opinion, there is no question of any difficulty arising in giving effect to the provisions of the Act or to any doubt arising in respect of the matters mentioned in cls. (i) to (v). The question whether an establishment, like that of the respondent relating to the glass works coming under el. (2) of S. 19A was subject of a judicial adjudication and therefore S. 19A could not have come into play for the Central to give any direction. The Central Government and all other authorities were bound to give effect to the decision of the Bombay High Court so long as it held the field. Even according to the respon- dent, as is seen by its letter dated December 10, 1957 addressed to the Regional Provident Fund Commissioner, when the Act and the Scheme were applied in 1952 to all the employees of the respondent, the latter raised an objection that the Act and the Scheme will apply only to employees engaged in the manufacture of Hurricane Lanterns and non pressure Stoves. The said letter also refers to the fact that the Regional Provident Fund Commissioner, Bombay, by his reply dated March 31, 1953 rejected the said objection and held that the whole of the establishment of the respondent was covered by the Act and the Scheme. There is no controversy that the respondent has been ever since making contributions in respect of all the employees and had raised no dispute at all till after the judgment of the Bombay High Court. The proper stage when a doubt might have arisen for the Central Government to exercise its jurisdiction under s. 19A was when the respondent raised an objection early in 1953 regarding non-applicability Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 17 of the Act to all its employees, and when that objection was rejected on March 31, 1953. If the matter had been pursued further and the Central Government moved and a direction was given by the Central Government then it could be said that the Central Government has given a direction under s. 19A. The position before us is entirely different. After the decision of the Bombay High Court there is no warrant for assuming that there was still a difficulty or doubt in respect of which the Central Government had to give a direction under s. 19A. Considering the matter from this aspect also it follows that there could not have been a direction issued by the Central Government under s. 19A when the letter of August 19, 1959 was sent by the Central Provident Fund Commissioner to the Regional Provident Fund Commissioner. To conclude we are not inclined to agree with the view of the High Court that there has been decision under s. 19A of the Act under the letter dated August 19, 1959 read with letter dated September 21, 1959. There has been, in our opinion, no such decision and as pointed out earlier it was only a limited decision not to apply the Act and the Scheme, in view of the Bombay High Court's judgment I till the disposal of the appeal in this Court. After the decision of this Court the demand made on the respondent is perfectly justified and the High Court committed an error in quashing the notice dated May 22, 1963. The second contention about the non-liability of the respon- dent based upon the award of the Industrial Tribunal in 1. T. No. 29 of 1960 need not detain us very long. It is true that in view of the decision of the Bombay High Court the employees' Union moved the State Government to refer the dispute regarding the provident fund. The award dated June 24, 1960. has given as mentioned certain directions in this regard. The Company has been absolved from making any provident fund contributions during certain years on the ground that it has suffered loss. The award is not based upon circumstances which are relevant for the purpose of applying the Act and the Scheme. Admittedly the appellants were not parties to the award. No doubt under the Industrial Disputes Act the award will be binding as against the respondent and its workmen. 'But the appellants are seeking in these proceedings to enforce the statutory duty cast upon them to collect the contributions due from the respondent which again is a statutory liability under the Act and the Scheme. The object of the appellants in enforcing the Act is only to discharge the statutory duty enjoined on them for the benefit of the employees concerned. In view of the decision of this Court, it is clear that the Act and the Scheme apply to all the sections of the respondent, and if so it follows that the respondent is liable to make contributions and that at the rate specified in the Act. Even the rate given by the Industrial Tribunal for the limited period is not in accordance with the Act. We have already pointed out that the High Court has not expressed any opinion on the effect of the award. But according to us, the award in I. T. No. 29 of 1960 does not stand in the way of the appellants demand for the period mentioned in the letter dated May 22, 1953 regarding the provident fund and the administrative charges. From the discussion contained above, it is also clear that even if a decision has been taken by the Central Government, it is not inconsistent with the provisions of the Act. On the, other hand, as pointed out by us, that decision was only in accordance with the decision of the Bombay High Court subject to its being revised, if the appeal succeeded in this Court. The Department having succeeded in the appeal in this Court, it is clear that the demand made by the Department is justified. Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 18 We, however, make it clear that in realising the amounts on the basis of the demand dated May 22, 1965 the appellants will give due credit for any amounts that may have been contributed by the employer as its share of the provident fund under the award in I.T. No. 29 of 1960 for the periods in question. If no contribution has been made for those periods, it is open to the Department to realise the dues of the employer as per the provisions of the Act. If, however, the amounts have been contributed only at a lesser rate, the appellants can realise only the balance, if any, due under the Act and the Scheme. A subsidiary contention was raised by Mr. Tarkunde that in any event the demand for payment of administrative charges for the period referred to in the letter of May 22, 1963 is not warranted. We are not inclined to accept this contention of the learned counsel. When once the employer is held liable for Payment of its share of provident fund contribution for the periods in question, it follows that it will also be liable to pay the administrative charges. In the result, the judgment and order of the High Court dated September 17, 1965 are set aside and the writ petition filed by the respondent will stand dismissed. The appeal is allowed and the appellants will be entitled to their costs in this appeal. S.C. Appeal allowed. Petition dismissed. Union Of India & Anr vs Ogale Glass Works on 1 September, 1971 19 | {
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Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 Equivalent citations: 1971 AIR 966, 1971 SCR (3) 840, AIR 1971 SUPREME COURT 966 Bench: S.M. Sikri, G.K. Mitter, K.S. Hegde, P. Jaganmohan Reddy PETITIONER: DAMYANTI NARANGA Vs. RESPONDENT: THE UNION OF INDIA AND OTHERS DATE OF JUDGMENT23/02/1971 BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SIKRI, S.M. (CJ) MITTER, G.K. HEGDE, K.S. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 966 1971 SCR (3) 840 1971 SCC (1) 678 CITATOR INFO : D 1971 SC1737 (31) D 1985 SC 973 (9) RF 1985 SC1622 (5) D 1987 SC 379 (9) RF 1988 SC1136 (30,31) ACT: Fundamental Rights-Freedom of Association-Hindi Sahitya Sammelan, a registered society-Parliament enacting legislation declaring Sammelan as of national impor tance-Power to frame rules to admit new members without consent of original members of Society If infringes right to form Association of original members of society- Transferring properties of Society to Sammelan while Society kept in existence- If infringes right to hold property-Constitution of India Article 19 (1)(c) and (f) cls. (4) and (5)-Hindi Sahitya Sammelan Act, 1962. Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 1 HEADNOTE: The Hindi Sahitya Sammelan (hereinafter referred to as the Society) was a registered society founded for the development and propagation of Hindi. After a number of years of its successful working differences arose between its members and this resulted in litigation. in 1956 the Uttar Pradesh legislature passed the U.P. Sahitya Sammelan Act, under which a statutory body was created under the name of Hindi Sahitya Sammelan. This act was declared void by the Allahabad High Court as violating the freedom of association guaranteed under article 19(1)(c) of the Constitution. Thereafter, Parliament enacted the Hindi Sahitya Sammelan Act, 1962legislating under entry 63, list I of the Seventh Schedule declaringthat "the institution known as the Hindi Sahitya Sammelan is an institution of national importance". By the Act a statutory sammelan was constituted as a body corporate by the name of the Hindi Sahitya Sammelan. Under s. 4(1) of the Act the Sammelan was to consist of the first members of the Society and all persons who might become members thereafter in accordance with the rules made in that behalf-by the first Governing Body to be constituted by the Central Government by notification. The Act provided, for vesting in the Sammelan of all property movable or immovable, of or belonging to the society. Petitions under Article 226 in the High Court and under Article 32 in this Court were filed challenging the constitutionality of the Act mainly on the ground that the Act interfered with the right of the petitioners to form association under Article 19(1) (c) of the Constitution. The High Court held that since all the members of the society had also become members of the Sammelan under the Act, there was no infringement of the right to form association. In the appeal and in the petition under Article 32, the respondent contended that having declared the old Hindi Sabitya Sammelan, which was a society registered under the Societies Registration Act, 1860 as an institution of national importance, Parliament has proceeded to legislate in respect of it under entry 63 of List I of the Seventh Schedule in order that its administration may not suffer as a result of the quarrels that were going inter be between the members of the society; it was for this purpose that a first Governing Body was constituted to take over the management temporarily; the Act was designed to reconstitute the Sammelan in such a manner that it could worm successfully and without difficulties; and in making provisions for this purpose all members of the old society were included as members of the Sammelan 8 4 1 so that their right to form association may not be taken away from them Alternatively the respondent took up the Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 2 position that the Act no where specifically laid down that the society shall stand dissolved while it constituted a new Sammelan and therefore, it should be inferred that while the society still continued to exist in its original form the law has brought into existence a new Sammelan to which all the functions and the properties etc.-of the society have been passed. Allowing the petition and the appeal. HELD : Under s. 12(1) (a) very wide powers are given to the first governing body to make rules in respect of matters relating to membership including qualifications and disqualifications for membership of the Sammelan. Under this power the rules framed could make provisions for admission of persons as members whom the original members of society may never have liked to admit in their Society. The number of such new members could even be so large as to leave the original members in a small minority with the result that those members. could become totally ineffective in the society. Thus the Sammelan which has come into existence, is not identical-with the Sammelan which was a registered society under the Societies Registration Act ., This is clear interference with the right to form a society which has been exercised by the members of the Society by forming the Society with its constitution under which they were members. The Act does not merely regulate the admi- nistration of the affairs of the Society; what it does is to alter the composition of the society itself. The result of this change in composition is that the members, who voluntarily formed the society are now compelled to act in that Association with other members who have been imposed as members by the Act and in whose admission to membership they had no say. The right to form association necessarily implies that the persons forming the society have also the right to continue to be associated with only those whom they voluntarily admit in the association. Any law by which members are introduced in the voluntary association without any option being given to the members to keep them out or any law which takes away the membership of those who have voluntarily joined. it will be a law violating the right to form association. [847 H; 849 C-E] The right guaranteed by Article 19(1)(c) cannot be confined to the initial stage of forming an association. if it were to be so confined, the right would be meaningless because as soon as an association is formed, a law may be passed interfering with its composition so that the association formed may not be able to function at all. The right can be effective only if it is held to include within, it the right to continue the association with its composition as voluntarily agreed upon by the persons forming the association. And, Article 19(4), on the face of it, cannot be called in aid to claim lidity for the Act. Therefore the provisioncontained in the Act for reconstituting the society into the Sammelan is void. The whole Act becomes ineffective in as much as the formation of the new Sammelan Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 3 is the very basis for all the other provisions in the Act. [849 F-H; 851 E] O.K. Ghosh and Another v. E. X. Joseph, [1963] SUppl. 3 S.C.R. 789; State of Madras v. V. G. Row, [1952] S.C. R. 597 and V. G. Row v. The State of Madras, A.I.R. 1951 Mad. 147, referred to. The alternative submission cannot be accepted as ensuring the validity of the Act. First, the specific case taken by the respondent has been, that the Actreconstitutes the Society and does not create a separate and independent body in the form of a new Sammelan. Secondly, even if it be acceptedthat a new Sammelan has been constituted, the question of- 842 legislative competence of Parliament to pass such a law will arise. The Sammelan is itself a body corporate and that Sammelan has never been declared as an institution of national importance. The only institution that was so declared was the society which, of course, earlier carried the same name as the new Sammelan. Parliament was, therefore, not competent to legislate in respect of this newly constituted Sammelan which at no stage has been declared as an institution of national importance. Thirdly, if it were to be held that Parliament passed this Act so as to transfer all the properties and assets of the Society to the Sammelan, the Act would contravene Article 19(1)(f) of the Constitution. The Sammelan is a new, separate and distinct legal entity from the Society. The Society is thus deprived of all its properties by the Act and such a law depriving the Society of its properties altogether cannot be held to be a reasonable restriction in the public interest on the right of the society to hold the property. The applicability of Article 19(1(f) is on the assumption that the old Society still exists as it was and yet its properties have been transferred to the Sammelan. If the Society still exists, so does its Governing Body in whom the property of the Society vested. The Act thus deprives the members of the Governing Body of the property which still continued to vest in them in spite of the passing of the Act. This total deprivation of property instead of regulating the management of the affairs of the Society of its property cannot clearly be justified as a reasonable restriction in public interest. If the law is passed not merely for ensuring proper management and administration of the property, but for totally depriving the persons, in whom the property vested, of their right to hold the property, the law cannot be justified as reasonable restriction under Article 19(5). [852 B-H; 853 E-854 A] The Board of Trustees, Ayurvedic and Unani Tibia College, Delhi v. The State of Delhi & Anr. [1962] Suppl. I S.C.R. 156; referred to. Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 4 JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 91 of 1964. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights and Civil Appeal No. 358 of 1966. Appeal by special leave from the judgment and order dated September 9, 1963 of the Allahabad High Court in Civil Writ Petition No. 1885 of 1962. J.P. Goyal and Raghunath Singh, for the petitioner (in W.P. No. 91 of 1964). A.K. Sen, J. P. Goyal and Raghunath Singh, for the appel- lants (in C.A. No. 358/66). B.Sen and S. P. Nayar, for respondent No. 1 (in W.P. No. 91 of 1964) and respondents Nos. 3 and 4 (in C.A. No. 358 of 1966). N.N. Sharma, for respondent No. 2 (in W.P. No. 91/64) and respondents Nos. 16 and 17- (in C.A. No. 358/66). The Judgment of the Court was delivered by Bbargava, J.-This writ petition and the appeal challenge the validity of the Hindi Sahitya Sammelan Act No. 13 of 1962 (hereinafter referred to as "the Act"). The facts leading up to the passing of this enactment are that, in the year 1910, some eminent educationists assembled at Banaras and founded an Association for the development of Hindi and its propagation throughout the country. This Association was named as the Hindi Sahitya Sammelan. On the 8th January, 1914, it was registered as a Society under the Societies Registration Act No. 21 of 1860, with Head Office at Allahabad, under the name of Hindi Sahitya Sammelan. The rules and bye-laws of the Society laid down the objects of this Association and the manner of its working. It had three classes of members, viz., special members (Vishisht Sadasya), permanent members (Sthayi Sadasya), and ordinary members (Sadharan Sadasya). Under the bye-laws, apart from the original members constituting the Society, further mem- bers could be admitted under these three classifications on being elected by the working committee of the Society. Under the Rules and bye-laws of the Society, other bodies could be constituted for carrying on activities of the Society. These included a Governing Body, a Working Committee, a Hindi University Council, Literary Council (Sahitya Samiti), Library Committee, Parchar Samiti and Rashtriaya Bhasha Prachar Samiti. Through the agencies of these various Committees, the Society carried on the work of development and propagation of Hindi, of spreading the use of Devnagri scrip, of holding examinations, and of confer- ring Degrees for proficiency in Hindi. The Society owned landed properties and buildings at Allahabad as well as at some other places such as Warding, and was holding considerable funds for carrying on its activities. The Society worked very successfully for a number of years. It appears that in the year 1950, some differences arose between the members of the Society, and attempt was made to alter the constitution, of the Society. while one section wanted the alterations, another section was opposed to it. This resulted in litigation. Three different suits were instituted in the civil Courts at Allahabad in this connection and injunctions were sought by one party against the other. Ultimately, the Court appointed a Receiver. In view of- these circumstances, the U.P. Legislature passed an Act known as the U.P. Hindi Sahitya Sammelan Act Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 5 No. 36 of 1956, under which a statutory body was created under the name of Hindi Sahitya Sammelan, and the word "Sammelan" was defined as referring to the Hindi Sahitya Sammelan constitu- ted under the Act. Under that Act. Under that Act, the mana- gement and properties of the original Hindi Sahitya Sammelan, which was a registered Society, were to be taken over by the new statutory Sammelan. That Act was, however, declared void by the Allahabad High Court on the ground that Act had made the original Sammelan cease to exist and provided for the constitution of a new Sammelan under its terms in which the members of the original Sammelan had no say, so that Act infringed the right of the members of the original Sammelan of forming an association guaranteed by Art. 19 (1) (c) of the Constitution. It was further held that Act was not saved under Art. 19(4) of the Constitution. Thereafter, the present Act, now challenged in this writ petition and the appeal, was passed by Parliament under Entry 63 of List I of the Seventh Schedule to the Constitution. The Act itself, in section 2, contained the necessary declaration to give legislative competence to Parliament under that Entry. The Act first contained in section 2 a declaration in the following words :- "Whereas the objects of the institution known as the Hindi Sahitya Sammelan which has its head office at Allahabad are such as to make the instituation one of national importance, it is hereby declared that the institution known as the Hindi Sahitya Sammelan is an institution of national importance." Having declared this institution as an institution of national importance, th.-, Act proceeded to define "Sammelan" as meaning the institution known as the Hindi Sahitya Sammelan incorporated under this Act, while the word "Society" was defined to mean "the Hindi Sahitya Sammelan which has its head office at Allahabad and is registered under the Societies Registration Act, 1860." Under section 4(1) of the Act, the Sannnelan was constituted which was to consist of the first members of the Sammelan and all persons who may hereafter become members thereof in accordance with the rules made in that behalf. This statutory Sammelan was constituted as a body corporate by the name of the Hindi Sahitya Sammelan, and under sub-section (2) of section 4, it was to have perpetual succession and a common seal with power, subject to the provision of the. Act, to acquire, hold and dispose of property and to contract and to sue and be sued by that name. The Head Office of the Sammelan was to be at Allahabad. Under subs.(4) of section the first members of the Sammelan were to consist of persons who, immediately before the appointed day.- (a) were special members (Vishisht Sadasya) of the Society; 8 45 (b) (were. life members (Sthayi Sadasya) of the Society. (c) had been Presidents of the Society; or (d) were awarded the Mangla Prasad Paritoshik by the Society. Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 6 This sub-s. (4) of section 4 was amended retrospectively with effect from the date that the Act came into force by the Hindi Sahitya Sammelan (Amendment) Act No. 1 of 1963, and the first members of the Sammelan were, under this amendment, declared to be- (a) all persons who, immediately before the appointed day, were members of the Society; (b) all persons who, before that day, had been Presidents of the Society; and (c) all persons who, before that day, were awarded the Mangla Prasad Paritoshik by the Society. It is not necessary to give in detail the other provisions of the Act, except that it may be mentioned that the Act provided for vesting of all property, movable or immovable, or, belonging to the Society in the Sammelan, transferring all rights and Liabilities of the Society to the Sammelan, converting reference to the Society in any law to the Sammelan, and other similar necessary provisions. The Act itself did not make any provision for the future membership of the Sammelan; but, under section 12(1) (a), the first Governing Body of the Sammelan was directed to make rules in respect of matters relating to membership, including qualifications and disqualifications For membership of the Sammelan. The first Governing Body was to be constituted under section 8 and was to consist of a Chairman, a Secretary and 13 other members. This Governing Body was to be constituted by a notification in the Official Gazette by the Central Government. The thirteen members were to be chosen as follows :- (i) one member to represent the Ministry of the Central Government dealing with education; (ii)one member to represent the Ministry of the Central Government dealing with finance; (iii)not more than three members from among the former Presidents of the Society; and (iv)the remaining number from among persons who are, in the opinion of the Central Govern- ment, eminent in the field of Hindi language or Hindi literature. It was this first Governing Body which was to make rules on all matters relating to membership of the Sammelan under section 12 (1 )(a) of the Act. These rules were not have effect until they were approved by the Central. Government and were published by the first Governing Body in such manner as the Central Government may, by order, direct. A copy of the rules was also to be laid before each House of Parliament. Counsel for respondent No. 1 placed before us a copy of the rules which, according to him, have been made by the first Governing Body with the approval of the Government and have been published as required. The Rules come into force on 1st of February, 1971. The petition under Art. 32, and the petition under Art. 226, out of which the civil appeal arises, Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 7 were both moved much earlier and long before these Rules were framed. These petitions challenged the validity of the Act, without taking into account the actual Rules framed, mainly on the ground that he Act had interfered with the right of the petitioners to form association Linder Art. 19(1)(c) of the Constitution and was not protected by Art. 19(4). In the petition before the Allahabad High Court, the Court held that, since all the members of the Society had also become members of the Sammelan under the Act, there was no infringement of the right to form association, so that the Act could not be declared invalid on that ground. The writ petition in this Court has been filed by only one member of the Society, while the petition in the High Court and the appeal against the judgment of the High Court, which is before us, were filed by the original Hindi Sahitya Sammelan as one party and 72 members of that Sammelan joining as other petitioning parties. 'In the civil appeal, thus, the grievance that the Act ha$ infringed the fundamental right has been put forward both by the Society itself as well as by 72 of its members, including members of the Working Committee and the Governing Body of the society. They have all come up to this Court against the decision of the High Court in this appeal by special leave. In the counter-affidavits filed on behalf of the respondents in the writ petition before the High Court as well as in the writ petition in this Court, the position taken up was that the Act, in fact, does not deprive the Society and its members of any rights which they had under the constitution of the Society and did not interfere with their right of association inasmuch as all the members of the Society have been included as members of the Sammelan under the Act. The High Court, in fact, dismissed the writ petition on accepting this submission put forward on behalf of the respondents. In the arguments before us, learned counsel for respondent No. 1, however, took UP a different position and urged that the Act keeps the Society in-tact as it was, where a new Sammelan is constituted under the Act for the purpose of managing the institution which has been declared as an institution of national importance. He put this aspect of the case in the forefront, but, in the alternative, he also argued the case on the basis of the position taken up in the counter-affidavits in the High Court and in this Court as mentioned above. We consider it convenient to first deal with the case as was specifically put forward in the counter-affidavits. In these counter- affidavits, the position taken up is that, having declared the old Hindi Sahitya Sammelan, which was a Society registered under the Societies Registration Act, 1860, as an insti tution of national importance, Parliament has proceeded to legislate in respect of it under Entry 63 of List I of the Seventh Schedule in order that its administration may not suffer as a result of the quarrels that were going on inter-se between the members of the Society. It was for this purpose that a first Governing Body was constituted to take over the management temporarily. The Act was designed to reconstitute the Sammelan in such manner that it could work successfully and without difficulties and, in making provision for this purpose, all members of the old Society were included as members of the Sammelan, so that their right of forming association may not be taken away from them. The Society was never dissolved; instead of the Society remaining a body registered under the Societies Registration Act, it was converted into a statutory Sammelan under the Act. It, however, appears on examination of the provisions of the Act that the Sammelan under the Act is composed not only of persons, who were members of the Society, but of others who have been given the right to be members of the Sammelan without the consent of the preexisting members. Under section 4(4) itself, as retrospectively amended in 1963, apart from persons, who were members of the Society, others, who have been made members of the Sammelan, are all persons who, before that day, had Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 8 been Presidents of the Society and all persons who, before that day, were awarded the Mangla Prasad Paritoshik by the Society. These members have been added without any option being available to the existing members of the Society to elect or refuse to elect them as members which was the right they possessed under the constitution of the Society itself. Further, under section 12 (1) (a), very wide powers were given to the first Governor Body to make rules in respect of matters relating to membership, including qualifications and disqualifications for membership of the Sammelan. Under this power, the rules framed could make 10-L1100 SupCI71 provision for admission of persons as members whom the original members of the Society may never have liked to admit in their Society. The number of such new members could even be so large as to leave the original members in a small minority with the result that those members could become totally ineffective in the Society. Even in the Rules actually framed, there is provision for admission of members under various classes. In addition to the persons mentioned in section 4(4) of the Act, Rule 6 proVides for membership of persons who may become Sabhapatis of the Sammelan for any annual session subsequent to the Act coming into force, and persons who may be awarded Mangala Prasad Paritoshik subsequent to the Act coming into force. Under Rules 7, 8, and 9, new Vishisht Sadasyas, Sthayi Sadasyas, and Sadharan Sadasyas can be admitted to the membership of the Sammelan on payment of Rs. 1,000/- or Rs. 300/-, as the case may be. This admission to membership, according to the Rules, will be made by the new Karya Samiti to be elected under the Rules and not by the Working Committee of the original members of the Association. Further, under section 7(2) of the Act, the Governing Body of the new Sammelan is to consist of such number of persons, not exceeding 55, as the Central Government may from time to time determine; and out of these, a number not exceeding 7 are to be nominated by the, Central Government from among educations of repute and eminent Hindi scholars. These 7 nominees are to be chosen by the Central Government and on becoming, members of the Governing Body, under Rule. 11 they become members of the Sammelan. Under Rule 10, educational institutions can also be admitted as Sanstha Sadasyas of the Sammelan by the new Karya Samiti and, thereupon, a representative of each of such institution has right to participate in' proceedings of the Sammelan, exercising all the rights of a member. It will, thus, be seen that the Sammelan, which has come into existence under the Act, is not identical with the Sammelan which was registered as a Society under% the Societies Registration Act. 1860. Certain persons have been added as members by the Act and by the Rules. Admission of future members is no longer at the choice of the original members who' had formed the Asso- ciation,Persons, in whose admission as members the members of the, Society, had no hand, can become members and get the right of associating with them in the Sammelan, without the original members having any right to obecti. this is clear interference with the right to form an association which had been exercised by the members of the Society by forming the Society with its constitution, under which they were members and future members could only come in as a result of their choice by being elected by their Working Committee. We are unable to agree with the High Court that the new Sammelan, as constituted under the Act, is identical with the Society and that all the rights of forming an association, which were being exercised by members of the Society, have been kept in-tact under the Act. It was argued that the right guaranteed by Article 19 (1 (c) is only to form an association and, consequently, any regulation of the affairs of the Association, after it has been formed, will not amount to a breach of that right. It is true that it has been held by this Court that, after an Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 9 Association has been formed and the right under Art. 19 (1) (c) has been exercised by the members forming it, they have no right to claim that its activities must also be permitted to be carried on in- the manner they desire. Those cases are, however, inapplicable to the present case. The Act does not merely regulate the administration of the affairs of the Society, what it does is to alter the composition of the Society itself as we have indicated above. The result of this change in composition is that the members, who voluntarily formed the Association, are now compelled to act in that Association with other members who have been imposed as members by the Act and in whose admission to membership, they had no say. Such alteration in the composition of the Association itself clearly interferes with the right to continue to function as members of the Association which was voluntarily formed by the original founders. The right to form an association, in our opinion, necessarily, implies that the persons forming the Association have also the right to continue to be associated with only those whom they voluntarily, admit in the Associate on. Any law, by which members are introduced in the voluntary Association without any option being given to the members to keep them out, or any law which. takes away the membership of those who have voluntarily Joined it, will be a law violating the right to form an association. If we were to accept the submission that the right guaranteed by Art. 19 ( 1 ) (c) is confined to the initial stage of forming an Association and does not protect the right to continue the Association with the membership, either chosen by the founders or regulated by rules made by the Association itself, the right would be meaningless because, as soon as an Association is formed, a law may be passed interfering with its composition., so that the Association formed may not be able to function at all. The right can be effective only if it is held to include within it the right to continue the, Association with its composition as voluntarily agreed upon by the persons forming the Association. This aspect was recognised by this Court though not in plain words, in the case of O. K. Ghosh and Another v. E. X. Joseph("). The Court, in that case.. was considering the validity of Rule 4 (B) of the Central Civil Service,,, (Conduct) Rules, 1955, which laid down that: (1)[1963] Supp 3 S.C.R. 789. "No Government servant shall join or continue to be a member of any Service Association of Government servants (a)which has not, within a period of six months from its formation, obtained the recognition of the Government under the Rules prescribed in that behalf; or (b)recognition in respect of which has been refused or withdrawn by the Government under the said Rules." This Court held:- "It is not disputed that the fundamental rights guaranteed by Art. 19 can be claimed by Government servants. Art. 33 which confers power on the Parliament to modify the rights in their application to the Armed Forces, clearly brings out the fact that all citizens including Government servants, are entitled to Claim the rights guaranteed Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 10 by Art. 19. Thus, the validity of the impugned rule has to be judged on the basis that the respondent and his co-employees are entitled to form Associations or Unions. It is clear that Rule 4-B imposes a restriction on this right. It virtually compels a Government servant to withdraw his membership of the Service Association of Government Servants as soon as recognition accorded to the said citation is withdrawn or if, after the Association is formed, no recognition is Aaccorded to it within six months. In other words, the right to form an Association is conditioned by the existence of the recognition of the said Association by the Government. If the Association obtains the recognition and continues to enjoy it, Government servants can become members of the said Association; if the Association does not secure recognition from the Government or recognition granted to it is withdrawn, Government servants must cease to be the members of the said Association. That is the plain effect of the impugned rule." The Court in the above passage, thus, accepted the principle that the Government servants, who may have formed an Association. could not, be compelled to resign from it by imposition of a condition of recognition of this Association by the Government and that if the Government servants are required to cease to be members that would be a violation of the right under Art. 19 (1) (c). The Court, of course, in that case, further proceeded 'to examine whether such a restriction on the right could be justified under Art. 19(4) or not. That case, thus, supports our view that the right to form an Association includes the right to its continuance and any law altering the composition of the Association compulsorily will be a breach of the right to form the Association. This Court had also proceeded on the same basis in the case of State of Madras v. V. G. Row(1). Though this aspect was not clearly brought out in the judgment, the point, which came up for consideration, was decided on the basis that persons forming, an Association had a right under Art. 19 (1) (c) to see that the composition of the Association continues as voluntarily agreed to by them. That decision was given in an appeal from a judgment of the High Court of Madras reported in V. G. Row,v. The State of Madras(2). In the High Court, this principle was clearly formulated by Rajamannar, C.J., in the following words :- "The word "form" therefore, must refer not only to the initial commencement of the association, but also to the continuance of the association as such." The Act, insofar as it interferes with the composition of them Society in constituting the Sammelan, therefore, violates the right of the original members of the Society to form an association guaranteed under Art. 19(1) (c). Article 19(4), on-the face of it, cannot be called in aid to claim validity for the Act. Under Art. 19(4), reasonable restrictions can be imposed only in the interests of the sovereignty and integrity of India, or in the interests of public order or morality. It has not been contended on behalf of the respondent, nor could it be contended that this alteration of the constitution of the Society in the manner laid down by the Act was. in the interests of the sovereignty and integrity of India, or in, the interests of public order or morality. Not being protected under Art. 19(4), if must be held that the provision contained, in the Act for reconstituting the Society into the Sammelan is, void. Once that section is declared void, the whole Act becomes. ineffective inasmuch as the Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 11 formation of the new Sammelan is the very basis for all the other provisions contained in the Act. In view of this position emerging in the course of argu- ments, Mr. B. Sen put forward an entirely different and alter-native case before us which we have mentioned earlier. The. position he took up was that the Act nowhere specifically lays. down that the Society small stand dissolved, while it does constitute a new Sammelan. According to him, therefore, it should (1) [1952] S.C.R. 597. (2) A.I.R. 1951 Mad. 147. be inferred that, while the Society still continues to exist in its original form, the law has brought into existence a new Sammelan to which all the functions, properties, etc. of the Society have passed under the Act. There are three reasons why this alternative submission cannot be accepted as ensuring the validity ,of the Act. The first is that the specific case taken by the respondents has been that the Act reconstitutes the Society and does not create a separate and indepedent body in the form of a new Sammelan. Secondly, even if it be accepted that a new Sammelan has been constituted by the Act, the question will ,arise of the Legislative competence of Parliament to pass such :a law. Constitution of Societies is under List 11 of the Seventh Schedule. Parliament purported to exercise legislative power under Entry 63 of List I on the basis of a declaration that the Hindi Sahitya Sammelan, Allahabad was an institution of national importance. The institution that was declared was the Society itself. It was not a case where the Society could be distinguished from some other institution which might have been declared as an institution of national importance There can, of course, be cases where a Society may be running a college, a school or some other like institution, in which case Parliament may declare that particular institution as of national importance, without declaring the Society as such In the present case, what section 2 of the Act did was to declare the Society itself as an institution of national importance, and, consequently, Parliament became competent to legislate in respect of the Society. On the interpretation now sought to, be put forward, the Act keeps that Society in-tact, but deprives it of all its functions and properties and transfers them to 'a newly constituted body, viz., the Sammelan, as defined under the Aet. This Sammelan is itself a body corporate, and that Sammelan has never been declared as an institution of national importance. The only institutaion that was declared as of national importance was the Society which, of course, earlier, carried the same name as the new Sammelan. Parliament was, therefore, not competent to legislate in respect of this newly constituted Sammelan which, at no stage, had been declared as an institution of national importance. The third reason why this submission must be rejected, is that, if we were to hold that Parliament pased this Act so as to transfer all the properties and assets of the Society to the Sammelan, the Act would contravene Art. 19(1)(f) of the Constitution. On this interpretation, what the Act purports to do is to take away all the properties of the Society, leaving the Society as an existing body, and give them to the new Sammelan. This Sammelan is a new, separate and distinct legal entity from the Society. The Society is, thus' deprived of all its properties by the Act. Such a law depriving the Society of its properties al- 8 5 3 together cannot be held to be a reasonable restriction in the public interest on the right of the Society to hold the property. The property, under section 5 of the Societies Registration Act, 1860, vested in the Governing Body of the Society. The members of the Governing Body, therefore had the right to hold the property under Art. 19(1)(f) and they having been deprived of that property have rightly approached the Courts for redress of their grievance. In this connection counsel for the respondents Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 12 relied on decision of this Court in The Board of Trustees, Ayurvedic and Unnanii Tibia College, Delhi v. The State of Delhi and Another(1), where the Board of Trustees of the Ayurvedic and Unani Tibbit College, Delhi was dissolved by the Tibbia College Act, 1952, and the property, which had vested in the Board of Trustees, passed to the newly constituted Board under the impugned Act. The Court held that there was no violation of the fundamental rights guaranteed by Art. 19(1)(f) or Art. 31 That decision, however, proceeded on the basis that the property of the original Society registered under the Societies Registration Act had vested in the Board of Trustees which had been dissolved and the property, thereafter, did not vest in the members of the Society in view of the provisions of the Act of 1860. In these circumstances, it was held that no one could complain that his right to property under Art. 31 or his right to hold the property under Art. 19 (1) (f) had been violated by the impugned Act. In the present case, the applicability of Art. 19(1)(f) is being considered by us on the assumption that the old Society still exists as it was and, yet all its properties have been transferred to the Sammelan. If the Society still exists, so does its Governing Body in whom- the property of the Society vested. The Act, thus, deprives the members of the Governing Body of the property which still continued to vest in them in spite of the passing of the Act. This total deprivation of property, instead of regulating the management of the affairs of the Society or its properties, cannot clearly be justified as a reasonable restriction in public interest. It is true that, at the time when the Act was passed, litigation was going on between the members of the Society, and the affairs of the Society were probably in a mess. The remedy, however, could not lie in depriving the Society of its property altogether. Reasonable restrictions could have been imposed so as to ensure the proper preservation of the property of the Society and its proper management. If the law is passed not merely for ensuring proper management and administration of the property, but for totally depriving the persons, in whom the property vested, of their (1) [1962] Suppl. I S.C.R. 156. right to hold the property, the law cannot be justified as a reasonable restriction under Art. 19(5). Consequently, even on this alternative position taken up by counsel for the respondents, the Act cannot be held to be valid. As a result, the petition and the appeal are both allowed with costs. The Act is declared to be invalid, so that there will be restraint on the concerned bodies, including the Union Government, from taking or continuing any action under the Act.There will be one hearing fee. R.K.P.S. Petition and Appeal allowed. 8 5 5 Damyanti Naranga vs The Union Of India And Others on 23 February, 1971 13 | {
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Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 Equivalent citations: 1971 AIR 815, 1971 SCR (3) 607, AIR 1971 SUPREME COURT 815 Author: I.D. Dua Bench: I.D. Dua, S.M. Sikri, Vishishtha Bhargava PETITIONER: MUNICIPAL CORPORATION OF DELHI Vs. RESPONDENT: SHIV SHANKAR DATE OF JUDGMENT01/02/1971 BENCH: DUA, I.D. BENCH: DUA, I.D. SIKRI, S.M. (CJ) BHARGAVA, VISHISHTHA CITATION: 1971 AIR 815 1971 SCR (3) 607 1971 SCC (1) 442 ACT: Repeal-Implied-Prevention of Food Adulteration Act, 1954- Fruit Products Order, 1955-Sale of adulterated Vinegar- Prosecution under Adulteration Act-Competence-If Fruit Products Order impliedly repeals Adulteration Act. HEADNOTE: The respondent, who was selling Vinegar under a license granted under the Fruit Products Order, 1955, made by the Central Government under s. 3 of the Essential Commodities Act, was prosecuted under the Prevention of Food Adulteration Act. 1954, for selling adulterated vinegar. He pleaded that vinegar, whether brewed or synthetic, being a food product and standard specification for such vinegar being tabulated in Part XIV attached to the Second Schedule Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 1 of the Fruit Order, persecution without the previous sanction of the licensing Officer as required by clause 15 of the said order was incompetent. The trial judge rejected the contention. But the High Court quashed the proceedings. It was observed that the special provisions of the Fruit Order had overriding effect and therefore a manufacturer of fruit products could only be prosecuted under the provisions of the Fruit Order. In the appeal to this Court it was contended for the respondent that there was an irreconcilable conflict between the two statutory provisions, and the Fruit Order being, not only of a date later than the Adulteration. Act but also having, by virtue of s. 3(6) of the Essential Commodities Act overriding effect over all other laws, it must prevail over the Adulteration Act and the rules. On the question whether the Fruit Order impliedly repeals the Adulteration Act, HELD : The plea of implied repeal must fail and the appeals must be allowed. To determine if a later statutory provision repeals by implication an earlier one it is necessary to scrutinise and consider the true meaning and effect both of the earlier and the later statute. If the objects of the two statutory provisions are different and the language of each statute is restricted to its own object or subject, then they are generally intended to run in parallel lines without meeting and there would be no real conflict though apparently it may appear to be so on surface. [611 D-G] The provisions of the Adulteration Act and the Fruit Order, for effectuating their respective objects, have imposed, different restrictions in the manufacture and sale of vinegar whether brewed or synthetic. in the interest of public health the respondent has to comply with the provisions of the Adulteration Act and Rules and in the interests of equitable distribution of essential commodities including the articles of food covered by the Essential Commodities Act and the Fruit Order they have to comply with the provisions of the fruit Order. Both the provisions are supple- 608 mentary and cumulative in their operation and no provision of the Fruit Order is shown to be destructive of or fatal to any provision of the Adulteration Act or the Rules made thereunder so as to compel the court to hold that they cannot stand together. If the Adulteration Act or Rules impose some restrictions on the manufacturer, dealer and seller of vinegar, then they have to comply with them irrespective of the fact that the Fruit ,Order imposes lesser number of restrictions in respect of these matters. The former do not render compliance with the latter impossible, nor does compliance with the former necessarily and automatically involve violation ,of the latter. Even if both 'statutes to some extent overlap, section 26 of the Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 2 General Clauses Act fully protects the guilty parties against double jeopardy or double penalty. [618 C-H] Om Prakash Gupta V., State of U.P., [1957] S.C.R. 423, T. S. Baliali v. T. S. Rengachari, 1969 3 S.C.R. 65, State v. Gurcharan Singh, A.I.R. 1952 Punjab 89, and Paine v. Stater, [1883] 11 Q.B.D. 120. ,referred to. JUDGMENT: CRIMINAL APPELLATE JURISDICTION:, Criminal Appeals Nos. 151 to 158 of 1966. Appeals from the judgment and order dated December 30. 1964 of the Punjab High Court, Circuit Bench at Delhi in Criminal Revisions Nos. 81-D to 83-D, 107-D and 129-D to 132-D of 1964. Bishan Narain, B. P. Maheshwari and N. K. Jain, for the appellant (in all the appeals). C. K. Daphtary, N. N. Goswami, K. L. Mehta and S. K. Mehta, the respondent (in Cr. A. No. 151/1966). K. L. Gossain, N. N. Goswami, K. L. Mehta and S. K. Mehta, the respondent (in Cr. As. Nos. 152 to 158 of 1966). S. K. Mehta for the intervener. The Judgment of the Court was delivered by Dua, J.-These eight appeals with certificate (Crl. Al)- peals Nos. 151 to 158 of 1966) raise a common question of law and would, therefore, be disposed of by a common judgment. In-deed, all the appeals in the Punjab High Court were also disposed of by a learned single Judge of that Court sitting on circuit at Delhi by a common judgment and another learned single Judge of the same Court similarly certified the cases to be fit for ,appeal to this Court by a common order. The only question canvassed at the bar requiring determina- tion by us is whether the respondent is liable to be prosecuted under the Prevention of Food Adulteration Act, 37 of 1954 (hereafter called the Adulteration Act) for selling adulterated vinegar when the vinegar is being sold under a licence granted under the Fruit Products Order, 1955 (hereafter called the Fruit Order) made by the Central Government under s. 3 of the Essen- tial Commodities Act. The High Court has relying on an un- reported Bench decision of the Punjab High Court in State v. RaJ Kumar (Crl. A. 996 f 1961 decided on October 29, 1962) held that they cannot be prosecuted. It was argued in the High Court that the rules made under the Adulteration Act had come into force after the enforcement of the Fruit Order and vinegar being mentioned as an article of food in those rules, prosecution under both the provisions of law was permissible. Reliance in support of this argument was also placed on s. 26 of the General Clauses Act. This argument was not accepted and it was observed that the special provisions of the Fruit Order had overriding effect and, therefore, a manufacturer of Fruit Products could only be prosecuted under the provisions of the Fruit Order. Prayer for reference to a larger Bench for reconsideration of Raj Kumar's case Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 3 (supra) did not find favour with the learned single Judge. In this Court the view taken in Raj Kumar's case (supra) was sought to be supported by the learned counsel for the, respondent. The provisions of the Fruit Order and of the Adulteration Act, it was contended, could not harmoniously co-exist on the statute book, as compliance with one would, in certain contingencies, result in violation of the other some respects. With respect to the particular charges tried in the cases in appeal, however, no attempt was made on behalf of the respondents to show that there was any fatal conflict or inconsistency between the two provisions. The question before us accordingly lies within a very narrow compass. The appellant urged that there is no implied repeal of the Adulteration Act by the Fruit Order in so far as the sale of vinegar is concerned, whereas the case of the respondent is that there is an implied repeal and the respondents are not liable to be prosecuted under the Adulteration Act for violating its provisions. Shri Bishan Narain sought support for his submission from Om Prakash Gupta v. State of U.P. (1) and T. S. Baliah v. T. S. Rangachari (2). In the former case S. 5 (1 ) (c) of the Prevention of Corruption Act was held not to repeal s. 409 I.P.C. The decision of the Punjab High Court (Khosla and Falshaw, JJ.) in State v. Gurcharan Singh(3) holding to the contrary was overruled. In the latter case s. 52 of the Income tax Act, 1922 was held not to repeal s. 177, T.P.C. It is unnecessary to refer in detail to the facts of all the eight cases separately as no such reference was made by either side at the bar. Shri Bishan Narain for the appellant, by way of illustra- (1) [1957] S.C.R. 423 (2) [1969] 3 S.C.R. 65. (3) A.I.R. 1952 Punjab 89. tion made a passing reference to the facts of Crl. Appeal No. 155 of 1966. From the record of that appeal we find that samples of (i) sugar cane juice vinegar, (ii) vine (pure) vinegar and (iii) pure jaman vinegar, were takes by a Food Inspector from the shop of the respondent on October 17, 1960 and on the 'same having been found highly adulterated and unfit for human consumption because of the presence of sulphuric acid which is prohibited, complaints under ss. 7/16 of the Adulteration Act were instituted by the Municipal Prosecutor in December, 1960. After the prosecution evidence was recorded, the respondent Shiv Shan- ker applied to the trial magistrate in October, 1963 praying that the prosecution be dropped. In this application it was admitted that the prosecution had arisen out of a raid dated October 17, 1960 at the promises of the accused "when allegedly samples of vinegar were taken which are stated to be adulterated because of the presence of sulphuric acid". It was pleaded that-the petitioning accused had secured in 1960 a licence under the Fruit Order and vinegar whether brewed or synthetic being a food product and standard specification for such vinegar being tabulated in Part XIV attached to the Second Schedule of the Fruit Order, prosecution without the, previous sanction of the Licensing Officer as required by cl. 15 of the said Order was unauthorised. Prosecution under the Adulteration Act was on this ground pleaded to be incompetent. In the application reliance in support of this plea was placed on the unreported Bench decision of the Punjab High Court in Raj Kumar's case in which according to the accused it had been held that a licensee under the Fruit Order could not be prosecuted for any contravention of that Order or of the Adulteration Act without the previous sanction of the Licensing Authority appointed under the Fruit Order. The trial magistrate basing himself on an unreported single Bench decision of Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 4 the Punjab High Court and on s. 26 of the General Clauses Act rejected this application. On revision, the Additional Sessions Judge relying on the decision in Raj Kumar's, case (supra) made a reference to the High Court recommending that the proceedings be quashed. J. S. Bedi, J., relying on Raj Kumar's case (supra) quashed the pro- ceedings. S. K. Kapur J., who certified the case to be fit for appeal after quoting a passage from Raj Kumar's case (supra) considered the question raised to be important enough for appeal to this Court. The general principles governing implied repeal appear to us to have long since been settled. The difficulty is normally experienced in their application to a given case. From the passage quoted by Kapur J., from the unreported Bench decision in Raj' Kumar's case (supra) upholding the implied repeal of the Adulteration Act by the Fruit Order it seems to us that the Division Bench did not correctly and fully grasp them. We accordingly, consider it proper to broadly restate the general rule. It was laid in Paine v. Stater(1) that when two Acts are inconsistent or repugnant the later will be read as having impliedly repealed the earlier. As the legislature must be presumed in deference to the rule of law to intend to enact consistent and harmonious body of laws, a subsequent legislation may not be too readily presumed to effectuate a repeal of existing statutory laws in the absence of express or at least clear and unambiguous indication to that effect. This is essential in the interest of certainty and consistency in the laws which the citizens are enjoined and expected to. obey. The legislature, which may generally be presumed to know the existing law, is not expected to intend to create confusion by its omission to express its intent to repeal in. clear terms. The courts, therefore, as a rule, lean against implying a repeal unless the two provisions are so plainly repugnant to each other that they cannot stand together and it is not possible on any reasonable hypothesis to give effect to both at the same time. The repeal must, if not express, flow from necessary implication as the only intendment. The provisions must be wholly incompatible with each other so that the two provisions operating together would lead to absurd consequences, which intention could not reasonably be imputed to the legislature. It is only when a consistent body of law cannot be maintained without abrogation of the previous law that the plea of implied repeal should be sustained. To determine if a later statutory provision repeals by implication an earlier one it is accordingly necessary to closely scrutinise and consider the true meaning and effect both of the earlier and the later statute. Until this is done it cannot be satisfactorily ascertained if any fatal inconsistency exists between them. The meaning, scope and effect of the two statutes, as discovered on scrutiny, determines the legislative intent as to whether the earlier law shall cease or shall only be supplemented. If the objects of the two statutory provisions are different and the language of each statute is restricted to its own objects or subject, then they are generally intended to run in parallel lines without meeting and there would be no real conflict though apparently it may appear to be so on the surface. Statutes in pari materia although in apparent conflict should also so far ,is reasonably possible, be construed to be in harmony with each other and it is only when there is an irreconcilable conflict between the new provision and the prior statute relating to the same subject matter, that the former, being the later expression of the legislature, may be held to prevail, the prior law yielding to the extent of the conflict. The same rule of irreconcilable repugnancy controls implied repeal of 'a general by a special statute. The subsequent provision treating a phase of the same genera subject matter in a more minute way may be intended to imply repeal pro-tanto of the (1) [1883] 11 Q.B.D. 120. Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 5 Repugnant general provision with which it cannot reasonably co,exist. When there is no inconsistency between the general and the special statute the latter may well be construed as supplementary. In the light of these broad guidelines we may now examine the two statutes as they stood in 1960 because the cases with which we are concerned relate to that year. The history and the scheme of the two statutory provisions would be helpful in discovering the legislative intent on the question of implied repeal. Turning first to the Adulteration Act, it was enacted by the Parliament to make provision for the prevention of adulteration of food and it came into force on June 1, 1955. Previously corresponding laws on adulteration of foodstuffs were in force in different States, having been enacted by their respective legislatures. All those laws were repealed by s. 25 of the Adulteration Act. It may be pointed ,out that under the Government of India Act, 1935 "adulteration of foodstuffs and other goods" was a provincial subject whereas under the Constitution it is included in the Concurrent List. Section 2(i) of this Act which defines the word "adulterated" con- sists of several sub-clauses. One of these sub-clauses is (1) according to which "an article of food shall be deemed to be adulterated if the quality or purity of the article falls below the prescribed standard or its constituents are present in quantities Which are in excess of the prescribed limits of variability". Clause (v) of s. 2 defines "food" to mean "any article used as food or drink for human consumption other than drugs and water and includes : (a) any article which ordinarily enters into or is used in the composition or preparation of human food, and (b) any flavouring matter or condiments. According to cl. (ix) an article of food shall be deemed to be "misbranded" if it falls within an) one of the sub-clauses (a) to (k). It is not necessary to reproduce all these sub-clauses. "Pack- age" has' been defined in cl. (X) to mean "a box, bottle, casket, tin, barrel, case, receptacle, sack, bag, wrapper or other thing in which an article of food is placed or packed". We have referred to the definitions of "misbranded" and " package" because one of the cases before us (Crl. A. 154 of 1966) is a case of alleged misbranding, the remaining seven cases being ,of alleged adulteration. Section 5 prohibits import of, inter alia, adulterated and misbranded food and all articles of food in contravention of any provision of the Act or of any rules made thereunder. Section 7 prohibits manufacture for sale or store and also sale and distribution of, inter alia, adulterated and misbranded food land of articles of food, in contravention of the Adulteration Act and the Rules made thereunder. Section 8 provides for appointment of Public Analysts and s. 9 for the appointment of Food Inspectors. The powers of Food Inspectors are contained in S. 10. He possesses very wide powers for the purpose of effectively achiev- ing the statutory object of preventing the manufacture, sale and distribution etc., of adulterated articles of food. The procedure for taking samples of food by the Food Inspector for analysis is prescribed in s. 11 and the report of the Public Analyst is made admissible by s. 13. The proviso to sub-s. (5) of s. 15 makes the certificate signed by the Director of Central Food Laboratory final and conclusive proof of the facts stated therein. The Central Food Laboratory is established by the Central Government under s. 4 for the purpose of carrying on functions entrusted to it by the Adulteration Act or by the Rules made thereunder. Section 16 provides for penalties for offences under the Adulteration Act and cl. (a) of sub-s. (1) makes it an offence for any person, whether by himself or by any person on his behalf to import into India or manufacture for sale or to store, sell or distribute any article of food in contravention of any of the provisions of the Act or of any rules made Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 6 thereunder. In the prosecution for an offence pertaining to the sale of an adulterated or misbranded article of food s. 19 makes impermissible the defence that the vendor was ignorant of the nature, substance or quality of the food sold by him or that the purchaser having purchased an article for analysis was not prejudiced by the sale. Section 20 prohibits cognizance and trial of offences under the Act except when prosecution is instituted by or with the written consent of the State Government or a local authority or a person authorized in this behalf by such Government or authority. Under the proviso to this section a purchaser referred to in s. 12, is, however, empowered to institute a prosecution if he produces in court a copy of the report of the Public Analyst along with the complaint. Section 21 overrides s. 32, Cr.P.C. in the matter of sentence to be passed under this Act by the Presidency Magistrates or Magistrates of 1 Class, trying offences under the Act. Section 23 confers on the Central Government wide powers to make rules under the Act after consulting the Central Committee for Food Standards appointed by the Central Government under s. 3. Section 24 empowers the State Government, (after consultation with the Central Committee for Food Standards and with previous publication) to make rules for giving effect to the provisions of the Act in matters not covered by s. 23. Various States have actually framed rules under this section. We may now briefly refer to the Prevention of Food Adultera- tion Rules, 1955 (hereafter called the Adulteration.Rules). These rules were made by the Central Government under s. 4(2) and s. 23(1) of the Adulteration Act and were published in the Official Gazette as per notification dated September 12, 1955. The rules other than those contained in Part III- Appendix B-Item A.12 Margarine, Part VI and Part VII came into force on the date of their publication in the Official Gazette : the rules contained in Part III, Appendix B, Item A.12 Margarine came into force on June 1, 1956 and the rules contained in Part VI and Part VII came into force on December 1, 1956-: vide r. 1(3). Under S. 23(2) (prior to its amendment in 1964) all rules made under sub-s. (1) had to be laid as soon as possible before both Houses of Parliament. By Act 49 of 1964 sub-s. (2) was amended so as to provide for every rule made under sub-s. (1) to be laid before each House of Parliament while in session, for a total period of 30 days in order to afford an opportunity to the two Houses to study and to modify or annul it for, future if both Houses so agree. We have referred to this amendment as some of the rules were amended thereafter. The effect of the subsequent amendment of some of the rules will be noticed later. The Adul- teration Rules clearly bring out the anxiety of their authors to see that wholesome food is sold to the citizens. The duties and powers of Food Inspectors as contained, inter alia, in rr. 9 and 1 3, broadly illustrate this anxiety. These rules also indicate that the framers of the Rules were not unaware of the different provisions of the Fruit Order. By way of illustration reference may be made to r. 50 which prescribes conditions of licence to manufacture, sell, stock, distribute or exhibit certain articles of food. In cl. (1) of sub-r. (1) of this rule the fruit-products covered under the Fruit Order and some other articles have been excluded from the operation of this rule. This clause was amended twice, once in November, 1956 and again in April, 1960. Had the Adulteration Act been intended to be impliedly repealed by the Fruit Order (which would also mean implied repeal of the rules) it would have been unnecessary to expressly exclude such fruit-products from the operation of this rule. Rule 5 and Appendix B of these Rules came into force on December 1, 1956 after the promulgation of the Fruit Order. According to r. 5 the standard of quality of the various articles of food specified in Appendix B are as specified therein. In Appendix B item at sl. no. A.16 deals with "fruit products". But the articles of fruit products dealt with in A. 16.01 to A. 16.12 clearly show that vinegar is not included in the expression "fruit products". Vinegar Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 7 is dealt with in A.20 and synthetic vinegar in A.20.01. Both these items were added in April, 1960. We may now turn to the Essential Commodities Act, 10 of 1955 and the Fruit Order. The Essential Commodities Act was enacted in 1955 with the object of providing, in the interests of the general public, for the control of the production, supply and distribution of, and trade and commerce in, certain commodities. It came into force on April 1, 1956 repealing the Essential Commodities Ordi- nance No. 1 of 1955 which had been promulgated with the same object and enforced on January 26,1955, the date of the expiry of the Essential Supplies (Temporary) Powers Act 26 of 1946. The last named Act had replaced the Essential Supplies (Temporary Powers) Ordinance No. XVIII of 1946 which had come into force on October 1, 1946. That Ordinance was promulgated with the object of continuing, during a limited period, powers to control the production, supply and distribution of, and trade and commerce in, foodstuffs and certain other commodities. To empower the Indian Legislature to enact law on this subject matter the British Parliament had passed India (Central Government and Legislation) Act, 1946(9 and 10 Geo. Vl, c.39). The lndian Legislature not being in session the Ordinance was promulgated to meet the emergency and this was replaced by Act 26 of 1946. Reference has been made by us to this past history for the purpose of indicating the different objects and purposes intended to be achieved by the two legislative measures. Section 2 of the Essential Commodities Act which is the definition section defines in cl. (a) "essential commodity to mean any of the classes of commodities stated in sub-cls. (i) to (xi). Sub-clause (v) refers to "foodstuffs, including edible oil-seeds and oils" and cl. (xi) confers power on the Central Government to declare by a notified order any other class of commodity to be an essential commodity for the purposes of the Act, being a commodity with respect to which Parliament has power to make laws by virtue of Entry 33 in List III in the 7th Schedule to the Constitution. Section 3 of the Act confers on the Central Government power to control production, supply, distribution etc., of essential commodities by providing, by an order, for regulating or prohibiting the production, supply and distribution of those commodities and trade and commerce therein. Every order made under this section has to be laid before both Houses of Parliament as soon as may be after it is made. By virtue of s. 6 Orders made under s. 3 have effect notwithstanding anything inconsistent there- ,with contained in any enactment other than the Essential Commodities Act. Section 7 provides for penalties for contravention of orders made under s. 3. Under s. 11 courts are prohibited from taking cognizance of offences punishable under this Act except on a report in writing of the facts constituting such an offence made by a person who is a public servant as defined in s. 21, I.P.C. Section 12 of this Act vests in the Presidency Magistrates and Magistrates of 1 Class power to pass sentences of fines exceeding Rs. 1,000/- on convicted persons notwithstanding the restriction in this respect imposed on their powers by s. 32, Cr.P.C. As already noticed earlier, an ordinance called the, Essential Corn modifies Ordinance, 1 of 1955 had been promulgated on the expiry of the Essential Commodities (Temporary Powers) Act and the present Act was passed to replace that Ordinance. 6 16 It may appropriately be pointed out at this stage that it was not the respondent's case that the Essential Commodities Act had the effect of impliedly repealing the Adulteration Act for the purposes of these cases. The only argument urged was that the Fruit Order had that effect and its Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 8 overriding effect by virtue of S. 3 of the Act was strongly emphasised. We may now turn to the Fruit Order (S.R.O. 1052 dated 3rd May, 1955 published in the Gazette of India dated 14th May, 1955) which was made by the Central Government in exercise of the powers, conferred on it by s. 3 of the Essential Commodities Act. Clause (2) of this Order, which is the definition clause, defines the expression "fruit product" in sub-cl. (d) and "vinegar, another brewed or synthetic" is included in this expression as per item (ii) of this sub-clause. "Licensing Officer" as defined in sub- cl. (g) means the Agricultural Marketing Adviser to the Government of India and it includes any other Officer empowered in this behalf by him with the approval of the Central Government. "Manufacturer" as defined in sub-cl. (h) means a licensee engaged in the business of manufacturing in fruit products for sale and includes a person purchasing such fruit products in bulk and repacking them for sale either by himself or through someone else. Clause 4 prohibits all persons from carrying on business of manufacture except and in accordance with the terms of an effective licence granted to him under this Order in Form "B". Clause 5 prescribes procedure for applications for the grant of a licence under cl. 4. Clause 7 enjoins the manufacturers to manufacture fruit products in conformity with the sanitary requirements and the appropriate standard of quality and composition specified in the Second Schedule to the Order and cl. 8 lays down the requirements to be complied with by the manufacturers in regard to the packing, marketing and labelling of containers, of fruit products. Clause 10 prohibits sale, exposure for sale, despatch or delivery to any agent or broker for the purpose of sale, any fruit products which do not conform to the standard of quality and composition specified in the Second Schedule or which are not ,packed, marked and labelled in the manner laid down in the Order: ,the proviso to this clause contains directions for fruit products imported into India. Clause 12 contains a mandate for every manufacturer to comply with the directions and orders issued to him and failure to do so is to be deemed to be a contravention of the provisions of the Order. According to cl. 15 no prosecution for contravention of any of the provisions of this Order is to be instituted without the previous sanction of the Licensing Officer. The object and purpose of the Adulteration Apt is to eliminate the danger to human life and health from the sale of unwholesome articles of food. It is covered by Entry 18, List III of the 7th Schedule to the Constitution. The Essential Commodi- ties Act on the other hand has for its object the, control of the production, supply and distribution of, and trade and commerce in,. essential commodities and is covered by Entry 33 of List III. In spite of this difference in their main objects, control of production and distribution of essential commodities may, to an extent from a. broader point of view include control of the quality of the essential articles of food and, thus considered, it may reasonably be urged that to some extent it covers the same field as is covered by the provisions of the Adulteration Act. The two provisions may, therefore, have within these narrow limits co-terminus fields of operation. On this premise we have to see if the two provisions can stand together having cumulative effect and in case they cannot, which provision has the overriding or controlling effect. It is needless to point out that they can stand together if the powers are intended to be exercised for different purposes without fatal inconsistency or repugnancy. Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 9 At the bar Shri Daphtary in his usual persuasive manner argued that there is an irreconcilable conflict between the two statutory provisions and the Fruit Order being, not only of a date later than the Adulteration Act but also having, by virtue of s. 3(6) of the Essential Commodities Act, overriding effect over all other laws, it must prevail over the Adulteration Act and Rules. He pointed out that under the Fruit Order the prosecution can be instituted only with the previous sanction of the Licensing Officer whereas under the Adulteration Act even a purchaser may, without any such sanction, institute a prosecution merely by producing along with his complaint a certificate from the Public Analyst. He also drew our attention to s. 20-A of the Adulteration Act according to which, unlike the Fruit Order, the Court trying an offence under that Act is empowered to implead the manufacturer, distributor or dealer of any article of food, it is satisfied that he is also concerned with, that offence, and proceed against him as though the prosecution had been instituted-against him under s. 20. We do not think this section in any way reflects the legislative intention of implied repeal of the Adulteration Act by the Fruit Order. The two statutory provisions can operate within their respective spheres without giving rise to any absurdity or such grave inconvenience as would impel the court to sustain the plea of implied repeal., Incidentally it may also be pointed out that this section was added by Act 49 of 1964 which came into force on March 1, 1965 long after 1960 when the present cases were started. Shri Daphtary developed his argument by adding that if the respondents have manufactured for sale and have sold vinegar in accordance with the terms of the licence granted to them under the Fruit Order then imposition of further restrictions under the Adulteration Act and Rules with a threat of severe penal consequences for violation of those provisions would be in direct conflict with the mandate or directions under the Fruit Order. The counsel contended that at least the freedom to manufacture and sell vinegar as permitted by the Fruit Order is curtailed or further circumscribed by the Adulteration Act and Rules and this must necessarily cut across the provisions of the Fruit Order. He illustrated his point by submitting that under the Fruit Order use of colouring matter is more liberal than under the Adulteration Act and Rules. In view of these conflicting provisions the Adulteration Act and Rules, according to Shri Daphtary must be held to have been impliedly repealed by the Fruit Order. We are unable to agree with this submission. The two statutory provisions, for the purpose of effectuating their respective objects, have imposed ,different restrictions on the respondents when they manufacture and sell vinegar whether brewed or synthetic. We are, however, '.Informed at the bar that in the present case the disputed vinegar is synthetic. In the interest of public health the respondents have to comply with the provisions of Adulteration Act and Rules and in the interests of equitable distribution of essential commodities including the articles of food covered by Essential Commodities Act and the Fruit Order they have to comply with the provisions of the Fruit Order. The provisions of the Adulteration Act and of the Fruit Order to which our attention was drawn seem to be supplementary and cumulative in their operation and no provision of the Fruit Order is shown to be destructive of or fatal to any ,provision of the Adulteration Act or the Rules made Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 10 thereunder So as to compel the court to hold that they cannot stand together. If the Adulteration Act or Rules impose some restrictions on. the manufacturer, dealer and seller of vinegar then they have to comply with them irrespective of the fact that the Fruit Order imposes lesser number of restrictions in respect of these matters. The former do not render compliance with. the latter impossible, nor does compliance with the former necessarily and automatically involve violation of the latter. Indeed, our attention was not drawn to any provision of the Adulteration Act and Rules, compliance with which would result in breach of any mandate, whether affirmative or negative, of the Fruit Order. We are, therefore, unable to find any cogent or convincing reason for holding that the Parliament intended by enacting the Essential Commodities Act or the Fruit Order to implidely repeal the provisions of the adulteration Act and the Rules in respect the statutes can function with full the provisions of the Adultera of the vinegar in dispute. Both vigour side by side in their own parallel channels. Even if they happen to some extent to overlap. s. 26 of the General Clauses Act fully protects the guilty parties against double jeopardy or double penalty. This section lays down that where an Act or omission constitutes an,' offence under two or more enactments then the offender shall be liable to be prosecuted and punished under either or any of those enactments but shall not be liable to be punished twice for the same offence. If, therefore, the provisions of the Adulteration Act and those of Fruit Order happen to constitute offences covering the same acts or omissions then it would be, open to the prosecuting authorities to punish the offender under either of them subject to the only condition that a guilty person should not be punished twice over. There is also another aspect which has to be kept in view. Both the Adulteration Act and the Essential Commodities Act have been amended from time to time after their enactment. Being governed by Entries in List III of the 7th Schedule even the States have power to amend these enactments and indeed they have been so amended in some States. The subsequent amendments of the Adulteration Act and of the Essential Commodities Act by the Parliament and the amendment of the Adulteration Rules would also tend to negative any legislative intendment of implied repeal of the Adulteration Act by the Essential Commodities Act or the Fruit Order. It may be recalled that cl. (1) of sub-r. (1) of r. 50 of the Adulteration Rules was amended in 1956 and again in 1960 and the amended clause is indicative of the rule making authority being conscious of both the statutory provisions being operative in their respective fields at the same time, thereby negativing implied repeal. A.20 dealing with "vinegar" was also added in Appendix B of the Adulteration Rules in 1956 and A. 20.01 dealing with " synthetic vinegar" was added in April, 1960. A passing reference may also be made to some of the relevant amendments in some rules made subsequent to the enforcement of the amended section 23 (2). In r. 55 in items at sl. nos. 19 and 20, dealing with pickles and chutnies made from fruit or vegetables and with tomato and other sauces, respectively, the preservatives mentioned in cl. 2 were amended. Similarly in r. 51(2) Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 11 the table containing articles like fruit and vegetable juices including tomato- juice was amended. Both the above amendments were made in December, 1965. It may here be pointed out that pickles, chutnies, tomato products, kutchups, sauces and also other unspecified items relating to fruits or vegetables are included in the definition of "fruit product" under the Fruit Products Order. These amendments, though made after 1960, do seem to further negative the intendment of implied repeal as argued on behalf of the respondent. In view of the foregoing discussion it seems to us that the two statutory provisions can harmoniously operate without causing confusion or resulting in absurd consequences' and the scheme of the Adulteration Act and Rules can without difficulty fit into the scheme of the Fruit Order under the Essential Commodities Act. The challenge on the ground of implied repeal must, therefore, be rejected. Incidentally we may note that the view taken by the learned single Judge in this case was later overruled by a Full Bench of the 918 Sup. C.I./71 Delhi High Court in Municipal corporation v. Harnarain (Crl. A. No. 163 of 1967 decided in May, 1969). Shri Daphtary, as a last resort, tried to press into service Art. 14 in his challenge to the prosecution of the respondent. According to him the prosecuting authorities have an unguided licence to prosecute his clients under one or the other statute and since the penalty under the Adulteration Act is more severe than that under the Fruit Order the principle of equality before the law is violated As this point was not taken in any of the courts below we did not permit him to raise it in this Court. It would, however, be open to the respondent, if so advised, to raise this point in accordance with law in the court below, because the cases have not yet been finally disposed of. The competence of the prosecution having been challenged at an intermediate stage, the cases will have to go back to the trial court. As these cases have been pending since 1962 the trial court should dispose them of with due dispatch and without any further avoidable delay. The appeals are accordingly allowed and the cases remitted to the trial court for further proceedings according. to law in the light of the observations made above. R.K.P.S. Appeals allowed. Municipal Corporation Of Delhi vs Shiv Shankar on 1 February, 1971 12 | {
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Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 Equivalent citations: 1971 AIR 2147, 1972 SCR (1) 193, AIR 1971 SUPREME COURT 2147, 1972 ALL. L. J. 1025, 1971 (1) SERVLR 410, 1973 2 SCJ 449, 1971 UJ (SC) 784, 1972 (1) SCR 193, ILR 1973 1 ALL 262 Author: D.G. Palekar Bench: D.G. Palekar, S.M. Sikri, A.N. Ray PETITIONER: MUNICIPAL BOARD, KANNAUJ Vs. RESPONDENT: STATE OF UTTAR PRADESH, & ORS. DATE OF JUDGMENT12/08/1971 BENCH: PALEKAR, D.G. BENCH: PALEKAR, D.G. SIKRI, S.M. (CJ) RAY, A.N. CITATION: 1971 AIR 2147 1972 SCR (1) 193 1972 SCC (3) 345 ACT: U. P. Municipalities Act, 1916-Section 34(1-B), scope of. HEADNOTE: The Executive Officer of the Municipal Board, Kannauj (U.P.) dismissed 74 striking employees. Some of the employees appealed against the order of dismissal and most of them were, reinstated. The others did not appeal and the dismissal order stood in their cases. After a year, the State Govt. purporting to act under s. 34 (1-B) of, the U.P. Municipalities Act, passed an order prohibiting the execution or further execution of the order of dismissal passed by the Executive Officer on the ground that r. 5 of the U. P. Municipal Board Servants (Enquiry Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 1 punishment and termination of service) Rules were not followed and the dismissed employees were not heard and so the alleged order was illegal and improper. Section 34(1-B) of the U.P. Municipalitie Act, inter alia, provides that the State Govt. may by order 'prohibit the execution or further execution of a resolution or order', passed by a Board, 'if in its opinion such resolution or order is prejudicial to the public interest' or has been passed 'in abuse of powers or in fragrant breach of provision of any law in force', and 'may prohibit continuance by any person or any act in pursuance of such resolution or order.' The Municipal Board challenged the order of the State Government in a writ petition; but the High Court dismissed the petition. In appeal to this Court the Board contended that the provisions of s. 34 (1-B) were incapable of application to an order of dismissal. Allowing the appeal, HELD:The State Government has no power to cancel or set aside an order which exhausts itself after it has been passed or made. Where the resolution or order does not require any acts to be performed or steps to be taken for the execution or further execution of the resolution or order of the Board or its officer there remained nothing of which execution could be prohibited. The sub-section only empowers the State Government to prevent something being done in futuro. [200A-E] Shujaat Ullah Khan v. State of U.P. & Ors, 1966 A.L.J. 499, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 42 of 1968. Appeal by special leave from the judgment and order dated July 21, 1967 of the Allahabad High Court in Special Appeal No. 457 of 1967. 19 4 J. P. Goyal and G. N. Wantoo, for the appellant. O. P. Rana, for respondents Nos. 1 and 2. H. K. Pari and S. K. Dhingra, for respondents Nos. 3, 9, 13, 15, 16, 25, 31 to 35, 38, 39, 42 to 50, 53 to 56, 58, 59, 60 to 62, 65 to 67, 69 to 71, 73 and 76. The Judgment of the Court was delivered by Palekar, J. This appeal by special leave against the decision of the appellate Bench of the Allahabad High Court involves the question of the legality and validity of an order dated 12th May, 1965 passed by the State Government purporting to act under section 34(1-B) of the Uttar Pradesh Municipalities Act, 1916 (hereinafter referred to as "the Act"). The impugned order is as follows "U.P. Government Department of Municipal Board, Serial No. 1725 GI IIP 1964/64 12-5-65 NOTIFICATION The then Executive Officer of Municipal Board, Kannauj dismissed 74 sweepers of Municipal Board Kannauj from 9th April, 1964 under section 76 of U.P. Municipalities Act, 1916. The dismissal of the above sweepers was illegal and improper Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 2 because the procedure prescribed in Rule 5 of the Uttar Pradesh Municipal Karamchari (Janch, Dand tatha Seva Samapti) Niyamawali [U.P. Municipal Boards Servants (Enquiry, Punishment and Termination of Service Rules)]was not followed and they were not given any opportunity of being heard and the opinion of the State Government is that the above order of 9th April, 1964 by the present Executive Officer Municipal Board Kannauj is adverse to public interest and the order has been made by seriously defying the rules of Uttar Pradesh Municipal Karamchari Janch Dand tatha Seva Samapti Niyamawali [U.P. Municipal Boards Servants (Enquiry, Punishment and Termination of Service Rules)]. 1 9 5 So, the Governor of Uttar Pradesh in exercise of his power under section 34 sub-section 1-B of the U.P. Municipalities Act, 191 6 (U.P.Act No. 11, 1916) prohibits the execution of the above order of 9th April 1964 and any act done by any person in pursuance of that order and the continuance of that order. By order PRAN NATH KAPOOR Secretary." This order was challenged in a writ petition before the High Court by the Municipal Board, Kannauj as being illegal and invalid on several grounds. The substance of the allegations in the petition by the Municipal Board was that, on account of certain disputes between the Board and the sweeper-employees of the Board, there was a sudden strike by the latter on 7th April, 1964. As many as 74 sweepers struck work without notice. By reason of the strike, insanitary conditions developed in the town endangering public health. The Board bad, therefore, to act quickly as in an emergency to recruit sweepers to do the job; but it was difficult to recruit new men unless continuous employment was given to them and, hence, on 8th April, 1964, the Board arranged to have it announced by beat of drum in the town that, unless the striking employees resumed duties by the evening of 9th April, 1964, they were liable to be dismissed. The strikers did not join duties by the evening of 9th April, 1964 and, therefore, the Executive Officer of the Board dismissed the 74 strikers who were made parties to the petition. It was admitted that the procedure laid down by Rule 5(1) of the Uttar Pradesh Municipal Boards Servants (Inquiry, Punishment and Termination of Service) Rules (hereinafter referred to as "the Rules") was not adopted before taking disciplinary action by way of dismissal; but the Board justified its action by reference to the proviso to Rule 5(1) which stated that the provisions of sub-rule 5(1) shall not apply where the person concerned had absconded and where, for reasons to be recorded in writing, it was impracticable to communicate with him. 19 6 After the dismissal of the 74 employees on 9th April, 1964 some of the employees appealed against the order of dis- missal and most of them were reinstated. The others did not appeal and, therefore, the order of dismissal stood in their case. New recruits were appointed in their place. Later, i.e., more than a year after the order of dismissal, the State Government, purporting to act under section 34(1-B) of the Act, passed the above order prohibiting the execution or further execution of the order of dismissal passed by the Executive Officer. It was contended that no such order under S. 34(1-B) of the Act could be validly made by the State Government. Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 3 The State Government, which was respondent No. 1 to the petition, supported its order and contended that the order had been passed in the public interest as, in its opinion, the order of the Executive Officer was illegal and arbitrary and had the effect of throwing a large body of employees out of employment making them suffer privation and misery on account of the continuing operation of the order which was illegally passed. The employee-respondents, on the other hand , denied the more substantial allegations in the petition. They alleged that, as a matter of fact, the employees had not gone on strike and, therefore there was no question of their abstaining from doing their duties either on the 7th, 8th or the 9th of April, 1964. There was no question also of any insanitary conditions developing in the town and there was no good reason at all for passing an order of dismissal of all the employees in a body. They further alleged that the order had been passed out of sheer spite in order to teach them a lesson. The High Court did not, obviously, undertake an inquiry into the disputed facts. What was, however, relevant for its decision was whether, in case the State Government honestly formed the opinion that the order of the Executive Officer was prejudicial to the public interest or was in flagrant breach of a provision of any law-in this case, rule 5(1) of the- Rules, the order prohibiting the execution or further execution of the order would be valid. The learned single Judge, who considered the petition in the first instance, and the Appellate Bench held that it was open to the State Government, on its own inquiry, to form the opinion that the order passed by the Executive Officer dismissing a large body of employees was against public interest and in violation of the law in force and, conse- quently, the order passed by the State Government under s. 34 (1 -B) of the Act was a valid order. On that view of the matter, the Board's petition was dismissed by the High Court and, hence, the present appeal. The only point of substance urged by the Board before this Court was that the provisions of section 34(1-B) of the Act were incapable of application to an order of dismissal. The contention was that, when an order of dismissal is passed, the order operates by its own force and no further steps are necessary to implement such an order. It was submitted that the sub-section applied only to those cases where the resolution of the Board or order required some steps to be taken to effectuate the resolution or the order and not when the resolution or order was effective by its own force. In other words, where on the passing of the resolution or order it exhausted itself, the State Government could hardly "prohibit the execution or further execution" of that resolution or order; and, therefore, where the State Government interfered by prohibiting the execution or further execution of the resolution or order, it really intended to cancel or set aside the resolution or order which, in the submission of the petitioner, was beyond the powers of the State Government. It appears to us that there is considerable force in this submission. Section 34 is in that part of Chapter 11 of the Act which deals with the subject "Control of Board". The marginal note to the section is "Power of the State Government or the Prescribed Authority or the District Magistrate to prohibit execution of or further execution of resolution or order of the Board". Sub-sections (1) and (1-A) deal with the powers, of the Prescribed Authority and the District Magistrate in this respect. Sub-section (1-B) deals with the powers of the State Government and is as follows :- " (1-B). The State Government may, of its own motion or on report or complaint received by order prohibit the execution or further execution of a resolution or order Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 4 passed or made under this or any other enactment by a board or a committee of a board or a joint committee or any officer or servant of a board or of a joint committee, if in its opinion such resolution or order is prejudicial to the public interest, or has been passed or made in abuse of powers or in flagrant breach of any provision of any law for the time being in force, and may prohibit the doing or continuance by any person of any act in pursuance of or under cover of such resolution or order." It should be noted that the words underlined above were inserted by an amendment which came into force on 30th November, 1964, that is to say much after the order of dismissal by the Executive Officer had been passed, though before the order of the State Government dated 12th May, 1965. Before the amendment, the State Government could pass the order of prohibition of execution only when, in its opinion, the resolution or order was prejudicial to the public interest; but, after the amendment, such an order could also be made by the State Government if, in its opinion, the resolution or order was made in- abuse of powers or in flagrant breach of any provision of any law for the time being in force. It was contended on behalf of the Board that it was not competent for the State Government in this case to make the order on the ground that the order of dismissal was in flagrant breach of a provision of the law for the time being in force. But that point is only of academic interest, because the order itself shows that it had been passed also on the ground that the order of dismissal was prejudicial to the public interest. We assume, therefore, that the State Government was satisfied that the order of dismissal passed by the Executive Officer was prejudicial to the public interest. The question, however, is whether, after the order of dismissal had been passed on the 9th April, 1964, the State Government had the power virtually to set aside or cancel the order under the cover of purporting "to prohibit the execution or further execution of that order." In our opinion, that sub-section does not clothe the State Government with such a power. The resolution of the Board or the order of a duly authorised officer of the Board is not liable to be cancelled or set aside under this section. All that could be done under it is to prohibit the execution or further execution of the resolution or order, or the doing or cont- inuance by any person of any act in pursuance of or under cover of such resolution or order. Where the resolution or order does not require any acts to be performed or steps to be taken for the. execution or further execution of the resolution or order of the Board or of its Officer, as in the present case, there is really nothing to prohibit. It was contended on behalf of the State that, when the State Government was empowered to order prohibition of the execution of the resolution or order, it was virtually em- powered to set aside or cancel the order and, in support of this view, a reference was made to sub-section (4) of that section which provides that it shall be the duty of the Board, if so required by the authority making the order under sub-section (1-B) to take any action which it would have been entitled to take, if the resolution or order had never been made or passed, and which is necessary for preventing any person from doing or continuing to do anything in pursuance of the resolution or order. If the object of the provision was to clothe the State Government with the power to cancel or set aside the resolution of the Board or order, it would have simply said so without resorting to the circumlocution "prohibit the execution or further execution of the resolution or order". We do not, therefore, think that sub-s. (1-B) read with sub S. (4) applies to any resolution or order which exhausts itself after it is passed or made. That is the view taken by a Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 5 learned Judge of the Allahabad High Court in Shujaat Ullah Khan v. State of U.P. & Others.(1) In that case, a resolution was passed by the Board exonerating Shujaat Ullah Khan, who was the Executive Officer of the Board, from certain charges that had been framed against him. The State Government, thereupon, purporting to act under section 34(1- B) of the Act, quashed the Board's resolution on the ground that it was illegal, not having been passed by 2/3rds of the members constituting the Board and was otherwise prejudicial to the public interest. This, order of the State Government was challenged by Shujaat Ullah Khan on several grounds, one of them being that no order under s. 34(1-B) could be passed, because the resolution of the Board had been fully implemented and nothing remained to be executed in respect (1) 1966 A.L.J. 499. 4-M1245Sup CI/71 there of. This contention was accepted by the learned Judge who observed as follows "It is clear that the only order that can be passed by the State Government under this sub- section is a prohibitory order to prevent something being done in the future. It is not open to the Government, acting under this sub- section, to give any positive direction such as has been given in the present case, where the Government has ordered the Board to reconsider its report and to make a further enquiry and take a fresh decision. The resolution passed by the Board, exonerating the Executive Officer and dropping the charges against him, exhausted itself as soon as it was passed, for the charges were straightaway dropped and the Executive Officer stood exonerated. There remained nothing to be done in the future and there was nothing left for execution or further execution that could be prohibited by the State Government under sec. 34(1-B)." In our opinion, that reasoning equally applies to the present case. The order of dismissal was self-operative and nothing remained for execution or further execution which could be prohibited by the State Government under that section. On that ground alone, the order passed by the State Government will have to be set aside. It was next contended on behalf of the employee respondents' that there was really no effective order of dismissal, because that order had not been communicated to the employees. We asked the learned counsel whether this contention was taken earlier either in the reply-filed by them to the petition or in the arguments before the High Court. He was not able to show that this had been done. On the other hand, reference was made by the learned counsel for the petitioner to an order passed by the Executive Officer on 9th April, 1964, for communication of the order of dismissal to the sweepers and also to the letter dated 8th May 1965 written by the President of the Board to the District Magistrate which is appended to the petition as Annexure 'C'. This letter says that the orders of dismissal had been communicated to the sweepers 2 01 on 10th April, 1964. Moreover, we have on record a letter written by and on behalf of the sweepers to the Secretary, Local Self Government Department, U.P., which clearly goes to show that the sweepers had come to know that hey had been dismissed from service. This letter was received in the office of the Secretariat on 21st April, 1964 which only shows that the sweepers must have been communicated the order of dismissal much earlier. We also know that many sweepers had filed appeals. In any case, since the contention is put forward for the first time now in this Court and involves consideration of facts, it cannot be permitted to be raised. In the result the appeal is allowed and the order of the State Government dated 12th May, 1965 is quashed. There shall be no order as to costs. S.C. Appeal Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 6 allowed. Municipal Board, Kannauj vs State Of Uttar Pradesh, & Ors on 12 August, 1971 7 | {
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Daulatram Rawatmull vs The C.I.T. (Central) Calcutta on 18 January, 1971 Equivalent citations: (1972)4SCC95, 1971(III)UJ259(SC), AIRONLINE 1971 SC 7, 1972 (4) SCC 95 Author: A.N. Grover Bench: J.C. Shah, A.N. Grover, K.S. Hegde JUDGMENT A.N. Grover, J. 1. This is an appeal by special leave from a judgment of the Calcutta High Court in two connected references made Under Section 66 of the Income tax Act, 1922, hereinafter called the "Act". 2. The appellant is a partnership firm duly registered under the Indian Partnership Act, 1982. It consisted of six partners whose names shares are given below : (1) Nandlal Bhuwalka /3/-(2) Girdharilal Bhuwalka /3/-(3) Shyamlal Bhuwalka /2/-(4) Bajranglal Bhuwalka /2/-(5) Rawatmull Company /3/-(6) Rameshwarlal Company /3/- The appellant carried on the business as dealers and commission agents in jute and other commodities. It also acted as procuring agents for rice and paddy for certain areas for the Government of Bengal for the procurement of which it was paid commission It was originally assessed on March 30, 1948 for the assessment year 1946-47 the corresponding year of account being from September 27, 1944 to October 15, 1945. On February 19, 1955 the Income tax Officer issued a notice Under Section 34 of the Act stating that he had reason to believe that the appellant's income for the year in question had been under-assesssed and the appellant was called upon to file a return of income for that year. After the return had been filed and after the Income tax Officer had examined the books of account etc. he made reassessment by an order dated February 20, 1956. By the said order the Income tax Officer, interalia, added the of sum Rs. 10,00,000/-to the income of the appellant as undisclosed income. This amount represented two deposits of Rs. 5,00,000/-each in the Central Bank of India. Ltd , Jamnagar Branch and which stood in the names of Raghu-nath Prasad Nopani alias Raghunath Prasad Agarwal and Bishwanath Bhuwalka alias Bishwanath Gupta who were respectively the sons of Rawatmull Agarwal and Bajranglal Agarwal partners of the appellant firm. The appellant had obtained an overdraft facility to the extent of Rs. 10 lakhs upon the security of these two fixed deposits receipts from the Calcutta branch of the Central Bank of Daulatram Rawatmull vs The C.I.T. (Central) Calcutta on 18 January, 1971 1 India. The Income-tax Officer, after investigation, was satisfied that these amounts deposited in the names of the sons of the two partners of the firm were secreted profits of the appellant firm itself On appeal the appf'llateAssistantComm-issioner held that the appellant had been able to explain the source of Rs. 50,000/-only out of the fixed deposit of Rs. 5,00,000/-in the name of Bishwanath Gupta. He thus reduced the addition made by the Income-tax Officer by Rs. 50,000/-only. The appellant filed an appeal before the Income tax Appellate Tribunal which upheld the order of the Appellate Assistant Commissioner. 4. The Appellant filed a petition Under Section 66(1) of the Act for stating certain questions of law arising out of the order of the Appellant Tribunal The Tribunal referred some questions but did not refer the following question which, on the High Court being moved Under Section 66(2), was directed to be referred : Whether on the facts and in the circumstance of the case there was material before the Income-tax Appellate Tribunal to hold that the sum of Rs. 5,00,000/-standing in the name of Raghunath Prasad Company and sum of Rs. 4,50,000/-cut of the sum of Rs. 6,00,000/-in the name of Biswanath Bhuwalka representing the fixed deposits were the canceled income of the assessee firm lor the relevant previous year for the assessment for the year 1946 47. The High Court came to the conclusion that the materials on the record were not sufficient for holding that the amount of Rs. 4,50,000/-out of the deposit in the name of Biswanath Gupta belonged to the appellant. But so far as the other deposit of Rs. 5,00,000/-was concerned which stood in the name of Raghunath Prasad the High Court came to the contrary conclusion and the question was accordingly answered We are concerned in the present appeal only with this part of the question referred to the High Court which has been answered against the assessee. 5. Now the High Court referred to the following facts which had been proved or established for arriving at the conclusion that the deposit of Rs. 5,00, 000/-which stood in the name of Raghunath Prasad was the concealed income of the appellant : (1) The procedure which was adopted for opening the deposit account and obtaining overdraft facilities was of a peculiar nature. What had happened was that on November 22, 1944 an amount of Rs. 50.000/-in cash was tendered to the Bara Bazar branch of the Central Bank of India, Calcutta. The cash so tendered was transferred to the Bombay Head Office of the Bank and a demand draft for Rs. 5,00,000/-was issued through the Bombay Head Office of the Bank to its Jamnagar branch. With that amount a fixed deposit account was opened in the name of Raghunath Prasad Agarwal with the Jamnagar branch of Central Bank on November 8, 1944. The other deposit in the name of Biswanath Gupta followed a similar course though the dates were different. On December 2, 1944 a letter of guarantee and a letter of continuity were signed by Raghunath Prasad Agarwal and Biswanath Gupta at the Calcutta branch of the Central Bank along with pronotes signed by the appellant firm for keeping these two deposits under lien of the Bank against overdraft facilities The overdraft account itself had been opened on or about November 24, 1944. (2) At first the assessee's overdraft facility was stated to be a clean overdraft without any security. It was, however, detected during investigation that the overdraft was against Daulatram Rawatmull vs The C.I.T. (Central) Calcutta on 18 January, 1971 2 the collateral security of the said two deposits. (3) The office of the appellant was in the same premises in which the Bara Bazar branch of the Central Bank was situated and from where the two remittances aggregating Rs. 10,00,000/-were made for opening deposit accounts at Jamnagar. (4) No consideration had been received by either of the holders of these two deposits for the accommodation that was extended to the appellant. (5) Raghunath Prasad in his individual assessment for the assessment year 1947-48 had explained the source of Rs. 5,00,000/-kept as fixed deposit with the Jamnagar branch of the Central Bank and had asserted that the said amount belonged to him. Biswanath also had claimed that the amount of fixed deposit was his own money and had given an explanation how he had acquired the sum of Rs. 5,00,000/-. The explanation of Raghunath Prasad in his personal assessement was accepted by the Income-tax Officer but in the assessment of the appellant firm the income tax authorities declined to accept the explanation given by Raghunath Prasad. 6. The High Court approached the matter thus. The onus lay on the department to show that the aforesaid deposits in the names of Raghunath Prasad and Biswanath belonged to the appellant. In case of the deposit in the name of Raghunath Prasad there were additional facts which went against the case of the appellant. Raghunath Prasad claimed that he had himself started the business in share brokerage and share dealings from February 17, 1944. His capital account on September 26, 1944 merely showed a balance of Rs. 563/. The next assessment for 1946-47 for the period September 27, 1944 to October 15, 1945 showed that his capital account had a balance of only Rs. 29,664/-as on October 15, 1945. By that time Raghunath Prasad had already deposited the amount of Rs. 5,00,000/-in the manner mentioned before on November 2, 1944. But later on during the period ending October 15, 1946 his capital account was credited with an amount of Rs. 5,07,500/-. It was further established that the deposit account in the name of Raghunath Prasad was adjusted against the overdraft account of the appellant. Raghunath Prasad died on August 16, 1945. His fixed deposit matured on Dec. 19, 1945. The amount of the deposit was not paid to the heirs of Raghunath Prasad but was adjusted the overdraft of the firm. The amount due to the Bank was liquidated but the appellant's account books showed a credit of Rs. 5,00,000/-in the account of Raghunath Prasad. The sum of Rs. 7500/-which was received on account of interest was also paid to the appellant under a stamped receipt on December 19, 1945. According to the High Court two inferences were possible. (J) That the money belonged to the appellant otherwise it could not have been adjusted against its loan (2) that the money belonged to Raghunath Prasad and it was adjusted against the dues of the appellant because it was given as security by Raghunath Prasad. The Tribunal had drawn the first inference It was not possible, therefore, for the High Court not to accept the conclusion of the Tribunal. About the other amount of Rs. 4,50,000/-out of the deposit in the name of Biswanath the High Court did not find that the materials on the record were sufficient for holding that the money belonged to the appellant. 7. The sole argument that has been addressed on behalf of the appellant is that there was hardly any justification for the High Court making a distinction between the two deposits, namely, the one in the name of Biswanath and the other in the name of Raghunath. The deposits were made in the same manner and in similar circumstances and the overdraft facilities were obtained by the appellant on the basis of both the fixed deposits. In the individual assessments also of both these persons their explanation had been accepted by the respective income tax authorities about the Daulatram Rawatmull vs The C.I.T. (Central) Calcutta on 18 January, 1971 3 source of the funds from they made the deposits. It has also been emphasised that Raghunath was running his own business and that his explanation had been fully accepted in his individual assessment and the income tax authorities could not sit in appeal over the decision in his assessment which was final and in which a definite finding had been given that the money belonged to him. All these matters have been fully dealt with in the judgment under appeal and we are unable to accede to the Contention that no distinction could be made between the deposit which stood in the name of Biswanath and the amount which was deposited in the name of Raghunath. 8. In the above view of the matter the appeal fails and it is dismissed with costs. Daulatram Rawatmull vs The C.I.T. (Central) Calcutta on 18 January, 1971 4 | {
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Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 Equivalent citations: 1971 AIR 1337, 1971 SCR 181, AIR 1971 SUPREME COURT 1337, 1973 BLJR 326, 1972 PATLJR 100, 1971 2 SCJ 650, 1971 SCD 459 Author: J.M. Shelat Bench: J.M. Shelat, I.D. Dua PETITIONER: SHAMBHU PRASAD SINGH Vs. RESPONDENT: MST. PHOOL KUMARI & ORS. DATE OF JUDGMENT24/03/1971 BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. DUA, I.D. BHARGAVA, VISHISHTHA CITATION: 1971 AIR 1337 1971 SCR 181 ACT: Hindu Law--Family arrangement--Principles for deciding whether a document is family arrangement. Adverse possession--When established. HEADNOTE: Raj Kumar, the common ancestor of the parties had four sons- Lalji Singh, Amar Singh, Ramji Singh and Raghunandan Singh. Amar Singh had three sons, namely, Sonadhari, Girwardhari and Nankhu father of present appellant. In 1898 Amar Singh purchased the land on which the house in dispute stood from his own funds but in the name of his brother Lalji Singh. Nankhu was taken in adoption by Ramji Singh. Shortly thereafter in 1915, a document Ex. I was executed between Raj Kumar's descendants. In it the claim of Nankhu to a Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 1 half share in the house in dispute was recognised. In 1949, Nankhu and the appellant filed the instant suit for a declaration of their half share in the house in dispute. The defendants (present respondents) were the branches of Sonadhari and Girwardhari. The suit was resisted inter alia on the following grounds: (i) that Ex. 1 was not a family arrangement but only a deed of relinquishment; and therefore Nankhu who had no anterior title to the house in dispute did not acquire any interest in it by virtue of Ex. 1; (ii) that even if he had an interest in the house he lost it by reason of adverse possession by the respondent. The trial court decreed the suit. The decree was upheld by the Single Judge of the High Court. The Division Bench however decided both the points of dispute in favour of the respondents. It held that there was no dispute or conflict of interest between the branches of Amar Singh and Ramji Singh, and that Amar Singh and Nankhu had acted in concert in the execution of Ex. I which was therefore not a family arrangement. It upheld the claim of the respondents that Nankhu and the appellant had lost title to the house by the adverse possession of the respondents. The visits of Nankhu and his wife to the house were held by the Division Bench to be 'in the nature of visits of guests of the defendants'. In appeal to this Court against the judgment of the High Court. HELD: (i) The arrangement under challenge has to be considered as a whole for ascertaining whether it was made to allay disputes, existing or apprehended, in the interest of harmony in the family or the preservation of property. It is not necessary that there must exist a dispute actual or possible in the future, in respect of each and every item of property among all members arraigned one against the other. It would be sufficient if it is shown that there were actual or possible claims and counterclaims by parties in settlement whereof the arrangement as a whole had been arrived at, thereby acknowledging title in one to whom a particular property falls on the assumption (not actual existence in law) that he had an anterior title therein. [191 F-G] Pullaiah v. Narasimham, A.I.R. 1966 S. C. 1837, Sahu Madho Das v. Mukund Ram, [1955] 2 S.C.R. 22 and Rani Mewa Kuwar v. Rani Hulas Kuwar. (1873-74) L.R. I I.A. 157 at 166, applied. 182 Williams v. Williams, (1867) 2 Ch. A. 294, referred to. An examination of the terms of Ex. I showed that it was incorrect to assume, as the High Court did, that in the disputes amongst the different branches of the family, Nankhu and Amar Singh were acting in concert, or that there was no conflict of interest among them. The parties to Ex. 1 arrived at a settlement in view of claims and cross claims by some against the others. Taken as a whole and in the light of the recitals and the statements in the operative part of the document indicating conflict amongst the members of the family, the document represented an arrangement bona Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 2 fide entered into, for settling existing or at any rate apprehended disputes, and therefore, satisfied the tests of a family arrangement laid down in the decisions of this Court. In this view Nankhu must be said to have acquired a half share in the house in dispute under Ex. 1. [193 H, 194 E-G] (ii) Adverse possession has to have characteristics of adequacy, continuity and exclusiveness. The onus to establish these characteristics is on the adverse possessors. Accordingly, if a holder of title proves that he too had been exercising during the currency of his title various acts of possession, then, the quality of those acts, even though they might not be sufficient to constitute adverse possession as against another, may be abundantly sufficient to destroy that adequacy and interrupt that exclusiveness and continuity which is demanded from a person challenging by possession the title which he holds. As between co-sharers, the possession of one cosharer is in law the possession of all co-sharers. Therefore to constitute adverse possession, ouster of the non-possessing co-sharer has to be made, out. As between them therefore, there must be evidence of open assertion of a hostile title coupled with exclusive possession and enjoyment by one of them to the knowledge of the other. But once the possession of a cosharer has become adverse as a result of ouster, a mere assertion of a 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 reentry upon the property or by resuming possession in such a manner as it was possible to do. For this purpose the mere fact that a dispossessed co-sharer comes and stays for a few days as a guest is not sufficient. [194 H-195 E] Kuthali Moothavar v. Paringati Kunharankutcy, (1921) 48 I.A. 395, 404, Lakshmi Reddy v. Lakshmi Reddy, [1957] S.C.R. 195, 202, Mohammad Bagar v. Naim-un-Nisa Bibi A.I.R. 1956 S.C. 548 and Wantakal Yalpi Chenabasavana Gowd v. Y. Mahabaleshwarappa, [1955] 1 S.C.R. 131, 138, followed. Ammakannu Ammal v. Naravanaswami Mudaliar, A.I.R. 1923 Mad. 633, approved. in view of the evidence in the present case the Division Bench was not justified in interfering with the finding of fact concurrently given by the Trial Court and the learned Single Judge that the adverse possession by Baijnath which commenced from 1933 was sufficiently interrupted by acts of possession by Nankhu, and therefore his title was not extinguished by adverse possession. [199 A-B] The appeal must accordingly be allowed. JUDGMENT: Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 3 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1655 of 1966. Appeal from the judgment and decree dated August 25, 1964 of the Patna High Court in Letters Patent Appeal No. 119 of 1958. D. Goburdhun and R. Goburdhun, for the appellant. S. V. Gupte, D. P. Singh and N. Nettar, for respondent No. 1. U. P. Singh for respondents Nos. 2 to 4. The Judgment of the Court was delivered by Shelat, J.-Two questions arise in this appeal. The first is whether the transaction evidenced by Ex. 1, dated March 20, 1915 was a family arrangement so as to confer on the appellant an,, his father, Nanhku Prasad, since deceased, title to a half share in the house in dispute. The second is that even if it was so, whether such title became extinguished as a result of adverse possession for the statutory period by Baijnath, the deceased husband of respondent 1. The parties are near relations. The following genealogy explains the relationship amongst them Rajkumar Singh Lalji Singh Amar Singh Ramji SinghRaghunandan Reshmi Kuer Patreja KuerSingh Nanhku Pd. Suba Faujdar Balkeshwar Singh (Plff. No.1) Shambu Pd. Decnath Singh (Plff. No. 2) Sonadhari Girwardhari Kamaldhari Tarke shwar Pd. Baijnath Pd. alias alias Daljit Nanu Babu Kamta Prasad (Deft. No. 2) died in 1948 Phul Kumari Devi (sons of Deft. (widow) 2-Nos. 3 to 7) Deft. No. 1. There is no dispute that Amar Singh purchased from his own funds under a registered deed, dated January 20, 1898, the ,,land on which the house in dispute stands. His son, Nankhu, the deceased father of the present appellant, was taken in adoption sometime prior to March 20, 1915 by Ramji Singh and his wife Patreja Kuer as they had no issue, whereupon Nankhu ceased to have any interest in the properties owned by Amar Singh and his branch. In 1933, Nankhu and the present appellant, then a minor, filed Suit No. 33 of 1933 against Sonadhari Tarkeshwar, Baijnath and Reshmi Kuer (the widow of Amar Singh, wrongly described by the High Court as the wife of Rajkumar in the genealogy set out in its judgment) in respect of certain properties which bad nothing to do with the house in dispute. The written statement filed in that suit was that Nankhu had been paid the price of his share in the house in dispute and that the entire house, consequently, belonged to and was since then in the ex- clusive possession of the defendants. That suit went upto the High Court when in 1941 a compromise application was filed by the parties settling that suit. But, as the suit had nothing, as aforesaid, to do with the house in dispute, nothing was said about the allegation that Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 4 Nankhu had been paid off in respect of his interest in that house. In 1949, Nankhu and the appellant filed the instant suit for a declaration of their half share in the house in dispute. In answer to the suit, the respondents raised three defenses : (1) that Nankhu and the appellant derived no interest under Ex. 1. (2) that assuming that they derived such interest, it was relinquished by them on being paid the price thereof, and (3) that in any event they lost their interest by reason of adverse possession by the respondents The Trial Court rejected all the three defenses raised by the respondents and decreed the suit, holding that Nankhu had acquired one half share in the said house under Ex. I. Against that decree, two appeals were filed in the High Court, one by respondent I and the other by some of the other respondentdents. These appeals were heard first by a learned Single Judge of the High Court. Before the learned Single Judge, the finding of the Trial Court that Nankhu and the present appellant had not relinquished their interest in the house on their being paid the price thereof was not disputed. The only questions agitated before the learned Single Judge, therefore, were whether Nankhu had a half share, that is to say, whether he derived his title to ,the half share under and by virtue of Ex. 1, and if so, whether he lost it as a result of adverse possession by the respondents. In respect of the first question. the parties urged two conflicting pleas. Nankhu and the appellant contended that Ex. I was a family arrangement under which he got half share in the house and that that family arrangement was valid and binding on the parties. The respondents, on the other hand, contended that Ex. I was only a Ladavi deed, that is, a deed of relinquishment. The argument on behalf of Nankhu and the appellant was that there were outstanding disputes between the different branches of the family of Rajkumar, and those disputes were ultimately settled at the instance of and with the aid of certain family friends resulting in Ex. I by way of a family arrangement. Therefore, even if Nankhu and the appellant were not able to show their anterior title to the house, they were entitled under Ex. I to a half share therein. The learned Single Judge accepted the contention raised by Nankhu and the appellant. His reasoning in this connection was that although the land on which the suit house stood was purchased by Amar Singh out of his own funds, it was purchased in the furzi name of Lalji, but there was no evidence that Lalji ever admitted to be the furzidar of Amar Singh. Consequently, though Nankhu, by his ,adoption, lost all interest in the properties of Amar Singh, yet the fact that in Ex. I Amar Singh acknowledged Nankhu having a half share in the house indicated that there was some apprehension in the mind of Amar Singh of a future dispute and that it was such an apprehended dispute which Ex. 1, while dealing with the house, settled. The learned Single Judge added that ,even assuming that there was no existing or apprehended dispute and the settlement was made out of consideration for the peace of the family or preservation of its properties, the settlement would have to be regarded as a family arrangement. Regarding the plea of adverse possession, 'he upheld the finding of the Trial Court that Nankhu and the appellant had established their acts of possession during the statutory Period, and that consequently, the continuity and exclusiveness of the respondents' adverse possession had been disrupted. On these findings, he dismissed the appeals and confirmed the decree passed by the 'Trial Court. Respondent I thereupon filed a letters patent appeal which was heard by a Division Bench of the High Court. The same two questions were reagitated, namely, as to the nature of Ex. 1, and as to the adverse possession. On the first question, the reasoning adopted by the Division Bench was on the following lines : Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 5 (1) that the executants of Ex. I formed three conflicting groups, namely, (a) Suba, Faujdar and Balkeshwar, constituting one group of members of Lalji's branch, being executants 1 to 3; (b) Raghunandan and his son, Kamaldhari, being executants 4 and 5 and constituting Raghunandan's branch; and (c) Amar Singh for himself and as the guardian of Baijnath, then a minor, Sonadbari for himself and as guardian of his minor son, Tarkeshwar, and Nankhu, who had, as earlier stated, gone to the line of Ramji on his adoption, being executants 6,7 and 8; (2) that the disputes, in settlement of which Ex. I was executed by these three groups, were, as its recitals show : (a) conflicting claims made by the said three sets of executants as to whether they were joint or separate in status, the claim of executants 1 to 3 being that all the members of Rajkumar's family were still members of an undivided Hindu family, and that therefore, although the properties stood in the names of and were in possession of individual members, they continued to be joint family properties including properties standing in the names of female members, namely, Reshmi and Patreja; (b) the allegation by executants 4 and 5 (Raghunandan's branch) that all the four branches of Rajkumar's four sons were separate and yet claiming share in the properties standing in the names of members of Lalji's branch, and (c) the claim by executants 6, 7 and 8 (Amar Singh, Sonadhari and Nankhu-by now in the line of Ramji) that the parties were separate in status, and therefore, the properties in the names of the two said females belonged exclusively to them and the members of the other branches had no interest whatsoever in them-, (3) that the Trial Court and the learned Single Judge were in error in holding that what Ex. I did was to evidence relinquishment by the rest of the members of the family of their claims in properties standing in the names of or in possession of particular members, and thereby acknowledging their anterior title in such properties. In fact Nankhu had no such anterior title, nor could be in law have any such title in the house in dispute in view of his having got out of Amar Singh's branch as a result of his adoption by Ramji; (4) that there was no subsisting or apprehended dispute between Amar Singh and his family, on the one hand, and Nankhu on the other, the latter not having made any claim for a share in the house in dispute, and that therefore, there was no question of preservation of peace or family property, there being nothing on record to show that Nankhu had held out any threat to the family peace or property; therefore, there was a total want of mutuality as in consideration of Nankhu getting a half share, Amar Singh got nothing in return and cases of the type of Williams v. Williams(1) had no Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 6 application; (5) that the recitals in Ex. I showed that the only dispute which prevailed at the time was "branchwise" and in that dispute Nankhu did not set up any contest against Amar Singh and his branch and indeed, both of them acted in concert, both claiming that the members of Rajkumar's family were separate and the properties standing in the names of Reshmi and Patreja were their exclusive properties; (6) that acknowledgement of exclusive title of Amar Singh and Sonadhari (executants 6 and 7) to certain properties, and likewise acknowledgement of exclusive title of Nanhku (executant No. 8) to certain other properties set out in paras 3 and 4 of Ex. I were not by way of settlement of any existing or apprehended dispute between them, and therefore, that part of Ex. I could not be regarded as providing any consideration for conferring the half share in the disputed house on Nanhku. On this reasoning the Division Bench declined to treat Ex. I as a family arrangement. The conclusion of the Bench clearly signified that it had relied on two fundamental premises: (1) that there were only three sets of executants, the third set consisting ;of executants 6, 7 and 8, and (2) that Amar Singh and Nanhku had acted in concert as there were no conflicting claims by and between them. In view of this conclusion there was no need for the Divi- sion Bench to go into the question of adverse possession. However, it decided to do so for the reason that although the finding on the question of adverse possession was concurrent, it had bee,-, seriously challenged before it. On this question, the Division Bench firstly relied on the Municipal Assessment Register for 1900-1901, (Ex. D), and the extract from the Demand Register of a Patna Municipality for 1915-16, (Ex. E). Ex. D showed the name of Amar Singh as the sole owner of the property. Ex. E mentioned Sonadhari and Baijnath only as the owners of the house as Amar Singh had died soon after Ex. I was brought into existence. The Division Bench was impressed by the fact that though only recently, in March 1915, Nanbku's half share in the house had been acknowledged in Ex. 1, his name was deliberately omitted in Ex. E, which meant that Sonadhari and Baijnath had openly asserted their title to the whole of the house and yet anhku took no steps to assert his title. Nor did he at any time (1) [1867] 2 Cb. A. 294. pay his share of the municipal taxes and the costs of repairs carried out later on by Baijnath. The Division Bench was also impressed with the fact that even when Baijnath, in his written statement in suit No. 33 of 1933, claimed that Nanhku's share had been paid off and be had since then been in exclusive possession of the entire house, Nankhu took no steps to vindicate his title until he and his son filed the present suit in 1949. The Division Bench came to the conclusion that there was not only an assertion of a hostile claim by Baijnath but that that assertion was accompanied by an ouster which remained open and continuous throughout the statutory period. As regards the evidence khat Nanhku and sometimes his wife came and stayed in the house, the Division Bench took the view that these were casual visits "in the nature of visits of guests of the defendants", and therefore, did not have the effect of interrupting the continuity and the exclusiveness of possession by the respondents. The Bench even observed that the respondents had completed their title by adverse possession long before Baijnath claimed exclusive possession in his said written statement in 1933. In this view, the Division Bench held that Nanhku's title in the house was extinguished by adverse Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 7 possession. The Division Bench accordingly allowed the respondents' appeal with costs all throughout. Both the conclusions of the Division Bench have been challenged before us as incorrect. On the question as to the nature of Ex. I a large number of decisions were cited at the bar to show when a transaction can be said to be a family arrangement. It is not necessary to advert to them as most of them have been considered by this Court in its previous decisions, wherein principles as to when an agreement can properly be regarded as a family arrangement have been set out, Thus, in Pullaiah v. Narasimham(1) after setting out how courts in England view family arrangements, Subba Rao, J. (as he then was) observed that the concept of such a family arrangement has also been accepted by courts in India, adapting the concept to suit the family set up in this country which is different in many respects from that obtaining in England. After examining some earlier decisions which be characterized as illustrations of how family arrangements were viewed, he summarized the law as to a family arrangement as follows: - ,,Briefly stated, though conflict of legal claims in praesenti or in future is generally a condition for the validity of a family arrangement, it is not necessarily so. Even bona fide disputes, present or possible, which may (1) A. I. R. 1966 S. C. 1837. not involve legal claims will suffice. Members of a joint Hindu family may, to maintain peace or to bring about harmony in the family, enter into such a family arrange- ment. If such an arrangement is entered into bona fide and the terms thereof are fair in the circumstances of a particular case, Courts will more readily give assent to such arrangement than to avoid it". Even in England, family arrangements are viewed as arrange- ments governed by principles which are not applicable to dealings between strangers. The courts, when deciding the rights of parties under family arrangements, consider what is most for the interest of families and have regard to considerations which in dealings between persons not members of the same family would not be taken into account. Matters which would be fatal to the validity of similar transactions between strangers are not objections to the binding effect of family arrangements. (see Halsbury's Laws of England, (3rd Ed.), Vol. 17, 215). Thus, in Williams v. Williams(1) the Court held that a family arrangement might be such as the court would uphold although there were no rights in dispute, and if sufficient motive for the arrangement was proved, the Court would not consider the adequacy of consi- deration. But the question of consideration or mutuality would arise, as Williams' case(1) shows, when other considerations, such as existing or an apprehended dispute or the question of preservation of property or honour of the family, are absent, so that it is not necessary for a valid family arrangement that there must exist actual competitive claims or disputes or that the arrangements must be backed by proper consideration. Even disputes likely to arise in future or preservation of family property and honour would be sufficient to uphold an arrangement bona fide made between the members of a family. What actually happens when such a family arrangement is made is explained by Bose, J., in Sahu Madho Das v. Mukund Ram(1) in the following words : Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 8 "It is well settled that a compromise or family arrangement is based on the assumption that there is an antecedent title of some sort in the parties and the agreement acknowledges and defines what that title is, each party relinquishing all claims to property other than they had previously asserted, to the portions allotted to them respectively. That explains why no conveyance is required in these cases to pass the title from the one in whom it resides to the person receiving it under the (1) [1867] 2 Ch. A. 294. (2) [1955] 2 S. C. R. 22. family arrangement. It is assumed that the title claimed by the person receiving the property under the arrangement had always resided in him or her so far as the property falling to his or her share is concerned and therefore no conveyance is necessary." He went on to say that this was not the only kind of arrangement which the courts would uphold, and that they would take the next step of upholding "an arrangement under which one set of persons abandons all claims to all title and interest in all the properties in dispute and acknowledges that the sole and absolute title to all the properties resides in only one of their number (provided he or she had claimed the whole and made such an assertion of title) and are content to take such properties as are assigned to them as gifts pure and simple from him or her or as a conveyance for consideration when consideration is present". In such a kind of arrangement where title in the ,(entire property is acknowledged to reside in only one of them and thereupon that person assigns parts of it to others there would be a transfer by that agreement itself which obviously in such a case would need a registered document. This decision lays down the assumption underlying a family arrangement, namely, of an anterior title and its acknowledgement in one to whom a property or part of it falls under the arrangement. (see also Rani Mewa Kuwar v. Rani Hulas Kuwar(1). Therefore, it is not necessary that there must exist an anterior title sustainable in law in such a person which the others acknowledge. The arrangement under challenge has to be considered as a whole for ascertaining whether it was made to allay disputes, existing or apprehended, in the interest of harmony in the family or the preservation of property. It is not necessary that there must exist a dispute, actual or possible in the future, in respect of each and every item of property and amongst all members arrayed one against the other. It would be sufficient if it is shown that there were actual or possible claims and counter,claims by parties in settlement whereof the arrangement as a whole had been arrived at, thereby acknowledging title in one to whom a particular property falls on the assumption (not actual existence in law) that he had an anterior title therein. In the light of these decisions we must now examine Ex. I to see if the contention of the appellant that it was a family arrangement is correct or not. The document Ex. 1, after reciting the death of the common ancestor, Rajkumar, his leaving him surviving four sons and the (1) (1873-1874) L. R. 1 I. A. 157. at 166. deaths of certain other family members thereafter, reads as follows : Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 9 "Signs of ill feeling developed among us, the executants Nos. 1 to 8, and at the time of survey and settlement operations, dispute in connection with the properties arose. On account of dispute, wrong statements and claim were made. On account of which the names of some of us, the executants were recorded in a wrong manner on the record of rights and in the office of the land Registration Department, in respect of some of the properties having regard to the real state of affairs and title. At the time of the survey and settlement operations ,etc. the claims and allegations of us, the executants Nos. 1 to 3, were that we, the executants, are all members of the joint family and the properties standing in the names ,of a certain member of the family as well as those in the name of certain female member of the family, belong to the joint family. Contrary to this, the to 5 were that all the four sons of Raj Kumar Singh became separate and that executants Nos. 1 to 3 always continued to remain separate from the (other) executants and executants Nos. 4 and 5 separate from the (other) executants and executants Nos. 6 to 8 separate from the other executants, but in spite of this allegation of separation, executants Nos. 4 and 5, on account of dispute, made contrary to the real state of affairs with respect to certain properties owned and possessed by to 8 also made allegations and claims of separation and it was alleged that executants Nos. 1 to 5 (?) neither had nor have any connection and concern with the properties, which were and are in the names of Mosst. Patriga Kuer and Mosst. Reshmi Kuer, although no party was member of a joint family, nor was any property joint. As the dispute among us, the executants is contrary to the real state of affairs, and in case the said dispute continues there is apprehension ,of consideration loss and damage to us, the executants, therefore, on the advice of the well wishers of the parties ,and of the respectable persons and on the advice of the legal advisers of the parties, as also with a view to set at rest all kinds of dispute, it was settled that all the disputes should be put to an end by executing a deed of agreement by way of a deed of relinquishment of claims (ladavi) and the property, which is actually ,owned and possessed by a certain party should be declared to belong to that party exclusively, and as a matter of fact, the family of us, the executants, is separate and the property, which stands in the name of a certain person, has been purchased from his or her funds, and in respect of his or her name should continue to remain entered in the land Registration Department etc. and the name should be entered if the same is not entered and the other parties totally gave up their claim with respect thereto." Then follow parts 1 to 4 in each of which certain properties are set out, and in respect of which, title of each of the four sets of the executants is acknowledged by the rest. Para 4, which relates to properties falling to the share of Nanhku, executant 8, commences with the declaration by the rest of the executants, including Amar Singh and Sonadhari, that Nanhku was the adopted son of Ramji and Patreja Kuer, that certain properties set out therein were exclusively acquired by Patreja Kuerand that Nanhku, as the adopted son of Ramji and Patreja Kuer, was exclusively entitled to them on the death of Patreja, and' 'that "we, the executants Nos. 1 to 5, 6 and 7, and the heirs of executant No. 6 neither have nor shall have any claim, title or possession and connection in respect thereof in any manner and on any allegation". Following up the arrangement made in Paras I to 4, four schedules giving particulars of properties which were acknowledged to be belonging to the four Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 10 sets of' executants were appended to Ex. 1. As regards two houses,. ;one at Rajipur and the other in dispute, Schs. 3 and 4 both set out a half share in them as belonging to executants 6 and 7 and the other half as belonging to executant 8, i.e. Nanhku, in each of them. As already stated, the fundamental premise on which the Division Bench proceeded to consider Ex. I was that there were three sets of executants, namely, those belonging to Lalji's branch, i.e., executants 1 to 3, those belonging to Raghunandan's branch i.e., executants 4 and 5, and the third set consisting of Amar Singh and Sonadhari executants 6 and 7, and Nanhku, executant 8. The second premise on which the Division Bench rested its entire reasoning was that whereas there were disputes between the three sets of executants, there were no disputes between Amar Singh, Sonadhari and Nankhu, that in fact the three of them acted in concert, and that therefore, one half share given to Nanhku in the house in dispute was altogether voluntarily given without any anterior title and without any claim or dispute raised by Nanhku in, respect thereof. In our view, both the premises were incorrect rendering the conclusion drawn therefrom untenable. it is true that Amar Singh had in 1898 purchased out of his own moneys the land on which the, suit house stands. It is also true that Nanhku was adopted sometime. before the execution of Ex. 1, and therefore, on the date of its execution he could not have any valid claim enforceable in law any property belonging to Amar Singh and his branch. But, as stated earlier, a dispute or a contention, the settlement of which can constitute a family arrangement, need not be one which is actually sustainable in law. The harmony in a family can be unsettled even by competitive and rival claims which cannot be upheld in law. Therefore, if Amar Singh and the other executants or some of them were to challenge, for instance, the factum or the validity of Nanhku's adoption, or if notwithstanding his adoption, Nanhku were to make a claim in properties held by Amar Singh and his branch or if some of the executants were to claim that the 'family of Rajkumar was still a joint and undivided family or that though the members of the family were separate, the properties held in the individual names of some of them including Reshmi Kuer and Patreja Kuer were joint, there would be sufficient disputes to constitute a settlement of them a family arrangement. A claim, made by executants 1 to 5 that the properties held by Reshmi Kuer and Patreja Kuer were not their separate properties but-were joint family properties, liable to be partitioned amongst all, was bound to affect both Amar Singh and Nanhku, If such a claim were to be persisted and dragged to a court of law there is no gainsaying that it would put into jeopardy not only the interests of Amar Singh and Nanhku but also the harmony of the family. The recitals in Ex. I clearly show that whereas members of Lalji's branch were claiming that the family was still joint and undivided, and therefore, they had interest in all the properties irrespective of their standing in the names of particular individuals, Raghunandan and his son claimed that the members of the family were not joint and yet claimed share in all the properties including those standing in the names of Reshmi Kuer and Patreja Kuer. Thus the claims by executants '1 to 5 were definitely hostile to the interests of Amar Singh to ':the extent of the properties standing in the name of Reshmi Kuer and of Nanhku to the extent of the properties standing in the name of Patreja Kuer. The claims made by the branches of Lalji and Raghunandan sought to bring all the properties into hotch potch including those held by Resbmi Kuer and Patreja Kuer, thus, affecting the rights of Amar Singh and Nanhku in the different properties and not the same properties. Their interests, Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 11 therefore, were not identical and there was thus no reason for them to act jointly. Indeed, there was no evidence whatsoever and nothing in Ex. I itself to show that they were acting in concert as assumed by the Division Bench. 13-1 S. C. India/71 It is true that the recitals in Ex. I do not expressly set out any conflict of claims between Amar Singh and Nanhku. Nevertheless, it is significant that in para 4 of Ex. I the executants found it necessary to insert therein a declaration not only by executants 1 to 5, but also executants 6 and 7 that Nanhku was the adopted son of Ramji and Patreja Kuer, that on the death of Patreja Kuer he, as such adopted son, was absolutely entitled to the properties set out therein in addition to those which stood in the name of Patreja Kuer. If the adoption of Nankhu was accepted by all and was not made the subject matter of any doubt or dispute, there was no necessity of including such a declaration and in particular joining executants 6 and 7 in such a declaration. If Amar Singh and Nanhku were acting in concert why had Amar Singh and his son, Sonadhari as executants 6 and 7, to be joined as declarants to the adoption of Nanhku. Para 4 of Ex. I also shows that there were certain bonds and mortgage deeds standing in the name of Patreja Kuer which were acquired from out of the personal funds of Ramji. Such a statement had to be acknowledged in paragraph 4 presumably ,because rights in those bonds and deeds were not admitted to be the exclusive rights of Patreja. If those rights were to be treated as joint family property, as claimed by executants 1 to 5, Amar Singh would get a share in them and to that extent his interest must be said to be in conflict with that of Nanhku. A similar result would follow if properties standing in the name of Rashmi Kuer were to be treated as joint family properties. It would not, therefore, be correct to assume that in the disputes amongst the different branches of the family. Nanhku and Amar Singh were acting in concert or that there' was no conflict of interest between them. In our judgment, the parties to Ex. I arrived at a settlement in view of claims and cross claims by some against the others. Taken as a whole and in the light of the recitals and the statements in the operative part of the document indicating conflicts amongst the members of the family, the document represented an arrangement bona fide entered into, for settling existing or at any rate apprehended disputes, and therefore, satisfied the tests of a family arrangement laid down in the decisions earlier referred to. In this view Nanhku must be said to have acquired a half share in the house in dispute under Ex. 1. On the question of adverse possession by a co-sharer against another co-sharer, the law is fairly well settled. Adverse possession has to have the characteristics of adequacy, continuity and exclusiveness. The onus to establish these characteristics is on the adverse possessor. Accordingly, if a holder of title proves that he too had been exercising during the currency of his title various acts of possession, then, the quality of those acts, even though they might not be sufficient to constitute adverse possession as against another, may be abundantly sufficient to destroy that adequacy and interrupt that exclusiveness and continuity which is demanded from a person challenging by possession the title which he holds. (see Kuthali Moothavar v. Paringati Kunharankutty(1). As between co-sharers, the possession of one cosharer is in law the possession of all co-sharers. Therefore, to constitute adverse possession, ouster of the non-possessing cosharer has to be made out. As between them, therefore, there must be evidence of open assertion of a hostile title coupled with exclusive possession and enjoyment by one of them to the knowledge of the other. (see Lakshmi Reddy v. Lakshmi Reddy(1) and also Mohammad Baqar v. Naim-un-Nisa Bibi.(3)) But, once the possession of a co-sharer has become adverse as a result of ouster, a mere assertion of a Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 12 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 a manner as it was possible to do. (see Wuntakal Yalpi Chanabasavana Gowd v. Y. Mahabaleshwarappa(4)). The mere fact that a dispossessed co-sharer comes and stays for a few days as a guest is not sufficient to interrupt the exclusiveness or the continuity of adverse possession ,so as not to extinguish the rights of the dispossessed co-sharer. (see Ammakannu Ammal v. Naravanaswami Mudaliar(5)). On this issue, the parties led considerable evidence, oral and documentary. On examination of that evidence, both the Trial Court and the learned Single Judge gave a concurrent finding that even if the possession by the respondents was adverse the appellant and his father had done acts of possession at various intervals which were sufficient to interrupt both the continuity and the exclusiveness of possession by the respondents. The Division Bench, however, did not agree with the concurrent finding on a reappraisal of the evidence. by it. It is not necessary for us to go into the details of that evidence once again as certain facts clearly emerge out of the evidence to prevent the extinguishment of Nanhku's and the appellant's title in the property as a result of adverse possession by the respondents. The principal facts which impressed the Division Bench were (i) that though in the Demand Register of Patna Municipality for 1915-16 (Ex. E) Sonadhari and Baijnath were the only (1) [1921] 48 I. A. 395, 404. (3) A. I. R. 1956 S. C. 548. (5) A. I. R. 1923 Mad. 633. (2) [1957] S.C.R. 195, 202. (4) [1955] 1 S. C. R. 131, 138. persons named as occupiers, Nanhku had not taken steps to include his name, (2) that all throughout it was Sonadhari and Baijnath who paid the municipal taxes and Nanhku at no time paid his share of the taxes or his share in the cost of repairs and laying of a water pipe in the house, and (3) that though in his written statement in suit No. 33 of 1933 Baijnath claimed that he was in exclusive possession of the house as he had paid Nanhku the proportionate price of his share, Nanhku did not take any steps to vindicate his title until he and his son filed the present suit in 1949 by which time the statutory period for adverse possession had already been completed. There was, however, evidence (if Nanhku and his wife having stayed on different occasions in the house. But the Division Bench was of the view that such acts of possession were only casual and did not have the effect of interrupting the adverse possession of the respondents. It needs to mention in this connection that Nanhku was all along residing in a village and not in Patna, Therefore, his acts of possession could only be when he came down from his village for some work to Patna. In 1915-1916, when Sonadhari got his name and that of Baijnath entered in the Demand Register (Ex. E) it might be that Nanhku did not know that they had omitted his name. His half share in the house Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 13 had been acknowledged in Ex. I only recently by Amar Singh and Sonadhari as well. Relations between the parties had not yet become unfriendly so as to make Nanbku suspect that his name would be deliberately omitted in the municipal records or that possession by Sonadhari and later on by Baijnath would be treated by them as adverse. Baijnath, no doubt, was using the whole house, but so long as his possession did not amount to ouster his possession would be that of both the co-sharers. If Baijnath used the entire house, except when Nanhku stayed in it during his occasional visits, Nanhku would naturally think that Baijnath should pay the taxes. It was not the case of the respondents that Baijnath ever demanded a share in the taxes or a share in the cost of repair and that such a demand was refused by Nanhku. The High Court on these facts was not right in observing that the title of Baijnath was already completed by adverse possession long before Baijnath filed his written statement in 1933, as mere use and enjoyment by him of the house, in the absence of such use amounting to ouster, would not make it adverse possession. It was for the first time that in the written statement filed in 1933 Baijnath openly asserted his title to the whole of the house. Since that assertion was accompanied by the fact that he was in enjoyment of the whole house that act would amount to ouster and adverse possession would commence as from that date. Obviously, the earlier possession could not be tacked on to the subsequent possession because the plea in that very written statement was that Baijnath had paid off the price of Nanhku's share thereby implied admitting Nankhu's title to a half share in the house. Suit No. 33 of 1933, in which Baijnath filed the said written statement, was settled in 1941. In the compromise application filed by Nankhu and Baijnath, both of them stated that they were residing in that house. That assertion by Nanhku was never disputed by Baijnath. But apart from that assertion there was the fact that Nanhku had no other place to reside in Patna. His case was that whenever he visited Patna he used to stay in the house in dispute. Apart from that assertion being natural, his evidence in that connection was corroborated by Prabhu Narain, P.W. 4, an Advocate residing in the neighbourhood. The Division Bench brushed aside his evidence without giving any adequate reason although it bad been accepted by both the Trial Court and the learned Single Judge. In the light of this evidence it is not possible to say that all throughout the period from 1933 till the statutory period for adverse possession was completed Nanhku had not stayed in the house at any time. Respondent herself admitted that on suit No. 33 of 1933 being settled, relations between Nanhku and Baijnath became friendly. If that be so, it was natural that Nankhu would stay in the house whenever be visited Patna in 1941 and thereafter. The Municipal Survey Khasra (Ex. 2), dated December 19, 1933 mentions Nanhku along with Sonadhari and Baijnath as owners of the house. Since this entry was made after Baijnath had made a hostile claim to the entire house in the written statement filed in suit No. 33 of 1933 on September 16, 1933, the entry must presumably have been made at the instance of Nanhku. Such an act on his Part would be a clear assertion of his title in the house. Under the Bihar and Orissa Municipal Survey Act, 1 of 1920, before such khasra was finalised it had to be published and objections to it, if any, had to be invited and disposed of. No objection was ever raised by Baijnath to the said khasra. It is surprising that Baijnath did not resist the entry in the khasra although he had made a claim to the whole of the property only three months before the date of the khasra. That indicates that his claim *as merely a counterblast against Nanhku's suit. Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 14 The view of the Division Bench that the occasional putting up by Nanhku and his wife in the disputed house was merely casual and was. in the nature of visits as guests of the respondents cannot be accepted. Such stay, however occasional, would. not be casual as it was accompanied by an open assertion of his title as evidenced by the khasra (Ex. 2). It could not also be that he stayed in the house as the guest of the respondents because after he filed the suit in 1933 and until it was settled, his relations with Baijnath could not have been friendly. These acts on the part of Nanhku Were ample enough to interrupt the continuity and the exclusiveness of possession by Baijnath. The Division Bench also relied on a sale deed (Ex. C) dated October 12, 1933, executed by Baijnath and Tarkeshwar in favour of one Kamalnain Pandey. The High Court appears to have taken the view that, the land sold under Ex. C appertained to for was part of the land on which Amar Singh had put up the disputed house, and that although Baijnath and Tarkeshwar sold part of that land, no objection was taken at any time to such a sale by Nanhku. The recitals in Ex. C show that the land, sold under Ex. C. was jointly purchased on January 20, 1898 by. Amar Singh and one Gajadhar Singh for construction of a house thereon. Amar Singh had a share in the said land to the extent of I katha 15 dhurs while his c0-purchaser had a share of 2 kathas 15 dhurs. The recitals further show that Amar Singh's original intention in purchasing the land was to build a house thereon. He appears to have given up that idea as till this sale took place the land was lying waste and unutilised. It is important to note that this sale was for I katha 10 dhurs, out of 1 katha 15 dhurs which was the share of Amar Singh. This land obviously could not be the land on which the house in dispute was built, for, if that was so, Baijnath could not have ,sold away I katha 10 dhurs out of the total extent of katha 15 dhurs to which Amar Singh was entitled. The house could not have stood on 5 dhurs only. Therefore, the land sold under Ex. C was a land different from the one on which the disputed house was situate. This conclusion is also borne out by the description of the sold land in the schedule to Ex. C where its northern boundary is described as follows: "North : Parti (waste) land thereafter the house of us, the executants." This description shows that between the disputed house and the land sold under Ex. C there was to the north of it some waste .land. The land sold under Ex. C being different land, the High Court was not right in relying on that sale deed to prove adverse possession on the ground at Nanhku never took objection to the said sale. He could not, as this land had nothing to do with the house in dispute. Besides the evidence discussed above, there was other evidence. But the incidents therein described were irrelevant on the question of adverse possession as they took place in 1948 and thereafter, that is to say, a long time after title by adverse possession would have been completed if such adverse possession were to be accepted as established. In view of the evidence discussed above the Division Beach was not justified in interfering with the finding of fact concurrently given by the Trial Court and the learned Single Judge that the adverse, possession by Baijnath which commenced from 1933 was sufficiently interrupted by acts of possession by Nanhku, and therefore, his title was not extinguished by adverse possession. In the view we take on both the questions, the appeal must be allowed and the judgment and decree of the Division Bench must be set aside and the judgment and decree passed by the Trial Court and upheld by the learned Single Judge must be restored. The respondents will pay to the appellant his costs all throughout. G.C. Appeal allowed. Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 15 Shambhu Prasad Singh vs Mst. Phool Kumari & Ors on 24 March, 1971 16 | {
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Union Of India vs Sardar Bahadur on 29 October, 1971 Equivalent citations: 1972 LAB. I. C. 627, (1972) 2 S C R 218, (1972) 1 LAB L J 1, 1972 SERV LR 355, (1972) 8 CO-OP L J 301 PETITIONER: UNION OF INDIA Vs. RESPONDENT: SARDAR BAHADUR DATE OF JUDGMENT29/10/1971 BENCH: ACT: Civil Servant--Enquiry--Reliance on statements of witnesses in a criminal case without calling witnesses--If permissible. Scope of enquiry--Interference by High Court on findings,. Punishment imposed on basis that all charges proved--Finding by Court that only some charges are proceed--Interference with punishment imposed--Propriety. Civil Services Conduct Rules, r. 13 (5)--'Likely to have official dealings, scope of. HEADNOTE: After the respondent (a section officer in the Ministry of Industry and Commerce) was acquitted in a criminal case an enquiry under r. 15 of the Central Civil Services (Classification, Control and Appeal) Rules, 1957, was held against him on the basis of three. charges. Statements of the witnesses in the criminal case were tendered in evidence in the enquiry without calling the witnesses. The Inquiring Officer rejected those statements and found that only the third charge was proved and not the first two. The third charge was that he borrowed a sum of money without obtaining previous sanction of the Government and placed himself tinder pecuniary obligation to the lender and thereby contravened r. 13(5) of the Central Civil Services (Conduct) Rules, 1955. The lender was the representative of a firm which was an applicant for licences, and though the application was made to a section in which the respondent was not working, it would in due course have to be dealt with by' the section in which the respondent was working. The Disciplinary Authority found that all the charges had Union Of India vs Sardar Bahadur on 29 October, 1971 1 been proved and passed an order compulsorily retiring the respondent from service. A Single Judge of the High Court quashed the order and the letters patent appeal filed by the State was dismissed. In appeal to this Court, it was contended that the statements rejected by the Inquiring Officer should have been admitted, that all the three charges should have been held to be proved and that the order of compulsory retirement was justified. HELD : (1) Tribunals should observe rules of natural justice in the conduct of the inquiries, that is, no material can be relied upon to establish a contested fact unless spoken to by a witness who is subjected to cross-examination. In the present case, the persons whose statements were sought to be relied on were in station, but were not produced for cross- examination by the respondent. They should have been recalled, and tendered for cross-examination by the respondent. The Inquiring Officer was therefore justified in refusing to receive the statements as evidence.[223 A-D] M/s. Barailly Electricity Supply Co. Ltd. v. Workmen, [1971] 2 S.C.R. 617 at 629 and State of Mysore v. S. S. Makapur, [1963] 2 S.C.R. 943, 952, followed. 219 (2)But the interference by the High Court with respect to the third charge was not justified. [225 F-G] The second part of r. 13(5) of the Civil Services Conduct Rules forbids a civil servant from borrowing money from a person with whom he is likely to have official dealings. The words 'likely to have official dealings' take within their ambit the possibility of future dealings between the officer concerned and the person from whom he borrowed the money. In the present case, even if the applications were dealt with at the initial stage by another section the respondent should have known, that in due course, the section in which be was working would have to deal with them. Therefore, when he borrowed money a few days earlier the respondent contravened the rule. [225 A-C] (3) A disciplinary proceeding is not a criminal trial and therefore the standard of proof required is that of preponderence of probability and not proof beyond reasonable doubt. If the inference that the lender was a person likely to have official dealings with the respondent was one which a reasonable person would draw from the proved 'facts of the case, the High Court was wrong in sitting as a court of appeal over a decision based upon it. The 'Letters Patent Bench had the same power of dealing with all questions, either of fact or of law arising in the appeal, as the Single Judge of the High Court. It the enquiry was properly held the question of adequacy or reliability of the evidence cannot be canvassed before the High Court. A finding cannot be characterised as per-verse or unsupported by any relevant materials, if it was a reasonable inference from proved facts. [225 D-G] Union Of India vs Sardar Bahadur on 29 October, 1971 2 State of Andhra Prsdesh v. S. Sree Rama Rao, [1964] 3 S.C.R. 25, 33, followed. Jugal Kishore Bhadani v. Union of india, A.I.R. 1965 Pat. 196, approved. (4) If the order of the punishing authority could be supported on any finding as to substantial misdemeanour for which the particular punishment could be imposed it is not for the court to consider whether the charge proved alone would have weighed with the authority in imposing the punishment. Therefore, the punishment of compulsory re- tirement imposed was not liable to be quashed even though the first two charges had not been proved.[226 G-H;227 A-C] State of Orissa v. Bidyabhushan Mahapatra, [1963] Supp. I S.C.R. 648, 666, followed. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1758 of 1970. Appeal by special leave from the judgment and order dated April 20, 1970 of the Delhi High Court in Letters Patent Appeal No. 75-D of 1966. R. H. Dhebar, P. H. Parekh, S. P. Nayar and Urmila Kapoor, for the appellant. Mohan Behari Lal, for the respondent. The Judgment of the Court was delivered by Mathew, J. This is an appeal by Special Leave filed by the Union of India from the judgment in appeal under clause 10 of Letters Patent of the Delhi High Court confirming the decision of a learned Single Judge allowing Civil Writ No. 716-D of 1964 filed by the Respondent by quashing the order made by the President on 23rd April, 1963 compulsorily retiring the Respondent from service. The Respondent, Shri Sardar Bahadur, was employed as a Section Officer in the Ministry of Commerce and Industry in the Steel & Cement Section (B) which along with other sections like Industries Act and Industrial Policy etc. was under the control of Shri P. S. Sundaram, Deputy Secretary in that Ministry at that time. In April, 1956, the Ministry invited applications for grant of licences to set up steel re-rolling mills. On June 14 1956, one Shri Nand Kumar representing Messrs Ram Sarup Mam Chand and Messrs Mam Chand and Company of Calcutta applied for five licences to set up steel re-rolling mills. He also handed over on June 125, 1956 to the respondent a cheque for Rs. 2,500/- drawn on the Punjab Co-operative Bank Limited in favour of Shri P. S. Sundaram. The cheque was certified by the bank as good for payment upto September 24, 1956. At the back of the cheque, there was a signature which purported to be that of Shri P. S. Sundaram. It may be noted at this stage that Shri P. S. Sundaram, the Deputy Secretary had denied the signature to be his. Above the signature the Union Of India vs Sardar Bahadur on 29 October, 1971 3 respondent wrote the words "Please pay to Shri Sardar Bahadur.' Lower down the respondent wrote the following words "Please collect and credit the amount into my account. First payee's endorsement may kindly be guaranteed on my behalf and risk." This cheque was duly cent to the account of the respondent and the amount of Rs. 2,500/- was credited to his account in the State Bank of India, New Delhi. The respondent was prosecuted by the Special Police Esta- blishment on the allegations that the amount covered by the cheque was taken by him as illegal gratification for using his official position illegally and in a corrupt manner in order to procure licences for Messrs Ram Sarup Mam Chand of Calcutta who bad filed applications in that behalf and that the signature of Shri P. S. Sundaram had been forged by him. The respondent was charged with offences punishable under Section 5 (2) read with Section 5 (i) (d) of the Prevention of Corruption Act, 1947 and Section 161, 467 and 471. of the Indian Penal Code. The respondent was acquitted of all the charges on june 20, 1960. There after it was proposed to hold an 'inquiry against him under Rule 15 of the Central Civil Services (Classification, Control and Appeal) Rules, 1957 on the basis of the following charges :- 1."That be failed to inform Shri P. S. Sundaram Deputy Secretary, Ministry of Commerce and Industry, New Delhi, that a cheque for.Rs. 2,500/- in the name of Shri Sundaram had been issued by Shri Nand Kumar of Messrs Ram Sarup Main Chand and Messrs Main Chand & Company of Calcutta, 'whose applications for grant of licences for establishing steel-re-rolling mills were pending in the Ministry of Commerce and Industry, as security in 'connection with the said applications when he knew that no such deposit. was to be made; 2. That he failed to inform Shri P. S. Sundaram that the said Shri Nand Kumar had given him a cheque bearing Shri Sundaram's signature and bad asked him to deposit it in his account. which he had done after asking the bank (instead of showing the cheque first to Shri Sundaram himself) to' guarantee the said signature of Shri Sundaram; and 3. That he borrowed a sum. of: Rs. 2,500/- (the amount covered by the cheque referred,.to above) from the said Shri Nand Kumar, without obtaining previous sanction of the Government and placed himself under pecuniary obligations to the extent of Rs. 2,500/- and thereby also contravened rule 13(5) of the Civil Services (Conduct) Rules, 1955." The enquiry was held and the Inquiry Officer found that the first two charges were not proved as the identity of P. S. Sundaram the payee of the cheque, had, not, been established with Shri 'P. S. Sundaram Deputy Secretary.. But the Inquiring Officer found that the. third charge has been proved. Union Of India vs Sardar Bahadur on 29 October, 1971 4 The findings of the Inquiring Officer on the first two charges were not agreed to by the Deputy Secretary, Ministry of External Affairs, exercising the powers of the President. He found that all the charges had been proved. The President after- consultation with the Union Public Service Commission passed an order on April 22, 1968 holding that the charge of gross misconduct and failure to 'Maintain absolute integrity. and devotion to duty as a Government ' servant had been substantially proved against the respondent and imposing the penalty of compulsory ,retirement on him. The respondent was directed to be retired from service With immediate effect. it was this order which was quashed by the Single Judge in the writ petition filed by the respondent. The Letters Patent Appeal against the-order filed by the Union of India before the Division Bench was dismissed. it was contended on behalf of the appellant that the Inquiry Officer went wrong in finding that charges Nos. 1 & 2 had not been proved and that the President was right in holding that these charges had been proved and therefore the High Court should have found that charges Nos. 1 & 2 were proved, as there was evidence to support the charges. It was contended that the Inquiring Officer wrongly rejected the copies of ',he statements of the witnesses examined in the original trial, which statements if admitted, would have fully established the first two charges against the respondent. Counsel for the appellant argued that the provisions of the Evidence Act are not applicable to disciplinary proceedings and therefore the statements of the witnesses in the criminal trial ought to have been admitted and relied on for establishing the guilt of the respondent on the first two charges. Counsel relied on the following observations of Venkatarama lyer,J.in Union of India v. Varma(1) "Now it is no doubt true that the evidence of the Respondent and his witnesses was not taken in the mode prescribed in the Evidence Act; but that Act has no application to enquiries conducted by Tribunal even though they may be judicial in character. The law requires that such Tribunals should observe rules of natural justice in the conduct of the enquiry and if they do so their decision is not liable to be impeached on the ground the procedure followed was not in accordance with that which obtains in a Court of law." In M/s. Bareilly Electricity Supply Co. Ltd. v. The Workmen and Others.(2) the scope of the above observation was considered and this is what Jaganmohan Reddy, J. said:- "But the application of principle-,of natural justice does not imply that what is not evidence can be acted upon. On the other hand what it means is that no materials can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and are subjected to cross-examination by the party against whom they are sought to be used. When a document is produced in a Court or a Tribunal the questions that naturally arise is, is it a genuine document, what are its contents and are the statements contained therein true." (1) [1958] S.C.R. 499. (2) [1971] (2) S.C.C. 617 at 629 We do not think that the statements should have been received in evidence as the appellant had taken no step to produce the persons who made the statements for cross- examination of the respondent. It was the duty of the appellant to have produced the persons whose statements were sought to be proved for the cross-examination of the respondent. In State of Mysore v. S. S. Makapur(1), this Court said that the purpose of an examination in the presence of a party against whom an enquiry is made, is sufficiently achieved, Union Of India vs Sardar Bahadur on 29 October, 1971 5 when a witness who has given a prior statement is recalled, that statement is put to him, and made known to the opposite party, and the witness is tendered for cross-examination by that party. As the persons whose statements were sought to be relied on were in Delhi and as they were not produced and tendered for cross- examination by the respondent, we think that the Inquiring Officer was right in refusing to act upon the statements relied on by the appellant. As there was no material before the Inquiring Officer to. show that P. S. Sundaram mentioned in the cheque is P. S. Sundaram, the Deputy Secretary, we think the High Court was justified in holding that these charges had not been proved. Coming to charge No. 3 the Single Judge as well as the Divi- sion Bench said that although there was great deal of suspicion on the bona fides of the transaction in the respondent borrowing money from Nand Kumar, suspicion cannot take the place of proof. They, therfore, held that the charge has not been proved. The third charge, as already stated, was that the respondent borrowed Rs. 2,500/- from Nand Kumar without obtaining the previous permission of the Government and placed himself under a pecuniary obligation to the extent of the amount and thus contravened the provisions of Rule 13 (5) of the Central Civil Services (Conduct) Rules 1955 which reads "(5) No Government servant shall, save in the ordinary course of business with a bank or a firm of standing, borrow money from or otherwise place himself under pecuniary obligation to any person within the local limits of his authority or any other person with whom he is likely to have official dealings, nor shall he permit any member of his family, except with the previous sanction of the Government, to enter into any such transactions : Provided that a Government servant may accept a purely temporary loan of small amount, free of interest, from a personal friend or a relative or operate a credit account with a bona fide tradesmen." (3) 1963(2) S.C.R. 943 at 952, The Inquiring, Officer found that the respondent had borrow- ed Rs. 2,500/- from Nand Kumar without obtaining the previous permission as required by Rule 13 (5) and thereby contravened the provisions of the sub-rule. The learned Single Judge held that although it was proved that the money was borrowed and the respondent placed himself under pecuniary obligation to Nand Kumar , there' was no evidence nor had it been found either by the Inquiring Officer or by. the President that Nand Kumar was a person with whom the respondent was likely to have official dealings. He further said that the evidence of Shri N. S. Satureman was quite clear that application for licence of M/s Ram Sarup Mam Chand was received in the Industries, Act Section which was called I.A. (1) Section whereas the petitioner was working in the Steel & Section where the copies of these appli- cations started coming only in July 1956 and so in June 1956 when the cheque wag issued. it was not-.possible to see how in the absence 'of any other evidence the petitioner could he regarded as 'being in a position where Nand Kumar was- likely to have any' official, dealings with him in the matter of the grant of the licences. The Division Bench accepted this finding: Union Of India vs Sardar Bahadur on 29 October, 1971 6 It may be noted that the fist part of the sub-rule 13 (5) of the Central Civil.Service's (Conduct) Rules 1955 says that no Government servant shall borrow money from. or otherwise place himself under a pecuniary obligation to any person within the local limits of his authority, save in the, ordinary. course of business with a bank or a firm of. standing. The second part of the sub-rule. forbids him from borrowing money fro any other person with whom he. is likely to have official dealings. The appellant at no time had a case that the respondent contravened the first part of the sub-rule in borrowing the' amount from Nand Kumar. So, neither the learned Single Judge nor the Division Bench had occasion to consider the application of the first part of the sub-rule to the facts of the case. Even . in the Special Leave Petition the appellant did not rely on the first part of the subrule. We do not, therefore, think it. necessary to consider the scope of the first part of the sub-rule or its. application to the case here. A finding cannot be characterised as perverse or unsupported by any relevant materials if it is a reasonable inference from proved facts. Now what are the proved facts : Nand Kumar as representative of M/s Ram Sarup Mam Chand and M/s Mam Chand and Company, of Calcutta filed five applications for licences to set up steel re-rolling mills on 14-6-1956. On 25-6-56, a cheque drawn in favour of P.' S. Sundaram was given to the respondent by Nand Kumar for Rs. 2,'500/-; the cheque was endorsed and the amount credited in the account: of the respondent. When the respondent borrowed the amount in question from Nand Kumar, he was not working in the Industries Act Section Nand Kumar knew that the respondent was working in the Steel & Cement Section of the Ministry and the applications for. the grant of licences for setting up the steel plant re- rolling mills would go to that Section. Even if the applications were to be dealt with at the initial stage by the Industries Act Section the respondent at least was expected to know that in due course the section in which he was working had to deal with the same. This is borne out by the fact that in July 1958 copies of the applications were actually sent to the Steel & Cement Section where the res- pondent was working. If he, therefore, borrowed money from Nand Kumar a few days earlier it seems rather clear that he placed himself under pecuniary obligation to a person who was likely to have official dealings with him. The words "likely to have official dealings" take within their ambit the possibility of future dealings between the officer concerned and the person from whom he borrowed money. A disciplinary preceeding is not a criminal trial. The standard proof required is that of preponderance of proba- bility and not proof beyond reasonable doubt. If the inference that Nand Kumar was a person likely to have official dealings with the respondent was one which reasonable person would draw from the proved facts of the case, the High Court cannot sit as a court of appeal over a decision based on it. Where there are some relevant materials which the authority has accepted and which materials may reasonably support the conclusion that the officer is guilty, it is not the function of the High Court exercising its jurisdiction under Art. 226 to review the materials and to arrive at an independent finding on the materials. If the enquiry has been properly held the question of adequecy or reliability of the evidence cannot 'be convassed before the High Court Union Of India vs Sardar Bahadur on 29 October, 1971 7 (See State of Andhra Pradesh v. S. Sreo Rama Rao(1). No doubt there was no separate finding on the question whether Nand Kumar was a verson likely to have official dealings with the respondent by the Inquiring Officer or the President. But we think that such .a finding was implied when they said that charge No. 3 has been proved. The only question was whether the proved facts of the case would warrant such an inference. tested in' the light of the standard of proof necessary to enter a finding of this nature, we are satisfied that on the material facts proved the inference and the implied finding that Nand Kumar was a person likely to .have official dealings with the respondent were reasonable. The Division Bench said that the conclusion of the Single Judge that there was no evidence before the Inquiring Officer that Nand Kumar was likely to have official dealings with the respondent was not wholly unwarranted, and there are limits, to as (1) [1964] 3 S.C.R. 25 at 33, the powers exercised by a Single Judge under Article 226 of the Constitution, there are limits to the powers of a Division Bench while sitting in appeal over the judgment of a Single Judge. If the inference that Nand Kumar was a person likely to have official dealings with the respondent was in the circumstances of the proved facts in the case a reasonable one, we do not think there was anything which prevented the Division Bench from interfering with the order of the Single Judge. In Jugal Kishore Bhadani v. Union of India(1), the Court observed:- "It is well established principle of law that unless the statute oherwise provides an appellate Court has the same power of dealing with all questions, either of fact or of law, arising in the appeal before it, as that of the Court whose judgment is the subject of scrutiny in the appeal." The respondent contended that he did not borrow Rs. 2,500/- from Nand Kumar. His case was that Nand Kumar owed him Rs. 500/- and that when he gave the cheque to the respondent it was on the understanding that Rs. 2,000/- would be repaid to him and that was done immediately. The respondent produced a receipt executed by Nand Kumar for having received Rs. 2,000/-, but Nand Kumar was not examined to prove the genui- neness of the receipt. The Inquiring Officer has considered the question at length in his report and he came to the conclusion that the case of the respondent that he did not borrow Rs. 2,500/from Nand Kumar cannot be accepted. The learned Single Judge found that the petitioner had borrowed the amount of Rs. 2,500/- from Nand Kumar. That finding was endorsed by the Division Bench. As it was a reasonable inference from materials before the Inquiring Officer that Nand Kumar was a person likely to have official dealings with the respondent and since the respondent borrowed money from such a person without the permission of Government, the finding of the Inquiring Officer and the President that the respondent had contravened Rule 13(5) of the Central Civil Services (Conduct) Rules, 1955 should not have been interfered with by the High Court. It may be recalled that the punishment of compulsorily retirement was imposed upon the respondent on the basis that all the three charges had been proved against him. Now, it is found that only the third charge has been proved. The question then is whether the punishment of compulsorily retirement imposed by the President can be sustained even though the first two Union Of India vs Sardar Bahadur on 29 October, 1971 8 charges have not been proved. (1) A.I.R. 1965 Patna 196, Now it is settled by the decision of this Court in State of Orissa v. Bidyabhushan Mohapatra(1) that if the order of a punishing authority can be supported on any finding as to substantial misdemeanour for which the punishment can be imposed, it is not for the Court to consider whether the charge proved alone, would have weighed with the authority in imposing the punishment. The Court is not concerned to decide whether the punishment imposed, provided it is justified by the rules, is appropriate having regard to the misdemtanour established. We reverse the judgment under appeal and hold that order of the President imposing the punishment of compulsorily retirement was not liable to be quashed. In the result, the appeal is allowed, but in the circumstances, there will be no order as to costs. V.P.S. Appeal allowed. (1) [1963] Supp. 1 S.C.R. 648 a 666. Union Of India vs Sardar Bahadur on 29 October, 1971 9 | {
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Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 Equivalent citations: 1972CRILJ1059, (1972)4SCC783 Author: D.G. Palekar Bench: A.N. Ray, D.G. Palekar JUDGMENT D.G. Palekar, J. 1. These criminal appeals by special leave are by Onkar Nath, Sidhauli alias Sri Narain and Kailash respectively from the. Judgment of the Allahabad High Court by which the order of acquittal passed by the learned City and Sessions Judge, Kanpur is set aside and they have been convicted under Section 302 r/w Section 34, I.P.C. and sentenced to imprisonment for life. Kailash, Onkar Nath and Sidhauli alias Shri Narain were accused Nos. 1 to 3 respectively in the Sessions Court. The charge against them was that they had, in furtherance of their common intention, committed the murder of one Manohar Lal at about 8.10 P.M on April 23, 1964 in front of the shop of a milk vendor, Chhunno, situate in Lathi Mohal P.S. Collectorganj in the City of Kanpur. 2. The deceased Manohar Lal was about 22 years old and was the son of one Kailash Nath. Kailash Nath had two shops-one in the Generalganj Bazar bearing the name of Kailash Nath Raj Kishore. The main business of sale and purchase was carried on in that shop. The other shop was in the Panch Kucha lane and bore the name of Kailash Nath Dalai. This shop was mainly concerned with the maintenance of Bahikhatas and account books. Raja Ram, P.W. 1 was the Munim of Kailash Nath. 3. About 5 or 6 days prior to the incident the accused Sidhauli and Kailash were gambling in the Ahata of Sawai. Manohar Lal, the deceased, who happened to pass by the place reprimanded them for these activities. This was not liked by Sidhauli and Kailash who gave a threat to Manohar Lal. Manohar Lal reported the matter to his father who, thereupon, instructed his employees that one or the other of them should keep Manohar Lal company whenever he was going away from the house or the shop. 4. Accordingly, on the night of April 23, 1964 after closing the shop at 8.00 P.M., which was the time for all shops to close, Raja Ram, P.W. 1 and Manohar Lal started for the latter's house by the aforesaid Generalganj Bazar Street. That street appears to be a one way street and no conveyances, not even Rickshas, were allowed to ply in that street. When the two of them reached near the shop of Chhunno, the milk vendor, they noticed that the three accused were near the aforesaid shop. On seeing them, they came up, Sidhauli addressed Manohar Lal reminding him about the superior airs Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 1 about gambling which he displayed a few days ago and told him that he now wanted to settle scores with him. Manohar Lal retorted that he had seen many a person like Sidhauli whereupon Sidhauli asked the other two accused to finish Manohar Lal. Thereupon Kailash and Onkar Nath each whipped out a knife and attacked Manohar Lal in the back. Manohar Lal made an attempt to run but Sidhauli caught hold of him by his hand. Manohar Lal fell on the ground there and became unconscious. The incident attracted a number of persons and as the miscreants were running away, shouts were uttered and they were chased by Raja Ram, P.W. 1, Keshav. Dutt. P.W. 2, Krishna Behari, P.W. 5 and one Ramesh Chand all of whom caught Kailash before he had run five or six paces while the other two accused Onkar and Sidhauli ran away and disappeared. Kailash had still the knife in his hand. He was disarmed by Raja Ram, P.W. 1. A large crowd had gathered on the spot and just when the captors of Kailash were thinking of taking him to the Police Station, Raj Kishore. P.W. 7, the brother of Manohar Lal, came on the scene. He was coming from the shop of one Nankare in the same street after closing the shop at about 8.00 P.M. On the way he had seen a crowd and hastened to the spot. From some distance he first saw that Raja Ram, P.W. 1 and two or three other persons had caught hold of Kailash and after advancing further he saw his brother Manohar Lal lying on the road with injuries. Raja Ram shortly told him that Manohar Lal had been stabbed by two or three persons and. that they were taking Kailash to the Police Station. He left it to Raj Kishore to remove Manohar Lal to the hospital. The captors of Kailash then took him to the Police Station of Collectorganj. The Sub-Inspector Basdeo Sahai, P.W. 17 was present in the Police Station along with Head Constable Anwar Ahmed, P.W. 10 who was the Head Moharrir. The later recorded Raja Ram's statement as per Ext. K.I. Kailash was taken into custody. A seizure memo was made of the blood stained knife as per Ext. K. 2. It was found that there were blood stains on the shirt of Kailash and so the shirt was also seized under the Memo Ext. K. 3. The knife and shirt are Exts. 1 and 2 in the case. These were sent to the Chemical Analyser in due course who certified that whereas there was human blood on the shirt, the blood on the knife had disintegrated. 5. While Anwar Ahmed was recording the complaint of Raja Ram, a telephone message was received at 20.35 hours i. e. 8.35 P.M from Sub-Inspector Jagdish Dutt, P.W. 8 who was in-charge of the Control Room. The message was that a man was lying injured at the crossing of Lathi Mohal. Anwar Ahmed informed the Control Room that a report in respect of the occurrence had been already lodged and necessary action was being taken. The necessary entries were made with regard to the progress of the investigation in the General Diary of the Police Station and Anwar Ahmed went on duty at 9.00 P.M-his place being taken by Head Constable Sheo Prasad. P.W. 13. 6. The source of P.S.I Jagdish Dutt's information in the Control Room that a man was lying near the gate of Lathi Mohal was Shri Onkar Nath Seth. P.W. 12. Shri Onkar Nath Seth is a local Advocate and has his house only 40 or 50 paces from the shop of Chhunno the milk vendor. On being informed by somebody that a man was lying injured, he went to the place and saw the injured person. Nobody gave him any in formation as to who he was and what had happened and so he went back to his house and at 8.34 P.M telephoned to the Control Room informing it that a man was lying injured near the gate of Lathi Mohal and a patrol car should be sent. It was this message from Shri Onkar Nath which was picked by P.S.I. Jagdish Dutt in the Control Room. On receiving that message, he sent a wireless message to patrol car No. 2 in-charge of Nazrey Hasan, P.W. 9 and at the same time also sent the message to the Collectorganj Police Station within whose jurisdiction the Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 2 man was lying. That is how at 8.35 P.M. Anwar Ahmed, P.W, 10 received the message from the Control Room which was duly recorded by him in the General Diary of the Station. 7. On receiving the message from the Control Room P.S.I. Nazrey Hasan, P.W. 9 proceeded to the locality indicated. He reached the place at about 8.49 P.M. The man who was standing there said that he was the brother of the injured person (obviously referring to Raj Kishore, P.W. 7) and gave the name and address of the injured. He then put the injured Manohar Lal in the car. An Officer of Sirki Mohal Outpost and some Constables had already come there. The Sirki Mohal Outpost is under the Collectorganj Police Station. He, therefore, took Constable Mohammad Khalil of that Outpost along with him in the car and though the brother of the injured Raj Kishore wanted to go in the car to the hospital, he could not be accommodated. He left the scene of offence at about 8.54 P.M. and reached Urshula Hospital with the injured at about 8.59 P.M. Dr. Sumra, P.W. 11 who was in-charge at once examined the injured, person and found that he was, dead. He then informed the Police Station Kot-wali about his death. Message about death was transmitted from the Kotwali Police Station to the Collectorganj Police Station at about 11.30 P.M. and the same was noted by the Head Mohrrir Head Constable Sheo Prasad, P.W. 13. 8. In the meantime P.S.I. Basdeo Sahai, P.W. 17 after finishing part of the investigation of the offence, which had been registered as an offence under Section 307 I.P.C. at the Police Station, had gone to the scene of occurrence for further investigation. He recovered the blood stained earth from the place where Manohar Lal had fallen and recorded also the statements of eye witnesses who had accompanied him from the Police Station. While the investigation was proceeding, the officer received intimation from his Police Station that Manohar Lal. had died. So he ordered S.I. Ram Das, P.W. 16 the Officer incharge of Sirki Outpost, who was there at the place since about 8.30 P.M to proceed to the hospital to prepare the inquest report. He had been instructed to take the duplicate copy of the complaint from the complaint Raja Ram P.W. 1 for the purposes of the inquest. Ram Das went to the hospital at about 12.30 a.m. but there was a delay in obtaining the body in. the hospital. He could actually start his inquest panchnama at about 2. O'clock. 9. In the meantime P.S.I. Basdeo Sahai, P.W. 17 continued his investigation at the scene of offence. He started searching for Onkar and Sidhauli. The house of Onkar which was close to the shop of Chhanno, his uncle was searched at about 1.00 or 1.30 a. m. but he was not found. Thereafter he went to Canal road in search of Sidhauli. His house was searched but Sidhauli was not found. The search continued till about 10. O' clock on 24-4-1964 but both Onkar and Sidhauli were found to have absconded. After returning to the Police Station at 10.00 A. M. he recorded the statement of Kailash and sent him to the Jail : Doctor as there were two small injuries on the little finger of the right hand. The search of Onkar and Sidhauli was fruitless and so he reported for proceeding against the accused under Sections 87 and 88 of the Criminal Procedure Code. Thereafter Sidhauli Surrendered before a court in Unnao.on 28th April 64 and since he Claimed. to be identified' in an identiflcation; parade at Unnao, a test identification parade was held in the District. Jail Unnao on 11th. June. 1964.At. this; identification parade, he was correctly picked out by Raja Ram, P.W. X and Keshav Dutt, P.W. 2. Krishna Behari, P.W. 5 did not pick him out. As for Onkar, he surrendered in the court at. Lakhimpur Kheri on 4th May, 1964. Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 3 10. On being charged for the murder of Manohar Lal the accused pleaded not guilty. The case of Kailash in his statement under Section 342 Criminal Procedure Code was that on the evening in question at about 7.45 p.m. he was returning home from a shop in Collectorganj and when he reached the turning of Jagannath Lane, he saw two or three unknown persons attacking Manohar Lal with knives. As he knew Manohar Lal, he went for his rescue but the assailants. turned on him and he received injuries; on both his hands. So leaving Manohar Lal at the place, he rushed to the Police. Station Collectorganj to give information. He asked the officers to take, down his information but they said that they would make the investigation first and then record his statement. He further stated that he, had been made to sit there in the Police Station till about midnight and the officers asked him to give evidence against two or three persons whose names he could not recall at the time. He refused to oblige saying that though he did not know the names of the assailants, he could recognise them if shown to him. Because of this obstinacy on his part, he alleged, .he had been falsely implicated by the police. He admitted that article No. 2 - the shirt, which he was wearing at the time, contained blood stains and was seized. He, however, denied that the knife Ext. 1 had been snatched from him by P.W. 1 Raja, Ram. Though Kailash had stated that he received injuries on both the hands, it is now established that he had only two wounds on the inner surface of the right hand little finger only - one being a slight lacerated wound and the other an incised wound above it. In the certificate given by the Doctor, however, an inadvertent mistake crept in to the effect that these two wounds were on the left hand little finger. In fact that should be the right hand little finger. The injuries were one above the other on one finger of one hand, that is the right hand and there was no injury on the left hand. We may mention here only that both the courts agree that these injuries on the little finger sustained by Kailash must have been , caused in the act of inflicting injuries on another person with a knife and not in warding off knife blows by a third person. Kailash had deliberately told a: falsehood that he had received injuries on both hands taking the cue from the error made in the medical certificate with a view to suggest that the injuries on both hands were more likely to be caused when he was warding off an assault on him. 11. The other two accused namely Onkar and Sidhauli denied participation in the incident and alleged that they had been falsely implicated because of enimity with the police. 12. On behalf of Kailash. Laxmi Narain. D.W. 1 was examined as a witness to suggest that the story told by Kailash in court was probable. 13. It is not in dispute that deceased Manohar Lal was attacked with knives at about 8.10 p.m. and he had fallen on the road hardly two or three paces away from the shop of Channo, the milk vendor. There is no dispute also that whosoever be the assailants, it was a clear case of murder. The learned Sessions Judge on a consideration of the evidence recorded the following findings: (1) The motive alleged by the prosecution was substantially proved; (2) The three eye-witnesses examined in the case namely Raja Ram, P.W. 1, Keshav Dutt. P.W. 2 and Krishna Behari, P.W. 5 were not reliable witnesses, since it was very probable that they were not at the scene of offence at all to witness the assault. Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 4 (3) Raj Kishore, P.W. 7 must not have reached the place of occurrence till after Manohar Lal had been removed to the hospital. (4) That the story of Kailash may not be entirely trustworthy. However his case that he had by himself gone to the Police Station could not be ruled out. The story of the prosecution that he had been caught by the alleged witnesses and others did not appear to be true. (5) The F.I.R. must not have been recorded at 8.25 p.m. as alleged by the prosecution. The entries made in the General Diary from 8.25 p.m. till the next morning may not have been made that night only. They might have been made on the next day as suggested by the defence. (6) That both Onkar and Sidhauli had absconded after the incident. (7) There was a great possibility that these very accused might have been involved in the affair, but, however strong the suspicion, there could be no conviction. 14. Accordingly, the learned Sessions Judge gave the benefit of doubt to the accused and acquitted them. 15. Aggrieved by the order of acquittal the State went in appeal to the High Court. Being an appeal against acquittal, the High Court approached the findings of the Sessions Judge in the light of the principles laid down by the Privy Council in the case of Shiv Swaroop (2) and by this court in Sanwat Singh v. State of Rajasthan and other cases. Since the High Court was of the opinion that the accused were wrongly acquitted, it recorded from place to place in the judgment how the learned Sessions Judge was palpably wrong in the consideration of the evidence. Finally the High Court observed, "On a consideration of the evidence on record in the light of the aforesaid principles we are satisfied that the grounds on which the learned Sessions Judge acquitted the respondents (accused) were not good and reasonable, and the order of acquittal was against the weight of evidence. The learned Sessions Judge did not approach the case in the correct perspective. Before rejecting the testimony of the eve witnesses the learned Sessions Judge should have considered the question as to whether the prosecution case as to the pursuit given to the miscreants and as to the apprehension of respondent Kailash Nath on the spot and as to his being taken in custody to the Police Station was established or not. The one grave error which he committed was that he first recorded a finding on the question as to whether the eye witnesses could have been present at the scene of occurrence or not. Having once come to a finding that they could not have been present at the scene of occurrence he could not have recorded a finding in favour of the prosecution on the question as to whether respondent Kailash Nath was apprehended on the spot or not. The prosecution evidence should not have been considered by the learned Sessions Judge in isolated parts and a finding on the question as to whether the eye witness account was trustworthy or not should have been recorded after taking into consideration the prosecution evidence as a whole." Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 5 16. After hearing counsel on behalf of the accused and the State and on a perusal of the evidence to which our attention was invited,, we have come to the conclusion that the above criticism of the High Court was fully justified. We will only add that the learned Sessions Judge failed to see the wood for the trees. 17. Learned Counsel for the appellants put before us in the fore-front an argument which seems to have impressed the learned Sessions Judge. The argument was that the evidence of the Advocate Mr. Onkar Nath Seth, P.W. 12 was the touch stone for determining. whether the prosecution case was true or not. It was submitted that Mr. Seth was a disinterested witness and if his evidence is accepted it would be clearly established that neither Raj Kishore, P.W. 7 nor Raja Ram, P.W. 1 could have been there before 8.34 P.M and hence the story now told by the prosecution that the first information had been recorded at the instance of Raja Ram, P.W. 1 at 8.25 P.M is demonstrably false. The argument proceeds this way (1) If Raj Kishore, P.W. 7. had arrived at the scene within a minute or two of the stabbing and had seen Raja Ram and the other captors taking Kailash, it would be expected that Raj Kishore would remain near the fallen Manohar Lal, in which case Mr. Onkar Nath Seth would not have failed to learn who the deceased was, who were his assailants and as to whether one of them was caught and taken to the Police Station. And since Mr. Onkar Nath Seth. even after enquiry, did not learn about any of these things, it would be clearly established that Raj Kishore, P.W. 7 must not have come there at all till Manohar Lal was removed from the place; (2) and if Raj Kishore, P.W. 7 was not there at all, the story told by Raja Ram, P.W. 1 that he had met Raj Kishore before leaving the scene of offence was false; (3) That in all probability Raja Ram, P.W. 1 was also not there at the time of the incident because if he had been there and Raj Kishore was not there, he would not have left the place leaving Manohar Lal unattended. He would have been more anxious to take Manohar Lal to the hospital than to take Kailash to the Police Station. There were other captors of Kailash and he could have requested the captors to take Kailash to the Police Station and remained behind to make arrangements for removing Manohar Lal to the hospital. The very fact that he was not there when actually the police van came to take Manohar Lal away would go to show that Raja Ram, P.W. 1 must not have come to the scene of offence at all at any time. Therefore, the case now put forward by the prosecution that he had , gone to the Police Station with Kailash and had filed the first information at 8.25 p.m. is false. 18. The whole argument proceeds on the assumption that if Raj Kishore, P.W. 7 were on the scene of offence. Mr. Onkar Nath Advocate, would not have failed to get all the particulars, since Mr. Onkar Nath had made enquiries with regard to the person whom he had seen fallen on the ground. That assumption, however, cannot be made, in the circumstances of the case. It is an' undisputed fact that the stabbing incident could not have taken place later than 8.10 p.m. The evidence of Raja Ram, P.W. 1 and the other two eye witnesses is that immediately after the stabbing and the falling down of Manohar Lal, the miscreants were chased and accused Kailash. was caught with the knife in his hand. They lost no time in taking him to the Police Station which would mean that within two minutes of the stabbing Raja Ram and the other captors of Kailash marched him to the Police Station. According to Raj Kishore and the eye witnesses, Raj Kishore arrived just when they were taking him away. Raja Ram did not waste time. He merely told Raj Kishore to attend to his brother saying that he was taking Kailash to the Police Station. That is also the evidence of Krishna Behari, P.W. 5 and Keshav Dutt, P.W. 2. The last witness does not say in so many words that the man to whom Raja Ram spoke was Raj Kishore but he says that a person had come at that time and Raja Ram told the person that he should look after Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 6 the boy and that he was going to the Police. Station. So if this evidence is believed, then it is clear that Raj Kishore, P.W. 7, had come on the scene of offence within a couple of minutes of the stabbing. That was also not unlikely because Raj Kishore's evidence shows that after closing the shop at 8.00 p.m. he was coming that way to go to his house and the, scene of offence was on the way not far from the shop. When he saw a crowd . and heard about stabbing, he hastened to the spot and met Raja Ram just when he was preparing to go to the Police Station. The evidence of the prosecution, therefore, goes to show that Raj Kishore was there almost immediately after the stabbing and the captors including Raja Ram departed thereafter. Mr. Onkar Nath's visit to the scene was much later. Mr. Onkar Nath says that at about 8.15 p.m. some body told him when he was in his house that some body had fallen on the road with injuries. He therefore, went there and found that a boy was lying in the middle of the road in front of the shop of Chhanno, the milk vendor. It is, therefore, clear from his evidence that Mr. Onkar Nath had come to the place after Raja Ram had gone away from the place and, therefore, he could not have seen the apprehension of Kailash and his being marched to the Police Station. There is further indication in his evidence that at least 10 to 15 minutes must have passed between the stabbing and the actual arrival of Mr. Onkar Nath on the scene. The time, can be fairly fixed from his own evidence. After returning to his house, Mr. Onkar Nath had telephoned to the Control Room and that was at 8.34 p.m. There is record about this at the Control Room. The house of Mr. Onkar Nath is hardly about 40 to 50 paces from the scene of offence. He further says that he was at the scene of offence for about five or six minutes. Calculating back, therefore, it is clear that Mr. Onkar Nath must have come to the scene of offence not much earlier than 8.25 p.m. In other words, between the stabbing and the coming of the Advocate, there was a Hap of nearly 10 to 15 minutes. In the meantime a big crowd had gathered. According to the prosecution witnesses it was a crowd of about 50 or 100 people. Mr. Onkar Nath says that there was a crowd when he went there but he says that it was a crowd of about 10 to 15 people. It is not disputed that this is a busy street and that was the time when shopkeepers were closing their shops and going away. It may be, therefore, taken that there must have been a fairly big crowd when Mr. Onkar Nath arrived at the scene. It is not the case that Mr. Onkar Nath had come there in his court robes or that he was in any way distinguishable from any other member of the crowd. Nor can it be said that Mr. Onkar Rath had taken the trouble to make any serious enquiry, because if he were serious about it he could have made enquiries with the milk vendor Channo who was admittedly in his shop and the man had fallen only two or three paces away in front of Chhanno's shop. Chhanno was a man known to Mr. Onkar Nath. But Mr. Onkar Nath had not taken the trouble to question Chhanno. It would, therefore, appear that Mr. Onkar Nath must have casually asked the first man he met in the crowd as to who the boy was and he must not have received any answer. In fact he admits that when he put the first question, he did not receive any answer and so he did not make any further enquiry. One does not know with whom he made the enquiry. He might be just a passerby who, like the other members of the crowd, might have had only a casual interest. It is not also the case that Mr. Onkar Nath knew Raj Kishore or Raj Kishore knew Mr. Onkar Nath. For aught we know, Raj Kishore may have been there somewhere in the crowd not necessarily close to his brother. It would be difficult to conceive that Raj Kishore who was unaccompanied by friends at the time and who was anxious about removing his brother to the hospital would be fixed to the side of Manohar Lal all the time. Even to get help he might have to leave the side of his brother. Assuming further that he was near enough to hear the question of Mr. Onkar Nath, he might not have cared to answer him because to him he was just another passerby whose idle curiosity he may have ignored to satisfy Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 7 through sheer tiresomeness. Further Raj Kishore had no inducement to make himself conspicuous before the arrival of the police by declaring that he was the brother of the deceased, because he was now in ah area where his brother had been stabbed and some of the miscreants were still at large. In this state of things the assumption made in the argument that if Raj Kishore was there Mr. Onkar Nath would not have failed to know better particulars about the boy, is not a sound assumption. As against this, we have a large volume of evidence to show that Raj Kishore. P.W. 7 was at the spot. We have already referred to the evidence of Raja Ram, P.W. 1, Keshav Dutt, P.W. 2 and Krishna Behari, P.W. 5. Their evidence as also the evidence of Raj Kishore clearly shows that he was at the scene of occurrence within a couple of minutes of the stabbing. Reference was made to the fact that Raj Kishore's name was not referred to in the First Information Report where Raja Ram, P.W. 1 merely stated "people are sending him to the hospital". It was contended that if Raj Kishore was there, Raja Ram P.W. 1 would have said that Raj Kishore was arranging to send him to the hospital and not that "people are sending him to the hospital". We do not think that by his particular statement Raja Ram wanted to exclude Raj Kishore. It is not the case of Raja Ram that some un-known man in the crowd was making arrangements to take Manohar Lal to the hospital. And since he made a definite assertion at the Police Station that people were sending him to the hospital, it only shows that Raja Ram was perfectly confident that arrangements were being made to send Manohar Lal to the hospital. He could get this confidence only because ' there was Raj Kishore present at the scene of offence. Moreover, the Investigating Officer had recorded more detailed statements of Raj Ram, P.W. 1, Keshav Dutt, P.W. 2 and Krishna Behari, P.W. 5 that same night at about 10.00 P.M. and it is not elicited from their cross-examination by reference to the police statements that they had failed to mention the presence of Raj Kishore at the time of the departure from the scene of offence at 8.10 P.M. Then again there is the evidence of Sub Inspector Ram Das, P.W. 16 who says that when he came to the scene at about 8.30 P.M he had met Raj Kishore at the place. Later, the Officer in-charge of the Mobile Patrol Car No. 2 reached the place at 8.49 P.M. and he met Raj Kishore there and it was Raj Kishore who furnished him the name and address of Manohar Lal. Against all this evidence which establishes Raj Kishore's. presence, at the; scene of occurrence soon after the stabbing, it will be extremely improper to hold that he must not have been present there merely because Mr. Onkar Nath, Advocate, did not receive any answer to the casual question asked by him to ascertain who that boy was. 19. And if Raj Kishore was there as alleged by the prosecution, there was no difficulty in Raja Ram proceeding to the Police Station with Kailash leaving Raj Kishore at the scene to make arrangements for removing Manohar Lal to the hospital. Then again if Raja Ram, P.W. 1 and the other captors of Kailash proceeded to the Police Station from the scene of occurrence soon after 8.10 P.M., there is no dispute that they would be in the Police Station at about 8.25 P.M. for recording the complaint. 20. The. defence suggestion before the learned Sessions Judge was that till the inquest papers were prepared between 2.30.& 3.30 A.M., on the same night, the Police Station had no idea of this offence at all and that the wheels of investigation started moving only thereafter. The allegation is that after the Investigating Officer found that an offence had been committed in a particular locality, he decided to falsely im plicate the accused because of some grudge against Sidhauli. It is not the case that Raja Ram. P.W. 1 or the other two eye witnesses, who were perfect strangers, had any interest in implicating falsely any of the accused in this case. But the suggestion is that the Investigating Officer Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 8 had a grudge against Sidhauli and he, therefore, pressurised Raja Ram. and the other two witnesses to give false evidence and it was only after he was successful in doing so that he obtained the F.I.R. from P.W. 1 Raja Ram on the morning of 24-4-1964. This suggestion on behalf of the defence seems to have very much impressed the learned Sessions Judge. There were serious difficulties, however, in accepting such a defence. The First Information Report was stated to have been recorded at 8.25 P.M. The seizure memo of the knife and the shirt had been made soon after and regular entries had been posted with regard to the same in the General Diary maintained at the Police Station in accordance with the regulations. Apart from entries with regard to the investigation of the offence that same night there are also other entries made in the General Diary in serial order which had nothing to do with this offence. These entries in the General Diary were fatal to the defence suggestion. The learned Sessions Judge however, brushed aside the difficulty with the facile observation that all those entries which are shown to have been made in the night in the General Diary must not have been made at all at the time and , that; after keeping some space blank in the General Diary, those entries must have, been made on the next day. after the investigating Officer had fixed up . everything. In our opinion the learned Sessions Judge was not justified in making this criticism. He has practically charged the Police Station with fabricating an official Register. The General Diary at the Police Station is maintained under U.P. Police Regulations. Regulation No. 294 prescribes that the General Diary . shall be written in duplicate under the superintendence of the officer-in-charge of the Station who is responsible for the entries made in it. The regulation further says that the original is to be sent to the Superintendent or Assistant or Deputy Superintendent-in-charge of the sub-division. The diary should be a complete but brief record of the proceedings of the police and of occurrences reported to them or of which they have obtained information.1 In other words, the General Diary, is to be kept from minute to minute and from hour to hour and a charge of this nature that the Officer-in-charge of the Station had not written up the General Diary in accordance with the regulation would be indeed a very serious charge which may not be countenanced unless established by strong evidence. As a matter of fact though the Officer-in-charge of the Police Station Basdeo Sahai. P.W. 17 and the two Head Moharrirs who were incharge of the General Diary on that night namely Anwar Ahmed and Shedeo Prasad had been examined in the case, there is no cross-examination of these witnesses on the charge now made. The entries till 9.00 P.M. relative to the present offence had been made by Head Constable Anwar Ahmed, P.W. 10. He was off duty at 9.00 P.M. and his place was taken by Head Constable Sheodeo Prasad P.W. 13. It will be wrong to assume that these two Head Constables who were in-charge of the General Diary would keep for no known reason blank spaces in the Diary for being filled up at some future time. It was not also explained why at all these Officers would decide to leave blank spaces in the General Diary at 8.25 P.M. The defence that the Police Station did not know about this offence till 3.30 A.M. would postulate that no body interested in filing a complaint with regard to this offence had approached the Police Station during the night. The only intimation which the Police Station had received in connection with this offence was-one received from the Control Room at 8.35 P.M. That intimation conveyed the Police Station nothing more than that, a per son was injured and lying at a certain place. No names or particulars had been mentioned. It would be recalled that this intimation had been given from the Control Room by Sub Inspector Jagdish Dutt, P.W. 8 as soon as he received the telephone message from Mr. Onkar Nath Seth. the Advocate. In the ordinary course this would be the first entry in the General Diary in connection with this offence. But what we find is that even before this intimation was received, several entries have been made in Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 9 connection with this offence-the first of them being at 8.25 P.M. relating to the First Information lodged by Raja Ram, P.W. 1. In fact Head Constable Anwar Ahmed, P.W. 10 says that when he was recording the statement of Rate Ram, P.W. 1 this particular message was received from the Control Room at 8.35 P.M. and at that very time he told the Control Room on the phone that a report in respect of that offence had already been lodged at the Police Station and necessary action was being taken. This is confirmed by Jagdish Dutt, P.W. 8 when he was specifically asked about it ,in his cross-examination. It is not suggested that Jagdish Dutt who was in-charge of the Control Room had anything to do with any mischief contemplated by the officers of this Police Station and it would only show that Anwar Ahmed, P.W. 10 was telling the truth when he said that when the message was received from the Control Room the investigation, of this offence was in progress. The General Diary shows that this particular message from the Control Room has been duly entered at 8.35 P.M. The suggestion is that even this message must not have been entered at the time but noted on a separate piece of paper to be posted in the General Diary sometimes afterwards. It is not easy to see why at this particular point of time Anwar Ahmed should not have made the record in the General Diary in due course of official business. The message itself was innocuous and did not suggest that an offence had been committed or who the offender was or who were the assailants. Therefore, there is no reason whatsoever why the entry should not have been made at the time when the message was received. And since this entry about the message follows the entry with regard to the first information report, the normal inference would be that the several entries had been made in due course of official business. If the defence suggestion were true, we must assume that something must have occurred at 8.25 P.M. which inspired the Police Station not to enter the entries in due course. If none of the persons interested in complaining about the offence had reached the Police Station at that time and there was no known source of information at the Police Station with regard to the offence, there could not have been any good reason at all why the entries should not be made in the usual course. The importance of this aspect of the question was not lost on the learned Sessions Judge. He got over, this difficulty also by saying that Kailash must have come at about 8.25 P.M. and must have given some information. According to the learned Judge Kailash must have given information about his companions Onkar and Sidhauli and that was the reason why the officers attached to the Police Station stayed their hands and refrained from making any entry about the information given by Kailash. Now the case of Kailash, as disclosed in his statement under Section 342, Criminal Procedure Code, is that he had merely seen two or three persons assaulting Manohar Lal the deceased with knives and since he knew Manohar Lal he went to his rescue. The assailants of Manohar Lal, however, turned on him and he got injuries on both his hands. He, therefore, left the place and went to the Police Station to make a report. He does not say that he implicated Onkar and Sidhauli as being the assailants. Therefore, there is no basis for the conjecture of the learned Sessions Judge that the names of Onkar and Sidhauli might have been' mentioned by Kailash as the assailants. Secondly if what Kailash actually says is true there could be no possible reason for the Station Officer not to record his statement in the usual course because he was reporting the commission of a cognizable offence without naming the assailants and was wanting the officers to take immediate action to save Manohar Lal. It is impossible to believe that if such a statement of a cognizable offence being committed was reported to the Police Station, the Officers would have remained absolutely indifferent and inactive. As already stated no other influence was working at the Police Station at that time and, therefore, there could have been no reason at all why the information given by Kailash should not have been recorded. To suggest that the Officer delayed Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 10 recording of Kailash's statement in order to implicate Onkar and Sidhauli would be absurd because Kailash had not mentioned the names of Onkar and Sidhauli. It would be extravagant to suggest that on hearing of a stabbing case within his area, the Officer would at once think of Onkar and Sidhauli with a view to implicate them falsely, without ascertaining, in the first place, the circumstances of the stabbing, the availability of Onkar and Sidhauli on that day at the particular place and time, the probability of eye witnesses mentioning the names of other assailants and the inclination of the relations of Manohar Lal to help the officer in his mischievous plans. It was not even considered by the learned Sessions Judge whether Kailash, in the circumstances, would have voluntarily gone to the Police Station to give information. It was possible for him to phone the Police Station to get immediate help to rescue Manohar Lal. Instead of that it is supposed that he went to the Police Station which was about three to four furlongs away. Secondly Kailash would be the last person to go to the Police Station by himself when there were circumstances which would impel him to keep himself as far away from the Police Station as possible. He could not have forgotten that only four or five days previously, he and Sidhauli had given a threat to Manohar Lal - a fact of which due notice has been taken by the learned Sessions Judge. He had. blood on his shirt and injuries on the right little finger which would draw the suspicion of any experienced Police Officer at the Police Station. It is, therefore, impossible to believe the story of Kailash that he had gone to the Police Station by himself to report about the assault on Manohar Lal and that though he made his report the Officer decided not to record it. 21. It necessarily follows from the above discussion that Kailash must have been brought to the Police Station with the blood stained knife by somebody at 8.25 P.M. and in that behalf we have a large body of evidence both of the eye witnesses Raja Ram, P.W. 1 etc. and the Police Officers who were in-charge of the Police Station. Immediately after the arrival of Raja Ram with Kailash, the investigation proceeded in the usual manner. Raja Ram's F.I.R. was recorded, the necessary seizure memos were prepared, the General Diary entries were posted and thereafter we know from Anwar Ahmed's evidence that he went off duty at 9.00 P.M. The Investigating Officer Basdeo Sahai, P.W. 17, however, took some more time at the Police Station to complete the proceedings before he went to the scene of offence. There was no particular hurry because he had already come to know that the Control Room had been contacted and there were people attending to Manohar Lal at the scene of offence. The offence which had been recorded at the time was only under Section 307, I.P.C. and not under Section 302, I.P.C. It was only much later when the Investigating Officer was at the scene of offence and recording the statements of the eye witnesses that the report about the death of Manohar Lal was received by him. In our opinion, there was no sufficient basis for the learned Sessions Judge to think, that the information about this offence had not been received till early next morning and that the General Diary had not been posted with the entries in due course of official business. 22. Once it is established that the First Information Report was given by Raja Ram, P.W. 1 at 8.25 P.M. the defence which had impressed the learned. Sessions Judge completely collapses. Kailash had been brought to the Police Station with a blood stained knife and the eve witnesses were available who, had also taken part in chasing and capturing Kailash. As mentioned earlier, none of the three eye witnesses had any personal interest in implicating the three accused. In fact nothing was suggested to them in their cross-examination. One more remarkable thing which must be noted Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 11 is that even Raja Ram, P.W. 1 had not known the other two captors Keshav Dutt, P.W. 2 and Krishna Behari, P.W. 5 and the captors also did not know each other. Their evidence, however, shows that all these three witnesses had known the three accused since before the incident. The High Court has accepted their evidence as substantially true and we do not think that we have any good grounds to differ from the High Court's assessment of the. evidence. The learned Sessions Judge having once formed the erroneous opinion that the F.I.R. must not have been recorded at 8.25 P.M. had no other alternative but to discard the evidence of eye witnesses; and. this the learned Sessions Judge has done by attaching undue importance to minor details in the evidence of these witnesses as pointed out by the High Court. The High Court was, therefore, justified in its criticism of the judgment of the learned Sessions Judge as unreasonable and palpably wrong and coming to its own conclusion as to the guilt of the accused. 23. In the result these appeals fail and are dismissed. Onkar Nath Sidhauli Alias Narain And ... vs The State Of U.P. on 10 November, 1971 12 | {
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Saptawna vs The State Of Assam on 5 February, 1971 Equivalent citations: AIR1971SC813, 1971CRILJ679, 1971(III)UJ341(SC), AIR 1971 SUPREME COURT 813, 1971 UJ (SC) 341 Author: S.M. Sikri Bench: S.M. Sikri, P. Jaganmohan Reddy, I.D. Dua JUDGMENT S.M. Sikri, C.J. 1. In this petition under Article 32 of the Constitution the petitioner complains against his detention. The relevant facts are these. It appears that the petitioner was arrested on January 10, 1968 but it is not quite clear by whom he was arrested. The suggestion of the State Counsel is that he was arrested originally under the Armed Forces (Assam and Manipur) Special Power Act, 1958. Be that as it may, according to the affidavit of Shri P, Sengupta, Deputy Secretary to the Government of Assam, Political (A)Department, he was arrested by the Civil Police on Jan 24, 1968, and was produced before the competent Magistrate on January 25, 1968, in connection with G.R. Case No. 27/68. It is further stated that the Civil Police registered other cases against the petitioner vide G.R 235/68 of Aijal Police Station Case No. 16 (8) 68 Under Section 32(5) D.I.R., G.R 212/66 of Aijal Police Station Case No. 54 (5) 66 Under Section 121, I.P.C , etc and G.R. Case No. 27/6.8 vide Session Case No. 128/69 Under Section 121A, 392 I.P.C. It is further stated in the affidavit that subsequent to the production of the petitioner before the Magistrate in connection with G R Case No. 27/68, the petitioner was shown as arrested in the other two cases as well. The petitioner was, however, discharged from G R. 27/68 on October 10, 1970, but it is maintained in the affidavit that the petitioner is in Custody in connection with the other two cases in which he has been charge-sheeted. It was denied that the petitioner was never produced before a Magistrate. It is further stated that the last order of remand for the petitioner was passed by the Aijal Court in G R. Case Bo. 235/68 on December 16, 1970 It was admitted that there has been delay in the trial of the cases owing to various circumstances but it appears that the High Court has already ordered on December 18, 1970 that the trial of the cases should be completed within four months. It was further stated that this order of the High Court has been communicated to the prosecuting authorities and every effort is being made to comply with the order of the Hon'ble High Court for early disposal of the case. 2. The learned Counsel for the petitioner says that the petitioner is entitled to be released on three grounds: (1) The original date of arrest being January 10, 1968 and the petitioner nor having been produced before a Magistrate within 24 hours, the petitioner is entitled to be released; (2) The petitioner having been arrested in one case on January 24, 1968 and he having been discharged from that case, he is entitled to be released; and (3) As the petitioner was not produced for obtaining Saptawna vs The State Of Assam on 5 February, 1971 1 remand he is entitled to be released. 3. A similar case came before this Court from this very District (V.L. Rohlua v. Dy. Commr. Aijal Dist) Writ Petition No. 238 of 1970) decided on 29.9.1970) and the first point was answered by a Bench of Five Judges thus: If the matter had arisen while the petitioner was in the custody of the Armed Forces a question might well have arisen that he was entitled to be released atleast made over to the police. However, that question does not arise now because he is an undertrial prisoner. It seems to us that even if the petitioner had been under illegal detention between January 10 to January 24, 1968 though we do not decide this point the detention became lawful on January 24, 1968 when he was arrested by the Civil Police and produced before the Magistrate on January 25, 1968. He is now an undertrial prisoner and the fact that he was arrested in only one case does not make any difference The affidavit clearly states that he was also treated to have been arrested in the other cases pending against him. 4. It appears from the affidavit that the petitioner was not produced before the Magistrate in all cases, but as observed by this Court in the case of V.L Rohlua (supra) "the Criminal Procedure Code is not applicable by reason of the Sixth Schedule to the Constitution in this area. This was laid down in State of Nagaland v. Rattan Singh . On the spirit of the Criminal Procedure Code applies." It is not necessary that the petitioner should be produced on each occasion before a Magistrate for remand. 5. In the result the petition fails and is dismissed. Saptawna vs The State Of Assam on 5 February, 1971 2 | {
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State Of Andhra Pradesh vs P.V. Narayana on 9 February, 1971 Equivalent citations: AIR1971SC811, 1971CRILJ676, (1971)1SCC483, 1971(III)UJ339(SC), AIR 1971 SUPREME COURT 811, 1972 SC CRI R 17, 1971 SCD 247, 1971 UJ (SC) 339 Author: S.M. Sikri Bench: S.M. Sikri, P. Jaganmohan Reddy JUDGMENT S.M. Sikri, C.J. 1. This appeal is by certificate granted by the Andhra Pradesh High Court against its judgment allowing the appeal of the respondent and quashing the proceedings against him. He had been convicted by the learned Special Judge for S.P.E. cases, Secunderabad, Under Section 161 I.P.C. & Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act, 1947 and sentenced to various terms of imprisonment. 2. The facts of the case and the points raised before us are as follows : 3. The respondent was working as Head Train Examiner and was posted at Waltair in the South Eastern Railway. It was alleged that on 14th July, 1964, the respondent demanded & accepted an amount of Rs. 5/-as gratification, other than legal remuneration, from P.W. 1 who too was a railway employee, as a motive or reward for having attested on 1-7-1964 an Urban Bank Pay Order dated 20-6-1964 for Rs. 265 80 nP. drawn in favour of P.W. 1 and for having posted him for duty at the Waltiar Goods Yards. It appears that P.W. 1 approached the Inspector of the Special Police Establishment and informed him that the respondent was harassing him for a payment of bribe of Rs. 5/-. The Inspector made confidential enquiries and learnt that the respondent was indulging in corrupt practices and that there was truth in the complaint made by P.W. 1. On 13-7-64 he presented the requisition Ex. P14 before the 1st Class Magistrate, Visakhapatnam, requesting him to authorise the Inspector to investigate the case. After stating the facts briefly in this requisition he said, "As the Superintendent of Police, S.P.E., is engaged in administrative matters and supervising investigations at Hyderabad and the other two Deputy Superintendents of Police are also engaged in the investigation of important cases and other enquiries and as it is not possible to secure their presence in the near future at Waltair to investigate into said complaint of Sri Appanna, I request that I may be permitted Under Section 5(A) of the Prevention of Corruption Act (Act II of 1947) and Section 155(2) Criminal Procedure Code to investigate the allegations and to lay a trap." On the same day the District Munsif-cum-First Class Magistrate, Visakhapatnam, passed the following order : State Of Andhra Pradesh vs P.V. Narayana on 9 February, 1971 1 Whereas it is alleged that respondent is demanding and accepting illegal gratification from his staff for showing official favours and that he demanded Rs. 5/-as bribe from Shri Ella Appanna for having attested his cheque. And Whereas, I am satisfied that the Superintendent of Police and the two Deputy Superintendents of Police, Special Police Establishment, Hyderabad, are otherwise engaged and unable to take up investigation of the allegations complained of; And Whereas, I Shri D. Krishnam Raju, am satisfied on a perusal of the petition of the Inspector Police, and on hearing Shri P. Sreerama Murthy, Inspector of Police, that that there are reasonable and good grounds to authorise investigation of the allegations. I do hereby authorise Shri P Sreeramamurthy, Inspector of Police, Special Police Establishment, Hyderabad Under Section 5(A) of Act II of 1947 and 155(2) Cr.P.C. to investigate the allegations and to lay a trap. 4. It would be seen from the requisition and the order of the Magistrate that it is not stated that the Inspector of Police had contacted the Superintendent of Police or the two Deputy Superintendents of Police or he was told by them that they were engaged in administrative matters and supervising investigation of important cases and they were unable to take up the investigation of either this case or other cases. In his evidence he admitted that before giving the requisition he did not send any memo or letter to his office for ascertaining whether the D.S.P. or S.P. were engaged in any other case. So, the net result seems to be that the Inspector made the requisition at his own initiative without getting into contact with the S.P. or the D.S.P. The Magistrate was apparently satisfied that the assertion of the Inspector of Police that the Superintendent of Police and the two Deputy Superintendents of Police were unable to investigate or unable to take up the investigation It seems to us that the procedure adopted is wholly unwarranted by the provisions of the Prevention of Corruption Act. It may be that the Inspector though that it was not necessary that the Superintendent of Police or the Deputy Superintendents of Police should themselves write to Magistrate or apply that the Inspector of Police be authorised to investigate but it seems to us that they must be in the picture before the Inspector of Police applies for permission. In other words they must tell the Inspector of Police that they are too to take up the investigation of this case or they must on this ground authorise him to apply to the Magistrate to permit him to investigate the case. This procedure which has been adopted by passes the provisions of the Act and nullifies the objective of Parliament that the senior Officers should ordinarily investigate such cases. The High Court in our view rightly held that the grant of permission to investigate the case is not merely a mechanical act and the Magistrate had erred in giving the sanction. 5. It appears that the Superintendent of Police felt that the permission, which P.W. 11 had obtained from the Magistrate was some what defective and, therefore, it was felt that the Magistrate be requested again to give a fresh sanction. Accordingly he applied to the Fourth City Magistrate on 24th July, 1964, that as he himself and the Deputy Superintendent of Police were engaged in the investigations and secret inquiries and were unable to take up investigation personally, the Inspector of Police be authorised to conduct further investigations. On 25th July, 1964, the Magistrate gave the necessary authorisation But the High Court rightly remarked that the main State Of Andhra Pradesh vs P.V. Narayana on 9 February, 1971 2 investigation had already been done by that time. The High Court on being satisfied rightly held that the investigation was unauthorised and as such the proceedings were vitiated. Before the High Court, the learned Counsel for the respondent argued on the facts of the case but as the sanction itself was held invalid, the High Court did not give its opinion with regard to the facts of the case. 6. The learned Counsel for the appellant Shri P. Ram Reddy contended that assuming the sanction was bad, this Court has held on a number of occasions that an illegal investigation does not violate the trial. In other words, that in order to set aside the conviction it must be shown that there has been miscarriage of justice as a result of bad and irregular investigation The earliest case on the point is H.N Rishbud and Inder Singh v. The State of Delhi . This Court observed : If, therefore, cognizance is in fact taken on a police report vitiated by the breach of a mandatory provision relating to investigation, there can be no doubt that the result of the trial which follows it cannot be set aside unless the illegality in the investigation can be shown to have brought about a miscarriage of justice.... We are, therefore clearly, also, of the opinion that where the cognizance of the case has in fact been taken and the case has proceeded to terminate, the invalidity of the precedent investigation does not vitiate the result, unless miscarriage of justice has been caused thereby. 7. The latest decision to which our attention is invited was an unreported case Dr. M.C. Sulkunte v. State of Mysore U.J. (S.C.) 1971 p. 83. It is clear from these authorities that the High Court tired in quashing the proceedings against the respondent solely on the ground of illegal investigation. 8. The High Court did not go into the question whether the illegal investigation had resulted in prejudice to the respondent. The learned Counsel for the respondent contended that the very fact that the main investigation was conducted without a valid sanction had resulted in prejudice to the respondent. It seems to us that the High Court should, apart from other questions which it did not deal with, also go into this question of prejudice. We accordingly accept the appeal, set aside the judgment and order of the High Court and remand the case to it for disposal in accordance with law. State Of Andhra Pradesh vs P.V. Narayana on 9 February, 1971 3 | {
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State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 Equivalent citations: 1971 AIR 1859, 1971 SCR 412, AIR 1971 SUPREME COURT 1859 Author: A.N. Ray Bench: A.N. Ray, C.A. Vaidyialingam PETITIONER: STATE OF MAHARASHTRA Vs. RESPONDENT: LAXMAN ABAJI A ANR. DATE OF JUDGMENT20/04/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. VAIDYIALINGAM, C.A. CITATION: 1971 AIR 1859 1971 SCR 412 ACT: Hyderabad Abolition of Inams Act, 1954 (Act VIII of 1955)- Landlord and Tenant-Relationship if continued to subsist between date of abolition of Inams vesting land in the state and date of coming into force of the entire Act. HEADNOTE: On the question whether the relationship of landlord and tenant continued to subsist between July 20, 1955 when the inams were abolished and the land vested in the State under the Hyderabad Abolition of Inams Act, 1954 (VIII of 1955) and July 1, 1960 when a notification under s. 1(3)(b) of the Act made the entire Act applicable, HELD: Though the Inams were abolished and the land vested in the State by reason of s. 3(1) of the Act the rights and interests of landlord and tenant mentioned in s. 3(2) (b) were preserved by s. 33 inasmuch as s. 3(2) cls. (d), (g) (h) and (i) did not come into effect until July 1, 1960. The crucial date for grant of occupancy rights under State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 1 the 1955 Act is July 1, 1960 when the entire Act including, in particular, the provisions regarding grant of occupancy rights and cls. (d), (g), (h) and (i) of s. 3(2) came into effect. The relation between landlord and tenant ceased on July 1,1960 and if any tenant surrendered possession prior to July 1, 1960, and the inamdar accepted such surrender and remained in possession of the land on the relevant date, i.e., July 1, 1960, the inamdar would be entitled to grant of occupancy rights. On the other hand if the tenant claimed to be in possession of the land on the relevant date and the inamdar also claimed to be in possession the Government will have to ascertain as to who was lawfully in possession on the relevant date. [416E; 417G]. Dattatraya Sadashiv Dand v. Ganpati Raghu Gaoll, 67 B.L.R. 521, approved. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2531 and 2533 of 1966. Appeals from the judgments and orders dated April 1, 1965 of the Bombay High Court in Special Civil Applications Nos. 804 and 697 of 1964 respectively. M. C. Bhandare, Badri Das 'Sharma for S. P. Nayar, for the appellant (in both the appeals). W. S. Barlingay and A. G. Ratnaparkhi, for respondent No. The Judgment of the Court was delivered by Ray, J.--These two appeals are by certificate from two judg- ments dated 1 April, 1965 of the Bombay High Court. Both the appeals turn on the question as to whether relationship of landlord and tenant continued to subsist between 20 July" 1955 when the inams were abolished by and the land vested in the, State under the Hyderabad Abolition of Inams Act, 1954 being Act VIII of 1955 (hereinafter referred to as the 1955 Act) and 1 July, 1960 when a notification under section 1(3) (b) of the 1955 Act made the entire 1955 Act applicable. The contention on behalf of the State was that when the 1955 Act came into existence on 20 July, 1955 inams were abolished and the land vested in the State, and, therefore, the relationship between the inamdar landlord and the tenant in respect of the inam land ceased. The contention on behalf of the inamdar and the tenant on the other hand was that though inams were abolished and the land vested in the State on the coming into force of the 1955 Act on 20 July, 1955 the relationship of inamdar landlord and tenant continued upto 1 July, 1960 because all the provisions of the 1955 Act did not come into effect until 1 July, 1960 and those which did not come into operation had the effect of saving and preserving the relationship between inamdar landlord and tenant. The High Court upheld the contention of the inamdar landlord and the tenant. State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 2 The 1955 Act received the assent of the President on 16 July, 1955 and was published in the Hyderabad Gazette Extra- ordinary on 20 July, 1955. Under section 1(3) (a) of the said 1955 Act sections 1, 2, 3 (except clauses (d), (g), (h) and (i) of sub-section (2) of section 3), sections 30 to 34 (both inclusive), section 35 to the, extent to which it enabled rules to be made for the purposes of the aforesaid sections, section 36 and section 37 of the 1955 Act came into force on the date of the publication of the 1955 Act in the official Gazette. The other important provision is section 1(3) (b) of the 1955 Act which enacted that the rest of the Act cc shall come into force on such date as the Government may, by notification in the official Gazette, appoint in this behalf". It may be stated here that the short title of the 1955 Act was Hyderabad Abolition of Inams Act, 1954. By the Hyderabad Abolition of Inams (Amendment) Act, 1959 the title of the 1955 Act was changed to Hyderabad Abolition of Inams and Cash Grants Act, 1954. The Amendment was by reason of the Act being made applicable to "cash grants and inams in the, nature of community service, inams and watans" by introducing sub-section (2A) in section 1 of the 1955 Act. The 1959 Amendment Act came into force on 1 July, 1960 by a gazette notification dated 3 June, 1960. There, was another gazette notification on 3 June, 1960 No. HDA-1060-IV-(b)L- that in exercise of the powers conferred by clause (b) of sub-section (3) of section 1 of the Hyderabad Abolition of Inams and Cash Grants act 1954. the Government of Maharashtra appointed 1 July, 1960 to be the date on which the rest of the said Act "shall come into force". That is how all the provisions of the 1,955 Act came into force on 1 July, 1960. The State relied on section 3(1) of the 1955 Act in support of the proposition that the inams were abolished and the land vested in the State, and, therefore, the relationship of landlord and tenant came to an end. It is noticeable that section 3(2) of the 1955 Act provided "save as expressly provided by or under the provisions of the Act and with effect from the date of vesting, the consequences mentioned in clauses (a) to (i) will ensue". The important clauses in section 3(2) of the 1955 Act are as follows: "(b)--All rights, title and interest vesting in the inamdar, kabiz-e-kadim, permanent tenant, protected tenant and non-protected tenant in respect of the inam land, other than the interests expressly saved by or under provisions of this Act and including those in all communal lands, cultivated and uncultivated lands whether assessed or not), waste lands, pasture lands, forests, mines and minerals, quarries, rivers and streams, tanks and irrigation works, fisheries and ferries, shall cease and be vested absolutely in the State free from all encumberances ; (d) all rents and land revenue including cesses and royalties, accruing in respect of such inam lands, on or after the date of vesting, shall be payable to the State and not to the inamdar, and any payment made in contravention of this clause shall not be valid. (g) -the inamdar and any other person whose rights have vested in the State under clause State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 3 (b) shall be entitled only to compensation from the Government as provided for in this Act (h) -the relationship with regard to inam land as between the inamdar and kabiz-e-kadim, permanent tenant, protected tenant or non- protected tenant shall be extinguished ; (i) - the inamdar, kabiz-e-kadim, permanent tenant,' protected tenant, and a non-protected tenant of inam lands and any person holding under them and a holder of a inam, shall as against the Government, be entitled only to such rights and privileges and be subject to such conditions as are provided for under this Act and any other rights and privileges which may have accrued to any of them in the inam before the date of vesting against the inamdar shall case and shall not be enforceable against the Government or the inamdar". Among these clauses, clause (b) which came into effect on 20 July, 1955 saved from vesting in the State the interests expressly saved by or under the provisions of the 1955 Act. As to what interests were saved or protected from being vested in the State would be found in section 33 of the 1955 Act and clauses (b),(d), (g), (h) and (i) of section 3(2) of the 1955 Act. Section 33 of the 1955 Act is as follows : -- "Nothing in this Act shall in anyway be deemed to affect the application of the provisions of the Hyderabad Tenancy and Agricultural Lands Act, 1950, to any inam or the mutual rights and obligations of an inamdar and his tenants, save in so far as the said provisions are in anyway inconsistent with the express provisions of the Act". Section 33 therefore provided first that the application of the provisions of the Hyderabad Tenancy and Agricultural Lands Act, 1950 to any inam was not to be affected by the 1955 Act save in so far as the said provisions were inconsistent with the provisions of the said 1955 Act. Secondly, section 33 saved the mutual rights and obligations of an inamdar and his tenant. It would, therefore, follow that the combined effect of clause (b) of Section 3(2) and of section 33 of the 1955 Act is that the mutual rights and obligations of the inamdar and the tenant were not affected by the 1955 Act. The rights and obligations of the inamdar would be inter alia to receive rent and land revenue. The rights of the tenant on the other hand would be primarily to continue in possession of the land and to enjoy its income subject to liability to pay rent and deliver possession to the inamdar in accordance with the provisions of the Hyderabad Tenancy and Agricultural Lands Act, 1950 in so far as the same were applicable. Clauses (d), (g), (h) and (i) of section 3(2) of the 1955 Act did not come into effect on 20 July, 1955. Those clauses came into effect only on 1 July, 1960. These clauses dealt with some of the mutual rights and obligations of the landlord and tenants which were preserved until 1 July, 1966. State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 4 Clause (d) deals with rent and land revenue including cesses and royalties in respect of inam lands on or after the date of vesting to be payable to the State and not to the inamdar. In view of the fact that this clause was not brought into operation until 1 July, 1960 rent in respect of inam was not payable to the State on or after the date of vesting, namely, 20 July, 1955 until the coming into effect of clauses (d), (g), (b) and (i) on 1 July, 1960. Clause (h) dealt with extinction of relationship as between landlord and kabz-e-kadim, permanent tenant, protected tenant or non-protected tenant with regard to inam land. Kabiz-e-kadim, permanent tenant, protected tenant and non- protected tenant are all defined in section 2 of the Act. Broadly stated, they are all different categories of tenant. In view of the fact that clause (d) did not come into effect on 20 July, 1955 it follows that the legislative intention was that the relationship between inamdar and tenant with regard to inam land would continue and be not extinguished until the provision was made applicable on 1 July, 1960. Clause (i) provided that with effect from the date of vesting rights and privileges which might have accrued to any person in inam before the date of vesting against the inamdar would cease and would not be enforceable against the Government or the inamdar. Clause (i) did not come into effect until 1 July, 1960 and is another illustration of the saying of mutual rights and obligations of the landlord and the tenant. It therefore follows that though the inams were abolished and the land vested in the State by reason of section 3(1) of the 1955 Act the, rights and interests of landlord and tenant mentioned in section 3(2) (b) of the 1955 Act were preserved by section 33 of the 1955 Act inasmuch as section 3(2) clauses (d), (g), (h) and (i) of the 1955 Act did not come into effect until 1 July, 1960. Clause (b) of section 2 of the 1955 Act defined the expression "date of vesting". The Hyderabad Abolition of Inams (Amendment) Act, 1956 (Act 10 of 1956) (hereinafter called the 1956 Amendment Act) which was deemed to have come into force on 20 July, 1955 provided as follows : "Notwithstanding anything contained in the principal Act, with effect from the date of publication of that Act in the official Gazette and till the, commencement of the provisions mentioned in clause (b) of sub- section (3) of section 1 of that Act the full land revenue, payable in respect of every inam abolished and vesting in the Government under section 3 of that Act, shall be recovered from the inamdar of such inam as if he were the occupant of such land and, on the commencement of the said provisions of that Act, it shall be recovered in accordance, with those provisions". Section 4 of the 1956 Amendment Act provided for recovery of land revenue from the inamdar with effect from the date of publication of the 1955 Act, namely, 20 July, 1955. Section 4 of the 1956 Amendment Act was to remain effective and operative till the commencement of the provisions mentioned in section 1 (3) (b) of the 1955 Act, namely, 1 July, 1960. Section 4 of the 1956 Amendment Act provided for recovery of land revenue from the inamdar as if he were the occupant of such land. The words ',as if he were the occupant of such land" indicate that the inamdar was to be treated in possession of the inam. This was necessary because the grant of occupancy rights State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 5 mentioned in sections 5 and 6 of the 1955 Act did not come into effect until 1 July, 1960. The dominant idea was to continue the relationship of landlord and tenant in respect of the inam land and to look to the inamdar only for land revenue by treating him to be an occupant. Sections 4, 5, 6, 7 and 8 of the 1955 Act deal respectively with registration of inamdars, kabiz-e-kadim, permanent tenant, protected tenant and non-protected tenant as occupants. These occupancy rights under sections 4 to 8 could not be granted before 1 July, 1960 when those sections came into force. Upto 1 July, 1960 the mutual rights and obligations of the landlord and the tenant were preserved by providing inter alia in section 33 of the 1955 Act, the application of the Tenancy Act. Again, after the abolition of the inams by the 1955 Act the right. of the landlord to be in possession was preserved. Similarly, the right of the tenant to continue in possession was preserved. Neither the right of the landlord nor the right of the tenant was any right which flowed from any authority or grant of the Government. These rights emanated from the protective provisions of the statute. It is because of the continuance of the mutual rights and obligations of the landlord and the tenant that section 4 of the 1956 Amendment Act recognised the inamdar "as if he were in occupation of the land" for the purpose of land revenue. This liability of the inamdar to pay land revenue was provided in order to enable the inamdar to enjoy all his rights including that of revenue in the inam land. it may also be noticed here that although the scheme of the 1955 Act was to abolish the inams and to vest the land in the State, there was no provision in the Act empowering the Government to resume possession. The relationship between inamdar and his tenant came to an end on 1 July, 1960 when the State by reason of the coming into force of sections 4 to 8 of the 1955 Act granted occupancy rights to persons mentioned in those sections. In Civil Appeal No. 2531 of 1966 respondent No. 2 Gajya was inamdar of survey No. 22 measuring 28 acres 15 gunthas 27-1 S.C. India/71 situated at Azambag Village, Taluka Gangakhed at Hyderabad. Respondent No. 1 Laxman claimed to be a tenant on the basis of the lease executed by respondent No. 2 on 9 April, 1950. After 1 July, 1960 the Tahsildar of Gangakhed took necessary steps to confer the occupancy rights on respondent No. 2 in regard to the said land as he was in possession of the land on the date of vesting, namely, 20 July, 1955. Respondent No. 1 objected to the same and claimed that he was entitled to the occupancy rights under section 6 of the Act as he was lawfully in possession of the said land on 1 July, 1960. 'The Tahsildar by his order dated 20 October, 1962 rejected the application of respondent No. 1 and conferred the occupancy rights on respondent No. 2 as the latter was in possession of the disputed land on the date of vesting. Respondent No. 1 being aggrieved by the order preferred an appeal to the State Government. The appeal was dismissed on 24 January, 1964. Respondent No. 1 thereafter filed an application under Article 227 of the Constitution in the Bombay High Court. The High Court by an order dated 1 April, 1965 set aside the order made by the Government and the Tahsildar and remanded 'the matter to the Tahsildar to hear all parties including the inamdar and thereafter decide who was lawfully in possession of the land on 1 July, 1960. The High Court took the view that the crucial date for conferment of occupancy rights under the 1955 Act would be 1 July, 1960 when the entire 1955 Act came into operation and the relationship of landlord and tenant which was preserved even after the date of vesting, namely, 20 July, 1955 came to an end on 1 July, 1960. State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 6 In Civil Appeal No. 2533 of 1966 respondent No. 1 was the inamdar of three pieces of land measuring in all 69 acres and 37 gunthas situated at village Paranda, Taluka Paranda, district Osmanabad. Respondent No. 2 was the tenant of respondent No. 1 in respect of those lands and was in possession of those lands on 20 July, 1955. Some time in the months of May and June, 1956 respondent No. 2 voluntarily surrendered his tenancy rights in the land to respondent No. 1. The surrender was accepted by the inamdar. The possession of the land was delivered to respondent No. 1. After the coming into effect of the entire 1955 Act on 1 July, 1960, the Tahsildar notified that respondent No. 2, the tenant was entitled to occupancy rights under the provisions of the 1955 Act. Respondent No. 1 objected and claimed that he was entitled to the occupancy rights of the land under section 6 of the 1955 Act as he was lawfully in possession of the land on 1 July, 1960 and the respondent No. 2 had surrendered his tenancy rights in 1956. The Tahsildar by his order dated 30 June, 1963 conferred the occupancy rights on respondent No. 2, the tenant as he was in possession on 20 July, 1955. Respondent No. 1, the inamdar preferred an appeal to the State Government, The State Government rejected the appeal on 24 January, 1964. The inamdar thereafter made an application to the Bombay High Court under Article 227 of the Constitution. The High Court by an order dated 29 March, 1965 held that the material date for the purpose of grant of occupancy rights was 1 July, 1960 and not the date of vesting of the land in the State on 20 July, 1955. The High Court further held that on 1 July, 1960 the inamdar was lawfully in possession of the land. The High Court directed that the Government should recognise the inamdar as occupant under section 6 of the 1955 Act. The High Court was right in both the orders. The crucial date for grant of occupancy rights under the 1955 Act is 1 July, 1960 when the entire 1955 Act including in particular the provisions regarding grant of occupancy rights and clauses (d), (g), (h) and (i) of section 3(2) of the 1955 Act came into effect. The Government became entitled to the possession of the land. The Government became entitled to grant of occupancy rights. The relationship between landlord and tenant ceased on 1 July, 1960. If,any tenant had surrendered possession prior to 1 July, 1960 as happened in Civil Appeal No. 2533 of 1966 and the inamdar accepted such surrender and remained in possession of the land on the relevant date 1 July, 1960 the inamdar would be entitled to grant of occupancy rights. On the other hand, if the tenant claimed to be in possession of the land as in Civil Appeal No. 2531 of 1966 on the relevant date 1 July, 1960 and the inamdar also claimed to be in possession, the Government will have to ascertain as to who was lawfully in possession on the material date 1 July, 1960. The Bombay High Court in Dattatraya Sadashiv Dhand v. Ganpati Raghu Gaoll (1) held that the relationship of landlord and tenant continued up to 1 July, 1960. We are in agreement with the decision on that point. For these reasons the appeals fail and are dismissed with costs, as of one hearing fee. K. B. N. Appeals dismissed. (1) 67 Bom. L. R. 521. State Of Maharashtra vs Laxman Abaji A Anr on 20 April, 1971 7 | {
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Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 Equivalent citations: 1971 AIR 2377, 1972 SCR (1) 137, AIR 1971 SUPREME COURT 2377 Author: S.M. Sikri Bench: S.M. Sikri, A.N. Ray, D.G. Palekar PETITIONER: VISHWESHA THIRTHA SWAMIARI & ORS Vs. RESPONDENT: STATE OF MYSORE AND ANR. DATE OF JUDGMENT12/08/1971 BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) RAY, A.N. PALEKAR, D.G. CITATION: 1971 AIR 2377 1972 SCR (1) 137 CITATOR INFO : R 1992 SC1264 (14,17,19) ACT: Mysore Land Revenue (Surcharge) Act, 1961 as amended-Com- petence of State Legislature to levy-Surcharge on land revenue-Whether the Acts discriminatory and therefore violative of Art. 14 of the Constitution. HEADNOTE: In 1961, the new State of Mysore enacted Mysore Land Revenue (Surcharge) Act, 1961, by which a surcharge on the land Revenue @15 n.p. on every rupee of land revenue was levied and this was payable by every landholder liable to pay a sum exceeding Rs. 20 as land revenue. By another enactment Mysore Land Revenue (Surcharge) Amendment Act, 1962, the surcharge for 1962-63 and 1963-64 was raised to 100 per cent Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 1 of the land revenue in the case of wet and garden lands and 75 % in respect of dry lands. Both these Acts were challenged before the High Court on several grounds but the High Court rejected them and dismissed the petitions. In appeal, before this Court it was contended (i) that the Mysore Legislature was not competent to enact the Mysore Act of 1961 and the amending Act and (ii) that since there is inequality in taxation between lands comprised in South Kanara District and the areas in the erstwhile Mysore State, the levy is hit by Art. 14 as being discrimirfatory in character and therefore bad in law. Dismissing the appeal, HELD: (i) Surcharge fell squarely under Entry 45 of List It and it is not a tax on land revenue but an enhancement of land revenue by way of surcharge and even if it is raised by 1 00 % does not change the nature of the imposition. It is still land revenue and the Mysore Legislature is competent to enact the impugned Acts. [140 D- E] (ii) In view of the temporary nature of the Acts imposing additional land revenue, while resettlement and survey was being done in the entire State in order to have a uniform land revenue law, the Acts in question are not violative of Art. 14 of the Constitution. [144F] C. V. Rajagopalachariar v. State of Madras, A.I.R. 1960 Mad. 543, State of Andhra Pradesh v. Nalla Raja Reddy [1967] 3 S. C. R. 28 and State of Madhya Pradesh v. Bhopal Sugar Industries Ltd.[1964] 6 S.C.R. 846, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2222 of 1966, 441 to 444 and 446 of 1970. Appeal from the judgment and order dated September 17, 1965 of the Mysore High Court in Writ Petitions Nos. 1173, 1138, 1151, 1152, 1153 and 1155 of 1963. V. S. Desai and R. B. Datar, for the appellants (i all the appeals). R. Gopalakrishnan and M. Veerappa, for the respondents (in all the appeals). The Judgment of the Court was delivered by Sikri, C. J.-Seven writ petitions were filed in the Mysore High Court under art. 226 of the Constitution challenging the validity of the Mysore Land Revenue (Surcharge) Act, 1961-Mysore Act XIII of 1961-, as amended by Mysore Acts 1 and 31 of 1963, as being ultra vires the Constitution. Some of the petitioners were from South Kanara District, and some from Bellary. District, which were part of the Madras State prior to the reorganisation of States. Some petitioners were from the Karnatak area of the then Bombay State. The High Court held that the Acts were within the competence of the Mysore legislature and did not violate Arts. 14, 19 or 31 of the Constitution. Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 2 There are six appeals before us but the learned counsel for the appellant gave us facts relating to writ petition arising from South Kanara district only. It is common ground that if the High Court judgment on the writ petition arising from South Kanara district is upheld, the other appeals must also fail. In writ petition No. 1137 of 1963, which is concerned with lands in South Kanara district, the facts in brief are these. The petitioner mutt, which is appellant before us, owned immovable properties in the district of South Kanara and was paying an assessment to the Government approximately of about Rs. 8,000/- per annum. In respect of these lands survey and settlement were introduced from 1902 to 1904 and classified into three major classes of lands, viz., dry, wet and garden. The settlement was for a period of 30 years and the wet lands were further classified into sub-classes. Under the terms of the Ryotwari settlement governing the district the revenue assessment rates for the different classes of lands were fixed for a period of 30 years and they could not be varied during that period. In 1934, after the said period of 30 years, by notification dated April 20, 1934, the rates of assessment of garden and wet lands were revised and increased uniformly by 12 1/2 per cent on the existing rates. Under the settlement of 1934 it was an express term and condition that there was to be no increment of assessment during the period of 30 years of the settlement of any assessment. The Madras Legislature levied a surcharge on these lands in 1954, and again in 1955, but by the time anything could be done under the Madras Land Revenue (Surcharge) Act, 1954 and the Madras Land Revenue (Additional Surcharge) Act, 1955, the district of South Kanara with the exception of Kasaragod Taluk became integrated with Mysore and other areas and formed the new State. By virtue of s. 119 of the States Reorganisation Act the lands continued to pay land revenue under the existing law, but the new state enacted Mysore Act No. XIII of 1961 called the Mysore Land Revenue (Surcharge Act, 1961, which came into force on April 1, 1961. Under this Act a surcharge on the land revenue at the rate of 15. np. on every rupee of land revenue was levied and this was payable by every landholder liable to pay a sum exceeding Rs. 20 as land revenue. Section 3 (2) provided for an exemption to merged territories or merged areas within the Bombay Area, or within the Hyderabad area, if on such land the land revenue payable had not been fixed by a revenue survey and settlement made under the Bombay Land Revenue Code, 1879, or the Hyderabad Land Revenue Act, 1318 Fasli, and the land revenue payable after remission, if any, was equal to ,or more than the land revenue and the surcharge under sub-s. (1) payable on similar lands in the nearest neighbouring villages to which the revenue survey and settlement had been introduced. Another Act, called the Mysore Land Revenue (Surcharge) (Amendment) Act, 1962, was enacted and it ,came into force from April 1, 1962. Under this Act the surcharge for the two years, viz., 1962-63 and 1963-64 was raised to 100 per cent of the land revenue in. the case of wet and garden lands and 75 per cent of the land revenue in respect of such dry lands. Section 5 of the Surcharge Act of 1961 provided for the surcharge being treated as land revenue and being recovered as such. Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 3 Before the High Court the acts were challenged on four grounds : (1) The Mysore Legislature had no legislative competence to enact the Mysore Act No. 13 of 1961 or the amending Act; (2) Under any circumstances, the Legislature had no competence to levy additional land revenue if the levy in question was considered as land revenue during the period the settlement was in force; (3) The impugned Act was ultra-vires art. 19 (1) (f)and art. 31 of the Constitution; and (4) The levy in question was hit by art. 14 of the Constitution as the same was discriminatory in character. Before us the learned counsel for the appellant has confined his attack on the first and the fourth grounds. The High Court held that the so-called land revenue surcharge was but an additional imposition of land revenue' or a land tax and fell either within Entry 45 or Entry 49 of the State List. It seems to us that the surcharge fell squarely within Entry 45. The legislation is but an enhancement of the land revenue by imposition of surcharge and it cannot be called a tax on land-revenue, as contended by the learned counsel for the appellant. It is a common practice among the Indian Legislatures to impose surcharge on existing tax. Even art. 271. of the Constitution speaks of a. surcharge for the purpose of the Union being levied by way of increase in the duties or taxes mentioned in art.. 269) and art. 270. Section 3 (1) of the Act of 1961 reads: "3(1)-Notwithstanding anything contained in any contract, grant or other instrument, or in the Mysore Land Revenue Code, 1888 (Mysore Act IV of 1888) or any other corresponding law or orders having the force of law in any area of the State:- (a) Every landholder liable to pay a sum exceeding twenty rupees for a revenue year to the Government in respect of all lands held by him shall pay for every revenue year surcharge at the rate of fifteen naye paise on every rupee of the land revenue payable by him; and (b) where the term for which the assessment of land revenue on any land fixed under the Mysore Land Revenue Code, 1888 (Mysore Act IV of 1888) or under any corresponding law or order in. force in any area of the State has expired, every such landholder shall pay for every revenue year an additional surcharge at the rate of twenty naye paise on every rupee of the land revenue on such land until the land revenue fixed at the next revenue survey and settlement on such land becomes payable." It seems to us that the Act clearly levies land revenue although it is by way of surcharge on the existing land revenue. If this is so, the fact that the surcharge was raised to 1 00 % of the 1-and revenue on the wet and garden land and 75 % of the land revenue in respect of dry lands, subject to some minor exceptions, does not change the nature of the imposition. We may mention that the Madras High Court took the same view in C. Y. Rajagopalachariar v.. State of Madras. (1) We agree with the High Court that the Mysore Legislature was competent to enact the Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 4 impugned Acts. The learned counsel challenged the validity of the Acts. under art. 14 of the Constitution on the ground that it was common ground that there was inequality in taxation between the lands comprised in the South Kanara District and the areas in the erstwhile Mysore State. The High Court proceeded on the basis that the land revenue was highest in the Madras area of the State as it was represented to it that in the old Madras. State half of the estimated net produce was taken as land revenue where as in other areas only 1/16th of the gross. produce was taken as land revenue. These facts were not admitted by the State but the High Court assumed those facts for the purpose of the case to be correct. We will also proceed on those assumptions because even assuming facts it cannot be said that there has been any breach of art. 14 of the Constitution. (1) A.I.R. [1960] Mad.543. This Court, in State of Andhra Pradesh v. Nalla Raja Reddy (1), while dealing with the Andhra Pradesh Land A Revenue (Additional Assessment) and Cess Revision Act 22 of 1962 made the following general ,observations "A statutory provision may offend Art. 14 of the Constitution both by finding differences where there are none and by making no difference where there is one. Decided cases laid down two tests to ascertain whether a classification is permissible or not, viz., (i) the classification must be founded ,on. an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group; and (ii) that the differential must have a rational relation to the ,object sought to be achieved by the statute in question. After referring to the decision of the Madras High Court in Rajagopalachariar's (2) case this Court observed : "In the said Madras Acts a surcharge was im- posed in addition to the previous rates and the previous rates had been made on the basis of ryotwari settlements which did not offend Art. 14 of the Constitution and, therefore, a small addition to the said rates could not likewise infringe the said article." Referring to the judgment under appeal in the present case, this Court observed in Nalla Reddy's case as follows: "Nor has the decision of the Mysore High Court in H.H. Vishwasha Thirtha Swamiar or Sri Pajawar Nutt v. The State of Mysore in regard to the Mysore Land Revenue Surcharge Act (1 3 of 196 1) any bearing on the present question. There, as in the Madras Acts, the revenue surcharge levied was an additional imposition of land tax and, therefore, the Mysore High Court held that it did not offend Art. 14 of the (1) [1967] 3 S.C.R. 28, 46-48. Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 5 (2) A.I.R. 1960 Med. 543. Constitution. In holding that Art. 14 was not infringed, the Court said- "We have before us a temporary measure. That is an extremely important circumstance. The State, not unreasonably, proceeded on the basis that a temporary levy could be, made on the basis of existing rates' We can think of no other reasonable basis on which. the levy could have been made. It may be that in the result some areas were taxed more than others. But yet it cannot be said with any justification that there was any hostile discrimination between one area and another." It will be seen that in that case on existing rates based upon scientific data a surcharge was imposed as a temporary measure till a uniform land revenue law was enacted for the whole State." It seems to us that this Court rightly distinguished the two above mentioned cases on good grounds. We have here a temporary measure imposing additional land revenue while resettlement and survey was being done in the entire State. This process necessarily takes a long time. It is stated in the judgment of the High Court that the settlement report was received by the Government only in 1963. In these circumstances it cannot be said that the State acted arbitrarily in imposing a surcharge on land revenue which was being levied under the existing settlements and acts. Reorganisation of the State is an important factor in considering art. 14 and existing laws or any temporary laws that may be made because of reorganisation. This Court, in State of Madhya Pradesh v. Bhopal Sugar Industries Ltd. (1) observed: "Continuance of the laws of the old region after the reorganisation by S. 119 of the States Reorganisation Act was by itself not discrimi- (1) [1964] 6, S.C.R. 846, 852-53. natory even though it resulted in differential treatment of persons, objects and transactions in the new State, because it was intended to serve a dual purpose-facilitating the early formation of homogeneous units in the larger interest of the Union, and maintaining even, while merging its political identity in the new unit, the distinctive character of each region, till uniformity of laws was secured in those branches in which it was expedient after full enquiry to do so." In reply to the argument that the State had sufficient time and opportunity to decide, whether the continuance of the impugned act in the Bhopal region would be consistent with art. 14 of the Constitution, this Court observed: "It would be impossible to lay down-any definite time-limit within which the State had to make necessary adjustments so as to effectuate the, equality clause of the Constitution." Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 6 The learned counsel contended before us that the State could have easily waited for a few years before levying the additional surcharge while the enquiries were pending. Ibis is a matter not for the Courts but for the State Legislature to determine. If the State needs funds urgently it is for it to levy additional revenue provided it does not infringe art. 14. In view of the facts of this case, the temporary nature of the Acts, and the pendency of the resettlement and survey proceeding we cannot say that the Legislature has acted contrary to the provisions of art. 14. In the result the appeals fail and are dismissed but there will be no order as to costs in these appeals. S. C. Appeals dismissed. Vishwesha Thirtha Swamiari & Ors vs State Of Mysore And Anr on 12 August, 1971 7 | {
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Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 Equivalent citations: 1971 AIR 1804, 1971 SCR 561, AIR 1971 SUPREME COURT 1804, 1972 MAH LJ 137 1971 SCD 706, 1971 SCD 706 Author: A.N. Ray Bench: A.N. Ray, J.M. Shelat PETITIONER: MAHARASHTRA STATE ROAD TRANSPORT CORPORATION Vs. RESPONDENT: MANGRULPIR J T. MOTOR SERVICE (P) LTD., & ORS. DATE OF JUDGMENT29/04/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. SHELAT, J.M. CITATION: 1971 AIR 1804 1971 SCR 561 ACT: Motor Vehicles Act, 1939, ss. 46, 47, 57-Bombay Motor Vehicles Rules, 1959-Applications for permit-Power of Regional Transport Authority to call for additional information and to publish it for objections-Qualifications of applicants to be considered as on date of application for permit or as on date of consideration of applications. HEADNOTE: The respondents were bus operators who applied for renewal of permits. which were to expire on different dates between February 28, 1966 and September 30, 1966. The Maharashtra State Road Transport Corporation (appellant herein) applied for grant of substantive permits in lieu of the renewal applications made by the respondents. On account of litigation the applications of the parties could not be decided for several years. At the meeting of the Regional Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 1 Transport Authority on July 29, 1970 when all the applications were placed for consideration on merits, a preliminary issue was raised on behalf of the appellant to the effect that in view of the unusually long time which had elapsed since the making of the applications in 1965-66 it had become necessary to call for and consider up to date information about all the applicants. The Regional Transport Authority directed all the applicants to file additional information relating to matters covered by columns 10 to 16 and 19 of the prescribed form of the application by August 21, 1970 and directed their publication and invitation of objections thereon. All the applicants including the respondents tendered additional up to date information about their operations in terms of the order of the Regional Transport Authority. The additional information was published and objections thereto were received. The Authority posted all the applications for consideration on merit at a meeting due to be held on November 26, 1970. The respondents meanwhile moved the High Court for an order on the Regional Transport Authority to forbear from taking into account up to date information while judging the merits of the contending operators and to enjoin the said Authority to consider the applications only on the basis of the information originally filed in the year 1965-66. In appeal by special leave to this Court the questions for consideration were (i) whether the Regional Transport Authority had power to call for additional information as it did; (ii) whether such additional information could be ordered to be published; and (iii) whether the Regional Transport Authority was bound to decide the applications on the basis of the qualifications of the applicants originally given therein. HELD: (i) In deciding the question of power of the Regional Transport Authority to call for further information it has to be borne in mind that the Regional Transport Authority shall, in considering an application for permit, have regard among other matters to the interests of the public generally, the advantages to the public of the services to be provided, the adequacy of other passenger transport services, the operation 36-1 S.C. India/71 562 by the applicant of other transport services including those in respect of which applications from him for permits are pending, the benefit to any particular locality or location, likely to be afforded by the service. Therefore in considering public interest if the Regional Transport Authority would find that the answers furnished by any applicant are not full and complete, it will be constricting the exercise of the power of the Regional Transport Authority by denying it authority to ask for additional information for full and detailed consideration of the applications in the interest of the public. No hard and Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 2 fast rule can be laid down as to how the Regional Transport Authority will act or what the limitations of its powers will be. It is a statutory body. It is to exercise its powers in the public interest. Such public interest will have to be considered with regard to particular matters enumerated in s. 47 of the Motor Vehicles Act, 1939 and the particulars of an application are to be judged with reference to ss. 46 and 47 in particular of the Act. Rule 68(6) of the. Bombay Motor Vehicles Rules, 1959 also enables the State or the Regional Transport Authority, as the case may be, to require an applicant to appear before it and to withhold the consideration of the application for the permit until the applicant has so appeared in person if so required or by any recognised agent if so permitted, and until the applicant has furnished such information as may be required by the Regional Transport Authority in connection with the application. The words 'in connection with the application' are important. These words indicate that the Regional Transport Authority will have power to ask for further information. In the absence of the Regional Transport Authority acting under corrupt motive or malafide or for any oblique purpose the discretion which is conferred on the Regional Transport Authority should not be undermined or restricted. (ii) Under s. 57 of the Act the application is to be published in order to enable parties to submit representation in connection therewith. In the present case in view of the fact that information was asked for with regard to specific columns of the application it could not be denied that the information was in connection with the application. It was therefore within the competence of the Regional Transport Authority under s. 57 of the Act to publish the application or the substance thereof in order to enable the persons affected thereby to send their representations to the Regional Transport Authority. It would be in fulfillment of the objects and purposes of the Act and advancement of public interest to ensure that the permit is granted to the most meritorious applicant. Therefore it is all the more necessary to publish additional information in order to have the fullest materials on record for proper assessment and evaluation of the merits and demerits. (iii) The High Court was in error in holding that the Regional Transport Authority would have to consider the respective qualifications of the applicants as on the date of their applications and not as on the date of the actual consideration by the Regional Transport Authority of the applications for the grant of permit. Normally the Regional Transport Authority would consider the applications for the grant of permits within a short time of the submission of the applications. If for any reason a long time has elapsed as in the present appeal, the Regional Transport Authority will have to consider the various matters enumerated in cls. Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 3 (a) to (f) of s. 46 of the Act at the time of the consideration of the applications. The death or insolvency of an applicant since the filing of the application cannot be ignored. The public interest stands in the forefront. 563 Maharashtra State Road Transport Corporation v. Babu Goverdhan Regular Motor Service, & Ors., [1970] 2 S.C.R. 319, Dhani Devi v. Sant Bihari & Ors., [1969] 2 S.C.& 507 and A. S. Jalaluddin v. Balasubramaniar Bits Service (P) Ltd. C.A. No. 161/65 Dt. 31-10-1967, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 117 of 1971. Appeal by special leave from the judgment and order dated November 20, 1970 of the Bombay High Court, Nagpur Bench in Special Civil Application No. 939 of 1970. M. C. Chagla, Santosh Chatterjee and G. S. Chatterjee, for the appellant. B. R. L. Iyengar, M. N. Phadke, Naunit Lal, and Swaranjit Sondhi, for respondents nos. 1 to 6. The Judgment of the Court was delivered by Ray, J.-This is an appeal by special leave from the judgment dated 20 November, 1970 of the Bombay High Court directing the Regional Transport Authority to dispose of the applica- tions for stage carriage permits pending before it without any further delay and without any further adjournment at the instance of any party whatsoever. The principal questions for consideration in this appeal are; first, whether the Regional Transport Authority has power to call for further or additional information from the applicants for the grant of permit at the time of consideration of the applications for the grant of permits under the Motor Vehicles Act, 1939 hereinafter referred to as the Act and secondly whether the Regional Transport Authority will consider the qualifications of the applicants as on the date of the consideration of the applications for grant of permits. The respondents are private operators. They held substan- tive permits on various routes. They applied for renewal of permits which were to expire on different dates between 28th February, 1966 and 30th September, 1966. The appellant applied for grant of substantive permits in lieu of the renewal applications made by the respondents. While those applications were pending before the Regional Transport Authority, Nagpur, some private operators on different routes made an application under Article 226 of the Constitution challenging the validity of the direction of the State Transport Appellate Tribunal to the Regional Transport Authority to allow ;the State Transport Corporation an applicant for the grant of permit to furnish complete information in respect of columns 10, 14 and 15 on the prescribed form of their application for grant of permit. The Nagpur Bench of the Bombay High Court by judgment and order dated 5 October, 1967 quashed the order of the State Transport Appellate Tribunal by holding that the application filed by the State Transport Corporation in that case was defective and the Appellate Committee had no jurisdiction to give the State Transport Corporation a fresh opportunity to furnish additional particulars. An appeal was Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 4 preferred from the judgment of the High Court to this Court being Civil Appeal No. 1297 of 1968 : Maharashtra State Road Transport Corporation v. Babu Goverdhan Regular Motor Service & Ors. This Court on 10 September, 1969 held that the Regional Transport Authority would be acting within its jurisdiction in calling upon an applicant to give more complete details and to give an opportunity to the other parties to state their objections. During the pendency of appeal in the case of Babu Goverdhan Regular Motor Service, the respondents except respondent No. 4 moved the High Court by Writ Petitions in the year 1969 for hearing of their applications for grant of permit. Those Writ Petitions were disposed of by the High Court by consent order dated 20 March, 1969 by which it was agreed that till the decision of this Court in Babu Goverdhan Regular Motor Service, the renewal applications of the respondents and the applications of the appellant in lieu of renewal would be postponed for consideration. After the decision of this Court in Babu Goverdhan Regular Motor Service the Regional Transport Authority held a meeting on 28 October, 1969 to consider the applications. The appellant at that meeting sought permission to Me additional information in the light of the above decision of this Court. The Regional Transport Authority adjourned the proceeding till 27 November, 1969. At the meeting held on 27 November, 1969 respondent No. 6 contended that the Regional Transport Authority must, before proceeding to consider that application, fix the limit of the number of permits under section 47(3) of the Act. This step was to be taken before consideration of the applications for the grant of permit. The Regional Transport Authority postponed the consideration of the applications and fixed the next meeting on 12 December, 1969, so that it would comply with the provisions of section 47(3) of the Act. No meeting could however be held for want of quorum and the next meeting was fixed for 8 January, '1970. (1) [1970] 2 S.C.R. 319. The appellant meanwhile by a letter dated 29 December, 1969 addressed to the Regional Transport Authority gave additio- nal information in respect of columns 10, 11, 12, 14 and 15 of the prescribed form and called upon the Regional Transport Authority to publish the said information to enable the contending or competing operators to file objections. The appellant gave up to date information in order to enable the Regional Transport Authority to judge the respective merits of the applicants which, according to the appellant, could not be done on the basis of information furnished in the application filed in the year 1966. The appellant simultaneously furnished copies of the additional information to the respondents who were the private operators. At the meeting of the Regional Transport Authority on 21 March, 1970 the appellant requested the Regional Transport Authority for publication of the additional information. The Regional Transport Authority acceded to the request and directed the Secretary of the Regional Transport Authority to publish additional information. Some of the respondents who had initially objected to the receipt and publication of additional information ultimately withdrew the objections. At about the time of the application of the information one of the respondents applied to the High Court for an order that the Regional Transport Authority was unduly delaying consideration of the applications on merits. The High Court by an order dated 30 April, 1970 directed the Regional Transport Authority to commence consideration of the applications as expeditiously as possible and within two months from the date of the order. The High Court further observed that the applications for the grant of permits were ripe for hearing and it was not the stage at all for publishing any information which the Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 5 appellant might have lodged with the Regional Transport Authority. The High Court took the view that the Regional Transport Authority might call for additional information but it was not the case there because the appellant of its own sent additional information and it amounted to an amendment of their application which was not permissible under the Act and also in view of the decision of. this Court in Babu Goverdhan Regular Motor Service case(1). The Regional Transport Authority held the meeting on 29 July, 1970 and all the applications were placed for consideration on merit. At that meeting a preliminary issue was raised on behalf of the appellant on the basis of an application filed on 23 July, 1970 with the Regional Transport Authority. to the effect that in view of the unusually long time which had elapsed since the making of the applications in the year 1965-66 for the grant of permits it had become necessary to call for and consider up to (1) [1970] 2 S.C.R. 319. date information about all the applicants. The Regional Transport Authority directed all the applicants to file additional information relating to matters covered by columns 10 to 16 and 19 of the prescribed form of the application by 21 August, 1970 and directed their publication and invitation of objections thereon. All the applicants including the respondents tendered addi- tional up to date information about their operations in terms of the order of the Regional Transport Authority. Additional information was published. Objections thereto were received. The Regional Transport Authority posted all the applications for consideration on merit at a meeting due to be held on 26 November, 1970. The respondents meanwhile moved the High Court for an order on the Regional Transport Authority to forbear from taking into account up to date information while judging the merits of the contending operators and to enjoin the Regional Transport Authority to consider the applications only on the basis of the information originally filed in the year 1965- 66, and not on the basis of any up to date information. The High Court by judgment and order dated 20 November, 1970 directed the Regional Transport Authority to dispose of all the applications at the meeting on 26 November, 1970 and not to postpone consideration and disposal of the applications on any ground whatsoever. This is the judgment out of which the present appeal arises. The High Court held that applications filed under section 46. of the Act could not be permitted to be amended and calling for additional information by the Regional Transport Authority would have the effect of granting amendment of applications. Secondly, the High Court held that the order of the Regional Transport Authority dated 29 July, 1970 virtually permitted amendment of the applications by the private operators as well as by the appellant and this course was contrary to law and was opposed to the previous directions given by the High Court on 30 April, 1970 to the Regional Transport Authority, to dispose of the applications within two months. Thirdly, the High Court held that the Regional Transport Authority had to consider the respective qualifications of the applicants as on the date of their applications and not as on the date of the actual consideration by the Regional Transport Authority. Fourthly, the High Court held that while considering the applications the Regional Transport Authority under section 47 of the Act could call for such specific information as it needed from a particular applicant, but in Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 6 the present case full information from all the applicants had already been called for and was now on the record of the Regional Transport Authority and therefore the Regional Transport Authority should dispose of the applications pending before it for five years without further delay. The first question which falls for consideration is whether the Regional Transport Authority can call for further or additional information from the applicants. The applications for stage carriage permit are to contain particulars mentioned in section 46 of the Act and in clauses (a) to (f) thereof which are as follows "Application for stage carriage permit.-An application for a permit in respect of a service of stage carriages or to use a particular motor vehicle as a stage carriage (in this Chapter referred to as a stage carriage permit) shall, as far as may be, contain the following particulars namely: (a) the route or routes or the area or areas to which the application relates; (b) the number of vehicles it is proposed to operate in relation to each route or area and the type and seating capacity of each such vehicle; (c) the minimum and maximum number of daily trips proposed to be provided in relation to each route or area and the time table of the normal trips; (d) the number of vehicles intended to be kept in reserve to maintain the service and to provide for special occasion; (e) the arrangements intended to be made for the housing and repair of the vehicles, for the comfort and convenience of passengers and for the storage and safe custody of luggage; (f) such other matters as may be prescribed." An application for stage carriage permit is under the Bombay Motor Vehicles Rules 1959 to be made in the form prescribed by rule 80 and described as form P. St. S. A. The prescribed form of the application contains 22 columns. In the present appeal, the columns which are relevant for consideration are columns 10 to 16 and 19. These columns are as follows: "10. Number of vehicles kept in reserve to maintain the service regularly and to provide for special occasion 11. Arrangements made for housing and repair of vehicles (to be given in detail) 12. Arrangements made for convenience and comfort of passengers 13. Arrangements made for storage and safe custody of luggage Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 7 14. Particulars of any stage or contract carriage permit valid in the State, held by the applicant 15. Particulars of any permit held by the applicant in respect of the use of any transport vehicle in any other State 16. Whether any of the permits stated above has been subject of an order of suspension or cancellation in last four years. If so, give details 19. I am at present in possession of vehicles available for use under the permit applied for." Section 47 (1) of the Act which deals with the power of the Regional Transport Authority to grant permits is as follows "Procedure of Regional Transport Authority in considering application for stage carriage permit: (1) A Regional Transport Authority shall, in considering an application for a stage carriage permit, have regard to the fol- lowing matters, namely; (a) the interests of the public generally (b) the advantages to the public of the service to be provided including the saving of time likely to be effected thereby and any convenience arising from journeys not being broken; (c) the adequacy of other passenger transport services operating or likely to operate in the near future, whether by road or other means, between the places to be served ; (d) the benefit to any particular locality or localities likely to be afforded by the service (e) the operation by the applicant of other transport services, including those in respect of which applications from him for permits are pending ; (f) the condition of the roads included in the proposed route or area; and shall also take into consideration any representations made by persons already providing passenger transport facilities by any means along or near the proposed route or area, or by any association representing persons interested in the provision. of road transport facilities recognised in this behalf by the State Government, or by any local authority or police authority within whose jurisdiction any part of the proposed route or area lies Provided that other conditions being equal an application for a stage carriage permit from a cooperative society registered or deemed to have been registered under any enactment in force for the time being shall, as far as may be, be given preference over applications from individual owners." The other section relevant for purposes of grant of permits is section 57 of the Act which deals with the procedure of the Regional Transport Authority in considering applications for stage carriage permit. There are 10 sub-sections of section 57. The two important sub-sections for the purposes of Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 8 the present appeal are section (2) and (3). Sub-section (2) deals with the time for making applications for grant of permits. No dispute arises on that subsection in the present appeal. Sub-s. (3) provides that on receipt of an application for stage carriage permit the Regional Transport Authority shall make the application available for inspection at the office of the Authority and shall publish the applications or the substance thereof in the prescribed manner together with a notice of the date before which representations in connection 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 win be considered. The only question which arises on sub-section (3) of section 57 of the Act in the present appeal is whether further or additional information as may be called for by the Regional Transport Authority will also have to be published. In the case of Babu Goverdhan Regular Motor Service(1) this Court held that the form prescribed by the Rules requiring the furnishing of information on the various particulars and matters referred to therein was valid and section 46 of the Act, Rule 80 of the Bombay Motor Vehicles Rules and the prescribed form would all have to be read together in order to find out the scheme of the Act on the question of power of the Regional Transport Authority to ask for full and complete information. Section 46 of the Act which deals with applications for stage carriage permit enumerates the particulars to be given in the applications. The prescribed form is with reference to these particulars. In the case of Babu Goverdhan Regular Motor Service(1) the State Transport Corporation in filling up columns 14 and 15 with regard to particulars of stage or contract carriage permits held by the applicant in the State and in any other State did not give full particulars of permits and ended by using the word "et cetera". The (1) [1970] 2 S.C.R.319. High Court in the case of Babu Goverdhan Regular Motor Service held that the application of the appellant in that case was invalid' because the application did not give full and complete details in respect of columns 14 and 15. This Court held that the applicant in that case should have given an exhaustive list of the other permits held by it in the State or in any other State and therefore the State authorities could call upon a party to give complete details. The High Court in the present case expressed the view that giving of details would amount to an amendment of the application and that this Court in the case of Babu Goverdhan Regular Motor Service(1) held that there could be no amendment of an application. The decision of this Court is not to that effect. If particulars will be furnished these particulars will become part of the application. The application is to that extent amended. In deciding the question of power of the Regional Transport Authority to call for further information it has to be borne in mind that the Regional Transport Authority shall, in considering an application for permit, have regard among other matters to the interests of the public generally, the advantages to the public of the services to be provided, the adequacy of other passenger transport services, the operation by the applicant of other transport services including those in respect of which applications from him for permits are pending, the benefit to any particular locality or localities likely to be afforded by the service. Therefore in considering public interest if the Regional Transport Authority would find that the answers furnished by any applicant are not full and complete, it will be constricting the exercise of power of the Regional Transport Authority by Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 9 denying it authority to ask for additional information for full and detailed consideration of the applications in the interest of the public. No hard and fast rule can be laid down as to how the Regional Transport Authority will act or what the limitations of their powers will be. It is a statutory body. It is to exercise statutory powers in the public interest. Such public interest would have to be considered with regard to particular matters enumerated in section 47 of the Act and the particulars of an application are to be judged with reference to sections 46 and 47 in particular of the Act. Reference may also be made to rule 68(6) of the Bombay Motor Vehicles Rules which enables the State or the Regional Transport Authority, as the case may be, to require an applicant to appear before it and to withhold the con- sideration of the application for the permit until the applicant has so appeared in person if so required or by any recognised agent if so permitted, and until the applicant has furnished such information as may be required by the Transport Authority in connection with the application. The words "in connection with the application" are important. These words indicate that the Regional, (1) [1970] 2 S.C.R. 319. Transport Authority will have power to ask for further information. In the present case, on 29 July, 1970 the Regional Transport Authority found that the applications which had been submitted in the year 1965-66 would hardly represent the real merits of the operators in the year 1970. The Regional Transport Authority therefore directed the applicants to file additional information relating to matters covered by columns 10 to 16 and 19 of the prescribed form. The further direction was that the information would be filed before 21 August, 1970, and would be published and objections would be called for within 15 days from the date of publication. Counsel for the respondents submitted that the information supplied by the applicants pursuant to the direction of the Regional Transport Authority would be voluminous and the publication would take a long time. Under section 57 of the Act the application is to be published in order to enable parties to submit representation in connection therewith. Publication therefore is a statutory obligation. In view of the fact that information was asked for with regard to specific columns of the application it cannot be denied that the information was in connection with the application. It will therefore be within the competence of the Regional Transport Authority under section 57 of the Act to publish the application or the substance thereof in order to enable the persons affected thereby to send their representations to the Regional Transport Authority. The Regional Transport Authority is entrusted by the statute to consider the applications for the grant of permit. Application are on a printed form. It will be, in the interest of the applicants to furnish all information. If however for any reason, the Regional Transport Authority will require further information, it will depend upon the facts and circumstances of each case as to whether the power is exercised bona fide, and whether the discretion that is conferred on the Regional Transport Authority is exercised properly and judiciously. In the absence of the Regional Transport Authority acting under any corrupt motive or mala fide or for a oblique purpose the discretion which is conferred on the Regional Transport Authority should not be undermined and restricted. The High Court was in error on the second question in hold- ing that the Regional Transport Authority would have to consider the respective qualifications of the applicants as on the date of their applications and not as on the date of the actual consideration by the Regional Transport Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 10 Authority of the applications for the grant of permit. Normally, the Regional Transport Authority would consider the applications for the grant of permits within a short time of the submission of the applications. If for any reason a long time elapses as in the present appeal, the Regional Transport Authority will have to consider the various matters enumerated in clauses (a) to (f) of section 46 of the Act at the time of consideration of the applications for the grant of permits. The public interest stands in the forefront. If the Regional Transport Authority will find that the applicant has become insolvent subsequent to the submission of the application it cannot be expected that the Regional Transport Authority will yet have to grant a permit to the insolvent applicant. In refusing the grant of permit the solvency of the applicant will enter the area of appreciation and assessment of the merits and demerits of the applicant. Again, if an applicant died subsequent to the submission of the application the Regional Transport Authority will have to consider at the time of the grant of permit whether it will allow the heirs. or legal representatives to stand in the shoes of the deceased applicant. This question arose before this Court in Dhani Devi v. Sant Bihari & Ors. (1). This Court held that the Regional Transport Authority would have power to substitute the heirs/successors in place of the deceased applicant in the records of the proceedings and allow the successors to prosecute the application. In the unreported decision of this Court in A. S. Jalaluddin v. Balasubramaniar Bus Service (P) Ltd. and Anr.(2) the Regional Transport Authority refused to grant permit to an applicant on the ground that he did not have either main office or branch office or residence on the route applied for. The applicant preferred an appeal to the State Appellate Tribunal. The Tribunal set aside the order and granted the permit to the appellant. Before the Tribunal the appellant's counsel in that case stated that the applicant had sent to the Regional Transport Authority in advance of the date fixed for consideration of the application for the grant of permit a letter stating that the appellant had secured a branch office on the route in question. The finding of the Tribunal was challenged by writ petitions in the High Court. The learned Single Judge of the High Court held that the finding of the Tribunal could not be challenged but the Division Bench held that the finding of the Tribunal as to possession of branch office and residence on the route by the appellant was without evidence. This Court set aside the Bench decision of the High Court and restored the judgment of the learned Single Judge by holding that there was material before the Tribunal that the appellant had secured a branch office. This decision establishes two propositions: First, that an applicant can furnish additional or further information in connection with the application before the Regional Transport Authority and, secondly that the Regional Transport Authority is competent to (1) [1969] 2 S.C.R.507. (2)C.A.No.161 of 1965 decided on 31-10-1967. act on such information at the time of consideration of the applications for the grant of permits. It will always have to be found out in the facts and circumstances of each case as to the nature of information, the manner of furnishing it in order to decide whether the Regional Transport Authority was entitled to ask for such information and the applicant was entitled to furnish it. If the Regional Transport Authority will have at the date of the consideration of the grant of permit information which may disentitle the applicant by reason of conviction, insolvency, loss of fleet, lack Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 11 of facilities, or any subsequent event of importance as would affect the grant of permit to an applicant, it would be in fulfilment of the objects and purposes of the Act and advancement of public interest to ensure that the permit is granted to the most meritorious applicant. Therefore it is all the more necessary to', publish additional information in order to have the fullest materials on record for proper assessment and evaluation of the merits and demerits. The High Court was wrong in directing the Regional Transport Authority to proceed on the basis of applications submitted in the year 1965-66. The Regional Transport Authority will dispose of the applications on the basis of further information forwarded by the applicants and published by the Regional Transport Authority and representations by parties in connection therewith as expeditiously as possible. The obvious need not be stressed that long time has elapsed and the Regional Transport Authority should proceed in accordance with law without further delay. The appeal is accepted. The judgment of the High Court is set aside. Each party will pay and bear their own costs. G. C. Appeal allowed., Maharashtra State Road Transport ... vs Mangrulpir J T. Motor Service (P) Ltd., & ... on 29 April, 1971 12 | {
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Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 Equivalent citations: 1971 AIR 1725, 1971 SCR 721, AIR 1971 SUPREME COURT 1725, 1971 2 SCJ 607, 1973 MADLW (CRI) 90, 1971 2 ANDHLT 282, 1971 CRI APP R (SC) 336, 1971 KER LT 462, 1971 SCD 750 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, A.N. Ray PETITIONER: FOOD INSPECTOR, CALICUT CORPORATION Vs. RESPONDENT: CHERUKATTIL GOPALAN AND ANR. DATE OF JUDGMENT06/05/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. RAY, A.N. CITATION: 1971 AIR 1725 1971 SCR 721 1971 SCC (2) 322 ACT: Prevention of Food Adulteration Act, 1954 (37 of 1954)- Section 16 (1)(a)(i)-Sale of Food for analysis-To be guilty of offence under section, food need not be intended for sale and person selling need not be a dealer. HEADNOTE: A sale of an article of food for analysis being "sale" within the meaning of s. 2(xiii) of the Prevention of Food Adulteration Act, 1954, an article of food sold to the Food Inspector, if found to be adulterated, the accused will be guilty of an offence punishable under s. 16(1)(a)(i) read with S. 7 of the Act. The article of food purchased by the Food Inspector need not have been taken out from a larger quantity intended for sale and the person from whom the Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 1 article of food has been purchased need not be a dealer as such in that article. [729 G] Where sugar purchased by the Food Inspector from the Respondents' tea stall was found to be adulterated and the Respondents were charged with an offence under s. 16(1) (a) (i) of the Act, the respondents must be held guilty of the offence charged with, even though the sugar purchased was not intended for sale as such and the respondents were not dealers in sugar. Mangaldas Raghavji Ruparel and Anr. v. The State of Maharashtra and Anr., [1965] 2 S.C.R. 849, State of Gujarat v. Asandas Kimmatrai Kevalramanni, A.I.R. 1964 Guj. 191, Municipal Board, Faizabad v. Lal Chand Surajmal and Anr., A.I.R. 1964 All. 199 and The Public Prosecutor v. Palanisami, A.I.R. 1965 Mad. 98, referred to. Public Prosecutor v, Kandasamy Reddiar, A.I.R. 1959 Mad. 33. Explained. In re: Govinda Rao, A.I.R. 1960 Andhra Pradesh 366, disapproved. JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 281 of 1968. Appeal by special leave from the judgment and order dated June 26, 1968 of the Kerala High Court in Criminal Appeal No. 113 of 1968. A. Sreedharan Nambiar, for the appellant. S. K. Mehta, K. L. Mehta, and K. R. Nagaraja, for the respondents. The Judgment of the Court was delivered by Vaidialingam, J.-This appeal, by special leave, by the Food Inspector, Calicut Corporation, is directed against the judgment and order dated June 26, 1968 of the Kerala High Court in 46-I S.C. India/7i Criminal Appeal No. 113 of 1968 confirming the acquittal of the respondents of an offence under S. 16(1)(a)(i) of the Prevention of Food Adulteration Act, 1954 (Act No. 37 of 1954) (hereinafter to be referred to as the Act). The first respondent is the Manager and the second respondent, his wife, are the owner and licencee of a tea stallin the premises No. 4/777 Customs Road, Calicut. They were accused Nos. 1 and 2 respectively. On November 17, 1965 at about 9.45 A.M., the Food Inspector, Calicut Corporation, purchased from the first respondent 600 grams of sugar for a price of 78 paise ,for analysis from the stock of sugar kept in the premises to be used in the preparation of tea sold to customers in the said tea stall run by the second respondent under the licence issued by the Corporation. The quantity of sugar so purchased was sampled as per the rules in the presence of the first accused and the witnesses. One portion of the sample was sent to the Public Analyst for analysis.' The Analyst in his report Ex. P. 3 dated December 28, 1965 has certified that the sample contained artificial sweetner saccharin equivalent to about seven percent of cane sugar and therefore it was adulterated. In fact the analysis is as follows : Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 2 "Ash 0.02 per cent Total sugar 96.00 per cent as cane sugar Saccharin 14.0 mgs. per 100 gms." On the basis of this report the Food Inspector filed on March 21, 1966 a complaint against the two accused in the Court of the District Magistrate, (Judicial), Calicut. After setting out the necessary facts and the report of the Public Analyst, the complaint alleged that the sale of such sub-standard food which was adulterated is prohibited under S. 7 read with item A. 07.01 in appendix to the rules framed under the Act and therefore, it was an offence. There is a reference to the conviction of the first accused on prior occasions. It is not necessary for us now to refer it. Both the accused were charged of an offence under s. 16(1)(a)(i) of the Act for having sold on November 17, 1965 600 gm. of sugar for a price of 78 paise to the Food Inspector from the tea stall and which sugar was found to be adulterated by the Public Analyst. Both the accused pleaded not guilty and even denied having sold sugar to the Food Inspector. The learned District Magistrate recorded the following find- ings : The "sugar" is an article of food as defined under s. 2(v) of the Act ; the Food Inspector purchased sugar from the tea stall of the accused, sampled it then and there and handed over to the first accused. There was a sale as defined in the Act of sugar to the Food Inspector by the first accused; the ,purchase and the sampling by the Food Inspector were done in strict compliance with the provisions of the Act. The report of the Public Analyst establishes that the sugar purchased from ,the tea stall of the accused was adulterated. But in order to hold that the accused have committed an offence, it must be :established that the accused were selling sugar as such in the tea stall, which is not the fact in this case. On the other hand, the accused were selling tea and the sugar was kept only for the purpose of being mixed with tea which was sold to the ,customers and the Food Inspector has clearly admitted that sugar as such is not in the tea stall of the accused. Inasmuch as sugar was not kept for sale by the accused, they are not guilty ;of any offence. In this view, both the accused were acquitted ,under s. 258(1) of the Code of Criminal Procedure. The State filed an appeal before the Kerala High Court challenging the acquittal of the respondents. The High Court agreed with the findings of the District Magistrate that there was a sale as defined in the Act of sugar to the Food Inspector by ,the accused on November 17, 1965 and the said article was adulterated as is established by the report of the Public Analyst. The High Court set before it the principle that the prosecution will have to establish, under such circumstances, that the persons from whom the article of food had been purchased are those "selling those articles as such". The High Court applied the test to find out whether the respondents "are persons selling ,sugar as such" and answered the question in the negative. Agreeing with the findings of the District Magistrate that the sugar in the tea stall of the accused was not kept for sale as such but for being utilised in the preparation of tea which was being sold to the customers, the High Court finally held that the purchase by the Food Inspector of sugar from the respondents cannot be considered to be a purchase under the Act so as to make them liable of the offence with which they were charged. Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 3 Mr. A. S. Nambiar, learned counsel for the appellant, urged that the views of both the High Court as well as the District Magistrate that the respondents are not guilty as they are not dealers in sugar as such, is erroneous, specially after a finding that there has been a sale to the Food Inspector under the Act and the article was found to be adulterated. According to Mr. Nambiar when once the article of food is sold to the Food Inspector for analysis, it is of no consequence that the said ,article was not intended to be sold as such by the accused, as a sale of an article of food under the Act attracts all the consequences that flow from such sale as provided under the Act. On the other hand, Mr. S. K. Mehta, learned counsel for the respondents, urged that in order to make the respondents liable, it must be established that they were dealers in sugar as such. In view of the concurrent findings based upon the admission of the Food Inspector that the accused were not dealers in sugar as such and that the sugar kept by them was intended to be used in the preparation of tea, their acquittal is justified. Before we proceed to deal with these contentions with reference to the provisions of the Act and certain decisions placed before us by both the learned counsel, it is to be recorded that Mr. Nambiar has made it clear that his clients do not want the respondents to be convicted, in case his contentions are accepted. On the other hand, he stated that the Corporation is only anxious to have a decision of this Court on the legal point. We will now refer to some of the material provisions of the Act. Section 2(1) defines the various expressions enumerated therein. In particular it is only necessary to refer to clauses 5, 12, 13 and 14 defining the expressions "food", "prescribe", "sale" and "sample" respectively. They are as follows : "(v) "food" means any article used as food or drink for human consumption other than drugs and water and includes- (a) any article which ordinarily enters into, or is used in the composition or preparation of human food, and (b) any flavouring matter or condiments "(xii) "Prescribed means prescribed by rules made under this Act." (xiii) "sale" with its grammatical variations and cognate ex. pressions, means the sale of any article of food, whether for cash or on credit or by way of exchange and whether by wholesale or retail, for human consumption or use, or for analysis, and includes an agreement for sale, an offer for sale, the exposing for sale or having in possession for sale of any such article and includes also an attempt to sell any such article. Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 4 (xiv) "sample" means a sample of any article of food taken under the provisions of this Act or of any rules made thereunder." There is no controversy that sugar with which we are concerned in this case is an article used as food for human consumption or at any rate it is an article which ordinarily entered into or is used in the composition or preparation of human food. Even according to the respondents the sugar so kept in their tea stall was intended to be used in the preparation of tea which was being sold to the customers. A reference to the definition of 'sale' will also show that a sale of any article of food for analysis comes within that definition. That the sample of food purchased by the Food Inspector in this case satisfies the definition of 'sale' in clause 14 is also beyond controversy. Before we refer to certain other sections, it is necessary to state that ss. 4(2) & 23(1) of the Act give power to the Central Government to make rules in respect of the matters referred to in those sub-sections. By virtue of the powers conferred under ss. 4(2) and 23(1) the Central Government have framed the Prevention of Food Adulteration Rules, 1955 (hereinafter to be referred to as the Rules). Rule 5 provides that the standards of quality of the various articles of food specified in Appendix B to the Rules are as defined in that Appendix. Appendix B deals with the definition and standards of quality. Item A. 07.01 of the appendix deals with cane sugar and enumerates its contents. It- is not necessary for us to deal with the definition of the expression 'adulterated' in s. 2(i) as well as the requirements under item A. 07.01 of the Appendix B of the Rules as there is no challenge to the report of the Public Analyst that the sugar in question was adulterated, as it does not conform to the requirements of the item mentioned above. In fact the High Court ,as well as the District Magistrate have also proceeded on that basis. We will now revert back to the Act. Section 7 prohibits the manufacture, sale etc. of certain articles of food. It is not necessary to refer to the various items enumerated therein. But we will refer only to the main part of s. 7, which is as follows "'Section 7. No person shall himself or by any person on his behalf manufacture for sale" or store, sell or distribute- It will be seen that s. 7 deals not only with manufacture, sale, storing or distributing but also selling. We are particularly emphasising this aspect because it has been missed in this case not only by the two courts but also in some of the decisions, to, which our attention has been drawn. Section 10 deals with the powers of the Food Inspector. Under sub- section 10(i)(a) the Food Inspector has power to take samples of any article of food from any of the persons enumerated in sub-clauses (i) to (iii) Section 12 gives a right even to a purchaser, who is not the Food Inspector of having the article of food analysed by a Public Analyst in accordance with that section. Section 16(1)(a)(i), breach of which is alleged against the respondents is as follows "S. 16(1) If any person- (a) whether by himself or by any other person on his behalf imports into India or manufactures for sale, or stores, sells or distributes any article of food- (i) which is adulterated or misbranded or the sale of which is prohibited by the Food (Health) authority in the interest of public health; Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 5 Here again it is to be noted that any person who sells any article of food which is adulterated shall be punishable in accordance, with that section. The Food Inspector purchased sugar on November 17, 1965, from the tea stall of the respondents on payment of price. The said transaction clearly amounts to a sale under s. 2(xiii) of the Act. From the definition of "sale" already quoted, a sale of an article of food, for analysis is a sale. Under such circumstances it amounts to a sale under the Act as has been laid down by this Court in Mangaldas Raghavji Ruparel and another v. The State of Maharashtra and another(1). It was held in the said decision that there is a special definition of "sale" in s. 2(xiii) of the Act which specifically includes within its ambit the sale for analysis. Mr. Nambiar referred us to certain decisions to the effect that when once there is a sale as defined in the Act of an article of food, it is not necessary to establish that the accused are dealers in that article as such In the decision reported in Municipal Board, Faizabad v. Lal Chand Surajmal and another(2) the accused had a shop where tea was sold and for the purpose of preparing tea, they had stored milk which was a necessary ingredient for the preparation of tea. The Food Inspector took a sample of milk from the tea shop and on analysis it was found' to be adulterated. The question was whether the accused could, be convicted for an offence under s. 16(1)(a)(i) read with s. 7 of the Act. The plea of the accused was that the milk kept in (1)[1965] 2 S.C.R. 894. (2).R. 1964 All. 199. the tea shot) was not intended to be sold as such but was kept for being used in. the preparation of tea. The High Court held that though the accused could not be convicted for storing the milk, which was found to be adulterated as the milk was not stored for sale as such, nevertheless, they did 'sell' milk to the Food Inspector. As the said sale was of adulterated milk, the accused have committed an offence. It is not necessary for us in the case before us to consider whether the expression 'stored? occurring in s. 7 and s. 16 should be interpreted as storage for purposes of sale. The case on hand can be disposed of without deciding that aspect. In the State of Gujarat v. Asandas Kimmatrai Kevalramanni(1) the Food Inspector purchased 'Dahi' (Curd) and on analysis it was found to contain fifty percent fat deficiency. The accused was prosecuted for an offence under s. 16(1)(a)(i) of the Act. The accused pleaded that he had not stored 'Dahi' for purposes of sale but he was keeping it only for the preparation of 'Lachhi' and he further pleaded that the 'Dahi' purchased by the Food Inspector was not taken from a larger quantity which was stored by him for the purpose of sale as 'Dahi'. Here again we are not concerned with the observations of the learned Judge as to what constitutes storing under the Act. But the learned Judge held that it is not necessary that the accused should be a dealer in 'Dahi' as such and it is also not necessary that the 'Dahi' sold to the Food Inspector must have been taken out of a larger quantity intended for sale. It was held that so long as there has been a sale as defined under the Act to the Food Inspector of Dabi and when it was found adulterated, the accused is guilty of the offence. To a similar effect is the decision of The Public Prosecutor v. Palanisami Nadar(2) where it was held that when there has been a sale to the Food Inspector for analysis of an article of, food, which, when found to be adulterated, the accused is guilty of an offence. Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 6 Mr. Mehta, learned counsel for the respondents, referred us to the decisions reported in Food Inspector, Kozhikode v. Punsi Desaie) Narain Das v. State,(1) and Rameshwar Das Radhey Led v. The State,(1). in all those decisions the Court has considered the question as to whether the storage of an article under (1) A.I.R. 1964 Guj. 191, (2) A.I.R. 1965 Mad. 98. (3) A.I.R. 1959 Kerala 190. (4) A.I.R. 1962 All. 82. (5) A.I.R. 1967 Punjab 132. the Act must be for the purpose of sale. We have already indicated that the- said question does not arise for consideration before us and we do not propose to refer to those decisions in detail. But we may point out that the decision in Narain Das v. State(1) has been distinguished by the same Court in Municipal Board Faizabad v. Lal Chand Surajmal and another,(2) to which we have already referred. Mr. Mehta referred us to two decisions; The Public Prosecutor ,V. Kandasamy Reddiar(3) and in Re. Govinda Rao(4) in support of his contention that the article of food purchased by the Food Inspector must be shown to have been kept by the accused for purposes of sale as such. In other words, according to the learned counsel the person "from whom an article of food is purchased by the Food Inspector must be a dealer in such article". In the Public Prosecutor v. Kandasamy Reddiar(3) the findings of the two courts were that the accused was carrying the milk taken from his own buffalo for his own use. This decision does not assist the respondents. But it must be stated that the said decision does not consider the legal effect of a sale to a Food Inspector under the Act and its consequences. But we may point out that under s. 10(1)(a) the Food Inspector has got power to take samples of any article of food from the persons enumerated in sub-clauses (i) to (iii). It will be seen in particular from sub-clause (ii) of s. 10(1)(a) that the Food Inspector can take samples from "any person who is in the course of conveying, delivering or preparing to deliver such article to a purchaser or consignee". In the case before us if the accused had purchased the sugar and it was in the process of being conveyed to be delivered to the accused, the Food Inspector could have taken the sample under s. 10 from any person in the course of conveying the article for delivery. Similarly, even if the sugar had been delivered to the accused, under sub-clause (iii) of s. 10(1)(a), the Food Inspector could have taken the samples from them as consignee of the article. In the In Re. Govinda Rao(4) the accused who was the pro- prietor of a Coffee and Meals Hotel was prosecuted for having sold adulterated ghee to the Food Inspector. The defence was that the, accused was not a dealer in ghee as such and that, the said article was stored in the Hotel for the purpose of being served along with the meals to the customers or for using it in the preparation of other articles of food. The accused was acquitted on the ground that in order to constitute an offence, the (1) A.I.R. 1962 All. 82. (2) A.T.R. 1964 All. 199. (3) A.I.R. 1959 Mad. 333. Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 7 (4) A.I.R. 1960 Andhra Pradesh 366. accused should have been a dealer in ghee,as such and that the _prosecution cannot succeed by the Food Inspector merely taking adulterated ghee which, was stored by the hotel keeper for being ,served with the meals or for preparing other articles of food. We are not inclined to agree with this decision because it .has not considered, the legal effect of a sale to a Food Inspector under the Act. We do not also find any indication in the Act -that when a Food Inspector purchases an article of food from a person, the latter must be a dealer in that article as such. Mr. Mehta, learned counsel for the respondents relied on ss. 12 and 14 to support his argument that the Act contemplates ,.that the person from whom an article of food is purchased must ,be a dealer of that article as such and if that article is found to be adulterated, a person can be found guilty under the Act. If article A is stored for the purpose of being used in the preparation of other articles of food, the fact that article A purchased by the Food Inspector is found to be adulterated will not make the person selling that article liable under the Act. Section 12 give a right to any purchaser, other than the Food Inspector, to have the article purchased by him analysed by the Public Analyst in accordance with that section. Section 14 makes it mandatory on a manufacturer, distributor or dealer of any article of food to give a warranty when he sells an article about the nature and quali ty of that article to the vendor. We are not able to find how these two sections support the propositions enunciated by Mr. Mehta. If a third party had purchased sugar from the tea stall of the accused and if the said purchase constitutes a "sale' under the Act, s. 12 gives such a party to have the article analysed by a Public Analyst. Similarly, s. 14 is also of no assistance to the respondents. To sum up we are in agreement with the decisions reported in Municipal Board, Faizabad v. Lal Chand Surajmal and another(1) and The Public Prosecutor v. Palanisami Nadar(2) to the extent to which they lay down the principle that when there is a sale to the Food Inspector under the Act of an article of food, which is found to be adulterated, the accused will be guilty of an offence punishable under s. 16(1)(a)(i) read with s. 7 of the Act. We further agree that the article of food which has been purchased by the Food Inspector need not have been taken out from a larger quantity intended for sale. We are also of the opinion that the person from whom the article of food has been purchased by the Food Inspector need not be a dealer as such in that article. We are not inclined to agree with the decisions laying the contrary propositions. (1) A.I.R. 1964 All. 199. (2) A.I.R. 1965 Mad. 98. Coming to the case on hand, on the finding of the two courts the sugar in question has been found to be adulterated. The purchase by the Food Inspector from the accused of sugar for purposes of analysis is a sale under s. 2(13) of the. Act. Section 7 prohibits a person from selling adulterated article of food. Similarly, under s. 16(1)(a)(i) any person who sells adulterated food commits an offence and is punishable therein. The sugar which is the commodity before us is food under s. 2(5) Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 8 of the Act. We have already pointed out that sugar by itself' is an article used as food or at any rate it is an article 'which, ordinarily enters into or is used in the composition or preparation of human food. In this case the sale was for analysis and the article was an article of food and in view of the concurrent findings of both the courts that it was adulterated, the respondent& have contravened ss. 7 and 16(1)(a)(i) of the Act. Hence it must be held that the respondents are technically guilty of the offence with which they were charged and they have been wrongly acquitted by the High Court and the District Magistrate. But in view of the fact that the appellant has argued the appeal only as a test case and does not challenge the acquittal of the respondents, we merely set aside the order and judgment of the High Court. But we may make it clear that apart from holding the respondents technically guilty, we are not setting aside the order of acquittal passed in their favour. In the result the judgment and order of the High Court are: set aside and the appeal allowed. We find that on December 12, 1968 when granting special leave this Court had directed the appellant to deposit Rs. 1000/to be used by the respondents for their costs and liberty has been given to the respondents to withdraw the amount to pay fee to, the counsel, in case they engage a counsel. As the respondents have engaged a counsel, they are entitled to withdraw from the court deposit the amount representing the costs incurred by them. and the fee payable to the counsel under the relevant rules. Surplus,, if any, will be refunded to the appellant. K.B.N. Appeal allowed. Food Inspector, Calicut Corporation vs Cherukattil Gopalan And Anr on 6 May, 1971 9 | {
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State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 Equivalent citations: 1971 AIR 2200, 1972 SCR (1) 110, AIR 1971 SUPREME COURT 2200, 1971 LAB. I. C. 1374, 1971 2 LABLJ 331, 1973 2 SCJ 476, 24 FACLR 225, 40 FJR 217, 1972 (1) SCR 110 Author: G.K. Mitter Bench: G.K. Mitter, C.A. Vaidyialingam, P. Jaganmohan Reddy PETITIONER: STATE BANK OF BIKANER & JAIPUR Vs. RESPONDENT: SHRI HARI HAR NATH BHARGAVA DATE OF JUDGMENT11/08/1971 BENCH: MITTER, G.K. BENCH: MITTER, G.K. VAIDYIALINGAM, C.A. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 2200 1972 SCR (1) 110 1971 SCC (2) 591 ACT: Industrial Disputes Act, 1947, s. 33C(2)-Sastry Award-Power of Attorney entrusting supervisory work-If entitled to supervisory allowance for period when not called upon to discharge supervisory functions. HEADNOTE: The respondent, a clerk of the appellant bank, was entrusted with supervisory work and a general power of Attorney was executed in his favour to endorse Hundies cheques, warranty, Railway receipts, pension bills and other negotiable and mercantile instruments and to prosecute, defend, answer and oppose any suit etc. on behalf of the appellant bank. The respondent filed an application before the Labour Court, State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 1 Rajasthan under s. 33C (2) of the Industrial Disputes Act, praying for computation of special allowance under the Sastri Award, on the ground that he was discharging supervisory duties. The Labour Court, allowed supervisory allowance of Rs. 40 p.m. with consequential benefits. In appeal to this Court the appellant bank ,contended that since the respondent was not called upon to perform the functions enumerated in the power of attorney, he is not entitled to any special allowance. Dismissing the appeal. HELD : (i) The payment of a special allowance was called for when an employee discharged duties of a supervisory nature or was accorded the status of a person competent to discharge functions of a supervisory character. [115d] (ii) Since the Management by the power of Attorney, had placed the respondent in a category of persons with responsibility and entrusted him with functions of a supervisory character and the employee was to discharge that responsibility, he was entitled to supervisory allowance no matter, whether he was actually called upon to discharge such functions or not for a certain period of time. [1 15F, 11 6B] State Bank of' Hyderabad v. V. A. Bhinde, [1969] 2 L. L. J. 713, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil appeal No. 1923 of 1966. Appeal by special leave from the order dated February 14, 1966 of the Central Govt. Labour Court, Rajasthan, Jaipur in Misc. Application No. CLC-4 of 1964. G. L. Sanghi and P.M. Tiwari for the appellant. M. K Ramamurthi, J. Ramamurthi and Vineet Kumar, for the respondent. The Judgment of the Court was delivered by Mitter, J. This appeal by special leave is from an order of the Central Government Labour Court, Rajasthan passed on February 14, 1966 on an application under S. 33-C (2) of the Industrial Disputes Act filed by the respondent, Hari Har Nath Bhargava, holding that the latter was entitled to supervisory allowance under paragraph 164 (b) (9) of the Sastry Award even for the period when the latter was not actually performing supervisory duties. The facts in this case may be shortly stated. The respondent was appointed a clerk by the State Bank of Jaipur in 1949. He was transferred to Kota in the year 1952. He was entrusted with supervisory work from 6th April, 1954. The bank executed a power-of-attorney in his favour on May 31, 1954 in pursuance of a resolution of its Board of Directors passed on 20th May, 1954. He was transferred from Kota to Jaipur on July 12, 1955. On December 27, 1955 he was posted at Sikar where he had to perform supervisory duties. On January 1, 1956 he was promoted to the cadre of junior officers of State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 2 the bank. On March 31, 1964 the respondent filed an application before the Central Government Labour Court, Rajasthan under S. 33-C (2) praying for computation of special allowance under what is known as the Sastry Award on the ground that he had been discharging supervisory duties from 6th April, 1954 to 1st January, 1956. By this time the Bank of Jaipur had amalgamated with the Bank of Bikaner and the amalgamated bank, the appellant before us, came to be known as the State Bank of Bikaner and Jaipur. The execution of the power of attorney dated 29th May, 1954 was admitted but the appellant denied "that the duties entrusted to the respondent constituted performance by him of any supervisory nature of work". A point was also taken that although no period of limitation is laid down by any statute with regard to applications under S. 33-C of the Act the respondent's claim being a stale one should not be entertained. The appellant amended its written statement in 1965 wherein it was stated that the respondent was only required to perform the functions enumerated in the power of attorney as and when so directed by the bank. As a matter of fact, he had been entrusted with supervisory duties from 6th April, 1954 to 12th July, 1955 and thereafter from 27th December, 1955 to 6th January, 1956. The respondent was examined before the Labour Court where he said that he was "the second signatory at Kota during the period, April 1954 to middle of July 1955". At the Jaipur branch where he was transferred, there were many signatories above him, while at Sikar there was only another such signatory and he was the second officer. Obviously what he meant by the word "signatory" was a person authorised by the bank to discharge the functions covered by the power of attorney. The relevant portion of the said power of attorney read "The Bank do here by nominate constitute and appoint Shree Hari Har Nath Bhargava in the service of the said bank at Kota to be the true and lawful attorney of the said bank at its registered office at Jaipur aforesaid or at any other place or places in India where the said bank may have or establish branches or agencies and to which he may from time to time or at any time be appointed by the said bank as Branch Manager, Agent, Sub-Agent, Accountant, or in any capacity whatever for and in the name of and on behalf of the said bank to do, transact jointly with Secretary, Manager, Sub-Manager etc. the matters and things mentioned thereafter." The matters mentioned included the endorsement of "hundies, drafts, cheques, warrants, railway receipts, pension bills and other negotiable and mercantile instruments and to commence, prosecute, enforce, defend, answer and oppose any suit or other legal proceedings and demands touching any matters in which the bank was or may thereafter be interested or concerned." It is worthy of note that after the execution of the power of attorney the respondent was empowered to, discharge functions which could only be described as. supervisory in nature and unless there was a command or direction that he should not act thereon or unless the power of attorney was cancelled his authority, to act in a supervisory capacity would continue in force. State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 3 The Sastry Award is not on record in extenso but paragraph 164 thereof quoted by the Labour Court shows; that certain categories of employees were to be considered as fit for special allowances. These included inter alia stenographers, cashiers (other than routine clerks), supervisors, clerks-in-charge, departmental-in-charges and head clerks. The award noted that although scales of basic pay and dearness allowance for clerical and subordinate staffs had been laid down for doing ordinary duties, there were certain posts even in these grades for which an incumbent required special qualifications or skill for the efficient discharge of the duties assigned and an extra payment in such cases was necessary by way of, recognition of and compensation for the skill or responsibility. The award further noted that : "Having regard to the numerous banks of varying sizes and resources, it is not possible to have one general pattern of allowances for such special types of work....... It is neither easy nor desirable to bring them all into one fairly general rule regardless of the bank's past practice or present capacity." Paragraph 162 of the award shows that there were three, ways in which this extra payment might be provided for (1) The employee might be given additional increments in the same scale. (2) He might be paid a lump-sum allowance in addition to his other emoluments. This was said to have the advantage of carrying a man even beyond the usual maximum limit. (3) He might be given a higher scale leading up to a higher maximum. According to the award it was on the whole better to adopt either the first or the second method or sometimes even a combination of both. According to the Labour Court the underlying idea behind the said award was that when one general scale for clerical service had been provided in the award, it was thought just and proper that persons with special qualifications or skill required for discharging work carrying with it greater responsibility than the usual work should definitely get higher emoluments than the ordinary workmen. The Labour Court said that "this did not mean that the person of the same qualifications and skill who had been granted the powers of attorney by the bank should be allowed special allowance only for any particular period unless a man was temporarily appointed to do supervisory work". In the result, the Labour Court allowed the respondent supervisory allowance at Rs. 40 p.m. with ,effect from 6th April, 1954 to 31st December, 1955 with, consequential benefits. It is to be noted however that although a point had been taken in the written statement of the bank about the delay in the filling of the application under S. 33-C it had not been pressed before the Labour Court. Mr. Sanghi appearing for the appellant was prepared to concede that so far as the periods 6th April, 1954 to 12th July, 1955 and 27th December, 1955 to 31st December, 1955 were concerned he was not contesting the claim. But in so far as the period 13th July, 1955 to 27th December, 1955 was concerned, his client was pressing the appeal as a matter of principle as this would constitute a test case by which other similar cases might fall to be decided. This Court had to deal with a case where an identical question arose. In State Bank of Hyderabad v. V. A. Bhide (1) this Court had to consider State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 4 the claims of the respondents in that appeal for payment of special allowance granted to supervisors under what were known as the Sastry and Desai awards. It was there contended on behalf ,of the appellant bank that in order to claim the supervisory allowance the parties must establish that the main or essential duties entrusted to them and actually discharged by (1)[1969] 2 L.L.J. 713. them were duties and functions of a supervisory nature. This Court considered the Sastry and Desai awards and observed (at p. 727) : "..before a person can claim the supervisory special allowance, he must establish that he has discharged the duties and functions which are similar to 0r the same as the duties or functions assigned to supervisors coming under category 9. This decision [Lloyds Bank Ltd. v. Panna Lal Gupta and others (1)] also makes it clear that in deciding the status of an employee claiming the special allowance, the designation of the employee is not decisive and what determines the status is a consideration of the nature of the duties and functions assigned to the employee concerned." In our view the payment of a special allowance is called for when an employee discharges duties of a supervisory nature or is accorded the status of a person competent to discharge functions of a supervisory character. If no power of attorney is execute& as in this case but in fact the employee is asked to render services of a supervisory character and the employee does such work at the request of the bank, he becomes entailed to the allowance. Once however a power of attorney giving the wide powers of agency as was done in this case is executed, it should be held that the management had placed him in a category of persons with responsibility and the employee was to discharge the responsibility without any further request in that behalf. It may be that the initial giving of power of attorney was necessitated by the fact that at Kota there was only one officer besides the respondent who could discharge duties like endorsing hundies, drafts etc. and it became necessary for the bank to have a second officer who could carry on this kind of work. But the power of attorney does not show that the bank thought it necessary to-clothe the respondent with the said powers only for discharging his duties when he was at Kota. The power of attorney was operative at any branch of the bank irrespective of the capacity which might be occupied by the respondent at a particular point of time. It may be (1) [1961] 1 L.L.J. 18. that at Jaipur there was a number of officers superior to the respondent who were empowered to discharge duties mentioned in the power of attorney but this does not necessarily lead to the inference that the respondent lost his responsibility or was denuded of the powers while he was at Jaipur. If he discharged any of the duties men- tioned in the power of attorney the same would be lawful and would be binding on the bank. The fact that he was not actually called upon to discharge such functions did not take away from his responsibility or status of a person ,competent to discharge functions of a supervisory character and we see no reason why he should be deprived of supervisory allowance unless the bank gave him notice that he was not to act on the power of attorney while at Jaipur. We therefore hold that the Labour Court had come to the correct conclusion. State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 5 Mr. Sanghi tried to urge the point that the Labour ,Court should not have entertained the application as being inordinately belated and that even though the Labour Court did not adjudicate on this point it was open- to the bank to urge it before us. We made it clear that we were not going to entertain this plea in view of the fact that although the point had been taken in the written statement of the bank, it was not agitated before the Labour Court and further was not taken even in the special leave petition. In the result, the appeal is dismissed. The order for costs made at the time of the grant of the special leave will stand. S.C. Appeal dismissed. State Bank Of Bikaner & Jaipur vs Shri Hari Har Nath Bhargava on 11 August, 1971 6 | {
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Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 Equivalent citations: 1971 AIR 1756, 1971 SCR 671, AIR 1971 SUPREME COURT 1756 Author: K.S. Hegde Bench: K.S. Hegde, A.N. Grover PETITIONER: SUSHILA DEVI AND ANR. Vs. RESPONDENT: HARI SINGH AND ORS. DATE OF JUDGMENT05/05/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N. CITATION: 1971 AIR 1756 1971 SCR 671 ACT: Contract Act (9 of 1872), s. 56-Frustration-Applicability to leases. HEADNOTE: The appellants were legal representatives of the owner of a village. In January, 1947, the previous owner called for tenders for taking the property on lease for a period of three years. The respondents' tender was accepted and they deposited along with the tender earnest money and security for the payment of rent. The terms of the tender required that the lease deed should be got registered by the lessee and that the lessee alone would be personally responsible for taking possession of the lands. As a result of the partition of India the village became a part of Pakistan. Even before actual partition, because of serious communal troubles, it was not possible for the respondents to go to the village either to cultivate the lands or to collect the rent from those who were Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 1 cultivating. No lease deed- was executed or registered. Under those circumstances the respondents filed a suit claiming a decree for the refund of the amounts deposited and damages. The lower courts held that the contract had become impossible of performance and decreed the suit in part. In appeal to this Court, HELD:(1) The law of frustration as embodied in s. 56 of the Contract Act applies only to a contract that is, an agreement to lease, and does not apply to leases. [674A; 675A-B] Raj Dhruv Dev Chand. v. Harmohinder Singh, [1968] 3 S.C.R. 339, referred to. (2)But in this case there was no lease. Since lease was to be for a period of three years it could have been validly made only under a registered instrument, and therefore, there was only an agreement to lease and not a lease. Such an agreement comes within the scope of s. 56 of the Contract Act. [675D-E] (3)The impossibility contemplated by s. 56 is not confined to something which is not humanly possible. If the performance of a contract becomes impracticable or useless having regard to the object and purpose of the parties then it must be held that the performance of the contract became impossible. But the supervening events should take away the very basis of the contract and it should be of such a character that it strikes at the root of the contract. [676C-D] In the present case, the respondents sought to take on lease the properties with a view to enjoy the properties either by personally cultivating them or by sub-leasing them to others. That object became impossible because of supervening events. Under the terms of the agreement the 672 lessor was not expected to deliver the actual possession of the properties but because of the prevailing circumstances it was impossible for the respondents to either take possession of the properties or even to collect rent from the cultivators. Therefore, the contract had become impossible of performance. [676D-F] Satyabrata Ghose v. Mugneeram Bangur and Co., [1954] S.C.R. 310, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1225 of 1966. Appeal by special leave from the judgment and decree dated December 14, 1964 of the Jammu & Kashmir High Court in Civil First Appeal No. 1 of 1960. Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 2 S. T. Desai and P. C. Bhartari for the appellants. Hardev Singh and Hiral Lal Kapoor, for respondents Nos. 12A to 12C. The Judgment of the Court was delivered by Hegde, J.-The appellants are the legal representatives of Dewnani Vidya Wati. The said Vidya Wati was the owner of the village known as Kotli Delbagh Rai in Tehsil Gujranwalla. It appears that she used to give the lands in that village on lease for a term of years by calling for tenders and accepting the highest tender. In about January 1947, she published a notice inviting tenders from interested persons for taking those lands on lease for a period of three years beginning from kharif 1947 to Rabi 1950. The tenders had to be submitted before January 1, 1947. Clause (3) of the tender notice stated that "the terms of lease can be perused in the Dewan estates office Jammu before filing of the tenders. No excuse of ignorance as to the time will be entertained after the acceptance of the lease." A note containing the terms on which the lands would be, leased was exhibited for the information of the tenderers in the office of the lessor. For our present purpose the only terms that are relevant are those contained in Clauses 4 and 5 of the note. Clause 4 reads : "According to the terms of the tender, the lessee shall be the essence of contract. In case the lessee is 15 days from the date of the acceptance of. the lease. The expenses of the completion and Registration of the deed shall be borne by the lessee. The period of 15 days fixed for the completion and registration of the lease deed shall be the essence of contract. In case the lessee is negligent to get the lease deed registered, the lease shall stand cancelled. The earnest money and the security, shall also be forfeited. A fresh tender for the lands shall be called for and any loss caused in this connection shall be home by the lessee." Clause 5 says "The lessee shall, be personally responsible to get the possession of the lands under Patta after the registration of lease deed. On getting the possession of the land the lessee shall get the counter part of the lease deed executed from his cultivators and deposit the same in the estates office. And shall furnish a certificate for any part of land which he keeps for his self-cultivation. He shall inform and deposit fresh counter lease deed in case of any change in his cultivators and shall get a written receipt from the Manager for the same." The respondents tendered in response to the notice calling for tenders. Their tender was accepted. Alongwith the tender they deposited a sum of Rs. 1,000 as earnest money. Later on they deposited a sum of Rs. 34,000 as security for the payment of rent. No lease was executed or registered. From the material on record, it is that possible to find Out as to who was responsible for the non-execution of the lease. But that aspect is not material for our present purpose. The landlord has not sought to cancel the contract. The agreement to lease continued to be in force even after the period within which the lease deed had to be registered. Tehsil Gujiranwalla became a part of Pakistan as a result of partition of India on August 15, 1947. Even before the partition Vidya Wati as well as the respondents had migrated to India because of the communal disturbances. Considerable evidence was led in the case to establish that even before the Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 3 actual partition of India took place, because of the serious communal troubles, it was not possible for the respondents to go to Gujranwalla either to cultivate the lands or even to collect the rent from those who were cultivating the lands. Under those circumstances the respondents called upon Vidya Wati to refund the, amount deposited as security for the payment of rent as well as to pay them a sum of Rs. 2,000 as damages. She declined to comply with that demand. Thereafter they filed the suit from which this appeal arises claiming a decree for Rs. 36,000, Rs. 34,000 as refund of the amount deposited and Rs. 2,000 as damages. Vidya Wati 43--1 S.C.India/71 resisted the suit on various grounds. She pleaded that she had done all that she was expected to do under the contract. Therefore the claim made against her was not sustainable. According to her the lands sought to be leased were in the possession of the actual cultivators ; she was not required to evict those cultivators and deliver physical possession to the respondents. She was only required to deliver the landlord's possession of the lands proposed to be leased. According to her she had given to the respondents such possession as she could have given under the circumstances. She further pleaded that the doctrine of frustration is not applicable to leases. In addition she pleaded that the suit was barred by limitation. She also contended that under the contract she was entitled to forfeit the amount deposited as security. At the trial most of the contentions advanced by Vidya Wati were given up. The only issue on which the parties went to trial was whether the contract was frustrated because of the supervening circumstances mentioned earlier. The trial court rejecting the contention of the plaintiffs came to the conclusion that Vidya Wati was not expected to deliver physical possession of the properties intended to be leased. She had only to give such possession as she had. But at the same time it upheld the contention of the plaintiffs that the agreement to lease was frustrated. In appeal a Division Bench of the High Court of Jammu and Kashmir agreed with the trial court that the contract referred to in the plaint was frustrated because of the supervening circumstances. It opined that the doctrine of frustration applied to leases as well. It further held that under the contract Vidya Wati was expected to deliver actual possession of the property to the plaintiffs and that she had neither delivered physical nor even symbolic possession of the same to the plaintiffs. In the result it affirmed the decision of the trial court. Thereafter this appeal has been brought by special leave. During the pendency of the appeal to the High Court Vidyawati died and the present appellants were brought on record as her legal representatives. The only question that falls for decision in this appeal is whether the contract referred to in the plaint has become void in view of the circumstances established. In other words had the performance of the contract become impossible in view of the prolonged and widespread communal troubles and the long drawn out tension that prevailed between India and Pakistan. The law of frustration is embodied in Section 56 of the Contract Act. That section to the extent material for our present purpose reads "A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful." The conclusion of the Division Bench of the Jammu and Kashmir High Court that Section 56 of the Contract Act applies to leases as well cannot be accepted as correct. Section 56 applies only to a contract. Once a valid lease comes into existence the agreement to lease disappears and its place is Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 4 taken by the lease. It becomes a completed conveyance under which the lessee gets an interest in the property. There is a clear distinction between a completed conveyance and an executory contract. Events which discharge a contract do not invalidate a concluded transfer see Raja Dhruv Dev Chand v. Harmohinder Singh and anr(1). In view of that decision the view taken by some of the High Courts that Section 56 of the Contract Act applies to leases cannot be accepted as correct. Further the English decisions bearing on the point can have no further relevance. But in this case there was no lease. There was only an agreement to lease. As seen earlier, the agreement between the parties was that the properties in question should be leased to the plaintiffs for a period of three years. Such a lease could not have been validly made except under a registered instrument. As seen earlier the contract between the parties provided that the lease deed should be registered within 15 days from the date of the acceptance of the tender. For one reason or the other, the contemplated lease deed was neither executed nor registered. Therefore we have before us only an agreement to lease and not a lease. Such an agreement comes within the scope of Section 56 of the Contract Act. We agree with the trial court that under the terms of agree- ment Vidya Wati was not expected to deliver actual possession of the properties sought to be leased. The contract between the parties provided that "The lessee shall be personally responsible to get the possession of the lands under Patta after the registration of lease deed". In our opinion on this point the conclusion of the appellate court is not sustainable. But in fact as found by the trial court as well as by the appellate court, it was impossible for the plaintiffs to even get into Pakistan. Both the trial court as well as the appellate court have found that because of the prevailing circumstances, it was impossible for the plaintiffs to either to take possession of the properties intended to be leased or even to collect rent (1) [1968] 3 S. C. R. 339. from the cultivators. For that situation the plaintiffs were not responsible in any manner. As observed by this Court in Satyabrata Ghose v. Mugneeram Bangur and Co. and anr (1), the doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening unpossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act. The view that Section 56 applies only to cases of physical impossibility and that where this section is not applicable recourse can be had to the principles of English law on the subject of frustration is not correct. Section 56 of the Indian Contract Act lays down a rule of positive law and 'does not leave the, matter to be determined according to the intention of the parties. The impossibility contemplated by Section 56 of the Contract Act is not confined to something which is not humanly possible., If the performance, of a contract becomes im- practicable or useless having regard to the object and purpose the parties had in view then it must be held that the performance of the contract has become, impossible. But the supervening events Should take &way the basis of the contract and it should be of such a character that it strikes at the root of the contract. From the facts found in this case it is clear that the plaintiffs sought to take On lease the properties in question with a enjoy those properties either by personally cultivating sub-leasing them to others. Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 5 That object became because of the supervening events. Further the terms of the agreement between the parties relating to taking possession of the properties also become impossible of performance. Therefore we agree with the trial court as well as the appellate court that the contract had become impossible of performance. in the result this appeal fails and the same is dismissed. But taking into consideration the fact that both the plaintiffs as well as the defendant had become the victim of circumstances which were beyond their control, we direct the parties to bear their own costs in this appeal. V. P. S. Appeal dismissed. (1) [1954] S. C. R. 310. Sushila Devi And Anr vs Hari Singh And Ors on 5 May, 1971 6 | {
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Dattatraya vs Rangnath Gopalrao Kawathekar (Dead) By ... on 28 January, 1971 Equivalent citations: AIR1971SC2548, (1972)4SCC181, AIR 1971 SUPREME COURT 2548, 1972 4 SCC 181 1971 SCD 366, 1971 SCD 366 Author: K.S. Hegde Bench: A.N. Grover, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. Defendant No. 2 in the suit from which this appeal arises is the appellant before this Court. The plaintiffs sued for the possession of the suit properties on the basis of their title. Their case was that defendant No. 1 Dagaduba, who was the owner of the suit properties sold the same to the plaintiffs on January 12, 1952; but some of the defendants had trespassed on those properties and hence they were constrained to file the suit. The suit was filed on February, 14, 1953. 2. The first defendant in Ms written statement pleaded that the suit properties originally belonged to his family; there was a division in the family between himself and his brother, the second defendant; in that division the suit properties fell to Ms share; thereafter he became the absolute owner of the same and he mortgaged the same to the plaintiffs. But later he changed that version and admitted that he sold the suit properties to the plaintiffs. The second defendant admitted that the suit properties originally belonged to his family. He also admitted that there was a partition in his family but his case was that as a result of that partition the suit properties fell to his share and that he was in possession of the same. He denied that his brother had any right to alienate the suit properties or in fact he had alienated the same. 3. The two primary questions that arose for decision before the trial Court were (1) whether in the partition in the family of defendants 1 and 2, the suit properties fell to the share of the first defendant or the second defendant and (2) whether the first defendant had sold the suit properties to the plaintiffs. The trial Court decided both these questions in favour of the plaintiffs and decreed the plaintiffs suit. In appeal the learned District Judge held that the suit properties belonged to the joint family of defendants 1 and 2 and that it had never been partitioned. He further came to the conclusion that the sale put forward by the plaintiffs has not been established. The High Court reversed the decree of the first appellate Court and restored that of the trial Court. Thereafter this appeal has been brought after obtaining special leave. Dattatraya vs Rangnath Gopalrao Kawathekar (Dead) By ... on 28 January, 1971 1 4. As seen earlier both the first defendant as well as the second defendant had pleaded that there was a partition in the family. Therefore the only question that fell for decision was whether the suit properties fell to the share of the first defendant or the second defendant. There was no basis in the pleadings for the finding of the learned District Judge that the suit properties were the joint family properties of the first and the second defendants. This was entirely & new case made out by the District Judge. The pleadings in the case did not permit the learned District Judge to come to such a conclusion. Hence in our opinion the High Court was justified in reversing that finding of the first appellate Court. An attempt was made before us to justify the finding of the first appellate Court that the suit properties were joint family properties of defendants 1 and 2 by referring to the evidence in the case. We are not satisfied that there is any evidence to support that case. Further a case not pleaded cannot be made out by evidence. 5. Now coming to the question whether the suit properties fell to the share of the first defendant or the second defendant, it was pleaded in the plaint that the second defendant had specifically admitted in a document executed by him on January 12, 1952 that the suit properties were of the exclusive ownership of his brother and that he had no right on the same. In his written statement, the second defendant had pleaded that the deed in question is a forgery and that he had not executed it. The trial Court came to the conclusion that the said deed was executed by the second defendant. The first appellate Court also did not accept the contention of the second defendant that he did not execute that deed. On the other hand, the first appellate Court held that the same was obtained in misrepresentation. No plea of misrepresentation was taken in the written statement. No issue as to whether the said deed was obtained by misrepresentation was raised. Therefore it was not open to the first appellate Court to consider whether the deed in question was invalid on the ground that it was obtained by misrepresentation. The only plea put forward by the second defendant was that the deed was a forgery. Both the trial Court as well as the first appellate Court have rejected that plea. Mr. Sanghi, the learned Counsel for the appellant contended that when the execution of a document is denied the party seeking to prove that document must not only prove that the alleged executant has signed that deed, but he must also prove that the executant had signed the same with the knowledge of its contents. What facts and circumstances have to be established to prove the execution of a document depend on the pleas put forward. If the only plea taken is that the executant has not signed the document and that the document is a forgery, party seeking to prove the execution of a document need not adduce evidence to show that the party who signed the document knew the contents of the document Ordinarily no one is expected to sign a document without knowing its contents but if it is pleaded that the party who signed the document did not know the contents of the document then it may in certain circumstances he necessary for the party seeking to prove the document to place material before the Court to satisfy it that the party who signed the document had the knowledge of its contents. 6. Now we come to the question whether the sale deed put forward by the plaintiffs is true and genuine. As mentioned earlier, the first defendant the alleged executant of the document has admitted its execution. It is said that the sale deed was a registered sale deed. The plaintiffs' case is that they produced that sale deed in a civil Court in a suit filed by them but the civil Court's records were burnt during the police action in Hyderabad. Their further case is that most of the records of the registration office in which the sale deed was registered were also burnt at that time and one of Dattatraya vs Rangnath Gopalrao Kawathekar (Dead) By ... on 28 January, 1971 2 the books that were burnt was that in which the sale deed in question was copied. In support of that case he examined his lawyer who produced the sale deed into civil Court on his behalf. His evidence has been accepted both by the trial Court as well as by the first appellate Court. In Order to prove the destruction of the book maintained in the registration office, wherein copies of the registered deeds were maintained, the plaintiffs examined P.W. 7, Syed Ahmedulla to support that case. He was the Kabala Navis of the registration office in which the sale deed executed by the first defendant in favour of the plaintiff is said to have been registered. The said sale deed is said to have been executed in the year 1335 F. He deposed that the Bahi of 1335 F. had been destroyed in the police action. That evidence of his was not challenged in crossexamination. On the other hand in his crossexamination, it was brought out that many other Bahis pertaining to the other sale deeds were also destroyed. 7. The trial Court accepted his evidence. Curiously enough the first appellate Court thought that the plaintiff should have produced better evidence for the proof of the destruction of the Bahis and the witness in question was not a competent witness to speak to the destruction of the records in question. In our opinion the learned appellate Judge erred in thinking that P.W. 7 was not competent witness to speak to the destruction of the Bahis. P.W. 7 also proved Ex. 1, a copy of Ferist No. 2 giving the extract of a sale deed executed by the first defendant in favour of the plaintiffs. That exhibit reads: An Extract re-registration of Documents. In the Court of the Munsif Tuljapur (Translation of a copy of the Extract in Urdu). Exhibit I S. A. 1106 of 1960. A copy of the Extract (Ferist No. 2) Under Section 80 of the Rules of the Registration concorning the Register No. 1 of 1355F. OFFICE OF THE SUB-REGISTRAR, TALUKA, TULJAPUR. 1. Name of the place where the property is situated Sindphal 2. Property mentioned in the document S. No. Acres Gunthas Rev. Asst. Share 455 2 20 8-0-0 Whole 456 2 19 7-8-0 do 457 2 30 8-8-0 do 458 2 10 7-8-0 do 459 15 37 20-0-0 do 3. Kind of the document Sale deed 4. Name of the executant of document Dagdu s/o Dattatraya 5. Name of the person in whose favour (1) Rangnathrao s/o Gopalrao document is executed. (2) Vasantrao s/o Digambarrao 6. No. of the document 188 7. No. of the page 28-83 8. Volume One of 1355F 9. Date of registration 20 th Khurdad 1355F 8. That exhibit shows the names of the concerned parties, the nature of the document and description of the properties dealt with. It shows that the document executed was a sale deed. The vendor is the first defendant and the vendees are the plaintiffs. The description of the properties shown therein tallies with the suit properties. It is true, as contended by Mr. Sanghi that the nature of the document mentioned therein is not conclusive. But so far as the nature of the document is concerned, both the vendor and the vendee admit that It was a sale deed. Therefore that question Dattatraya vs Rangnath Gopalrao Kawathekar (Dead) By ... on 28 January, 1971 3 does not arise for consideration. We agree with the High Court that the learned District Judge erred In thinking that the secondary evidence afforded by Exh. 1 is not a satisfactory one. 9. The only question that remains for consideration is whether the suit properties fell to the share of the first defendant in the partition that took place between him and the second defendant. On this question, we have the unimpeachable evidence afforded by Exh. 2 executed by the second defendant in favour of the plaintiffs on 12-1-1952. That document styles itself as an agreement English translation of that document reads as follows: Agreement deed executed by Rao-saheb Duttoba Bandgar r/o Sindphal at present Tuljapur 1952 on Shake 1873 'Khar' Name Sawanchere, Miti Poush Sudh 15, in favour of Shri Rangnath Gopalrao Kawthekar and Vasant Digamberrao Kawthekar r/o Kasba Tuljapur. The terms of the agreement are that you both are the absolute owners of the lands bearing Survey Nos. 455, 456, 457, 458, 459 named Thike Nagral, situated at Sindphal which were sold by my elder brother Dugdoba Duttoba Bandgar through Registered sale deed along with the mango trees situated in the said lands and right to use that water of the well as an owner. I agree that I will not interfere or obstruct in your right of possession. You are the owners as per the said registered sale deed and I will accordingly apply to Patel, Patwari of the said village to make necessary entries in the (D) Form (in vernacular). If I will fail to do so you can do it as per terms of this agreement and registered Saledeed. Neither I nor my heirs have any right in it. The sale deed of the said land is registered on 20-7-55. I admit it. You enjoy the land as before so the Agreement Deed Is executed with the consent. Dated 12-1-1952. 10. From this document it Is clear that the second defendant admitted that the suit properties were of the exclusive ownership of the first defendant, his brother and that he had no right in the same. The plaintiffs evidently were put to the necessity of taking this document from the second defendant in view of the destruction of the records referred to earlier. It is clear that the second defendant after executing that document is now trying to resile from the admissions made by him with a view to take advantage of the situation in which the plaintiffs are placed. Mr. Sanghi contended that unless we come to the conclusion that in view of Exh. 2. the appellant is estopped from putting forward his title to the suit properties, Ex. 2 is irrelevant. We are unable to accept this contention. Exh. 2 is relied on by the plaintiffs to prove the admission of the second defendant that the suit properties belonged to his brother and that his brother had sold the same to the plaintiffs. Admission is an important piece of evidence. But it is open to the person who made the admission to prove that those admissions are not true. It was not the case of the appellant that the admissions contained in Ex. 2 are wrong admissions and he made those admissions under some erroneous impression or that they were obtained from him by misrepresentation. His case was that he never executed Ex. 2. We have already rejected that case. Hence the admissions contained in Ex. 2 assume importance. Admission is one thing, estoppel is another. Admission is a piece of evidence but estoppel creates title. Ex. 2 was relied on as an admission and not as an estoppel. We agree with the High Court that Ex. 2 affords satisfactory evidence to prove the first defendant's title to the suit properties. It further proves the alienation effected by the first defendant in favour of the plaintiffs. Dattatraya vs Rangnath Gopalrao Kawathekar (Dead) By ... on 28 January, 1971 4 11. The only other contention advanced on behalf of the plaintiffs is that the alienation put forward in the plaint is an invalid as it contravened the provisions of Agricultural Lands Alienation Act inasmuch as the purchaser did not obtain the sanction of the Collector before purchasing the properties as the first defendant was a shepherd and as such a member of a protected tribe. The trial Court came to the conclusion that the first defendant was not a shepherd and it was not proved that he was a member of a protected tribe. In appeal the learned District Judge was inclined to think that the first defendant was a member of a protected tribe but it left open the issue . relating to the validity of the sale and chose to decide the case on other grounds. In the High Court the plea covered by the afore mentioned issue was not agitated. The High Court did not consider that plea and as such we did not permit Mr. Sanghi to raise that plea in this Court. 12. In the result this appeal fails and the same is dismissed with costs. Dattatraya vs Rangnath Gopalrao Kawathekar (Dead) By ... on 28 January, 1971 5 | {
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Har Prasad And Ors. vs The State Of Madhya Pradesh on 6 April, 1971 Equivalent citations: AIR1971SC1450, 1971CRILJ1135, (1971)3SCC455, AIR 1971 SUPREME COURT 1450 Author: C.A. Vaidialingam Bench: A.N. Ray, C.A. Vaidialingam JUDGMENT C.A. Vaidialingam, J. 1. This appeal, by special leave, by the six appellants is directed against the judgment and order dated May 3, 1967 of the Madhya Pradesh High Court in Criminal Appeal No. 374 of 1964 confirming their conviction for offences under Sections 148, 452, 302 read with Sections 149 and 307 read with Section 149, I.P.C. as well as the sentences imposed for those offences. In view of the sentence of imprisonment for life passed for the offence under Section 302 read with Section 149, the sentences in respect of other offences have been directed to run concurrently. 2. In all fourteen accused, including the appellants were tried by the learned Sessions Judge, the allegations being that all of them formed themselves into an unlawful assembly with the common object of intentionally murdering with dangerous weapons two persons Balmukund and his son Ram Gopal, and of attempting to murder Lal Singh, P.W. 1, son of Balmukund and that they in prosecution of the common object caused the death of the above two persons and also attempted to murder Lal Singh. There were also certain other offences alleged under the Indian Arms Act. 3. The case of the prosecution was as follows: Ram Gopal and Lal Singh were sons of Balmukund. Balmukund and Ram Gopal were notorious gundas who constituted a grave menace to the people of Jaisinagar. The first and the second appellants are brothers; appellants Nos. 4, 5 and 6 are also brothers. All the fourteen accused, including the appellants armed with dangerous weapons like Farsa, guns and Katarnas, on the night of October 30, 1963 formed themselves into an unlawful assembly and came in a body to Commit the murder of Lal Singh, Balmukund and Ram GopaL Lal Singh was sitting in the house of Imrat Joshi and when he was just starting to go to his house, he was obstructed by some of the accused including the appellants Nos. 2, 4, 5 and 6. They were armed with deadly weapons and the second appellant in particular was armed with a pistol. On seeing the said accused approaching him menacingly, Lal Singh raised an alarm and shouted for his brother Ram Gopal to come to his assistance. Ram Gopal, who was at that time sitting in the house of Hari Krishna P.W. 5 immediately came rushing to the place where Lal Singh was. At that time the Har Prasad And Ors. vs The State Of Madhya Pradesh on 6 April, 1971 1 appellants Nos. 1 and 2 fired gun shots. Ram Gopal and Lal. Singh ran into the house of P.W. 5 to take shelter. But all the fourteen accused followed them and attempted to break open the front door of the house of P.W. 5. In the meanwhile some of the accused had gained entrance through the back of the house and all the accused began to attack Lal Singh, Ram Gopal and Balmukund. Appellants Nos. 1 and 2 had pistols, appellant No. 5 had a Farsa and the others had Katarnas in their hands. The first and the second appellants fired their guns towards Ram Gopal and when he fell down, he was given severe blows with Katarnas by some of the other accused including the appellants Nos. 3 and 6. As a result of the injuries sustained, Ram Gopal died on the spot. 4. Lal Singh, who was hiding within the house of P.W. 5 and watching the attack made on his brother, was seen by the accused and he was dealt blows by Katarnas by some of the accused including the 6th appellant. He was also shot at by the first and second appellants and he sustained a gun shot wound in his right thigh. 5. The report of the incident was made by P.W. 2, a neighbour on the same night on the basis that he heard some altercation and the noise of gun firing and that Ram Gopal was crying for help. This report admittedly did not contain any details regarding the incident relating to the attack as P.W. 2 was not an eye witness. The post-mortem certificate issued by P.W. 19 regarding Ram Gopal shows that he had received as many as five injuries. According to the doctor the death was caused due to shock and haemorrhage as a result of severe cutting of large blood vessels. The doctor had also stated that the injuries Nos. 1 and 5 were sufficient in the ordinary course of nature to cause death either individually or collectively. It must be noted that no injury due to gun shot has been spoken to by P.W. 19 regarding Ram Gopal. 6.The post-mortem certificate regarding Balmukund showed that he had received three incised wounds and gun shot injury. One of the injuries had cut the occipital bone and brain. According to the doctor the injury to the occipital bone and brain and the gun shot injury were sufficient in the ordinary course of nature to cause death either individually or collectively. 7. Regarding Lal Singh P.W. 1, Dr. Dutta, P.W. 26, has given wound certificate wherein he has stated that he suffered three injuries. According to the doctor injury No. 2 was likely to cause death and collectively all the three injuries were such that in the ordinary course of nature death may be caused. Ex. P. 78 is the certificate issued by the doctor regarding the injuries found, on Lal Singh. P.W. 26 has not noted any injury on the thigh of Lal Singh. But the doctor in his evidence has stated that as the condition of Lal Singh when he was brought to the hospital was very precarious and intravenous saline injection could not be given, the said injection was given by piercing a needle into his thigh. But the doctor has not referred to any gun shot injury on the thigh in the certificate Ex. P. 78. 8. The prosecution relied on the evidence of Lai Singh, P.W. 1, Benibai P.W. 3 and her husband Hari Krishna P.W. 5. But the main case of the prosecution was sought to be rested on the evidence of P.W. 1. Har Prasad And Ors. vs The State Of Madhya Pradesh on 6 April, 1971 2 9. All the accused pleaded not guilty and they also set up a defence of alibi. This plea of alibi has been concurrently disbelieved by both the Sessions Judge and the High Court. 10. The learned Sessions Judge after a very exhaustive consideration of the evidence has held that the prosecution has not been able to establish that any of the accused was responsible for the death of Balmukund. There is no controversy that Balmukund met with his death due to Injuries received at or about the time when his son Ram Gopal was murdered and P.W. 1 injured. As the evidence relating to the attack by the accused on Balmukund was that of a solitary witness P.W. 4 and as that witness had given contradictory statements, the learned Sessions Judge felt it unsafe to act on that evidence. Therefore, none of the accused has been convicted for the murder of Balmukund. Out of the fourteen accused, the learned Sessions Judge felt considerable doubt regarding the part played by four among them and accordingly acquitted those accused. Ultimately the above six appellants and two others Butti and Babulal were convicted for the offences under Sections 148, 452, 302 read with Section 149 and 307 read with Section 149, I.P.C. But so far as two other accused Purshottam and Balmukund were concerned, the learned Sessions Judge convicted them of an offence under Section 201, I.P.C. and sentenced them to five years rigorous imprisonment. The learned Sessions Judge in spite of there being contradictions in the evidence of R W. 1 accepted that evidence as true regarding the material facts connected with the incident. In fact the learned Judge has felt that as some of the prosecution witnesses were not prepared to stand by the statements made before the committing Court, their evidence before the Sessions Court will have to be treated with great caution. The statements given before the committal Court by P. Ws. 3 and 5 were treated as substantive evidence under Section 288, Cr.P.C. 11. The ten accused who had been convicted including the appellants, challenged their conviction before the High Court. The High Court has acquitted Babulal and Butti giving them the benefit of doubt. Similarly with regard to Purushottam and Balmukund, the High Court while confirming their conviction reduced the sentence to the period already undergone. So far as the appellants are concerned, their conviction, as well as the sentences have been upheld, though, the High Court acquitted the first appellant of the offence under Section 25B of the Indian Arms Act. for which also he was convicted by the Sessions Judge. 12. Mr. Sadhu Singh, learned Counsel for the appellants who appeared as amicus curiae urged that Babulal and Butti had also been convicted by the Sessions Judge for the same offences as the appellants and on the same evidence. But the High Court did not accept the prosecution evidence so far as those two accused were concerned and had acquitted them. Therefore, the case against the appellants also should have been dealt with and treated in the same manner and the High Court has acted erroneously in convicting the appellants alone. The counsel further urged that the conviction of the appellant is almost exclusively based upon the sole testimony of P.W. 1, whose evidence is full of contradictions and inconsistencies on material particulars and as such it was very unsafe to act on such evidence. The counsel quite naturally urged that out of the fourteen accused, four have been acquitted by the trial Court and two by the High Court and in respect of the two others sentence has been reduced. As the evidence against all the accused was common and as the same has not been acted upon so far as the accused who have been acquitted are concerned, the appellants also should get the benefit of doubt in the circumstances. Har Prasad And Ors. vs The State Of Madhya Pradesh on 6 April, 1971 3 13. On the other Mr. I. N. Shroff, learned Counsel for the State pointed out the findings of the Sessions Court as well as the High Court wherein the ,so called contradictions in the evidence of P.W. 1 have been duly noted. He further pointed out that according to the two Courts those contradictions were only on minor matters without affecting the truth of the evidence of P.W. 1 on material particulars. He further pointed out that P.W. 1 sustained very serious injuries and his presence on the spot at the time of the incident could not be doubted. The benefit of doubt, the counsel pointed out, has been given by the High Court to Babulal and Butti because no overt act had been attributed to them either by Lal Singh or P.W. 5 at the earliest occasion. The counsel further pointed out that both the learned Sessions Judge and the High Court have rejected the false plea of alibi set up by the appellants. In these circumstances, Mr. Shroff urged that the conviction of the appellants as well as the sentences passed are both justified. 14. We have been taken through the material evidence, oral and documentary, as also the reasons given by both the learned Sessions Judge and the High Court for accepting the case of the prosecution so far as the appellants are concerned. We are satisfied that the judgment of the High Court calls for no interference. 15. It was not disputed either before the trial Court or the High Court that Earn Gopal met with homicidal death on the night of October 30, 1963 and that Lal Singh P.W. 1 also suffered serious injuries at or about the same time. It has also not been disputed that Ram Gopal met with his death in the house of P.W. 5 and that Lal Singh also sustained the injuries in that house If that is so, it becomes clear that the presence of P. Ws. 1 and 5 at the time when the attack is stated to have taken place is quite probable and true. Added to this P.W. 1 has sustained very serious injuries and he had been treated by the doctor, to whose reports we have already made a reference. It is no doubt true that P.W. 1 has referred to his sustaining gun shot injuries and his brother also being fired by the first and second appellants, who are stated to have been armed with pistols. The post-mortem certificate regarding Ram Gopal and the wound certificate issued to P.W. 1 do not refer to any gun shot injuries. The attempt of the appellants has been to ask the Court that in view of these circumstances, the evidence of P.W. 1 is false. We are not impressed with this contention. This aspect has been adverted to by the High Court. Admittedly Balmukund had gun shot injuries, though there is no-specific evidence as to who caused those injuries. So it is clear that during this incident guns have been used. Therefore, in view of the large number of accused involved in the occurrence, it is quite natural for P.W. 1 to get a bit confused. But gun shots were heard during this incident as is clear from the evidence of P.W. 2, who gave the First information Report. 16. Certain inconsistencies in the statements made by P.W. 1 in Ex. P. 101 and in his evidence before the Sessions Court were pressed before us. Those aspects have been considered by both the Courts and they have come to the conclusion that though there are some discrepancies, they are not such as to affect the truth of the witness regarding the material facts relating to the incident. We do not propose to cover the ground over again excepting to say that we are in agreement with the views expressed by the High Court. 17. The evidence relating to the actual incident and as spoken to by P.W. 1 has been very closely analysed by the High Court and we aspect as correct the approach made in that regard. Har Prasad And Ors. vs The State Of Madhya Pradesh on 6 April, 1971 4 18. Regarding the acquittal by the High Court of Babulal and Butti, it is necessary to clear the ground. Though they Were also charged with some offences as the appellants and convicted by the Sessions Judge, the High Court has acquitted them. The High Court has not disbelieved the evidence of P. Ws. 1 and 5 regarding these two accused. Babulal has been acquitted by the High Court on the ground that P.W. 1 did not refer to any part having been played by him nor to any injury having been inflicted by him to Ram Gopal or to the witness. Similarly, P.W. 5 before the committing Court had omitted to mention Butti as one of those whom he could identify. It is in view of these circumstances that the High Court has given the benefit of doubt to Babulal and Butti and acquitted them. The position, so far as the appellants are concerned, is entirely different. The evidence against them by the witnesses has been substantially consistent and the High Court found no infirmity in that evidence. 19. We have gone through the reasons given by the learned Sessions Judge for acquitting four accused. We find that the case of those acquitted accused stands on a different footing from that of the appellants. Therefore, the reasons given by the trial Court for acquitting those four accused will not assist the appellants in any manner. Similarly, even the reduction of sentence by the High Court regarding the two accused Purushottam and Balmukund, it will be noted that the High Court has upheld as right their conviction by the learned Sessions Judge for an offence under Section 201. I.P.C. The learned Sessions Judge had convicted them to undergo rigorous imprisonment for five years. But the High Court was of the view that the reduction of sentence to the period already undergone will meet the ends of justice. This circumstance again is of no assistance so far as the appellants are concerned. 20. A criticism was made that the trial Court should not have treated as substantive evidence under Section 288, Criminal P. C. the statements made in the committing Court of P. Ws. 3 and 5. This contention need not detain us long. The High Court having due regard to the principles laid down by this Court in Shranappa Mutyappa Halke v. State of Maharashtra has correctly held that the Sessions Judge acted properly in Invoking Section 288, Criminal P. C. and we entirely agree with the reasons given by the High Court. 21. To conclude we are in agreement with the decision of the High Court so far as the appellants are concerned. 22. The appeal fails and is dismissed. Har Prasad And Ors. vs The State Of Madhya Pradesh on 6 April, 1971 5 | {
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Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 Equivalent citations: 1971 AIR 1567, 1971 SCR 329, AIR 1971 SUPREME COURT 1567, 1973 MADLW (CRI) 106, 1973 BLJR 605, (1971) 2 SC CRI R 315, 1971 SCD 590 Author: A.N. Ray Bench: A.N. Ray, C.A. Vaidyialingam PETITIONER: SUKRA MAHTO Vs. RESPONDENT: BASDEO KUMAR MAHTO &. ANR. DATE OF JUDGMENT02/04/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. VAIDYIALINGAM, C.A. CITATION: 1971 AIR 1567 1971 SCR 329 1971 SCC (1) 885 CITATOR INFO : RF 1981 SC1514 (10) ACT: Indian Penal Code, s. 499 Ninth Exception-Charge of defamation To come within Ninth Exception accused must prove that he made statement in good faith or in protection of his own interest or someone else's interest--Ingredients of good faith. HEADNOTE: There was a proceeding under s. 144 of the Criminal Procedure Code between the respondents and the appellant regarding some agricultural land in Bihar. The land was recorded in the names of the two brothers Karma Ahir and Faizu Ahir. The appellant was the grandson of the former. The first respondent and his brother claimed the land as sons of Faizu Ahir by his second wife. Both the parties Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 1 were called upon to show cause. The appellant in showing cause described the first respondent and his brother as illegitimate sons of Faizu Ahir having been born of a concubine. A complaint was filed against the appellant for having made the above defamatory statement. The appellant pleaded not guilty. The trial magistrate held that the statement in question was false and defamatory and convicted the appellant under s. 500 of the Indian Penal Code. The Additional Judicial Commissioner upheld the conviction. The Patna High Court dismissed the appellants application in revision. In appeal before this Court by special leave, the question for consideration was whether the appellant could claim the benefit of the Ninth Exception to s. 499 of the Indian Penal Code. HELD: The ingredients of the Ninth Exception are first that the imputation must be in good faith, secondly the imputation must be for protection of the person making it or of any other person or for the public good. These are all questions of fact. [332D] The person alleging good faith has to establish as a fact that he made enquiry before he made the imputation and he has to give reasons and facts to indicate that he acted with due care and attention and was satisfied that the imputation was true. The proof of the truth of the statement is not an element of the Ninth Exception as of the First Exception to s. 499. In the Ninth Exception the person making the imputation has to substantiate that his enquiry was a attended with due care and attention and he was thus satisfied that the imputation was true. The accent is on the enquiry, care and objective and not subjective satisfaction. [332F-G] Harbhajan Singh v. State of Punjab, [1965] 3 S.C.R. 235 and Chaman Lal v. State of Punjab, A.I.R. 1970 S.C. 1372, relied on. In the present case there was no evidence to show that before making the imputation the appellant made any enquiry in good faith. The appellant had not shown due care and attention before making the imputation. By reason of the findings of fact that the appellant did not act with -are and caution and secondly that the appellant was related to the respondent :and thirdly that no enquiry was made by the appellant, the appellant could not claim good faith. [333C] 330 Just because a proceeding is pending it Will not be open to a person to impute the statements of the nature in the present case. There was no question of title involved. Even if title is involved that by itself will not entitle a person to make a defamatory statement and then take the plea that it was for the protection of interest. Protection of interest of person making the imputation will have to be established by showing that the imputation was itself the protection of interest of the person making it. In the Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 2 present case the question was who was in possession of land. It would not be open to a person to deny or resist possession in proceeding under s. 144 of the Criminal Procedure Code by hurling defamatory invectives and then claim the benefit of protection of interest. [333G] The appeal must accordingly fail. JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 53 of 1968. Appeal by special leave from the judgment and order dated October 30, 1967 of the Patna High Court in Criminal Revision No; 1734 of 1967. Ganpat Rai, for the appellant. D. Goburdhun and Ram Das Chadha, for respondent No.1. D. Goburdhun, for the respondent No. 2. The Judgment of the Court was delivered Ray, J.-This is an appeal by special leave from the Judgment and order of the Patna High Court dated 30 October, 1967 dismissing an application in the criminal revisional jurisdiction against the judgment of the First Additional Judicial Commissioner, Ranchi dated 31 July, 1967 upholding the conviction and sentence passed by the Judicial Magistrate, First Class, Ranchi. The appellant was convicted under section 500 of the Indian Penal Code and sentenced to pay a fine of Rs. 500 and in default to suffer simple imprisonment for three months. There was a proceeding under section-144 of the Criminal Procedure Code between the respondents and the appellant regarding some land in the village Hatma in the district of Ranchi in the State of Bihar. The land was recorded in the names of two brothers Karma Ahir and Faizu Ahir. The appellant is the grandson of Karma Ahir. Faizu Ahir had two sons by his first wife. Both of them died during his lifetime. The respondent and his brother Sahdeo Mahto claimed the land as sons of Faizu Ahir by his second wife. This led to a dispute between the parties. There was a proceeding under section 144 of the Criminal Procedure Code. Both the parties were called upon to show cause. The appellant in showing cause described Basdeo Mahto and his brother Sahdeo Mahto as illegitimate sons of Faizu Ahir having been born of concubine. The prosecution case was that the complainant's brother-in law was present in the court of the Sub-Divisional Officer in the month of November, 1965 when the appellant's lawyer submitted before the Sub Divisional Officer that the respondent and his brother were illegitimate sons of Faizu Ahir having been born of concubine. The complainant then obtained a certified copy of the written statement field by the appellant. Thereafter the complainant filed the complaint. The case of the complainant was that Faizu Ahir had married Mst. Sauni, who was a widow, in Sagai form more than 40 years ago according to the custom prevalent among the Yadav community. She was living with Faizu Ahir as his wedded wife and was treated as such by the community. The appellant and his Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 3 brother were born long after the marriage and were the legitimate sons of Faizu Ahir. The complainant alleged that the appellant made the statements with a view to humilating and defaming the appellant and his brother. The appellant pleaded not guity. His defence was that the statements made in the written statements were true. The appellant further said that he had to disclose this fact as the respondent and his brother dishonestly claimed the property to which they had no right. The findings of fact are these. Faizu Ahir married Sauni in Sagai form. The respondent was the legitimate son of Faizu Ahir. On these findings the Magistrate held that the statements in the written statement were false and defamatory. The appellant was convicted under section 500 of the Indian Penal Code. The First Additional Judicial Commissioner of Chota Nagpur, Ranchi heard the appeal preferred by the appellant and upheld the conviction and confirmed the sentence. The Additional Judicial Commissioner held that the appellant did not lead any oral evidence to show that he acted in good faith. The appellant relied on a certified copy of the deposition of the respondent in case No. GR. 775/65. There the respondent was asked a question in that case as to whether Faizu Ahir had kept a concubine and whether he was the son of that concubine. The respondent replied that he did not know that Faizu Ahir kept a concubine and that he was the son of the concubine. On this evidence of the respondent in case No. GR. 775/65 it was argued on behalf of the appellant before the Judicial Commissioner that the respondent did not categorically deny the suggestion that Faizu Ahir had kept a concubine and that he was the son of the concubine, and, therefore, the appellant did not act out of malice. The Judicial Commissioner held that the entire evidence of the respondent in that case was that Puran and, Jitu were his step, brothers and the answers were sufficient to show that there was a denial of the suggestion that he was the son of the concubine. The answer that the respondent did not know would not mean that he accepted or did not deny the suggestion. The relevant provision in the present case is the Ninth Exception to section 499 of the Indian Penal Code. Section 499 deals with defamation. Section 500 prescribes punishment for defamation. There are nine exceptions to section 499. These nine exceptions are the cases in which there is no defamation. The Ninth Exception covers the present case and is as follows :- "It is not defamation to make an imputation on the character of another provided that the imputation be made in good faith for the protection of the interests of the person making it, or of any other person, or for the public good". The ingredients of the Ninth Exception are first that the imputation must be made in good faith; secondly, the imputation must be for protection of the interest of the person making it or of any other person or for the public good. Good faith is a question of fact. So is protection of the interest of the person making it. Public good is also a question of fact. This Court is Harbhajan Singh v. State of Punjab(1) in dealing with the Ninth Exception to section 499 of the Indian Penal Code said that it would have to be found out whether a person acted with due care, and attention. This Court said there "Simple,belief or actual belief by itself is not enough. The appellant must show that the belief in his impugned statement had a rational basis and was not just a blind simple belief. That is where the element of due care and attention plays an important role". The person alleging good faith has to Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 4 establish as a fact that he made enquiry before he made the imputation and he has to give reasons and facts to indicate that he acted with due care and attention and was satisfied that the imputation was true. The proof of the truth of the statement is not an element of the Ninth Exception as of the First Exception to section 499. In the Ninth Exception the person making the imputation has to substantiate that his enquiry was attended with due care and attention and he was thus satisfied that the imputation was true. The accent is on the enquiry, care and objective and not subjective satisfaction. This Court in Chaman Lal v. State of Punjab(2) dealing with good faith in the Ninth Exception said that "in order to establish (1) [1965] 3 S. C. R. 235. (2) A. I. R. 1970 S. C. 1372. good faith and bonafide it has- to be seen first, the circumstances under which the letter was written or.,,words were Uttered; secondly whether there was anY malice: thirdly, whether the appellant made any enquiry before he made the allegations ; fourthly whether there are reasons to accept the version that he acted' with care and caution and finally whether there is preponderance of probability that the appellant acted in good faith". Judged by these tests laid down in the rulings of this Court the findings of act in the present case are that there is no evidence to show that before making the imputation the appellant had made any enquiry in good faith and the appellant had not shown due care and attention before making the imputation. By reason of the findings of act that the appellant did not act with care and caution and secondly that the appellant was related to the respondent and thirdly that no enquiry was made by the appellant, the appellant could not claim good faith. The second ingredient in the Ninth Exception is that the imputation is to be made for the protection of the interest. The protection of interest contemplated in the Ninth Exception is that communication must be made bonafide upon a subject in which the person making the communication has an interest or duty and the person to whom the communication is made has a corresponding interest or duty. The illustration (a) to the Ninth Exception typifies that idea : "A, a shopkeeper, says to B, who manages his business-"Sell nothing to Z unless he pays you ready money, for I have no opinion of his honesty". A is within the exception, if he has made this imputation on Z in good faith for the protection of his own interests". There was a proceeding under section 144 of the Criminal Procedure Code. Just because a proceeding is pending it will not be open to a person to impute the statements of the nature in the Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 5 present case. There was no question of title involved. Even if title is involved that by itself will not entitle a person to make a dafamtory statement and then take the plea that it was for the protection of interest. Protection of interest of the person making the imputation will have to be established by showing that the imputation was itself the protection of interest of the person making it. In the present case, the question was who was in possession of the land. It would not be open to a person to deny or resist possession in proceeding under section 144 of the Criminal procedure Code by hurling defamatory invectives and then claim the benefit of protection of interest. The High Court was justified in dismissing the revision application and not interfering with the judgment and order of the Judicial Commissioner. The appeal fails and is dismissed. G.C. Appeal dismissed. Sukra Mahto vs Basdeo Kumar Mahto &. Anr on 2 April, 1971 6 | {
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Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 Equivalent citations: 1971 AIR 2074, 1971 SCR (3) 428, AIR 1971 SUPREME COURT 2074, 1971 TAX. L. R. 1350, 80 ITR 467, 1972 (1) ITJ 40, 1971 3 SCR 428, 1972 (1) SCJ 115, 1971 UPTC 313, (1972) 2 S C J 115 Author: K.S. Hegde Bench: K.S. Hegde, J.C. Shah, A.N. Grover PETITIONER: COMMISSIONER OF INCOME-TAX, MADRAS Vs. RESPONDENT: T.S.P.L.P. CHIDAMEBARAM CHETTIAR (DEAD) THROUGHL. Rs. DATE OF JUDGMENT21/01/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. SHAH, J.C. GROVER, A.N. CITATION: 1971 AIR 2074 1971 SCR (3) 428 ACT: Income Tax Act, 1922, s. 34(1) (a) Requirements of-Assessee not disclosing part of money repaid against loan and interest-If undisclosed amount not taxable and to be presumed adjusted against principal-System of accounts maintained by assessee-If relevant in relation to concealed income. HEADNOTE: The assessee's father made various loans to P in 1932. In July, 1932 P executed a mortgage of some of his properties in favour of the assessee's father for a sum of Rs. 2 . 76 lakhs. After the mortgagee had instituted a suit in December, 1940 claiming a sum of Rs. 5.50 lakhs inclusive of principal and interest, a compromise decree was passed in Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 1 October, 1943 for a sum of Rs. 3.50 lakhs in full satisfaction of the mortgagee's claim. When the income-tax assessment proceedings of the assessee for the assessment year 1944 45 as karta of his Hindu Undivided Family were pending, the Income Tax Officer, Trichy, received information from the Income Tax Officer, Erode, that the mortgagor had secretly paid to the mortgagee a sum of Rs. 1.50 lakhs during the year ended on April 1, 1944, and that this was not included in the compromise decree. As the assessee denied receiving this amount and the Assessing Officer had no other material before him, he made a note in the order sheet that the I.T.O., Erode should be asked to give further details, and in the meantime the assessment for 1944-45 should not be held up. On receiving further information, the Assessing Officer came to believe that a sum of Rs. 1.50 lakhs had escaped assessment and after issuing the assessee a notice under s. 34(1) (a), he included the additional sum and taxed him on that basis. The Appellate Assistant Commissioner set aside the order and directed the I.T.O. to re-do the assessment after giving the assessee an opportunity to cross-examine the witnesses on the basis of whose statements he had reached his conclusion. After examination of further witnesses and other evidence, a fresh order of assessment was made on the, assessee under s. 23(3) read with s. 34 and this was affirmed by, the Appellate Assistant Commissioner as well as by the Tribunal. Although the High Court, upon a reference, found that the assessment under s. 34 was valid and the I.T.O. had rightly acted in giving effect to the order of the Appellate Assistant Commissioner to re-do the assessment, it held, purporting to rely on the decision in C.I.T. Bihar and Orissa v. Kameshwar duringthe relevant accounting year was not taxable as the assessee maintainedhis accounts according to the Chetty system and must be presumed to have appropriated the amount towards the principal amount due to the mortgagor. On appeal to this Court by the assessee as well as by the department, HELD : The assessee's appeal must be dismissed and that of the Department allowed; 429 (i)There was no force in the contention that as the Income Tax Officer had before him the information about payment of a sum of Rs. 1.50 lakhs at the time he made the initial assessment and did not choose to act on the information, it was not open to him thereafter to initiate proceedings under s. 34. On the facts found, under assessment due to non-disclosure of material facts was established. At the time he issued notice under s. 34(1) (a) on the basis of the material before him, the Income-tax Officer could have 'formed the necessary belief and stated in the notice that he had formed such belief; the requirements of s. 34(1) (a) were therefore Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 2 fully satisfied. [432 F] Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District 1, Calcutta and anr. [1961] 41, I.T.R. 191; referred to. (ii)The only ground on which the assessment order was set aside by the Appellate Assistant Commissioner was that the assessee had not been given a proper opportunity to put forward his case. He did not hold that the notice under s. 34(1)(a) was invalid. There was therefore no assessee under s. 34(1) (a). [433 D] (iii)The High Court was in error in thinking that the decision of the JudicialCommittee in Kameshwar Singh's case had laid down the rule that whenever any amount is received by a creditor which he has not specifically appropriated either towards the principal or the interest due to him, the taxing authorities should proceed on the basis of the presumption that it has ,been appropriated towards the principal. In the present case it was evident that after secretly receiving the amount of Rs. 1.50 lakhs, the creditor did not enter it in his account-books with a view to evade tax. If he intended to appropriate that amount towards the principal, there was no. need for him not to enter that receipt in his accounts. The fact that the assessee was maintaining the Chetty system of accounts was immaterial on the facts of the case. The system of maintaining accounts is wholly irrelevant because the receipt in question had not been entered in the accounts at all. [437 Al JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 365 and 671 of 1967. Appeals from the judgment and order dated January 6, 1966 of the Madras High Court in Tax Case No. 143 of 1963 (Reference No. 37 of 1963). B Sen, B. D. Sharma and R. N. Sachthey, for appellant (in C.A. No. 365 of 1967) and the respondent (in C A.. No. 671 of 1967)'. T.A. Ramachandran and D. N. Gupta, for the respondents (in C.A. No. 365 of 1967) and the appellants (in C.A No.671 of 1967). The Judgment of the Court was delivered by Hegde J.-The first of these two appeals (both by certificate) viz. that filed by the Commissioner of Income Tax - and the second, that filed by the legal representatives of assessee fails. The facts as found by the Tribunal and set out in the statement of the case, relevant for the purpose of these appeals are as follows : Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 3 The relevant assessment year is 1944-45, corresponding to the accounting year ended on April 12, 1944. The assessee is one Chidambaram Chettiar (since deceased). The father of the assessee Palaniappa Chettiar was a money lender. He had made various advances to one Nallathambi Sakkarai Manradiar, who will hereinafter be referred to as the Pattayagar, a prominent landlord in Coimbatore District, on promissory notes. The total principal advanced by the father of the assessee upto July 6, 1932 amounted to Rs. 1,38,535. The interest on the same came to Rs. 1,34,965. On July 6, 1932, a further advance of Rs. 2500 was made to the Pattayagar and for the amounts due from him, the Pattayagar executed a mortgage of some of his properties in favour of the assessee's father for a sum of Rs. 2,76,000. Till 1938, only a sum of Rs. 13,620 was paid by the mortgagor in part payment of the debt due from him. On December 14, 1940 the mortgagee instituted a suit on the foot of the mortgage bond claiming a sum of Rs. 5,50,573 inclusive of principal and interest. On September 19, 1943, the claim was compromised and on October 5, 1943, a compromise decree was passed for a sum of Rs. 3,50,500 in full satisfaction of the mortgagee's claim. The decree amount was made payable on or before October 1, 1944. The debt under the compromise decree was subsequently discharged. For the assessment year 1944-45, the assessee Chidambaram Chettiar, as karta of his Undivided Hindu Family was assessed under S. 23(3) of the Income Tax Act, 1922 (to be hereinafter referred to as the Act), on February 12, 1946, on a total income of Rs. 78,556 which, on appeal was reduced to Rs. 53,153. When the assessment proceedings of the assessee were pending before the Income-tax Officer, Trichy, that Income-tax Officer received information from the Income-tax Officer, Erode that the mortgagor had paid secretly to the mortgagee a sum of Rs. 1,50,000 during the year ended on April 1, 1944 and that the same was not included in the compromise decree. When the Income-tax Officer asked the assessee about the same, he denied having received any amount secretly. Apart from the information conveyed by the Income tax Officer, Erode, the Assessing Officer had no other material before him to show that any amount had been paid secretly by the mortgagor to the mortgagee. Hence on May 27, 1945, the Income-tax Officer made the following note in the order sheet "It is denied that there was any secret understanding not to show the payment of Rs. 1,50,000. The receipt of this amount is entirely denied.. The Incometax Officer, Erode should be asked to give further details and to ask the Pattayagar to produce evidence of the payment. In any event, this should come up for consideration only in the assessment year 1944-45 as only the excess over Rs. 2,76,000 plus legal expenses can be treated as interest income in the hands of the assessee and so, the assessment for 1944-45 should not be held up pending further investigation." After sometime the Assessing Officer made further enquiry into the information given by the Income-tax Officer, Erode and thereafter he came to believe that a sum of Rs. 1,50,000 had escaped assessment by reason of the omission of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year 1944- Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 4 45. He accordingly issued a notice under s. 34(1)(a) on March 9, 1953. In reply to that notice, the assessee filed a return similar to the one filed by him earlier. He denied having received Rs. 1,50,000 secretly from the mortgagor. The Income-tax Officer did not accept the plea of the assessee. He accordingly included an additional sum of Rs. 1,50,000 to the income of the assessee earlier determined for the assessment year 1944-45 and taxed him on that basis. In appeal, the Appellate Assistant Commissioner set aside the order of the Income-tax Officer and directed the Income- tax Officer to re-do the assessment after giving the assessee an opportunity to cross-examine the parties examined by the Income-tax Officer on the basis of whose statements he had come to the conclusion that a sum of Rs. 1,50,000 had been secretly paid to the mortgagee by the mortgagor. Thereafter the Income-tax Officer further in- quired into the matter; Pattayagar's books of account were got produced to prove that an additional sum of Rs. 1,50,000 had been paid to the assessee. Some witnesses were also examined in the presence of the assessee to prove that fact. After doing so, a fresh order of assessment was made on the assessee under s. 23(3) read with s. 34. His order was affirmed by the Appellate Assistant Commissioner as well as by the Tribunal. At the instance of the assessee, the following three questions were submitted to the High Court under s. 66(1) of the Act. "(1) Whether assessment under section 34 was valid and proper. ? (2) Whether the Income-tax Officer rightly acted in giving effect to the order of the Appellate Assistant Commissioner setting aside the assessment to re-do the same according to law after Living an opportunity to the appellant to place all his cards before the Department ? (3) Whether Rs. 1,50,000 is taxable as income of the year of account ?" The High Court answered the first two questions against the assessee and the third question against the Department. The legal representatives of the assessee are challenging the High Court's ,,decision on the first two questions and the Commissioner is challenging the High Court's decision on the third question. We shall first take up the assessee's appeal. There is hardly any merit in that appeal. It was urged on behalf of the representatives of the assessee that as, even when the original assessment proceedings for the relevant year were before the Income-tax Officer, he had before him the information given by the Incometax Officer, Erode, but yet, he did not choose to act on that information, it was not open to him thereafter to initiate proceedings under s. 34. We are unable to accept this contention. On the facts found by the Tribunal, it is established that the assessee's father had clearly suppressed the receipt of Rs. 1,50,000 from the mortgagor. The assesses had a duty to disclose fully and truly all material facts necessary for his assessment. Herein we are not dealing with. a case coming under s. 34(1)(b). All that we have to see is whether the requirements of s. 34(1)(a) are satisfied. This Court in Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta and anr., (1) ruled that to confer jurisdiction on the Income-tax Officer to take action under S. 34, ( 1 ) (a), two conditions must be satisfied viz. ( 1 ) he has reason to believe that there was under-assessment and Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 5 (2) that he must have reason to believe that the under- assessment has resulted from nondisclosure of material facts. On the facts found, under assessment is established and it is also established that the under assessment was due to non-disclosure of material facts. There can be no doubt that at the time he issued notice under s. 34(1)(a) on the basis of the material before him, the Income-tax Officer could have formed the necessary belief. In the notice issued he says that he had formed that belief. In our opinion the requirements of S. 34(1)(a) are fully satisfied. The fact that there was some vague information before the Income-tax Officer that the assessee's father had secretly received a sum of Rs. 1,50,000 from the mortgagor was by itself not sufficient to bring to tax that amount parti- cularly in view of the fact that the assessee had stoutly denied that fact and the court records did not support that information. It is true that the Income-tax Officer could have made further enquiry into the matter but the fact that he did not make any further enquiry does not take the case out of S. 34(1)(a) particularly when the assessee had failed to place truly and fully all the material 'facts before him. The remark of the Income-tax Officer that "in (1) [1961] 41 I.T.R. 191 any event this (the receipt of Rs. 1,50,000) should come up for consideration only in the assessment year 1944-45 as only the excess over Rs. 2,76,000 plus legal expenses can be treated as interest income in the hands of the assessee and so, the assessment for 1944-45 should not be held up pending further investigation" in the order sheet does not amount to a decision taken by him. It may be noted that those remarks were not made in the order assessing the income of the assessee. It must also be remembered that the Income-tax Officer, at the time he made those remarks was not satisfied about the correctness of the information given by the Income-tax Officer, Erode. Hence those remarks must be treated as casual observations and not a decision taken on the basis of facts found. We see no substance in the contention that the Income-tax Officer did not give effect to the order of the Appellate Assistant Commissioner when the latter asked him to reassess the income of the assessee. The only ground on which the assessment order was set aside by the Appellate Assistant Commissioner was that the assessee had not been given a proper opportunity to put forward his case. The Appellate Assistant Commissioner did not hold that the notice issued by the Income-tax Officer under s. 34(1)(a) was an invalid notice. Therefore there was no need for the Incometax Officer, Trichy to issue a fresh notice to the assessee under s. 34(1)(a) as contended on behalf of the assessee's representatives. All that the Income-tax Officer had to do was to afford proper opportunity to the assessee to show that in fact he had not received the aforementioned sum of Rs. 1,50,000. That opportunity had been given. In view of our above conclusion Civil Appeal No. 671 of 1967 fails and the same is dismiss ed. Now coming to the appeal filed by the Commissioner of Income-tax, the High Court came to the conclusion that the sum of Rs. 1,50,000 received by the assessee during the relevant account year must be presumed to have been appropriated by the assessee towards the principal amount due to the mortgagor and hence the same cannot be considered as an income of the assessee during that year. The assessee was maintaining his accounts in accordance with what is known as Chetty system of accounts. The material on record shows that according to the Chetty system of accounts, the creditor appropriates a receipt first towards the cost of litigation, then towards the principal amount due and the balance towards the arrears of interest. The High Court was of the view that the sum of Rs. 1,50,000 secretly received by the creditor must be deemed to have been kept in suspense. As the debator had not given any direction about the appropriation of that amount it was open to the Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 6 creditor to appropriate the same towards the principal amount and further he must be presumed to have appropriated that amount towards the principal amount before s. 34 proceedings were started against him firstly because of the system of accounts maintained by him and secondly because every one must be deemed to have acted in a manner least disadvantageous to him. In support of this conclusion reliance was placed by the High Court on the decision of the Judicial Committee in The Commissioner of Income-Tax, Bihar and Orissa v. Kameshwar Singh(1). In that case, nature of several receipts by the assessee came up for consideration. For our present purpose we need only refer to two of them. One Damodar Das Burman owed to the assessee in the Fasli year 1332 Rs. 3,09,281. During the currency of the debt the debtor had made regular payments to the assessee over a number of years, the total of which payments was not stated. Those payments were entered in the deposit register maintained by the assessee but no allocation thereof were made as between principal and interest, and no part of those payments were carried to the interest register maintained by the assessee. Consequently no part of these payments was subjected to tax until the Fasli year 1331, in which year for the first time the Income-tax Officer came to know about the deposit register maintained by the assesse,e. In that year, the deposit register showed a receipt of Rs. 38,091 and on this the officer claimed and was paid tax on the footing that it was attributable to interest and not to principal. The result is that against the total interest on the debt, viz. Rs. 3,09,281, no sums had been attributed by the assessee to interest out of the payments made to him by the debtor. But the Income-tax Officer had himself treated the sum of Rs. 38,091 received in the year Fasli 1331 as interest and taxed it accordingly. That left Rs. 2,71,190 as the balance of the total interest on the debt, during its currency towards which balance the assessee made no attributions of interest out of the payments received by him from the debtor during its currency. No tax accordingly had been paid in respect of any of these receipts other than on Rs. 38,091. Therefore the question before the Court was how in those circumstances should be received of Rs. 2,78,000 in the Fasli year 1332 be treated. Dealing with that question the Judicial Committee observed : "Now, where interest is outstanding on a principal sum due and the creditor receives an open payment from the debtor without any appropriation of the payment as between capital and interest, by either debtor or creditor, the presumption is that the payment is attributable in the first instance towards the outstanding interest........ This presumption is no doubt operative primarily in questions between debtor and creditor, but (1) [1933] 2 I.T.R. 94. in their Lordship's view, the Income-= Officer, finding that the assessee received a payment from his debtor of Rs. 2,78,000 in the year Fasli 1332 and that the assessee had not up till then credited himself as having received, any interest receipts to the Revenue Authorities was entitled in the circumstances to treat this sum of Rs. 2,78,000 as applicable to the outstanding interest to the extent of Rs. 2,71,190 and accordingly to treat the payment to that extent as income of the assessee in the year of payment." From the facts noted above, it is clear that what presumption should be drawn in regard to appropriation of an open payment depends on the circumstances of a case. Now we shall proceed to deal with the second receipt namely that from Kumar Ganesh Singh. In the Fasli year 1332 Kumar Ganesh Singh owed the assessee 32 lacs as principal and Rs. 6,09,571 as interest, or a total of Rs. 38,09,571 in all, in respect of an unsecured loan. In that year the assessee and his debtor entered into an arrangement whereby, as the Commissioner stated "the assessee took over Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 7 from the debtor in satisfaction of this amount the following items of property movable. or immovable:- 1. The Kajora Colliery valued atRs.7,37,339/- 2. Shares in different companies valued atRs.94,125/- 3. Bills received by the above brokers (i.e. Ganesh Singh's firm)Rs.48,809,- 4. DecreeRs.1,42,594/- 5. Transfer of loan to the Agra United Co.Rs.10,00,000/- 6. Pronotes and hand-notes (of third parties)S. 7. Hand-notes from Kumar Ganesh SinghRs.17,34,596- Rs. 38,09,569/ The question for decision was whether as a result of the above settlement, it could be said that in the account year the assessee had received a sum of Rs. 6,09,571-due to him as interest. The Judicial Committee came to the conclusion that the first six items mentioned above amounting to Rs. 20,74,973 may perhaps reasonably enough be regarded as the equivalent of cash, but the seventh item of Rs. 17,34,596 consisting of the debtor's own promissory notes, was clearly not the equivalent of cash. A debtor who gives his creditor a promissory note for the sum he owes can in no sense be said to pay his creditor; he merely gives him a document or voucher of debt possessing certain legal attributes. The next question was whether the receipt of Rs. 20,74,973 can be said to include a receipt of interest of Rs. 6,09,571 ? The Judicial Committee answered that question thus : "He (Counsel for the Crown) relied on the already invoked in the case of Damodar Das Burman above, that a creditor is presumed to apply payments received from his debtor towards the extinction of interest claims before capital claims. But the situation which their Lordships are now considering differs materially from that which existed in the case of Damodar Das Burman. In that case, apart from other specialities there was no settlement, but merely an open payment to account. Here there was an arrangement effecting the whole indebetedness whereby certain assets were accepted in part satisfaction and promissory notes were taken for the balance. The basis of the presumption, namely, that it is to the creditor's advantage to attribute payments to interest in the first place, leaving the interest-bearing capital outstanding, is gone. Moreover, if the question were one between Kumar Ganesh Singh and the assessee, i.e.,- between debtor and the creditor, the assessee might up to the last moment appropriate 'the Rs. 20,74,973 to capital account...... Their Lordships have also not omitted to bear in mind the provisions of ss. 60 and 61 of the Indian Contract Act, though these were not relied on in argument as applicable to the case. In the result their Lordships are of opinion that having regard to the nature of the transaction, the assessee is entitled to say that he has accepted the first six items Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 8 in discharge pro tanto of his debtor's capital liability and that the capital debt now stands discharged to that extent. No part of the sum of Rs. 20,74,9 73 accordingly was received by the assessee as taxable income in the year of computation." Here again we notice that the conclusion drawn by the Judicial ,Committee depended on the facts and circumstances before them. Though the factum of settlement of the debt was relied upon as one of the circumstances, for finding out the meaning of appropriation, it was by no means a conclusive circumstance. Evidently their Lordships bore in mind the possibility of the assessee not being able to realise the debts under the hand-notes. Under those circumstances it was advantageous to the assessee to appropriate the money value of the properties received towards, the capital, otherwise there was a possibility of his having to pay income-tax ;on a receipt which ultimately may not prove to be an income. It is under those circumstances their Lordships observed : "that in a question with the revenue the tax-payer is entitled to appropriate payments as between capital and interest in the manner least disadvantageous to himself." In our opinion the High Court was in error in thinking that the decision of the Judicial Committee in Kameshwar Singh's case(1) has laid down a firm rule that whenever an assessee receives a payment and does not appropriate the same either towards the principal or interest, he must be deemed to have appropriated the same towards the principal. The decision in question, in our opinion, does not lay down the rule that whenever any amount is received by a creditor which he has not specifically appropriated either towards the principal or the- interest due to him, the taxing authorities should proceed on the basis of the presumption that it has been appropriated towards the principal. On the facts of that case it was clear that 'it was advantageous to the creditor to appropriate the receipt towards the principal. But turning to the facts of the present case the total amount due to the assessee was over 6 lakhs. Out of that the principal amount was less than 3 lakhs. The compromise decree was for Rs. 3,50,500. The creditor secretly received Rs. 1,50,000/-. He does not enter the same in his account books. Evidently he did not enter the same in his account- books with a view to evade tax. If he intended to appropriate that amount towards the principal, there was no need for him not to enter that receipt in his accounts. Obviously he appropriated the amount towards the interest due to him and that is why he did not enter that receipt in the accounts so as to facilitate evading payment of tax on that amount. The fact that the assessee was maintaining Chetty system of accounts is immaterial on the facts of the case. The system of maintaining accounts is wholly irrele- vant because the receipt in question had not been entered in the account at all. Hence, in our opinion, the High Court erred in answering the third question against the Department. We accordingly allow Civil Appeal No. 365 of 1967 and answer the third question referred to the High Court in favour of the Revenue namely that the receipt of Rs. 1,50,000/- is taxable as income of the year of account. The assessee shall pay the costs of these appeals-hearing fee one set. Civil Appeal 365 of 1967 allowed. Civil Appeal 671 of 1967 dismissed- R.K.P.S. (1) [1933] 2 I.T.R.94. Commissioner Of Income-Tax, Madras vs T.S.P.L.P. Chidamebaram Chettiar ... on 21 January, 1971 9 | {
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Commissioner Of Income-Tax, Gujarat Ii vs Kurban Hussain Ibrahimji Mithiborwala on 2 September, 1971 Equivalent citations: [1971]82ITR821(SC), (1972)4SCC394, 1972(4)UJ65(SC) Bench: A.N. Grover, K.S. Hegde JUDGMENT 1. Civil Appeal No. 1172 of 1971 is by special leave and Civil Appeal No. 1990 of 1968 is by certificate. These two appeals raise the same question for decision. In a reference under Section 66(2) the Tribunal referred to the High Court of Gujarat the following question : Whether on the facts and in the circumstances of the case, there was a material irregularity in the notice issued to the assessee under Section 34 and dated 28th February, 1968 and if so, whether such irregularity vitiated the proceedings taken under the said notice. The High Court answered that question in the affirmative and in favour of the assessee. Aggrieved by that decision, the Commissioner of Income Tax, Gujrat has brought this appeal. 2. The facts of the case as set out in the Statement of case at these : The concerned assessment year is 1949 50, the relevant previous year being S.Y. 2004 ending on November 1, 1948. For that assessment year the assessee was assessed. At the time of that assessment, the assessee pleaded this, his accounts books had been destroyed during the communal riots in Marc 1948. He also denied having any bank account. Some after he made the assessment. The Income-tax Officer came to know that the assessee had been accounts during the relevant accounting year. Hence he sought to comment proceedings under Section 34 of the Indian Income tax Act, 1922. On February 28, 1958 he issued notices both under Section 22(2) as well as under Section 34 of the Act. In his notice under Section 22(2) he mentioned that he w; going to reassess the assessee for the assessment year 1949-50. But in his notification under Section 34 he stated: Whereas I have reason to believe that your income assessable the income-tax for the year ending 31st of March, 1949 has escape assessment.... The notice under Section 34 referred to the assessment of the assessee for the accounting year ending 1947 whereas the notice under Section 22(2) referred to the assessment of the assessee for the accounting year ending November, 1948 After the receipt of those notices the assessee addressed a letter to the Income tax Officer on Commissioner Of Income-Tax, Gujarat Ii vs Kurban Hussain Ibrahimji Mithiborwala on 2 September, 1971 1 Nov. 19, 1958 pointing out the discrepancy about the assessment years mentioned in the two notices and further requested the Income-tax Office to clarify the position, whether the notice was Under Section 31(1)(a) or 34(1)(b). The Income tax Officer did not choose to reply that letter but proceeded to reopen and reassess the assessee. Aggrieved by that order the assessee went up in appeal to the Appellate Asstt. Commissioner. The Appellate Asstt. Commissioner allowed his appeal on the ground that the Section 34 notice was invalid. But on a further appeal taken by the Commissioner, the Tribunal reversed the decision of the Appellant Asstt. Commissioner. It held that the irregularity in the notice did not in any manner prejudice the assessee. Thereafter as directed by the High Court, the Tribunal submitted to the High Court the question set out earlier. We have earlier referred to the opinion given by the High Court. 3. It is well settled that the Income-tax Officer's jurisdiction to reopen an assessment under Section 34 depends upon the issuance of a valid notice. If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction. In the notice issued Under Section 34 the Income-tax Officer sought to reopen the assessment of the assessee for the assessment year 1947-48 but in fact he reopened the assessment of the year 1948-49. Hence, in our opinion, the High Court was right in holding that the notice in question was invalid and as such the Income-tax officer had no jurisdiction to revise the assessment of the assessee for the year 1948-49. 4. In the result Civil Appeal No. 1172 of 1971 fails and the same is dismissed with costs. 5. Now coming to Civil Appeal No. 1990 of 1968 the High Court did not give any reason in support of the certificate granted by it. That being so, that appeal was not maintainable. We have not remitted the appeal back to the High Court for considering whether a certificate should be given or not we have gone into the merits of the case in Civil Appeal No. 1172 of 71. Hence Civil Appeal No. 1990 of 68 is dismissed as not maintainable, No costs. Commissioner Of Income-Tax, Gujarat Ii vs Kurban Hussain Ibrahimji Mithiborwala on 2 September, 1971 2 | {
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Anand Swarup Singh vs State Of Punjab on 30 November, 1971 Equivalent citations: AIR1972SC2638, 1973LABLC8, (1972)ILLJ528SC, (1972)4SCC744, 1972(4)UJ299(SC), AIR 1972 SUPREME COURT 2638, 1972 4 SCC 744, 1973 LAB. I. C. 8, 1972 SERVLR 147, 1972 (1) LABLJ 528, 1972 SCD 126 Bench: A.N. Grover, A.N. Ray, K.S. Hegde JUDGMENT 1. This is a plaintiff's appeal. The plaintiff joined as Naib Tehsildar in Patiala State on June 14, 1930. He was removed from service on January 20, 1949. His representation against his removal was rejected. Thereafter on October 25, 1965. he filed a civil suit for recovery of arrears of pension, said to be due from August 25, 1959 till October 24, 1965. The trial court decreed the claim as prayed for. 2. The State of Punjab went up in appeal against the decree of the trial court. In the grounds of appeal it was specifically stated: "it is prayed that the judgment and decree of the lower court to the extent it awards the amount of pension for 6 years be set aside and it be held that the respondent is entitled to recover the said amount for 3 years." From this it is clear that in the appeal the State of Punjab merely disputed the plaintiff's right to claim arrears of pension for six years, but conceded his right to claim pension for three years immediately preceding the suit But curiously enough at the time of the hearing of the appeal every one appears to have overlooked the scope of the appeal. The High Court went into the question whether the suit brought by the plain tiff was maintainable. It came to the conclusion that the suit was not maintainable and it accordingly dismissed the suit in its entirety. This conclusion is wholly untenable in view of the scope of the appeal filed by the State of Punjab. It may further be noted that on October 14, 1966, the President of India revoked the order made on January 20, 1949 and restored the plaintiff to service but by his order dated October 25, 1966 the President declared that the plaintiff must be deemed to have retired on September 28, 1955 when he attained the age of 55 years. In view of this order, which we are told was placed before the High Court the High Court was not justified in holding that the plaintiff's suit was not maintainable as the plaintiff had not prayed for a declaration setting aside the order made on January 20, 1949. In this view, it is not necessary to consider the correctness of the High Court's conclusion that the suit as brought by the plaintiff is not maintainable. 3. Now coming to the question whether the plaintiff is entitled to claim arrears of 6 years' pension, but question appears to be concluded by the decision of this Court in Shri Modhav Laxman Vaikunthe v. The State of Mysore wherein this Court held that in the case of a claim for arrears of salary the period of limitation will be that laid down in Article 102 of the Indian Limitation Act, 1908. It has not been shown that the ratio of that decision is inapplicable to the present case. 4. In the result this appeal is allowed to the extent mentioned above. The plaintiff will have a decree, against the defendants, for arrears of pension for three years preceding the suit with interest at the Anand Swarup Singh vs State Of Punjab on 30 November, 1971 1 rate mentioned in the trial court's decree. But in the circumstances of this case we allow him the full costs in all the courts. Anand Swarup Singh vs State Of Punjab on 30 November, 1971 2 | {
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Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 Equivalent citations: 1972 AIR 689, 1971 SCR (3) 802 Author: J.M. Shelat Bench: J.M. Shelat, C.A. Vaidyialingam PETITIONER: ASSTT. COLLECTOR OF CUSTOMS Vs. RESPONDENT: CHARAN DAS MALHOTRA DATE OF JUDGMENT19/02/1971 BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. VAIDYIALINGAM, C.A. CITATION: 1972 AIR 689 1971 SCR (3) 802 1971 SCC (1) 697 CITATOR INFO : E&D 1974 SC 150 (7,8,14,17) F 1984 SC1249 (10) R 1987 SC 731 (7) R 1988 SC1474 (7) F 1989 SC1884 (10) ACT: Customs Act (52 of 1962), s. 110 (1) and (2) and proviso- Power of extension of period, quasi judicial-Sufficient cause being shown'-Scope of. HEADNOTE: Under s. 110(1) of the Customs Act. 1962 if a proper officer has ,reason to believe' that any goods are liable to confiscation under the Act, he may seize such goods. Section 124 provides that no order confiscating any goods shall be made unless the owner of the goods is given notice in writing informing him of the grounds on which it is Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 1 proposed to confiscate the goods. Under s. 110(2) where any goods are seized under sub-s. (1) and no notice in respect thereof is given under s. 124 within six months ,of the seizure, the goods shall be returned to the person from whose possession they were seized; provided, the period of six months may 'on sufficient cause being shown' be extended by the Collector of Customs for a period not exceeding six months. On March 19, 1963 goods were seized from the respondent and, on September 19, 1963 an extension for a period of four months was applied for by the customs authorises and was granted by the Collector on the ,-round that certain inquiries yet remained to be made by them. On February 20, 1964, that is, one month after the extended period had expired, the Collector passed an order granting further extension for two months. Both the extension orders were passed without giving any opportunity to the respondent. The respondent- challenged the second extension and the High Court held that the orders of extension were bad as the Colle ctor had to decide the application for extension judicially. In appeal lo this Court, HELD : The power of extension under the proviso was quasi- judicial, or at any rate, one requiring a judicial approach, and therefore, an opportunity of being beard ought to have been given to the respondent before ,ordering extension. [811 B-C] (a) The policy of the Legislature is, that in view of the extraordinary power of seizure the inquiry should ordinarily be completed within six months, but in exceptional cases, the legislature entrusted to a superior officer the power of extension on sufficient cause being shown. The Collector is not expected to pass extension orders mechanically or as a matter of routine but only on being satisfied that there exist facts which indicate that investigation could not be completed for bona fide reasons within the time of 6 months laid down in s. 110(2), [808 C-E, F-G] (b) Whereas s. 110 (1) uses the expression reason to believe for enabling a customs officer to seize the goods, the proviso to sub-s. (2) uses the expression sufficient cause being shown. Sub-Section (1) does not contemplate an inquiry at the stage of seizure, the only requirement being the satisfaction of the concerned officer that there are relevant reasons to believe that the goods are liable to confiscation by reason of illegal im- 803 portation. The words sufficient cause being shown mean that the Collector must determine on materials placed before him that they warrant extension of time. Further, the civil right to have the seized goods restored which accrues on the expiry of the initial six months is defeated on exten- Therefore, when the' statute requires the determination being grantedtion of a sufficient cause on facts produced before the Collector it should be held to be a quasi Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 2 judicial function or at least a function requiring judicial approach; and there is no, distinction between extension orders passed before and those passed after the expiry of the initial or the extended period. [808 H; 809 A, C-D; 811 C-D] (c) When an order is made in bona fide exercise of power and within the provisions of the Act, which confer such power, the order is immune from interference by a court of law and therefore, the adequacy of the cause shown may not be a ground for interference, but the Collector has to hold an inquiry on facts, that is, on material placed before him, and consider the pros and cons of the question. [809 D-E; 811 E] (d) By holding such inquiry there is no danger of disclosure of facts which would be detrimental to the investigation. The only disclosure would be about the fact that investigation at some place or places and about certain matters was still incomplete and pending. As between the tight of the person from whom the goods were seized and the supposed danger to the investigation, the matter is not so weighted that it should he held that the Legislature could not possibly have contemplated a judicial approach by the Collector when he orders of extension of time. [813 G-H; 8 14 B-D] Kraipak v. Union of India, [1970] .1 S.C.R. 457, followed. Lakhanpal's case, A.I.R. 1967 S.C. 1507 and De Verteuil v. Knaggs, [1918] A.C. 557, referred to Sheikh Mohammed Sayeed v. Asstt. Collector of Customs, A.I.R. 1970 Cal. 134, Ganeshmul Channilal Gandhi v. Collector of Central Excise, A.I.R. 1968 Mys. 89 and M/s. Prakash Cotton Mills Pvt. Ltd. v. Asstt. Collector of Central Excise, Bombay, M.P. No. 127/1963 dt. 31-8-1970, overruled. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1056 of 1967. Appeal from the judgment and decree dated May 12, 1967 of the Calcutta High Court in Appeal from Original Order No. 218 of 1966. R. H. Dhebar and S. P. Nayar, for the appellants. S. T. Desai and P. C. Bhartari, for the respondent. The Judgment of the Court was delivered by Shelat, J. This appeal, under a certificate, raises two questions. The first is as to the nature of the power of the Collector of Customs under the proviso to the %second sub-section of S. 110 of the Customs Act, 52 of 1962, and the second is as to whether the Collector under that proviso can extend the period for giving notice under s. 124 (a) of the Act either after the initial period of six months or the extended period has already expired. In 1963, the respondent carried on business as a dealer in watches in the name and style of Walton Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 3 Watch Company in Calcutta. In 1955, he also used to have another business premises where he carried on the same business in the name of Walton Watch Company. That business was wound up in that year and he had the stock-in-trade of that business transferred to his business carried on in the name of Walton Watch Company. On March 19, 1963, the Rummaging.staff under the appellant raided the respondent's business premises and seized 218 watches, all of foreign 'Make, 87 of these watches, however, were released on the respondent then and there producing vouchers relating to them. Later on, 21 more watches were released on September 18, 1963 and February 27, 1964 on more vouchers having been produced. The case of the Customs authorities, however, was that he was not able to produce documentary evidence in respect of the rest of the watches, and therefore. Their release was not possible. On March 6, 1964, the appellant served on the respondent a notice under s. 124(a) to show cause why the rest of the said watches should not be confiscated and personal penalty should not be imposed upon him. Watches imported without licence or ,on which proper import duty has not been paid are undoubtedly liable to confiscation under s. 111(d). Sec. 1,10, which finds its place in Ch. XIII dealing with searches, seizure and arrest, provides for seizure, inter alia, of goods. Under sub-s. (1), if a proper officer has "reason to believe" that any goods are liable to confiscation under. the Act'. he may seize such goods. Sub- s. (2) reads as follows "(2) Where any goods are seized under sub- section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six months." Sec. 124 provides that no order confiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty. The section does not lay down any period within which the notice, required by it has to be given. The period laid down in S. 110(2) affects only the seizure of the goods and not the validity of the notice. Since the watches in question were seized on March 19, 1963, the initial period of six months provided under the, second subsection of S. 110 expired on September 19, 1963 and the respondent became entitled to the return of the said watches as no show cause notice had till then been issued to him. But the' appellant's case was that an extension for a further period of four months was applied for and was granted by the Collector on September 19, 1963 under his power under the said proviso on the ground that certain inquiries at Bombay and Delhi yet remained to be made. The extended period of four months expired on January 19, 1964 and a further extension of two months was applied for on January 3, 1964. But the Collector passed his order granting further extension on February 20, 1964, that is to say, about a month after the first extended period had expired. Admittedly, both the extension orders were passed ex parte and without any opportunity of being heard having been given to the respondent. The respondent, therefore, got no chance to resist either of the two applications for extension and to show that no sufficient cause had been shown, and that therefore, no order of extension was justified or should be granted, and the watches should, as provided by S. 110(2), be restored to him. He also got no opportunity to plead before the Collector Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 4 that the right to have, the watches restored to him having already accrued to him on January 19, 1964, it could not be defeated by an order of extension passed after the first extended period had already lapsed. Aggrieved by the two orders of extension passed in the manner aforesaid, the respondent moved the High Court of Calcutta under Art. 226 of the Constitution, contending that the proviso to s. 110(2) envisaged only one extension, and that therefore, the second extension was invalid. The learned Single Judge, who heard the writ petition, rejected this contention holding that the proviso empowered the Collector to grant as many extensions as the completion of the inquiry and the issuance of the notice under s. 124(a) required but in no case exceeding six months at a time. The second contention urged by the respondent was that the period of the first extension having expired on January 19, 1964 and no further extension having been granted by that date, he became entitled to restoration-of the said watches and the second order extending the period by two months more granted a month after the expiry of the first extended period would be of no avail to the Customs authorities. This contention too was rejected on the ground that where there is a prescribed time for doing a thing but an express power is given to an authority to extend that time, such power can be exercised even after the prescribed time has expired unless there is an express provision prohibiting to, do so. There was no such provision. The learned Single Judge also held that there was no need to give to the respondent any notice of the applications for extension, the only requirement being that a sufficient cause had to be shown to the satisfaction of the Collector. The learned Judge also rejected a third contention by the respondent that in the absence of any information with the Customs officers as regards the watches save that they were of foreign manufacture, they could not have 'entertained any reasonable belief that their importation was contrary to or in violation of any statutory provision. This contention was rejected on the strength of the supplemental affidavits of the Customs officers ordered by the learned Judge. The result was that the learned Judge dismissed the writ petition negativing, inter alia, the res- pondent's plea as to the restoration of the seized watches. On an appeal by the respondent, a Division Bench of that High Court took a contrary view. It held that the watches having been seized on March 19, 1963, the period of six months expired on September 18, 1963, that if a notice under s. 124(a) was not given by that time, s. 110(2) imposed a statutory obligation on the customs to return the goods to the person from whom they were seized. The Division Bench observed that even assuming that the first extension which was granted ex parte and without any opportunity to the respondent of being heard were to be valid, the period of four months granted then having expired on January 19, 1964 and no order for further extension having admittedly been made, it was obligatory on the Customs to return the watches to the respondent. There being such a statutory obligation under s. 110(2), there was a corresponding statutory right in the respondent to have them restored to him. The Divi- sion Bench was of the view that such a right having accrued to the respondent, it could not be defeated by an order passed one month after the lapse of the first extended period. It also held that the words "sufficient cause being shown" used in the proviso meant that the Collector had to decide an application for extension judicially, the reason being that the Collector could not fairly and justly determine that a sufficient cause was shown without hearing the pros and cons of the question, and therefore, he had no jurisdiction to grant extension without giving to the respondent an opportunity of being heard. In this connection the Division Bench observed "As long as the period of issuing notice has not expired, it might be one thing. But quite a different set of circumstances arise when the period has expired and the right to the return of the goods is vested in the person from whose possession the goods are seized. If you are to take away the right y on can only do that for a Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 5 sufficient cause. How can the officer concerned decide as to whether a sufficient cause has been shown, so as, to divest a vested right, unless he hears the parties affected. Even after the supplementary affidavits were filed in this case, it is extremely doubtful whether a sufficient cause has been shown." According to the- Division Bench, even if the Collector's function, tinder the proviso were to be treated as an administrative, function, his authority being to determine the question affecting the, rights of the citizen, there was an implied duty to act judicially. On this reasoning, the Division Bench held that in any event the second order of extension was bad. It also found that the show cause notice issued under s. 124(a) was vague, gave no opportunity to the respondent to explain the allegations contained therein, and therefore, was bad, with the result that the appellant would be required to give a fresh notice. For the reasons above stated the Division Bench reversed the judgment of the Single Judge and allowed the writ petition. The correctness of this judgment is the subject matter of this appeal. We may at this stage mention that counsel for appellant for- mulated the following two contentions only : (1) that the liability to return the goods seized under s. 110(1) on the expiry of the time prescribed under sub-s. (2) is not absolute as it is subject to the period being extended for a period not exceeding six months, that is to say, within the over all period of one year; that therefore, there is no question of any right being vested in the respondent on the expiry of the first six months or the extended period or such right being divested until one year from the date of seizure has expired: and (2) that the proviso to s. 1 10 (2) does not contemplate any notice to the respondent as the considerations which would weigh with the Collector or which would be relevant for granting extension would be of such a nature that they could not be disclosed. such disclosure being against public interest; that only two requirements are envisaged for the extension of time and they are (i) that a sufficient cause is shown, and (ii) that the extension is within one year. As already stated, sub-s. ( 1 ) of s. 1 1 0 authorises seizure. the only requirement being a reasonable belief on the part of the conceded officer at the time of seizure. The power of seizure founded on a mere reasonable belief being obviously an extraordinary power, the second sub- section envisages completion of the enquiry within a period of six months from the date of seizure. But it provides that if such an enquiry is not completed within that period and a notice under S. 124(a) is, therefore. not given, the person from whom the goods are seized becomes entitled to their restoration. However, on the supposition that in some cases such an investigation may not be completed owing to some difficulties, the legislature gave under the proviso power to the Collector, an officer superior in rank and also an appellate authority under S. 128, to extend the time on two conditions. namely, (1) it does not exceed one year, and (2) on sufficient cause being shown. The policy of the legislature, therefore. clearly was that in view of the extraordinary power of seizure, the enquiry should ordinarily be completed within six months but since it might not be possible to do so in some cases, it gave power of extension to the Collector. The legislature was thus careful to entrust the power of extension to a superior officer I who also has the power to hear inquiries under the Act involving penal consequences and also appeals. Cases where extension would have to be asked for and granted Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 6 are thus envisaged as exceptions to the general rule of six months laid down in sub-s. (2). The second limitation to the power is that such extension can be ranted only on sufficient cause being shown, a phrase often used in provisions for condonation of delay, such as s. 5 of the Limitation Act, 1909. There can be no doubt that the proviso to the second sub- section of s. II 0 contemplates some sort of inquiry. The Collector, obviously, is expected not to pass extension orders mechanically or as a matter of routine, but only on being satisfied that there exist facts which indicate that the investigation could not be completed for bona fide reasons within the time laid down in s. 110(2), and that therefore, extension of that period has become necessary. He cannot, therefore, extend the time unless he is satisfied on facts placed before him that there is a sufficient cause necessitating extension. The burden of proof in such an inquiry is clearly on the Customs officer applying for extension and not on the person from whom the goods are seized. The question, therefore, is as to the nature of such a function and power entrusted to and conferred on the Collector by the proviso. It will be noticed that whereas sub-s. ( 1 ) of s. 1 1 0 uses the expression "reason to believe" for enabling a Customs Officer to seize goods, the proviso to sub-section (2) uses the expres- sion "sufficient cause being shown" It would seem that sub- s. (1) does not contemplate, an inquiry at the stage of seizure, the only requirement being the satisfaction of the concerned officer that there are reasons to believe that the goods are liable to confiscation by reason of their illegal importation. Even so, such satisfaction, as laid down in Narayanappa v. Commissioner of Income Tax, Bangalore(1), is not absolutely subjective inasmuch as the reasons for his belief have to be relevant and not extraneous. It is clear that the legislature was not prepared to use the same language while giving power to 'the Collector to extend time and deliberately used the expression "sufficient cause being shown". The point is why should the legislature have used such a different expression while enacting the proviso if its intention was to confer power which would depend on a more' subjective satisfaction as to the cause for extension. The words "sufficient cause being shown" must mean that the Collector must determine on materials placed before hi that they warrant extension of time. Where an order is made in bona fide exercise of power and within the provisions of the Act which confers such power, the order undoubtedly is immune from interference by a court of law and therefore, the adequacy of the cause shown may not be a ground for such interference. But there, can be no doubt at the same time that the inquiry to be held by the Collector has to be on facts, i.e., materials placed before him. There is there- fore no question in such cases of the subjective satisfaction of the Collector' for, what he is asked to do by the proviso is to determine that the cause shown before him warrants an extension of time. In Lakhampal's case(2) this Court noticed a similar diffe- rence of language used in Tr. 30(1) (b) and 30-A(9) of the Defence of India Rules, 1962 which dealt with two different types of powers. Though it was a case dealing with preventive detention, what is important is that the decision primarily depended on the difference in language used in the two rules and the difference it made in the character of the two powers. A similar expression, though not exactly the same, also came to be construed by the House of Lords in De Verteuil v. Knaggs & Anr.(3), a case often referred to while Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 7 determining the nature of power. The question which arose there was whether under S. 203 of the Trinidad Immigration Ordinance, No. 161, the government could pass an order transferring indentured labour from one employer to another without notice to the concerned employer against whom complaints as to treatment of the laborers were made. The section provided that if at any time "it appears to the governor on (1) 63 I.T.R. 219. (2) A.I.R. 1967 S.C. 1507. (3) [1918] A.C. 557. sufficient ground shown to his satisfaction, that all or any of the immigrants indentured on any plantation should be removed therefrom, it shall be lawful for him to transfer the indentures of such immigrants to any other employer." Construing this provision, Lord Parmesan observed at p. 560 of the report : "The Ordinance does not prescribe any special form of procedure, but there is an obvious implication that some form of inquiry must be made, such as will enable the Governor fairly to determine whether a sufficient ground has been shown to his satisfaction for the removal of indentured immigrants. What is the procedure which in such a case the law will imply when the Legislature is silent ? The acting Governor was not called upon to give a decision on an appeal between parties, and it is not suggested that he holds the position of a judge or that the appellant is entitled to insist on the forms used in ordinary judicial procedure...... On the other hand, the acting Governor could not properly carry through the duty entrusted to him without making some inquiry whether sufficient grounds had-, been shown to his satisfaction that immigrants indentured on the La Gloria estate of the appellants would be removed. Their Lordships are of opinion that in making such an inquiry there is, apart from special circumstances, a duty of giving to any person against whom the complaint is made a fair opportunity to make any relevant statement which he may desire to bring forward and a fair opportunity to correct or controvert any relevant statement brought forward to his prejudice." In Kraipak v. Union of India(1) the power of a selection board to prepare a selection list from amongst the public servants for appointment in the senior and junior scales was held to be quasijudicial although the board had no power of appointment itself. In doing so, this Court observed that the dividing line between judicial and administrative functions was thin and gradually evaporating, and that the functions performed by those doing judicial function and administrative function, where the rights of citizens are affected to their prejudice, had the same object, namely, to do justice and deciding the question fairly and justly. In the former case, there would be express rules of procedure, but the effect of those rules is only to enable or facilitate to 'decide fairly and justly. The Court also pointed out that in recent years the concept of quasi- judicial power has been undergoing a radical change and noted with approval the decision in Regina v. Criminal Injuries Compensation Board Ex parta Lain (2) where it was (1) [1970] 1 S.C.R. 457. Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 8 (2) (1967) 2 Q.B. 864. held that certiorari would be available not only where, the impugned order infringes immediately enforceable rights but also where it is a paste as a result of which legally enforceable rights may be affected. If the power of preparing a selection list without the power to appoint, as in Kraipak's case(), and power to transfer indentured labour from one to another employer, as in De Verteuil v. Knaggs (2) , are held, in the context of their respective provision I to be quasi-judicial powers, there is no reason why, when the statute requires the determination of a sufficient cause on facts produced before the Collector should be held not to be a quasi judicial function or at least a function requiring judicial approach. But it may be said that in both these cases there was a civil right involved and the, power, therefore, had to be held to be quasijudicial. But in the present case also, the right to restoration of the seized goods is a civil right which accrues on the expiry of the initial six months and which is defeated on an extension being granted, even though such extension is possible within a year from the date of the seizure. Since the Collector has on facts to decide on the existence of a sufficient cause, although his decision as to sufficiency of materials before him may be within his exclusive jurisdiction, it is nonetheless difficult to comprehend how he can come to his determination unless, as the Division Bench of the High Court has said, he has before him the pros and cons of the question. An ex parte determination by the Collector would expose his decision to be one-sided and perhaps one based on an incorrect statement of facts. How then can it be said that his determination that a sufficient cause exists is just and fair if he has before him a one-sided picture without any means to check it unless there is an opportunity to the other side to correct or controvert it. The difference in the language used in the first subsection and the proviso to sub-s. (2) lends support to the contention that the power in one case may be subjective , and therefore, not calling for an enquiry, and the power in the other is one, the exercise of which necessitates an enquiry into materials placed before the Collector 'for his determination. In our view, these considerations lead to the conclusion that the power under the proviso is not to be exercised without an opportunity of being heard given to the person from whom the goods are seized. In a recent decision in Sheikh Mohammed Sayeed v. Assistant Collector of Customs(3) a contrary view has, however, been taken by a single Judge of the High Court of Calcutta. The extension order there was passed before the expiry of the initial six months' period. But the contention raised was that an opportunity to be heard should have been given to the petitioner. The learned (1) [1970] 1 S.C.R 457. (2) [1918] A.C.557.A.I.R. 1970 Cal. 134. Judge distinguished the decision of the Division Bench under this appeal (reported in A.I.R. 1968 Cal. 28) on the ground that the question involved in that decision was whether an opportunity of being heard had to be given in respect only of an extension when the right to restoration of the goods in question has already accrued to the party from whom they were seized, and therefore, the decision did not apply to the case before him when such a right had not vested in the petitioner. I With respect to the learned Judge, the distinction was not correct, firstly, because the first 'order of Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 9 extension was only assumed to be correct as the Division Bench concentrated its attention on the second order of extension which also involved the question of the right to restoration of the goods having already vested; and secondly, because the Division Bench set aside the extension order on the ground that the power of extension was quasi- judicial or at any rate one which required a judicial approach. The latter ground applied to both the orders, and therefore, if the second 'order of extension was bad, the first was for the same reason necessarily bad. The order of extension in both the cases would deprive the person from whom the goods are seized of the right to have the goods restored to him on the expiry of six months from the date of seizure. As for his decision on the nature of the power,, the learned Judge relied on decisions in Collector of Customs v. N. Sampathu Chetty (1), Babulal Amthalal v. Collector of Customs(2), Pukhraj v. Kohli(3) and Nathmal Jalan v. Additional Collector of CUStOMS(4) which were all cases where the exercise of power ended on reasonable belief or reasons to believe. But he held that the power under the proviso to s. 110(2) should be construed on the same princi- ples laid down in those decisions. This is made clear at page 141. of the report where he observed "In my view the same principles, are attracted in construing the phrase 'on sufficient cause being shown' ..... With regard to, the nature and sufficiency of the cause, it is the satisfaction of the Collector of Customs that provides the ground and justification for an order extending the time to complete the inquiry..... If the order of extension is made before expiry of the initial period of six months, or before expiry of the extended period, it cannot in my view be challenged on the ground that notice to show cause, or opportunity of being heard was not given to the party." In our view, equating the power, the exercise of which depends on a mere reasonable belief with the power, the 'exercise of which depends on 'sufficient cause being shown' envisaging at (1) A-I-R. 1962 S.C. 316. (3) A.I.R. S.C. 1559. (2) A.I.R. 1957 S.C. 877. (4) 70 C.W.N. 349. 8 1 3 least some sort of inquiry on facts placed before the authority and determination by him on those facts, is not warranted. Therefore, a conclusion based on such a premise creates difficulty in sustaining it. Further, the distinction between an order extending before and after the expiry of the initial or the extended period does not make any different as was sought to be made by the learned Judge, when one inquires into the character of the power of extension. Both would raise precisely the same question, whether the power is purely administrative requiring no opportunity of being heard or judicial or quasi-judicial, as in both the cases the right to the goods being restored would be involved. We cannot also agree with the learned Judge that there is no indication in the Act to suggest that the Collector is required to act judicially, firstly, because the proviso requires determination on facts and not on mere suspicion and a sufficient cause being made out by the applicant-officer, and secondly;- because a civil right of a citizen to the restoration of the goods on expiry of the period, whether initial or extended, is affected. The other decision, which takes a contrary view, is of the High Court of Mysore in Ganeshmul Channilal Gandhi v. Col- lector of Central Excise(). The grounds on which the learned Judges there took that view were (i) that the power was administrative, and (2) that if notice were to be necessary, the authority which applies for Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 10 extension would have to make a,disclosure about the investigation, which disclosure would be detrimental to the investigation itself. For the reasons already given we cannot agree with the first ground. As for the second ground, we do not see any reason for the apprehension. So far as the )initial period of six months is concerned, there is no question of disclosure of the investigation. The legislature itself contemplated that ordinarily such an investigation would be completed within that period. The question of disclosure would arise only in cases where for- bona fide reasons something yet remains to be done. The only disclosure in such cases would be about the fact that investigation at some place or places, or about certain matters is still incomplete and pending. No one suggests that the inquiry to be held by the Collector would be similar to the one held in a court of law or that the officer applying for extension would be compelled to disclose the names of his informants or such other matters which would be detrimental to the investigation. Even in more serious matters, such as applications for remand in criminal cases, opportunity to be heard has to be given No one has yet suggested that such an opportunity is detrimental to the investigation. The unreported judgment of the High Court (1) A.T.R. 19(8 Myscre F9. 8 14 of Bombay in M/s. Prakash Cotton Mills Pvt. Ltd. v. Assistant Collector of Central Excise ' Bombay(1) does not throw any further light as it is mostly based on the reasoning of the Mysore High Court. We are not satisfied that as between the right of the person from whom the goods are seized and the supposed danger to the investigation the matter is so weighted down that we would be compelled to hold that the legislature could not possibly have- contemplated a judicial approach by the Collector when he orders extension of time, the effect of which would be the deprivation of, or in any event,, postponement of the right to restoration. In our view, the first question must be answered In favour of the respondent, and therefore, the Division Bench was right in holding that the power under the proviso was quasijudicial, or at any rate, one requiring a judicial approach. Consequently, an opportunity of being heard ought to have been given to the respondent before orders for extension were made. The High Court, consequently, was justified in ordering restoration of the watches in question to the respondent. In this view it is not necessary for us to decide the second question raised by counsel for the respondent. We are also not dealing with the question as to whether the notice under S. 124(a) was vague, and therefore, void as decided by the Division Bench. That part of the decision of the High Court was not challenged before us, and therefore, we are not called upon to give our decision on that part of the case. In the result, the judgment of the Division Bench has to be upheld. The appeal will stand dismissed with costs. V.P.S. Appeal dismissed. (1) M.P. N. 127 of 1963 dt. August 31, 1970 Asstt. Collector Of Customs vs Charan Das Malhotra on 19 February, 1971 11 | {
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C.I.T., West Bengal Ii, Calcutta vs M/S. Electro House on 2 September, 1971 Equivalent citations: 1972 TAX. L. R. 1014, (1972) 1 S C R 589, (1972) 1 I T J 134, 82 I T R 824, (1972) 1 S C J 209 PETITIONER: C.I.T., WEST BENGAL II, CALCUTTA Vs. RESPONDENT: M/S. ELECTRO HOUSE DATE OF JUDGMENT02/09/1971 BENCH: ACT: Income-tax Act (11 of 1922), s. 33B-Whether jurisdiction of Commissioner depends on issue of proper notice to assessee. HEADNOTE: The Commissioner of Income-tax found that the orders of the Income-tax Officer granting registration to the assessee firm and renewal of registration for the next year were erroneous and prejudicial to the interests of revenue. He therefore proceeded against the assessee under s. 33B of the Income-tax Act, 1922, after issuing notice to the assessee. The High Court, on reference, held that the notice was not valid and that therefore, the Commissioner had no jurisdiction to proceed with the enquiry. Allowing the appeal to this Court, HELD : Section 33B, unlike s. 34 of the Act does not prescribe any notice to be given. For the assumption of jurisdiction to proceed under s. 33B a notice is not a condition precedent. The section only requires the Commissioner to give an opportunity to the assessee before reaching his decision and not before commencing the enquiry. The requirement is only a principle of natural justice, and its breach may affect the legality of the order, but does not affect the jurisdiction of the Commissioner. Therefore, the question as to what the notice given in the present case should have contained did not arise at it]. [592 C-H] Gita Devi Aggarwal v. C.I.T., West Bengal, 76 I.T.R. 496(S.C.), followed. C.I.T., West Bengal Ii, Calcutta vs M/S. Electro House on 2 September, 1971 1 JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2376 to 2379 of 1968 and 1168 to 1471 of 1971. Appeals by certificate/special leave from the judgments and orders dated May 2, 1968 of the Calcutta High Court in Incometax Reference Nos. 63, 112 and 113 of 1965. Jagadish Swarup, Solicitor-General, A. N. Kirpal, R. N. Sachthey and B. D. Sharma, for the appellant (in all the appeals). S.T. Desai and D. N. Mukherjee, for the respondent (in all the appeals). The Judgment of the Court was delivered by Hegde, J. Civil Appeals Nos. 1168-1171 of 71 are by special leave and Civil Appeals Nos. 2376-2379 of 68 are by certificate. These appeals arise from the decision of the Calcutta High Court in certain tax references. In those references the High Court was considering the one question referred to it by the Tribunal under section 66(1) of the Indian Income-tax Act, 1922 (in brief 'the Act') and two other questions referred to it by the Tribunal in accordance with the directions given by that Court under section 66 (2) of the Act. The High Court has only answered the question referred to it by the Tribunal under section 66(1) of the Act and it has not answered the other two questions as being unnecessary. The question referred under section 66(i) is : "Whether on the facts and in the circumstances of the case, the notice issued under, section 33B of the Indian Income-tax Act, 1922 met the requirements of the law and whether the Commissioner of Income-tax validly exercised jurisdiction under section 33B of the Indian Income-tax Act, 1922 ? The facts of the case lie within a narrow compass. The ,concerned assessment years are 1959-60 and 1960-61, the corresponding accounting years having ended on December 31 of each of the years 1958 and 1959. The assessee M/s. Electro House claimed to be a firm constituted under a deed of partnership dated January 2, 1958. The business of that firm was started by Baidyanath Gorai sometimes in the year 1949 and up to the assessment year 1958-59 he was assessed as the sole proprietor thereof. On January 2, 1958 he purported to enter into a partnership with his mother-in-law and son-in-law. Under that partnership he had 40% share and his mother-in-law and son-in-law had 30% share each in the profits and losses of the firm. The Income-tax Officer accorded registration of the partnership in question under section 26 A of the Act for the two assessment years with which we are concerned in these appeals. The Commissioner of Income-tax, West Bengal, however appears to have found on an examination of the records that the orders .of the Income-tax Officer granting registration to the assessee firm for the assessment year 1959-60 and renewal of registration for the assessment year 1960-61 were erroneous and prejudicial to the interests of the revenue. He therefore proceeded against the assessee under section 33B of the Act. Before doing so, he issued a notice to the firm C.I.T., West Bengal Ii, Calcutta vs M/S. Electro House on 2 September, 1971 2 on July 18, 1962 which reads thus "From Shri F. H. Vallibhoy Commissioner of Income Tax, West Bengal. To M/s. Electro House G. T. Road, Asansol. Gentlemen, SUB.-Income Tax, Assessment-1959-60 and 1960- 61 M/s. Etectro House-Registration u/s 26A of the Income Tax Act-Wrongly granted-Proposal u/s 33B to cancel orders u/s 26A-notice regarding:- On a perusal of the orders u/s 26A passed by Income Tax Officer, "A" Ward Asansol on 5th October. 1960 and 25th February, 1961 for the assessment year", 1959-60 and 1960-61 respectively in the above case and the connected records, I consider that the said orders are erroneous and prejudicial to revenue, inasmuch as registration u/s 26A of Income Tax Act 1922, for the assessment year 1959-60 and renewal of registration u/s 26A of the said Act for the assessment year 1960-61 should not have been granted as there are prima facie reasons and grounds to hold that the partnership brought into existence by the partnership deed dated 2nd January, 1958 is not a genuine one. 1, therefore, propose to cancel the orders u/s 26A of the Income-tax Act, 1922 for the assessment years 1959-60 and 1960-61 under powers vested in me under section 33B of the Income, Tax Act 1922, unless you show cause why the orders should not be so cancelled. I am prepared to hear your objections, if any, at 11 A.M. on 3rd August, 1962 at my office as noted above. Objections in writing, if any submitted on or before the above date will also be duly considered. Yours faithfully, Sd./- F. H. Vallibhoy, Commissioner of Income Tax West Bengal." The question for consideration is whether this notice is an invalid notice and consequently the Commissioner had no jurisdiction to proceed under section 33B. The Tribunal came to the conclusion that the notice issued was not one required to be issued by the Act and hence its validity or invalidity did not affect the jurisdiction of the Commissioner. It also held that it was a valid notice. But the, High Court differing from the conclusions reached by the Tribunal opined that the notice issued was not valid and therefore the Commissioner had no jurisdiction to proceed with the enquiry. In that view it thought it unnecessary to consider the remaining questions. Section 33B (1) reads : "The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Income-tax officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be C.I.T., West Bengal Ii, Calcutta vs M/S. Electro House on 2 September, 1971 3 made such enquiry as he deems necessary, pass such order thereon as 'the circumstances of the case justify, including an order enhancing or modifying the assessment, or canceling the assessment and directing a fresh assessment." This section unlike section 34 does not prescribe any notice to be given. It only requires the Commissioner to give an opportunity to the assessee of being heard. The section does not speak of any notice. It is unfortunate that the High Court failed to notice the difference in language between section 33B and 34. For the assumption of jurisdiction to proceed under section 34 the notice as prescribed in that section is a condition precedent. But no such notice is contemplated by section 33B. The jurisdiction of the Commissioner to proceed under section 33B is not dependent on the fulfillment of any condition precedent. All that he is required to do before reaching his decision and not before commencing the enquiry, he must give the assessee an opportunity of being heard and make or cause to make such enquiry as he deems necessary. Those requirements have nothing to do with the jurisdiction of the Commissioner. They pertain to the region of natural justice. Breach of the principles of natural justice may affect the legality of the order made but that does not affect the jurisdiction of the Commissioner. At present we are not called upon to consider whether the order made by the Commissioner is vitiated because of the contravention of any of the principles of natural justice. The scope of these appeals is very narrow. All that we have to see is whether before assuming jurisdiction the Commissioner was required to issue a notice and if he was so required what that notice should have contained ? Our answer to that question has already been made clear. In our judgment no notice was required to be issued by the Commissioner before assuming jurisdiction to proceed under section 33B. Therefore the question what that notice should contain does not arise for consideration. It is not necessary nor proper for us in this case to consider as to the nature of the enquiry to be held under section 33B. Therefore we refrain from spelling out what principles of ,natural justice should be observed in an enquiry under section 33B. This Court in Gita Devi Aggarwal v. Commissioner of Income-tax, West Bengal and others(1) ruled that section 33B does not in express terms require anotice to be served on the assessee as in the case of section 34. Section 33B merely requires that an opportunity of being heardshould be given to the assessee and the stringent requirement ofservice of notice under section 34 cannot, therefore, be applied to a proceeding under section 33B. For the reasons mentioned above, we allow Civil Appeal Nos. 1168 to 1171 of 7112 discharge the answer given by the High Court to the question set out earlier and answer that question as follows The notice issued did not contravene section 33B and the Commissioner validly exercised his jurisdiction under section 33B. But as the High Court has not considered the other questions referred to it, these cases will now go back to the High Court for considering those questions. Civil Appeals Nos. 2376 to 2379 of 68 are dismissed as being not maintainable, as the certificates on the basis of which those appeals were brought to this Court are not in accordance with law. But in those appeals there will be no order as to costs. V.P.S. C.A. No;. 1168-1171/71 allowed. C.A. Nos. 2376-2379/68 dismissed. C.I.T., West Bengal Ii, Calcutta vs M/S. Electro House on 2 September, 1971 4 (1) 76 I.T.R. p. 496. 4-L3Sup.C.I./72 C.I.T., West Bengal Ii, Calcutta vs M/S. Electro House on 2 September, 1971 5 | {
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Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 Equivalent citations: 1971 AIR 1696, 1971 SCR 761, AIR 1971 SUPREME COURT 1696, 1971 TAX. L. R. 957 Author: G.K. Mitter Bench: G.K. Mitter, S.M. Sikri, C.A. Vaidyialingam, A.N. Ray, P. Jaganmohan Reddy PETITIONER: PRAKASH CHAND MAHESHWARI & ANR. Vs. RESPONDENT: ZILA PARISHAD, MUZAFFARNAGAR & ORS. DATE OF JUDGMENT07/05/1971 BENCH: MITTER, G.K. BENCH: MITTER, G.K. SIKRI, S.M. (CJ) VAIDYIALINGAM, C.A. RAY, A.N. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 1696 1971 SCR 761 1971 SCC (2) 489 ACT: Professions Tax Limitation (Amendment and Validation) Act 1949-Retrospective validation of levy under U. P. District Boards Act, 1922 contravening limit of Rs. 50 laid down in Profession Tax Limitation Act XX of 1941-Validity-Procedure under r. 3 of Rules made under U.P. District Boards Act, 1922 whether unworkable under U.P. Kshetra Samithis and Zila Parishads Adhiniyam 33 of 1961-Time limit for assessment procedure under rr. 4 and 5 of Rules under 1922 Act whether mandatory-Rules whether not properly framed-Kar Adhikari appointed without consulting Public Service Commission as required by s. 43 of U.P. Kshetra Samithi and Zila Parishads Adhiniyam Act 1961-Mere sending of papers to Commission after making of appointment not sufficient compliance with Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 1 s. 43--Appointment is temporary and good only for two years-Assessment made after two years invalid. HEADNOTE: Tax on circumstances and property we levied in 1928 on persons residing in or carrying on business in the rural areas of District Muzaffarnagar under the provisions of the U.P. District Boards Act, 1922. In 1942, the Central Legislature passed the Professions Tax Limitation Act which laid down that no tax on circumstances and property levied by a local authority should exceed Rs. 50 except in cases where it was already being levied. The Act was passed in accordance with the provisions of s. 142-A of the Government of India Act 1935. In 1948 s. 108 of the U.P. District Boards Act was amended to provide that a board may continue a tax already imposed on persons assessed according to their circumstances and property, and that the tax so imposed shall not be abolished or altered without the previous sanction of the State Government, In order to get over the decision of the High Court of Allahabad in District Board of Farrukhabad v. Prag Dutt, (I.L.R. 1949 All. 26) the Central Legislature passed the Professions Tax Limitation (Amendment and Validation) Act 61 of 1949. This Act retrospectively exempted the circumstances and property tax levied by local bodies in U.P. from the upper limit of Rs. 50 laid down by the 1941 Act. On August 22, 1958 the U.P. Antarim Zila Parishad Act 22 of 1958 was passed by the U.P. Legislature. The said Act was extended to December 31, 1962 by successive legislation. The U.P. Kshetra Samithis and Zila Parishads Adhiniyam 33 of 1961 repealed the United Provinces District Board Act 1922 in relation to a district as from the date on which the establishment of Kshetra Samithis under the new Act was completed and as from the date on which the U.P. Antarim Zila Parishad Act was to stand repealed in relation to that district. Kshetra Samithis and Zila Parishad were constituted in the District of Muzaffamagar under the Act. The circumstances and property tax levied under the repealed Acts was continued under the new Act. 'Me taxing officer called Kar Adhikari was to be appointed according to the procedure laid down in s. 43 of the now Act. The appellants who carried on 'khandsari' and 'gur' business in the rural area of Muzaffarnagar District were, for the year 1967-68, assessed to pay a sum of Rs. 2,000 as circumstances and property tax. They filed a writ petition under Art. 32 of the Constitution challenging the levy on 762 the following grounds; (i) Central Act LXI of 1949 was beyond the legislative competence of the Federal Legislature because the power of the Federal Legislature having been once exercised to reduce the imposts over Rs. 50 per annum to that sum it was exhausted and could not be exercised a Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 2 second time; (ii) Even assuming the said Act was within the competence, of the legislature, as a result of the amendment of s. 108 of the U.P. Districts Boards Act in 1948 the board could only continue to levy the tax which was lawfully being imposed in 1948 on persons assessed according to their circumstances and properties in accordance with s. 114 and inasmuch as the tax had been reduced to Rs. 50 by the Central Act of 1941 the validation under the Professions Tax Limitation (Amendment and Validation) Act, 1949 would not serve to raise the limit of the tax to beyond Rs. 50 per annum, (iii) under r. 3 framed by the local self government of the U.P. under s. 172 of the Act of 1922 the tax was to be assessed by an assessing officer appointed by the District Board with the help of the members of the circle but since under the Zila Parishad Act there was no circle or members, the old rule had become unworkable; (iv) the prescribed time schedule mentioned in rr. 4 and 5 in the relevant notification not having been adhered to the assessment was illegal. (v) the rules of 1928 were not properly framed inasmuch as the procedure laid down in the relevant Chapter of the Act of 1922 was not followed strictly; (vi) the appointment of the Kar Adhikari was not made in accordance with the provisions of s. 43 of the U.P. Act. XXXIII of 1961 and therefore the assessment made by him was illegal. HELD:(i) The proviso to s. 142-A(2) of the Government of India Act, 1935 could not be read to give the legislature power to alter the quantum of assessment once for all. Clearly it gave power to the federal legislature to fix a rate of such tax in substitution for the one which was already prevailing on the 31st March, 1939 and it could do so not only once but from time to time. The use of the words 'unless for the time being' indicates that the legislature could at any point of time substitute a fresh rate of tax for the one prevailing. It follows that it was open to the federal legislature to make such substitution more than once. [771F772B] (ii)The amendment of s. 108 of the U.P. District Boards Act of 1922 in 1948 only allowed the continuance of the tax already imposed on persons assessed according to their circumstances and property. The argument that validation of the imposition of a tax by the Professions Tax Limitation (Validation and Amendment) Act, 1949 with retrospective effect was not possible could not, be accepted. In the case of M. P. Sundararamier & Co. this Court clearly laid down that a law authorising imposition of tax could be both retrospective and prospective. It necessarily followed that if the Act of 1949 was valid the imposition was saved even after 1950 under the proviso to cl. (2) of Art. 276 of the Constitution. [772H-773F] B.M. Lakhani v. Malkapur Municipality, A.I.R. 1970 S.C. 1002 distinguished. M.P.V. Sundararamier & Co. v. State of Andhra Pradesh, Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 3 [1958] S.C.R. 1422, relied on. (iii)The argument that the rules framed under the District Boards Act became inconsistent with and unworkable under the U. P. Zila Parishads Act could not be accepted. The assessment was to be done by the assessing officer appointed by the District Board. Even if there was a circle but the members of the circle refused to co-operate with him, the assessment would not be invalid. The help which they could render would only 763 be limited to giving information about the assesses. It was quite competent for the assessing officer to proceed with the assessment even if the members refused to help him. The situation was not altered by reason of the fact that the circle and the members had disappeared. [773G-774A] (iv)Rules 4 and 5 which laid down certain dates by which the work was directed to be taken in hand and completed were merely directory and not mandatory. There was nothing in these rules to suggest that if the dates were not strictly observed any prejudice would be caused to the assessee. [774B-C] Judgment of Allahabad High Court dated January 8 1963 in Civil Misc. Writ Petition No. 3160 of 1962, disapproved. (v)Even if there was any irregularity in the framing of the rules under the 19" Act the same was cured by the publication of the notification under s. 120(3) of the Act of 1922. [774G] (vi)The appointment of Kar Adhikari (respondent no. 2 in this case) took place on 8th August 1965, the impugned assessment was made on 6th March 1968 i.e. more than two years after the date of appointment. Under s. 43 the appointment of this officer to the post which carried an initial salary of more than Rs. 200 p.m. could be made by the Parishad in consultation with the Public Service Commission or other Commission or selection Body as might be constituted by the State Government and if there was a difference of opinion between the Commission and the Parishad the matter was to be referred to the State Government whose decision was to be final. In the present case the State Public Service Commission had been notified of the appointment and they had not expressed any disappro- val of the same. Appointing respondent no. 2 as Kar Adhikari and merely sending the papers relating to such appointment to the Public Service Commission would not be compliance with s. 43 of the Act. Even if it be regarded as a temporary appointment, it could only be effective for two years and as the assessments in the present case was made beyond that date it must be held that the assessment was made by a person not competent to make it. [774H-775H] Chandramouleshwar Prasad v. Patna High Court, [1970] 2 S.C.R. 666, applied. The position was not improved by the inclusion of the name of respondent no. 2 in List 'C under paragraph 9(4) of the Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 4 U.P. Zila Parishad Central Transferable Cadre Rules, 1966 which came into force with effect from December 20, 1966. In terms of s. 47 of U.P. Act of 1961 the appointment ceased to be valid after two years, the period having expired long before the hearing of this matter. The order of assessment of Rs. 2,000 on the petitioners dated 25th March 1968 must therefore be quashed. [776E-H] JUDGMENT: ORIGINAL JURISDICTION : Writ Petition No. 435 of 1968. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. E. C. Agarwala, for the petitioners. C. B. Agarwala, Uma Mehta, S. K. Bagga and S. Bagga, for respondents Nos. 1 and 2. O. P. Rana, for respondent No. 3. The Judgment of the Court was delivered by Mitter, J.-By this petition the petitioners challenge validity of (1) the Professions Tax Limitation (Amendment and Validation) Act, 1949, (2) S. 131 of the U. P. Zila Parishad Act, (3) an order of assessment of Rs. 2,000/- dated 25th March, 1968 made by the Kar Adhikari, Zila Parishad Muzaffarnagar and pray for incidental reliefs. The petitioners carry on the business of manufacture and sale of "khandsari" and "gur" in the District of Muzaffarnagar, U. P. They own a crusher in village Morna in the said district where the manufacture of khandsari as sugar is carried on. They challenge the imposition of "Circumstances and Property" tax of Rs. 2,000/- imposed on their business under, the order of assessment passed by respondent No. 2. Kar Adhikari, Zila Parishad Muzaffarnagar for the year 1967-68. As they did not produce their accounts for their business in khandsari the Kar Adhikari, an officer appointed by the Zila Parishad of Muzaffarnagar assessed them to Rs. 2,000/- as "Circumstances and Property" tax on the estimated income of Rs. 96,000/- from their property and business for the year. To appreciate how the Zila Parishad (a district authority) came to have the power to levy the tax, it is necessary to take an account of some past legislation. The Local body to administer the district of Muzaffarnagar in U. P. until the year 1958 was the District Board of Muzaffarnagar constituted under the U. P. District Boards Act, 1922 (U. P. Act X of 1922). Chapter VI of the Act containing sections 108 to 132 gave the Board certain powers of taxation, local rates etc. and prescribed the procedure for imposition and recovery of the levy. Under S. 114 the Board had the power to impose a tax on "circumstances and property" subject to certain conditions, inter alia, that the tax could be imposed only on persons residing or carrying on business in the rural area with an income above a certain minimum limit. The rate of tax was not to exceed Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 5 Rs. 0-0-4 in the rupee on the total income and the total amount of tax was not to exceed the maximum which might be prescribed by rule. By s. 115 a Board deciding to impose a tax had to frame proposals by special resolution, specifying the particular tax out of those prescribed in s. 108 which it desired to impose, the persons or classes of persons to be made liable and the description of the property or other taxable thing or circumstance in respect of which they were to be made liable, the amount of rate leviable from such persons or classes of persons and any other matter which the State Government required by rule to be specified. S. 116 enabled any person ordinarily residing or carrying on business in the district to raise objections to the proposal which had to be considered by the Board. Under s. 117 the Board had to submit the finally settled proposals to the State Government which could either sanction the same or return them to the Board for further consideration. When the State Government had sanctioned the proposal of the Board, it had to frame rules under s. 172 in respect of the tax as for the time being it considered necessary after taking into consideration the draft rules submitted by the Board. Following on the above, the Board was required to direct the imposition of the tax with effect from a date to be specified by special resolution. Under s. 120(1) a copy of the resolution passed by the Board was to be submitted by it to the State Government. Government was required to notify in the official gazette the imposition of the tax from the appointed day upon receipt of the copy, of the board's resolution and the imposition of a tax was in all cases to be subject to the condition that it had been so notified. Under sub-s. (3) of s. 120 a notification of the imposition of a tax under sub-s. (2) was to be conclusive proof that the tax had been imposed in accordance with the provisions of the Act. Matters mentioned in clauses (a) to (f) including inter alia the assessment and collection of taxes was under s. 123 to be governed by rules except in so far as the provision therefore was made by the Act. S. 172 empowered the State Government to make rules consistant with the Act in respect inter alia of matters mentioned in s. 123. On the 1st of March 1928, the U. P. Local Self Government issued a notification prescribing rules for the assessment and collection of a tax on circumstances and property in the rural area of the Muzaffarnagar District under s. 172 of the Act after the previous publication thereof as required by s. 176. Rule 3 provided that "the tax shall be assessed by an assessing officer appointed by the District Board with the help of the members of the circle concerned". Rules 4 and 5 laid down a time schedule for the work of the assessing officer and the submission of the list of persons within the district who appeared to be liable to pay the tax to the board. He was first required to prepare a list on or before 15th December of each year of all persons who appeared to him to be so liable. He was then to consider the circumstances and property of every person entered in the list and to determine the amount of the tax to which such person should be assessed. The name of every person assessed and the amount of tax to which he was assessed was to be entered in an assessment list in the form attached to the rules and was to be completed on or before the 20th of January next. After the preparation of the list and Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 6 the submission thereof to the Board 'the latter could take action to revise the list by a resolution and the Board was to return the list to the assessing officer by the 15th February. In terms of the U. P. District Boards Act, 1922 rules were framed on the 1st March 1928 and the State Government issued a notification on the 20th April, 1928 under S. 120(2) of the Art to the effect that the District Board Muzaffarnagar had in exercise of powers conferred by S. 108(2) imposed with effect from May 15, 1928 a tax on all persons ordinarily residing or carrying on business in the rural area of Muzaffarnagar District according to their circumstances and property at the rate of Rs. 0-0-3 in the rupee on incomes of Rs. 300/- but not exceeding Rs.1200 per annum and Rs. 0-0-4 in the rupee on incomes of over Rs. 1200/- per year provided that in the case of persons residing in notified and town areas and paying tax on circumstances and property to their respective committees, the rate of tax was to be Rs. 0-0-2 on the income of Rs. 300 but not exceeding Rs. 1200 and Rs. 0-0-3 on the income of over Rs. 1200/- per annum. In 1935 the Government of India Act of that year was enacted whereby the Legislative Lists were defined in the Seventh Schedule to the Act in terms of ss. 99 to 107 in Chapter I of Part V. Certain restrictions on legislative powers were also defined in Chapter 11 of the said Part containing ss. 108 to 110. Item 46 of the Provincial Legislative List was amended in 1940 to read "Taxes on professions, trades, callings and employments, subject, (however, to the provisions of section 142-A of this Act." The said section which also came into force under the same Amending Act ran as follows :- " 142-A. (1) Notwithstanding anything in section one hundred of this Act, no Provincial law relating to taxes for the benefit of a Province or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income. (2)The total amount payable in respect of any person to that Province or to any one municipality, district board, local board, or other local authority in the Province by way of taxes on professions, trades, callings and employments shall not, after the thirty first day of March,nineteen hundred and thirty-nine, exceed fifty rupees per annum: Provided that, if in the financial year ending with that date there was in force in the case of any Province or any such municipality, board or authority a tax on professions, trades, callings or employments the rate, or the maximum rate, of which exceeded fifty rupees per annum, the preceding provisions of this sub-section shall, unless for the time being provision to the contrary is made by a law of the Federal Legislature, have effect in relation to that Province, municipality, board or authority Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 7 as if for the reference to fifty rupees per annum there were substituted a reference to that rate or maximum rate, or such lower rate, if any (being a rate greater than fifty rupees per annum), as may for the time being fixed by a law of the Federal Legislature-, and any law of the Federal Legislature made for any of the purposes of this proviso may be made either generally or in relation to any specified Provinces, municipalities, boards or authorities. (3)The fact that the Provincial Legislature has power to make laws as aforesaid with respect to taxes on professions, trades, callings and employments, the generality of the entry in the Federal Legislative List relating to taxes on income." In exercise of the powers conferred by the above section the Central Legislature passed the Professions Tax Limitation Act, 1941 (Act XX of 1941) on 26th November 1941. The preamble to the Act shows that its object was to limit the total amount payable in respect of any person in respect of his profession, trade or calling etc. by way of tax to fifty rupees per annum notwithstanding the provision to the contrary in s. 142-A of the Government of India Act, 1935. The Act which contained only three sections and a Schedule provided by section 2 that the amount of tax payable in respect of any one person to a Province, municipality, district board etc. was to cease to be levied to the extent to which such taxes 'exceeded Rs. 50 per annum. The section ran as follows : "2. Notwithstanding the provisions of any law for the time being in force, any taxes payable in respect of any one person t a Province or to any one municipality, district board, local board or other local authority in any Province by way of tax on professions, trades, callings or employments, stall from and after the com- mencement of this Act cease to be levied to the extent to which such taxes exceed fifty rupees per, annum." S.3 was a saving provision whereby the provisions of s. 2 were not to apply to the taxes specified in the Schedule. All the five items in the Schedule related to taxes on professions, trades or callings by certain municipalities. S.108 of the U. P. District Boards Act, 1922 was amended in 1948 to read "A board- (a) shall, by notification in, the, official Gazette, impose a local rate under section 3 of the United Provinces Local Rates Act, 1914, as modified by this Act; and (b)I may continue a tax already imposed on person assessed according to their circumstances and property............ in accordance with section 114 Provided that the tax on circumstances and property So imposed shall not be abolished or altered without the previous sanction of the State Government."' It will be noticed that after the Professions Tax Limitation Act of 1941 the District boards in U. P. were not allowed to collect, a tax on circumstances and property of any person in excess of Rs. 50. The situation was however altered in 1949 when the Professions Tax Limitation (Amendment and Validation) Act, 1949 was passed with the assent of the Governor General on 26th December 1949 (Act LXI of 1949). This was really to get over the decision of the Allahabad High Court in District Board of Farrukhabad v. Prag Dutt (1). The Act was passed to amend the Professions Tax Limitation Act, 1941 and to validate the imposition in the United Provinces of Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 8 certain taxes on circumstances and property. Section 2 of the Act purported, to add items 3-A and 3-B in the Schedule to the Professions Tax limitation Act, 1941 with retrospective effect. Items 3-A and 3-B read as follows :- "3-A. The tax on inhabitants assessed according to their circumstances and property, imposed under clause (ix) of sub-section (1) of section 128 of the United Provinces Municipalities Act, 1916 (U. P. Act II of 1916). 3-B. The tax on persons assessed according to their circumstances and property. imposed under clause (b) of section 108 of the United Provinces District Boards Act, 1922 (J. P. Act X of 1922)." (1) I. L. R. [1949] Allahabad 26. The usual clauses for validation with retrospective effect were contained in s. 3 of the Act. Taxes on professions, trades, callings and employments again came to be dealt with by Art. 276 of the Constitution in 1950. Clause (1) of the article laid down that "Notwithstanding anything in article 246, no law of the Legislature of a State relating to taxes for the benefit of the state or of a municipality, district board, local board or other local authority therein in respect of professions, trades, callings or employments shall be invalid on the ground that it relates to a tax on income." Cl.(2) was aimed at limiting the maximum amount in respect of such taxes subject to certain qualifications. It ran as follows "The total amount payable in respect of any one person to the State or to any one municipality, district board, local board or other local authority in the State by way of taxes on professions, trades, callings and em- ployments shall not exceed two hundred and fifty rupees per annum Provided that if in the financial year immediately preceding the commencement of this Constitution there was in force in the case of any State or any such municipality, board or authority a tax on professions, trades, callings or employments the rate, or the maximum rate, of which exceeded two hundred and fifty rupees per annum, such tax may continue to be levied until provision to the contrary is made by Parliament by law, and any law so made by Parliament may be made either generally or in relation to any specified States, municipalities, boards or authorities." On August 22, 1968 the U. P. Antarim Zila Parishad Act (XXII of 1958) was passed by the U. P. Legislature. Under section 1(3) of the Act it was to come into force on 29th day of April 1959 and to expire on 31st December 1959. The said Act was purported to be extended to 31st December 1962 by successive legislation. Under s. 3 (1) of the Act of 1958 all district boards in U. P.......... and all committees of such boards constituted under the District Boards Act of 1922 were to cease to function and all members and the President of each board and all members of each committee were to vacate and be deemed to have vacated their respective offices. The U. P. Kshettra Samithis and Zila Parishads Adhiniyam, .1961 repealed the United Provinces District Boar& Act 1922 49-1 S.C. India/71 in relation to a district as from the date on which the establishment of Kshettra Samithis under the new Act (XXXIII of 1961) was completed and as from the date on which the U. P. Antarim Zila Parishad Act was to stand repealed in relation to that Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 9 district. The Kshettra Samitis and Zila Parishad were constituted in the District of Muzffarnagar under the Act. This Act was a comprehensive Act which prescribed inter alia for dividing all the rural areas of each district into khands, the establishment of Kshettra Samithis for each khand, their composition and establishment and incorporation of Zila Parishads. Each Zila Parishad was to be a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property and to discharge its functions under the Act. The powers and functions of Kshettra Samitis and Zila Parishads were specified in Chapter III of the Act. Chapter IV of the Act containing ss. 39 to 55 laid down provisions-for the appointment of officers and servants of the Zila Parishads. Under S. 43(1) appointments to the posts of Karya Adhikari, Abhiyanta and Kar Adhikari and the posts created under sub- section (2) of S. 39 carrying an initial salary of Rs. 200 or more per month were to be made by the Parishad in consultation with the State Public Service Commission or such other Commission or Selection Board as might be constituted by the State Government in this behalf in the manner prescribed provided that if there was a difference of opinion between the Commission and the Parishad the matter was to be referred to the State Government whose decision was to be final. Under S. 47 "Notwithstanding anything contained in S. 43...... officiating and temporary appointments to posts mentioned in sub-section (1) of section 43, may be made by the appointing authority specified in section 43 or in the rules made under section 44, without consulting the Commission, but no such appointment shall, except as provided in sub- section (2), continue beyond a period of one year save after consultation with the Commis- sion." Under sub-s.(2) the appointments made under sub-s.(1) might in special circumstances and where the appointing authority was the Parishad, with the approval of the State Government be continued without consulting the Commission for a period not exceeding two years. Chapter VII of the Act of 1961 contains provisions for taxation and levy of fees and tolls in ss. 1 19 to 146. S. 120 sanctioned the continuance of imposition of circumstances and property tax which was imposed or continued under the U. P. District Boards Act 1922 until abolished or altered and all rules, regulations and bye-was, orders, notifications were continue in force as if enacted under the Act of 1961. S. 131(1) enabled the Zila Parishad to exempt for a period not exceeding one year, from the payment of a tax or any portion of a tax imposed under the Act, any person who was in its opinion, by reason of property unable to pay the same and renew the exemption as often as it deemed necessary. Sub- ss. (2) and (3) allow other such exemptions either by the Zila Parishad or the State Government. The main plank of the argument on behalf of the petitioners was that the Central Act LXI of 1949 was beyond the legisla- tive competence of the Federal Legislature, but even assuming the said Act was within the competence of the legislature as a result of the amendment of s. 108 of the U. P. District Boards Act in 1948 the board could only continue to levy the tax which was lawfully being imposed in 1948 on persons assessed according to their circumstances and properties in accordance with s. 114 and inasmuch as the tax had been reduced to Rs. 50 by the Central Act of 1941 the validation under the Professions Tax Limitation (Amendment and Validation) Act, 1949 would not serve to raise the limit of tax to beyond Rs. 50 per annum. In our view, none of these contentions have any force. Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 10 On the first branch of his submission, counsel relied on a passage in Craies on Statute Law (sixth edition, page 283) reading: "If a power is given to the Crown by statute for the purpose of enabling something to be done which is beyond the scope of the royal prerogative, it is said to be an important constitutional principle that such a power, having been once exercised, is exhausted and cannot be exercised again." It was said that the effect of sub-s. (2) read with the proviso to s. 142-A of the Government of India Act was that although a tax in respect of professions, trades and callings might have been leviable after the 31st March 1939 if it was being levied before, the power of the Federal Legislature having been once exercised to reduce the imposts over Rs. 501- per annum to that sum, it was exhausted and could not be exercised a second time. The argument is patently fallacious. Here there is no question of any prerogative and the proviso cannot be read to give the legislature power to alter the quantum of assessment once for all. Clearly it gave power to the Federal Legislature to fix a rate of such tax in substitution for the one which was already prevailing on the 31st March 1939 and it could do so not only once but from time to time as is apparent from the use of the expression : "unless for the time being provision to the contrary is made by a law of the Federal Legislature." The words "unless for the time being" indicate that the Legislature could at any point of time substitute a fresh rate of tax for the one prevailing. It follows that it was open to the Federal Legislature to make such substitution more than once. Having reduced the rate of Rs. 50 by the Professional Tax Limitation Act the Legislature took power again to substitute the old rate to tax for the sum of Rs. 50. This substitution became effective as from the date of the Professions Tax Limitation Act, 1941 by the insertion of items 3-A and 3-B to the Schedule to the said Act. S. 3 of the Act of 1949 validated imposts for the period intervening between 1941 and 1949. Counsel sought to rely on a decision of this Court in B. M. Lakhani v. Malkapur Municipality (1) in aid of his contention that a fresh Act had to be re-enacted after 1949. In that case the appellants had filed a suit to restrain the municipality from recovery of "Bale and Bhoja" tax for the season 1953-54 and for the subsequent seasons and for a decree for refund of the amount paid contending that the tax was ultra vires the municipality. One of the points there canvassed was, whether the levy of the tax by the municipality was valid in law. The municipality was constituted in 1905 under S. 41(1) cls.(a) and (b) of The Berar Municipal Act, 1886. It purported to levy, with effect from October 1, 1912, a tax known as the Bale and Boja tax on cotton ginned and pressed in Ginning and Pressing factories at certain rates. On the 2nd October 1939 the municipality resolved to revise the rates and by notification dated January 2, 1940 under S. 67(5) of the C. P. and Berar Municipalities Act, 1922 tax was permitted to be levied at the rate of four annas per, 'bale with effect from October 1, 1939. The Court observed that the notification of 1940 was not saved by the proviso to, S. 142-A but the municipality collected tax at the rates set out in the said notification. Accordingly the Court held that Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 11 if the notification of 1940 was ineffective under the Government of India Act, 1935 it could not be revived under the Constitution by virtue of Art. 276(2) proviso. Clearly, that case is distinguishable from the facts of the case before us. In this case the impost remained the same between the passing of the Government of India Act, 1935 and the commencement of the Constitution. The amendment of S. 108 of the U. P. District Boards Act of 1922 in 1948 only allowed the continuance of the tax already imposed on persons assessed according to their circumstances and property. We cannot accept the argument that validation of the imposition of a tax by the Professions Tax Limitation (Validation and Amendment) Act. (1) A. I. R. 1970 S. C. 1002. 1949 with retrospective effect was not possible. An argument similar to that raised by the counsel for the petitioners was raised and negatived in M. P. V. Sundararamier & Co. v. The State of Andhra Pradesh (1). There it was contended on behalf of the assessees that s. 2 of the Sales Tax Laws Validation Act, 1956 which provided that no law of a State imposing or authorising the imposition of tax on inter-State sales during the period between April 1, 1951 and September 6, 1955 shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that sales took place in the course of inter- State trade, did not authorise the initiation of fresh proceedings for the imposition but only validated levies already made. Rejecting this contention it was observed (see p. 1460): "What is material to observe is that the power conferred on Parliament under Art. 286(2) is a legislative. power, and such a power conferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or restrospectively, unless there can be found in the Constitution itself a limitation on that power." and at p. 1461 "While a law prohibiting transfers (the subject matter of the appeal before the Privy Council in Punjab Province v. Daulat Singh-73 I. A. 59) must be prospective' a law authorising imposition of tax need not be. It can be both prospective and retrospective.", It necessarily follows that if the Act of 1949 was valid the imposition was saved even after 1950 under the proviso to cl. (2) of Art. 276 of the Constitution. It was next argued that the rules framed under the District Boards Act became inconsistent with and unworkable under the U.P. Zila Parishads Act. It was said that under rule 3 framed by the Local Self Government of the U. P. under s. 172 of the Act of 1922 the tax was to be assessed by an assessing officer appointed by the District Board with the help of the members of the circle. As under the Zila Parishad Act there were no circle or members, the old rule was said to have become unworkable. In our view this argument has no force. The assessment was to be done by the assessing officer appointed by the District Board. Even if there was a circle but the members of the circle refused to cooperate with him, the assessment would not be invalid. After all the help which they could render would only be limited to (i) [1958] S. C. R. 1422. Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 12 giving information about the assessees. It was quite competent for the assessing officer to proceed with the assessment even if the members refused to help him. The situation was not altered by reason of the fact that the circle and the members had disappeared. The next argument of counsel that the time schedule men- tioned in rules 4 and 5 in the notification of January 28 not having been adhered to, the assessment was illegal, must be rejected on the face of it. These rules laying down certain dates by which the work was directed to be taken in hand and completed were merely directory and not mandatory. There was nothing in these rules to suggest that if the dates were not strictly observed any prejudice would be caused to the assessee. We find ourselves unable to accept the observations to the contrary in a judgment of the Allahabad High Court dated 8th January 1963 rendered in Civil Miscellaneous Writ Petition No. 3160 of 1962 to which reference was made in this connection. In paragraph 21 of the petition, a complaint is made that the Zila Parishad had changed the rate of tax to 3 paise per rupee which is equivalent to 6 pies (old) per rupee being the rate which was in force under the District Boards Act and the minimum amount on income for levy of tax had also been raised under the Zila Parishad Act to Rs. 600 from Rs. 300 under the District Boards Act. It is pointed out in the counter affidavit of respondent No. 2 that the above statement is not correct and that the rate of 3 paise per rupee provided under S. 121 of the Zila Parishad Act was not applicable by virtue of s. 120 of the Act. The respondent further pointed out that the maximum amount on which the tax was leviable had been raised from Rs. 300 to Rs. 600 before the commencement of the Zila Parishad Act the change working in favour of the assessee. We are therefore not satisfied about the genuineness of the petitioners' complaint. A faint attempt was made to argue that the rules of 1928 were not properly framed inasmuch as the procedure laid down in the relevant chapter of the Act of 1922 was not followed strictly and the rules were not sent to Government for approval. In our view, even if there was any such irregularity in the framing of the rules, the same were cured by the publication of the notification under s. 120(3) of the Act of 1922. The last point raised by the petitioners relates to the appointment of the Kar Adhikari on the ground that it was not done in consultation with either the Public Service Commission of the State or any other Commission or body appointed in that behalf by the State Government Under s. 43 of the, U. P. Kshettra Samithis and Zila Parishads Adhiniyam, 1961 i.e. U.P. Act XXXIII of 1961. The appointment of respondent No. 2 in this case took place on 8th August 1965; the impugned assessment was made on 6th March 1968 i.e. more than two years after the date of appointment. Under s. 43 the appointment of this officer to the p t which carried an initial salary of more than Rs. 200 p.m' could be made by the Parishad in consultation with the .Public Service Commission or other Commission or Selection 'Body as might be constituted by the State Government and if there was a difference of opinion between the Commission and the Parishad the matter was to be referred to the State Government,.-' whose decision was to be final. Counsel for the respondents on the materials before this Court was only in a position to in-. form us that the State Public Service Commission had been notified of the appointment and they had not expressed any dis- approval of the same. We do not think that this was sufficient compliance with s. 43. In Chandramouleshwar Prasad v. Patna High Court (1) this Court had to consider the question of "appointment of persons to be and the posting and promotion of District Judges" in the State of Bihar which under Art. 233(1) Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 13 of the Constitution were to be made by the Governor of the State in consultation with the High Court. It appeared that there was some difference of opinion between the High Court and the Government of Bihar with regard to certain appointments and promotions of District Judges in the State of Bihar and the Government issued a notification on 17th October 1968 appointing the petitioner as temporary District and Sessions Judge Singh bhum until the appointment of a permanent officer in the vacancy caused by the retirement of an incumbent to that office. This Court found that before issuing the said notification the Government never attempted to ascertain the views of the High Court with regard to the petitioner's claim or gave the High Court any indication of its views with regard thereto. It was. observed that (p. 674) : "The Governor cannot discharge his functions under Art. 233 if he makes an appointment of a person without ascertaining the High Court's views in regard thereto............ 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." Appointing respondent No. 2 as Kar Adhikari and merely sending the papers relating to such appointment to the Public Service Commission would not therefore be in compliance with s. 43 of the Act. Even if it be regarded as a temporary appointment, it could only be effective for two years and as the assessment in this case was made beyond that date it must be held that the assessment was by a person not competent to make it. (1)[1970] 2 S. C. R. 666.] After the conclusion of the arguments of both parties, the respondents had an affidavit affirmed by one K. D. Banerjee, an Assistant in Panchayat Raj 11 Department, Government of U. P. to the effect that the State Government had created a Central transferable cadre of the class of officers, acting under s. 44 of Act XY-XIII of 1961 and that the Government had also framed rules known as U. P. Zila Parishad Central Transferable Cadre Rules, 1966 which came into force with effect from December 20, 1966. According to paragraph 8 of the rules, appointments for the first time to the cadre were to be made from amongst the officers who on the 26th April 1966 were holding the posts, inter alia, Kar Adhikari. Further, according to paragraph 9(4) of the rules, a list known as List 'C' was to be prepared containing the names of officers who as on 26th April 1966 are holding the posts of Secretary or Kar Adhikari etc. in a temporary or officiating capacity and the list was to be arranged in order of seniority. According to the affidavit the respondent No. 2 having been appointed in a temporary officiating capacity continued to be on that post under sub-r. (4) of rule 9 and his name was included in list 'C' and was being considered by the Government for permanent appointment in consultation with the State Public Service Commission. In our view the matters relied on in the affidavit do not alter the situation or improve the position of respondent No. 2 in any way. The non-obstante clause in s. 44 of Act XXXIII of 1961 only relates to sections 41, 42 and 43 and not to s. 47 which deals with officiating and temporary appointments to certain posts. It would therefore appear that by the inclusion of the name of respondent No. 2 in list 'C' he still continued to be in his officiating and temporary capacity. In terms of s. 47 therefore the appointment ceased to be valid after two years, the period having expired long before the hearing of Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 14 this matter. No argument was advanced to us on the question of the validity of s. 131 of the U. P. Zila Parishad Act and we do not express any opinion thereon. Although the major points raised by the petitioners are of no substance, we find ourselves unable to uphold the validity of the levy as it has not been shown to us that Kar Adhikari's appointment was valid in law. The order of assessment of Rs. 2,000/- on the petitioners dated 25th March, 1968 will therefore be quashed. In view of the divided success in the writ petition, we make no order as to costs. G. C. Assessment order quashed. Prakash Chand Maheshwari & Anr vs Zila Parishad, Muzaffarnagar & Ors on 7 May, 1971 15 | {
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Jayantilal Amrathlal vs The Union Of India (Uoi) on 22 February, 1971 Equivalent citations: AIR1971SC1193, (1972)4SCC174, 1971(III)UJ384(SC), AIR 1971 SUPREME COURT 1193, 1972 4 SCC 174 1971 U J (SC) 384, 1971 U J (SC) 384 Author: K.S. Hegde Bench: S.M. Sikri, G.K. Mitter, K.S. Hegde, P. Jaganmohan Reddy, A.N. Grover JUDGMENT K.S. Hegde, J. 1. The President of India promulgated a proclamation of emergency on October 26, 1962, in exercise of the powers conferred on him by Clause (1) of Article 352 of the Constitution of India, As the Parliament was not in session at that time, the President promulgated the Defence of India Ordinance on the same day (Ordinance No. IV of 1962). That Ordinance was published in the Gazette of India Extraordinary on that very day. In pursuance of the powers given by the said Ordinance, Defence of India Rules, 1962 were framed (to be hereinafter called the "Rules"). The Ordinance in question was replaced by the Defence of India Act 1962 (Act I of 1962). That Act came into force on December 12, 1962. The "Rules" framed earlier were continued under that Act. 2. By a notification published in the Gazette of India on January 9, 1963, the "Rules" were amended by in incorporating therein Part XII-A. The same is called as "Gold Control Rules, 1963". Rule 126(1) of those rules required every person not being a dealer to make a declaration within 30 days from the commencement of Part XII-A of the "Rules" or within such period as the Central Government by notification specify, to the administrator in the prescribed form, as to the quantity, description, or other particulars of the gold owned by him and Sub-rule 11 of that rule lays down that any person in possession or control of gold, not being ornaments shall be presumed, until the contrary is proved, to be the owner thereof. Under Rule 126(1), the declaration in question was required to be made before the 28th February, 1963. On February 7, 1963, the appellant made a declaration of 25 sovereigns and six gold bars, each of 26.2/3 Tolas in the prescribed form. 3. On November 18, 1964, a squad of Income-Tax Officers commenced searching the premises of the appellant. The search continued upto November 21, 1964. On November 20, 1964 the search party discovered huge amount of gold kept buried in one of the rooms of the appellant. The gold bars kept buried weighed 23,329 grams. Alongwith those bars 154 gold sovereigns weighing 1223 grams were Jayantilal Amrathlal vs The Union Of India (Uoi) on 22 February, 1971 1 also discovered The quantity of the gold so kept buried was of the value of Rs. 2,83,320/-. The discovered gold was kept in the Safe Deposit Vault of a bank and later on December 17, 1964, the same was seized by the Deputy Superintendent of Central Excise, Ahmedabad. Thereafter the Assistant Collector, Central Excise, Baroda issued a show cause notice to the appellant on June 5, 1965 requiring the appellant to show cause to the Collector of Central Excise, Baroda within 10 days of the receipt of that notice as to (1) why the gold under seizure should not be confiscated Under Rule 126-M of the Gold Control Rules and (2) why penalty Under Section 126-L(16) of the said rules should not be imposed on him. 4. The appellant challenged the validity of that notice before the High Court of Gujarat by means of a writ petition under Article 226 of the Constitution. The High Court upheld the validity of the notice in so far as related to the confiscation of the gold seized but ruled that the proceedings relating to the imposition of penalty were invalid in law. After the judgment of the High Court, the Collector of Central Excise by means of his communication dated December 6, 1968, informed the appellant that the previous notice is confined to show cause as to why the gold seized should not be confiscated. On January 10, 1968, when the writ petition of the appellant was pending before the High Court, the President withdrew the proclamation of emergency. Thereafter the Gold (Control) Ordinance of 1968 was issued. That Ordinance repealed Part XII-A of the "Rules". The provisions therein were replaced by the provisions of the Ordinance. Section 117(1) of the Ordinance dealt with Repeals and Savings. Section 117 provided : (1) As from the commencement of this Ordinance, the provisions of Part XII-A of the Defence of India Rules, 1962 shall stand repealed and upon such repeal, Section 6 of the General Clauses Act, 1897, shall apply as if the said Part were a Central Act; (2) Notwithstanding the repeal made by Sub-section (1) but without prejudice to the application of Section 6 of the General Clauses Act, 1897, any notification order, direction, appointment or declaration made or any notice, licence or certificate issued or permission, authorisation or exemption granted or any confiscation adjudged or penalty or fine imposed or any forfeiture ordered or any other thing done or any other action taken under or in pursuance of the provisions of Part XII-A of the Defence of India Rules, 1962, so far as it is not inconsistent with the provisions of this Ordinance be deemed to have been made, issued, granted, adjudged, imposed, ordered done or taken under the corresponding provisions of this Ordinance. 5. In view of Section 117 of the Gold (Control) Ordinance, the notice issued on June 5, 1965, initiating proceedings for forfeiting the gold seized must be deemed to have continued. The provisions in the "Rules" relating to forfeiture are not inconsistent with any of the provisions of the Gold (Control) Ordinance, 1968. 6. On August 24, 1968, the Parliament passed the Gold (Control) Act, 1968. The same received the assent of the President on September 1, 1968 and came into force on and from that date. By Section 116(1) of that Act Gold (Control) Ordinance, 1968 was repealed. Section 116(2) provided : Jayantilal Amrathlal vs The Union Of India (Uoi) on 22 February, 1971 2 Notwithstanding such repeal, anything done or any action taken including any notification, order or appointment made, direction given, notice, licence or certificate issued, permission, authorisation or exemption granted, confiscation adjudged d, penalty or fine imposed, or forfeiture ordered, whether under the Gold (Control) Ordinance 1968 or Part XII-A of the Defence of India Rules, 1962, shall in so tar as it is not inconsistent with the provisions of this Act, be deemed to have been done, taken, made, given, issued, granted, adjudged, imposed or ordered, as the case may be, under the corresponding provision of this Act, as if this Act had commenced on the 29th day of June, 1968. 7. In view of Section 116(2) of the Gold (Control) Act, 1968, it was urged on behalf of the appellant that the notice issued on June 5, 1965 can no more be operative because under the Gold (Control) Act, 1968, there are no provisions for making declaration relating to the possession of primary gold. At this stage it may be noticed that under the "Rules" every person who was in possession of primary gold, exceeding the prescribed weight was required to convert the same either into ornaments or sell the same to the licensed dealers within the time prescribed by the "Rules". Possession of primary gold thereafter exceeding the prescribed limit was an offence. That period had expired long before the Gold (Control) Act, 1968 came into force. Hence the Gold (Control) Act naturally did not make any provision for a declaration of the possession of primary gold. In view of that circumstance it was urged on behalf of the appellant that the provisions in the "Rules" requiring a declaration to be made in respect of the possession of primary gold are inconsistent with the provisions of the Gold (Control) Act and therefore the notice issued under the "Rules" cannot be considered as being continued under the provisions of the Gold (Control) Act, 1968. 8. The above contention is untenable. There are no provisions in the Gold (Control) Act, 1968 which are inconsistent with Rule 126(1)(10) of the "Rules". That being so, action taken under that rule must be deemed to be continuing in view of Section 6 of the General Clauses Act, 1897. It is true that Gold (Control) Act, 1968 does not purport to incorporate into that Act the provisions of Section 6 of the General Clauses Act. But the provisions therein are not inconsistent with the provisions in Section 6 of the General Clauses Act. Hence the provisions of Section 6 of the General Clauses Act are attracted in view of the repeal of the Gold (Control) Ordinance, 1968. As the Gold (Control) Act, does not exhibit a difference or contrary intention, proceedings initiated under the repealed law must be held to continue. We must also remember that by Gold (Control) Ordinance, ''Rules" were deemed as an act of Parliament. Hence on the repeal of the "Rules" and the Gold (Control) Ordinance, 1968, the consequences mentioned in Section 6 of the General Clauses Act, follow. For ascertaining whether there is a contrary intention, one has to look into the provisions of the Gold (Control) Act, 1968. In order to see whether the rights and liabilities under the repealed law have been put an end to by the new enactment, the proper approach is not to, enquire if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed law but whether it has taken away those rights and liabilities The absence of a saving clause in a new enactment preserving the rights and liabilities under the repealed law is neither material nor decisive of the question see State of Punjab v. Mohar Singh and T.S. Baliah v. Income-tax Officer, Central Circle VI, Madras 72 ITR 787. Jayantilal Amrathlal vs The Union Of India (Uoi) on 22 February, 1971 3 9. For the reasons mentioned above we agree with the High Court that the proceedings commenced by the Collector of Central Excise by means of the notice dated June 5, 1965 must be deemed to be continuing. 10. In the result this appeal fails and the same is dismissed with costs. Jayantilal Amrathlal vs The Union Of India (Uoi) on 22 February, 1971 4 | {
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Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 Equivalent citations: 1971 AIR 974, 1971 SCR (3) 815, AIR 1971 SUPREME COURT 974 Author: K.S. Hegde Bench: K.S. Hegde, S.M. Sikri, G.K. Mitter, P. Jaganmohan Reddy PETITIONER: LALJI RAJA & SONS. Vs. RESPONDENT: FIRM HANSRAJ NATHURAM DATE OF JUDGMENT23/02/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. BHARGAVA, VISHISHTHA SIKRI, S.M. (CJ) MITTER, G.K. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 974 1971 SCR (3) 815 1971 SCC (1) 721 CITATOR INFO : F 1977 SC 164 (9) R 1980 SC 101 (3) RF 1989 SC1614 (14) R 1991 SC2156 (10) ACT: Code of Civil Procedure, 1908, ss. 2(5), 2(12), 20, 38, 39, 40 48-Code of Civil Procedure (Amendment) Act, 1950 (Act 2 of 1951), s. 20(1) (b)-Decree passed under Code can be transferred to any court governed by Code-Court in Madhya Bharat not governed by Code prior to passing of Act 2 of 1951-Transfer of decree from West Bengal Court to Madhya Bharat Court while invalid before passing of Act 2 of 1951 could be validly made thereafter-Foreign Court, 'Foreign Decree', meaning of-Foreign Decree when a nullity- Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 1 Privileges' and 'rights' when protected under s. 20(1) (b) of Act 2 of 1951-Limitation for Execution Section 48 whether provides a bar or period of limitation. HEADNOTE: The appellants obtained a decree against the respondent in the court of Sub-Judge, Bankura (West Bengal) on December 3, 1949. On March 28, 1950 they applied to the court which passed the decree to transfer the decree with a certificate of non-satisfaction of the court at Morgan in the then State of Madhya Bharat. It was ordered accordingly. The Judgment debtors resisted the execute on the ground that the court had no jurisdiction to execute the same as the decree was that of a foreign court and that the same had been passed ex-parte. The court accepted that contention and dismissed the execution petition on December 29, 1950. On April , 1951 the Code of Civil Procedure (Amendment) Act 2 of 1951 came into force. By this Act the Code was extended to the former State of Madhya Bharat as well as various other places. Meanwhile the appellants appealed against the order of the Additional District Judge Morena dismissing the execution petition to the High Court of Madhya pradesh. The appeal was allowed. In further appeal this Court 'restored the order of the Addl. District Judge, Morena. Thereafter on February 15, 1963 the appellants filed another execution case before the Bankura Court praying for the transfer of the decree to the Molrena Court for execution. The Bankura Court again ordered the transfer of the decree of the Morena Court. The judgment debtors resisted execute on the flowing grounds : (1) that it was barred by yes judicature in view of the aforesaid decision of this Court; (2) that it was barred by s. 48 of the Code of Civil Procedure; (3) that it was barred by limitation and (4) that it was not executable because it was the decree of a foreign court. The Addl. District Judge rejected the objections. The High Court in appeal agreed with the executing court that the execution petition was neiber barred by resjudicata nor was there any bar of limitation but it disagreed with that court and held that the decree was not executable as the court which passed the decree was a foreign court. The decree holders filed the present appeal by special leave. The questions which fell for consideration were : (i) whether the decree under execution was not executable by courts situate in the area comprised in the former State of Madhya Bharat; (ii) whether the decree was barred by s. 48 of the Code. HELD:Per Sikri C.J., Mitter, Hyde and Bhargava JJ. (1) (a) On the date when the decree under execution was passed foreign court' was 8-1 100 SupCII71 816 Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 2 defined in s. 2(5) of the Code as a court situate beyond the limits of British India which had no authority in British India and was not established or continued by the Central Government. After the amendment of the Code of Civil Procedure in 1951. 'foreign court' under the Code means a court situate outside India and not established or continued by the authority of the Central Government. Whether we take the earlier definition or the present definition the Bankura Court could not be considered as a foreign court within the meaning of that expression in the Code. 'Foreign judgment' is defined as the 'judgment of a foreign court'. Hence the decree under execution could not be considered as a foreign decree for the purpose of the Code. [820 D-G] Accordingly the judgment-debtors could not take advantage of the provision in s. 13(b) of the Code under which the ex- parte decree of a foreign court is not conclusive. Nor could they take advantage of s. 13(d). They were served with notice of suit but did not choose to appear before the court. Hence, there was Po basis for the contention that any principle of natural justice has been contravened. Further s. 13(d) was not applicable because the judgment in question was not a foreign judgment. [821 D] (b) Under Private International Law a decree passed by a foreign court to whose juri diction a judgment-debtor had not submitted is an absolute nullity only if the local legislature had not conferred jurisdiction on the domestic courts over the foreigners either generally or in specified circumstances. Clause (c) of s. 20 of the Code provides that subject to the limitations mentioned in the earlier sections of the Code a suit can be instituted in a court within the local limits of whose jurisdiction the cause of action wholly or in part, arises. This provision confers jurisdiction on a court in India over foreigners when the cause of action arises within its jurisdiction. There was not dispute in the present case that the cause of action for the suit which led up to the decree under execution arose within the jurisdict on of the Bankura Court. Hence, it must be held that the suit in question was properly instituted. Accordingly the decree in question was a valid decree though it might not have been executable at one stage in courts in the former Indian States [822 B-F] Sardar Gurdyal Singh v. The Rajah of Faridkot, 21 I.A. 171, referred to. (c) A combined reading of ss. 2(12), 38, 39 and 40 of the Code shows that a decree can be transferred for execution only to a court to which the Code apple . This is what was ruled by this Court in Hansraj Nathu Ram's case. But by the date the transfer in the present case was made, the Code had been extended to the whole of India. It followed that the transfer of the decree in question which was not a foreign decree, to the Morena Court, was in accordance with the provisions of the Code. [823 B-D] Hansraj Nathu Ram v. Lalii Raja & Sons of Bankura, [1963] 2 Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 3 S.C.R. 619, applied. Narsingh Rao Shitole v. Shri Shankar Saran & Ors., [1963] 2 S.C.R. 577, distinguished. (d) Section 20(1)(b) of the Code of Civil Procedure Amendment Act, 1951 by which the Code was extended to Madhya Bharat and other areas undoubtedly protects the right acquired and privileges accrued under the law repealed by the amending Act. But even by straining the language of the provision it cannot be said that the non-executabilitv of the decree within a particular territory can be considered a privilege [824 E-F] 817 Nor is it a 'right accrued' within the meaning of s. 20(1) (b) of the Code of Civil Procedure (Amendment) Act, 1950. In the first peace in order to get the benefit of this provision the non-executability of the decree must be a right, and secondly it must be a right that had accrued from the provisions of the repealed law. It Was difficult to consider the non-executability of the decree in Madhya Bharat as a vested right of the judgment debtors. The non- executability in question pertained to the jurisdiction of certain courts and not to the "rights of the judgment debtors. Further the relevant provision of the Code of Civil Proedue in force in Madhya Bharat did not confer the, right claimed by the judgment debtors. All that had happened in view of the extension of +he Code to the whole of India in 1951 was that the decrees which could have been executed only by courts in British India were made' executable in the whole of India. The change made was one relating to procedure and jury diction. By the extension of the Code to Madhya Bharat, want of jurisdiction on the part of the Morena Court was remedied and that court was now competent to execute the decree [825 A-E] Hamilton Gell v. White [1922] 2 K.B 422, Abbot v. Minister for Lands, [1895] A.C. 425 and G. Ogden Industries Pvt. Ltd. v. Lucas, [1969] 1 All E.R. 121, applied. (ii)The execution was also not barred, by s. 48 of the Cod-.. For considering the true impact of cl. (b) of sub-s. 2 of s. 48 of the Code provisions of Arts. 181 and 182 of the Limitation Act, 1908 have also to be taken into consideration. These provisions clearly go to indicate that the period prescribed under s. 48(1) of the Code is a period of limitation. This interpretation is strengthened by the subsequent history of the legislation. By the Limitation Act, 1963 s. 48 of the Code is deleted. It-, place has not been taken by Art. 136 of the Limtation Act of 1963 The High Courts also are now unanimous that s. 48 of tile (ode is controlled by the provisions of the Limitation Act, 1908. [828 A-C] Kandaswami Pillai v. Kamappa Chetty, A-I-R, 1952 Mad. 186 (F.B.), Durg v. Poncham, I.L.R. [1939] All. 647, Sitaram v. Chunnilalsa, I.L.R. [1944] Nag. 250, Amarendra v. Manindra, A.I.R.'1955 Cal. 269, Krishna Chandra v Parovatamma, A.I.R. Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 4 1953 Orissa 13 and Ramgopal v. Sidram, A.I.R. 1943 Bom. 164 referred to. Per Jaganmohan Reddy, J.-(Concurring) No question of 'a vested right or privilege arose to entitle the respondent to challenge execution proceedings in Morena Court. The decree granted by the Bankura Court was executable by the Courts governed by the same Code, by talk Court which passed it or by the Court to which it was transferred. One the Code was made applicable to the whole of India by Amendment Act 11 of 1951 the decree was no longer a foreign decree qua the Morena Court which was a court under the Code to which the Bankura Court could transfer the decree for execution. No doubt in' Shitole's case it was observed that s. 13 of the Code creates substantive rights and not merely procedural and therefore defenses that were open to the resno-dents were not taken away by any constitutional changes, but the ratio of the decision was that the Gwalior Court not being a court that passed the decree after the coming into force of Act 11 of 1951 the Allahabad Court could not execute it. The impediment did not exist now in that the Bankura Court bad transferred the decree to a court under the Code. the plea that s. 48 Civil Procedure Code presents a bar of limitation was also not tenable. [831 F-H] 818 Kishendas v. Indo-Carnatic Bank Ltd. A.I.R. 1958 A.P. 407 Sardar Gurdayal Singh V. Raja of Firidkote, 21 I.A. 171, Rai Rajendra Sardar Maloji Narsingh Rao Shirole v. Shri Shankar Saran, [1963] 2 S.C.R. 577 and Hansaj Nathuram Y. Lalji Raja JUDGMENT: & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2427 of1966. Appeal by special leave from the judgment and order dated August 27, 1964 of the Madhya Pradesh High Court in Misc. Appeal No. 20 of 1964. S. C. Majumdar and R. K. fain, for the appellant. W. S. Barlingay, Ramesh Mali and Ganpat Rai, for the respondent. The Judgment of S, M. SIKRI, C.J., G. K. MITTER, K. S. HEGDE and V. BHARGAVA, JJ. was delivered by HEGDE, J. P. JAGAMOHAN REDDY, J. gave a separate Opinion: Hegde, J. This is an execution appeal. The decree-holders are the appellants herein. This case has a long and chequered history. The decree-holders obtained a decree against the respondents in the court of Sub-Judge, Bankura (West Bengal) for a sum of over Rs. 12,000/-, on December 3, 1949. On March 28, 1950 they applied to the court which passed the decree to transfer the decree together with a certificate of non-satisfaction to the court at Morena in the then Madhya Bharat State for execution. It was ordered accordingly.. The execution proceedings commenced in the court of Additional District Judge at Morena on September 21, 1950 (Money Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 5 Execution Case No. 8 of 1950). The judgment-debtors resisted the execution on the ground that the court had no jurisdiction to execute the same as the decree was that of a foreign court and that the same had been passed exparte. The court accepted that contention and dismissed the execution petition on December 29, 1950. On April 1, 1951 the Code of Civil Procedure (Amendment) Act, (Act 11 of 1951) came into force. As a result of that the Code of Civil Procedure (in short the 'Code') was extended to the former State of Madhya Bharat as well as to various other places. Meanwhile the decree-holders appealed against the order of the learned Additional District Judge, Morena dismissing the execution petition, to the High Court of Madhya Pradesh. The Madhya Pradesh High Court allowed their appeal. As against that the judgment debtors appealed to this Court. This Court allowed the appeal of the judgment- debtors and restored the order of the learned Additional District Judge,, 'Morena. The decision of this Court is reported in Hansraj Nathu Ram v. Lalji Raj and sons of Bankura(1). Therein this Court ruled that the transfer ordered by (1) [1963] 2 S.C.R. 619. the Bankura court was without jurisdiction as on that date 'the Code' did not apply to the Morena court.. This Court held that Morena court not being a court to which the, Code' apple, the decree could not have been transport to it It further bed that ss. 38 and 39 of 'the Code' did not afford jurisdiction for such a transfer. It may be noted that at the time the Bankura Court ordered the transfer of the decree, the Morena court was governed by the Indian Code of Civil Procedure as adapted by the Madhya Bharat Adaptation Order, 1948. In other words it was governed 'by a law passed by the then Madhya Bharat State. In the course of its judgment this Court observed that under 'the Code' " a decree can be executed by a court which passed the decree or to which it was transport for executing and the decree which could be transferred has to be a decree 'passed under the Code and the court to which it could be transferred has to be a court which was governed by the Indian Code of Civil Procedure". The first stage of the execution proceedings came to an end by the decision of this Court rendered on April 30, 1962. On February 15, 1963, the decree holders filed another exe- cution case before the Bankura court. Therein they prayed for the transfer of the decree again to the Morena court for execution. As noticed earlier, by that time 'the Code' had been extended to the Madhya Bharat State which had become a part of the State of Madhya Pradesh. The Bankura court again ordered the mans fer of the decree to the Morena court. The execution proceedings were started afresh in the Morena court on August 31, 1963 (Execution Case No. 1 of 1963). The judgment-debt- resisted the execution on various grounds viz. (a) that it is barred by res-judicata in view of the decision of this Court referred to earlier-, (b) that it is barred by s. 48. of 'the. Code'; (c) that it is barred by limitation; and (d) that the decree is not executable as it is a decree of a foreign court. Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 6 The learned Additional District Judge rejected the objections raised by the judgment-debtors. The judgment- debtors appealed against that order to the High Court of Madhva Pradesh. The High Court agreed with the executing court that the execution petition is neither barred by res- judicata nor by s. 48 of "the Code', nor is there any bar of limitation.but it disagreed with that court and held that the decree was not evecutable as the court which passed the decree was a foreign court. In arriving at that conclusion it purported to rely on the decision of this Court in Rai Rajendra Sardar Maloji Narsingh Rao Shitole v. v. Sri Shankar- Saran and Ors..(1). Aggrieved by that decision the decree-holders have brought this appeal by special leave. From the contentions advanced before us, two questions arise 1. [1963]2 S.C.R. 577. for decision. They are (1) whether the decree under execution is not executable by courts situate in the area comprised in the former State of Madhya Bharat and (2) whether the decree is barred by S. 48 of 'the Code'. The contention of the Judgment-debtors is that the decree under execution being a decree of a foreign court is a nullity qua the courts in the former State, of Madhya Bharat and therefore the same is not executable in the Morena court. According to the decree-holders the decree in question is not a decree of a foreign court as contemplated by 'the Code' and the court -to which the decree is transferred for execution namely the Morena court is a 'court' ascontemplated by ss. 38 and 39 of 'the Code' and therefore therecan be no valid objection to its execution in the Morena court. Before referring to the decided cases on the point it is necessary to read the relevant provisions of 'the Code' as the execution is sought in accordance with the provisions therein. 'Foreign Court is defined in s. 2(5) of 'the Code'. That definition as it stood on the date the decree under execution was passed read thus "foreign -court" -means a Court situate beyond the limits of British;: India which has no authority in British India and, is: -not established or continued by the Central Government.", A new definition of foreign court" was substituted by the Code of Civil Prcedure (Amendment) Act 11 of 1951. That definition reads "foreign court" means a court situate outside India and not established or continued by the authority of the Central Government". Whether we take the earlier definition or the present definition into consideration the Bankura court, cannot be considered as a "foreign court" within 'the meaning of that expression in 'the Code'. Foreign judgment is defined in 'the Code' as the judgment of 'a foreign court'. (S. 2(6) of 'the Code'). Hence the decree under execution cannot be considered as a foreign decree for the purpose of the Code. Section 13 of 'the Code' provides that "A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or, between parties under whom they or any of them claim litigating under the same title except (b) where it hasnot, been given on the merits of the case." The judgment with which we are concerned in this case was an ex-parse judgment. The Bankura court had no jurisdiction over the judgment-debtors. The Judgment-debtors did not submit themselves to the jurisdiction of that court though they were served with a notice of the suit. Hence if the Bankura court can be considered as a foreign court then s, 13(b) would have come to the rescue of the Judgment-debtors and it would have enabled them to pread that the judgment in Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 7 question was not conclusive and consequenty the decree is not binding against them. But as the judgment in question cannot be considered as a judgment of a foreign court, they can take no assistance from s. 13(b). But assistance was sought to be taken from s. 13(d) which says that the foreign judgments are not conclusive "where the proceedings in which the judgment was obtained are opposed to natural justice". It was urged on behalf of the judgmentdebtors that as the decree under execution was an ex-parte decree, we must hold that the proceedings in which the judgment was obtained were opposed to natural justice. We are unable to accede to this contention. As mentioned earlier, the judgment-debtors were served with the notice of the suit. They did not choose to appear before the court, Hence there is no basis for the contention that any principle of natural justice had been contravened. Further as held earlier the judgment in question is not a foreign judgment. Reliance was placed on Private International Law in support of the contention that in a personal action, a decree pro- nounced in absentee by a foreign court, to the jurisdiction of which the defendant had not in any way submitted himself is an absolute nudity. It was urged that the Bankura court had no jurisdiction over the judgment-debtors and therefore the decree passed being one pronounced in absentem is a nullity. In support of this contention reliance was placed on the decision of the Judicial Committee in Sirdar Gurdval Singh v. The Rajah of Faridkote(1). Therein the Judicial Committee observed "In a personal action, to which none of these causes of jurisdiction apply, a decree pronounced in absentem by a foreign Court, to the jurisdiction of which the Defendant has not in any way submitted himself, is by international law an absolute nullity." But the Board qualified those observations by the following words : "He is under no obligation of any kind to obey it; and it must be regarded as a mere nullity by the Courts (1). 21 I.A. 171. of every nation except (when authorised by special local legislation) in the country of the forum by which it was pronounced." The above remarks of the Board indicate that even a decree which is pronounced in absentem by a foreign court is valid and executable in the country of the forum by which it was pronounced when authorised by special local legislation. A decree passed by' a foreign court to whose jurisdiction a judgment-debtor had not submitted is an absolute nullity only if the local legislature had not conferred upon jurisdiction on the domestic courts over the foreigners either generally or under specified circumstances. Section 20(c) of 'the Code' confers jurisdiction on a court in India over the foreigners if the cause of action arises within the jurisdiction of that court. Hence the observation of the Board quoted in some of the decisions of the courts in India including the decision of this Court in Shitole's case(1) that such a decree is an absolute nullity' may not be apposite. It may be more appropriate to say that the decree in question is not executable in courts outside this country. The board itself had noticed that this rule of Private International law is subject to special local legislation. Clause (c) of s. 20 of 'the Code' provided at the relevant time and still provides that subject to the limitations mentioned in the earlier sections of 'the Code', a suit can be instituted in a court within the local limits of whose jurisdiction the cause of action. wholly or in part, arises. There Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 8 is no dispute in this case that the cause of action for the suit which led up to the decree under execution arose within the jurisdiction of Bankura court. Hence it must be held that the suit in question was a properly instituted suit. From that it follows that the decree in question is a valid decree though it might not have been executable at one stage in courts in the former Indian States. This takes us to ss. 38 and 39 of 'the Code'. Section 38 provides that a decree may be executed either by the court which passed it, or by the court to which it is sent for execution. Section 39(1) to the extent it is material for our present purpose prescribes "The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court- (a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain within the local limits of the jurisdiction of such other Court........ (1) [1963] 2 S.C.R. 577. Section 40 prescribes "Where a decree is sent for execution in another State, it shall be sent to such Court and executed in such manner as may be prescribed by rules in force in that State." Rules are defined in s. 2(12) as meaning Rules and Forms contained in the 1st Schedule or made under s. 122 or s. 125 of 'the Code'. On a combined reading of ss. 2(12), 33, 39 and 40, it follows that a decree can be transferred for execution only to a court to which 'the Code' applies. This is what was ruled by this Court in Hansraj Nathu Ram v. Lalji Raja and sonw cf Bankura(1). But by the date the impugned transfer was made, 'the Code' had been extended to the whole of India. In fact the court to which the decree was transferred is now an entirely new court in the eye of the Iaw-see the decision of this Court in Shitole's case(2). From the foregoing discussion., it follows that the decree under execution is not a foreign decree and its transfer to the Morena court is in accordance with the provisions of the Code'. That being so, the decree under execution satisfies the dictum of this Court in Hansraj Nathu Ram v. Lalji Raja and sons(1) that "a decree can be executed by a court which passed the decree or to which it was transferred for execution and the decree which could be transferred has to be a decree Passed under the Code and the Court to which it could be transferred has to be a Court which was governed by the Indian Code of Civil Procedure." It was next urged on behalf of the judgment-debtor that in view of the decision of this Court in Shitole's cave (supra) we must hold that the decree is a nullity and that it cannot be executed at all in the courts situate in the former State of Madhya Bharat. In Shitole's case (sunra) this Court was called upon to consider a converse case. Therein the decree under execution was one passed by a court in Gwalior State in a suit instituted in May 1947. The defendants were the residents of U.P. They did not appeal before the Gwalior court though served with the notice. An ex-parte decree was passed against them in November, 1948. On September, 1951, the Gwalior court transferred the decree for execution to Allahabad and on October 16. 1951, the decree-holder filed an application for execution of the decree before the Allahabad Court. The judgmentdebtors contended that the decree being a decree of foreign court to whose jurisdiction they had not submitted, was a mullity and the execution application in respect thereof was not majntanable. That contention was accented by this Court. It may be noted that the Gwalior Court was not a court constituted under the (1) [1963]2 S.C.R. 619. Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 9 (2) [1963]2 S.C.R. 577. provisions of 'the Code'. It was admittedly a foreign court for the purpose of any proceedings under the Code'. The ratio of that decision is wholly inapplicable to the present case. The question whether a decree is a foreign decree or whether it can be transferred to another court for execution has to be judged by the provisions of 'the, Code'. It was' next contended that in view of S. 20 cl. (b) of 'the Code' of Civil Procedure (Amendment) Act, 1951 by which the Code is extneded to Madhya Bharat and other areas, the judg- ment-debtors' right to resist the execution of the decree is protected. Section 20(1) of the Act deals with Repeals and Savings. That section to the extent relevant for our present purpose reads : "If, immediately before the date on which the said Code comes into force in any part B State corresponding to the said Code, that law shall on that date stand repealed. Provided that the repeal shall not affiec (b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed................... ;................ as if this Act had not been passed. This provisions undoubtedly protects the rights acquired and privileges accrued under the law repealed by the amending Act. Therefore the question for decision is whether the non-executability of the decree in the Morena court under the law in force in Madhya Bharat before the extension of 'the Code' can be said to be a right accrued under the repealed law. We do not think that even by straining the language of the provision it can be said that the non- executabity of a decree within a particular territory can be considered as a privilege. Therefore the only question that we have to consider is whether it can be considered as a 'right accrued' within the meaning of s. 20(1) (b) of the Code of Civil Procedure (Amendment) Act, 1950. In the first place, in order to get the 'benefit of that provision, the noli-executability of the decree must be a right and secondly it must be a right that had accrued from the provisions of the repealed law. It is contended on behalf of the judjment-debtors that when the decree was passed, they had a right to resist the execution of the decree in Madhya Bharat in view of the provisions of the Indian Code of Civil Procedure (as adapted) which was in force in the Madhya Bharat at that time and the same is a vested right. It was further urged on their behalf that right was preserved by S. 20 (1 ) (b) of the Code of Civil Procedure Amendment Act, 1950. It is difficult to' consider the non-executability of the decree in Madhya Bharat as a vested right of the judgmentdebtors. The non-executability in question pertains to the jurisdiction of certain courts and not to the rights of the judgmentdebtors. Further the relevant provisions of the Civil Procedure Code in force in Madhya Bharat did not confer the right claimed by the judgment-debtors. All that has happened in view of the extension of 'the Code' to the whole of lndia in 1951 is that the decree which could have been executed only by courts in British India are pow made executable in the whole of India. The change made is one relating to procedure and Jurisdiction. Even before 'the Code' was extended to Madhay Bharat the dccree in question could have been executed either against, the person of the judgment-debtors if they hid happened to come Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 10 to British India or against any of their properties situate in British India. The execution of the decree within the State of Madhya Bharat was not Permissible because the arm of 'the Code' did not reach Madhya Bharat. It was the invalidity of the order transferring the decree to the Morena court that stood in the way of the decree-holders in executing their decree in that court on the earlier occasion and not because of any vested rights of the judgment-debtors. Even if the judgment-debtors had not objected to the execution of the decree, the same could not have been executed by the court at Morena on the previous occasion as that court was not promly seized of the execution , proceedings. By the extension of 'the Code' to Madhya Bharat, want of jurisdiction on the part of the Morena court was remedied and that court is now made competent to execute the decree.' That a provision to preserve the right accrued under a repealed Act "was not intended to preserve the abstract rights conferred by the repealed Act .... It only applies to specific rights given to an individual upon happening of one or the other of the events specified in statute case Lord Atkins' observations in Hamilton Gell v. White(1). The mere right. existing at the date of repealing statute; to take advantage of provisions of the statute repealed is not a "right accrued" within the meaning of the usual saving clause-see Abbot v. Minister for lands (2 ) and G. Ogden Industries Pty. Ltd. v. Lucas(3). From what has been said above, it follows that the view taken by the High Court that the decree in question is a nullity qua the Morena court cannot be accented as correct. The decree in question is neither a 'foreign decree' as contemplated by 'the Code' nor its transfer to the Morena court impermissible under 'the Code'. By the provisions of 'the Code' the Morena court is re- (1) [1922] 2 K.B. 422. (2) [1895] A.C. 425. (3) [1969] 1 All E. Report 121. quired to proceed with the execution unless there is any valid objection. We now come to the question whether the execution is barred by S. 48 of 'the Code. (That section was repeated in 1963). Both the executing court as well as the High Court have taken the view that on the facts of this case, the limitation prescribed in s. 48 of 'the Co&' is extended under S. 14(2) of the Limitation Act, 1908. Both those courts have concurrently come to the conclusion that the previous execution proceedings had been prosecuted by the decree-holders with due diligence and with good faith and the same, became infructuous in view of the fact that the Morena court had no jurisdiction to proceed with the execu- tion. The finding that the previous execution proceedings were carried on with due diligence and good faith and that the same became infructuous for want of jurisdiction on the part of the Morena court was not challenged before us. But it was urged on behalf of the judgment-debtors that S. 48 prescribed a bar and not a period of limitation and consequently the decree-holders cannot take the benefit of S. 14(2) of the Limitation Act. It is necessary to examine the correctness of this contention. Section 48 read thus "(1) Where an application to execute a decree not being a decree grantincg an injunction has been made, no order for the execution of the same decree shall be made upon any fresh application presented after the expiration of 12 years from- Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 11 (a) the date of the decree sought to be executed or (b) where the decree or any subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurring periods, the date of the default in making the payment or delivery in respect of which the applicant seeks to execute the decree. (2) Nothing in this section shall be deemed- (a) to preclude the Court from ordering the execution of a decree upon an application presented after the expiration of the said term of twelve years, where the judgment- debtor has, by fraud or force, prevented the execution of the decree at some time within twelve years immediately before the date of the application; or (b) to limit or otherwise affect the operation of article 183 of the First Schedule to the Indian Limitation Act, 1908". Art. 18 3 of the Indian Limitation Act, 1908 read thus ------------------------------------------------------------ "Description of application. Period of Time from which period Limitationbegins to run. ------------------------------------------------------------- To enforce a judgment, decree Tweleve years When a present right to enor order of any Court established force the judgment, decree or by Royal Charter in the exercise order accrues to some person of its ordinary origiial civilcapable of releasing,the right. jurisdiction or an order of the Provided 'that when the Supreme Court.judgment, decree or order has been revived, or some part of the principle money secured thereby or some interest on such money has been paid, or some acknowledgment of the right thereto has been given in writing signed by the person liable to pay such principal or interest or his agent, to the person entitled thereto or his agent, the twelve years shall be computed from the date of such revivor, payment or acknowledgment or the latest of such revivors payments or acknowledgments, as the case may be. At this stage it is also necessary to read Art. 181 of the Limitation Act of 1908. That Art prescribed that an application for which no period of limitation is provided elsewhere in the Sch. to the Limitation Act, 1908 or by s. 48 of the Code, the period of Limitation is three years and that period begins to run when the right to apply accrues. Art. 182 of that Act provided that for the execution of a decree or order of any Civil Court not provided for by article 183 or by s. 48 of 'the Code', the period of limi- tation is three years or where a certified copy of the decree or order has been registered-six years. The time from which the period was to run is set out in the 3rd Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 12 column of the Sch. The argument advanced on behalf of the judgment-debtors is that s. 48 is a self-containecr Code and the period prescribed therein is a bar and not a period of limitation and hence the decree-holders cannot take the benefit of s. 14(2). In support of this argument reliance is placed on sub-s. 2 (a) of s. 48 of 'the Code'. That sub-section undoubtedly lends some support to the contention of the judgment-debtors. It indicates as to when the period prescribed under s. 48(1) can be extended. By implication it can be urged that the period prescribed under s. 48(1) of the Code can only be extended under the circumstances mentioned in that clause and not otherwise. But in assessing the correct- ness of that contention we have to take into consideration cl. (b) of sub-s. (2) of s. 48 of the Code' as well as Arts. 181 and 182 of the Limitation Act, 1908. These provisions clearly go to indicate that the period prescribed under S. 48(1) of 'the Code' is a period of limitation. This conclusion of ours is strengthened by the subsequent history of the legislation. By the Limitation Act 1963, s. 48 of 'the Code' is deleted. Its place has now been taken by Art. 136 of the Limitation Act of 1963. At one stage, there was considerable conflict of judicial opinion as to whether S. 48 is controlled by the provisions of the Limitation Act 1908. But the High Courts which had earlier taken the view that s. 48 prescribes a bar and not limitation have now revised their opinion. The opinion amongst the High Courts is now unanimous that s. 48 of 'the Code' is controlled by the provisions of the Limitation Act, 1908-see Kandaswami Pillai v. Kamappa Chetty(1); Durg v. Panchanti(2) Sitaram v. Chunnilalsa(3); Amarendra v. Manindra ( 4) Krishna Chandra v. Paravatamma(5); and Ramgopal v. Sidratm(6). We are of the opinion that the ratio of the above decisions correctly lays down the law. That apart, it would not be appropriate to unsettle the settled position in law. For the reasons mentioned above this appeal is allowed and the order of the High Court is set aside and that of the trial court restored. The executing court is directed to proceed with the execution. The respondents shall pay the costs of the appellants both in this Court as well as in the High Court. P.Jaganmohan Reddy, J. I agree with my learned brother Hedge J., that the Appeal should be allowed. In the case of Kishendas v. Indo Carnatic Bank Ltd.(7) I bad while delivering the Judgment of the Bench expressed certain views which may appear to conflict with the view now taken. In that case the executability of a decree passed by the Madras High Court in 1940 by the City Civil Court Hyderabad on the ground of its be a foreign decree was called in question. The Respondent went into liquidation and a liquidator was appointed by the original side of Madras High Court. The liquidator filed an application under Sec. 191 of the Indian Companies Act for the recovery of a sum of Rs. 1375 from the APPellant who was a subject of H.E.H the Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 13 Nizam and a resident of Hyderabad on account (1) A,I.R. 1952 Mad. 186 (F.D.). (3) I.L.R. [1944] Nag.250. (5) A.I.R. 1953 Orissa 13. (2) I.L.R. [1010] All. 647. (4) A.I.R. 1955 Cal. 269. (6) A.I.R. 1943 Bom. 164. (7) A.I.R. 1958 A.P. 407. of unpaid calls and the Court passed on ex-parte decree on 15-8-1940 against the appellant. The liquidator field an execution petition in that Court praying for a transfer of the decree to the City Civil Court Hyderabad which was ordered on 15-3-1951 when. the Hyderabad Civil Procedure Code was in force in the Hyderabad Stat under which the decree of the Madras High Court would be a foreign decree and the only way in which the liquidator could recover the decreetal amount was by filing a suit on that decree. No doubt the Madras High Court could not on that date i.e. 15-3-1951 pass an order directing the transfer of the decree as it was to a Court which was not governed by the Indian Civil Procedure Code (hereinafter called the Code) nor on that date were there any reciprocal arrangements for ex--- cuting those decrees in the Hyderbad State. Madras High Court could not therefore transfer a decree passed by it for execution to a Court which did not satisfy the provisions of Sectons 43 to 45 on that date. It did not also appear from the facts of that case whether any notice was served on the appellant but following the decision of the majority of the High Courts in this country and also relying on the observations of their Lordships of the Privy Council in Sardar Gurdayal Singh v. Raja of Faridkot (1) that a decree pronounced in absentum by a foreign Court the Jurisdiction to which the defendant has not in any way submitted himself is by international law a nullity, I also took the view that the non-executability of the decree is to be determired as on the date on which it was passed and that no distinction can conceivably be made between the. decree passed by British Indian Courts before the merger or before the Independence when it was a foreign decree and a decree passed by the Courts of a native State before the Independence or merger in both cases the character of the Judgment would be that of a foreign Judgment and if it suffers from any want of jurisdiction or otherwise it will continue to be subject to that defect. This Court had also expressed a similar view in Raj Rajendra Sardar Malaji Marsingh Rao Shitole v. Sri Shankar Saran & OrS.(2) when it held that an ex-parte decree passed in 1948 by the Gwalior, Court against residents of U.P. who did not appear was not executable in Allahabad even though the Gwalior Court had transferred the decree in October 1957 after the Civil Procedure Amendment Act IT of 1951 come info force after which the Gwalior Court was a Court under the Cade. It was held by a majority that the decree passed by the- Gwalior Court did not change it,, nationality in spite of subsequent constitional changes or amendments in the Code of Civil Procedure. that if a decree was unenforceable in a particular Court at the time it was passed it would not become enforceable and valid simply because of the political changes that (1) 21 I.A. 171. Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 14 (2) [1963]2 S.C.R. 577. took place unless there is a specific provision to the contrary and that the decree being a nullity outside the Courts of the United States (Madhya Bharat) in the absence of any specific Provision it could not be enforced in the United States (Madhya Bharat) Kapur J., speaking for himself, Ralagopala Ayyangar and MUDholker JJ., observed at pages 594-595 thus :- "It will not be correct to say that the decree which was a nullity before the Constitution came into force suffered only from the defect of enforcibility by execution. Sec. 13 creates substantive rights and is not merely procedural and therefore defenses which were open to the Respondents were not taken away by any Constitutional changes in the absence of a specific provision to the contrary. It is erroneous to say therefore that the decree of the Gwalior Court was unenforceable when passed because of some impediment which the subsequent Constitutional changes had removed; but that decree suffered from a more fundamental defect of being a nullity and the rights and liabilities created under it remained unaffected. by subsequent changes". The contention that the decree of the Gwalior Court could be executed after its transfer on September 14, 1951 when the Civil Procedure Code came into force throughout India by virtue of Act 11 of 1951 and that therefore the Gwalior Court had the power to transfer the decree which the Allahabad Court had under the law authority to execute was also negatived for the reason that the "Court which made the order of transfer in September 1951 was then not the Court which passed the decree within the meaning of Sec. 39". Das Gupta J., with whom Sarkar J., as he then was, concurred, did not find it necessary to deal with the question of foreign decree which as he said the Allahabad Court rightly considered a nullity. On the second and third question he held that Allahabad had no power to execute the decree under Sec. 38 of the Civil Procedure Code as there was no valid transfer to it from the Court which passed the decree nor did Section 43 of the Civil Procedure Code as it stood applied to the execution of that decree. Even though the observations in Kishendas's case find support in the above Judgment the ratio of the decision in that case being that the Madras Court on the date of the order could not transfer the decree to the Hyderabad Court, the facts of the case however do not warrant an application of the principles of international law or of the decree being a nullity. The earlier-execution proceedings ended unsuccessfully with the decision in Hansraj Nathu Ram v. Lalji Raja & Sons of Bankura(1). It was decided in that case, (1) [1963]2 S.C.R. 619. that Morena Court not being a Court to Which the Code applied the decree could not have been transferred and that Section 38 and 39 of the Code did not afford jurisdiction for such transfer as the Morena Court at the time of transfer was governed by the Madhya Bharat Civil Procedur Code and not by the Code. What is relevant in the present case is that when the decree holder again applied to the Bankura Court for execution of his decree by the Morena Court after the decision of this Court in Hansraj's case, both the Court that passed the decree and the Court to which it is transferred for execution were Courts under the Code, as such no question of the Bankura decree Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 15 being a foreign decree or it being a nullity could arise. The Morena Court on the date when the order of transfer of the decree was passed by the Bankura Court is not a Court governed by the Gwalior law or Madhya Bharat law as such the impediment to executability of the Bankura decree no longer exists nor could it be considered in the light of Section 20(c) of the Amendment Act 11 of 1951 as having saved any right or privileges under the repealed procedure code of Gwalior or Madhya Bharat. Whatever may be the views expressed in the several decisions a view which I was also inclined to take in the decision referred to, though on the facts of that case it may not have been necessary, on a further a fuller Qonsideration I agree with great respect with the views of my learned brother Hegde, J., that no question of a vested right or a privilaeae arises to entitle the Respondent to challenge the execution proceedings in Morena Court. The decree granted by Bankura Court was executable by the Courts governed by the same Code by the Court which passed it or by the Court to which it transferred. Once the Code is' made applicable to the whole of India by the Amendment Act II of 1951 the decree is no longer a foreign decree qua the Morena Court which is a Court under the Code to which the Bankura Court could transfer the decree for execution. No doubt in Shitole case it was observed that Section 13 of the Code creates substantive rights and not merely procedural and therefore defence that were open to the Respondents were not taken away by any Constitutional changes but the ratio of the decision was that the Gwalior Court not being a Court that passed the decree after the coming into force of Act IT of 1951 the Allahabad Court could not execute it. That im. pediment does not exist now in that the Bankura Court has transferred the decree to a Court under I the Code. 'Me plea that Section 48 Civil Procedure Code presents a bar of limitation is also not tenable. In the result-I agree that the appeal should beallowd as directed by my learned brother. G.C. Appeal allowed. L 1100 Sup Cl/71 Lalji Raja & Sons vs Firm Hansraj Nathuram on 23 February, 1971 16 | {
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Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 Equivalent citations: AIR1972SC386, [1971]82ITR804(SC), (1972)4SCC517, [1972]1SCR991, AIR 1972 SUPREME COURT 386, 1972 4 SCC 517, 1972 TAX. L. R. 163, 1972 (1) SCR 991, 1972 (1) ITJ 573, 1974 SCC (TAX) 351, 82 ITR 804, 1972 2 SCJ 102 Author: K.S. Hegde Bench: A.N. Grover, H.R. Khanna, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. This is an appeal by certificate from the decision of the High Court of Punjab and Haryana in a Reference under Section 66(1) of the Indian Income-tax Act, 1922 (to be hereinafter referred to as the Act). The question referred to the High Court for its opinion was: Whether on the facts and in the circumstances of the case, the receipt of Rs. 70,000/-by the assessee on 11-6-1954 was revenue or capital in nature. 2. The High Court held that the said receipt was capital receipt. Aggrieved by that decision the Commissioner of Income-tax came up in appeal to this Court. 3. We shall now refer to the material facts found by the Income-tax Appellate Tribunal as can be gathered from the case stated. The assessee was assessed as an individual. The relevant assessment year is 1955-56, the accounting period for the same ended on Asad sudi 1, S.Y. 2011. 4. The assessee was instrumental in discovering the existence of Kankar deposits in Jind State. He also brought about an agreement between one Shanti Parsad Jain and the erstwhile State of Jind, now a part of Punjab State for the acquisition of sole and exclusive monopoly rights of manufacturing cement in the said Jind State. That agreement was entered into on April 2, 1938. The same was to remain operative for a period of 25 years, which term was liable to be extended to 100 years at the option of the said Shanti Parsad Jain or his nominee. Shanti Parsad Jain transferred his rights under that agreement to a public limited company by name M/s. Dalmia Dadri Cement Ltd. on May 4, 1938. The assessee was one of the promoters of the said company. Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 1 5. For the services rendered by the assessee, the Dalmia Dadri Cement Co. by an agreement dated May 27, 1938 agreed, to pay him a commission of 1% on the yearly net profits earned by the company from the said cement factory. That agreement was to subsist so long as the original agreement dated April 2, 1938 subsisted. 6. The agreement dated May 27, 1938 between the assessee and the Dalmia Dadri Cement Co. was acted upon till 1950 and thereafter the company did not pay the commission agreed to be paid. Consequently the assessee filed a suit against the company claiming the commission due to him. The said suit ended in a compromise and the compromise was made a decree of court. Under that decree the assessee was to be paid Rs. 15,000/ as commission for the years 1951 and 1952 and Rs. 15,000/-as commission for the year 1953. Further he was to be paid Rs. 70,000/-by way of compensation for the termination of the agreement between him and the company as from January 1, 1954. That compensation was received by the assessee on June 11, 1954. 7. The assessee's claim that the sum of Rs. 70,000/-was capital receipt and hence not taxable in his hands was rejected by the Income-tax Officer. That officer held that the said sum of Rs. 70,000/-was a remuneration paid once and for all for the services rendered by the assessee and as such taxable in his hands. This decision was affirmed by the Appellate Assistant Commissioner, who held that the amount of Rs. 70,000/-was a lump sum compensation received for the services rendered; hence the same was a receipt in the ordinary course of assessee's business and consequently it was taxable as a revenue receipt. 8. Aggrieved by that order the assessee took up the matter in appeal to the Tribunal. The Tribunal held that the company by paying the said compensation of Rs. 70,000/-terminated the contract which enabled the assessee to receive from the said company a commission of one per cent of the net profits and as such the said receipt by the assessee was capital and not revenue. 9. Thereafter at the instance of the Commissioner the question set out earlier was referred to the High Court for its opinion which, as mentioned earlier, was answered in favour of the assessee. 10. It was not the case of the Revenue that the assessee was engaged in the business of discovering Kankar or any other mineral. He appears to have found Kankar by mere chance. It is also not the case of the Revenue that the assessee was engaged in the business of bringing about agreements between parties. In fact, it is not the case of the Revenue that the assessee was engaged in any business. There is no evidence to show that he was a business man. His discovery of Kankar as well as his part in bringing about the agreement mentioned earlier were stray acts, possibly occasioned by fortuitous circumstances. 11. Business as understood in the income-tax law connotes some real, substantial and systematic or organised course of activity or conduct with a set purpose-see the decision of this Court in Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax 26 I.T.R. 765. By this statement we do not mean to say that under no circumstance a single transaction cannot amount to a business transaction. But this is not one such. Herein we are dealing with the stray activity of a non-business man. Hence it is difficult to agree with the Revenue in its contention that the agreement entered into Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 2 by the assessee with the Dalmia Dadri Cement company should be considered as a business activity. 12. In the determination of the question whether a particular receipt is capital or an income, it is not possible to lay down any single test as infallible or any single criterion as decisive. The question must ultimately depend on the facts of the particular case and the authorities bearing on the question are valuable only as indicating the matters that have to be taken into account in reaching a decision. That, however, is not to say that the question is one of fact, for these questions between capital and income, trading profit or no trading profit, are questions which, though they may depend to a very great extent on the particular facts of each case, do involve conclusions of law to be drawn from those facts-see Commissioner of Income-tax Nagpur v. Rai Bahadur Jairam Valij and Ors. 35 I.T.R. 148. 13. The controversy whether a particular receipt is capital or revenue has engaged the attention of this Court as well as of the High Courts in numerous cases. It is, by no means an easy question to decide. It is neither feasible nor profitable to refer to those cases because in the ultimate analysis the decision in those cases rests on the facts of each case. But the case nearest to the case before us is that decided by the House of Lords in Van Den Berghs Ltd. v. Clark 19 Tax Cases 390 : (1935) 3, I.T.R. Supp. 17. The facts of that case were as follows: The assessee therein received a sum of € 450,000 in full settlement of all claims and counter-claims which existed between the assessee and a Dutch company. Both the companies had been engaged in the business of manufacturing and dealing in margarine and similar products. They had entered into pooling arrangements at as early a date as in 1908 under which they bound themselves to work in friendly alliance and to share their profits of their respective business in margarine in specified proportions. This basic agreement of 1908 was being added to and varied from time to time particularly in 1913 and 1920 and, under this, the agreement was to subsist until 1940. In 1922 the assessee made a claim against the Dutch company for about € 450,000 as the amount due to it by the Dutch company under the agreements recited just previously. This was however repudiated and the Dutch company claimed that far from owing any moneys to the assessee, moneys were owing to them. One of the methods suggested for putting an end to the dispute was by a termination of the agreement between the two companies but this was resisted by the assessee company. A settlement was, however, reached in 1927.whereby in consideration of the payment by the Dutch company of €.450,000 to the assessee as damages, the agreements were determined as at 31st December, 1927 and each party released the other from all claims thereunder. The question was whether this sum of € 450,000 was a revenue receipt on which the income-tax could be levied against the assessee. The matter came up before Finlay J. He held against the Crown. According to him the sum received was not a revenue receipt. This decision was reversed by the Court of Appeal but was restored on a further appeal by the House of Lords. Finlay J. in the course of his judgment formulated the question to be considered by him in these terms: Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 3 I agree with Mr. Latter that there are three questions here. The first is: What was this payment for ? The second is: If a payment for future rights, is it assessable ? The third question is: Ought it to go into the year 1927. 14. The learned judge's answer to the first question was that it was a payment for future rights. He held that it was really a payment for cancelling such rights as subsisted in the assessee between 1928 and 1940. Having answered the first question in that manner the learned judge held on the second question that it was not assessable. In arriving at that conclusion he reasoned thus: Not without hesitation, I have come to the conclusion that it is not liable to assessment. I think that the agreement being an agreement whereby this company had a share in the profits of another company, was a capital asset. I think that the case is to be distinguished from the case where there is a cancellation of a contract made in the ordinary course of the company's business.... But it seems to me that where one gets, as one does here, not a contract made in the course of the company's business-for it is not the business of this company to make pooling agreements or to make agreements whereby they acquired shares in the business of another company-it seems to me that where one gets a payment made in respect of the cancellation of that agreement, that, truly is a sum received by way of capital and not an income receipt at all. 15. Lord Macmillan who delivered the leading judgment of House Lords put the case thus: Now what were the appellants giving up? They gave up their whole rights under the agreements for thirteen years ahead. These agreements are called in the stated cases 'pooling agreements' but that is a very inadequate description of them, for they did much more than merely embody a system of pooling and sharing profits. If the appellants were merely receiving in one sum down aggregate of profits which they would otherwise have received over a series of years, the lump sum might be regarded as of the same nature as the ingredients of which it was composed. But even if payment is measured by annual receipts, it is not necessarily in itself an item of income.... The three agreements which the appellants consented to cancel were not ordinary commercial contracts made in the course of carrying on their trade; they were not contracts for the disposal of their products or for the engagements of agents or other employees necessary for the conduct of their business: nor were they merely agreements as to how their trading profits when earned should be distributed as between the contracting parties. On the contrary, the cancelled agreements related to the whole structure of the appellant's profit making apparatus. They regulated the appellant's activities, defined what they might and what they might not do and affected the whole conduct of their business. I have difficulty in seeing how money laid out to secure, or money received for the cancellation of, so fundamental an organisation of a trader's activities can be regarded as an income disbursement or an income receipt'.... In my opinion that asset, the congeries of rights which the appellants enjoyed under the agreements and which for a price they surrendered was Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 4 a capital asset. 16. It is now well settled that a distinction has to be drawn between a payment made for past services or discharge of past liabilities and that made for compensation for termination of an income producing asset. The former does not lose its revenue nature but the latter being a payment for destruction of a capital asset, must be considered as capital receipt. 17. The distinction between a capital receipt and a revenue receipt came up for consideration before this Court in Senairam Doongarmal v. Commissioner of Income-tax, Assam 42 T.T.R. 392. The assessee therein owned tea estate consisting of tea gardens, factories and other buildings, carried 0:1 a business of growing and manufacturing tea. The factory and other buildings on the estate were requisitioned for defence purposes by the military authorities. The assessee continued to be in possession of the tea gardens and tended them to preserve the plants but the manufacture of tea was completely stopped. The assessee was paid compensation for the year 1944-45 under the Defence of India Rules calculated on the basis of the out-turn of tea that would have been manufactured by the assessee during that period. The question was whether the amounts of compensation were revenue receipts taxable in the hands of the assessee. This Court held that the first consideration before holding a receipt to be profits or gains of business within Section 10 of the Income-tax Act was to see if there was a business at all of which it could be said to be income. The primary condition of the application of Section 10 was that tax was payable by an assessee under the head "Profits and gains of a business" in respect of a business carried on by him. Where an assessee did not carry on business at all the section could not be made applicable and any compensation for requisition of assets that he received could not bear the character of profits of a business. The Court further held that the amounts of compensation received by the assessee were not revenue receipts and did not comprise any element of income. It is true that in that case the Court did not consider whether the income in question could have been considered as income from other sources but the ratio of that decision is that the compensation paid being in respect of sterilisation of an income producing asset, the same should be considered as a capital receipt. 18. The only other decision we need make reference is the decision of this Court in Kettlewell Bullen and Co. Ltd. v. Commissioner of Income-tax, Calcutta, 53, I.T.R. 261. Therein this Court observed that it cannot be said as general rule that what is determinative of the nature of a receipt on the cancellation of a contract of agency or office is extinction or compulsory cessation of the agency or office. Where payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business or deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business and such cancellation leaves him free to carry on his trade though freed from the contract terminated, the receipt is revenue; where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee's income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt. These decisions lay down the tests to be applied in distinguishing a capital receipt from a revenue receipt. With the guidance thus afforded, let us now take a second look at the facts found for answering the question referred. The assessee, possibly, by some fortuitous circumstance discovered Kankar in some place in Jind State. This circumstance gave him an oppurtunity to bring about an Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 5 agreement between the State of Jind and Shanti Prasad Jain and when Shanti Parsad Jain transferred his right to a new company, in the formation of which the assessee had a hand, he was promised certain yearly commission on the net profits earned by the company. None of these activities of the assessee can be considered as a business activity but yet he did acquire an income yielding asset as a result of his activities. But the compromise decree destroyed that asset and in its place he was given Rs. 70,000 a compensation. This payment was neither in respect of the services rendered by him in the past nor towards the accumulated commission due to him. It was paid as compensation to him because he gave up his right to get commission in future to which he was entitled under the agreement. It was a price paid for surrendering a valuable right which in our opinion was a capital asset. Therefore that receipt must be considered as a capital receipt. 19. For the reasons mentioned above this appeal fails and the same is dismissed with costs. Commissioner Of Income-Tax, Punjab, ... vs Prabhu Dayal (Decd., By Legal ... on 6 October, 1971 6 | {
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Rajindra Nath Mahato vs T. Ganguly, Dy. Superintendent & Anr on 2 December, 1971 Equivalent citations: 1972 AIR 470, 1972 SCR (2) 671, AIR 1972 SUPREME COURT 470, 1972 CURLJ 200, 1973 MADLW (CRI) 261, 1972 2 SCR 671 Author: A.N. Ray Bench: A.N. Ray, D.G. Palekar PETITIONER: RAJINDRA NATH MAHATO Vs. RESPONDENT: T. GANGULY, DY. SUPERINTENDENT & ANR. DATE OF JUDGMENT02/12/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. PALEKAR, D.G. CITATION: 1972 AIR 470 1972 SCR (2) 671 1972 SCC (1) 450 ACT: Code of Criminal Procedure (Act 5 of 1898),ss. 202, 204 and 561A--Power to issue process--Who has--Right of High Court, to go Into weight of evidence under s. 561A. HEADNOTE: After taking cognizance of an offence against the respondent the Magistrate enquired into it and submitted a report to the Sub-Divisional Magistrate that a prima facie case was made out against the respondents. The Sub-Divisional Magistrate directed the issue of process. The High Court in a petition to quash the issue of process hold that under s. 204, the Sub-Divisional Magistrate had no right to issue process since he was not the Magistrate who had taken cognizance of the offence, and also observed that the evidence in the case came from tainted sources. Rajindra Nath Mahato vs T. Ganguly, Dy. Superintendent & Anr on 2 December, 1971 1 Dismissing the appeal to this Court, HELD: (1) Under s. 204, Cr. P.C. the Magistrate who takes cognizance could issue process and under s. 202, Cr. P.C., a Magistrate to whom a case had been transferred could issue process. Since, in the present case, the magistrate who issued process had not taken cognizance of the offence and there was no order transferring the case to him, the High Court was right in quashing the issue of process. [673 C-F] (2) Under s. 561A, Cr. P.C., the High Court could go into the question as to whether there was any legal evidence. [673 F-G] JUDGMENT: APPELLATE JURISDICTION: Criminal Appeal No. 291 of 1968. Appeal by special leave from the judgment and order dated March 28, 1968 of the Calcutta High Court in Criminal Revision No. 159 of 1968. P. K. Chatterjee, for the appellant. P. K. Chakravarty, for respondent No. 1. The Judgment of the Court was delivered by Ray, J. This is an appeal by special leave from the judgment dated 28 March, 1968 of the High Court at Calcutta quashing the processes issued against the three accused persons. The appellant on 8 March, 1966 filed a petition of complaint against the Block Development Officer Purulia, the Officer- in Charge of the local Police Station and T. Ganguly, the Deputy Superintendent of Police, Purulia under section 395 of the Indian Penal Code on the allegation that during search of the appellant's house they committed dacoity in the house. The Magistrate dismissed the complaint under section 203 of the Code of Criminal Procedure on the ground that the complaint was incompetent without sanction as the accused were Government servants. The complainant thereafter moved the Sessions Judge, Purulia against the order of dismissal. A reference was made to the Calcutta High Court. The learned Single Judge of the Calcutta High Court accepted the reference, set aside the order of the Magistrate and sent the case back for proceeding in accordance with law. On 27 March, 1967 the Magistrate Shri S. K. Ganguly took cognizance of the case and fixed a date for holding judicial enquiry. The Magistrate on 22 November, 1967 came to the conclusion that a prima facie case under section 395 of the Indian Penal Code had been made out against the three accused and submitted a report to the Sub-Divisional Magistrate, Purulia. The Sub-Divisional Magistrate, Purulia on receipt of the report of the judicial enquiry passed an order on 6 December, 1.967 directing the issue of process against all the three accused. This order forms the subject matter of the appeal. Rajindra Nath Mahato vs T. Ganguly, Dy. Superintendent & Anr on 2 December, 1971 2 One of the accused thereafter moved the High Court at Calcutta for quashing the process. The High Court at Calcutta said that cognizance of the offence was taken by the Magistrate Shri S. K. Ganguly but process was issued by the Magistrate Shri S. Sarkar and held that Shri Sarkar not having taken cognizance of the offence had no right to issue process under section 204 of the Code of Criminal Procedure. The High Court, therefore, quashed the process and observed that the learned Magistrate who had taken cognizance of the offence if he was so advised would be at liberty to issue processes against the other two accused persons. The question for consideration is whether Shri Sarkar could have issued process in the-present case. Shri Ganguly was the Magistrate who took cognizance. Shri Sarkar was not the Magistrate who took cognizance. Therefore, under section 204 of the Code of Criminal Procedure the Magistrate who took cognizance of the case could issue process. Sections 191 and 192 of the Code of Criminal Procedure con- template transfer of cases by a Magistrate, who has taken cognizance, of an offence. Section 191 of the Code of Criminal procedure of transfer of a case or commitment to the Court of sessions on the application of the accused. Section 192 of the Code of Criminal Procedure speaks of transfer of a case by a Magistrate who has taken cognizance to any Magistrate subordinate to him for enquiry or trial. In these cases where either the Magistrate has taken cogni- zance and is in session of the case or where a case is transferred by a Magistrate who has taken Cognizance to another Magistrate subordinate to him the complainant is required to be examined under section 200 of the Code of Criminal Procedure. There are certain exceptions with which we are not concerned in the the present appeal. The relevant section which confers power on the Magistrate to whom the case has been transferred to issue process is section 202 of the Code of Criminal Procedure. The language of section 202 of the Code of Criminal Procedure is that the Magistrate may, for reasons to be recorded in writing, postpone the issue of process for compelling the attendances of the person complained against. Therefore the power of the Magistrate to issue process under section 202 of the Code, of Criminal Procedure is not limited by the terms of section,204 of. the Code-of Criminal Procedure to issue process. Therefore, the two courses are : first, under section 204 of. the Code of Criminal Procedure for the Magistrate taking cognizance to issue process Or secondly under section 202 of the Code of Criminal Procedure for a Magistrate to whom a case has, been transferred to issue process. In the present case there was no order of transfer of the case, by Shri Ganguly to Shri Sarkar. The issue of process is a matter for judicial determination. Before issuing a process' the Magistrate has to examine the complainant. That is why the issue of process is by the Magistrate who has taken cognizance or the Magistrate to whom the case has been transferred. The High Court therefore correctly quashed the issue of process. It was contended on behalf of the appellant that the High Court should not have gone to the question as to whether a prima facie case was established or not. The High Court under section 561-A of the Code of Criminal Procedure can go into the question as to whether there is any legal evidence. When the High Court said that the evidence in the present case came from tainted sources and was not reliable the High Court meant what can be described as 'no case to go to the jury'. Rajindra Nath Mahato vs T. Ganguly, Dy. Superintendent & Anr on 2 December, 1971 3 The High Court correctly quashed the process against T. Ganguly. The appeal therefore fails and is dismissed. V.P.S. Appeal dismissed. Rajindra Nath Mahato vs T. Ganguly, Dy. Superintendent & Anr on 2 December, 1971 4 | {
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Commissioner Of Income-Tax (Central), ... vs Associated Industrial Development Co. ... on 7 September, 1971 Equivalent citations: AIR1972SC445, [1971]82ITR586(SC), (1972)4SCC447A Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde JUDGMENT A.N. Grover, J. 1. This is an appeal by special leave from a judgment of the Calcutta High Court in an Income-tax Reference. 2. The assessee is a private limited company. It acts as managing agents of various companies including National Pipes and Tubes Company Ltd., Indian Conduit Pipes Ltd. and National Rolling and Steel Ropes Ltd. During the assessment year 1957-58 the accounting year being the financial year ending March 31, 1957 the assessee sold 20,000 shares of the first company, 14,150 of the second company and 10 Preference shares of the third company. The sale of the shares of the first company resulted in a profit of Rs. 1,29,401/-whereas the sale of the shares of the other two companies led to a loss of Rs. 3374/-Thus there was a net profit of Rupees 1,26,027/-from the sale of shares of all the three companies. The total number of shares in the first company acquired by the assessee during the years 1943 to 1953 aggregated to 60,700 shares. Out of this holding 10,700 shares were sold in 1955 and 20,000 shares were sold during the year ending March 31, 1957. The profit that arose to the assessee on the sale of 10,700 shares in 1955 was not subjected to tax as the income tax authorities held that the assessee was not a dealer in shares. As a matter of fact the assessee had never been treated as a dealer in shares in any of the past assessments and its holdings in the various companies were treated as investment and not as stock in trade of the assessee's shares dealing business The assessee claimed that the net profit of Rs. 1,26,027/-on the sale of the aforesaid shares was capital gain. The immediate necessity for the sale of the shares was stated to be the reduction of the bank overdraft with the Central Bank of India and the entire sale proceeds were deposited with that Bank. The Income-tax Officer, however, held that the profit was taxable as the assessee was entitled under its Memorandum of Association to deal in shares. The Appellate Assistant Commissioner was of the view that the profit resulting from the sale proceeds was revenue receipt as the purchases were made in several lots and the past records showed that the assessee had been regularly purchasing and selling shares mostly of those companies of which it or its associated concerns were the managing agents. When the appeal was taken to the Tribunal it was pointed out by the departmental representative that the profit from the sale of shares in question had been credited to the profit and loss account. There was a difference of opinion between the Judicial Commissioner Of Income-Tax (Central), ... vs Associated Industrial Development Co. ... on 7 September, 1971 1 Member and the Accountant Member of the Tribunal. The Judicial Member held that the assessee was trading in shares whereas the Accountant Member took the contrary view and held that the department had failed to bring on record any evidence to show that the purchase of shares in managed companies had been made with an intention of selling them at a profit. Ultimately the case was referred to the President of the Tribunal under Section 5A(7) of the Income-tax Act 1922. The question which was referred to him was whether the assessee was or was not a dealer in shares during the relevant accounting period. The President of the Tribunal, agreed with the Judicial Member that the assessee was a dealer in shares which were confined to the shares of the managed companies. Ultimately on the Tribunal being moved the following question of law was referred to the High Court: Whether on the facts and in the circumstances of the case, the Tribunal was justified in holding that the profit of Rs. 1,26,027/-arose to the assessee in the course of its business as a dealer in shares and as such was liable to be assessed as a revenue profit? The High Court upheld the majority view of the Tribunal that the assessee was a dealer in shares. It, however, proceeded to consider the question from an entirely new angle. Its approach was like this. The facts that part of the shares were subscribed for the purpose of acquiring the managing agency of the National Pipe and Tubes Co. and that subsequently large blocks of shares were purchased and held for long period without sale and further that the shares were sold not in small blocks but in big blocks to reduce the assessee's liability to the Central Bank of India in its overdraft account showed that these shares were held by the assessee as a part of its investment It, therefore, proceeded to hold that the profit of Rs. 1,26.027 did not arise to the assessee in the course of its business as a dealer in shares. It was thus found to be a capital and not a revenue receipt. The question was answered in favour of the assessee. 3. It seems to us that the High Court went beyond the matters which were the subject matter of controversy before the departmental authorities and the Appellate Tribunal. It was never the case of the assessee at any stage that although it was a dealer in shares those shares which were the subject matter of sale were held by way of investment. It had maintained throughout that all the shares were held by it as an investor and that it could not be regarded as a dealer because the shares did not form its stock-in-trade. That case of the assessee was negatived because of the extensive dealings and other facts and circumstances which were taken into consideration. The figure of purchases and sales as also of the profits relating to the years 1954 to 1957 which were set out in the order of the President of the Tribunal justified the view that although up to a certain point of time it had been assessed as an investor but the multiplicity of the transactions occurring successively over the years supported the departmental stand that the assessee had ceased to be an investor and had become a dealer. Before the Tribunal it was open to the assessee to contend that even on the assumption that it had become a dealer and was no longer an investor in shares the particular holdings which had been cleared and the sales of which had resulted in the profit in question had always been treated by it as an investment. It can hardly be disputed that there was no bar to a dealer investing in shares. Commissioner Of Income-Tax (Central), ... vs Associated Industrial Development Co. ... on 7 September, 1971 2 But then the matter does hot rest purely on the technical question of onus which undoubtedly is initially on the revenue to prove that a particular item of receipt is taxable. Whether a particular holding of shares is by way of investment or forms part of the stock-in-trade is a matter which is within the knowledge, of the assessee who holds the shares and it should, in normal circumstances, be in a position to produce evidence from its records as to whether it has maintained any distinction between those shares which are its stock-in-trade and those which are held by way of investment. The assessee, in the present case, made no attempt whatsoever to make out a case that the shares which had been sold were a part of its capital investment. Nor did it place any material from which it could be established that those shares had been treated in its books differently from other shares held by it. The mere fact that the sale proceeds were paid into the overdraft account in which admittedly proceeds of sale of all the shares held by the assessee were being credited as and when the sales were made and that these shares had not been sold with any amount of frequency could not be regarded as sufficient to establish that these shares had been held by way of investment. Even otherwise it was for the Appellate Tribunal to give its decision on facts and since no decision was invited from the Tribunal as to whether the shares in question had been held by way of investment it was not open to the High Court to give its finding on that question which was essentially one of fact and which it was within the jurisdiction of the Tribunal to determine. 4. In the result the appeal succeeds and is allowed with costs. Instead of the answer returned by the High Court the question is answered in favour of the Revenue and against the assessee. Commissioner Of Income-Tax (Central), ... vs Associated Industrial Development Co. ... on 7 September, 1971 3 | {
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Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 Equivalent citations: AIR1971SC2474, 1971CRILJ1708, (1972)4SCC150, 1972(4)UJ57(SC), AIR 1971 SUPREME COURT 2474, 1972 4 SCC 150, 1972 (1) SCJ 198, 1972 MADLJ(CRI) 145 Author: J.M. Shelat Bench: I.D. Dua, J.M. Shelat, S.C. Roy JUDGMENT J.M. Shelat, J. 1. The appellant was, since 1945, serving as an assistant goods clerk at various railway stations on the Eastern Railway. He did so till January 1963 when he was suspended from service. The last two railway stations where he served were Buxar and Patna Junction between 1957 to 1963. 2. He was tried by the Special Judge, Patna under Section 5(i) read with Section 5(2) of the Prevention of Corruption Act, 2 of 1947, the charge being that while working as an assistant goods clerk at Buxar and Patna between April 1956 and March 1959 he was habitually accepting and obtained or agreeing to accept or demanding illegal gratification and also for misconduct in the discharge of his official duties as contemplated by Sub-section 3 of the section. His defence was that he was falsely involved in the charge by the traders who presented his strictness against transgression of the railway rule and by trade union rivals in league with the investigating officer. He a denied that he acquired or was in possession of properties or pecuniary resources disproportionate to his known sources of income. 3. The learned Trial Judge held that except for one instance when he demanded Rs. 15/-as illegal gratification the rest of the instances alleged against him had not been established. The appellant therefore, could not said to be habitually accepting or obtaining or demanding illegal gratification within the meaning of Clause (a) of Section 5(1). But he accepted the prosecution case of the appellant being in possession of properties and pecuniary resources d proportionate to the known sources of his income and on that finding held his guilty under Section 5(2) and sentenced him to two years' rigorous imprisonment On appeal against the said conviction, the High Court confirmed the sentence and dismissing the appeal held that although the case against the appellant then he was habitually demanding or accepting illegal gratification had not be proved, and only one instance of demanding bribe had been proved, it was enough for the purpose of Sub-section (2) of Section 5 that it had also been established that he was in possession of properties disproportionate to his known Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 1 sources income, and was therefore, guilty of misconduct in the discharge of his official duties as envisaged by Sub-section (3) of Section 5. Hence this appeal by special leave. 4. As regards the appellant's demand of Rs. 15/-as bribe from Chiran Lal Ladiya (P.W. 18), there was concurrent finding both of the Trial Judge ana of d the High Court. In the absence of any reason shown to us for interfering with that finding, we decline to reappraise the evidence in respect of that instance in accordance with the well-settled practice of this Court. 5. As regards the prosecution case of the appellant being in possession of properties and pecuniary resources disproportionate to his known sources of income, the evidence was that when he was appointed in 1945 in the service of the railways, he started with a monthly salary of Rs, 45/-By 1958 his salary had gradually reached Rs. 147/-exclusive of the usual deductions. As calculated by the Special Judge, the total amount of salary drawn by him from 194 to 1958 was not more than Rs. 16,172/-. This figures, as noted by the High Court, was not controverted by the appellant, and therefore, could safely b accepted. 6. As against such a modest salary, there were four savings bank accounts in the post offices at Arrah and Balia. One account was in the name of the appellant's minor son showing total deposits therein amounting to Rs. 8 176/: made between 1950 and 1953. The second account was in his own name wherein between 1950 and 1953 various amounts were deposited aggregating Rs. 3,056/-In the third account, which was in the name of his minor daughter, deposits made between 1953 and 1954 totalled Rs. 6,300/-. The fourth account was in the name of the appellant's wife That account was opened with an initial deposit of Rs. 13,005/-on May 5, 1955. On July 20, 1959, another sum of Rs. 2,237/ was deposited therein. There were, no doubt, several withdraws from these accounts during this period. But the fact was that between 1950 and 1955 the total amount of deposits made in these tour accounts came to Rs. 30,537/-. 7. The appellant's wife and children admittedly had no independent source of income. Throughout this period they were living with him. Their intenance and upkeep must have exhausted a major part, if not the entire, salary earned by the appellant. Despite that fact, the evidence showed that he had chased two trucks, one in April, 1956 for Rs. 27,810/-, and the other in January 1957 for Rs. 27,505/-. There is no gainsaying that the savings accounts and the acquisition of the two trucks meant that the appellant was in possession property which was dispropotionate in comparison with the salary he was earning during the period. Under Sub-section (3) of Section 5 the presumption of miss conduct has to be raised which the appellant had to rebut by satisfactorily counting how and wherefrom he had acquired those cash deposits and the o trucks, the total value of which came to a little more than Rs. 80,000/-aiust the total amount of salary of Rs. 16,000/-and odd drawn by him but out which very little could have been saved by him. 8. The appellant's defence was that he, his father Ramanand Upadhyaya and his step brother Radha Krishna Misra (D.W. 1) and produced me account books relating to the money lending business. D.W. 1 claimed his evidence that he was looking after the affairs of the family both during the life-time of the appellant's father and after his death in 1958, and was therefore, in a position to depose about the said business and the family nds. In the witness box however, he could not even Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 2 give the locations of the lands, nor could he give any exact idea of the income from those lands are from the money lending business. In fact at one stage of his evidence he admitted that during the lifetime of the appellant's father, the father himself asked to look after that business and he alone used to maintain accounts in respect thereof. In view of such vague and indefinite evidence, both the special Judge and the High Court were of the opinion that Misra was not a witness who could have managed the said lands or the said business as claimed by the defence, and therefore, was not in a position to give any idea as to the income arising from them with any degree of preciseness. The books of account relating to the money lending business showed only the accounts of persons to whom moneys were lent, but did not show the gains made from that business. Since neither the appellant nor D.W. 15 nor the books threw any light on the question as to the profits and gains from the business and the lands, the evidence came to no more than that the appellant's father used to carry on that business during his lifetime. 9. There was, however, the evidence of P.W. 19, the Lekhpal of Karanpur Chapra that Ramand Upadhyaya was possessed of about 200bighas of lands in various villages, out of which 41 bighas were kasht and the rest were lands mortgaged to him. Presumably, the mortgage amounts, for which those lands had been mortgaged to him, came either from the capital or the income of the money lending business. But as aforesaid neither the appellant's statement, nor the evidence of D.W. 1, nor the books produced in the Trial Court threw any light on the extent of that business, the capital or the income arising therefrom, of the amount involved in those mortgages The evidence also did not point to the fact that any particular amount was diverted towards making the said deposits in the said savings accounts or towards the purchase of the said two trucks. As regards the houses in Balia, as against the allegation of D.W. 1 that there were four houses which fetched an annual income of Rs. 500/-to Rs. 600/-, the municipal records showed that there were only two houses which stood not in the name of the father but that of the step brother, and that the annual assessment in respect of them were respectively Rs. 45/-and Rs 70/-only. Obviously, the income from the houses could not be as high as alleged by D.W. 1. Prima facie the fact that the two houses stood in the name of Radha Krishna would indicate that they belonged to him unless it was shown by some evidence, such as title deeds, that they belonged to the joint family, and that it was only for the sake of convenience or expediency that they were entered in the municipal registers in the name Radha Krishna. Neither such evidence nor the evidence of Radha Krisna, was adduced to show that the houses belonged to the family or what the income was or that such income or part of it was deposited in the saving accounts or was utilised towards the purchase of the said two trucks professional income, whatever it was, earned by Radha Krishna would ordinarily be the income of Radha Krishna. Unless, therefore, it was shown this, it was allowed to be treated as family income by Radha Krishna or brought by him in the hotchpotch, it was difficult to treat that as a known source of income for explaining the deposits in the post office accounts or acquisition of the trucks. 10. Mr. Chari relied on a compromise decree, dated June 5, 19 with a view to show that the appellant had filed a suit for partition of houses against the stepbrother. Strangely, the fact of the appellant have filed that suit was not relied upon in the Trial Court by him. The appellant did not also rely on the suit or the compromise decree in the High Court, would, therefore, appear that the suit and the decree were collusive, the purpose, being to show that the houses were family properties. If that was it is difficult to understand why the fact of the suit having been filed by t appellant and the Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 3 compromise decree passed therein were not relied on him either in the Trial Court or in the High Court. 11. Of the two trucks, one was purchased in the name of the appellant's wife on April 16, 1956. The price of that truck was paid in the installments, all of which were paid up between March and April 1956. The savings bank account in her name showed that Rs. 12,000/-were withdraw therefrom by her on April 2, 1956, exactly on the day on which the second installment of Rs, 18,155/-as part of the price of the truck was paid M/s. Tewary Bechar & Co. from whom that truck was purchased. No doubt the case of D.W 1 was that this truck as well as the other truck were purchased by the appellant's father. But the truck was registered in the name of the appellant's wife. Only a few days after its purchase she transferred and got registered in the name of her son. The evidence was that all the payments : respect of the purchase of the two trucks were made by D.W. 1 and not the appellant's father, though, it was he who was alleged to have purchase them. In the ledger of M/s. Tewary Bechar & Co. the appellant's wife was shown as the purchaser, and curiously, her address shown there was care" D.W. 1, and not the appellant or his father It was somewhat extraordinary that although the appellant's father was said to have purchased the trucks, there was no trace of his name either in the books of M/s. Tewari Bechar & Co. or in the registration entries or anywhere else. The books maintained by the father in respect of the money lending business also do not appear to have shown that he had made these purchases, nor did they have any account there in effecting the purchases. 12. In the light of this evidence neither the Trial Court nor the High Court was prepared to accept the appellant's explanation or the evidence of D.W. 1 that the trucks were not purchased by him but his father from the in come of the business or the lands. No explanation was forthcoming as to why, if the father was the purchase, the trucks were purchased in the name o the appellant's wife, why they were registered in her name, how or under what family arrangement one was transferred to the appellant's son, why payments were made in the name of D.W. 1 and why the address of the appellant's wife was shown to be care of D.W. 1. The evidence would, on the contrary, show that the entire arrangement for purchasing the trucks was made by D.W. 1 and that was why payments were made through or by him and the address of the purchaser, the appellant's wife was shown as care of D.W. 1, so that if any enquiry had to be made by M/s. Tewary Bechar & Co. with regard to the payment of the price that concern could address such enquiry to or through D.W. 1. 13. As against all this evidence, upon which the Trial Court and the High Court gave thier concurrent findings, counsel for the appellant raised two contentions Relying on the observations of this Court in Jhingan v. U.P. , cited in fairness to the appellant by the High Court itself, counsel contended that though Section 5(3) raised a presumption against an accused person upon proof of disproportion between the known sources of his income and the properties held by him, it would be enough for its rebuttal if the explanation tendered by him appeared on a preponderance of probabilities to be true, and therefore, he was not required to prove his case as strictly as where a case had to be proved beyond any reasonable doubt Therefore, the argument ran, the High Court had thrown upon the appellant a burden of proof which was excessive than the one required under Sub-section (3) of Section 5. The second contention, which indeed was the corollary of the first, was that the evidence showed that though the appellant's father carried on the said business and also held as much as 200 Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 4 bighas of lands, no bank or similar account stood in his name in which he could have deposited the earnings from the said business and the said lands. That would suggest, counsel arguad, that the appellant's explanation that the deposits in the savings accounts and the cost of the trucks came from those earnings was true. The High Court, therefore, ought to have regarded his explanation as being on a preponderance of probabilities acceptable and as satisfactorily accounting the disproportion between the income of the appellant and the properties and pecuniary sources acquired by him. 14. A reasonable view of the evidence on record and an examination of the findings based on that evidence given with unanimity both by the Special Judge and the High Court, hawever, fail to satisfy that either of the two contentions can prevail. There is no doubt that upon proof of the disproportion mentioned in Sub-section (3) of Section 5, the onus falls upon an accused person to account satisfactorily the acquisition of properties and pecuniary sources held or possessed by him. That onus, it is true, may not be as strict as the initial onus on the prosecution which was first to establish the disproportion between the properties held by an accused and the known sources of his income. The disproportion in the present case established by calculations made by the Special Judge, which were not controverted, came to neatly Rs. 80,000/-for which the appellant had to give a satisfactory account. It is true that he tried to suggest that the deposits and the cost of the two trucks came from the income of lands, the houses, the money lending business and the professional earnings of the stepbrother. But, barring the appellant's statement under Section 342 of the CrPC, the evidence of D.W.I and some account books produced by D.W. 1, there was no other evidence. As aforesaid, the evidence of D.W. 1 was so vague and indefinite that both the courts came to the conclusion that he could not be managing the family affairs as he claimed to have done. It was surprising for a man who claimed to have managed the family properties and the business not even to know where the lands were situate, what were the profits derived km them, the extent of the money lending business and the income derived there from. There was no explanation forthcoming as to how the two houses in Balia happened to stand in the name of the step-brother, nor was there any evidence that they or the lands or the said business belonged to take family. Equally was there no proof that the father had diverted the income from the lands and the business towards making deposits in the savings accounts, the more substantial of which were in the account in the name of the appellant's wife. The entire contention was on an assumption that all these properties and the business belonged to the family, and that the father had diverted the income there from in the savings accounts and towards the purchase of the trucks. The first assumption was based on the sole ground that there was no account in the name of the father. But there was no evidence as to the extent of the income or as to the manner in which the father had dealt with it. The houses also were assumed to be family properties although they stood in the name of the step brother. It was easy to prove them to be the family properties, if they were so, by producing the title deeds or any other similar evidence, If the money lending business was substantial enough to lay aside such a sum as Rs. 80,000/-, there would have to be a licence for a business of that extent and there would also be an income-tax laibility, through both of which it would have been possible to show that it belonged to the joint family, its extent and the diversion of its capital or gains in the savings bank accounts or towards the purchase of the trucks. None of these things was even attempted. In these circumstances if the Special Judge and the High Court refused to treat the defence as satisfactorily accounting the disproportion, it is not possible to say that they were either wrong or that they threw upon the Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 5 appellant a burden excessive than warrented. 15. On a perusal of the evidence on record and the circumstances established through it we do not find any reason to interfere with the concurrent conclusions of the two courts. In the result, the appeal must fail and is dismissed. Rameshwar Prasad Upadhyaya vs The State Of Bihar on 20 September, 1971 6 | {
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Nawabganj Sugar Mills Co. Ltd. vs Commissioner Of Income-Tax, Delhi And ... on 24 September, 1971 Equivalent citations: AIR1972SC1684, [1972]86ITR44B(SC), AIR 1972 SUPREME COURT 1684, 1972 TAX. L. R. 779 Author: C.A. Vaidialingam Bench: C.A. Vaidialingam, P. Jaganmohan Reddy JUDGMENT C.A. Vaidialingam, J. 1. These ton appeals, by special leave, are directed against the common judgment and order dated March 14, 1967 of the Delhi High Court declining to direct the Income-tax Appellate Tribunal, Delhi Bench, to refer along with the statement of case, questions Nos. 1 to 3 enumerated in. their applications. 2. The reference was asked for by the three different Companies by whom the above appeals are filed in respect of Income-tax Case No. 20-D of 1965 connected with I.T.C. Nos. 21-D to 29-D of 1965 arising from a common order of the Income-tax Appellate Tribunal, Delhi. Bench. As the facts in the case and questions of law sought to be referred were common, the following tabular statement will give an idea of the appeals filed by the three Companies, who are the appellants together with the particulars regarding the years of assessment and Income-tax case numbers: C.A. No. I.T.G. No. Assessment Name of Company year 1864/67 28-D/85 1952-53 Basti Sugar Mills 1S65/67 27-D/65 1950-51 " 1366/67 23-D/65 1948-49 " 1367/67 21-D/65 1951-52 " 1868/67 20-D/65 1950-51 Nawabganj Sugar Mills 1369/67 25-D/65 1948-49 " 1870/67 26.D/65 1951-52 " 1871/67 24-D/65 1949-50 " 1872/67 29-D/65 1952-53 Punjab Sugar Mill 1373/67 22-D/65 1955-58 " 3. The Basti Sugar Mills Company limited, which is the appellant in Civil Appeals Nos. 1364 to 1367 owned two sugar factories at Basti and Wal tharganj. It is their case that for the purpose of selling their output of sugar they appointed Selling agents at a commission of 0-12-0% of all sales of sugar effected through the agents. Their Selling agent prior to 1944 was M/s. Gursarandas Kapur & Sons at Kanpur. On July 26, 1944 by a resolution of the Board of Directors, the Company appointed M/s. Gokul Nagar Sugar Mills Co. Ltd. as the Selling agents at 0-12-0% commission. In the course of the original assessment for the year 1947-48, which was completed on March 10, 1950, the Income-tax Officer called upon the said Company to furnish details of. the items of work done by M/s. Gokul Nawabganj Sugar Mills Co. Ltd. vs Commissioner Of Income-Tax, Delhi And ... on 24 September, 1971 1 Nagar Sugar Mills Co. Ltd. as Selling agents, The Company informed the Income-tax. Officer that the said Selling agents have been doing the work that they were expected to do and they in turn had appointed sub-agents on commission basis for effecting sales at various places. The Income-tax Officer accepted this explanation and allowed, by order dated June 21, 1949 a deduction for Rupees 47.921/-paid as commission to the selling agents. But when the assessment proceedings for the assessment year 1952-53 in respect of Nawabgani Sugar Mills Co. Ltd. was being dealt with the Income-tax Officer took the view that the selling commission should not be allowed and accordingly issued a notice dated March 29, 1954, under Section 34(1)(a) of the Income-tax Act, 1922 (hereinafter to be referred as the Act). The Company filed a return under protest. 4. Regarding Nawabganj Sugar Mills Company Ltd., which is appellant in Civil Appeals Nos. 1368-1371 of 1967 the facts are also more or less identical except that for the assessment year 1948-49, the Income-tax Officer by his order dated February 28, 1951 allowed a deduction of Rs. 60,980/-as the amount paid as commission to the selling agents M/s. Gokul Nagar Sugar Mills Co. Ltd. For the assessment year 1949-50 also the commission paid to the said selling agent was allowed as deduction. But for the assessment year 1952-53 the Income-tax Officer issued a notice dated January 19, 1957 requiring the said company to explain why the amount of commission claimed to have been paid by them to the selling agents should not be disallowed . 5. The facts relating to M/s. Punjab Sugar Mill Company Ltd, which is the appellant, in Civil Appeals Nos. 1372 and 1373 of 1967 are also identical except that in the course of assessment for the assessment year 1947-48, the commission of Rs. 37,978/-paid to the same selling agent namely, Gokul Nagar Sugar Mills Company Ltd. was allowed as per order dated February 27, 1950. But when dealing with the case of Nawabganj Sugar Mills Co. Ltd for the assessment year 1952-53, the Income-tax officer took the view that the selling agency commission claimed to be paid to the selling agents should not be allowed. Hence he issued a notice to the Com pany under Section 34(1)(a) of the Act and the company filed a return under protest. 6. It may be stated that the managing agent of all the three appellant companies are M/s. Narang Brothers Ltd. and their Chairman was Dr. Gokulchand Narang. The selling agent of the three appellants is also the com mission agent, namely, M/s. Gokul Nagar Sugar Mills Co. Ltd. 7. The controversy before the Income-tax authorities related to the claim made by all the appellants for deducting as expenditure of the business of the companies the selling agency commission paid to M/s. Gokul Nagar Sugar Mills Company Ltd. In respect of some years the jurisdiction of the Income-tax Officer to take action under Section 34 of the Act was also challenged. 8. In respect of the assessment year 1952-53 relating to Nawabgani Sugar Mills Co. Ltd., the evidence, both oral and documentary, was let in by the assessee that M/s. Gokul Nagar Sugar Mills Co. Ltd. were the selling agents and that the commission paid to them as selling agents should be de ducted as business expenditure. The evidence so let in was treated as com mon in respect of the claims made by all the three appellants. Nawabganj Sugar Mills Co. Ltd. vs Commissioner Of Income-Tax, Delhi And ... on 24 September, 1971 2 9. The Income-tax Officer held that all the three companies were con trolled and supervised by Dr. Gokul chand Narang. He further held that M/s. Gokul Nagar Sugar Mills Co. Ltd., the selling agent, was also controlled and supervised by Dr. Gokulchand Narang. Though M/s. Gokul Nagar Sugar Mills Co. Ltd. was appointed as selling agent by a resolution dated July 26, 1944, the latter rendered no service whatsoever so as to earn any commission. In this connection the Income-tax Officer referred to various items of evidence that were placed before him by the parties. Ultimately, he found that the amount claimed to have been paid as selling agent commission can not be deducted as an item of business expenditure. 10. In all the appeals filed by the three Companies, the Appellate Assistant Commissioner gave some relief by allowing deduction in respect of sums paid directly as commission to some sub-agents. But on the main question relating to the amount paid to M/s. Gokul Nagar Sugar Mills Co. Ltd., the Appellate Assistant Commissioner also agreed with the Income-tax Officer. The contention that action could not be taken under Section 34(1)(c) was also rejected. 11. The Income-tax Appellate Tribunal, Delhi Bench, by its common order dated December 31, 1962 after a consideration of the materials on record and the reasons given by the Income-tax Officer and the Appellate Assistant Commissioner, rejected the claim made by the appellants in respect of the commission said to have been paid to the selling agent M/s. Gokul Nagar Sugar Mills Co. Ltd. The view of the Appellate Tribunal is that no evidence has been placed by the appellants to show that M/s. Gokul Nagar Sugar Mills Co. Ltd. had really acted as selling agent and that on the other hand the appellants themselves have been directly dealing with several sub-agents. In fact, the finding of the appellate Tribunal was that there was no privity of contract between the appellants and M/s. Gokul Nagar Sugar Mills Co. Ltd. On this reasoning the Appellate Tribunal also agreed with the findings recorded by the two officers that no claim for deduction in respect of selling agent commission can be allowed. The Appellate Tribunal also held that the action taken under Section 34 was justified. The result was that all the appeals filed by the three Companies were dismissed. 12. The assessee companies filed applications before the Appellate Tribunal under Section 66(1) to state a case and refer the following four questions to the High Court 1. Whether in the facts and circumstances of the case, the Tribunal was: justified in holding that no services were rendered by M/s. Gokul Nagar Sugar Mills Co. Ltd. to M/s. Nawabganj Sugar Mills Co. Ltd. 2. Whether in holding as they have done, the Tribunal was justified in giving its decision without taking into account the statement of Shri Ram Sahai Dhir and the receipts showing the Commission paid to "M/s. Gursarandas Kapur and some sub-agents of the recipient company. 3.Whether in view of the facts and in the circumstances of the case the Tribunal has rightly concluded that Dr. Sir G. C. Narang signed letters acting as the Chairman of the Nawabganj Sugar Mills Co., Ltd. when he had no capacity to deal with the sub-agents in that capacity. Nawabganj Sugar Mills Co. Ltd. vs Commissioner Of Income-Tax, Delhi And ... on 24 September, 1971 3 4. Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the provisions of Section 34(1)(a) were rightly invoked. 13. By its order dated February 19, 1965 the Appellate Tribunal rejected the said applications on the ground that no question of law arose from the order of the Tribunal and that the decision of the Tribunal was exclusively on facts. 14. The appellants filed applications before the Delhi High Court under Section 66(2) of the Act, to direct the Income-tax Appellate Tribunal to refer the four questions, enumerated above. The High Court, by its order dated March 14, 1967, directed the Income-tax Appellate Tribunal to state a case and refer question No. 4 alone, but rejected the applications of the appellants in so far as they related to questions Nos. 1 to 3. The view of the High Court is that the points covered by the questions Nos. 1 to 3 are all on facts and that in the face of the findings recorded by the Appellate Tribunal, no question of law arose for consideration. 15. Mr. V. S. Desai, learned counsel for the appellants, urged that the Income-tax Appellate Tribunal, which is the final authority on facts, has not taken into account the material evidence adduced by the parties. He further urged that the appellants had adduced the evidence of certain wit nesses to establish that M/s. Gokul Nagar Sugar Mills Co. Ltd. were the selling agent and the persons who gave evidence had been appointed as sub agents by them and that commissions were also paid to them by the selling agent. Particularly, the counsel point ed out that the evidence of Ram Sahai Dhir and Shiv Nand Verma has not at all been adverted to by the Appellate Tribunal. The counsel also urged that certain receipts produced Nos. 948 dated April 24, 1946 and 298 dated February 13, 1947 showing the payments made by M/s. Gokul Nagar Sugar Mills Co. Ltd. as commission to their sub-agents have not been even referred to by the Appellate Tribunal. The counsel further pointed out that even the High Court has held that the Income-tax Appellate Tribunal has made no reference to the evidence of these two witnesses, nor has it adverted to the receipts claim ed to have been given by the sub-agents. The High Court's view in this regard that it is not every piece of evidence available on record that must be dealt with by the Appellate Tri bunal, is strenuously criticised by Mr. V.S. Desai. The Counsel relied on the decision of this Court in Udhavdas Kewalram v. Commr. of Income-tax, Bombay City. where it. has been held that the Tribunal has to act judicially and consider all the evidence in favour and against the assessee and that an order recorded on a review of only a part of the evidence and ignoring the remaining evidence, cannot be regarded as conclusively determining the questions of fact raised before the Tribunal. Mr. Desai, hence urged, that the High Court was not justified in declining to direct the Appellate Tribunal to refer questions Nos. 1 to 3. 16. Mr. It. H. Dhebar, learned Counsel, for the Department has refer red us to the findings recorded by the Income-tax Officer, the Appellate Assistant Commissioner as well as the elaborate discussion contained in the order of the Appellate Tribunal, and pointed out that all relevant material on record has been taken into account by all the authorities, Including the Appellate Tribunal and that the appellants can have no grievance in that regard. All material facts have been considered and findings have been re corded on facts against the appellants that M/s. Gokul Nagar Sugar Mills Co. Nawabganj Sugar Mills Co. Ltd. vs Commissioner Of Income-Tax, Delhi And ... on 24 September, 1971 4 Ltd. rendered no service whatsoever as selling agent and that the materials on record conclusively establish that the appellants themselves were dealing with their sub-agents direct. The learned Counsel further pointed out that the Income-tax Officer summoned Dr. Gokul Chand Narang under Section 37 of the Act to produce the correspondence with the sub-agents as well as the sugar mills. Only 13 letters spread over a period of three years written by Dr. Gokul Chand Narang in his personal capacity and in the letter-head of M/s. Gokul Chand Ram Sahai were produced. None of the re plies to those letters from the sub-agents were produced. The counsel finally urged that the order of the High Court declining to direct the Appellate Tribunal to refer questions Nos. 1 to 8 is correct. 17. We are of the opinion that here is no substance in these appeals. We have gone through the orders of the Income-tax Officer, the Appellate Assistant Commissioner, as well as the Income-tax Appellate Tribunal. No Joubt, there is a resolution produced by the appellants dated July 26, 1944 in and by which the sugar selling agency of Nawabganj Sugar Mills Co. Ltd. is given to M/s. Gokul Nagar Sugar Mills Co. Ltd. on 0-12-0%. There is no other evidence to show the nature of the arrangement or as to how exactly this resolution is to be carried out. 18. A reading of questions Nos. 1 to 3 clearly shows that the points raised therein are purely questions of fact. But as the contention of Mr. V. S. Desai is that certain material facts have not been considered at all by the Tribunal and hence the findings arrived at by it cannot be conclusive, in view of this infirmity, we will refer to the evidence on record not with a view to decide whether the Tribunal has properly appreciated the evidence, but to see whether there was evidence to sup port the findings recorded by the Tribunal and whether that finding could on that evidence be reasonably reached. 19. We have already referred to the resolution dated July 26, 1944. The first criticism of Mr. V. S. Desai is that the evidence of sub-agents appointed by the selling agent has not been consider ed by the Appellate Tribunal. The two witnesses in this regard are Ram Sahai Dhir and Shiv Nand Verma. The contention of Mr. V. S. Desai that the evidence of Ram Sahai Dhir has not been considered, as such by the Appellate Tribunal, Is only technically correct be cause it is seen from the order of the Appellate Tribunal that it has refer red to the relationship between the appellants and a company known as M/s. Ramdev and Company. , Ram Sahai Dhir in Ms evidence has clearly stated that he Is the sole proprietor of M/s. Ramdev and Company. He has further stated that after he got the sub-agency from M/s. Gokul Nagar Sugar Mills Co. Ltd. he along with his brother and son formed a partnership for this purpose in the name of M/s. Ramdev and Company. The Appellate Tribunal in paragraph 7 of Its order has considered a telegram sent on September 1, 1948 to M/s. Ramdev and Company by the Chairman of Nawabganj Sugar Mills Co. Ltd. That telegram states that the agency of M/s. Gursarandas Kapur and Sons has been terminated ed and M/s. Ramdev and Company is asked to sell and freely secure challans. Ram Sahai Dhir in his evidence has stated that M/s. Gursarandas Kapur and Sons were the selling agent of the appellants originally and that he start ed his own sugar business in or about 25. In the result, the Judgment and order of the High Court dated March 14, 1967 are confirmed and the appeals are dismissed with one set of costs to the respondent. Nawabganj Sugar Mills Co. Ltd. vs Commissioner Of Income-Tax, Delhi And ... on 24 September, 1971 5 | {
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Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 Equivalent citations: 1972 AIR 23, 1972 SCR (1) 817, AIR 1972 SUPREME COURT 23, 1972 4 SCC 323, 1972 TAX. L. R. 14, 1974 SCC (TAX) 39, 1972 (1) SCR 817, 1972 (1) ITJ 374, 1972 (1) SCJ 612, 1972 83 ITR 403, 83 I T R 403 Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde PETITIONER: COMMISSIONER OF GIFT TAX. KERALA Vs. RESPONDENT: GHEEVARGHESE. TRAVANCORE TIMBERS &PRODUCTS, KOTTAYAM DATE OF JUDGMENT20/09/1971 BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. CITATION: 1972 AIR 23 1972 SCR (1) 817 ACT: business-Proprietor's daughters taken as partners-All assets of proprietary business transferred to partnership business- Daughters' contribution of capital effected by transfer of money from father's account to daughters' accounts-Whether share of goodwill of proprietary firm also thereby gifted- Gifted amounts whether exempt under s. 5 (1) (xiv)-Tests for exemption-"In the course of business and "for the purpose of the business', meaning of. HEADNOTE: The assessee was the sole proprietor of a business in timber and timber products. He converted the proprietary business into a partnership business by means of a deed of partnership dated August 1, 1963. The partnership consisted of the assessee and his two daughters. The capital of the Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 1 partnership was to be Rs. 4,00-000. The assessee contributed Rs. 3,50,000 and each of his two daughters, one married and the other unmarried contributed Rs. 25,000. The contribution of the capital by the daughters was effected by transfer of Rs. 25,000 from the assessee's account to the account of each of the daughters. All the assets of the proprietary business were transferred to the partnership. In these assets the assessee and his daughters were entitled to shares in the proportion of their share capital i.e. the assessee was entitled to a 7/8 share and each of his daughters to 1/16 share. The profits and losses of the partnership business were to be divided in equal shares between all the three partners. The assessee was the managing partner of the firm. The assessee filed a return of gift tax for the assessment year 1964-65 in respect of the gift of Rs. 50,000 in favour of his daughters representing the share capital contributed by his daughters. The Gift Tax Officer however took the view that in addition to the gift of the aforesaid amount the assessee had gifted 1/3rd portion of the goodwill of his proprietary business to each of his daughters. Accordingly he added a sum equal to 2/3rd of the goodwill as estimated by him to the gift of Rs. 50,000 admitted by the assessee. The Appellate Assistant Commissioner dismissed the assessee's appeal. The Appellate Tribunal held that only 1/8 of the goodwill was gifted to each of the daughters but the gift was exempt under s. 5 (1) (xiv) of the Gift Tax Act. The High Court in reference held in favour of the assessee. In appeal by special leave, HELD : The goodwill was a part of the assets which had been transferred to the partnership. Under s. 14 of the Partnership Act, subject to the contract between the partners the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise by or for the firm and includes also the goodwill of the business. The departmental authorities in the present case never treated as all the assets and property of the assessee which were transferred to the partnership pertaining to his pro- prietary business as a gift nor was it suggested that the property and assets valued at Rs. 4,00,000 were the subject matter of the gift. The departmental authorities only picked up one of the assets of the assessee's L3Sup. C.I./72 818 proprietary business namely its goodwill and regarded that as the subject of gift having been made to the daughters. There was no justification, for this approach. Accordingly no gift tax was payable by the assessee on the goodwill of the assessee's business. [823A-D] (ii)To be exempt under s. 5(1)(xiv) a gift should be proved to have been made not only in the course of carrying & the business, profession or vocation but also for the purpose of such business, profession or vocation. The expression 'in Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 2 the course of carrying on of business etc.' means that the gift should have some relationship with the carrying on of the business. If a donor makes a gift only while he is running the business that may not be sufficient to bring the gift within the first part of el. (xiv) of s. 5(1) of the Act. It must further be established to bring the gift within that provision, that there was some integral connec- tion or relation between the making of the gift and the carrying on of the business. The meaning of the word 'purpose' is that which one sets before himself as an object to be obtained; the end or aim to be kept in view in any plan, measures, exertion or operation, design, intention. Therefore on the plain meaning of the word 'purpose' as employed in el. (xiv) the Object, plan or design must have connection or relationship with the business. [824 A-G] In the present case, considering the terms of the partnership dead there was no cogent material to come to the conclusion that the gift of Rs. 25,000 to each of the daughters by the assessee was in the course of carrying on the business of the assessee and was for the purpose of the business. The real object of the assessee was to benefit the daughters for the natural reason that the father wanted to look to the advancement of his daughters. Accordingly the assessee who had himself shown the amount of Rs. 50,000 in his return of gift tax could not claim exemption for that amount under s. 5 (7) (xiv). [826 C-G] State of Travancore Cochin & Ors. v. Chanmugha Vilas Cashew Nut Factory & Ors. [1954] S.C.R. 53, B. W. Noble Ltd. v. Mitchell 11 T.C. 372, Morgan v. Tate & Lyle Ltd. 35 T.C. 367, 378, C.I.T., West Bengal T. Birla Cotton Spinning & Weaving Mills Ltd. dt. 17-8-71 and Commissioner of Gift Tax v. Dr. Grorge Kuruvilla, 77 I.T.R. 746, applied. Commissioner of Gift Tax, Kerala v. Dr. George Kuruvilla, (1965) K.L.R. 721, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2293 of 1968. Appeal by special leave from the judgment and order dated (October 9, 1967 of the Kerala High Court in Income-tax Reference No. 64 of 1966. O.P. Malhotra, R. N. Sachthey and B. D. Sharma, for the appellant. S.T. Desai, A. K. Verma and J. B. Dadachanji, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judgment of the Kerala High Court in a reference made under S. 26 (1 ) of the Gift Tax Act, 1958, hereinafter referred to as the "Act", relating to the assessment year 1964-65. The assessee was the sole proprietor of the business run under the name and style of Travancore Timbers and Products at Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 3 Kottayam. He converted the proprietary business into a partnership business by means of a deed of partnership dated August 1, 1963. The partnership consisted of the assessee and his two daughters. The capital of the partnership was to be Rs. 4,00,000/-. The assessee contributed Rs. 3,50,000/and each of his two daughters, one of whom was married and the other unmarried, contributed Rs. 25,000/-. The contribution of the capital by the daughters was effected by transfer of Rs 25,000/from the assessee's account to the account of each of the daughters. All the assets of the proprietary business were transferred to the partnership. In these assets the assessee and his daughters were entitled to shares in proportion to their share capital. In other words the assessee was entitled to a 7/8 share and each of his daughters to 1/16 share. The profits and losses of the partnership, business, however, were to be divided in equal shares between all the three partners. The assessee was the managing partner of the firm. The assessee filed a return of gift tax for the assessment year 1964-65 in respect of the gift of Rs. 50,000/- in favour of his daughters representing the share capital contributed by his daughters. The Gift Tax Officer, however, took the view that in addition to the gift of the aforesaid amount the assessee had gifted 1/3rd portion of the goodwill of his proprietary business to each of his daughters. On the basis of the profits of the earlier years the Gift Tax Officer determined the value of the goodwill at Rs. 1,61,865/- and the value of the 2/3rd share of the goodwill gifted to the daughters at Rs. 1,07,910/- which was added to the amount of Rs. 50,000/- and the gift tax was assessed accordingly. The assessee preferred an appeal to the Appellate Assistant Commissioner of Gift Tax which was dismissed. The Appellate Tribunal on appeal held (i) the goodwill constituted an exiting immovable property at the time of-the admission of the assessee's daughters into the business; (ii) the gift was exempt under s. 5 (i) (xiv) of the Act as the assessee was actually carrying on the business when he admitted his two daughters into it, the main intention of the assessee being to ensure continuity of the business and to prevent its extinction on his death. Such a purpose amounted to business expediency and therefore all the conditions of s. 5 (1) (xiv) were satisfied; (iii) the goodwill was a capital asset and the assessee's daughters had only 1/8 share in the assets of the business. The gift or the goodwill were, therefore, only of 1/8 share. The following questions of law were referred by the Tribunal at the instance of the Commissioner of Gift Tax : (i) "Whether on the facts and in the circumstances of the case, the goodwill of the assessee's business is an existing property within the meaning of s. 2 (xii) of the Gift tax A ct ? (ii)Whether on the facts and in the circumstances of the case, the assessee gifted only a 1/8th share in the goodwill of the business to his two daughters or whether he gifted a 2/3rd share ? (iii)Whether on the facts and in the circumstances of the case, the gift was exempt from assessment under S. 5 (1) (xiv) of the Gift tax Act ?" The High Court answered all the questions in favour of the assessee and against the Revenue. Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 4 It is essential to look at the deed of partnership closely because certain clauses which, have a material bearing do not appear to have received the attention either of the Appellate Tribunal or the High Court. It was recited, inter alia, that the assessee was desirous of introducing into the business of Travancore Timbers and Products his major daughters and also his minor children as and when they attained majority. It was next stated that upon the treaty for the introduction of the said partners into the business for the par' and for the partnership it was agreed that the first partner (assessee) would gift a sum of Rs. 25,000/- to each of his two major daughters. The property of the business was next described. It was stated to consist of the land and buildings, plant, fixtures. and machinery, book debts, benefits of existing contracts etc. and stock-in-trade and other movable chattels and effects. The assessee as beneficial owner conveyed and assigned unto the partners including himself all these properties including the good-Will of the marks and all rights and privileges belonging thereto. Each of the partners covenanted that he or she will duly pay discharge or perform all the debts and liabilities, contracts and engagements of the individual business of the assessee subsisting in the shares and proportions in which they respectively became entitled under the business. It was expressly stated in the first schedule which contained the terms, conditions and stipulations that the partnership was to be at will. Clause (2) in the schedule is of particular importance. According to clause 2 (a) if the partners or partner who, for the first time, represented or possesses the major part in the value of the capital of the business desired to continue the business with additional partners they, he or she would be at liberty to do so on giving 6 months' previous notice to the other partner or partners paying to the partners or partner not desiring to continue the value of their his or her shares or share and interest in the business, property and the goodwill and giving a bond of "indemnity" with regard to the mode of ascertaining such value and the payment thereof and the amount of the penalty of such bond and otherwise as if the partnership had under these presents been stipulated to continue after the 31st day of March 1964 and such other partners or partner had happened to die immediately after the last mentioned day. It was further provided that if the 31st day of March 1964 passed without the then partners or partner who possessed the major part in the value of the capital having given the aforesaid notice then the partners or partner who, for the first time, represented or possessed a minor part in value not being less than two equal third parts of the capital would be at liberty to continue the business by giving six calendar months' previous notice of their, his or her desire to do so and paying to the partners or partner not desiring to continue the value of their, his or her shares or share and interest for the time being of the business and the property and goodwill thereof etc. If the partnership was to continue under either of the eventualities mentioned. before every partner for the time being who desired to continue would have the right to do so. Clause 7 laid down that the parties shall be entitled to the capital and property of the partnership for the time being in the following shares : Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 5 "The said first partner Ghee Varghese shall be entitled to 7/8th share thereof and each. of second and third partners to 1/ 16th part thereof". Clause 8 (a), and Clause 9 are reproduced below : 8 (a) "The capital of the partnership shalt be the sum of Rs. 4,00,000/- (Rupees Four lakhs only) being the value ascertained as aforesaid of the property of the said late business taken over by the said parties hereto and of such further capital as shall be hereafter contributed by the partners and all such further capital shall whether the same shall be contributed out of the profits or otherwise be contributed by the partners for the time being in the shares in which they are for the time being entitled to the existing capital of the partnership." 9."The net profits or losses of the partnership shall subject to the provisions of these presents belong to the partners for the time being in equal shares." Under clause 10 the assessee was to be the managing partner of the firm. He alone had the power to sign the cheques on account of the partnership in the, name of the firm. He had the power to borrow from Banks and other private parties for the purpose of the business and to execute bands, documents agreements and other activities as might be necessary. There were other provisions also which showed that it was the assessee who retained substantially the control of the running of the business in his own hands. Clause 17 provided that whenever any of the partners died during the continuance of the partnership then the partnership would not be dissolved between the surviving partners and elaborate provisions were made with regard to what would pass to the, representatives of such deceased partner from out of the properties and assets of the partnership as also its profits. The partnership deed also contained what were called special provisions as to the share of the first partner. Clause 18 provided that the assessee who was the first partner could nominate either one or all of the his minor children to be a partner or partners on their attaining majority. Such nomination or appointment could be made by a will or codicil. It is somewhat surprising that the Gift Tax Officer picked up the assets of the business of the assessee, namely, the goodwill for treating that as a gift apart from the amount of Rs. 50,000/- which had admittedly been gifted to the daughters. It was mentioned in the assessment order that as the assessee had failed to disclose the gift relating to the same action under S. 17(1) (c) was being taken. Before the Appellate Assistant Commissioner it was contended inter alia, that the value of the goodwill should not be included as a part of the gift. Alternatively it was contended that the value had been calculated correctly. This was apart from the other contentions which were raised claiming exemption under S. 5 (1 ) (xiv) of the Act. Without examining the contentions that the value of the goodwill should not be included as a part of the gift the Appellate Assistant Commissioner examined the other contentions and agreed with the view taken by the Gift Tax Officer. The way the Tribunal examined the question relating to the goodwill was by treating it as an asset which had been gifted by the assessee to his two daughters. This is what the Tribunal observed : "By admitting his two daughters, as partners of the business, the assessee also admitted them to the benefit arising out of the goodwill of the business". Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 6 Now it is quite clear that according to the deed of partnership and even otherwise on admitted facts goodwill was a part of the properties and assets of the business which the assessee was running under the style of Travancore Timber & Products at Kottayam. All these were valued at Rs. 4,00,000/-. The entire property of the assessee's proprietary business was transferred to the new partnership. According to clause 7 in the schedule to the partnership deed the parties were to be entitled to the capital 'and property of the partnership in the following shares : Assessee 7/8th share. each daughter 1/16 share These shares were proportionate 'to the capital with which the partnership was stated to have been started. out of Rs. 4,00,000/the, assessee was deemed to have contributed Rs. 3,50,000 and each of the daughters Rs. 25,000/-. The goodwill, as stated earlier, was a part of the assets which had been transferred to the partnership. Under s. 14 of the Indian Partnership Act subject to contract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise by or for the firm and includes also goodwill of the business. The departmental authorities, in the present case, never treated all the assets and property of the assessee which were transferred to the partnership pertaining to his proprietary business as a gift nor has any suggestion been made before us on behalf of the Revenue that the property and assets valued at Rs. 4,00,000/- were the subject, matter of gift. All that the departmental authorities did and. that position continued throughout was that they picked up one of the assets of the assessee's proprietary business, namely, its goodwill and regarded that as the subject of gift having 'been made to the daughters, who were the other partners of the firm which came into existence by virtue of the deed of partnership. This approach is wholly incomprehensible and no attempt has been made before us to justify it. In our opinion the second question which was referred by the Tribunal should have been framed as follows "Whether on the facts and in the circumstances any gift tax was payable on the goodwill of the assessee's business. If the answer be in the affirmative how much share in the goodwill was liable to such tax" ? We reframe the question in the above terms. It is quite obvious that the answer to the first part of the question has to be in the negative and therefore there is no necessity of answering ,he second part of the question. Question No. 1 also does not arise and need not be 'answered. We may next deal with the third question. Section 5 of the Act gives the exemption in respect of certain gifts. Sub- clause (xiv)of sub-s. (1) is as follows 5 (1) "Gift tax shall not be charged under this Act in respect of gifts made by any person- (xiv)in the course of carrying on a business, profession or vocation, to the extent to which the gift is proved to the satisfaction of the Gift Tax Officer to have been made bona fide for the purpose of such business, profession or vocation". The critical words are "in the course of" and "for the purpose". Therefore the gift should be proved to have been made not only "in the course of carrying on the business, profession or vocation" but also bona fide for the purpose of such business, profession or vocation. The words "in the course of" were Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 7 considered by this Court in State of Travancore Cochin & Others v. Shanmugha Vilas Cashew Nut Factory & Others(1) in connection with the language employed in Art. 286 of the Constitution. It was pointed out 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 also postulates a connected relation. There clause 1(b) of the Article was under consideration and what was exempted under the clause was the sale or purchase of the goods taking place in the course of the import of the goods into or export of the goods out of the territory of India. The only assistance which can be derived in the present case is the emphasis on there being connected relation between the activities for which these words are used. Thus the expression "in the course of carrying on of business etc." means that the gift should have some relationship with the carrying on of the business. If a donor makes a gift only while he is running the business that may not be sufficient to bring the gift within the first part of clause (xiv) of S. 5(1) of the Act. it must further be established, to bring the gift within that provi- sion, that there was some integral connection or relation between the making of the gift and the carrying on of the business. Under clause (xiv) of S. 5 (1) the second requirement is that the gift should have been made bona fide for the purpose of such business etc. According to the meaning of the word '-purpose" in Webster's New International Dictionary, it is that which one sets before himself as an object to be attained; the end or aim to be kept in view in any plan, measure, exertion or operation; design intention. Therefore on the plain meaning of the word "purpose" as employed in clause (xiv) the object, plan or design must have connection or relationship with the business. To put it differently the object in making the gift or the design or intention behind it should be related to the business. Some assistance may be derived from the language used in S. 19 (2) (xv) of the Income tax Act 1922. According to that provision any expenditure laid out or expended wholly and exclusively for the purpose of business, profession or vocation is a permissible deduction in the computation of profits. In B W. Noble Ltd. v. Mitchell(2) a sum had been paid to a retiring Director in very peculiar circumstances. The object of making the payment was that of preserving the status and reputation of the company which the Directors felt would be (2) 11 T.C. 372. (1) [1954] S.C.R. 53. imperilled either by the other Director remaining in the business or by a dismissal of him against his will involving proceedings by way of action in which the good name of the company might suffer. Sargant L.J. was of the view that preservation of the status and dividend earning power of the company was well within the ordinary purpose of the trade, profession or vocation of the company. Indeed the English courts have refrained from adopting any dogmatic or set line for discovering the meaning of the expression "for the purpose of" when used in connection with trade or business because it is essentially a matter which depends on the various sets of circumstances and facts of a particular case for determining whether certain expenditure has been incurred for the purpose of the trade or business : (See Morgan v. Tate & Lyle, Ltd.(1). According to a recent decision of this court in Civil Appeals Nos. 1351-1353, 1897 & 1241 of 1968 (The Commissioner of Income tax, West Bengal v. Birla Cotton Spinning & Weaving Mill,,; Ltd. etc. (2) the expression "for the purpose of the business" is essentially wider than the expression "for the purpose of earning profits". It covers not only the running of the business or its administration but also measures for the preservation of the Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 8 business, protection of its assets and property. It may legitimately comprehend many other acts incidental to the carrying on of the business. Another test that has often 'been taken into consideration is whether the expenditure was necessitated or justified by commercial expediency. The High Court, in the present case, relied on Commissioner of Gift Tax, Kerala v. Dr. George Kuruvilla (3) . There the assessee was a doctor by profession at the time of the gift which lie made in favour of his son who also joined his father's profession. The Kerala High Court took the view that the gift had been made in the course of carrying on of the business, profession a or vocation within the meaning of s. 5 ( 1 ) (xiv) of the Act and also for the purpose of such business, profession or vocation. That decision was reversed by This court in Commissioner of Gift Tax v. Di-. George Kuruvilla (4) It has been observed that s. 5 ( 1 ) (xiv) of the Act does not indicate that a gift made by a person carrying on any business is exempt from tax nor does it provide that a gift is exempt from tax merely because the property is used for the purpose for which it was used by the donor. Without deciding whether the test of "commercial expediency" was strictly appropriate to the claim for exemption under the aforesaid provision this court held that there was, no evidence to prove that the gift to the donee in that case was "in the course of carrying on the business" of the donor and "for the purpose of the business". (1) 35 T.C. 367, 378. (2) Decided on 17-8-1971. (3) (1965) K.L.T. 721. (4) 77 I.T.R. 746. We are satisfied that in the present case also it has not been established that the requirements of S. 5 (1) (xiv) of the Act were satisfied. The assessee was certainly carrying on his business at the point of time when he admitted his two daughters into the firm. But from that fact alone it did not follow that the gift had been made in the course of the assessee's business nor could it be held that the gift was made for the purpose of carrying on the assessee's business. The Tribunal came to the conclusion that the partnership did provide for the continuance of the partnership business in spite of the death of the partner and that the main intention of the assessee was to ensure the continuity of the business and to prevent its extinction on his death. A true and correct reading of the deed of partnership indicates that the partners could go cut from the partnership in terms of clause 2 of the schedule in the deed of partnership. Moreover the partnership was expressly stated to be at will. The real intention of the assessee apparently was to take his daughters into the firm with the object of conferring benefit on them for the natural reason that the father wanted to, look to the advancement of his daughters. It was further provided in the deed that even the minor children would, in due course, be admitted to partnership. Clause 8 of the schedule already referred to laid down that the assessee could nominate either one or all of his minor children to be partner or partners on their attaining majority and such nomination or appointment could be made even by a will or codicil. The assessee retained complete control over the running of the partnership business and it can hardly be said that he needed any help from his daughters particularly when there is no evidence that he was Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 9 in a weak state of health, his age being below 50 years. Moreover there is nothing to show that the daughters had any specialised knowledge or business experience so as to be able to assist in the development or management of the business. We are wholly unable in these circumstances to accept that the present case is different from Dr. George Kuruvilla's(1). in our judgment there was no cogent material to come to the conclusive that the gift of Rs. 25,000/- to each of the daughters by the assessee was "in the course of carrying on the business" of the assesese and was "for the purpose of the business". It may be recalled that the assessee had himself made a return in the matter of assessment of Gift tax payable tinder the Act in respect of the amount of Rs. 50,000/- which had been gifted by him to his two daughters. The answer to question No. 3, consequently, would be in favour of the Revenue and against the assessee so far as that amount is concerned. For the reasons given above the answers returned by the High Court are discharged and in their place the question shall stand answered in accordance with this judgment in the following manner : Question No. 1 : does not arise. Question No. 2 as reframed : The first part is answered in the negative and in favour of the assessee. The second part does not arise. Question No. 3 : The answer is in favour of the Revenue and against the assessee so far as the gift of Rs. 50,000/- is concerned. The appeal shall stand disposed of accordingly. In the circumstances of the case we make (no order as to costs. G. C. Appeal dismissed. Commissioner Of Gift Tax. Kerala vs Gheevarghese. Travancore Timbers ... on 20 September, 1971 10 | {
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Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 Equivalent citations: AIR1971SC1630, 1971CRILJ1188, (1971)1SCC523, 1971(III)UJ302(SC), AIR 1971 SUPREME COURT 1630, 1971 UJ (SC) 302, 1971 CRI APP R (SC) 205, 1971 SCD 337, 1972 SC CRI R 36 Author: P. Jaganmohan Reddy Bench: S.M. Sikri, P. Jaganmohan Reddy JUDGMENT P. Jaganmohan Reddy, J. 1. This appeal is by Special leave against the Judgment of Division Bench of High Court of Bombay which while directing "that the prosecution must pay to each of the accused Nos. 1, 3, 4, 5, 6 and 7 the tourists' class air fare for one lawyer plus Rs. 100/-per day for the expenses of the stay of the lawyer in Germany for executing the Commission"...denied to accused No. 2 the Appellant before us, the same facility. The High Court had in fact stated that the Appellant will not be entitled "to be paid anything at all in respect of the expenses that he will have to incur if he chooses to be represented by a lawyer for the purpose of cross-examining the prosecution witnesses who will be examined on Commission in Germany, as there is a concluded finding of fact that he had intimidated and tempered with the German witnesses both of the High Court as also of the Supreme Court". The Special leave petition also raised several other questions of law which were stated to be important namely whether the High Court had power to issue Commission on an interlocutory application in a revision application against the discharge of an accused person, whether it was entitled to grant an application for Commission when a similar application rejected by another Bench of the same High Court on the merits and substantially on the same facts, whether the case falls within the provision of Section 503 Criminal Procedure Code for issue of a Commission and if not whether the High Court has inherent jurisdiction to enlarge the scope of the Section on the ground that there is a lacuna in the said provision which can be filled in by the exercise of the inherent jurisdiction of the High Court and other legal points which it is unnecessary to recapitulate. When this application came up for consideration this Court by an order, dated 25-8-70 limited the Special leave only to the question "whether the order of the High Court refusing to allow any expenses for the lawyer of the Petitioner to be taken to Germany is justified or not justified". Subsequent to the filing of this Appeal another accused namely accused 3 Sibal also filed an application for grant of Special leave against this very same order in which the order of the High Court has been challenged on various grounds including the ground that the amount allowed for expenses of the applicant was insufficient and that while the order by the Magistrate directing the accused to be discharged which order was confirmed Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 1 by the High Court in earlier proceedings, was still operative, the learned Judges had no power to pass any orders appointing a Commission for examination of witnesses abroad. Some of these grounds it will be seen are similar to those raised in the Special Leave Petition filed by the Appellant where as we noticed earlier leave was limited to the question whether the High Court was justified in disallowing the expenses and air fare to the Appellant's lawyer. The learned Advocate for the Appellant though sought to extend the scope of the Appeal, we have confined his submission only to that limited question. 2. In order to understand the nature of the order and the circumstances in which it was passed it is necessary to set out briefly the history of this prosecution which demonstrates a striking example of the manner in which the provisions of law designed to ensure a fair, and speedy trial have been taken full advantage of to prolong and procrastinate and in fact negate the main purpose of criminal justice namely an expeditious trial. The 7 accused including the Appellant as Accused 2 and the petitioner in Special leave petition accused 3 are being tried for an offence Under Section 120(b) of Indian Penal Code read with Section 167(81) of the Sea Customs Act 1878 and Section 5 of the Exports & Imports Control Act, 1947. The offences with respect to which this prosecution has been lodged are said to have been committed between August 1957 and March 1960 by the 7 accused along with one Ramlal Laxmidutt Nanda who died on 15-9-60 before the Assistant Collector of Customs filed Criminal case No. 42/W of 1962 in the Court of the Presidency Magistrate, Bombay Of the 7 accused, accused 4 is a clearing Agent while Accused 5, 6 and 7 are petty employees The prosecution case is that the main brain behind the conspiracy is that of the deceased Nanda who along with 7 accused imported into Indian contraband goods in contravention of the Customs Act and Export & Import Control Act. It is alleged that there were six business concerns which were importing certain goods from Germany; 1) the Eastern Trading Corporation of which the deceased Nanda was the proprietor and the Ist accused who is the nephew was his Manager. The second was Shantilal Chaganlal & Co., of which the second accused was one of the partners The 3rd concern is Hindu Trade Service in which the deceased Nanda and the first accused are partners. The 4th concern was Suresh Trading Co of which the proprietor was the 3rd accused who resided permanently in Delhi. The second accused Mithani holds a general power of Attorney from Suresh Trading Co. and a power of Attorney limited only to operate the bank accounts with Hong Kong and Shangai Bank for the Eastern Trading Corporation. Apart from these four concerns there were 2 other concerns namely D. Deepak & Co., and Raj Trading Co. The proprietor of the former was one Desh Deepak while of the later was the deceased Nanda and its Manager first accused. In respect of Deepak & Co. A2 held a comprehensive, power of attorney to manage the work of the concern and to operate its Bank account .The Modus-operandi adopted by the accused in the commission of the offence with which they are charged is that under the pretext of importing goods of small value under a licence they fradulently imported without licence valuable goods like wrist watches, mathematical sets, out glass articles, thermometers etc. of a total value of over Rs. 50 lakhs, and evaded a duty of about Rs. 20 lakhs. The last 4 consignments themselves which were impounded were of about Rs. 5 lakhs the market value of which is estimated at Rs. 15 lakhs. It is alleged that the accused in the perpetration and execution of their criminal design obtained the collaboration of certain foreign firms in West Germany by obtaining false invoices showing that goods were those for which they had licences and which they could legitimately bring into India. It appears that when goods are exported the forwarding agent of the exporting Company obtains from the Shippers what Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 2 is known as Verla-descheins which we are told in commercial parlance are mate's receipts. This form is filled in by the forwarding agent, in which among other things the number of packages, the nature and quantity of goods contained therein have to be specified. After this form is duly filled in by the forwarding agent it is sent to the ship with the consignments and after the goods are checked the verladescheins is forwarded by the ship to its shipping agent.The agent obtains a form of the bill of landing, fills it with the required particulars with the number of verladescheins and dispatches to the shipping agent who after comparing the No. of the bill of lading with the mate's receipt, signs the bill of lading and sends it to the forwarding agent who in his turn sends it to the consignee of the goods. It is however admitted that when the shipping agent receives the bill of lading duly filled up from the forwarding agent it is his duty to compare the particulars in the mate's receipts with those in the Bill of lading, but ws are told that since there are thousands of packages which a shipping agent has to deal with, generally only the No. in the mate's receipt is checked up with the bill of lading and if it tallies the bill of lading is signed and returned to the forwarding agent. The prosecution allege that they were able to get about 10 verladescheins in respect of certain consignments which discloses that the foreign co-conspirators probably due to certain regulations in Germany which might require inspection of the consignments to be sent out used to enter correctly actual contents, their nature and quantity in the Verladeschein but when the bill of lading is filled in, taking advantage, it is said of the practice in the shipping Companies of only checking the No. of the verladeschein with that stated in the bill of lading, false description of goods and other particulars were given so that when the bill of lading was received by the importers in Bombay the Custom Officials would only know that the consignment contains those goods stated in the bill of lading which were goods permitted to be imported under the licence. Shri Khan-delwala explained the further case of the prosecution as to what happened when the goods were received in the Bombay port which of course has yet to be established by credible evidence. It appears that invariably another consignment would also be despatched which contained the actual goods shown in the bill of lading for which the bill of lading would not be forwarded. When the consignment arrives there will be two sets, one of 13 packages containing importable goods which are shown in the bill of lading along with another of 11 packages containing contraband goods. The 13 packages would have markings with letter "T" which could be made into "I" by giving a stroke at the end of the letter. When the bill of lading is received and the Customs Officers clear the consignment after checking up one or two packages out of the 13, the letter 'I' in the other consignment of 13 packages is changed to the letter 'I' by giving stroke at the end of it and these 11 packages along with two from the consignment of 11 which has been examined and passed would be taken away leaving the remaining 11 behind in the docks After several consignments had been cleared over a period of tew years the Customs Officials began to suspect and ultimately they detected the conspiracy and detained the last 4 consignments. Their investigation, it is said has disclosed the modus-operandi referred to above. It is the case of the prosecution that the accused by following the system narrated above brought into India 24 consignments of which the last 4 consignments were seized. With regard to 8 of the remaining 20 consignments the prosecution say that it has in its possession verladescheins which give description of contraband goods, though the bill of lading in respect of these 8 very consignments shows these goods as covered by licences. The further case of the prosecution is that verladeschein related to consignments in the name of Suresh Trading Co, & Deepak & Co. and that it has in its possession ten verladescheins which have to be proved in order to bring home the offence to the accused. The prosecution commenced examination of witnesses in March '62 and in all Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 3 examined 200 witnesses by December, '62 but in August '62 it wanted to mark these 10 verladescheins without examining any witnesses, either Under Section 32 or Under Section 10 of the Evidence Act. The Magistrate by his order of 24-8-1962 while holding that these were inadmissible Under Section 10 of the Evidence Act. After so holding he framed charges on the basis of 9 verladescheins as also on the footing that the alleged conspiracy had ended on 1-2-60 (instead of 31-3-60). It would seem that the charges framed by the Magistrate were fewer than what the prosecution desired and consequently in February 1963 it filed Criminal Revision Application No. 107 of 1963 in the Bombay High Court in which it inter-alia challenged the order of the Magistrate rejecting the 10 verladescheins as not being admissible Under Section 32 of the Evidence Act in not admitting one out of 10 verladescheins Under Section 10 of the Evidence Act and framing fewer charges than requested by the prosecution on the footing that the conspiracy had ended on 1-2-60 and not on 31-3-60 as contended by the prosecution This revision petition took over a year to come up for hearing and was ultimately heard and determined by Gokhale J , on 19/20 August '64. The learned Judge upheld the order of the Magistrate that the 10 verladescheins were inadmissible Under Section 32 of the Evidence Act. He however reversed the order of the Magistrate admitting 9 of the 10 verladescheins Under Section 10 of the Evidence Act because he was of the view that even those 9 were not admissible under that Section In this view he remanded the case to the Magistrate for reconsidering the charges framed by him. The prosecution applied for a certificate of leave to appeal to this Court which was rejected and subsequently to Special Leave Petitions No. 965 and 966/65 were filed against that Judgment but this Court dismissed both of them on 27-1-1966. 3. When the case went back to the Magistrate the prosecution applied for taking photostat copies of certain documents from the Magistrate's Court in order to enable it to send them to West Germany where witnesses were proposed to be examined for proving the verladescheins as also in respect of other matters relevant and necessary to support the prosecution case The Magistrate granted this application but Accused 1 challenged it before the High Court of Bombay. The High Court however prescribed 3 months time for the prosecution to call the foreign witnesses namely upto 4-1-67 but it was alleged that before the time for expiry arrived an anonymous letter was written by the Appellant Mithani on 4-8-67 to German witnesses in an attempt to tamper with them and also warning them of the fate that would be fall them in case they came to India to give evidence. When this fact came to be known through the Govt. of India's representative in Germany the prosecution filed Criminal Application 24 of 1967 for cancellation of bail in the High Court. Chandrachand J. by his order dated 34d-6th March 1967 held that though the letter was an anonymous letter there was internal evidence to connect Accused 2 with it and consequently cancelled the bail and directed Accused 2 to surrender, with liberty to him to move the Court on or after 26-6-67 for a fresh order of bail. Against this order Criminal Application 64/67 by Special Leave was filed but on 4-5-67 this Court while dismissing the appeal fixed 26-6-67 as the date within which the prosecution were to examine German witnesses. When the foreign witnesses were however not examined by that date Accused 2 was released on bail. The prosecution thereafter applied to the Magistrate for examination of the witnesses at Namburg or Berlin or London. The Magistrate not only rejected this application on 8-8-67 but also directed on 9-8-67 that the case should go on On the order of the Magistrate dated 8-8-67 the prosecution again preferred Criminal Revision 882/67 but that was dismissed by Desai and Wagle JJ on 9-8-68 Against that order it filed Special Petition No. 944/68 in this Court which was allowed to be withdrawn on 4-11-68. On 2-12-68 the prosecution made another application to Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 4 the Magistrate to examine certain witnesses but the Magistrate rejected that application on 9-1-69 and on 26-2-69 he discharged the appellant and the petitioner Sibal Against this order Criminal Revision Application No. 565/69 was filed on 25-8-69 and later Criminal application 873/69 in Criminal Revision Application No. 569/69 was also filed for the issue of a Commission for examining the German witnesses which was allowed by the High Court. The High Court also granted time to the prosecution & fixed 31-5-70 for return of the Commission which date was subsequently extended upto 31-8-70. The appellant filed Special Leave Petition No. 618/67 in the Supreme Court against the order of 25-5-70 but leave was granted limited only to the question of whether the to and fro tourist class air fare and expenses at Rs. 100/-a day for the lawyer of the Petitioner should be paid by the State. During the pendency of this Appeal before us the High Court extended time for the return of the Commission upto 16-9-70 and this Court has extended that time till 31-12-70 and further extension was given till 31.3.71. 4. The brief history of this case would show how a prosecution which was launched in 1961 has been shuttling up and down for 10 years between all the Courts from the lowest to the highest, in which as we said earlier all the provisions of law designed to ensure speedy criminal justice have been taken advantage of to thwart it It may be noticed that there are a number of hurdles which the prosecution had to face having regard to what it to establish because of the alleged conspiracy extending beyond the frontiers of India into a country with whom India had till recently no agreement to enable Criminal Courts in this country to issue Commissions for examination of witnesses in that country. Be that as it may, we do not wish to be drawn into or determine any of the questions which have been hotly contested namely as to who is responsible for the latches & whether the prosecution supressed documents before the Court in getting the cancellation of bail or whether as stated by the prosecution it was the Appellant who was responsible for the predicament of the prosecution in whose path he has been throwing obstacles and delaying the trial because we are anxious to ensure that anything we might say in this regard should not even remotely influence the result of the case one way or the other What we are now concerned with is the question whether having regard to the leave to Appeal being limited to the Specific question set out already, the Appellant should be given the same facilities as were accorded to other accused. The Magistrate's order against the Appellant is obviously based upon what it considered to be concluded finding of fact of the High Court as also the Supreme Court that the Appellant intimidated and tampered with the German witnesses In every criminal trial the accused is entitled to have the witnesses examined in his presence and if a departure is made and witnesses cannot be brought here for one reason or the other whether due to the action of the Appellant or the in-action or want of diligence or the part of the prosecution, and they have to be examined on commission beyond the frontiers of this Country it is incumbent upon the prosecution and the Court in ensuring a fair and impartial trial to afford to the accused the same facilities for employment of a lawyer, the payment of his to and fro air fare to the place where the Commission will examine witnesses and his daily expenses while he is engaged in the work of the commission. When the Court had directed the prosecution to give facilities in respect of payment of the transport charges and foreign exchange at Rs. 100/-as daily allowances to A1, A3, A4, A5 and A7 we find little merit in the Court singling out the accused Appellant. It is not a case of punishment for something he is said to have done during the initial stages for which he in any case had his retribution by the loss of personal freedom for nearly three months when his bail was cancelled and he was directed to surrender. We think interest of justice requites that he also should be treated in Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 5 the same way as the other accused and consequently we allow the appeal and direct that the prosecution to pay to the Appellant also the tourist class air fare for one lawyer plus Rs. 100/ per day for the expenses of the stay of the lawyer in Germany during the actual time required for execution the Commission. 5. In so far as the Special Leave Petition (Criminal) No. 890 of 1970 of A1 is concerned similar ground to those urged by Accused 2 when he filed his Special Leave Petition were also urged namely that the High Court could not without setting aside the order of discharge direct a Commission for the examination of German witnesses to issue. This Court had in A2's application specifically limited the question only to his grievance that he was neither paid his lawyer's air fare to Germany and back nor his daily allowance, and did not think that the other questions raised therein were such as to merit leave being granted. Apart from this consideration even on the question of jurisdiction of the High Court to make the impugned orders there is a decision of this Court is Rajeswar Prasad Mishra v. State of West Bengal which supports the contention of the learned Advocate for the Respondent that the Criminal Courts and the High Courts have ample power and jurisdiction even in a case of a conviction to direct additional evidence in the interest of justice and fair play rather than take a different view of the oral evidence. Much more so can the High Court in a case of discharge direct even before setting aside the order of discharge to take further evidence or additional evidence if it considers that it is necessary in the interest of justice to do so. In any view of the matter this is not a case in which leave should be granted. The petition is accordingly rejected. Ratilal Bhanji Mithani vs State Of Maharashtra And Ors. on 4 February, 1971 6 | {
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Udaipal Singh vs The State Of U.P. on 7 September, 1971 Equivalent citations: 1972CRILJ7, (1972)4SCC142, 1972(4)UJ38(SC), AIR 1972 SUPREME COURT 54, 1972 4 SCC 142, 1972 MADLJ(CRI) 259, (1972) 1 SCJ 408, 1972 ALLCRIR 226, 1972 ALLCRIR 220 Bench: I.D. Dua, J.M. Shelat, S.C. Roy JUDGMENT 1. The facts giving rise to this appeal by special leave may briefly be stated. 2. Udaipal Singh, appellant, was admittedly married to Savitiridevi, deceased in 1958 and since March, 1964 till her death which occurred on the night between 18th and 19th April, 1964 she was staying in her husband's house in village Mundgaon in which her husband Udai Pal Singh, appellant, her father-in-law Harnath Singh and her mother-in-law Bari Beti all lived together. She died an unnatural death in her bedroom which was also the bedroom of husband on the night between 18th and 19th April, 1964. Information about her death was lodged by her father-in-law Harnath Singh at the police station Mohammadabad, four miles away from Mundgaon at about 10.30 a.m. on April 1964. That report deserves to be reproduced in extenso as recorded in the general diary. It reads : Time 10.30 am. Mohammadabad. At this time Shri Harnath Singh son of Mahuker Singh Thakur of village Mandgaon which is at a distance of four miles from this police station and to its east came to the police station and informed that his son Udaipal Singh was clerk of Sri Babu Singh Vakil of Fatehgarh He used to go to Fatehgarh daily every morning. On the previous day when he was going there he found that his wife who belonged to Parbatpur, had not prepared Ins meals. The son abused his wife and left for Fatehgarh without taking any meals. He did not return to his house that evening. At about 8 or 9 p m. his daughter-in-law informed his wife that she had some headache. She went to her room to lie on a cot and when she did not get up early that morning his wife went to her room and found that she was lying dead on her cot She conveyed that information to him He also went there and saw everything himself. In all probability the daughter-in-law in an angry mood has eaten something (poison) with the result that she is now dead. An inquest would beheld because it is reported to be a case of suicide. Ganga Prasad Tripathi (P.W. 3) who has at that time Sub Inspector (II) at the police station Mohammadabad thereupon left for village Mundgaon and arrived at the appellant's house at about 12 noon. There he found Harnath Singh, father of the Udaipal Singh vs The State Of U.P. on 7 September, 1971 1 appellant, present at the door. The Sub-Inspector then collected the panchas and found the dead body of Savitiri Devi lying on a cot Side a room close to the court yard. The dead body was covered with a chaddar Smt. Bari Beti, mother of the appellant, was present in the house. She was asked by the Sub-Inspector to remove the chaddar so that the necessary investigation into the apparent cause of death could be held. But Bari Beti declined to comply with this request. After some time, however, she was persuaded by the Sub-lector and the panchas to do so. She then went inside the room where the dead body was lying and removed the chaddar but not completely. She kept the face of the dead body covered. When the Sub-Inspector insisted on seeing the face for the purpose of preparing his report Harnath Singh, the father of the appellant, Jagdeep Singh brother of Harnath and others present objected to it saying that it was a question of family honour and prestige and that the face of the deceased could not be uncovered. When every effort made by the Sub Inspector to persuade the people to comply With his request failed, he himself removed the chaddar from the face of the dead body and saw an incised wound on her face. One corner of her sari was also besmeared with blood. Harnath Singh and Bari Bet then moved away towards the court yard. On enquiry by the Sub Inspector as to what they had to say about the injuries on the face of the deceased Harnath Singh and, Bari Beti kept quite and gave no reply. The atmosphere seems to have become tense and the Sub-Inspector found it to be very difficult to continue the examination of the injuries on the body of the deceased. Harnath Singh and Bari Beti as also others present, started pleading with the Sub-Inspector not to send the body for postmortem. Ultimately the panchas recorded their separate opinion on the report prepared by the Sub-Inspect or. This opinion reads: 3. "Smt. Savitiri Devi died as a result of her having taken some poison." 4. The Sub Inspector disagreed with this opinion and prepared his report (Ex. Ka-9). The dead body was then sent to the mortuary for postmortem examination. The Sub-Inspector also took the following other precautions. Some water in a small katori (bowl) and phial which were kept beneath the cot of the deceased were duly sealed in the presence of the witness. Some stains on the ground indicating that somebody had vomited there were also found by the Sub-Inspector. A sample of that earth was also taken and duly sealed. The doctor who was to perform the postmortem examination was directed to preserve the viscera. All these articles, namely, the blood stained clothes of the deceased, the viscera, the earth having dirty stains, the water and the phial were sent to the chemical examiner for analysis and report. No chemical poison was detected in any of the aforesaid articles. The clothes of the deceased were however, found to be stained with human blood. 5. The postmortem examination disclosed the following external antemortem injuries on the person of the deceased: 1. Incised wound 5 1/2" x 3" bone extending from left cheek to right cheek. The whole of lower lip, left 1/3 of upper lip and the soft tissues upto chin had been cut off and were missing. This wound was caused by some sharp edged weapon. Udaipal Singh vs The State Of U.P. on 7 September, 1971 2 2. Contusion 6 1/2" x 4 1/2" on the right side of face and right temple with econhymosis of upper and lower side of right eye. 3. 1st degree burn 1 1/2 x 1" on the right side of perinium. 4. 1st degree burn, 3" x 1 1/2" on the right side of labrium majora. 5. 1st degree burn 1 1/2" x 1", on the left side of perinium, adjacent to vaginal orifice. 6. 1st degree burn 4" x 1 1/2" on the left librium majora and adjacent parts. 6. The internal examination revealed that both the lungs, larynx, traches and bronchi were congested. In the opinion of the doctor death was due to shock and haemorrhage caused by the injuries and these injuries were sufficient in the ordinary course of nature to result in death. 7. After receipt of the report of postmortem examination the police became certain that it was a case of murder with the result that on April 27, 1904 a case of murder was registered and after investigation Harnath Singh, his wife Bari Beti and their two sons Udaipal Singh and Muneshwar Singh were proceeded against. The committing magistrate discharged Munesbwar Singh but committed the other three to stand their trial under Section 302 read with Section 34, I.P.C. 8. The learned Sessions Judge found all the three guilty of the offence charged and on conviction sentenced each of them to imprisonment for life. The trial court relied on. (1) Motive, (2) Place and time of the murder of the deceased; (3) Presence of the three accused persons near the house at the time of the occurrence; (4) Conduct of the three accused in keeping quiet throughout the night and the conduct of Harnath Singh, accused in giving wrong information to the police and the conduct of both Harnath Singh, accused, his wife in not helping the investigating authorities and also in setting up his alibi; and (5) Nature of the injuries found upon the person of the deceased. 9. On appeal the High Court held Udaipal Singh guilty of the murder of his wife for the following reasons: (1) He had very strong motive to get rid of his wife Smt. Savitiri with whom his relations Were very much strained for the four years preceding the murder. (2) He was present in village Murdgaon and must have been in his own house when the occurrence took place. He had, therefore, the opportunity to commit the murder. Udaipal Singh vs The State Of U.P. on 7 September, 1971 3 (3) The place of occurrence was his own room (4) His conduct after the occurrence had taken place and the false explanation furnished by him. It was his duty to have given proper explanation as to how and in what circumstances Smt. Savitiri met her death. However, he came forward with a false explanation and a false plea of alibi. (5) In the very first report which Harnath Singh made to the police an attempt was made to create an alibi for Udaipal Singh. That also clearly indicated that Udaipal Singh was the murderer and had to be saved. He was accordingly held guilty under Section 302, I.P.C. or in the alternative under Section 302 read with Section 34 I.P.C. The other two accused persons namely his parents were held not to have as strong a motive as the present appellant had in getting rid of the deceased. Though in the opinion of the High Court there were grave suspicions against the parents as well they were, given benefit of doubt and acquitted of the charge of murder. Harnath Singh was held guilty of an offence under Section 201 I.P.C. and sentenced to rigorous imprisonment for three years, Bari Beti was given benefit of doubt for this offence as well. 10. Special leave application on behalf of both Harnath Singh and Udaipal Singh was filed in this Court on September 17, 1988. On November 6, 1968 an application was filed on behalf of the petitioners praying for permission to take an additional ground of appeal objecting to the admissibility of evidence of the letters said to have been written by the deceased to her father. On November 7, 1968 this Court declined special leave to Harnath Singh but granted the same to Udaipal Singh, appellant and also permitted him to file the additional grounds of appeal. 11 In this Court Shri Yogeshwar Prasad strongly contended that the appellant's case was distinguished by the High Court from that of his lather and mother on the ground only of his having stronger motive for getting rid of the deceased. Letters written by the deceased to her father on which alone the evidence of motive is founded were contended to be in admissible in evidence because they do not fall under Section 32(1) of the Indian Evidence Act. He further contended that the circumstantial evidence did not conclusively establish the appellant's guilt beyond reasonable doubt because it did not exclude reasonable possibility of his innocence. 12. Now, from the very nature of things apart from the inmates of the house there could be no eye-witness of the occurrence of this case and the prosecution had, therefore, necessarily to rely on circumstantial evidence only. In cases where only circumstantial evidence is available at the outset one normally starts looking for the motive and the opportunity to commit the crime. If the evidence shows that the accused having a strong enough motive had the opportunity of committing the crime and the established circumstances on the record considered along with the explanation if any of the accused, exclude the reasonable possibility of anyone also being the real culprit then the chain of evidence can be considered to be complete as to show that within all human probability the crime must have been committed by the accused. He may, in that event, safely be held guilty on such circumstantial evidence. On behalf of the appellant this proposition was not disputed. According to him the letters written by the deceased to her father alone distinguish the appellant's case from that of his parents and if those letters are excluded from consideration being inadmissible in evidence Udaipal Singh vs The State Of U.P. on 7 September, 1971 4 then, he would also be entitled to acquittal like his parents in our opinion, even excluding the letters written by the deceased to her father there is ample evidence showing the strong motive on the part of the appellant to get rid of his wile. The letter written by the appellant to his mistress (Ex. Ka-8) quite clearly brings out the feeling of disgust which he cherished towards the deceased. The admissibility of this letter was not been questioned on behalf of the appellant; before us, and in our opinion, rightly so. When confronted with this letter the appellant came out with the explanation that he had written it in order merely to tease his wife. This explanation did not appeal to the courts below and in our opinion, quite rightly. The trial court considered this explanation to be absurd and an afterthought. In the opinion of the Court this explanation had only to be stated to be rejected. This letter, according to that court, indicated that the appellant wanted to get rid of his wife. The circumstances which induced the High Court to uphold the appellant's conviction have already been reproduced earlier. These circumstances, were, in our opinion, rightly held by the High Court to be inconsistent with the innocence of the appellant and incapable of any other hypothesis then that of the appellant's guilt. Whether or not his parents were also guilty along with him need not be considered because they have been acquitted of the charge of murder and there is no appeal against their acquittal. The appellant's culpability on the facts and circumstances of this case is unaffected by the acquittal of his parents. This appeal fails and is accordingly dismissed. Udaipal Singh vs The State Of U.P. on 7 September, 1971 5 | {
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Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 Equivalent citations: 1971 AIR 823, 1971 SCR (3) 715, AIR 1971 SUPREME COURT 823, 1971 LAB. I. C. 487 Author: G.K. Mitter Bench: G.K. Mitter, A.N. Ray PETITIONER: GOVT. OF INDIA, MINISTRY OF HOME AFFAIRS & ORS. Vs. RESPONDENT: TARAK NATH GHOSH DATE OF JUDGMENT12/02/1971 BENCH: MITTER, G.K. BENCH: MITTER, G.K. RAY, A.N. CITATION: 1971 AIR 823 1971 SCR (3) 715 1971 SCC (1) 734 CITATOR INFO : O 1972 SC 554 (15,16,17,19,63) ACT: All India Service (Discipline and Appeal) Rules, 1955, rr. 5(2) & 7-Civil Servant-Suspension-If can be ordered in contemplation of disciplinary proceedings. HEADNOTE: Serious allegations of corruption and malpractices had been made against the respondent, a member of the Indian Police Service, serving in the State of Bihar. Inquiries made by the State Government revealed that there was a prima facie case made out against him. He was suspended by an order which stated that disciplinary proceedings were contemplated against the respondent. On the question whether the suspension of a member of the Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 1 service can only be ordered after definite charges have been communicated to him in terms of r. 5(2) of the All India Services (Discipline and Appeal) Rules, 1955, or whether the Government is entitled to place him under suspension even before that stage has been reached after a preliminary investigation, HELD : (1) The fact that in other rules of service there is specific provision for an order of suspension even when disciplinary proceedings were contemplated, does not mean that a member of the All India Service should be dealt with differently. It would not be proper to interpret the Rules, which from a self-contained Code, by reference to the provisions of other rules even if they were made by or under the authority of the President of India. [718 F-G] (2) Rule 7 expressly provides for suspension of a member of the service, having regard to the nature of the charges, for the purpose of disciplinary proceedings. The word 'charges' in the rule means accusations or amputations against a member of the service. If the disciplinary authority takes note of the allegation and is of the opinion after preli- minary inquiries that the circumstances of the case justify further investigation to be made before definite charges can be-framed it would not be improper to remove the officer from the sphere of his activity either by transfer or suspension inasmuch as it may be necessary to find out facts from people working under him or look into papers which are in his custody. Ordinarily when serious imputations are made against the conduct of an officer, the disciplinary authorities cannot immediately draw up the charges and in some cases a considerable time may elapse before the superior authority can come to a conclusion that definite charges can be levelled against the officer. Merely because the order mentions that the disciplinary proceedings were contemplated it cannot be held that the situation in the present case had not reached the stage which called for an order of suspension. In substance, disciplinary proceedings can be said to have been started when complaints about the integrity of an officer are entertained, followed by a preliminary inquiry into them culminating 716 in the satisfaction of the Government that a prima facie case has been made out against him for the framing of charges. When the order of suspension itself shows that the Government was of the view that such a prima facie case for launching departmental proceedings has been made out the fact that the order also mentions that such proceedings were contemplated makes no difference. 1721 B-F; 723 G; 724 G-H; 725 B-C] S. Govinda Menon v. Union of India, [1967] 2 S.C.R. 566, followed. Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 2 JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2338 of 1968. Appeal from the judgment and order dated March 31, 1965 of the Patna High Court in Misc. Judicial Case No. 1207 of 1964. Jagadish Swarup, Solicitor-General and B. K. P. Sinha, for the appellants. B. C. Ghosh, P. K. Chatterjee and Rathin Das, for the respondent. The Judgment of the Court was delivered by Mitter, J. The question in this appeal is, whether the order of suspension passed on the respondent on July 31, 1964 was properly struck down by the Patna High Court. The facts are as follows. The respondent is a member of the Indian Police Service appointed on 25th January, 1937 and at the material time he was holding the substantive rank of Deputy Superintendent of Police in Bihar. In June 1962 he was posted at Ranchi. He was transferred to Patna and appointed as Special Officer, Political, General and Transport Department on July 23, 1964. The order of which the validity is in question ran as follows :- "Whereas serious allegations of corruption and malpractices have been made against Shri T. N. Ghosh, 1. P., Deputy inspector General of Police, Southern Range, Ranchi; And whereas the said Shri T. N. Ghosh is also reported to have contravened certain provisions of the All India Services (Conduct) Rules, 1954; And whereas the enquiries made by the Government of Bihar ;Into these allegations have revealed that there is a prima facie case made out against him; And whereas disciplinary proceedings in respect of these matters are contemplated against the said Shri T. N. Ghosh; And whereas the Government of India, after carefully consi- dering the available material, and having regard to the nature of the charges and circumstances of the case, are satisfied that it is necessary and desirable to place the said Shri T. N. Ghosh under suspension Now, therefore, the Government of India hereby place the said Shri T., N. Ghosh, under suspension with immediate effect, until further orders, and direct that the said Shri T. N. Ghosh shall, during the period of suspension be paid such subsistence allowance as is admissible under the rules. By order and in the name of the President of India. Sd./- K. Sivaraj Deputy Secretary to the Government of India." The respondent addressed a memorial to the Secretary to the Government of India, Ministry of Home Affairs on 24th August 1964 complaining against the above order on the ground that it was not sanctioned by the rules i.e. All India Service (Conduct) Rules, 1954. In particular his grievance was that as there were only allegations against him which had not crystallised into charges an order of suspension could not be made before departmental proceedings were actually started and while Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 3 they were merely contemplated. He also- asked for communication of the nature of the departmental proceedings which had been started against him within 14 days with a request that the order of suspension be withdrawn in default thereof. It appears that there was no response to this. The respondent filed his writ petition on September 14, 1964 praying for the quashing of the order particularly on the above grounds raised in his memorandum. A counter affidavit to the petition was filed on behalf of the Chief Secretary to the Government of Bihar who was the third respondent in the petition. The averments in the said affidavit were that a report had been made to the Central Government against the petitioner on July 6, 1964 and having regard to the activities of the petitioner it had become necessary to remove him from the field of activities and as such he had been transferred to, Patna after being relieved of his post on July 1 3, 1964. It was said further that even before the receipt of the suspension order the petitioner had been actually questioned by S. P. Verma, the then Inspector-General of Police, Bihar as early as February 8, 1964 apprising the petitioner that his activities had attracted the attention of Government. It was admitted that departmental enquiry and investigation into the conduct of the petitioner were still going on and as such charges had not been framed against him. Finally, it was said that the order was not by way of punishment and had been passed pending departmental enquiry into his conduct. Another counter affidavit was filed on behalf of the Government of India and the Deputy Secretary to the Government of India, respondents 1 and 2 in the petition wherein substantially the same averments were made as in the counter affidavit on behalf of respondent No. 3. A large number of points were canvassed before the High Court which examined the provisions of different sets of rules and relying particularly on the difference in wording of rule 12 of the Central Civil Services Rules which empowered the appointing authority to place an officer under suspension inter alia, where a disciplinary proceeding against him was contemplated or was pending and rule 7 of the All India Services Rules (quoted in extensor hereinafter) it came to the conclusion that the order of suspension was not proper. Further, according to one of the Judges of that Court: "To allow a member of that (the AR India) service to be placed under suspension without the formal proceeding in started may cause humiliation to an officer of such high rank without any justification whatsoever. " According to the other learned Judge who took substantially the same view the order of suspension only indicated that disciplinary proceedings against the petitioner were in contemplation and this was not provided for in rule 7. In our view it would not be proper to interpret the provisions of the All India Service (Discipline and Appeal) Rules 1955 by reference to the provisions of other rules even if they were made by or under the authority of the President of India. The All India Services (Discipline and Appeal) Rules 1955 as they stood at the relevant time were a self-contained code-and we have to examine the provisions thereof to find out whether the order passed on the petitioner was justified. These rules were promulgated in exercise of the powers conferred by sub-s. ( 1 ) of S. 3 of the All India Services Act 1951 by the Central Government after consultation with the Governments of the States concerned. They were applicable to members of the Indian Administrative Service and those of the Indian Police Service. Cl. 3 of the Rules provided for penalties which might for good and sufficient reasons be imposed on a member of the service. Suspension is not a penalty covered by this clause. Cl. 4 indicated the authorities who would Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 4 institute proceedings and impose penalty against mem- bers of the Services. Cl. 5 which generally dealt with the procedure for imposing penalties provided by the first three sub-clauses as follows "(1) Without prejudice to the provisions of the Public Servants Inquiry Act, 1850, no order shall be passed imposing any of the penalties specified in rule 3 on a member of the Service unless he has been informed in writing of the grounds on which it is proposed to take action and has been afforded an adequate opportunity of defending hims elf. (2) The grounds on which it is proposed to take action shall be reduced to the form-of a definite charge or charges, which shall be communicated to the member of the Service charged together with a statement of the allegations on which each charge is based and of any other circumstances which it is proposed to take into consideration in passing orders on the case. (3) The member of the Service shall be required within such time as may be considered by the Government reasonably adequate in the circumstances of the case, to put in a written statement of his defence and to state whether he desires to be heard in person. (4) to (10) It was only after the written statement was received from the member that the Government might, if it considered necessary, appoint a Board of Enquiry or an Enquiry Officer to enquire into the charges framed against him. Other sub- clauses of this rule laid down generally the procedure which was to be adopted in the enquiry. Rule 7 provided as follows : "Suspension during disciplinary proceedings.- (1) If having regard to the nature of the charges and the circumstances in any case the Government which initiates any disciplinary proceedings is satisfied it is necessary or desirable to place under suspend the member of the Service against whom such proceedings are started that Government may- (a) if the member of the Service is serving under it pass an order placing him under suspension, or (b)if the member of the Service is serving under another Government, request that Government to place him under suspension, pending the conclusion of the inquiry and the, passing of the final order in the case 100SupCI/71 7 2 0 Provided that in cases where there is a difference of opinion between two State Governments, the mater shall be referred to the Central Government whose decision thereon shall be final. (2) A member of the Service who is detained in official custody whether on a criminal charge or otherwise, for a period longer than forty-eight hours, shall be deemed to have been suspended by the Government concerned under this rule. Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 5 (3) A member of the Service in respect of or against whom an investigation, inquiry or trial relating to a criminal charge is pending may, at the discretion of the Government under which he is serving, be placed under suspension until the termination of all proceedings relating to that charge.' if the charge is connected with his position as a Govt. servant or is likely to embarrass him in the discharge of his duties or involves moral turpitude. Under rule 8 a member of a Service who was placed under sus- pension was to be entitled to receive payment from the Government suspending his subsistence allowance as specified therein. The crucial question in this case is, whether suspension of a member of the Service can only be ordered after definite charges have been communicated to him in terms of sub-cl. (2) of rule 5 or whether the Government is entitled to place an officer under suspension even before that stage has been reached after a preliminary investigation has been made into the conduct of the officer concerned following allegations of corrupt or malpractice levelled against him. To determine this it is necessary to find out the object of placing a Government officer under "suspension" in terms of the said rule. 'Suspension' according to the Oxford Dictionary means "the :action of suspending or condition of being suspended; the action of debarring or state of being debarred, esp. for a time, from a function or privilege; temporary deprivation of one's office or position". A master can, subject to the contract of service, ask his servant not to render any service without assigning any reason but this would not be by way of punishment and the master would have to pay the servant his full wages or remuneration in such an eventuality. As Halsbury puts it : "Whether or not the master has power to suspend a servant during the duration of the contract of service depends upon the construction of the particular contract. In the absence of any express or implied term to the contrary, the master cannot punish a servant for alleg- 72 1 ed misconduct by suspending him from employment and stopping his wages for the period of the suspension." (See Halsbury's Laws of England, Third Edition, Vol. 25, Art. 989 page 518). Rule 7 of the Service Rules expressly provides for suspending of a member of the Service for the purpose of disciplinary proceedings. When serious allegations of misconduct are imputed against a member of a Service normally it would not be desirable to allow him to continue in the post where he was functioning. If the disciplinary authority takes note of such allegations and is of opinion after some preliminary enquiries that the circumstances of the case justify further investigation to be made before definite charges can be, framed, it would not be improper to remove the officer concerned from the sphere of his activity inasmuch as it may be necessary to find out facts from people working under him or look into papers which are in his custody and it would be embarrassing and inopportune both for the officer Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 6 concerned as well as to those whose duty it was to make the enquiry to do so while the officer was present at the spot. Such a situation can be avoided either by transferring the officer to some other place or by temporarily putting him out of, action by making an order of suspension. Government may rightly take the view that an officer against whom serious imputations are made should not be allowed to function anywhere before the matter has been finally set at rest after proper scrutiny and holding of departmental proceedings. Rule 7 is aimed at taking the latter course of conduct. Ordinarily when serious imputitions are made against the conduct of an officer the disciplinary authority cannot immediately draw up the charges : it may be that the Imputations are false or con- cocted or gross exaggerations of trivial irregularities. A considerable time may elapse between the receipt of imputations against an officer and a definite conclusion by a superior authority that the circumstances are such that definite charges can be levelled against the officer. Whether it is necessary or desirable to place the officer under suspension even before definite charges have been framed would depend upon the circumstances of the case and the view which is taken by the Government concerned. There would be nothing improper per se if the rules were to provide for suspension even before definite charges of misconduct had been communicated to the officer concerned. The question is whether the language of rule 7 is so correlated to that of rule 5 as to lead us to hold that the word "charges" in sub-cl. (1) of rule. 7 must mean a definite charge as mentioned in subcl. (2) of r. 5. It may be that even a case where definite charges have been raised against an officer he may satisfactorily explain the circumstances and the grounds alleged against him in his written statement. It is also possible that after. the enquiry is conducted it is found that the charges are all baseless. In principle we can see no difference between the position of an officer against whom definite charges have been framed to which he is required to put in his written statement and a situation where on receipt of allegations of grave misconduct against him the Government is, of opinion that it would not be proper to allow the officer concerned to function in the ordinary way. The matter is however not res integra and there is a series of decisions of this Court which throw considerable light on the power of a master including a Government to suspend a servant or an officer under rules of service or even de hors such rules. The law of master and servant including Government servants with regard to suspension of an employee was discussed at some length in The Management of Hotel Imperial V. Hotel Workers' Union(1). However rules of service of Government officers did not fall for consideration there. Champak Lal Chimanlal Shah v. The Union of India(1) was a case where a temporary Government servant's services were terminated. The case shows, as is well known, that even More a formal departmental enquiry is launched a preliminary enquiry is usually held to find out whether a prima facie case is made out against a Government servant. This preliminary enquiry is directed to the collection of facts in regard to the work and conduct of a Government servant in which he may or may not be associated so that the authority concern may decide whether or not to subject the servant concerned to the enquiry under Art. 311 for Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 7 inflicting one of the three major punishments mentioned therein and such a preliminary enquiry may even be held ex parte. In R. P. Kapur v. Union of India & another(3) the general principles governing a master and servant were discussed in some detail and it was said "If there is no express term in the contract relating to suspension and payment during such suspension or if there is no statutory provision in any law or rule, the employee is entitled to his, full remuneration for the period of his interim suspension; on the other hand if there is a term in this respect in the contract or there is a provision in the statute or the rules framed thereunder providing for the scale, of payment during suspension, the payment would be in accordance there with. On general principles therefore the authority entitled to appoint a public servant would be entitled to suspend him pending a departmental enquiry (1) [1960] 1 S.C.R. 476, 482. (2) [1964] 5 S.C.R. 190. (3) [1964] 5 S.C.R. 431, 445. 72 3 into his conduct or pending a criminal proceeding, which may eventually result in a departmental enquiry against him." There is however a direct authority of this Court in S. Govinda Menon v. The Union of India(1). The appellant before this Court was a member of the Indian Administrative Service. He was the First Member of the Board of Revenue, Kerala State and was holding the post of Commissioner of Hindu Religious and Charitable Endowments. On the basis of certain _ complaints containing allegations of misconduct against the appellant in the discharge of his duties as such Commissioner the Kerala Government instituted certain preliminary enquiries and thereafter started disciplinary proceedings against him and also placed him under suspension under rule 7 of the All India Services (Discipline and Appeal) Rules. One of the grounds urged by the appellant was that the order of suspension which was dated March 8, 1963 was not in compliance with rule 7 inasmuch as definite charges were framed against him only on 6th June, 1963. On the basis of rule 5(2) it was argued that the word "charges" which occurred in 'this rule and in rule 7 should be given the same meaning and no ,order of suspension could be passed under rule 7 before the ,charges in terms of r. 5(2) were tramed against him. This was turned down by this Court observing (at p. 582) : "Rule 5(2) prescribes that the grounds on which it is proposed to take action shall be reduced to the form of a definite charge or charges. The framing of the charge under Rule 5(2) is necessary to enable the member of the Service to meet the case against him. The language of rule 7(1) is however different and that rule provides that the Government may place a member of the Service under suspension "having regard to the nature of the charge/charges and the circumstances in any case" if the Government is satisfied that it is necessary to place him under suspension. In view of the difference of language in rule 5(2) and rule 7 we are of the opinion that. the word charges' in rule 7(1) should be given a wider meaning as denoting the accusation or imputation against the member of the Service." It is worthy of note, that in the order of suspension it was stated as follows "The Government have received several petitions containing serious allegations of official misconduct (1) [1967]2 S.C.R. Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 8 565. against Shri S. Govinda Menon . . . . Prelimi- nary enquiries caused to be conducted into the allegations have shown prima facie that the officer is guilty of corruption. The Kerala High Court has also occasion to comment on the conduct of the officer in their judgment in O.P. 2306 of 1962 delivered on, 12th February 1963............ The judgment in the above case and the preliminary report of the X-Branch police have disclosed the following grave charges of serious irregularity and official misconduct on the part of the accused officer The detailed enquiry into 'the charges by the XBranch is in progress. The evidence in the case has to be collected from a large number of officers who are. subordinate to the accused officer in his capacity as First Member of the Board of Revenue. In the interest of the proper conduct of the enquiry it is necessary that the officer should not be allowed to continue in that post. Having regard to the nature of the charges against the officer and the circumstances the proper course would be to place him under suspension. Shri S. Govinda Menon I.A.S........ is therefore placed under suspension under Rule 7 of the All India Services (Discipline and Appeal) Rules 1955 till the disciplinary proceedings initiated against him are completed.', It was urged before us that the order of suspension there was different from the one before us. While there is no doubt that the order against the appellant in the above case was far more detailed both with regard to the nature of the charges and to the necessity of placing him under suspension, in substance there is little difference for the purpose of rule 7 of the Service Rules. The order in this case dated 31st July 1964 shows that serious allegations of corruption and malpractices had been made against the respondent and he was also reported to have contravened the provisions of the All India Service Conduct Rules and enquiries made by the Government of Bihar into the allegations had revealed that there was a prima facie case made out against him. Merely because the order mentioned that disciplinary proceedings were contemplated against the respondent, as compared to rule 7 which contains phrases like "the initiation of disciplinary proceedings" and the "starting of such proceedings" we cannot hold that the situation in the present case had not reached a stage which called for an order of suspension. In substance disciplinary proceedings can be said to be started against an 7 25 officer when complaints about his integrity or honesty are entertained and followed by a preliminary enquiry into them culminating in the satisfaction of the Government that a prima facie case has been made out against him for the framing of charges. When the order of suspension itself shows that Government was of the view that such a prima facie case for departmental proceedings had been made out the fact that the order also mentions that such proceedings were contemplated makes no difference. Again the fact that in other rules of service an order of suspension may be made when "disciplinary proceeding', were, contemplated" should not lead us to take the view that a member of an All India Service should be dealt with differently. The reputation of an officer is equally valuable no matter whether he belongs to the All India Service or to one of a humbler cadre. It is the exigency of the conditions of service which requires or calls for an order of suspension and there can be no difference ,in regard to this matter as between a member of, an All India Service and a member of a State Service or a Railway Service. In the result the appeal is allowed but in the circumstances, of the case we direct the parties to pay and bear their own costs. Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 9 V.P.S. Appeal allowed. 72 6 Govt. Of India, Ministry Of Home Affairs ... vs Tarak Nath Ghosh on 12 February, 1971 10 | {
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Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 Equivalent citations: 1971 AIR 2444, 1972 SCR (1) 357, AIR 1971 SUPREME COURT 2444, 1971 TAX. L. R. 1627 Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde PETITIONER: COMMISSIONER OF INCOME TAX, U.P. Vs. RESPONDENT: GURBUX RAI HARBUX RAI DATE OF JUDGMENT24/08/1971 BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. CITATION: 1971 AIR 2444 1972 SCR (1) 357 ACT: Excess Profits Tax Act, 1940, ss. 10A and 15-Scope of. HEADNOTE: Section 10A of the Excess Profits Act, 1940, deals with transactions designed to avoid or reduce liability to excess profits tax and empowers the Excess Profits Tax Officer to make appropriate adjustments as respects liability to excess profits tax. But before any action can be taken under the section, there should be pending a proceeding for assessment or reassessment of excess profits tax. Under s. 15, if in consequence of definite information which has come into his possession, the Excess Profits Tax Officer discovers that the profits of any chargeable accounting period have escaped assessment, he may serve a notice on the assessee and proceed to assess the profits liable to excess profits tax. In the present case, the Appellate Assistant Commissioner, Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 1 in appeal from the Income-tax officer order, stated that there was a partial partition in the family of one of the partners of the assessee. On the basis of that order, the Excess Profits Tax Officer started proceedings under s. 1OA. He issued notices to the assessee under both ss. 15 and 10A on the same-day, but the notice under s. 15 was ordered to be issued first. After considering the reply of the assessee the Excess Profits Tax Officer passed an order under s. 15 modifying the original assessment. On the questions : (1) whether the Excess Profits Tax Officer was competent to apply the provisions of s. 10A and make the revised assessment under s. 15, and (2) whether there was any definite information by virtue of which the Excess Profits Tax Officer was competent to reopen the original assessment.. HELD : (1) Though the notices under ss. 15 and 10A were issued on the same date, the requirements of law were satisfied, because, the Excess Profits Tax Officer had initiated proceedings under s. 15, before issuing notice under s. 10A by ordering the notice under s. 15 to be issued first. The assessee also did not take any objection in his reply to the notice under s. 10A that the notice under s. 15 had not been issued before the notice under s. 10A was issued. [365 F; 366 B-C] (2)The information which came into the possession of the Excess ProfitsTax Officer of partial partition having been effected was relevant for thepurpose of s. 15 and once he had initiated proceedings under that section, he was competent and had jurisdiction to examine for the purpose of s. 10A whether partial partition had been effected for avoidance or reduction of liability to excess profits. [367 B-C] (a)The Appellate Assistant Commissioner in the proceedings relating to the assessment of income tax of the assessee had stated the fact of partial partition which was certainly information which came into the possession of the Excess Profits Tax Officer. It was information received from the decision of superior authorities and not a mere change of opinion by himself. [366 F-G] 358 (b)The proceedings before the Appellate Assistant Commissioner related only to assessment of income tax. Therefore, it could not be said, that because he did not consider whether the object of the partition was to reduce liability to excess profits, there was no escapement for purposes of excess profits tax. [367 A] Bansilal v. C.I.T., M.P., 70 I.T.R. 74 (S.C.) and Asstt. Controller of Estates Duty, Hyderabad v. H.E.H. Nizam of Hyderabad, 72 I.T.R. 376(S.C.), applied. JUDGMENT: Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 2 CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1225 and 1226 of 1967. Appeals from the judgment and decree dated May 22, 1964 of the Allahabad High Court in Income-tax Reference No. 189 of 1953. S.T. Desai, R. N. Sachthey and B. D. Sharma, for the appellant (in both the appeals). M.C. Chagla and A. N. Goyal, for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, C. J. Gurbux Rai Harbux Rai-hereinafter called 'the assessee'-is a registered firm carrying on a business in piece goods and commission agents. It has its head office at Kanpur and a branch office at Farrukhabad. During the chargeable accounting periods July 4, 1943 to June 21, 1944 and June 22, 1944 to July 10, 1945 Gurbux Rai and Harbux Rai (each representing his joint family) were the two partners of the assessees with equal shares in the profit and loss. In proceedings for assessment of tax under the Excess Profits for Act 1940 for the two chargeable accounting periods the assessee informed the Tax Officer that the joint family of Gurbux Rai had been dissolved and there was a reconstitution of the business of the partnership with effect from July 4, 1943. , According to the assessee the constitution of the firm after partition was that in the firm at Kanpur the former two partners were interested, their share being equal, but in the business of the firm at Farrukhabad there were three partners-Harbux Rai with -/8/- share, Chameli Devi with -/4/- share and Gopaldas with -/4/- share. In assessing tax under the Indian Income-tax Act, 1922 for the assessment year 1944-45 relevant to the account year ending June 21, 1944 the Income-tax Officer held that the case set up by the assessee that there was partition amongst the members of the family of Gurbux Rai could not be accepted. In the view of the Income-tax Officer, an attempt was made "to avoid proper incidence of taxation as an after- thought to create evidence for camouflaging the Farrukhabad business as a separate unit of assessment". The Income-tax Officer directed that the income be assessed as the income of the assessee and not as the income of a separate firm. The excess profits tax assessment being consequential upon the income-tax assessment, the Excess Profits Tax Officer assessed the entire income of the two businesses at Kanpur and at Farrukhabad, in the hands of the assessee firm. Against the order passed by the Income Tax Officer the assessee appealed to the Appellate Assistant Commissioner who by his order dated October 10, 1947 observed : "......that partial partition in respect of movable property of Gurbux Rai was effected on a date somewhere near Asadh Samvat 2000, from which date Farrukhabad was conducted by a separate firm consisting of Harbux Rai, Mst. Chameli and Gopaldas". Pursuant to this order the Income-tax Officer modified the assessment with respect to the Income-tax assessment of the assessee for the assessment years 1944-45 and 1945-46. The Excess Profits Tax Officer however started proceedings under s. 10-A by notice dated February 6, 1951 calling upon the assessee to show cause why appropriate adjustments should not be made in the Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 3 assessment, and passed orders in that behalf for both the chargeable accounting periods holding that the main purpose of the partial partition of the family business of Gurbux Rai was avoidance of excess profits tax liability. By order dated February 21, 1951 passed under s. 15 of the Excess Profits Tax Act the Excess Profits Tax Officer modified the original excess profits tax assessment. In the revised assessment in pursuance of orders under s. 10-A he included the income of the branch shop at Farrukhabad in the total income of the assessee for purposes of excess profits-tax assessment. The assessee appealed against the order of additional assessment contending that the Excess Profits Tax Officer was not competent to reopen the case under s. 15 as he had no definite information coming into his possession to enable him to discover that the profits of the chargeable accounting period had escaped assessment. The assessee contended that all the materials in the case were before the Excess Profits Tax Officer at the time of his original assessment and no new information came into his possession thereafter. The assessee also contended that the Excess Profits Tax Officer was not competent to pass any order under s. 10-A merely to make an adjustment in the revised assessment under s. 15. The Income-tax Appellate Tribunal held that the Excess Profits Tax Officer had received definite information regarding the state of the law in pursuance of the appellate order of the Appellate Assistant Commissioner who had held that the family of Gurbux Rai was partially partitioned. The Tribunal also held that the Excess Profits Tax Officer was competent to pass an order under s. 10-A, of the Excess Profits Tax Act. 3 6 0 The Tribunal thereafter referred the following questions to the High Court of Allahabad under s. 21 of the Excess Profits Act read with s. 66 (1) of the Income-tax Act, 1922 : "(1) Whether on the facts and in the circumstances of this case there was any definite information within the meaning of s. 15 by virtue of which the Excess Pro fits Tax Officer was competent to reopen the excess profits tax assessments ? (2) Whether in the circumstances of this case, the Excess Profits Tax Officer was competent to apply the provisions of s. 10-A and make necessary adjustments,in pursuance thereto in the revised assessment under s. 15 ?" The High Court of Allahabad held that since the Excess Profits 'Tax Officer purported to reopen the assessment under s. 15 of the Excess Profits Tax Act "only because of the order of-the Appellate Assistant Commissioner of Income- tax holding that the Farrukhabad business was no longer the business of the assessee and that the family of Gurbux Rai had partitioned its movable property, all of which proceeded upon material which was already initially before the Excess Profits Tax Officer and to which he had applied his mind when he made the original assessment, it was not a case where the Excess Profits Tax Officer can be said to have discovered", in consequence of definite information which had come into his possession, that profits chargeable to excess profits tax had escaped assessment. The High Court accordingly answered the first question in the negative. The High Court then observed that if the Excess Profits Tax Officer was not competent to take proceedings under s. 15 of the Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 4 Excess Profits Tax Act, it was not open to him to apply the provisions of s. 10 in the proceedings up= reopening the assessment under s. 15, for, in the view of the High Court an order under s. 10-A may be passed only where the Excess Profits Tax Officer is seized of jurisdiction in a pending assessment proceeding. As the proceedings initiated by the Excess Profits Tax Officer under s. 15 were void,: he had no power to make an order under s. 10-A of the Act. The High Court accordingly answered the second question also in the negative. Against the order passed by the High Court, these two appeals are preferred. A parallel proceeding which had come before this Court in Civil Appeals Nos. 741-743 of 1966 Gurbux Rai Harbux Rai v. The Commissioner of Income-tax, U.P. decided on August 2, 1968 may also be referred to. It may be recalled that the Excess Profits Tax Officer at Kanpur had served a notice under s. 10-A of the Excess Profits Tax Act requiring the assessee to show cause why appropriate adjustments as respects liability to excess profits tax should not be made so as to counteract the avoidance or reduction of liability to excess profits tax by converting the business in the name of Pussulal Jangalal the Farrukhabad firm -into a separate business. The contention of the assessee that disruption of the family was a genuine and bona fide transaction was rejected by the Excess Profits Tax Officer. The case was therein taken to the Income-tax Appellate Tribunal. The Tribunal confirmed the order of the Excess Profits Tax Officer. But at the instance of the assessee the Tribunal referred the following question to the High Court of Allahabad : "Whether on the facts and circumstances of this case, the transaction in question was one which could be. avoided under s. 10-A of the Excess Profits Tax Act ?" The High Court by order dated July 31, 1969 answered the question in the affirmative. Against the order passed by the High Court no further proceedings has been taken by the assessee challenging the conclusion of the High Court and that order has become final. The High Court has held in the judgment under appeal that action taken under s. 15 of the Excess Profits Tax Act was not competent and on that account the Excess Profits Tax Officer had not jurisdiction in the matter. But in the judgment of the High Court in Income-tax Reference No. 118 of 1962 decided on July 31, 1969 no question of jurisdiction arose. The Court had only answered the question whether the transaction of partial partition was one which could be avoided under s. 10-A of the Excess Profits Tax Act. The decision of the High Court (which had become final) about the authority of the Excess Profits Tax Officer to take action taken under s. 10-A does not affect the maintainability of the present appeal. Section 10-A of the Excess Profits Tax Act, insofar as it is relevant, provides : "(1) Where the Excess Profits Tax Officer is of opinion that the main purpose for which any transaction was effected was the avoidance or reduction of liability to Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 5 excess profits tax, he may, make such adjustments as respects liability to excess profits tax as he considers appropriate so as to counter- act the avoidance or reduction of liability to excess profits tax which would otherwise be effected by the transaction Section 15, insofar as it is relevant provides "If in consequence of definite information which has come into his possession, the Excess Profits Tax Officer discovers that profits of any chargeable accounting period chargeable to excess profits tax have escaped assessment, or have been under-assessed, or have been the subject of excessive relief, he may at any time serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section 13, and may proceed to assess or reassess the amount of such profits liable to excess profits tax The High Court in the judgment under appeal held that pro- ceeding under s. 10-A may be commenced only if there be a valid proceeding under the Excess Profits Tax which was pending for assessment or reassessment of excess profits which had escaped assessment and not otherwise. In our opinion the High Court was right in so holding. S. 10-A does not contemplate an independent proceeding. Section 10- A merely confers power upon the Excess Profits Tax Officer to make adjustments with respect to liability to excess profits tax : it confers power which the Excess Profits Tax Officer may exercise in the course of the ,original assessment or in the course of re-assessment. It is necessary therefore to determine whether an order was made under s. 10-A in a pending proceeding for assessment of Excess Profits tax. But the question whether there was a pending proceeding under s. 15 in the course of which an order under s. 10-A could be made cannot be ascertained on the materials available before us. The High Court had decided that the proceeding under S. 15 was not valid, because there was no definite information with the Excess Profits Tax Officer and on that account proceeding under s. 10-A was not valid. It has been assumed that there was a pending proceeding under s. 15 in the course of which an order under s. 10-A was made. Expression of that opinion of the High Court is challenged. We are of the view that in the interests of justice, it is necessary that a supple- mentary statement of the case should be called for on the question whether there was any proceeding pending under s. 15. On the question whether the proceeding under section 15 if pending was valid, we express no opinion at this stage. We direct the Tribunal to submit a supplementary statement of the case on the question whether the proceeding under 3 63 s. 10-A was started in the course of assessment or re- assessment proceeding commenced under s. 15. The supplementary statement to be submitted to this Court within three months from the date on which the papers reach the Tribunal. At this stage we express no opinion on the question whether the High Court was right in holding that the proceeding under s. 15 was not competent. [The following judgment was delivered after the Tribunal submitted the supplementary statement as directed.] Grover,J. In these appeals this Court by an order dated January 21, 1971 directed the Income tax Appellate Tribunal to submit a supplementary statement of the case on the question whether the proceedings under s. 10-A were started in the course of assessment or reassessment proceedings commenced under s. 15 of the Excess Profits Tax Act 1940, hereinafter called the "Ace'. The facts set out in the supplementary statement of the case may be recapitulated. M/s. Gurbux Rai Harbux Rai hereinafter referred to as the "assessee" is a registered firm carrying on business in piece goods. During the chargeable accounting period July 4, 1943 to June 21, 1944 and June 22, 1944 to Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 6 July 10, 1945 Gurbux Rai and Harbux Rai (each representing his joint family) were the two partners of the assessee with -equal shares. In the proceedings for assessment of tax under the Act for the above two chargeable accounting periods the assessee informed the Tax Officer that the joint family of Gurbux Rai bad been partitioned and ther e had been a reconstitution of the business of partnership with effect from July 4, 1943. According to the assessee the constit ution of the firm after the partition was that in the firm at Kanpur the former two partners were interested, their share being equal but in the business of the firm at Farrukhabad there were three partners, namely, Harbux Rai with a share of 8 annas. Mst. Chameli Devi with a share of 4 annas and Gopal Das with a share of 4 annas. In assessing tax under the Indian Income Tax Act, 1922 for the assessment year 1944-45 corresponding to the accounting year from October 19, 1942 to October 7, 1943 the Income Tax Officer held that the partition set up by Gurbux Rai could not be accepted as the same had been made to avoid proper incidence of taxation. He, therefore, assessed the income as that of the assessee and not as the income of a separate firm. The- excess profits tax being consequential upon the income tax assessment, the Excess Profits Tax Officer assessed the entire income of the two businesses at Kanpur and Farrukhabad in the hands of the assessee. Against the order passed by the Income Tax Officer in the income tax assessment 3 64 the assessee appealed to the Assistant Commissioner. On October 10, 1947, that Officer held that only partial partition had been effected in the joint family of Gurbux Rai. This is what he held. " ...... that partial partition in respect of movable property of Gurbux Rai was effected on a date somewhere near Asadh Samwat at 2000, from which date Farrukhabad business was conducted by a separate firm consisting of Harbux Rai, Mst. Chameli and Gopal Das." The income tax assessments were consequently modified for the two assessment years 1944-45 and 1945-46. The Excess Profits Tax Officer also started proceedings under s. 10-A of the Act by serving a notice dated February 3, 1951 on the assessee. The notice required the assessee to show cause why proper adjustment should not be made on the footing that the main purpose of the partial partition of the family of Gurbux Rai was the avoidance of 'the excess profits tax liability. By an order dated February 21, 1951 passed under s. 15 of the Act the Excess Profits Tax Officer modified the original assessment for both the chargeable accounting periods. In the revised assessment he included the income of the branch shop at Farrukhabad in the total income of the assessee for the purpose of assessment of Excess Profits tax. The assessee went up in appeal against the orders of the Excess Profits Tax Officer to the Appellate Assistant Commissioner. These appeals were dismissed. The Appellate Tribunal confirmed the order of the departmental authorities. Thereafter the Tribunal referred the following two questions of law to the Allahabad High Court under s. 21 of the Act read with s. 66(1) of the Income Tax Act, 1922. (1) "Whether on the facts and in the circumstances of this case there was any definite information within the meaning of s. 15 by virtue of which the Excess Profits Tax Officer was competent to reopen the excess profits tax assessments ? Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 7 (2) Whether in the circumstances of this case, the Excess Profits Tax Officer was competent to apply the provisions of s. 10-A and make necessary adjustments in pursuance thereto in the revised assessment under s. 15." The High Court answered both the questions in the negative. Pursuant to our previous order dated January 21, 1971 the Tribunal has submitted the necessary material to enable us to give our decision. It has stated that the notices under s. 15 of the Act were issued for both the chargeable accounting periods and they were served on the assessee on February 3, 1951. According to these notices the assessee was called upon to show cause why provisions of s. 10A of the Act should not be invoked. The assessee submitted a written reply objecting to the applicability of s. 10-A. The Excess Profits Tax Officer obtained approval of the Inspecting Assistant Commissioner and passed an order under s. 10A on February 21, 1951. According to the Tribunal the proceedings under s. 15 were pending for both the chargeable accounting periods when the proceedings under s. 10A of the Act were started by the Excess Profits Tax Officer. It has been added that the notices under s. 15 and under s. 10 were issued on the same date, namely, February 3, 1951 but from the order-sheet it was clear that notice under s. 15 was issued first and the, notice under s. 10A was issued thereafter. It is abundantly clear from the annexures to the supplementary statement of the case that on February 3, 1951 the assessee's counsel and K. S. Kalra and Gurbux Rai were present before the Excess Profits Tax Officer. Receipt of a notice alleged to have been issued under s. 10A of the Act previously was denied by them. The Tax Officer proceeded to record the following order "Issue notice u/s 15 requiring the return to be filed within 60 days of the date of service. Sd. E.P.T.O. Also issue notice u/s 10A as per draft. Sd. E.P.T.O." The order-sheet further shows that on February 15, 1951 reply to the notice was received along with the return and it was directed that the same be placed on the record. It is common ground that no objection was taken in this reply that the notice under s. 15 had not been issued before the notice under s. 10A was issued. Section 15 of the Act provides that if in consequence of definite information which has come into the possession the Excess Profits Tax Officer he discovers that profits of any chargeable accounting period have escaped assessment, etc., he may at -any ,time serve a notice containing all or any of the requirements which may be included in a notice under s. 13 and may proceed to assess or reassess the amount of such profits liable lo excess profits tax. The power so conferred can be exercised in the course of the original assessment or reassessment. It is essential, according to the law laid down by this Court that before any action can be taken or an order made under s. 10A there should be a proceeding which should be pending for assessment or reassessment of LI 340Sup CI/71 excess profits tax. In other words in the present case before the provisions of S. 10A could be applied the Tax Officer was bound to initiate proceedings under s. 15. According to what the Tribunal has said in Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 8 the supplementary statement of the case the proceedings under s. 15 had been commenced before action was taken under s. 10A. We have already referred to the orders which were made on February 3, 195 1. It, is true that the orders to issue notices under s. 15 and s. 10A were made at the same time but the notice under S. 15 was ordered to be issued first. ,Thus the Tax Officer had initiated proceedings under s. 15 before the notice was issued under s. 10A and it would be a' mere hypertechnicality to say that simply because the notice under s. 15 and the notice under s. 10A were issued on the same date the requirements of the law were not satisfied. The finding of the Tribunal also is to the effect, as noticed before, that proceedings under s. 15 were pending when the proceedings under s. 10A were taken. The second question, therefore, had to be answered against the assessee and in favour of the Revenue. On the first question the submission of Mr. M. C. Chagla. for the assessee is that there was no definite information which had, come into possession of the Tax Officer from which it could be said that he had discovered that profits of the relevant chargeable accounting period had escaped assessment. We are unable to agree. The Appellate Assistant Commissioner had made an order on October 10, 1947 in the proceedings relating to the assessment of income tax of the assessee that there had been only a partial partition in respect of the movable property (business) of Gurbux Rai. That was certainly an information which came into the possession of the Excess Profits Tax Officer not because of any change of opinion by himself but because of the decision of the Appellate Assistant Commissioner in the income tax proceedings. This Court has consistently held that the Income Tax Officer would have jurisdiction to initiate proceedings under s. 34 (1) (b) of the Income Tax Act, 1922, which is in pari materia with s. 15 of the Act if he acted on information received from the decision of the superior authorities or the court even in the assessment proceedings. (See R. B. Bansilal Abirchand Firm v. Commissioner of Income Tax, M.P.(1) and Assistant Controller of Estate Duty, Hyderabad v. Nawab Sir Osman Ali Khan Bahadur, H.E.H. The Nizam of Hyderabad & Others.(2) It has next been urged that the alleged object of having a partial partition, namely, of reducing the liability to excess profits --ax had never been examined by the Appellate Assistant Commissioner in the Income tax proceedings and therefore it could not be said that there had been escapement of income as a result of information (1) 70 I.T.R. 74. (2) 72 I.T.R. 376 derived from his- order. The Appellate Assistant Commissioner apparently did not go into that question because the proceeding& before him related to assessment of income, tax. Section 10A of the Act is a special provision which deals with the transactions designed to avoid or reduce liability to excess profits tax. The information which came into possession of the Excess Profits Tax. Officer of partial partition having been effected was relevant for the purpose of s. 15 and once he had initiated proceedings under that section he was perfectly competent and had jurisdiction to, examine for the purpose of s. 10A whether partial partition had been effected for avoidance or reduction of liability to excess, profits tax. The first. question, therefore, should have been answered against the assessee and in favour of the Revenue. The appeals succeed and are allowed with costs. The answers, to both the questions are returned in favour of the Revenue. Onehearing fee. V.P.S. Appeals allowed. Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 9 Commissioner Of Income Tax, U.P vs Gurbux Rai Harbux Rai on 24 August, 1971 10 | {
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Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 Equivalent citations: 1971 AIR 1277, 1971 SCR 53, AIR 1971 SUPREME COURT 1277, 1971 SC CRI R 1, 1971 UJ (SC) 500, 1971 ALLCRIR 437, 1971 SCD 509, 1971 CRI APP R (SC) 445 Author: P. Jaganmohan Reddy Bench: P. Jaganmohan Reddy, G.K. Mitter, K.S. Hegde PETITIONER: BABU LAL HARGOVINDAS Vs. RESPONDENT: STATE OF GUJARAT DATE OF JUDGMENT18/03/1971 BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN MITTER, G.K. HEGDE, K.S. CITATION: 1971 AIR 1277 1971 SCR 53 1971 SCC (1) 767 CITATOR INFO : F 1972 SC1631 (6) F 1974 SC 789 (4) ACT: Food Adulteration Act, 1954--Panch witness admitting signatures but denying presence at time of recovery of sample--Evidence of Food Inspector can be relied upon and s. 10(7) of Act must be taken as complied with Resolution of Municipal Corporation under s. 20(1) of Act authorising Medical Officer of Health to give written consent for prosecution under Act--Not necessary that authorisation should be by Commissioner--Effect of ss. 67(3) and 68(1)--Complaint need not be in the name of Corpora- tion--Rule 7(2) does not contravene ss. 13(1) and 23(1) (e) of Act and is not ultra vires. Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 1 HEADNOTE: The appellant was a dealer in milk. The Food Inspector purchased milk from him for analysis and sealed it in three bottles one of which was left with the dealer and one sent for analysis, the third being kept by the Inspector for production in court. The Public Analyst's report showed that be had caused the sample to be analyzed and that there was a deficiency of non-fatty solids in the sample. With the written consent of the Medical Officer of Health the Inspector filed a complaint under s. 16 of the Food Adulteration Act, 1954. Before the Magistrate the witness of the recovery of the sample admitted his signatures on the receipt Ex. 5 and on the wrappers and labels of the bottles in which the sample was sealed but denied that he was present when the sample was obtained. He claimed that he had signed Ex. 5 without reading it. The Magistrate relying on the testimony of the Food Inspector convicted the appellant. The High Court confirmed the conviction. With certificate under Art. 134(1) (c) of the Constitution appeal was filed in this Court. HELD: (1) The fact that the panch witness refused to support the prosecution in regard to the recovery of milk from the appellant could not mean that s. 10(7) of the Food Adulteration Act had not been complied with. The evidence of the Food Inspector alone if believed can be relied on for proving that the samples were taken as required by law. At the most courts of fact may find it difficult in any particular case to rely on the testimony of the Food Inspector alone though this result does not necessarily follow. The circumstances of each case will determine the extent of the weight to be given to the evidence of the Food Inspector and what in the opinion of the Court is the value of his testimony. In the present case the courts were justified in concluding on the evidence of the Food Inspector that he had complied with the requirements and that the samples were seized in the presence of the Panch witness whose signatures were taken in the presence of the accused. [57E-58C] Manka Hari v. State of Gujarat, 8 G.L.R. 588, referred to. (ii) The appellant had made no application to the Court for sending the sample in his custody to the Director, Central Food Laboratory under s. 13(2). It did not therefore avail him to say that over four months had elapsed from the time the samples were taken to the time when the complaint was filed and consequently the sample had deteriorated and 54 could not be analyzed. The Food Inspector had added a preservative to the appellant's sample and therefore the decision of this Court in Ghisa Ram's case was distinguishable. [58D, G] Municipal Corporation of Delhi v. Ghisa Ram, [1967] 2 S.C.R. 116, distinguished. (iii) The contention that the Medical Officer of Health Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 2 was not duly authorized under s. 20(1) of the Act to give his consent for the appellant's prosecution could not be accepted. The authority had been conferred by a resolution of the Municipal Corporation in this regard. The Corpora- tion did not for this purpose have to act through the Commissioner. A combined reading of ss. 67(3) and 68(1) of the Act clearly indicates that the Commissioner cannot exercise his functions without any fetters as if he is the Corporation. The Corporation is the controlling authority and can restrict; limit or impose conditions on the Commissioner in The exercise of any of the powers under s. 67(3) or under s. 68(1). The Corporation has the final voice in determining whether the Commissioner or any other person will discharge the function envisaged therein. That apart. s. 20(1) of the Act places no restriction on the Corporation to circumscribe the powers of the Commissioner. The Corporation was therefore free to authorize the Medical Officer of Health to give his written consent in appropriate cases to institute prosecution. [61H-62C] (iv) All that the Medical Officer of Health is required to do is to; give his written consent to institute the prosecution. There is no validity in the contention that the complaint should be in the name of the Corporation. [61D] State of Bombay v. Parshottam Kanaiyalal, [1961] S.C.R. 458, relied on. (v) Rule 7(2) of the Act which permits the Public Analyst to cause the samples to be analyzed by persons under him is not ultra vires. There is no inconsistency between the provisions of r. 7 and, those of s. 13(1) as to hold that the rule is in excess of what is prescribed by the section nor is there any justification for holding that the rule is beyond the rule making powers udder s. 23(1) (e) which empowers the Central Government after consultation with the committee to define the qualifications power and duties of the Food Inspectors and Public Analysts. [61G-62D] JUDGMENT: CRIMINAL APELLATE JURISDICTION : Criminal Appeal No. 133 of 1969. Appeal from the judgment and order dated April 15, 16, 17 and 18, 1969 of the Gujarat High Court in Criminal Appeal No.. 850 of 1966. Ravinder Narain, P. C. Bhartari for the appellant. P. K . Chatterjee, B. D. Sharma and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by P. Jagamohan Reddy, J.-The Appellant Babu Lal Hargovindas carries on business of selling milk in the City of Ahmedabad. ,On 2-12-1965 at about 8 Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 3 a.m. the Food Inspector Mangulal C.. Mehta visited the Appellant's shop, disclosed his identity and intimated to him that he was purchasing the milk for analysis. Thereafter 700 ML. milk which was being sold as cow's milk was purchased from him. It was divided into 3 parts and poured into three bottles in each of which he added sixteen drops of formalin as preservative. The bottles were then corked, sealed and wrapped and signatures of the Panch one Adambhai Rasulbhai were taken on the seals and wrappers. of the three, bottles that were then sealed one was given to the Appellant, one was kept by the Food Inspector to be produced in the Court as required by the provision of Food Adulteration Act, .1954 (hereinafter referred to as it contained total non-fat solids of 7.4 % instead of 8.5 % 11.30 a.m. to the Chemist Laxmansingh Vaghela who being authorized by the Public Analyst Dr. Vyas analyzed it. The analysis of the sample by Vaghela revealed that the milk was adulterated as it contained total non-fat solids of 7:4% instead of 8:5% which was the minimum prescribed. After the receipt of the report of the Public Analyst the Food Inspector filed a complaint on 6-4-1966 with the written consent of the Medical Officer of Health of the Ahmedabad Municipal Corporation. After examining the Food Inspector Mehta, the Chemist Vaghela and the Panch Adambhai Rasulbhai, the City Magistrate, 6th Court, Ahmedabad convicted the Appellant under Section 16(1)(a)(i) read with Section 7 of the Act for selling adulterated milk and sentenced him to undergo Rigorous imprisonment for one month and a fine of Rs. 1,000 in default to undergo a further period of 3 months rigorous imprisonment. Against this conviction and sentence the Appellant appealed to the High Court of Gujarat which confirmed the conviction. This Appeal against that Judgment is by Certificate under Article 134(1)(c) of the Constitution of India. It is contended before us:-Firstly that the requirements of Section 10(7) of the Act have not been complied with under this provision when the Food Inspector takes any action as specified in sub-sections 1(a), 2, 4 or 6 he shall call one or more persons to be present at the time such action is taken and take his or their signatures. The Panch witness however- did not support the case of the complainant that he was either present at the time when the sample was obtained from the Appellant or that his signatures were taken when the bottles were said to have been sealed. In these circumstances, it is submitted, the conviction cannot be sustained. Secondly the Appellant was not afforded an opportunity to send the sample of the milk left with him to the Director of Central Food Laboratory for a certificate inasmuch as the complaint itself was lodged after a lapse of over 4 months from the dates of taking the samples. In these circumstances the milk could not have been preserved for the Appellant to have taken the ,opportunity afforded to him by sub-section (2) of Section 13 by sending it to the Director, Central Food Laboratory for a certificate. Thirdly the Food Inspector who filed this complaint was not competent to file it because the Medical Officer of Health who gave written consent to file it was not validly authorized as required under Section 20(1) of the Act inasmuch as under the relevant provisions of the Bombay Provincial Municipal Corporation Act LIX of 1949 (hereinafter referred to as the 'Corporation Act as applied to the State of Gujarat it was the Municipal Commissioner and not the Municipal Corporation. that should have authorized the giving of written consent to prosecute. Fourthly even if the Medical Officer of Health can be said to be validly authorized by resolution of the Municipal Corporation dated 17-10-55 +"he, complaint is not in accordance with that resolution since the resolution authorized the filing of the complaint in the name of the ,Municipal Corporation but the complaint filed does not disclose that it is filed on Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 4 behalf of the Corporation. Lastly rule 7(2) of the Prevention of Food Adulteration Rules (hereinafter called the ',Rules') which permits the Public Analyst to cause the sample to be analyzed is ultra--vires because it is beyond the scope of Section 23(e) of the Adulteration Act. Most 'of these contentions were urged before the learned Single Judge of the Gujarat High Court who in a lengthy Judgment held them to be untenable. In our view also the submission of the learned Advocate for the Appellant are without force and must be rejected. It may be observed that Section 10(7) of the Act originally required that the Food Inspector, when he takes action either under the provisions of sub-sections (1), (2), (4) or (6), to call as far as possible not less than two persons to be present at the time when such action is taken and take their signatures but that provision was amended by Act 49 of 1964 and instead it was provided that the Food Inspector shall call one or more persons at the time when such action is taken and take his or their signatures. It appears that the person who witnessed the taking and sealing of the sample did not support the Food Inspector's version that the signatures of this Panch witness were taken on the receipt Ex. 5 and on the label and wrappers of the bottles at the time when the samples were obtained. The witness Rasulbhai who was serving in a Mill and also sits in the cycle shop of his brother which is adjoining to the milk shop of the Appellant, after he returns from his duty stated that on the date in question at about 8 a.m. he was called by the Food Inspector as a Panch witness and that he signed on the two bottles of milk and wrappers also. When he was confronted with the signature on Ex. 5 he said that he had signed it without reading it. The Food Inspector on the other hand asserted that he had in the presence of Panch witness corked, sealed, labelled and wrap- ped the bottles which were signed by the Panch twice on each of the bottles one on the label and the other on the wrapper and thereafter the accused had passed a receipt to that effect which was attested by the Panch witness in the presence of the accused. The Trying Magistrate was not prepared to take the word of the Panch witness that he had signed Ex. 5 without reading it or without seeing the accused signing the same and preferred the evidence of the Food Inspector. Before the High Court, none of the conten- tions raised before the Trial Magistrate namely that inasmuch as the Panch witness did not support the prosecution that all the requirements of Section 10(7) of the Act were not complied with or that the paper slips bearing signature of the Panch ought co have been affixed on the bottles and in the absence of such paper seals there could have been tampering of the seals before they were analyzed, though raised were not pressed having regard to a decision of that Court in Manka Hari v. State of Gujarat.(1). The learned Advocate for the Appellant contends that though these point-, were not pressed before the Gujarat High Court he is free to urge it before us. In the first place we do not think that having regard to the findings based on an appreciation of evidence of the Panch witness and the Food Inspector that the milk was bottled and sealed, signed and attested by the Panch witness in the presence of the accused as spoken to by the Food Inspector can be challenged before us as those are findings of facts. In the second place there is nothing to indicate that the provisions of sub- section (7) of Section 10 have not been complied with. Even otherwise in our view no question of the trial being vitiated for non-compliance of these provisions can arise. It is not a rule of law that the evidence of the Food Inspector cannot be accepted without corroboration. He is not an accomplice nor is it similar to the one as in the case of Wills where the law makes it imperative to examine an attesting witness under Section 68 of the Evidence Act to prove the execution of the Will. The Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 5 evidence of the Food Inspector alone if believed can be relied on for proving that the samples were taken as required by law. At the most Courts of fact may find it difficult in any particular case to rely on the testimony of the Food Inspector alone though we do not say that this result generally follows. The circumstances of each case will determine the extent of the weight to be given to the evidence of the Food Inspector and what in the opinion of the Court is the value of his testimony. The provisions of Section 10(7) are akin to those under Section 103 of the Criminal Procedure Code when the premises of a citizen are searched by the Police. These provisions are enacted to safeguard against any possible allegations-of excesses or resort to unfair means either by the Police Officers or by the Food Inspectors under the Act. This (1) 8 G. L. R. 588. being the object it is in the interests of the prosecuting authorities concerned to comply with the provisions of the Act, the noncompliance of which may in some cases result in their testimony being rejected. While this is so we are not to be understood as in any way minimizing the need to comply with the aforesaid salutary provisions. In this case however there is no justification in the allegation that the provisions have not been complied. with because the Panch witness had been called and his signatures taken which he admits. In these circumstances the Courts were justified in holding on the evidence of the Food Inspector that he bad complied with the requirements and that the samples were seized in the presence of the Panch witness whose signatures were.. taken in the presence of the accused. There is also in our view no justification for holding that the accused had no opportunity for sending the sample in his custody to the Director, Central Food Laboratory under Section 13(2) because he made no application to the Court for sending it. It does not avail him at this stage to say that over four months had elapsed from the time the samples were taken to the time when the complaint was filed and consequently the sample. had deteriorated and could not be analyzed. The decision of this Court in Municipal Corporation of Delhi v. Ghisa Ram(1) has no application to the facts of this case. In that case the sample of the vendor had in fact been sent to the Director of the Central Food Laboratory on his application but the Director had reported that the sample had become highly decomposed and could not be analyzed. It is also evident from that case that the Food Inspector had not taken the precaution of adding the preservative. It appears from page 120 of the report that the elementary precaution of adding preservative. to the sample which was given to the, Respondent should necessarily have been taken by the Food. Inspector, that if such precaution had been taken, the sample with the Respondent would have beer, available for analysis by the Director of the Central Food Laboratory 'and since the valuable right given to the vendor by Section 13(2) could not be availed of, the conviction was bad. No such defence is available to, the Appellant in this case because not only is there evidence, that the preservative formalin was added but the Appellant had: not even made an application to send the sample to the Director of Central Food Laboratory. The competence of the Food Inspector to file the complaint, has been challenged on the ground that the Medical Officer of Health who gave his written consent for filing it was not Validly authorized by the Municipal Commissioner And that in any case,, the complaint is not in accordance with the resolution of the Muni- 1 [1967] 2 S. C. R. 116. Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 6 cipal Corporation (hereinafter referred to as the 'Corporation') which authorized the filing of it in its name and not in the name of the Food Inspector. it appears the resolution of the Corporation of 17th October 1955 is in Gujarati but before the High Court the Advocates of the parties seem to have broadly agreed on the following translation :- 1955-56 A. D., Shri Ramniklal Inamdar proposed seconded by Shri Shantilal Manilal that, in pursuance of the recommendation of the Standing Committee Resolution No. 1124, dated 13-10-1955 the Medical Officer of Health is authorized to accord written consent for filing complaints for the Municipal Corporation in accordance with Section 20 of the Prevention of Food Adulteration Act, 1954 (Central Act). On votes being taken the proposal was carried". It was however pointed out by the lawyer of the Corporation that the translation should read slightly differently to replace that part, after the words "the Standing Committee resolution No. 1124 dated 13-10-1955" by the words "the authority of the Municipal Corporation to give written consent to file complaints under Section 20 of the Prevention of Food Adulteration Act is given to the Medical Officer". In whatever manner the resolution may be read it is clear that what it purports to do is to authorize the Medical Officer of Health pursuant to the powers vested in the Corporation as a local authority under Section 20(1) of the Act to have his written consent. The provisions of Section 20(1) are as follows "20(1)-No prosecution for an offence under this Act shall be instituted except by, or with the written consent of the Central Government or the State Government or a local authority or a person authorized in this behalf, by general or special order, by the Central Government or the State Government or a local authority". On a reading of the above provision it is manifest that a prosecution can be instituted either by the local authority or by a person authorized by it in that behalf by general or special order. The resolution therefore was in accord with the power vested by Section 20(1) of the Act by which the Corporation authorized the Medical Officer of Health to institute a prosecution. It is however stated that under the Corporation Act it is the Municipal Commissioner who is the authority empowered to Act for the Corporation and authorize any person to institute prosecution under ,the Act, and since the Medical Officer of Health was not so authorized by the Commissioner, the prosecution against the Appellant is invalid. This contention is based on the provisions of Sections 67 & 68 of the Corporation Act under which it is claimed that it is the Commissioner who is empowered to exercise the functions of the Corporation, as such it is his authorization that is required to satisfy the conditions prescribed in Section 20(1) of the Act for the institution of a prosecution under that Act. We do not however read the provisions of the Corporation Act referred to as pressed upon us. It is undisputed that under subsection (2) of Section 67 the Municipal Government rests in the Corporation unless of course there is any express provision which provides otherwise. There is no doubt that the Corporation Act specifically prescribes the respective functions of the several Municipal authorities as constituted under Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 7 Section 4 but it no-where relegates the Corporation to a subordinate position or makes it subservient to the Commissioner. In Section 67(3) upon which reliance is placed, the duties and powers of the Commissioner are made expressly subject to the approval and sanction of the Corporation as also subject to all other restrictions limitations and conditions imposed by the Corporation Act or any other Act for the time being in force. The duties and powers of the Commissioner, be it noted, are in respect of the carrying out of the provisions of the Corporation Act and of any other Act for the time being in force which imposes any duty or confers any power on the Corporation. This sub-section is dealing with the exercise of the executive power by the Commissioner which is subject to limitations. On no interpretation is it possible to hold that the Municipal administration vests solely in the Commissioner or that any function to be discharged by the Corporation ran only be discharged by the Commissioner and no one else. The scheme of the Corporation Act leaves no doubt that there are many instances where Corporation alone has to discharge the functions such as the appointment of certain officers under Sections 45. 53 and 58 or the discharging by it of the obligatory and discretionary duties under Sections 63 to 66. Section 68(1) empowers the Commissioner to perform or exercise any powers, duties and functions conferred or imposed upon or vested in the Corporation by any other law for the time being in force subject to the provisions of such law and to such restrictions limitations and conditions as the Corporation may impose. A combined reading of these two provisions clearly indicates that the Commissioner cannot exercise these functions without any fetters as if he is the Corporation. The Corporation is the controlling authority and can restrict limit or impose conditions on the Commissioner in the exercise of any of the powers envisaged in either under Section 67(3) or under Section 68(1), There is no gainsaying that the Commissioner can function under Section 68(1) subject to the control of the Corporation as also subject to the provisions of the law under which the powers are conferred. The power to restrict limit or impose conditions being vested in the Corporation, it has the final voice in determining whether the Commissioner or any other person win discharge those functions envisaged therein. That apart Section 20(1) of the Act itself places no restrictions on the Corporation to circumscribe the powers of the Commissioner. It therefore follows that if a discretion is vested in the Corporation either to give its written consent in which case the Commissioner could subject to such limitation as may be imposed by the Corporation under Section 68(1) exercise the function or to authorize any other person by general or special order to give his written consent to institute prosecution under the Act. The Corporation in either view is not fettered to empower the Medical Officer of Health to give his written consent in appropriate cases to institute prosecutions under the Act, which in fact is what he did. All that the Medical Officer of Health is required to do is to give his written consent to institute the prosecution. There is no validity in the contention that the complaint should be in the .name of the Corporation. As pointed out by this Court in the State of Bombay v. Parshottam Kanaiyalal,(1) Section 20(1) does not in terms prescribe that the complainant shall be named in the written consent. It merely provides that the complaint should be filed either by a named or specified Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 8 authority, or with the written consent of such authority. While the implication that before granting a written consent the authority competent to initiate a prosecution should apply its mind to the facts of the case and satisfy itself that prima facie case exists for the alleged offender being put up before a Court, is reasonable, the further implication that the complainant must be named in the written consent or that the name of the Municipal Corporation should appear in the complaint, has no basis. In our view, therefore, there is no defect in, the procedure followed while lodging the complaint against the appellant. Lastly, it was faintly urged that Rule 7(2) of the Rules is ultra vires the Act. It is contended that this Rule gives scope for the Public Analyst to cause the samples to be analyzed by persons under him, viz., the Chemical Examiner, instead of himself analyzing them, which is contrary to the express mandate of sub-section (1) of Section 13 and is beyond the scope of Section 23(1)(e) of the Act. This provision, according to the learned Advocate, requires the Public Analyst to analyze the sample of any article of food submitted to him for analysis, while the rule (1)[1961] 1 S.C.R. 458. gives scope to him to cause it to be analyzed by others which is beyond the scope of Section 23(1)(e). It is apparent from 'I reading of Section 13(1) that what is requires is that the report by the Public Analyst shall be in the prescribed form and that the same should be delivered to the Food Inspector. There is nothing to warrant the submission that the Public Analyst should himself analyze the samples. Sub-rule (3) of Rule 7 is in conformity with this provision when it requires the Public Analyst, after the analysis has been completed, to send to the person concerned two copies of the report of such analysis in Form III within a period of sixty days of the receipt of the sample. All that the Public Analyst is required under sub- rule 1 of Rule 7 on receipt of a package containing a sample for analysis from a Food Inspector or any other person is to compare the seals on the container and the outer cover with specimen impression received separately and shall note the condition of the seals thereon, or authorize someone else to do it. We can find no inconsistency between the provisions of Rule 7, and those of Section 13(1) as to hold that the Rule is in excess of what is prescribed by the Section, nor is there any justification for holding that the rule is beyond the scope of the rule-making power under Section 23(1) (e), which empowers the Central Government, after consultation with the Committee to define the qualifications, powers and duties of the Food Inspectors and Public Analysts. Rule 7 does no more than prescribe the duties of the Public Analyst, in which will fall the duty to have the samples analyzed. The qualifications of the Public Analyst are, however, prescribed in Rule 6, which shows that he is a person duly qualified, so that he is competent to have the samples analyzed his laboratory by qualified subordinates and under his supervision, which is what is implied in the requirement that he should give a report in the form prescribed. Rule 7(2) does not preclude the Public Analyst from himself analyzing the samples, as indeed a perusal of Form III would show that he certifies as follows : "I further certify that I have/have caused to be analyzed the aforementioned sample, and declare the result of the analysis to be as follows" : Whether the Public Analyst analyses the sample himself or causes it to be analyzed, there is no doubt that he had to subscribe to a declaration in respect of the result of the analysis and has further to give his opinion thereon which can only be done, if at some stage or other he takes part in the analysis either by himself analyzing or Babu Lal Hargovindas vs State Of Gujarat on 18 March, 1971 9 checking the results of the analysis with the assistance of his subordinates. In the light of the views expressed by us on the several contention raised before us, the appeal fails and is accordingly dismissed. G. C. Appeal dismissed. 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Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 Equivalent citations: 1971 AIR 1925, 1971 SCR 200, AIR 1971 SUPREME COURT 1925, (1971) 2 SC CRI R 383, 1971 UJ (SC) 535, 1971 SCD 575 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, A.N. Ray PETITIONER: CRICKET ASSOCIATION OF BENGAL & ORS. Vs. RESPONDENT: STATE OF WEST BENGAL & ORS. DATE OF JUDGMENT24/03/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. RAY, A.N. CITATION: 1971 AIR 1925 1971 SCR 200 1971 SCC (3) 239 ACT: Practice-High Court-Suo Motu interference with orders of lower courts under Criminal Procedure Code-Propriety. Code of Criminal Procedure (Act 5 of 1898), ss. 204(3), 248 and 253(2) Powers of Magistrate under. HEADNOTE: A complaint was filed against the first appellant and others- office bearers of the first appellant-under ss. 337 and 338, I.P.C., read with s. 114, that they were rash and negligent in the matter of making seating arrangements etc., for spectators of a cricket match, with the result that the spectators became unruly and the police resorted to lathi charge and the bursting of tear gas shells, causing injuries to several persons. The Chief Presidency Magistrate examined the complainant and issued summons to the accused. Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 1 Some of the office bearers challenged the order of the Chief Presidency Magistrate in a criminal revision before the High Court and the High Court held: (a) that the counsel appearing for the complainant conceded that no offence was made out under ss. 337 and 338 read with s. 114 I.P.C., (b) that in fact, the statements in ,he complaint do not make out the offences under ss. 337 and 338, and (c) that they make out only an offence under s. 336, I.P.C and therefore the prosecution will have to be given a chance to establish that offence against the accused. When the Chief Presidency Magistrate started to deal further with the matter, the complainant filed an application for leave to withdraw the complaint against 8 accused and the Magistrate discharged those accused under s. 253(2), Cr. P. C. The complainant filed another application some time later seeking permission to withdraw the complaint against the rest of the accused on the ground that he filed the complaint only to voice the grievances of bona fide spectators and since the matter was being inquired into by an Inquiry Commission to find out the persons responsible, he did not intend to proceed with his complaint. The complaint as against some of the accused was dismissed under s. 204(3), Cr. P. C.. on the ground that the complainant had not deposited the necessary charges for issue of summons, and as regards others, the Chief Presidency Magistrate held that he could not allow the withdrawal of the complaint as the proceedings under s. 338 I.P.C., were warrant proceedings. He however passed an order discharging all the remaining accused under s. 253(2), Cr. P. C., because he held that no useful purpose would be served by proceeding further with the complaint as the complainant was absent and no longer serious. Thereafter, a Division Bench of the High Court issued suo motu notice to the complainant and all the accused, to show cause why the order discharging the accused should not be set aside; and, after hearing the parties the Court set aside the orders of the Chief Presidency Magistrate on the grounds that: (a) The discharge of some of the accused under s. 204(3) on the ground that the complainant had not paid the process fee for issue of summons was not proper, since in the relevant rules framed by the High 201 Court there was no provision for such payment; and. (b) the order discharging the remaining accused under s. 253(2), Cr. P. C. was not justified in a warrant case. On the question whether the order of the High Court was justified. HELD: In a proper case the High Court can take action suo motu against the orders passed by the subordinate courts without being moved by any party; but the interference with the orders of the Chief Presidency Magistrate by the High Court in the present case was not justified in the circumstances of the case. [208D] (1) After the concession of the counsel for the complainant Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 2 and the ;categorical finding of the High Court that no offence under ss. 337 and 338 I.P.C., was made out and that investigation was to be made only in respect ,of an offence under s. 336 I.P.C., the Magistrate had to proceed with the trial only for the offence under s. 336 I.P.C. [206H; 207A] (2) Assuming that the Chief Presidency Magistrate had still to proceed with the trial for offences under ss. 337 and 338 I.P.C., and that the discharge under s. 204(3) Cr. P. C., was not justified, the Magistrate has got ample jurisdiction to discharge the accused under s. 253(2), Cr. P. C., land in the present case, the Magistrate had given good reasons for discharging the accused. [207B-D] (3) On the basis that the inquiry had to proceed for an offence under s. 336, I.P.C., the position would be that the summons case procedure would have to be followed and under s. 248 , Cr. P. C., the Magistrate had ample jurisdiction to permit the complainant to withdraw the complaint, and in fact, under that section, the Magistrate should acquit the accused, once he permits the complaint to be withdrawn. [208A-C] JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 270 of 1968. Appeal by special leave from the judgment and order dated January 14, 17, 1968 of the Calcutta High Court in Criminal Revision No. 475 of 1967. C. K. Daphtary, Nalin Chandra Banerjee, D. N. Mukherjee and Mukul Gopal Mukherjee, for the appellants. The respondent did not appear. The Judgment of the Court was delivered by Vaidialingam, J--This appeal, by special leave is, directed against the judgment and order dated 14/17 June, 1968 of the Calcutta High Court in Criminal Revision No. 475 of 1967 reversing the orders passed by the Court of the Chief Presidency Magistrate, Calcutta, discharging the accused- appellants. The circumstances leading up to the order of the High Court may be indicated : The second respondent filed a, complaint on January 3, 1967 before the Court of the Chief Presidency Magistrate, Calcutta,. in respect of the incident which took place, on the second day (January 1, 1967) of the Second Cricket Test Match between India and West Indies at the Eden Gardens. The Test match was to be played under the control, management and supervision of the Cricket Association of Bengal, which had sold tickets of various denominations for the game.There were tickets sold for all. days of the Match andthere were arrangements made for the sale of daily tickets.The game started as scheduled on December 31, 1966.The play was interrupted by a number of spectators scaling over the fencing erected around the play ground and entering the cricket field. Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 3 However, nothing untoward happened on that day. According to the prosecution, the first appellant started. selling tickets announcing that arrangements had been made for the accommodation of about 60,000 spectators, while as a matter of fact nearly a lakh of spectators were admitted into the enclosure. The sitting arrangement was most inconvenient and,, highly unsatisfactory. The arrangements made by the first appellant for accommodating the persons inside the enclosure were so grossly inadequate that it tended to endanger the personal safety of the spectators. On the day in question, the complainant, who was a holder of a season ticket for Rs. 45 /- went to attend' the game and found all the stands jampacked. Notwithstanding, this the people with tickets were being pushed into different en- closures with the result that the spectators within the enclosures started jumping over the fence and occupied the space between the lines of the field and the fencing. The police, unable to control' the rush and confusion caused by the behaviour of the crowd,suddenly started a lathi-charge followed by the bursting of tear gas shells, which resulted in causing injuries to various persons. This; infuriated the crowd, which retaliated by acts of arson. The arrangements for going out of the enclosures were also grossly inadequate with the result that some of the spectators who wanted to clear out quickly in panic sustained injuries. The Match had to be abandoned for the day. On these facts the complainant alleged that the first appellant who acted most rashly and negligently in overselling the tickets and admitting a large number of people than could be conveniently accommodated inside the ground and thereby endangered human lives and the personal safety of thousands of spectators. It was further alleged that as, a matter of fact the rash and negligent act of the first appellant also resulted in hurt being caused to a number of persons, who, bad come to witness the Match. Apart from the Cricket Association of Bengal, which was the first accused, he made 33 persons accused in his complaint petition. Those persons were the President, the Vice- President and other office bearers and Members of the Working Committee of the Cricket Association of Bengal. The complainant prayed for issuing summons against the 34 accused persons under ss. 337 and 338 read with s. 114 of the Indian Penal Code and to proceed against them according to law. On January 3, 1967 the Chief Presidency Magistrate examined the complainant and heard his counsel. As the Chief Presidency Magistrate was prima facie satisfied there was a case, he issued summons to the, persons shown as accused under ss. 337 and 338 read with s. 114 of the Indian Penal Code, fixing February 13, 1967 for appearance. The complainant bad also made a prayer for issue of search warrants and for seizure of the account books and other relevant papers in the custody of the first accused appellant and search warrants were issued on January 6, 1967. Some of the office bearers of the first appellant on receipt of summons challenged before the High Court in Criminal Revision No. 19 of 1967 the orders of the Chief Presidency Magistrate issuing summons and search warrants. They also prayed for quashing the complaint on the ground that the allegations even if fully established will not establish an offence under s. 337 and/or s. 338 read with s. 114 or any other section of the Indian Penal Code, and that the complaint was misconceived and constitutes an abuse of the process of the Court. The learned Single Judge stayed further proceedings before the Chief Presidency Magistrate and issued summons to the State and the complainant. After hearing all parties, the learned Single Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 4 Judge ultimately, by his order dated February 24, 1967, dismissed the Criminal Revision No. 19 of 1967. There were three points to be noted in the order of the learned Judge, namely, (1) Mr. Dutt, counsel appearing for the complainant conceded before the High Court that the process issued by the Chief Presidency Magistrate under ss. 337 and 338 read with s. 114 of the Indian Penal Code is misconceived (2) the High Court has given a finding that the statements made in the petition of complaint do not constitute the essential elements to make out offences under ss. 337 and 338 I.P.C., and (3) nevertheless, prime facie it cannot be stated tht the elements of an offence under s. 336 I.P.C. are not contained in the complaint, and therefore the prosecution ,will have to be given a chance to establish, if they can, that an offence under s. 336 I.P.C. has been committed. Though ultimately the criminal revision was dismissed, it will be seen from the aspects mentioned above that the complainant has conceded that the allegations in the complaint will not make out an offence under ss. 337 and 338 I.P.C. Apart from this concession, the learned Single Judge after independently considering the averments in the complaint has also held that no offence under s. 337 and 338 is disclosed in the complaint and that the issue of summons in respect of those offences cannot be upheld. But the ,High Court was prepared to give an opportunity to the prosecution to establish, if they can, that an offence under s. 336 I.P.C., at any rate, has been committed by the accused. It is needless to state that the Chief Presidency Magistrate was bound to have due regard to these directions contained in the order of the High Court when the case was to be proceeded with again in his court After the disposal of Criminal Revision No. 19 of 1967 by the High Court on February 24, 1967 and in consequence of the stay of proceedings being vacated, the Chief Presidency Magistrate proceeded to deal further with the complaint. On March 2, 1967 the complainant filed an application before the Chief Presidency Magistrate for leave to withdraw the complaint against eight accused, namely, accused Nos. 8, 10, 11, 22, 26, 31, 32 and 33. The reason given by the complainant was that the said accused persons had ceased to act as members of the Working Committee at the material time. On March 20, 1967 the Chief Presidency Magistrate discharged under s. 253(2) Cr. P.C. the eight accused as prayed for by the, complainant in his application dated March 2, 1967, after accepting the reasons given therein. The accused so discharged were Nos. 8, 10, 11, 22, 26, 31, 32 and 33. On May 31, 1967, the complainant filed another application before the Chief Presidency Magistrate seeking permission to withdraw the complaint against the rest of the accused. In that application he stated that he had filed the complaint to voice the grievances of the bona fide spectators, who had purchased tickets for witnessing the Cricket Test Match. He had further mentioned that an Inquiry Commission called the "Sen Commission" was already inquiring into the events connected with the incident that took place on January 2, 1967 in order to find out the persons responsible for the same. Under these circumstances, the complainant stated that he does not intend to continue the complaint instituted by him. On June 8, 1967, the Chief Presidency Magistrate dismissed the complaint as against accused Nos. 16, 17, 18, 19, 23, 27, 30 land 34, under s. 204(3) Cr. P.C. on the ground that the complainant had not deposited the necessary charges for issue of summons. It was noted by the Chief Presidency Magistrate that the complainant though called was absent. Dealing with the application dated May 31, 1967 filed by the complainant for permission to withdraw the complaint, the Chief Presidency Magistrate has stated that he cannot accord permission to withdraw the complaint as the proceedings under s. 338 I.P.C. are warrant procedure proceedings. But the Chief Presidency Magistrate has further stated that no useful. purpose will be served by proceeding further with the complaint as the complainant was not present and was also not serious to proceed with the complaint as is evident from his conduct in comitting Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 5 several defaults. For these reasons the Chief Presidency Magistrate passed an order discharging all the other remaining accused under s. 253(2) Cr. P.C. Therefore, it will be seen that by the two orders dated March 20, and June 8, 1967, referred to above, the Chief Presidency Magistrate discharged all the accused and terminated the proceedings initiated by the second respondent. The news regarding the termination of these proceedings appeared in some of the Dailies in Calcutta on June 10, 1967. On seeing the said news item, the High Court by its order dated June 13, 1967 called for the record pertaining to the case from the court of the Chief Presidency Magistrate, Calcutta. On August 1, 1967 a Division Bench of the Calcutta High Court issued suo moto a Rule (Criminal Revision No. 475 of 1967) to the complainant and the 34 accused persons to show cause why the orders discharging the accused persons passed on March 20, and June 8, 1967 should not be set aside. The learned Judges after hearing all the parties, by the impugned judgment set aside the two orders of the Chief Presidency Magistrate discharging the accused. The Chief Presidency Magistrate was directed to proceed with the complaint and dispose it of according to law. But the learned Judges directed that the proceedings need be continued only against the 14 accused, namely, Nos. 1, 2, 3, 4, 5, 6, 7, 9, 10, 12, 13, 14, 15 and 26. The learned Judges have held the discharge of some of the accused under s. 204(3) Cr. P.C. on June 8, 1967 on the ground that the complainant has not paid the process for issue of summons is not proper. According to the High Court there is no provision under the relevant rules framed by the High Court for payment of any process for issue of summons in respect of cognizable offences whether the case is instituted on a complaint or not. Similarly the High Court held that the orders discharging, under s. 253(2) Cr. P.C. some of the accused on March 20, 1967 and the remaining accused on June 8, 1967 are also not justified as the proceeding under s. 338 I.P.C. was that of a warrant case. Mr. C. K. Daphtary, learned counsel for the appellants, in attacking the order of the High Court has pointed out that there was no justification for the High Court, to interfere suo moto with the orders passed by the Chief Presidency Magistrate discharging the accused, in the circumstances mentioned by him' The counsel also pointed out that the Division Bench has not properly appreciated and given effect to the directions given in the judgment of the learned Single Judge in Criminal Revision No. 19 of 1961. After the order of the learned Single Judge, the counsel pointed out, that the proceedings have to be continued by the Magistrate only to inquire if an offence under s. 336 I.P.C. has been made out. In such a trial the summons case procedure has to be adopted and the Magistrate has got ample jurisdiction to permit the complainant, under s. 248 Cr. P.C. to withdraw the complaint. Even on the basis that the charges under ss. 337 and 338 survive and the warrant case procedure is to be adopted, Magistrate has jurisdiction under s. 253(2) to discharge the accused. Considering the matter from any point of view, the interference by the High Court is not justified. Neither the State nor the complainant has appeared before 'us to support the order of the High Court. We have already referred in great detail to the circumstances under which the 'impugned order was passed as they give a clear and complete picture of the whole matter. We have gone through the reasoning of the learned Judges and we are satisfied that the interference with the orders of the Chief Presidency Magistrate by the High Court was not justified and was not warranted Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 6 in the circumstances of the case. The fundamental error committed by the Division Bench is that it has proceeded on the basis that the learned Single Judge on the former occasion in Criminal Revision No. 19 of 1967 has not held that the prosecution under ss. 337 and 338 is not made out. We have already referred to the fact that during the hearing of Criminal Revision No. 19 of, 1967, Mr. Dutt, learned counsel appearing for the complainant conceded that the issue of process under ss. 337 and 338 I.P.C. was misconceived. On the other band, the Division Bench proceeds on the basis that no such concession has been made, which is erroneous as a fact. Again even apart from the concession, the learned Single Judge after discussing the essential ingredients of an offence under ss. 337 and 338 I.P.C. has categorically held in his order that the statements made in the complaint petition do not go to make ,up the essential ingredients for an offence under ss. 337 and 338. The learned Single Judge has also found that it is not possible at that stage to say that no offence even under s. 336 I.P.C. has been committed. It is on this reasoning that the learned Judge, though technically did not quash the proceedings, gave a clear indication that the prosecution is given a chance to establish, if they can, that the accused have committed an offence under s. 336 I.P.C. After the concession of the counsel for the complainant and the categorical finding of the learned ,Judge that no offence under ss. 337 and 338 I.P.C. is made out ;and that an investigation is to be made only in respect of an offence under s. 336 I.P.C., it is idle to expect the Magistrate to ignore these clear directions and proceed with the trial again for an offence under ss. 337 and 338 I.P.C. as if nothing had happened. That is exactly what unfortunately the Division Bench has done. It has ignored the concession of the counsel. It has ignored the clear finding of the learned Single Judge as also the directions given by him. It is this serious mistake committed by the Division Bench that has resulted in the passing of the order under attack. The legality of the orders passed by the Chief Presidency Magistrate can be considered from two points ,of view. Assuming that the Chief Presidency Magistrate has still to proceed with the trial for offences under ss. 337 and 338, I.P.C. it is no doubt true that he has to follow the warrant case procedure. Even under such circumstances, the Magistrate has got ample jurisdiction to discharge the accused under s. 253(2) P.C. Section 253 deals with the discharge of accused. Subsection (1) deals with the discharge of an accused when the Magistrate after taking all evidence referred to in s. 252 Cr. P.C. and making such examination of the accused, if any, as may be found necessary, finds that no case against the accused has been made out, which if unrebutted, would warrant his conviction. Subsection (2) of s. 253 is to the following effect : "253(2) Nothing in this section shall be deemed to prevent a Magistrate from discharging the accused at any previous stage of the case if, for reasons to be recorded by such Magistrate, he considers the charge to be groundless." This sub-section gives ample jurisdiction to the Magistrate to discharge an accused in the circumstances mentioned therein and ,the order of discharge can be passed at any previous stage of the case. Sub-section (1) under those circumstances will not operate as a bar to the exercise of jurisdiction by the Magistrate under sub-section (2). It is under sub-section (2) of s. 253 that the Magistrate has discharged the accused. He has given good reasons in the order for discharging the accused. Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 7 Assuming that the Division Bench is right in holding that the discharge under s. 204(3) Cr P.C. is not justified, we will proceed on the basis that the said order is one of discharge under s. 253(2). We have already referred earlier to the reasons given by the complainant in his application seeking permission to withdraw the complaint as well as to the reasons given by the Magistrate for discharging the accused. There is no controversy that at the material time, the Sen Commission was inquiring into the identical matter which was the subject of the criminal complaint. Under those circumstances, it cannot be said that the discharge of the accused by the Magistrate is either illegal or not justified. Even on the basis that the inquiry has to proceed for an offence under S. 336 I.P.C.-, the position will be that the summons case procedure will have to be followed. Even then, under S. 248 Cr. P.C. the Magistrate has ample jurisdiction to permit the complainant to withdraw the complaint. In fact under S. 248 Cr. P.C. the Magistrate should acquit the accused, once he permits the complaint to be withdrawn. Even if the order of discharge is to be treated as passed in a case where summons case procedure is to be followed, it was within the jurisdiction of the Magistrate and hence it cannot be characterized as either illegal or not justified. We accordingly hold that the Division Bench was not justified in interfering with the orders dated March 20, and June 8, 1967 passed by the Chief Presidency Magistrate, in the circumstances of this case. We, however, make it clear that we have no doubt that in proper cases the High Court can take action suo moto against the orders passed by the subordinate courts-without being moved by any party. In the result the appeal is allowed. The judgment and order of the High Court in Criminal Revision No. 475 of 1967 are set aside and the orders of the Chief Presidency Magistrate dated March 20, and June 8, 1967 will stand restored. V.P.S, Appeal allowed. Cricket Association Of Bengal & Ors vs State Of West Bengal & Ors on 24 March, 1971 8 | {
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Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 Equivalent citations: AIR1972SC1048, (1972)4SCC495, 1972(4)UJ45(SC), AIR 1972 SUPREME COURT 1048, 1972 4 SCC 495 1972 2 SCJ 491, 1972 2 SCJ 491 Author: S.M. Sikri Bench: S.M. Sikri, A.N. Ray, D.G. Palekar JUDGMENT S.M. Sikri, C.J. 1. This appeal by special leave arises out of a suit filed by the respondent, Data Ram Jagannath, hereinafter referred to as the plaintiff, against the appellant, Mohinder Singh Jaggi, hereinafter referred to as the defendant, for realisation of Rs. 9385.09 towards principal and Rs. 1338, 54 towards interest at 12% per annum, on khata account. Before the Trial court the defendant raised a counter claim in his additional written statement claiming accounts from the plaintiff in respect of the goods which came into their possession in pursuance of an agreement. 2. The Trial Court decreed the plaintiff's suit against the defendant but also accepted the cross-claim of the defendant for accounts and passed a preliminary decree for accounts to be rendered by the plaintiff for the goods lying in his custody. The Trial Court observed that the details of the decree would be worked out in the final decree. 3. The plaintiff appealed against the preliminary decree for accounts passed in favour of the defendant. The High Court allowed the appeal and set aside that part of the judgment and decree of Trial Court which directed the plaintiff to render accounts, and dismissed the cross-claim made by the defendant in his additional written statement. The defendant having obtained special leave, the appeal is now before us for disposal. 4. The suit was filed by the plaintiff; Dataram Jagannath, a registered partnership firm, and Datarm Jagannath, HUF., but they will be referred to compendiously as the plaintiff. The plaint Was filed on July 3, 1961, alleging that the plaintiff agreed to supply funds to the defendant as and when necessary to carry on his business. The plaintiff from time to time advanced loans to the defendant either in cash or by cheque or by retiring hundis from the Bank or by supplying goods to him on credit. After giving up certain amount stated to have become time-barred and also giving up some interest the balance was claimed. Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 1 5. In the written statement dated April 16, 1962, the defendant pleaded in para S "that without going to the account of both the parties and without settlement of account the plaintiffs cannot sue for any definite amount, hence, the plaintiffs without bringing a suit for account and without settlement of account cannot bring this suit in the present form for a definite sum of money." The defendant further denied that there was any agreement for advancing loans as such, as alleged by the plaintiff. It was farther alleged in para 18 that "the true facts of the case are that the defendant who carries on business of Motor Accessories is to place orders to outside stations and receives them through Railway and through Banks. That at times of necessities in order to realise the said goods from Binks the defendant on various occasions approached Sri Baij Nath who released the R/R of the defendant on payment and against the said payment the plaintiff used to retain the goods. Subsequently the defendant either released the goods or any part thereof on payment within a time required by the plaintiff No. or the plaintiff No, sold the goods so retained by him and realised his dues." It was further alleged that the defendant was not liable to pay the sum of Rs. 26,654.44; rather the plaintiff was liable to pay the said amount with interest to the defendant. It was also alleged that certain payments had not been accounted for. 6. It appears from the judgment of the Trial Court that the defendant asserted about the presence of a written agreement, vide his adjournment petition dated October 27, 1961, and the plaintiff denied about the presence of such a written agreement vide his objection dated November 4, 1961. When the plaintiff prayed for the amendment of the plaint, on April I, 1963, so as to include the statement of accounts as part of the plaint, the defendant filed the additional written statement. In this statement it was alleged in para 1 that "there was an agreement on stamp worth Rs. 1-2-0 bearing stamp Nos. 1514 and 1515 purchased by defendant on 9-8-57 under which it was arranged as follows: That the plaintiffs agreed that whenever required by defendant the plaintiffs would release from the Bank the R/R on full payment of the goods, sent from outside stations, under orders placed by the defendant and the plaintiff would retain the goods and the vouchers accounts etc. and would release the goods only on full payment made by the defendant. The said stamped agreement was kept with the plaintiff". He has not produced the same in court. 7. It was further alleged that according to the said contract, the plaintiff, on release of the said R/R, used to retain the goods with him and used to release the goods only on full payments made by the defendant. It was also alleged that the plaintiff had not delivered the goods released through the Bank to the tune of about Rs. 26, 654.44. 8. In para 7 of the additional written statement it was alleged that "the goods were being kept in the godown hired by the defendant from Sri B.B. Neogi under lock and key by the plaintiffs under the full control and charge of the plaintiffs and whenever the actual price of the goods were being paid by the defendant, the plaintiffs used to release that quantity of goods according to arrangement entered into between them; that when the defendant wanted release of the goods on payment, the plaintiffs did not deliver them and there was difference between the parties whereupon the plaintiffs have surreptitiously removed all the goods to some other godown without knowledge and consent of Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 2 the defendant and has brought this false suit for illegal gain." In para 9 it was stated as follows: That as the plaintiffs are bound to explain and render account to the defendant for all goods released by them and hence for the purpose of the defendant's counter claim the defendant tentatively values his claim at Rs. 100/-and pays court-fee of Rs. 10.50 np. and after the accounts are rendered bv the plaintiffs or failing that Commissioner settles account the defendant shall pay balance court-fee on the same. 9. The plaintiff, in his reply, denied that there was any agreement. He further alleged that the claim of the defendant, if any, was barred by limitation. It was denied that the plaintiff, on release of the railway receipt, used to retain the goods with him and released the goods only on full payment made by the defendant. It was stated that the plaintiff advanced loans to the defendant to retire hundis from the Bank and had nothing to do with the goods. It was denied that the goods were being taken and kept in the godown hired by the defendant from Sri B.B. Neogi. 10. The trial court framed first a number of issues, including : (3) Is there any cause of action to bring the suit against the defendant ? and (4) Is the suit maintainable without filing a suit for account? 11. The Trial Court later framed five additional issues as follows: (7) Was there an agreement between the parties regarding financing by the plaintiffs as alleged? (8) Have the plaintiffs released all the goods to the defendant? (9) Have all the payments made by the defendant credited by the plaintiff? (10) Are the plaintiffs liable to compensate the defendant for withholding goods, if so, to what extent? (11) Are the plaintiffs liable to render account to the defendant? 12. It may be noted that no point regarding limitation was included in the additional issues as arising out of the counter-claim. 13. The trial court dealt with issues Nos. 3, 4, 7 and 11 together, and held that the plaintiff's suit was maintainable, it was not barred by limitation, and the plaintiff's claim having been proved he was entitled to the decree. As stated above, the Trial Court also allowed the plaintiff's cross-claim for accounts. Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 3 14. In para 10 of its judgment, the Trial Court examined the question whether the plaintiff advanced money as pledge. After noting the pleadings, it found that "as per Ext. G it appears that on 9-8-57 the defendant purchased two stamps worth Rs. 2.4.0 and in token of such purchase from the stamp vendor he has affixed his signature and thumb marks". It held that the allegation in the written statement that only Rs. 1-2-0 stamps were bought was perhaps due to bad memory, as the numbers of the stamps had been given in the additions written statement. The Trial Court was inclined to accept the version of the defendant. It felt that this circumstances had a bearing on the defendant's contention that the plaintiff advanced money against the pledge of goods by having an agreement. 15. The trial court next found that P.W. 1, Baijnath Hala, who is a partner of the plaintiff firm, was acquainted with the defendant and the fact that the defendant had a cash credit account with the Punjab National Bank. It further found that the defendant was a West Punjab refugee who had no properties in the State of Orissa and it was unlikely that the plaintiff would advance money in huge amounts from time to time without any written acknowledgment or document and without securing the pledge of the goods. The Trial Court further found that the defendant was borrowing money previously from the Punjab National Bank by pledge of goods, and the hank served a notice on him on July 11, 1957, to deposit Rs. 14,000/-within 18 days failing which the motor parts pledged with it would be sold. It was then that the defendant approached the plaintiff to finance him in the same manner as he was carrying on with the Bank. The Court further found that the plaintiff loaned to the defendant Rs. 10,000/-and this amount was utilised by the defendant to pay off the dues of the Bank. 16. The defendant led some oral evidence and the trial court relied on that evidence. Kudrat Singh, D.W. 1, who runs business in motor parts at Jaipur Road, stated that he used to purchase goods from the defendant, both before the defendant stopped dealing with the Bank and after, and on both occasions he got the goods from the godown. After the defendant had stopped dealings with the Bank, the witness purchased goods three or four times and he used to go to the office of Dataram Jagannath at Nayasarak and his men were opening the godown. The Trial Court held that there was nothing to disbelieve D.W. 1 as he neither appeared to be interested nor inimical. 17. The evidence of D.W. 3, who is a doctor, is important, and there is no reason, as held by the Trial Court, that his evidence should not be believed. He was posted at Khurda where he was an Assistant Surgeon. He owned a Vauxhall car and one day in 1959 the main plate of the spring of the car broke on the way. He searched for the part and came to know that this part was available with the defendant. It was then about 8 or 9 p.m. The defendant told him that the part was not in his shop but was in the godown whose key was with Dataram Jagannath. On his request both the defendant and the witness went to the plaintiff's firm at Nayasarak but he could not get the part till the next morning and therefore he was forced to halt for the night. In the morning the witness and the defendant went again to the plaintiff's shop and the gumasta of the plaintiff came with the key and opened the godown about 7 or 8 shops off defendant's shop, may be 25 or 30 yards off. The witness was cross-examined in great detail but nothing was brought out to discredit his testimony. 18. Another circumstance which the learned Trial Judge relied on was the curious fact that on several dates the plaintiff received money from the defendant not in a lumpsum but by several Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 4 installments. For example, on December 16, 1957, four amounts were paid, i.e. Rs. 141/-, Rs. 149/-, Rs 108/-, and Rs. 50/-, and on February 17, 1958, three cheques were given, for, i.r. Rs. 163/-, Rs. 196/-, and Rs. 183/-. On February 19, 1958 two cheques were given and there are so many other dates on which more than one cheque was given. Further, the Trial Court was impressed by the fact that the defendant paid even naya paise along with rupees. For example, on December 23, 1957 a cheque for Rs. 183.41 was given, on January 6, 1958, one cheque for Rs. 38.50, on March 3, 1958, one cheque for Rs. 189.75, on March 24, 1958, one cheque for Rs. 156.18, and on March 25, 1958, one cheque for Rs. 276.28 were given and so forth. The Trial Court observed that "the advancement of money on several occasions by the plaintiffs disclose that they were making payments mostly for retiring the hundies of the defendant which also included several naya paisa on several occasions. Ordinarily if the plaintiffs' transactions would have been mere advancement of loans by cash the payments could not have been by fractions of rupee even and Ex. 1 and F series (accounts) mostly disclose Act that the payments were for releasing the goods of the defendant. Like-wise it is not under-stood as to why the defendant would have repaid money with fractions of rupee as well as repayments of several items on even a single date, unless it was for price of goods paid." 19. The defendant's case next was that after he issued that lawyer's notice, Ext. 14, dated April 25, 1961, and the plaintiff's reply dated May 9, 1961, the plaintiff in his absence removed goods worth Rs. 26,654.44. The trial Court, however, discounted this fact became the defendant was bound to maintain a register of goods kept in the godown, vide Clause 3(a) of Ext. A, which was the agreement with the Bank, and he had not maintained any such register nor produced it. Further, the defendant neither approached the police regarding the removal of the goods from the godown nor took any civil or criminal action. The Trial Court, however, felt that the cross-claim of the defendant should not be rejected as it was for accounts only. The trial Court also did not rely on the evidence of D.W. 2, an employee of the defendant, regarding the removal of the goods by the plaintiff in the absence of the defendant, as the evidence could not be corroborated. The Trial Court gave a curious reasoning that because the establishment register was lot produced, it could not be held that D.W. 2 was in the employment of he defendant at the relevant time. 20. It is not necessary for us to decide whether the goods were removed from this particular godown by the plaintiff because nothing turns on it as far as the question of passing a preliminary decree for accounts is concerned. In this connection we also need not go into the question that out of the three locks which were originally on the godown two were removed and one broken lock left there for D.W. 2 to pick up and give it to the defendant. But there is some evidence showing that locks of a similar nature were purchased by the plaintiff, though it is not necessary for us to go into this question. 21. It seems to us that on the facts found by the Trial Court and in our opinion correctly so found, the Trial Court was quite right in coming to the conclusion that the relationship between the plaintiff and the defendant was not merely of a lender and a debtor but also there was an arrangement similar to a cash credit agreement with the Bank. 22. With respect, we are unable to agree with the High Court that these circumstances did not lead to the conclusion that there was such an agreement. They have examined each individual item and Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 5 not considered the circumstances as a whole. It seems to us that all those facts are consistent only with the defendant's case. 23. The learned Counsel for the plaintiff raised a number of other points before us. He first said that the nature of the claim of the defendant being quite different from the claim of the plaintiff's, courts below erred in accepting the written statement as a plaint in a cross suit. It seems to us that the additional written statement was rightly treated as a cross claim by the courts below. It arose out of the transactions between the plaintiff and the defendant. 24. The counsel next contended that the requisites of the plaint, as provided for in the CPC, not having been complied with in the written statement, the same is fit to be rejected as a plaint. We have set out the main allegations in both the written statement and the additional written statement, and we are unable to see that these allegations do not show any cause of action or do not comply with the provisions of a plaint. It is true that the additional written statement is not artistically drafted, but in India it is difficult to apply strict rules of interpretation to pleadings in the lower courts. 25. The learned Counsel next contended that the claim in the cross suit was barred by limitation. According to him, the applicable article were Articles 48 or 48A of the Indian Limitation Act, 1908. Article 48 and 48A read: 48. For specific Three When the person moveable property years having the right lost or acquired to possession of by theft, or dishonest property honest misappropriation learns in whose possession or for compensation it is. for wrongly taking or detaining the same. 48A. To recover Three When the sale moveable property years becomes known conveyed or bequeathed the plaintiff in trust, deposited or pawned, from the trustee, depositary or pawnee for a valuable consideration. These articles obviously have no application. It seems to us that Article 120 applies The cross-claim was for accounts, which is not covered by any other article in the Limitation Act. 26. The learned Counsel next contended that the defendant having alleged about the removal of goods on a particular date and the evaluation o; the goods having been made by him at Rs. 26654.44, there was no question of rendition of accounts, and as both the courts below had concurrently found that there was no removal of goods the claim of the defendant must fail. We have already mentioned that it is not necessary to decide this point because it is irrelevant whether the goods were in godown A or godown B, it is for the plaintiff to account for the goods. 27. Lastly, the counsel urged that the defendant having based his claim on the written agreement and the agreement not having been proved, his claim ought to have been rejected We are unable to see any force in this contention. We hold that there was agreement arrived at between the parties, the agreement seems to have been supressed by the plaintiff but the essential terms or the agreement seems to be quite clear from the course of dealings between the parties. Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 6 28. In the result we set aside the judgment and decree of the High Court and restore that of the Trial Court. The appellant defendant will have his costs here and in the High Court. 29. We may mention that in pursuance of the preliminary decree passed by the Trial Court, certain proceedings were taken but the Trial Court was directed not to sign he final decree by older of the High Court. That order is now set aside and the Trial Court will now proceed from the stage where it left the proceedings and pass a final decree in accordance with law. Mohinder Singh Jaggi vs Data Ram Jagannath on 7 September, 1971 7 | {
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Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 Equivalent citations: 1972 AIR 121, 1972 SCR (1) 127, AIR 1972 SUPREME COURT 121, 1973 TAX. L. R. 394 Author: A.N. Ray Bench: A.N. Ray, S.M. Sikri, D.G. Palekar PETITIONER: ATLAS CYCLE INDUSTRIES LTD. Vs. RESPONDENT: STATE OF HARYANA & ANR. DATE OF JUDGMENT11/08/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. SIKRI, S.M. (CJ) PALEKAR, D.G. CITATION: 1972 AIR 121 1972 SCR (1) 127 1971 SCC (2) 564 CITATOR INFO : E 1975 SC2172 (14) R 1975 SC2193 (11) R 1984 SC 583 (21) O 1985 SC1683 (4,7) ACT: Punjab Municipality Act, 1911, s. 5(4), 62 (10)-Notification imposing octroi if became automatically applicable to new areas included in Municipality by virtue of s. 5(4)- Notification, bye law difference between. HEADNOTE: Section 5 (4) of the Punjab Municipality Act, 1911 enacts: "when any local area has been included in a municipality under sub-section (3) of this section of this Act, and, Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 1 except as the State Government may otherwise by notification direct all rules, bye-laws, orders, directions and powers made, or conferred under this Act and in force throughout the whole municipality at the time shall apply to such area." By a notification the industrial area within which the appellants' factory was situated was included within the municipality of Sonepat. Thereafter, the respondent- municipality purported to impose, levy and collect from the appellant octroi. The appellant filed a writ petition in the High Court for restraining the municipality from levying and collecting the octroi. The municipality relied upon the provisions contained in s. 5 (4) of the Act in support of the contention that the notification dated 3rd November 1942 issued under s. 62 (10) of the Act notifying the imposition of octroi within the octroi limits of the Sonepat municipal limits became applicable to the areas included. The High Court dismissed the petition. It came to the conclusion that by reason of the provisions contained in s. 5 (4) of the Act the taxes would "automatically become leviable" to new areas included in the municipal limits. Allowing the appeals, HELD: The High Court was wrong in holding that the municipality was competent to levy and collect octroi from the appellants by reason of the provision contained in s. 5 (4) of the Act. (i) Section 5 (4) of the Act speaks of rules, bye-laws, conducts, directions and powers and does not significantly, mention notification. The Act speaks of notification ceasing to apply to excluded areas, whereas, in the case of inclusion of areas the Act significantly omits any notifi- cation being applicable to such areas. The legislative intent is, therefore, unambiguous that notifications would not be applicable to an included area on the strength of s. 5 (4). And s. 62 (10) of the Act speaks of notification for the imposition of taxes and such a notification is the statutory basis of the imposition and levy of tax. [133 H] (ii) The word 'notification' is not synonymous with rules, bye laws, orders, directions and powers. The power to issue notifications orders, rules or bye-laws refers to different and separate methods of expression of exercise of power under the statute. Bye-laws are entirely 128 different from notifications imposing tax and the bye-laws fixing the 'limits and prescribing the routes by Which articles which are subject to octroi may be imported obviously cannot be equated with notification of imposition of octroi. [134 C, G] Bagalkot City Municipality v. Bagalkot Cement Co., [1963] Supp. I S.C.R. 710, distinguished. Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 2 JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1927 and 2222 of 1970. Appeals from the judgment and order dated May 18, 1970 of the Punjab and Haryana High Court in Civil Writ Nos. 2014 and 2611 of 1967. C.K, Daphtar and L N. Shroff, for the appellant (in C. A. No. 1927 of 1970). I. N. Shroff, for the appellant (in C.A. No. 2222 of 1970). V. C. Mahajan, and R. AT. Sachthey, for the respondent No. 1 (in both the appeals). M. C.. Setalvad, N. S. Das Bahl, P. C. Bhartari, J. B. Dadachanji and Ravinder Narain, for respondent No. 2 (in C. A. No. 1927 of 1970). P. C. Bhartari, J. B. Dadachanji and Ravinder Narain, for respondent No. 2 (in C. A. No. 2222 of 1970). The Judgment of the Court was delivered by Ray, J. These two appeals are by certificate against the common judgment dated 18 May, 1970 of the High Court of Punjab and Haryana dismissing the applications of the appellants for a writ of mandamus restraining the Municipality of Sonepat from levying against and collecting from the appellants any octroi in respect of raw materials, components and parts imported by the appellants into the factory of the appellants situated at Industrial Area, Sonepat. The factory of each of the appellants was situated at Industrial Area, Sonepat. The appellants carry on business of manufacturing bicycles and bicycle components and parts. On 30 September, 1966 a notification dated 15, September, 1966 was published in the Punjab Government Gazette to the effect that under section 5(1) of the Punjab Municipal' Act, 1911 (referred to for the sake of brevity as the Act) the President of India was pleased to declare his intention of including within the municipal limits of Sonepat in the Rohtak District, the area specified in the Schedule to the notification. The Schedule included the Industrial area of, Sonepat where the factory of the appellants was situated. Under section 5(2) of the Act the inhabitants of the area who objected to the proposed inclusion of the said area could submit their objection in writing within six weeks- of the date of publication of the notification. The appellants. filed objections in writing. On 1 November, 1966 after the bifurcation, of Punjab, the State of Haryana came into existence. A notification dated 11 August, 1967 was published in the Haryana. Government Gazette. The Gazette notification was to the effect that the Governor of Haryana, was pleased to,, include within the Municipality of Sonepat in the Rohtak District the areas mentioned in the notification. The industrial area within which the factory of the appellants was, situated was thus included within the local limits of the Municipality of Sonepat. Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 3 From 18 August, 1967 the respondent-Municipality, purported to impose, levy and collect from the appellants, octroi in respect of raw materials, components and parts imported by the appellants into their factory for consumption or use in the manufacture of bicycles and bicycle components. The respondent-municipality relied an the provisions. contained in section 5(4) of the Act in support of their contention that imposition of octroi which was in force within the municipality applied to the area included within the limits of the municipality by the notifications, and, therefore, the appellants were liable to payment of octroi. The provisions of section 5(4) of the Act are as follows:- "When any local area has been included in a municipality under sub-section (3) of this section of this Act, and, except as the State Government may, otherwise by notification direct all rules, bye-laws, orders, directions and powers made, or conferred under this Act and in force throughout the whole municipality at the time, shall apply to such area." The respondent-municipality relied on the provisions ,contained in section 5(4) of the Act that all rules, bye- laws, orders, directions and powers made, or conferred under the Act and in force throughout the whole municipality would apply to such an area, and, therefore, the notification No. 3798-C-42/60545 dated 3 November, 1942 issued under ,section 62(10) of the Act notifying the imposition of octroi within the octroi limits of the Sonepat Municipality became applicable to the area included. The relevant provisions for imposition of tax are to be found in sections 61 and 62 of the Act. Under section 61 of the Act any municipal committee may impose tax of different kinds enumerated there. The three broad heads of taxes under section 61 of the Act are those provided in sections 61(1)(a),61(1)(b)to(f)inclusive and61(2). Tax mentioned in section 61(1)(a) of the Act is on buildings and lands. Tax mentioned in section' 61 (1)(b) to (f) is tax on profession, ,calling, trade and of other forms which are not material for the purpose of the present appeals. Under section 61(2) of the Act the municipality may impose with the previous sanction of the State Government any other tax which the State Legislature has power to impose in the State under the Constitution. The levy of octroi is under section 61(2) ,of the Act. Competency to impose octroi is because of item 52 of the State List which reads "taxes on the entry of goods within the local limits of the area for sale therein." The power to levy octroi is indisputable and was not ,challenged. The contention on behalf of the appellants Was that the provisions contained in section 62 of the Act should have '- been followed. Section 62 consists of 12 sub-sections. Broadly stated, under section 62 of the Act a Municipal Committee passes a resolution proposing the imposition ,of any tax under section 61. When such a resolution has been passed the committee shall publish a notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed, and the system of assessment to be adopted. Any inhabitant, objecting to the proposed tax may within thirty days from the publication of the notice submit his objection in writing., to the committee. If the committee decides to amend its proposals it shall publish the amended proposal along with, a notice indicating that they are in modification of those previously published for objection. Objections may-within, thirty days be received to the amended proposal and the: committee shall then consider the objections. Counsel on behalf of the appellants contended that Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 4 this procedure. for inviting objections should have been followed. In the case of tax falling under section 6 1 (1)(b) to (f) of the Act the municipal committee after settlement of the proposals shall direct that the tax be imposed and forward,;, a copy of the order through the Deputy Commissioner to,, the State Government. These orders will be attracted by, the provisions of section 5(4) of the Act to the included areas. But orders by themselves are not the authority for imposition of tax. In the case of tax falling under section 61(1)(b) to, (f) of the Act the State Government one receipt of the order-shall notify under section 62 (10) of the Act the imposition of the tax in accordance with such order and shall in the notification specify a date not less than; one month from the date of the notification, on which the tax-shall come into force. Therefore, in the absence of notification falling within the ambit of section 5 (4), of the- Act the municipality will not be competent to levy or collect tax. In the case of a proposed tax. under section 61 (1) (a) of the Act the municipality has, to submit proposals together with the objection, if any,, made in connection., therewith to the Deputy Commissioner. The Deputy,Commissioner after considering the objections may either.refuse to sanction the proposals or, return them to 1 the municipality for further consideration or sanction them without modification or with such. modification not involving an increase of the amount to be imposed, as he deems. fit and then forward the same to, the State Government. a copy of the proposals and his- order. of, sanction.. In the case of tax falling under section 61 (1) (a) of the Act the State Government on receipt of the order of sanction of the Deputy Commissioner shall notify the imposition of the tax in accordance with such order and in the noti- fication shall specify a date not less than one month from the date of the notification, on which the tax shall come into ,.force. In the case of tax falling under section 61(2) of the Act the municipality has to submit proposals together with objections to the Deputy Commissioner. The Deputy Commissioner shall submit the proposal and objections with his recommendation to the State Government. The State Government on receiving the proposals for taxation under section 61(2) of the Act may sanction or refuse to sanction the same or return them to the committee for further consideration. In the case of tax falling under section 61(2) of the Act when the State Government on receipt of the proposal,and objections along with the recommendation of the Deputy Commissioner sanctions the imposition of the tax the State Government under section 62(10) of the Act shall notify the imposition of the tax and shall in the notification specify a date not less than one month from the ,date of the notification, on which the tax shall come into force. Inasmuch as the provisions of section 5(4) of the Act render the order of the relevant authorities sanctioning proposal of municipality for levy of octroi applicable to the included area, there cannot be any question of following the procedure for inviting objections to the proposed tax contemplated in section 62. It may also be stated here that a contention was advanced on behalf of the appellants that the applicability of octroi to the, included area would offend Article 14 of the Constitution by reason ,of denial to the persons within the included area of right to object to the tax. The provisions contained in section 5 of the Act and, in particular, sub-section (2) thereof, confer on inhabitants within the Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 5 area proposed to be included the right to object to the alteration proposed and submit objections in writing. The inhabitants. would thereby have the opportunity of objecting not only to the inclusion of the area but also to the incidence of tax as a result of the inclusion. Section 62 of the Act consists of 12 sub-sections. These sub-sections deal with three matters. The first five sub- sections deal with the procedure for proposals of tax, objections by inhabitants and final consideration of ob- jections by the committee. These sub-sections form part of a stage anterior to sanction by the relevant authorities of proposals for tax. Sub-section (6) to (9) of section 62 of the Act deal with the order of sanction by the appropriate authorities of the proposals for tax. These orders are not the provisions by which tax is imposed. These orders are sanction for imposition of tax. These orders are attracted by virtue of the provisions contained in section 5(4) of the Act to the included areas. But in the absence of notification by the Government under section 62(10) of the Act there is no imposition of tax. Section 62 (10) of the Act indicates that there is imposition of tax only when the State Government shall notify the imposition of the tax and shall in the notification specify a date on which the tax shall come into force. In the absence of imposition of tax by a notification under section 62 (10) of the Act the municipality is not competent to impose, levy or collect tax. Section 62(12) of the Act enacts that a notification of the imposition of tax shall be conclusive evidence that the tax has been imposed in accordance with the provisions of the Act. It is the notification under the statute which is conclusive evidence of the imposition of tax. The controversy in the present appeals is solved by finding out as to whether the notification dated 3 November, 1942 imposing octroi within the limits of the Sonepat Municipality became applicable by reason of the provisions contained in section 5(4) of the Act. It is noticeable at the outset that section 5(4) of the Act speaks of rules, bye-laws, orders, directions and powers and does not signi- ficantly mention 'notifications'. It is apposite to consider sections 6,7 and 8 of the Act which deal with the effect of exclusion of local area from the municipality. In the case of exclusion of an area from the Municipality it is provided in section 8(1) (a) of the Act that "This Act and all noti- fications, rules, bye-laws, orders, directions and powers issued, made or conferred under the Act, shall cease to apply thereto". When the Act provided for notifications ceasing to apply in the case of exclusion of local areas, and in the immediately preceding section 5 refrained from using the word 'notifications' becoming applicable in the case of inclusion of areas the legislative intent is unam- biguous and crystal clear that notifications could not become applicable to an included area on the strength of section 5(4) of the Act. The word 'notification' cannot be said to be synonymous with rules, bye-laws, orders, directions and powers for two reasons. First, the Act in the present case speaks of noti- fications for imposition of tax and uses the word 'notifi- cation' separately from the other words "rules, bye-laws, orders, directions and powers". In the case of exclusions of areas, the Act speaks of notification ceasing to apply to excluded areas whereas in the case of inclusion of areas the Act significantly omits any notification being applicable to such area. Secondly, the General Clauses Act in section 21 speaks of power to issue notifications, orders, rules or bye-laws and it is, therefore, apparent that the power to issue notifications, orders, rules or bye-laws refers to different and separate methods of expression of exercise of power under the statute. Section 62(10) of the Act speaks of notification of the Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 6 imposition of tax. Such a notification is the statutory basis of imposition and levy of tax. Bye-laws are entirely different from notifications imposing tax as will be manifest from section 188 of the Act. Under that section the committee may by bye-laws as mentioned in clause(g) thereof fix limits for the purpose of collecting octroi where collection of octroi has been sanctioned and may prescribe routes by which articles which are subject to octroi may be imported into municipality. Bye-laws fixing the limits and prescribing the routes by which articles which are subject to octroi may be imported obviously cannot be equated with notification of imposition of octroi. In the present appeals, the High Court came to the conclusion that by reason of the provisions contained in section 5(4) of the Act taxes would 'automatically become' leviable' to new areas added to the municipal limits. The High Court fell into the error of holding that taxes became automatically leviable in new areas. The High Court relied on the decision of this Court in Bagalkot City' Municipality v. Bagalkot Cement Co. to support the conclusion of taxes becoming automatically leviable in extended areas on the ground that by reason of the provisions contained in section 5(4) of the Act the inhabitants of the, included area would 'suffer all the burdens that are inherent in their inclusion within the municipal limits'. This conclusion of the High Court is not supported either by the decision of this Court or by the provisions of the statute. In the first place, a taxing provision always receives a strict interpretation for the obvious reason that there must be clear and express language imposing a tax and the date from which such tax shall come into effect. Notifications, under the Act are the only authority and mandate for imposition and charge of tax. Notifications are not made applicable to included areas under section 5(4) of the Act. There cannot be any taxation by implication. Secondly, in the Bagalkot City Municipality case' there was no provision comparable to section 5(4) of the Act and this Court did not decide that taxes would become automatically leviable. On the contrary, this Court in the Bagalkot City Municipality case' in interpreting the words 'Municipal district' occurring in a bye-law did not extend the meaning of 'municipal district, to include areas which were subsequent to the making of the bye-law added within the limits of the municipal district' The reason given by this Court was that the expression 'municipal district' in the bye-law referred to the 'municipal district' as existing when the bye-law was framed. The words 'municipal district' in the bye-law were not construed to relate to extended areas. In the Bagalkot City Municipality case' section 48 of the Municipal Act provided that a bye-law could be made only with the sanction of the Government. The further provisions (1) [1963] Supp. 1 S.C.R. 710. 10-MI245SupCI/71 of section 48 in the Bagalkot CitY Municipality case' required publication of a proposed bye-law for the information of the persons likely to be affected thereby. The lack of publication of the bye-law to the Bagalkot Cement Company affected by the bye-law was held to be an additional reason for refusing to extend the meaning of the words 'municipal district' to include extended areas. There is no such aspect in the present appeals. The Bagalkot City Municipality case' is, therefore, of no aid in interpreting section 5(4) of the Act in the manner the High Court did. The High Court was wrong in holding that the municipality was competent to levy and collect octroi from the appellants by reason of the provisions contained in section 5(4) of the Act. The judgment of the High Court is set aside. The appeals are allowed. The applications of the appellants are allowed and writs of mandamus will go to the respondent municipality restraining the municipality from levying against and collecting from the appellants any octroi in respect of raw materials, Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 7 components and parts imported by the appellants into the factory of the appellants. Each party will pay and bear their own costs. Liberty to mention if the Respondent Municipality will fail to refund the monies within a fortnight. K.B.N. Appeals allowed. Atlas Cycle Industries Ltd vs State Of Haryana & Anr on 11 August, 1971 8 | {
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Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 Equivalent citations: 1972 AIR 1538, 1972 SCR (1) 695, AIR 1972 SUPREME COURT 1538, 1973 (1) SCJ 432, 1972 (1) SCR 695, 1975 BOM LR 410 Author: A.N. Ray Bench: A.N. Ray, S.M. Sikri, D.G. Palekar PETITIONER: KESHAVSINH DWARKADAS KAPADIA ETC,. Vs. RESPONDENT: M/S. INDIAN ENGINEERING COMPANY DATE OF JUDGMENT10/09/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. SIKRI, S.M. (CJ) PALEKAR, D.G. CITATION: 1972 AIR 1538 1972 SCR (1) 695 1971 SCC (2) 706 CITATOR INFO : RF 1992 SC1932 (5) ACT: Arbitration Act (10 of 1940), Sch. 1, para. 4--Appointment of umpire by arbitrators-Whether consent of umpire necessary-Disagreement between arbitrators what is. HEADNOTE: Disputes having arisen between the appellant and the respondent, they were referred to arbitration in accordance with an arbitration agreement. The arbitrators entered upon the reference and- also appointed an umpire. After the time for making the award had expired the appellant took the stand that one of the arbitrators would be biased in favour of the respondents. The respondents therefore called upon Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 1 the arbitrators to refer the matter to the umpire and also wrote to the umpire and the umpire entered upon the reference. Thereafter, the appellants filed applications under s. 33 of the Arbitration Act, 1940. The High Court held that the umpire rightly entered upon the reference, and extended the time to enable the umpire to make an award. In appeal to this Court it was contended that : (1) the appointment of the umpire was not valid because the consent of the appointee was not obtained,; and (2) under cl. 6 of the Arbitration agreement the operation of para 4 Sch. I of the Arbitration Act was excluded, and the umpire could enter upon the reference only in the event of a difference arising between the arbitrators and the arbitrators referred the matter to the umpire. Dismissing the appeal, HELD : (1) There is a distinction between appointment and acceptance of an office. The question of effectiveness or perfection is ordinarily subsequent to appointment. The scheme of arbitration proceedings indicates that the appointment of an umpire and the acceptance of office are two separate matters arising at different stages in the proceedings. [699 H; 700 A: 704 E] When the arbitrators are required to appoint an umpire it only means that the arbitrators are to concur in appointing the umpire. There is no particular method of appointment of an umpire though the usual method is by writing. Arbitrators who are required to appoint an umpire are under no obligation to obtain the approval of the choice of the person by the parties who appointed the arbitrators. If any party is dissatisfied with the choice it will not affect the validity of the appointment; nor is the appointment conditional upon the acceptance of appointment by the umpire. The necessity for communication of appointment to the parties as well as to the appointee depends on the language of the arbitration clause. The Arbitration Act does not say that the appointment of umpire by the arbitrators is to be made only after obtaining the consent of the appointee. [700 D-E; 701 D-F; 704 D-E] When the umpire assumes his office he accepts the appointment. Acceptance may be express or implied. It need not be in writing; it may be evidenced by conduct. It may also be evidenced by proceeding with 696 the arbitration. When the umpire is called upon to proceed in terms of the appointment he will either assent expressly or by conduct to act, or he will decline to act. [704 A-B, D, E-F] Mirza Sadik Husain v. Mussamat Kaniz Zohra Begam, L.R. 38 I.A. 181, applied. Ringland v. Lowndes, (1863) 15 C.B. (N.S.) 173; 143 E.R. 749 and Tradax Export S.A. v. Vokswagenwerk A.G. [1970] 1 All E.R. 420, explained and distinguished. (2) (a) Paragraph 4 of the first schedule provides that if Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 2 the arbitra-delivered to any party to the arbitration agreement or to the umpire a notice in writing stating that they cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators. 'Mere is no intention in cl. 6 of the agreement to exclude the operation of this paragraph. On the contrary the agreement shows that the intention of the parties was that when the arbitrators allowed time to expire without making the award the umpire should enter on the reference in lieu of the arbitrators. [704 H; 705 A-C] (b) In the present case, the arbitrators, by reason of the attitude of one of the parties could not agree to proceed with the matter. Where one of the arbitrators declines to act and the other is left alone in a case of this type, it will amount to disagreement between the arbitrators. [705 F- G] (c) Failure to make an award in time where the agreement prescribed time does in. certain circumstances, amount to disagreement. [705 D-E] Iossifoglu v. Counmantaros, [1941] 1 K.B. 496 and Russel on Arbitration, 18th Ed. pp. 205, 208, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2441 and 2442 of 1968. Appeals by special leave from the judgment and order dated October 17, 1968 of the Bombay High Court in Arbitration Petitions Nos. 49 and 50 of 1968. I. N. Shroff, for the appellant (in C.A. No. 2441/1968). V. M. Tarkunde and I. N. Shroff, for the appellant (in C.As. Nos. 2442 of 1968). S. V. Gupte, B. R. Agarwala for the respondent (in both the appeals). The Judgment of the Court was delivered to Ray, J. These two appeals are by special leave against I the judgment dated 17 October, 1968 of the High Court at Bombay determining under section 33 of the Arbitration Act that the umpire rightly entered upon the reference and further extending the time till 31 December, 1968 for making an award thereof by the umpire. Two questions arise for consideration in these appeals. First, whether there can be any valid appointment of umpire by arbitrators without obtaining consent of the appointee to be an um- pire. Second, on the construction of the arbitration agreement in the present case was the operation of paragraph 4 of Schedule: I of the Arbitration Act excluded with the result that the umpire could enter upon the reference only in the event of a difference arising between the arbitrators. Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 3 On 26 April, 1967 there was an arbitration agreement between the partnership firm of Indian Engineering Company and Keshavsinh Dwarkadas Kapadia. Kapadia had appointed M/s. Chetan Trading Company as the sole selling agent of Kapadia's, several products including aluminium and copper wire by an agreement dated 16 September, 1965. Chetan Trading Company in their turn appointed Indian Engineering Company as their sole selling agent in respect of aluminium and copper wires. Chetan Trading Company terminated their agreement with Indian Engineering Company. Kapadia also terminated the sole selling agency with Chetan Trading Company Indian Engineering Company contended that on the termination of the sole selling agency between themselves and Chetan Trading Company Indian Engineering Company became the sole selling agent of Kapadia in terms of the agreement' dated 16 September, 1965. Indian Engineering Company claimed damages against Kapadia for breach of the agreement. Kapadia claimed damages and moneys from Indian Engineering Company. 'Disputes arose between the parties. These disputes were referred to arbitration in accordance with the agreement dated 26 April, 1967. There was a similar arbitration agreement between Chetan Trading Company and Indian Engineering Company on 5 June, 1967 in respect of their disputes and claims against each other. The arbitration agreement and the arbitrators were identical in both the cases. Clauses 1, 2, 5 and 6 of the arbitration agreement which are relevant for the purposes of the present appeals are as follows:- Clause (1): All the disputes and differences arising out of or in relation to the said Sole Selling Agency Agreement be and they are hereby referred to the arbitration of the said Shri H. G. Advani and Shri J. N. Gandhi. Clause (2) That the arbitration shall be governed by them provisions of the Arbitration Act, 1940. Clause (5): The arbitrators shall make and publish their award within four months from the date of their entering upon the reference and they are hereby authorised to extend the said time from time to time as may be required with the previous written consent of both the parties hereto. Clause (6): The said arbitrators shall before proceeding with the arbitration appoint an umpire and in the event of any difference arising between them they shall refer the 'matter to the umpire for his decision and award. The arbitrators Messrs. Advani and Gandhi held their first meeting on 12 September, 1967. At the said meeting before entering upon the reference the arbitrators appointed an umpire in the following terms: "Mr. Porus Mehta failing him Mr. Murzban Mistry appointed umpire". Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 4 On 11 January, 1968 the time laid down by clause (5) of the agreement for making the award expired. On 14 January, 1968 the respondents wrote to the appellants to obtain the neces- sary extension of time for making the award. The appellants did not comply with the request and on 6 March, 1968 wrote to the arbitrators that Mr. Advani one of the arbitrators would be biased in favour of the respondents. Thereafter, the respondents through their solicitors called upon the arbitrators to refer the matter to the umpire and also by a separate letter called upon the umpire Mr. Porus A. Mehta to enter on the reference as umpire appointed by the arbitrators. Mr. Mehta fixed a meeting on 27 May, 1968. The appellants raised certain objections. The meeting was adjourned. Another meeting was fixed on 17 June, 1968. At the meeting held on 17th June, 1968 Mr. Mehta gave certain directions in regard to the proceedings and instructions thereof and fixed 12 July, 1968 for hearing. The appellants by letter dated 12 July, 1968 addressed to Mr. Mehta contended that the consent of the umpire was not obtained before his appointment and therefore there was no valid appointment of the umpire. Mr. Mehta fixed the meeting on 13 July, 1968 and decided to proceed with the arbitration and adjourned the meeting to 20 July, 1968. The appellants obtained an adjournment on the ground that the appellants wanted to file a petition challenging the appointment of Mr. Mehta as an umpire. Mr. Mehta adjourned the matter till 30 July, 1968. In this context of events the appellants filed applications under section 33 of the Arbitration Act which resulted in the order appealed against. Three contentions which had been advanced An the High Court were repeated here. First, that the arbitrators before pro- ceeding with the reference did not obtain consent of the umpire to his appointment as umpire, and, therefore, there was no appointment of umpire. Secondly, under clause (6) of the arbitration agreement operation of paragraph 4 of Schedule I of the Arbitration Act was excluded and the umpire could enter upon the reference only in the event of a difference arising between the arbitrators on their disagreement. No difference arose between the arbitrators in the present case but only time for making the award expired. Therefore, the umpire had no right to enter upon the reference. Thirty under clause (6) of the arbitration agreement, the umpire had no right to enter upon the reference unless the arbitrators referred the matter to the umpire. The High Court relied on the decision of the Judicial Committee in Mirza Sadik Husain v. Mussanmat Kaniz Zohra Begam and Anr.(1) (38 I.A. 181) and held that the umpire signified the consent by taking up the office and the umpire rightly entered on the reference. The High Court held that the contingency provided for in paragraph 4 of Schedule I to the Arbitration Act was not excluded. The High Court however said that if the High Court was wrong in the view that paragraph 4 of Schedule I to the Arbitration Act was not excluded, expiry of time to make an award could not be regarded as a disagreement between the arbitrators. The third contention of the appellants was also rejected by the High Court on the ground that clause (6) of the arbitration agreement in the present case did not apply when the arbitrators did not make an award within time. Counsel for the appellants contended that the words 'if any appointed arbitrator or umpire I neglects or refuses to get' occurring in section 8(1) of the Arbitration Act, 1940 mean that one can refuse to act only after one has accepted the appointment. This contention was supported by relying on the following observation in Russell on Arbitration, 18th Edition, at page 212: Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 5 "Acceptance of offices:-Acceptance of the office by the arbitrator appears to be necessary to perfect his appointment. It has been so decided in the case of an umpire, and it would seem to be only reasonable that an appointment should not be considered effective until the person appointed has agreed either expressly or tacitly to exercise the function of the office". Two decisions are cited in Russell in support of the view expressed by the author. These decisions are: Ringland v. Lowndes (7 ) (1863) 15 C.B.(N.S.) 173=143 E.R. 749 and Tradax Export S. A. v. Volkawagenwerk 3 A.G.', (1969) 2 O.B. 599. The decision in Tradax Export case (supra) has been affirmed by the Court of Appeal as will appear in (1970) 1 A.E.R. 420. It is important to notice the distinction between appointment and acceptance of office. The present appeals concern the appointment of an umpire. The questions of effectiveness or per- fection of appointment are by the nature of things subsequent to appointment unless the agreement or the statute provides otherwise. Arbitrators and umpire too are often appointed by the parties. Sometimes an umpire is appointed by arbitrator. The constitution of the arbitral body and the manner in which the appointments are made are primarily dealt with in the arbitration agreement or else the Arbitration Act will apply. In some cases, the appointment of arbitrator may require special consideration. If, for instance, two arbitrators are required to be appointed one by each party an appointment of arbitrator by a party is not complete without communication thereof to the other party. The reason in the words of Lord Denman is this : 'Neither party can be said to have chosen an arbitrator until he lots the other party know the object of his choice" (See Thomas v. Fredricks) ( 1 847) 10 Q.B. 775). Where each party was to appoint a valuer by 31 May, 1847 and one of the parties nominated a referee late on 31 May and sent by that night's post a notice thereof to the defendant who received it on 1 June, it was held that the plaintiff had not nominated a referee by 31 May. (See Tew v. Harris (1848) 11 Q.B. 7). The necessity for communication of appointment of arbitrator to the parties as also to the appointee depends often on the languae of the arbitration clause. In the Tradax Export case, (supra) the arbitration clause was as follows :- ".......... Any claim must be made in writing and claimant's arbitrator appointed within three months' of final discharge and where this provision is not complied with the claim shall be deemed to be waived and absolutely barred". This is described as the usual Centrocon arbitration clause in charterparty agreement. It is noticeable that in the Centrocon arbitration clause the claimant is required to appoint an arbitrator within three months of final discharge of cargo or else the claim is barred. An effective appointment of an arbitrator in such a clause is necessary to constitute arbitral authority within the stipulated Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 6 time to prevent the claim from being barred. Therefore, in such a clause not only communication to the appointee but also the acceptance of office by the appointee is essential for effective appointment of arbitrator within the meaning of the clause. A mere nomination or appointment unknown to the appointee was held not to be an appointment far less an effective appointment of arbitrator within the meaning of that clause. The appointment will be effective only when the appointed arbitrator accepts office and is armed with the duty and authority of an arbitrator. Even in such a clause the stage of effective appointment will be when he has indicated his willingness to act in that matter. In the Tradax Export case (supra) the charterers gave notice of appointment to the arbitrator. Three months expired The other side contended that there was no appointment of arbit- rator within the stipulated time. The arbitrator was not set in motion. Neither was the arbitrator clothed with the mandate of arbitration nor was the machinery of arbitration invoked by the charterers. The appointment of an arbitrator there had to be perfected and implemented by calling upon the appointee to act. In the Tradax Export case (supra) the Court of Appeal observed that if an application under section 27 of the English Arbitration Act, 1950 had been made, the court would have, granted relief as explained in Liberian Shipping Corporation 'Pegasus' v. A. King & Sons Ltd. (1967) 2 Q.B. 86. Section 27 of the English Arbit- ration Act is a special provision conferring power upon the court to extend the time for commencement of arbitration proceedings where in the circumstances of the case undue hardship would otherwise be, caused. This aspect indicates that in the Centrocon clause commencement of proceedings by effective- appointment is vital and that is why relief against rigour of time clauses is granted under section 27 of the English Arbitration Act, 1950. In the present appeals, the reference was to arbitrators and they were required to appoint an umpire. The appointment of an umpire by two arbitrators means that the arbitrators are to coneur in appointing an umpire. There is no particular method of appointment of an umpire prescribed by the Act. The usual method of appointment of an umpire by the arbitrators is in writing. Arbitrators who are required to appoint an umpire are under no obligation to obtain the approval of the choice of the personnel by the parties who appointed the arbitrators. If any party is dissatisfied with the choice that will not affect the validity of the appointment (See Oliver v. Collings (1809) 11 East 367-103 E.R. (1045). The appointment by arbitrators of an umpire should be the act of the will and judgment the two. Such an appointment is to be one of the choice and not of chance. [See Re. Cassell (1829) 9 B & C 624==109 E.R. 232]. If an umpire declines the office the appointment is ineffectual. Ile arbitrators in such a case can make another appointment of an umpire if the arbitration agreement empowers them to do SO Or the court can appoint an umpire in lieu of an appointed umpire who refuses to act. Declining the office will be refusal to act. It is, therefore, apparent that appointment of umpire is something different from the acceptance of office by the umpire. The arbitrator Or umpire assumes his office when he accepts the appointment. There is no NO authority for the proposition that consent of the appointee is required before an umpire is appointed by the arbitrators. The observations in Russll on arbitration. 18 th Ed. Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 7 at page, 212 do not support that submission. The decision in Ringland v. Lowndes supra) which is referred to in Russell had very special features. Under the Public Health Act, 1848 a disputed claim to compensation was to be settled by arbitration. Arbitrators were required to make an award within 21 days after the appointment or within extended time, if any. If arbitrators neglected or refused to appoint an umpire for seven days after being requested so to do by any party the court of quarter sessions would on the application of such party appoint an umpire. In that case arbitrators were appointed in January, 1861. The arbitrators refused to appoint an umpire. The plaintiff applied at the Easter sessions to appoint an umpire but failed in consequence of want of a notice of his intention to make such application. The plaintiff thereafter gave the required notice and the second application was made at the Midsummer sessions. One Johnson was named as umpire. But as his consent had not been obtained no formal appointment was made. A third application was made at the Michaelms sessions and Johnson was on 14 October appointed umpire and accepted the appointment. The question for consideration was whether the appointment of the umpire was at the Midsummer sessions or at the Michaelmas sessions. Under the statute the award was, to be made within three months from the umpire,s appointment. The umpire made- an award on 30 December, 1861. If the appointment was in the Midsummer sessions the Award would be bad. It will appear from the report (15 C.B ' (N.S.) 173 at pp. 178, 179 and 196-143 E.R. 4 749 at pp. 752 and 759) that it was the duty. and practice of the clerk of the peace to make an, entry of the acts and proceedings of the court from Which the orders of the court were subsequently formally drawn up and no order would in the course of practice be formally drawn up unless the assent of the umpire to act had been previously obtained. Counsel for the board in Ringland's case did not strongly press the objections that' an order 'was made at the Midsummer sessions because there was no formal order of the Court in Midsummer 'sessions. The decision in Ringland v. Lowndes (supra) went up on appeal as will, appear from, 17 C.B. (N.S.) 514.=144, E.R. 207, The appeal, however was on actual decision in Tringland,s case (supra) ;is 'to whether a party who attended before, an, arbitrator under protest, cross- examined adversary's witnesses and called witnesses did not preclude himself from afterwards objecting that the arbitrator was proceeding without authority it will appear at conceded that the, appointment of Johnson as an umpire took Place the October sessions. the special provisions of the statute, the mode. of making an application to the court of quarter Sessions, me practice of the court in regard to drawing up of orders for appointment of umpire and the specific requirement of consent of the appointee to an order for appointment of umpire are all special and peculiar features in Ringland v. Lowndes (supra) to support the view that acceptance of umpirage is necessary for the appointment of the umpire. The decision of the Judicial Committee in Mirza Sadiq Husain v. Musammat Kaniz Zohra Begam (supra) was on the meaning of the words 'refuses to act' occurring in section 510 of the Code of Civil Procedure, 1882. That section conferred power on the court to appoint a new arbitrator or umpire "if the arbitrator or the umpire refuses to act". The, Judicial Committee did not accept the construction put upon the words 'refuses to act' by the High Courts in India that the power of the court under section 5 10 to appoint a new arbitrator in place of another arises only when that other had first consented to act and thereafter refused or became incapable. The Judicial Committee said "it appears to their Lordships that when an. arbitrator is nominated by parties, his refusal to act is signified as clearly by his refusal to accept nomination as by any other course he could pursue. His Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 8 refusal to act necessarily follows, for he has not performed the first action of all, namely, to take up the office by signifying his assent to his appointment Their Lordships do not enter at length,into the matter as it appears that any other construction would open the way to an easy defeat of the provisions of the statute". Under section 8 of the Arbitration Act ,1940 if any umpire refuses to act and the arbitration agreement does not show that it was intended that the vacancy should not be supplied, and the parties or the arbitrators as the case may be, do not supply the vacancy any party may take recourse' to the provisions of the statute for appointment of umpire. The construction which the Judicial Committee put upon the words 'refuses to act' in Mirza Sadik Husain's case (supra) applies to the provisions contained in the Arbitration Act, 1940. Where the arbitrators appoint an umpire upon the condition of the umpire's acceptance of office, the arbitrators wilt have power to reappoint an umpire if the post is refused. 'Where, again, the arbitrators appoint an umpire, without any such condition of acceptance of office, and the appointee declines the office, the, arbitrators in accordance with their powers under the arbitration agreement ea appoint an umpire again. The court has also power to appoint in lieu of an appointed umpire who refuges to act, as stated in section 8 of the Arbitration Act, 1940. In all these cases the appointment of an. umpire becomes effective by acceptance of the office. Thereupon the power of appointment is exhausted. If the appointed person after acceptance of office refuses to act or will not act the parties have to take recourse to the court. When the umpire assumes his office he accepts the appointment. The acceptance may be express or implied. Ile acceptance need not be in writing. It may be evidenced by conduct. It may be also by proceeding with the arbitration. In Mirza Sadik Husain's case (supra) both the parties by agreement appointed arbitrators to settle their respective rights. One of the arbitrators refused to act. The respondents in that case declined to nominate another arbitrator in their behalf-. The Judicial Committee said that this declinature was within their rights, the reason being that the arbitrator refused to accept office or to act after he had been appointed. The arbitrators in the present case completed their appointment of umpire before entering on the reference. Thereafter, it remained for the umpire to act or to refuse to act. The question of acceptance of appointment of umpire arises with reference to the stage when he is called upon to act. The Arbitration Act, 1940 does not say that appointment of umpire by arbitrators is to be made only after obtaining consent of the appointee. The arbitrators here appointed an umpire before entering on the reference: The appointment was not conditional upon the acceptance of appointment by the umpire. The scheme of arbitration proceedings indicates that the appointment of umpire and the acceptance of office are two separate matters arising at different stages in the proceedings. When the umpire is called upon to proceed in terms of the, appointment he will either assent expressly or by conduct to act or he will decline to act. The High Court was correct in holding that there was a valid appointment of the umpire and the umpire rightly entered upon the reference. Ile umpire's authority commenced when he entered upon the reference on being asked to proceed with the reference. The other contention on behalf of the, appellants that para- graph 4 of the First Schedule to the Arbitration Act, 1940 was excluded by clause (6) of the arbitration agreement in the: present case is unsound. Section 3 of the Arbitration Act provides that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 9 Schedule in so far as they are applicable to the reference. Paragraph 4 of the First Schedule provides that if the arbitrators have allowed their time to expire without making an award or have delivered to any party to the arbitration agreement or to the umpire a notice in writing stating that they cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators. Clause (6) of the arbitration agreement does not state that only in the event of a difference arising between the arbitrators there shall be a reference to the umpire. There is no intention in the agreement to exclude the operation of paragraph 4 of the First Schedule to the Arbitration Act. In the present case the agreement provided for appointment of umpire. The agreement also provided for making of the award by the arbitrators. It is, therefore, apparent that the intention of the parties was that when arbitrators would allow their time to expire without making the award the umpire would enter on the reference in lieu of the arbitrators. The High Court expressed the view that if the arbitrators allowed the time to expire that by itself would not amount to disagreement between the arbitrators. As to what constitutes disagreement cannot be laid down in abstract or inflexible propositions. It will depend upon the facts of the case as to whether there was a disagreement. The High Court did not agree with the view expressed in Russel on Arbitration, 18th Ed. at pages 205 and 208, that failure to make an award in time where the agreement prescribed time in which the arbitrators award is to be made would amount to disagreement. In Lossifoglu v. Counmantaro [1941] 1 K.B. 396 the arbitration clause provided "in case the arbitrators so appointed disagree they shall appoints an umpire". One of the arbitrators repeatedly endeavoured to arrange a meeting with the other, but failed to arrange such a meeting. The arbitrator then unsuccessfully attempted to obtain consent of the latter to the appointment of umpire. Thereafter, application was made to the court for the appointment of umpire. Disagreement between the arbitrators may take various shapes and forms. In the present case the arbitrators by reason of attitude of a party in correspondence addressed to the arbitrators could not agree to proceed with the matter. Where one of the arbitrators decline to act and the other is left alone it will in a case of this type amount to disagreement between the two arbitrators. In the Present case, there was disagreement between the arbitrators. Time to make the award also expired. Therefore, from both points of view the umpire had authority to inter upon the reference. For these reasons, we are of opinion that the High Court was correct in making the order. The appeals are dismissed. The order of the, High Court is upheld, In view of the fact that the time granted by the High Court till 31 December, 1968 for making the award cannot apply, the umpire Porus A.. Mehta is I-L3Sup.Cl/72 granted time for three months to make the award. Three months will run from the date of service of this order by any party to these appeals. The appellants will pay one set of hearing fee to the respondents. V.P.S Appeals dismissed. Keshavsinh Dwarkadas Kapadia Etc vs M/S. Indian Engineering Company on 10 September, 1971 10 | {
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Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 Equivalent citations: 1972 AIR 486, 1972 SCR (2) 279, AIR 1972 SUPREME COURT 486, 1972 38 CUTLT 1, 1972 SCD 1171, 1973 2 SCJ 259, 1972 2 SCR 279, ILR 1973 CUT 123 Author: S.M. Sikri Bench: S.M. Sikri, J.M. Shelat, I.D. Dua, Subimal Chandra Roy PETITIONER: CHANDER SEKHAR SINGH BOI ETC. Vs. RESPONDENT: THE STATE OF ORISSA ETC. DATE OF JUDGMENT05/11/1971 BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) SHELAT, J.M. DUA, I.D. ROY, SUBIMAL CHANDRA MITTER, G.K. CITATION: 1972 AIR 486 1972 SCR (2) 279 1972 SCC (1) 63 ACT: Constitution of India, 1950, Art. 3LA--`Modification', scope of-Applicability of second proviso when provisions regarding ceiling limit are not in force. Courts-Jurisdiction to go into vires of provisions not brought into force. Bhagchar tenure, meaning of. HEADNOTE: By the Orissa Land Reforms Act, 1965, the Orissa Land Reforms Act, 1960, was amended by substituting new Chaps. III and IV for the original Chaps. III and-IV. By Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 1 notifications issued under s. 1(3) of the Act, under which different dates may be appointed by notification for the coming into force of different provisions of the Act, the Act and Chap. III, as amended, were brought into force; but no notification bringing into force the provisions of Chap. IV dealing with ceiling was issued. The appellant challenged the validity of the Act. The High Court held that Chap. III was a valid piece of legislation but that Chap. IV was unconstitutional and invalid. in appeal to this Court it was contended (1) that the provisions of Chap. III were invalid because they were not protected by the provisions. of Art. 31 (A) (1) of the Constitution as they do not provide for the acquisition by the State of any estate or of any rights therein or the ex- tinguishment or modification of any such rights; (2) if the provisions of Chap. III amounted to acquisition market value was payable as. compensation under the second proviso to the Article and not the compensation as fixed in s. 28 of the Act; (3) Chap. IV was ultra vires the provisions of the second proviso to Art. 31-A(1) of the Constitution. Dismissing the appeal, HELD : (1) The provisions of Chap. III of the Act modify the landlord's substantive rights in various respects inasmuch as they enable the determination of resumable land which the land owner would be entitled to cultivate himself, and regarding non-resumable land, the tenant is given a right to acquire it on payment of compensation. Therefore, these provisions fall within the protection given by Art. 31-A(1) of the Constitution. [286 D-F] Atma Ram v. State of Punjab, [1959] Supp. 1 S.C.R. 748 753; 767, followed. (2) The second proviso to Art., 31A(1) is not applicable because, no ceiling limit within the meaning of the proviso to Art. 31-A(1) has been fixed,. Till a notification under s. 1(3) of the Act is issued bringing in force the provisions of Chap. IV it cannot be said that there is any ceiling limit applicable to the appellant under any law for the time being in force. Moreover the essence of personal cultivation as used in the proviso is cultivation by or on behalf of the owner of the land. The appellant is the owner of Bhagchar lands, and Under this tenure the cultivator shares his crop with the owner. A crop-sharer does not cultivate on behalf of the landlord and therefore the Bhagchar lands are not under the appellant's person cultivation. [287 B-D; 288 A-B] 280 (3) The High Court should not have gone into question of the validity of Chap. IV Courts ordinarily ought not to go into the question of the validity of an Act or a provision of an Act unless it has been brought into force. Till then such a question would be academic, because, no body could be aggrieved by a provision of law which is dormant and which Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 2 cannot be enforced. Therefore, this Court would not go into the question whether the provisions of Chap. IV were ultra vires or not [282 D-F] State of Orissa v. Chander Sekhar. [1970] 1 S.C.R. 593, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 854, 1028, 1033 and 1097 of 1966, 1866 to 1867 and 2487 of 1969. Appeals from the judgment and order dated January 30, 1967 of the Orissa High Court in O.J.C. Nos. 329 of 1965 etc. Somnath Chatterjee and G. S. Chatterjee, for the appellant (in C.A. No. 854 of 1968) and respondent no. 2 (in C.A. No. 1867 of 1969). C. B. Agarwala, S. P. Nayar for R. N. Sachthey, for the res- pondent (in C.A. No. 854 of 1968) and the appellant (in C.As. Nos. 1028, 1033 and 1097 of 1968, 1865 to 1867 and 2487 of 1969). The Judgment of the Court was delivered by Sikri, CJ. The appellant, Chander Sekhar Singh Bhoi, in Civil Appeal No. 854 of 1968, filed a petition under Art. 226 of the Constitution (No. O.J.C. 329/1965) in the Orissa High Court, challenging the Orissa Land Reforms Act of 1960. herein:after referred to as the Principal Act (Act XVI of 1960) as amended by the Orissa Land Reforms Act, 1965 (Act XIII of 1965) hereinafter referred to as the Amending Act. He alleged that he owned about 220 acres of self-cultivated land and Chat he had about 5 acres of Bhagchar land. This petition was heard alongwith a number of other petitions by the High Court, and the high Court by its common judgment dated 30th January, 1967 disposed of all these petitions. The High Court came to the conclusion that "Chapter III of the Amending Act is a valid piece of legislation or in other words, it does not suffer from any invalidity but Chapter IV of the Amending Act is unconstitutional and invalid and accordingly it is struck down." The High Court accordingly allowed the petitions in part and directed the State not to give effect to the provi- sions of Chapter IV of the Amending Act. The State filed a number of appeals against that judgment .and this Court (Shah and Vaidialingam, JJ.) allowed the appeals and set aside the order passed by the High Court declaring Chapter IV of Act XIII of 1965 amending Act XVI of 1960 ultra vires (State of Orissa v. Chander Sekhar) (1). Civil Appeals No. 1028, 1033 & 1907/1968, 1865-67 & 2487/1969 are by the State of Orissa (hereinafter referred to as the State appeals) but these could not be heard by this Court (Shah and Vaidialingam, JJ.). The present appeal (C.A. No. 854 of 1968) was also not heard with the other appeals. In Civil appeal No. 854 of 1968 the appellant urged (1) That the High Court erred in holding Chapter III of the Act as inserted by Act XIII of 1965 in Act XVI of 1960 intra vires; and (2) That Chapter IV as inserted by Act XIII of 1965 in Act XVI of 1960 is ultra vires the provisions of the second proviso to Art. 31- A(1) of the Constitution. In the other appeals the State urged that the previous decision be followed and the judgment of the High Court set aside. On behalf of the respondent in C.A. No. 1867 of 1969 it is urged that the judgment of this Court is erroneous and needs reconsideration. We may mention that the Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 3 respondents in the other appeals have not entered appearance. The Orissa Land Reforms Act, 1960, received the assent of the President on October 17, 1960 and was published first in the extraordinary issue of the Orissa Gazette dated November 11, 1960. The object of the legislation is given in the preamble which reads : "WHEREAS it is necessary to enact a progressive legislation relating to agrarian reforms and land tenures consequent on the gradual abolition of intermediary interest; AND WHEREAS it is expedient to confer better rights on agriculturists to ensure increase in food production in the manner hereinafter appearing." Section 1 (3) of the Act provides: "It shall come into force in whole or in part, on such date or dates as the Government may from time to time by notification appoint, and different dates may be appointed for different provisions of this Act." On June 20, 1964 by virtue of Constitution (Seventeenth Amendment) Act, 1964, the Orissa Land Reforms Act. 1960 was (1) [1970] 1 S.C.R. 593. included in the 9th Schedule to the Constitution as entry 52. On August 11, 1965 the Orissa Land Reforms Amending Act 1965 (Act XIII of 1965) received the assent of the President and was first published in the extraordinary issue of the Orissa Gazette dated 17th August, 1965. By the Amending Act various provisions of the Principal Act were amended and in particular for the original Chapters III and IV of the Principal Act new Chapters III and IV were substituted. On September 25, 1965, a notification under Sec. 1(3) of the Principal Act was issued bringing the Act into force except Chapters III and IV. A further notification was issued under Section 1(3) of the Act bringing Chapter III of the Act as amended into force. No notification has as yet been issued under Section 1(3) of the Act bringing the provisions of Chapter IV into force. This fact was also noticed in the judgment of this Court in State of Orissa v. Chander Sekhar(1) but the Court nevertheless went into the question of validity of Chapter IV of the Act as amended because the High Court had held Chapter IV to be ultra vires. It seems to us that the Courts ordinarily ought not to go into the question of the validity of an Act or a provision of an Act unless it has been brought into force. Till then, such a question would be academic. No body can 'be aggrieved by a provision of law which is dormant and which cannot be enforced. The Constitution has provided for an advisory opinion being given by the Supreme Court, when the question is of such a nature and of such public importance that it is expedient to obtain the opinion of the Supreme Court. The High Court should not have embarked upon an academic question. In view of this we are not inclined to go into the question whether the provisions of Chapter IV were rightly held to be intra vires by this Court. The respondents in the State appeals can raise this question if so advised when the notification is issued under Section 1 (3) of the Act bringing Chapter IV into force. However, the appellant Chander Sekhar Singh was a party to the decision in State of Orissa v. Chander Sekhar(1) and that judgment is binding on him. He cannot ask us to review the judgment in this manner. Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 4 In order to appreciate the contentions of the learned counsel on the question of the validity of the provisions of Chapter III of the Act it is necessary to notice the relevant provisions of the Act bearing on this question. The following definitions were brought to our notice (1) [1970] 1 S.C.R. 593. "2(5) 'Ceiling area' means an extent of land equivalent to twenty standard acres;" "2(17) 'Landlord means a person immediately under whom land is held by a raiyat or a tenant; Explanation I--A raiyat or a tenant shall be deemed to be a landlord in relation to the tenant or tenants immediately under him; Explanation II--Government shall be deemed to be the landlord in respect of the lands held directly under them either by a raiyat or a temporary lessee or a tenant;" "2(22) 'personal cultivation' with its grammatical variations and cognate expressions means to cultivate on one's own account-- (a) by one's own labour; or (b) by the labour of any member of one's family; or (c) by servants or hired labour on wages, payable in cash or in kind, but not in crop share, under one's personal supervision or the personal supervision of any member of ones family;" "2(30) 'standard acre' means the unit of measurement of land equivalent to one acre of Class Il and, or one acre and a half of Class II land, or three acres of Class III land, or four acres of Class TV land;" "2(31) 'tenant' means a person who has no rights in the land of another but under the system generally known as Bhag, Sanja or Kata or such similar expression or under any other system, law, contract, custom or usage personally cultivates such land on payment of rent in cash or in kind or in both or on condition of delivery to that person- (a) either a share of the produce of such land; or (b) the estimated value of a portion of the crop raised on the land; or (c) a fixed quantity of produce irrespective of the yield from the land; or (d) produce or its estimated value partly in any of the ways described above and partly in another;" Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 5 Chapter II deals with Raiyats and Tenants. The heading of Chapter III is "Resumption of Land for Personal Cultivation." Section 24(1) gives a right to the landlord and the tenant to have the, resumable and non-resumable lands determined in accordance with the provisions of the Chapter. The expression "resumable land", by virtue of the Explanation, refers to land which can be resumed for personal cultivation by a landlord from a tenant. We are not concerned with S. 24(2). Section 25 fixes the extent of the resumable land which shall not be more than one-half of the lands in respect of each tenant, measured in standard acres only. Section 26 enables the landlord to make a selection under S. 25 and apply on the basis of the selection to the Revenue Officer in the prescribed manner and form. It also enables a tenant to apply to the Revenue Officer within the period of three months in the prescribed form and manner. Under S. 27 the Revenue Officer determines the particulars of the resumable lands and the non-resumable lands. Section 28 provides that while deciding matters under s. 27 the Revenue Officer shall determine, the compensation in respect of the non-resumable lands payable in the prescribed manner by the tenant which shall be determined in accordance with sub-ss. (2) and (3) of S. 28. Sub-section (2) enables the compensation to be fixed and paid in annual instalments mentioned therein. Sub-s. (3) provides for compensation for wells, tanks and structures of a permanent nature at the market value thereof to be paid along with the compensation under sub-s. (2). Under S. 29, after the disposal of appeal, if any, the Revenue Officer has to issue a certificate in the prescribed form to the landlord and also to the tenant specifying all matters to be determined under ss. 27 and 28. He is further directed to send a copy of such certificate to the authority competent to maintain the record-of-rights. Section 30 provides that the tenant shall with effect from the beginning of the year next following the date of the issue of the certificate under section 29 become a raiyat in respect of the land for which compensation has been determined under section 28. Sub-section (2) provides that the instalments of the compensation amount together with interest due thereon shall remain a first charge on the land to which it relates and shall be recoverable to the Revenue Officer by the person entitled thereto. Section 31(1) deals with the persons entitled to receive compensation, and under sub-s. (2), with effect from the date the tenant becomes a raiyat under S. 30, he holds the land free from all encumbrances, and the rights of all persons (not being Government or a landholder) mediately or immediately under whom the land was being held shall stand extinguished and the encumbrances, if any, created by such persons in respect of the. land shall thereafter attach to the other lands of the landlord. Section 32 provides that the certificate issued under S. 29 shall be conclusive proof the correctness of the contents thereof in respect of all disputes between the tenant and the persons whose rights stand extinguished in pursuance of s. 31. Section 33 provides for determination of fair and equitable rent for non-resumable land and the persons to whom it is payable. Section 34 provides that on the determination of the resumable lands the tenant on such land shall cease to have the right to continue in cultivation thereof with effect from the date of expiry of the year next following the date of issue of the certificate under s. 29. Section 35 provides for the contingency when both the landlord and the tenant in respect of any land fail to apply in accordance with the provisions of S. 26, and enables the Revenue Officer to determine resumable and non- resumable lands and other matters required to be determined under ss. 27 and 28. Section 36 provides for eviction of a landlord and a tenant who fail to personally cultivate the land without sufficient cause. The learned counsel challenged the provisions of Chapter III on the ground that they are not protected by the provisions of Art. 31A(1) because they do not provide for the acquisition by the Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 6 State, of any estate or of any rights therein or the extinguishment or modification of any such rights. He said that the creation of a similar and identical right in another person does, not amount to extinguishment of such rights. According to him, a right must vanish by the provisions of the Act before it can be said to be extinguished. We see no force in this contention. A similar argument was addressed to this Court in Atma Ram v. State of Punjab(1). This Court was then dealing with the provisions of the Punjab Security of Land Tenure Act, 1953. The provisions of the Punjab Act were summarised by this Court ,thus : "Thus, the Act seeks to limit the area which may be, held by a land-owner for the purpose of self-cultivation, thereby, releasing "surplus area" which may be utilized for the purpose of resettling ejected tenants, and affording an opportunity to the t enant to become the land-owner himself on payment of the purchase-price which, if anything, would be less than the market value." The argument addressed to us was answered by Sinha, J., as he then was, thus : "In this connection, it was further argued that extinguishment of a right does not mean substitution of another person in that right, but total annihilation of that right. In our opinion, it is not necessary to discuss this rather metaphysical argument, because, in our (1) [1959] Supp. (1) S.C.R. 748; 753; 767. opinion, it is enough for the purpose of this case to hold that the provisions of the Act, amount to modification of the landowner's rights in the lands comprised in his "estate" or "holding". The Act modifies the land- owner's substantive rights, particularly, in three respects, as indicated above, namely, (1) it modifies his right of settling his lands on any terms and to any one he chooses: (2) it modifies, if it does not altogether extinguish,his right to cultivate the "surplus area" as understood under the Act; and (3) it modifies his right of transfer in so far as it obliges him to sell lands not at his own price but at a price fixed under the statute, and not to any one but to specified persons, in accordance with the provisions of the Act, set out above. Thus, there cannot be the least doubt that the provisions of the Act, very substantially modify the landowner's rights to hold and dispose of his property in any estate or a portion thereof. It is, therefore, clear that the provisions of Art. 31A save the impugned Act from any attack based on the provisions of Arts. 14, 19 and 31 of the Constitution." It seems to us that this Act also modifies the landlords substantive rights in various respects inasmuch as it enables the determination of resumable land which the land- owner would' be entitled to cultivate himself and regarding the non-resumable land the tenant is given the right to acquire it on payment of compensation. This falls within the protection given by Art. 31A(1). The learned counsel then referred to the second proviso to Art. 31A(1) which reads : Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 7 "provided further that where any law makes any provision for the acquisition by the State of any estate and where any land comprised therein is held by a person under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicabl e to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure provides for payment of compensation at a rate which shall not be less than the market value thereof." Relying on the majority judgment in Ajit Singh v. State of Punjab(1), he said that the provisions of Chapter III amounted (1) [1967] 2 S.C.R. 142. to acquisition and accordingly the market value was payable as compensation under the second proviso, and not the compensation as fixed in S. 28. He urged that five acres of Bhagchar land are lands under his personal cultivation within the meaning of the words "personal cultivation" in the second proviso. He further said that although no notification under s. 1(3) of the Act had been issued bringing the provisions of Chapter IV, which dealt with ceiling the ceiling limit applicable to him would be the ceiling limit as provided in Chapter IV. It seems to us that there is no ceiling limit applicable to him within the meaning of the proviso because till a notification under s. 1 (3) is issued it cannot be said that there is any ceiling limit applicable to him under any law for the time being in force. Further it does not seem to us that the 5 acres of land mentioned above are under his personal cultivation. We have already set out the definition of the words, "personal cultivation". Mr. C. B. Agarwala has drawn our attention to similar definitions in various Acts. In The United Provinces Tenancy Act, 1959 "Khudkasht" means land (other than Sir) cultivated by a landlord, as under- proprietor or a permanent tenure-holder as such either himself or by servants or by hired labour. In the Delhi Land Reforms Act, 1954, "Khudkasht" has been defined thus : " 'Khudkasht' means land (other than Sir) cultivated by a proprietor either by himself or by servants or by hired labour,- (a) at the commencement of this Act, or (b) at any time during the period of five years immediately before the commencement of this Act, whether or not it was so cultivated at such commencement, provided that it has not, at any time after having been so cultivated, been let out to a tenant." In the Bihar Land Reforms Act, 1950 "Khas possession" means " 'Khas possession' used with reference to the possession of a proprietor or to tenure-holder of any land used for agricult ural or horticultural purposes means the possession of such proprietor or tenure-holder by cultivating such land or carrying on horticultural operations thereon himself with his own stock or by his own servants or by hired labour or with hired stock." Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 8 In our view the words 'personal cultivation" in the Second proviso to Art. 31A(1) must bear a similar meaning. The essence of "personal cultivation" seems to be cultivation by or on behalf of the owner of the land. It is quite clear that under the tenure known as Bhagchar, the cultivator shares his crop with the owner. So, when he grows the crop he grows it in his own right and not on behalf of any person. Therefore, it is difficult to hold that a crop- sharer cultivates on behalf of the landlord. In the result we hold that the High Court was right in holding that Chapter III of the Act is valid. We further hold that the High Court should not have gone into the question of the validity of Chapter IV and we accordingly set aside that part of the judgment. In the result, Civil Appeal No. 854 of 1968 is dismissed, but there will be no order as to costs. The other appeals are allowed, and the writ petitions filed by the respondents in the State appeals are dismissed. There will be no order as to costs in these appeals. V.P.S. Chander Sekhar Singh Boi Etc vs The State Of Orissa Etc on 5 November, 1971 9 | {
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C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 Equivalent citations: 1972 AIR 239, 1972 SCR (2) 515, AIR 1972 SUPREME COURT 239, 1972 (1) SCJ 505, 1972 CURLJ 191, 1972 SCD 347, 1972 2 SCR 515, ILR 1973 KARNATAKA 917 Author: Kuttyil Kurien Mathew Bench: Kuttyil Kurien Mathew, C.A. Vaidyialingam PETITIONER: C. F. ANGADI Vs. RESPONDENT: Y. S. MRANNAYYA DATE OF JUDGMENT23/11/1971 BENCH: MATHEW, KUTTYIL KURIEN BENCH: MATHEW, KUTTYIL KURIEN VAIDYIALINGAM, C.A. CITATION: 1972 AIR 239 1972 SCR (2) 515 1972 SCC (1) 191 ACT: Compromise decree-Party to decree given time to do an act within a specified period or by a specified day-Party failing to do it on the ground of impossibility of performance on the last day specified-Principles to be applied-Compromise decree, construction of according to law- Does not amount to varying of decree-Decree though in the nature of contract, different consideration apply when embodied in Judge's order. HEADNOTE: Under a compromise decree the respondent plaintiff agreed to deposit in court the sale amount by January 1, 1960. December 31, 1959 and January 1, 1960 were holidays. The respondent made the deposit on January 2, 1960 and sought to enforce his right under the decree compelling the appellant defendant to execute the conveyance. The appellant filed C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 1 execution for cost on the basis that the suit stood dismissed as per the provision in the compromise decree on the failure of the respondent lo deposit the amount by January 1, 1960., The Court held that the respondent had made the deposit in substantial compliance with the decree. appeals against this order were also dismissed. In appeals to this Court it was contended (i) where a party had to perform an act within a certain of by a certain date, the law would not take notice of the circumstance that the act became incapable of performance by reason of circumstances beyond his control on the last day of the period; (ii) the executing court had no right to alter or modify the terms of the decree and hold that the deposit made on January 2, 1960 had to be deemed to be a deposit made on January 1, 1960 and (iii) a compromise decree was a contract notwithstanding the fact that an order of court was superadded to it and a provision in a contract that an act had to be done within a certain period or by a particular day by a party was absolute dismissing the appeal. HELD : (i) The respondent had the right or the liberty to deposit the amount in court till and including January 1, 1960. That being so, the fact that be did not choose to make the deposit earlier would not affect his right or liberty to deposit the amount in court on January 1, 1960. [518 F-G] Halsbury vol. 37 3rd Edn. p. 96; Fateh Khan v. Chhajju & Ors., A.I.R. 1931 Lah. 386, referred to. It is a generally recognised principle of law that parties who are prevented from doing a thing in court on particular day, not by an act of their own, but by the court itself, are entitled to do it at the first subsequent opportunity. [520 G] Halsbury Vol. 37, 3rd Ed. p. 97, para 172, Muhammad Jan v. Shiam Lal; I.L.R. XLVI All. 328 (1924); Shooshee Bushan Rtidro v. Gobind Chander Roy, I.L.R. Cal. Vol. XVIII (1891) 231, Sambasiva Chari v. Ramasaini Reddi, I.L.R. 22 Mad. (1899) 179 and Mayor v. Harding, [1867] 2 Q.B. 410, referred to. The present case is concerned with a decree which specifically provided that the respondent should deposit the amount in court. He had, therefore, no option to pay the same to the appellant [520 C-D] Kunj Bihari v. Bitndeshri Prasad, I.L.R. vol. 51, 1929, All. 527, Roshan Lal v. Ganpat Lal. A.I.R. 1938 All., Indal v. Chaudhary 516 Ram Nidh, A.I.R. 33 [1946] oudh. 156 and Rain Kinkar Singh V. Smt. Kamal Basini Devi, A.I.R. 1938 Pat. 451, distinguished. Chatlapali Suryaprakasa Rao v. Polisetti Venkataratnam, A.I.R. 1938 Mad. 523, referred to. (ii)The executing court has the right to construe the decree in the light of the applicable provisions of law, If C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 2 in this case, on such a construction. the court found that the deposit made by the respondent on January 2, 1960, was according to law a deposit in compliance with the terms of the decree, then, the executing court was not varying the terms of the decree but executing the decree as it stood. [522 E] (iii)Although a contract is not the less a contract because it is embodied in a Judge's order, it is something more than a contract. Different considerations would apply when a contract is embodied in a Judge'-.; order [523 C] Wentworth v. Bullen, E.L.R. 141 769, Charles Hubert Kinch v. Fdward Keith Walcott, A.I.R. 1929 Journal & P.C. 289, Govind waman v.. Murlidhar Shrinivas, A.I.R. 1953 Bom, 412 and Morris v. Barret, E.I.R. 141, 768, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 174 and 175 of 1967. Appeals by special leave from the judgment and order dated June 16, 1966 of the Mysore High Court in Ex. Regular Appeals Nos. 33-34 of 1961. V.S. Desai, Naunit Lal and Swaranjit Sodhi, for the appellant (in both the appeals). D.V. Patel, O. P. Malhotra, P. C. Bhartari, for the respondent (in both the appeals). The Judgment of the Court was delivered by Mathew, J. These two appeals, by special leave, are from the common judgment passed by High Court of Mysore on 16-6-1966 confirming the order of the District Court, Bangalore, allowing an application for execution of the compromise decree passed on 24-6-1959 in appeal from the decree in O.S. 85 of 1949-50 of that court. The appellant was the defendant in the suit and the respon- dent the plaintiff. As matter in controversy between the parties in the appeal turns upon the construction of the compromise decree, it is necessary to set out its terms : (i) The defendant agrees to receive from the plaintiff a lakh of rupees paid as consideration for the sale of the property No. 44, Mahatma Gandhi Road, Bangalore, together with stamp charges of Rs. 3,300/- (rupees three thousand and three hundred only) with interest at six per cent per annum of the above two sums from 16-3-1947 up-to-date together with Rs. 7,000/- (rupees seven thousand only) deducted by the Corporation minus the rent received viz., Rs. 22,500/- (rupees twenty two thousand and five hundred only) and give up all rights to the said property. The plaintiff will be entitled to the materials lying on the premises. C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 3 (ii)The period of time fixed for the payment by the plaintiff to the defendant of this amount stated above is till 1-1-1960. (iii)The plaintiff agrees to deposit the amount in court for payment to the defendant. (iv)On failure of the plaintiff to deposit the amount in court by 1-1-1960 his suit now in appeal will be dismissed with costs throughout. (v) It is agreed by the parties that time is the essence of the contract and no further extension of time would be allowed and the dismissal of the suit with costs would be automatic. The respondent applied for challan on 22-12-1959 to deposit the amount and a challan was issued to him on 24-12-1959, the last working day before the court closed for Christmas holidays. December 31, 1959 and January 1, 1960, were holidays. Neither the lower courts nor the banks were open on these days. The respondent made the deposit on 2-1-1960 and sought to enforce his right under the decree by compelling the appellant to execute the conveyance in terms of the compromise decree by filing execution case No.25/1960. The appellant also filed execution case No. 45 of 1960 for cost on the basis that the suit stood dismissed as per the provision in the decree on the failure of the respondent to deposit the amount by 1-1-1960, These two petitions were heard together, and the court passed an order holding that the respondent had made the deposit in substantial compliance with the decree and allowing execution case No. 25 of 1960 and dismissing execution case No. 45 of 1960. Against this order, the appellant filed appeals 33 and 34 of 1960 before the High Court of Mysore. A Division Bench of the High Court, by its judgment dated 16-6-1966, dismissed the appeals with costs. The short question for consideration in these appeals is whether the deposit made by the respondent on 2-1-1960 was within the time specified in the compromise decree and would enable him to compel the appellant to execute the sale deed in accordance with the provisions of the compromise decree. It was argued on behalf of the appellant that the respondent had practically six month's time to deposit the amount, that he should not have waited for the last day of the period allowed to him by the decree to deposit the amount and if he was not diligent to deposit the amount earlier, he must suffer the consequences if the court happened to be closed on the last. day on which he should have made the deposit. Counsel said that there is a distinction between a case where under a decree an act has to be performed by a party on a day certain and a ease where the party has the liberty to perform the act within a certain time a certain day-. that in the former case, if the act cannot be pet-formed by reason of circumstances beyond his control, he will be relieved against the consequences of his default by reason of the maxim Lexnon cogit ad impossibility (the law does not cornpel a man to do that which he cannot possibly perform) if he performs the act at the next available opportunity, but where he has to per-form an act within a certain period or by a certain date, as in this case, the law will not take notice of the circumstance that the act became incapable of performance by reason of circumstances beyond his control on the last day of the period. Whether there is any logical or reasonable basis for making the distinction, we clear that in this case the respondent had the right or, perhaps, more accurately, the liberty to deposit the amount in court till and including 1-1-196O. In Halsbury's Laws of England vol. 37, 3rd Edition, page 96, :it is observed "Subject to certain exceptions, the general rule is that, when an ,let may be done or a benefit enjoyed benefit enjoyed upto the last moment of the last of that period." C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 4 if the respondent had the right or liberty to deposit the amount III court on 1-1-1960 under the compromise decree the fact that he did not choose 'Lo make the deposit earlier would not affect his right or liberty to deposit the amount in court on 1-1-1960. In Fateh Khan and another v. Chhajju and others(1), an argument similar to the one addressed by counsel for the appellant was advanced but was not countenanced by the court. That was a case where a pre- emptor was unable to deposit the purchase money in court on the last day of the period allowed by the decree; the period expired when the court was closed for the vacation and he deposited the amount on the reopening day. It was argued that the decree allowed the preemptor a period of time within which to deposit the amount, that he could have deposited (1) A.I.R. 1931 Lahore 386. the amount earlier, that he should not have waited till the last day of the period and that if the last day happened to be a holiday, he can take no advantage of that circumstance. The court repelled the argument by saying that if the argument is accepted it will have the effect of curtailing the days allowed to him by the decree without any reason. It was next contended for the appellant that it was open to the respondent to pay the amount to the appellant either on December 31, 1959, or January 1, 1960, and that he should not have waited till the 2nd to deposit the amount in court. Counsel submitted that under Order XXI Rule 1, the respondent could have paid the amount to the appellant on January 1, 1960, or earlier, that he should not have waited till the 2nd to deposit the amount in court and if the last day of the period happened to be a day on which the court was closed, that is not a circumstance which would relieve the respondent from his obligation to pay the amount within the time specified. In support of this argument counsel referred to Kunj Bihari and others v. Bindeshri Prasad and others(1), Roshan Lal v. Ganpat Lal (2), Indal v. Chaudhary Ram Nidh(3), and Ram Kinkar Singh and another v. Smt. Kamal Basini Devi(4), Kunj Behari and others v. Bindeshri Prasad and others(1) was a case where an installment decree provided that the first installment was payable on a certain date; the date specified expired during the vacation of the court and the amount was deposited in court on the re- opening day. It was held that the judgment debtors had the power to make the payment direct to the decree holder, that depositing in court was not the only course open to them and so they could not take advantage of the fact that the court was closed on the specified date and the payment made by them was not made in time. The other cases cited are to the, same effect. The Principle underlying these decisions is that when the judgment debtor has the option to pay the decree amount to the decree holder or to deposit it in court, he cannot choose one of them and act in a manner so as to prejudice the rights of the other party. Although under Order XXI, Rule 1. it is open to a judgment debtor to pay the amount direct to the decree holder or to deposit in court, he cannot choose the alternative when that will prejudice the decree holder. Even here there is a conflict of opinion among the High Courts. In Chatlapali Suryaprakasa Rao v. Polisetti Venkataratnam and others(5), the compromise decree there in question provided that the decretal amount should be paid in certain yearly (1) I.L.R. Vol. 51, 1929 Allahabad 527. (2) A.I,R, 1938 Allahabad 199 (3) A.I.R. (33) 1946 Oudh 156. (4) A.I.R. 1938 Patna 451. (5) A.I.R. 1938 Madras 523. C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 5 instalment on certain fixed date in each year. The decree further provided that in case of default of two successive instalments the whole amount would be recovered. The decree however did not provide to whom the money was to be paid. The judgment debtor failed to pay the first instalment. On a day previous to that on which the second instalment was due he obtained a challan. The day on which the instalment was due being a holiday, he paid the instalment next day in the Bank. It was held by the Madras High Court that the judgment debtor did not commit default in payment of the second instalment and consequently there was no default of two successive instalments. This is also the view that was taken in Premchand Bhikabhai v. Ramdeo Sukdeo Marwadi(1). It is not necessary to resolve the conflict of opinion on this aspect; as we are concerned with a decree which specifically provided that the respondent should deposit the amount in court. He had, therefore, no option to pay the same to the appellant and the appellant, perhaps, would have been within his right if he refused a tender of the amount to him. Ile parties, for obvious reasons, agreed that the amount should be deposited in court and that was made a rule of the court and, therefore, the principle of the decision in Kunj Behari and others v. Bindeshri Prasad and others and the other cases cannot be applied here. The question then arises as to what is the principle which should be applied in a case where a party to a consent decree is given time to do an act within a specified day or by a specified (lay and fails to do it on the ground of impossibility of performance on the last day specified but does it on the next practicable day. This question arose for consideration in Muhammad Jan v. Chiam Lal(2). There a decree in a pre-emption suit gave the plaintiff a period of one month within which to deposit the purchase money in order to obtain the benefit of the decree in his favour, and the period expired on a date on which the court Was closed for the vacation and the plaintiff made the deposit on the day on which the court re-opened. Piggott, Lindsay and Sulaiman, JJ. held that the deposit was in time under the terms of the decree. They said that there is a generally recognised principle of law under which parties who are prevented from doing a thing in court on a particular day, not by an act of their own but by the court itself, are entitled to do it at the first subsequent opportunity. The court quoted with approval the decision in Shooshee Bhusan Rudro and another v. Gobind Chunder Roy(3) where it was observed that the broad principle is that although the parties themselves cannot extend the time for doing an act in court, yet (1) A.I.R. (36) 1949 Nagpur 141. (2) I.L.R. Allahabad Series, Vol. XLVI, 1924, p. 328. (3) I.L.R. Calcutta, Vol. XVIII (1891) p. 231. If the delay is caused not by any act of their own, but by some act of the court itself-such as the fact of the court being closed-they are entitled to do the act on the first opening day. In Satnbasiva Chari v. Ramasami Reddi(1), the Madras High Court held that there is a generally recognised principle of law under which parties who are prevented from doing a thing in court on a particular day, not by any act of their own, but by the court itself, are entitled to do it at the first subsequent opportunity. We have already referred to Fateh Khan and another v. Chhajju and others where the Lahore High Court applied this principle to a pre- emption decree. Mayor v. Harding(2) is a case in point. In that case the appellant had applied to justices to state a case under the Summary Jurisdiction Act, 1857. He received the case from them on Good Friday, and transmitted it to the proper court on the following Wednesday. It was held that he had complied sufficiently with the requirement of the Act directing him to transmit the case within three days after receiving it, as it was impossible for him to C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 6 transmit the case earlier than he did because of the closure of the offices of the court from Friday till Wednesday. Mellor, J., dealt with the matter as follows : "Here it was impossible for the appellant to lodge his case within three days after he received it. As regards the conduct of the parties themselves, it is a condition precedent. But this term is sometimes used rather loosely. I think it cannot be considered strictly a condition precedent where it is impossible of performance in consequence of the offices of the court being closed, and there being no one to receive the case. The appellant lodge the case on Wednesday, that is, he did all that it was practicable for him to do." In Halsbury's Laws of England, Vol. 37, 3rd Edition, page 97, para 172, it is observed : "172. The fact that the last day of a prescribed period is a Sunday or other non- juridical day does not as a general rule give the person who is called upon to Act an extra day; it is no excuse for his omission to do the act on some prior day. This general rule does not hold good where the effect of it would be +Lo render performance of the act impossible. This would be the case if the whole of the prescribed period consisted of holidays, in Which case the act may lawfully be done on the next possible day. (1) I.L.R. 22 Madras (1899) p. 179 (2) [1867] 2 Q.B. 410. Again the general rule does not hold good where the last day is a Sunday and the act be done is one the performance of which on a Sunday is prohibited by the Sunday Observance Act, 1677, or where the act has to be done, not by the party only, but by the court or by the party in conjunction with the court. In such cases the act may, when the last day limited for the performance of it happens to be a day when the court or its office is closed, be done on the next practicable day." We think that the second exception to the general rule stated in the passage and in effect followed in the rulings cited above must apply to the facts here. But counsel for the appellant argued that the compromise decree provided that on default of the respondent to deposit the amount in court on 1-1-1960, there was to be an automatic dismissal of the suit by virtue of clause (v) thereof and the execution court had no right to alter or modify the terms of the decree and hold that the deposit made on 2-1-1960 shall be deemed to be a deposit made on 1-1-1960, and order the execution of the decree on that basis. A court executing the decree shall execute it as it stands. It cannot modify or vary the terms of the decree. No exception can be taken to that general principle. But the execution court has the right to construe a decree in the light of the applicable provisions of law and if in this case on a construction of the decree in the light of the applicable provision of law, it found that the deposit made by the respondent on 2-1-1960 was according to law a deposit in compliance with the terms of the decree, then the execution court was not varying the terms of the decree but executing the decree as it stood C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 7 after considering the effect of the deposit in the light of the relevant law. Counsel then contended that a compromise decree is none the less a contract, notwithstanding the fact that an order of court is super-added to it and, a provision in a contract that an act shall be done within a certain period or by a particular day by a party is absolute. In other words counsel said that duties are either imposed by law or undertaken by contract and the ordinary rule of law is that when the law creates a duty and a party is disabled from performing it without any default of his own, the law excuses him, but when a party by his own contract imposes a duty upon himself, he is bound to make it good not- withstanding any accident by inevitable necessity . Counsel in this connection referred to the passage in Halsbury's Law,-, of England Volume XIV, page 622, para 151, which reads as under " 1151. Where under a contract, conveyance, or will a beneficial right is to arise upon the performance by the beneficiary of some act in a stated manner, or a stated time, the act must be performed accordingly in order to obtain the enjoyment of the right, and in the absence of fraud, accident or surprise, equity will not ,relieve against a breach of the terms". Although a contract is not the less a contract because it is embodied in a judge's order, or, as said by Parke J. in Went worth v. Bullen(1) B. & C. 840, 850 "the contract of the parties is not the less a contract, and subject to the incidents of a contract. because there is super-added the command of a judge". still we think it is something more than a contract. The Judicial Committee of the Privy Council in Charles Hubert Kinch v. Edward Keith Walcott and others (2) observed "'An order by consent, not discharged by mutual agreement and remaining unreduced is as effective as an order of the court made otherwise than by consent and not discharged on appeal. A party bound by a consent order must when once it has been completed, obey it, unless and until he can get it set aside in proceedings duly constituted for the purpose. The only difference in this respect between an order made by consent and one not so made is that the first stands unless and until it is discharged by mutual agreement or is s et aside by another order of the court : the second stands unless and until it is discharged on appeal." In Govind Waman v. Murlidhar Shrinivas and others(3), the Bombay High Court held that a consent decree passed by a court of competent jurisdiction cannot be treated on the same footing as a contract between the parties, that although it is true that before a court passes a consent decree, it can and should examine the lawfulness and validity of the terms of the proposed compromise, but when once that stage is passed and a decree follows, different considerations arise and therefore, where I compromise decree contains a term against alienating certain property and gives the other party right to its possession on such alienation, the decree is not a nullity in spite of the fact that the term is opposed to S. 10, T.P. Act. And the fact that it is contrary to law would not affect its binding character, unless it is set aside by taking proper proceedings. That different conside- (1) English Law Reports, 141, P. 769. (2) A.I.R. 1929 journal & Privy Council, P. 289. (3) A.I.R. 1953 Bombay 412. C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 8 ration would apply when a contract is embodied in a judge's order is also clear from Morris v. Barret(1). In that case by a consent order it was provided that, upon payment of 341., the debt and costs as agreed, in installments on the 28th of May, on the 25th of June and on the 25th of every succeeding month until the whole is paid, all further proceedings in the cause be stayed. The order further provided that, in case default be made in any payment as aforesaid, the plaintiff be at liberty to sign final judgment for the said sum of 341., and issue execution for the amount unpaid. The first and two following installments were duly paid. The 25th of October, the day on which the fourth installment became payable, being a Sunday, the defendant called at the office of the planitiff's attorney on Monday the 26th, and offered to pay it, but was told he was too late, and that judgment had been signed. No judgment, however, was signed until the following morning. The defendant took out a summons to set aside the judgment, on the round that under the circumstances he had the whole of Monday to pay the money, and that the judgment signed after the money was offered was irregular. The court held that the defendant had the whole of Monday to pay the money. One of the arguments advanced in that case was that as the judge's order was a consent order, the principle governing contract must regulate the rights of parties and therefore the defendant was not excused from performing the contract by the accident of the day being a Sunday. In repelling this contention Erle, C.J. said :- "I desire not to be understood as giving any decision as to the rights of parties under a contract : but, in arriving at the conclusion I come to, I seek only to give effect to the duty which the law imposes upon a party who is directed by a judge's order to pay money...... The defendant was ready and offered to pay it on Monday; but the plaintiff, conceiving that the offer came too late. declined to receive it, and on the following day signed the judgment for the balance due. Confining myself to the judge's order and the remedy and duty thereon and to what ought to be the fair meaning and understanding of the instrument, I find no authority for saying that the defendant was bound to search for his creditor and pay him the money on the Sunday." Crowder, J. said : "This is not like the case of an ordinary contract; and I de-sire not to be understood as at all interfering (1) English Law Reports 141, p. 768. with any of the cases which have been referred to with reference to contracts. The cases upon the construction of statutes are also founded upon an entirely different consideration." We may also state that there is no evidence in this case that at the time when the compromise was entered into, either of the parties knew that the 31st of December, 1959 and the 1st of January, 1960, would be holidays. In these circumstances we think that the deposit made by the respondent on 2-1-1960 was in substance and in effect a deposit made in terms of the compromise decree and that the High Court was right in its conclusion. We dismiss the appeals but in the circumstances without any order as to costs. C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 9 K.B.N. Appeals dismissed. 3- L643SupCI/72 C. F. Angadi vs Y. S. Mrannayya on 23 November, 1971 10 | {
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Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 Equivalent citations: AIR1971SC1533, 1971CRILJ1164, (1971)3SCC460, 1971(III)UJ559(SC), AIR 1971 SUPREME COURT 1533, (1971) 2 SC CRI R 377, 1971 UJ (SC) 559, 1971 25 SC CRI R 377, 1971 SCD 882 Author: A.N. Grover Bench: A.N. Grover, G.K. Mitter JUDGMENT A.N. Grover, J. 1. These appeals by special leave are from a common judgment of the Assam & Nagaland High Court and are directed against the orders made by that Court quashing the charges for alleged offences under certain provisions of the Indian Penal Code and the Prevention of Corruption Act, 1947. The fact may be stated, Lt. Col. G. K. Apte, the respondent in Cr.A. No. 164/68 was posted to Tejpur as Staff Officer No. 1 in the summer of the year 1960. It appears that a project known as the "Tusker Project" had to carried out in the NEFA area The main duty of the units employed in the Project was the making of roads in the NEFA area to enable the movements of troops etc. in the event of any Chinese aggression. Brigadier Mani was in-charge of the Project as Military Chief Engineer, Apte was posted as Staff Officer No. 1. This post corresponded to that of a Superintending Engineer on the Civil side. The Chief Engineer had various powers which he could delegate to the senior officers working under him. Such powers included the authority to make local purchases of such items or articles as were required by the various units which were not readily available either from the Military Ordinance Stores or from the Military Supply Department. On may 20, 1960 the Chief Engineer delegated his power to Apte to make such purchases upto a maximum of Rs. 10,000/-for each order. He could also place orders with regard to printing, stationery and office equipment upto a certain limit. The respondent in the other appeal Maj B.S. Talwar served as Staff Officer No. 2 in the same establishment under Brig Mani and Apte. His powers and duties will be presently adverted to. The charges which were laid against Apte and Talwar relate to the purchase of stores and various items and articles mainly from certain local merchants. 2. On January 16, 1963 an information was lodged Under Section 153, Criminal Procedure Code, by the Superintendent of Police S P E /CIA that cooking utensils like Chaklas, Belans, Degchis and other articles like shovels etc. had been purchased from M/s. K.B Stores, Tejpur, at exobitant rates. It was said that Talwar was responsible for those deals. It appeared that he had colluded with K.B Stores and some others on various occasions and by abusing his position as a public servant he had obtained pecuniary benefit for them and for himself by showing favors is the matter of inviting quotations and placing orders. Between June 1960 and October, 1960 he had placed a large number Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 1 of orders with KB. Stores. Invariably enquiries about quotations were addressed to K.B. Stores, Kedar Mal Badri Narain, Agarwal & Co , Steel worth Ltd. and Trade & Industry (Assam) Private Ltd , Tezpur-Preliminary enquiries showed that these firms were either under a single ownership or were allied. There was thus a conspiracy amongst all of them to collude with Talwar and others for the purpose mentioned before. These offences had been committed Under Section 120B read with Section 5(2) and Section 5(1)(d) of the Prevention of Corruption Act. After investigation a charge-sheet dated June 10, 1963 was filed. The two officers Apte and Talwar and the employees and representatives of K B Stores Tezpur were accused of the offences mentioned before. A list of 47 supply orders was given it was alleged that Talwar had issued quotation inquiries to bogus firm like Agarwal & Co., Bagaria Stores which either did not exist or did not transact any local business with a view to avoiding competition. Quotations in the name of such firms were forged or caused to be forged by the employees of K.B. Stores. The normal procedure for issuing quotation inquiries and receiving of quotations was not followed by Apte and Talwar. In some cases blank quotation forms were obtained by Talwar from the office for handing them over of the firms of their own choice. Certificates were endorsed on the supply orders without calling any quotations. A number of supply orders were mentioned which had been issued under the signature of Apte. It was also stated that higher rates quoted by K.B. Stores than the lower rates quoted by other firms were accepted. 3. The Special Judge framed the following charges against Apte and Talwar: That during the period from June, 1960 to November 1960 at Tezpur you along with others agreed to commit or cause to be committed the offences of criminal misconduct in the discharge of official duty to the public servants viz, Lt Col. G.K. Apte and Maj B.S. Talwar punishable Under Section 5(2) of the prevention of Corruption Act 1947 and a cheating punishable Under Section 420 IPC by fraudulently and dishonestly placing or causing to be placed supply orders on M/s. K.B. Stores. Tezpur or M/s. Trade and Industry (Assam) Private Ltd. Tezpur for the supply of various Stores. And thereby you committed an offence punishable Under Section 120B of the Indian Penal Code, read with Section 5(2) & 5(1) of the Prevention of Corruption Act, 1947 and Section 420 IPC and within my cognizance. And I hereby direct that you be tried (5)? by the said Court on the said charge. He also framed separate charges against these two officers. Reference may be made to the charge against Apte: That you in pursuance of the said criminal conspiracy at Tezpur, during the period from June, I960 to November, 1960 being a public servant functioning as Staff Officer I, and quarter Office, Chief Engineer, Project Tusker, Tezpur, committed the offences of criminal misconduct in the discharge of official duty, by corrupt or illegal means or by otherwise abusing your position as a public servant obtaining for M/s. K B. Stores, Tezpur or M/s. Trade and Industry (Assam) Private Ltd. Tezpur, its partners or beneficiaries pecuniary advantage by fraudulently or dishonestly placing or causing to be placed the 41 supply orders as noted overleaf, on the said M/s. K.B Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 2 Stores or M/s. Trade and Industry (Assam) Private Ltd, Tezpur, for the supply of various stores and thereby committed an offence punishable Under Section 5(2) read with Section 5(1)(d) of the Prevention of Corruption Act 1947 and within my cognizance. AND I hereby direct that you be tried (5) by the said Court on the said charge. It was stated in the order of the Special Judge dated December 3, 1964 that from the material before him there was a prima facie case for preferring these charges. 4. Apte & Talwar moved the High Court Under Section 561-A Sections 435 & 439 of the Criminal Procedure Code. According to the High Court the first information report, the chargesheet and the other papers on the record did not disclose that any pecuniary advantage was obtained at all either for Apte himself or Talwar or for any other person nor was there anything to show that any corrupt or illegal means were adopted by them or that either of them had abused his position as a public servant. There was no allegation anywhere that any bogus order was placed or that the supply order contained false items or that the supply was not made under those orders The ingredients of the offences had not been established under the prevention of Corruption Act. Similarly with regard to the offence of cheating there was not even any allegation which disclosed that offence of criminal conspiracy Under Section 120B could only be framed it there was any prima facie proof of agreement to do or cause to be done an illegal act or an act which was not illegal by illegal means and there was not even the slightest indication from the material placed before the High Court that there was any such agreement. The entire material on the record did not show any prima facie commission of the offences with which Apte and Talwar had been charged. It was ordered that the charges be quashed and a direction was, made that no judicial proceedings pursuant to the charges should be held. 5. The learned Counsel for the Union of India has carefully taken us through the statements recorded Under Section 161 of the Criminal Procedure Code and has referred to such other material and facts and circumstances as are to be found on the record of the case before us to establish that the High Court was in error in coming to the conclusion that a prima facie case had not been made out against Apte and Talwar According to the statement of A.A. Noronaha who was holding the appointment of S.O.I. (Works) since September 15, 1960 an office order had been issued by the Chief Engineer dated March 13, 1961 as to the procedure which was to be followed with regard to the quotations for supply of stores. These quotations were to be called from the firms dealing in the material required by a specific time and date. It was necessary to call as many quotations as possible to get the benefit of competition in the market both in respect of rates and quality. The head of the office or the authorised officer accepted the lowest quotation but where he did not do so reasons had to be given for accepting the higher quotation. J.K. Basu who has described his designation as Supervisor B/S grade I was working in E (III) Section till September 14, 1960 during the material period. Talwar, according to him, used to name the firms to whom quotations were to be sent. Quotations were prepared by him and were handed over by him to Talwar. Talwar used to place the supply orders on the firm which was "the lowest tenderer" He gave instances of Talwar having asked him to bring some blank quotation inquiry forms and then to prepare quotations for certain items Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 3 which Talwar directed him. He was further told that the quotations should be addressed to Kedar Mal Badri Narain, Agarwal & Co, and K.B. Stores. The supply order was then placed on K B. Stores, after the forms had been received back duly filled up in the writing probably of the firm's representative. With regard to the supply order dated August 6, I960 his version was that Talwar called him to office and had asked him to bring some blank quotation forms which he did. Talwar then told him to prepare quotations for Air voice, K.B Store and Agarwal & Co,These forms were taken blank by him and after certain particulars had been filled in were later on returned duly completed by the firms The of rate K.B Store had been amended on one of the forms. Talwar asked him to alter the rates in the comperative statement register accordingly and delete the name of Air voice which had been previously recommended by Basu as being the lowest tenderer and put the name of K.B Store instead. The rate, however, which was paid was the same as quoted by Air voice The next instance of any consequence was furnished by Morohaha according to whom a supply order was placed for Ku-dalies on K.B. Store without handles at Rs. 4.50 each the votal amount of the order being Rs. 2538/-. In the original quotations firms had been asked to mention the weight of Kudalies with handles. This was done only by two firms N.N. Dey. & Co. of Calcutta and Trade and Industry (Assam) P. Ltd. The latter gave quotation with the weight including handle as 3 pounds whereas N.N. Dey & Co. had quoted Kudalies with handles with a weight of 4 pounds. Comparing the quotations of Trade & Industry (Assam) P. Ltd. with K.B. Store they were lower but the quotations of KB. Store were accepted even though they were higher and no weight was quoted. It had been certified by Apte that the stores were purchased by negotiations due to emergency and also because they were urgently required. It may be mentioned that Trade and Industry (Assam) P. Ltd. was alleged to be an allied concern of K B Stores. It has next been pointed out on behalf of the Union that the quotation for paints (green and white) offered by Pipes and Hardwares was lower than that of Trade and Industry (Assam) P. Ltd. on whom the supply order was placed for that paint. Pipes and Hardwares had offered the paint at Rs. 22/-per gallon whereas Trade and Industry (Assam) P. Ltd. on whom the order was placed had quoted Rs. 27.83. As regards the supply order dated July 19, 1960 it was placed on K B. Store by Apte at the rate of Rs. 36,75 per gallon where as the quotation which had been received was for Rs. 36.62 per gallon. Nothing was mentioned about the total amount that was paid in excess. 6. It is significant that the learned Counsel for the Union in spite of labourious research has been able to point only to the above four items in respect of which the evidence was that orders were placed with K.B. Store, Tezpur and higher rates were paid even though the quotations from Calcutta firms and other local firms were lower. In the petition filed to the High Court by Apte which was supported by his affidavit it had been explained that the Tuskar Project had been declared to be an emergent project by the Central Government. The position in the summer of 1960 was such that if the incoming army units were not supplied the material of various kinds required for the work immediately and were allowed to remain idle until quotation enquiries were issued and processed, the daily loss to the exchequer would have run into a huge figure Moreover the incoming army units required immediately the articles of personal use which were to be supplied to them at once without issuing of inquiries relating to quotations. The M.E.S. Rules which were applicable at that time gave discretion to the officers concerned to purchase materials directly without even issuing of quotation enquiries and that emergency certificates could be issued whenever purchases were made without inviting quotations, Whatever orders were placed or quotations were received were from the Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 4 approved firms and K.B. Stores was one of them. This store was the largest stockists of Tezpur and being on the army list of suppliers most of the orders were placed with it not only during the tenure of Apte and Talwar in their respective posts but orders had also been placed even prior and subsequently by other officers including Brigadier Mani and Col. De, Souza. 7. As regards the 47 items mentioned in the first information report Talwar maintained in his petition supported by an affidavit before the High Court that he never accepted any of the tenders; in most of the cases he processed the tenders and only 'forwarded them and submitted the same to the proper authorities for acceptance. 8. It has been pointed out on behalf of the respondents that the evidence relating to the four items on which Counsel for the Union has greatly relied was of a very vague and indefinite nature. No facts and figures have been given of the loss resulting to the Government and the gain made by K.B. Stores or its allied concerns. It is emphasised that the difference in the rates of K B. Store which were accepted and the quotations of other firms was minimal and it all depended on the immediate requirements and the confidence, particularly in the matter of quality and promptness, which the officer had in K. B Stores. This store had been on the approved list and had been making supplies even before the respondents took charge of their assignments in the Tusker Project. 9. This Court has laid down in R.P. Kapoor v. The State of Punjab that the inherent power of the High Court saved by Section 561 A of the Criminal Procedure Code could be exercised to quash proceedings in a proper case either to prevent the abuse of the process of the Court or otherwise to secure the ends of justice. The following were some of the illustrations given where the proceedings could and should be quashed: (a) where the allegations in the first information report or the complaint did not make out the offence alleged; (b) where either there was no legal evidence adduced in support of the charge or the evidence adduced clearly or manifestly failed to prove the charge. It has been emphasized that the High Court cannot embark upon an inquiry as to whether the evidence in the case is reliable or not to justify the framing of the charge. 10. Now the judgment of the High Court in the present case seems to indicate that firstly no attempt appears to have been made on behalf of the Union to bring to its notice the material which, after so much research, Counsel for the Union has been able to place before us; secondly even if some material was brought to its notice the High Court was satisfied that it was of such a nature that the ingredients of the offences with which the respondents were sought to be charged had not been made out. 11. It has now to be seen whether there should be interference with the orders of the High Court under Article 136 of the Constitution. The limitation on the exercise of that power cannot be defined with any precision. But the power is of an exceptional and overriding nature and has to be exercised sparingly, the paramount consideration always being the perpetuation of justice Now there is no doubt that there is some prima facie evidence regarding the procedural and other irregularities in the matter of acceptance of quotations while placing orders for supplies but out of 47 items which were mentioned in the charge-sheet our attention has been drawn mainly to four items only in which in two orders certain higher quotations of K.B. Store or its allied concerns were accepted. In Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 5 one case the difference was to be 13 Np. per gallon only. The mere acceptance of a higher quotation by itself cannot amount to the commission of any offence. The Military authorities do not appear to have taken any departmental action against the respondents who have since retired from service and are living in places distant from Assam. Even the material evidence sought to be produced relating to the year 1960 may not be readily available after a lapse of nearly 11 years. In these circumstances we feel that it will not promote the interest of justice to set aside the orders of the High Court was some what wrong in quashing the charges and the proceedings against the respondents. 12. The appeals are consequently dismissed. Union Of India (Uoi) vs Lt.Col. G.K. Apte on 23 March, 1971 6 | {
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Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 Equivalent citations: 1972 AIR 1786, 1972 SCR (1) 714, AIR 1972 SUPREME COURT 1786, 1972 TAX. L. R. 1869 Author: K.S. Hegde Bench: K.S. Hegde, A.N. Grover PETITIONER: KHEDUT SAHAKARI GINNING & PRESSING SOCIETYLTD. Vs. RESPONDENT: STATE OF GUJARAT DATE OF JUDGMENT14/09/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N. CITATION: 1972 AIR 1786 1972 SCR (1) 714 1971 SCC (3) 480 ACT: Bombay Cooperative Societies Act, 1925-Producers' Society pooling members goods consisting of cotton & cotton seeds and selling them with or without ginning-Whether goods purchased from members-Bye-laws of society showed that it way agent of members and did not purchase goods of members for purpose of selling-Not liable to pay purchase tax under Bombay Sales Tax Act, 1959. HEADNOTE: The appellant was a cooperative society registered under the Bombay Cooperative Societies Act, 1925. During the assessment period November 1, 1960 to October 31, 1961 the Society received large quantity of cotton from its members and the same was sold by it either after ginning and pressing or without ginning and pressing. The Society was a Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 1 registered dealer under the Bombay Sales Tax Act, 1959. The Sales Tax Officer accepted the return filed by the society and did not levy any purchase tax on it. However the Assistant Commissioner issued a notice under s. 57 of the Act on the basis that it had purchased cotton and cotton seeds from its members and these purchases were liable to purchase tax. The Tribunal, relying on bye-laws 37(7), 37(18), 37(19), 48, 49, 52, 53 and 55 of the Society, upheld the view of the Assistant Commissioner and dismissed the- Society's revision petition. It rejected the contention of the Society that it was functioning merely as the agent of its members. The High Court in reference also decided against the Society. In appeal to this Court by special leave. HELD : In considering whether a transaction is a sale or not what the court has to consider is whether as a result of the transaction, the property in the goods passed to the assessee 'for a price and whether the assessee sold those goods as its own. [717 B-C] Being a producer's society as defined in s. 3(h) of the Cooperative Societies Act the appellant Society was evidently formed primarily with the object of selling the produce of the members as their collective produce. The preamble to the Act showed that two of the objectives intended to be achieved by the Act were to provide for self help by the members of the society and for mutual aid among them. The bye-laws of the Act must be examined in the background of the preamble to the Act as well as the definition of Producers' Society., So examined none of the bye-laws including those relied on by the Tribunals showed that the society had purchased either cotton or cotton seeds from its members. [717 E-H] From bye-law 2 it was clear that the object of the society was not to purchase or sell any cotton or cotton seeds on its own behalf. aauses (7), (14), (16) and 18 of bye-law 37 indicated that the Society was selling the produce of others and not its own goods. Bye-law 45(1) under which loans on interest could be advanced to the members against the security of the goods clearly showed that the goods were entrusted to the Society and not sold to it. The society could not advance money on the security of its own goods. If the transactions were sales in favour of them 715 Society then the amounts to be paid by the society would be purchase price. Such a payment cannot be made on the security of goods, nor can that payment carry any interest. [718 B- 720 A] Bye-law 48 refers to the goods of the members of the society and not to the goods of the Society. Because of that bye- law the members of the Society, who are bound by that bye- law must be deemed to have authorised the Society to pool their goods, grade them if necessary and sell them either after ginning or without ginning. That bye-law also Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 2 prescribed the mode in which the price fetched should be distributed amongst the persons whose goods are sold. The society is the agent of all its members. Its principals are many. Because of the various bye-laws, the several principals must be deemed to have appointed a common agent- the So-ciety-for disposing of their goods in the manner most advantageous to them. To achieve that object they must be held to have empowered the Society to pool their goods, grade them if necessary, and sell them either after ginning or without ginning. Such an authority does not violate the laws of agency. A person can be an agent for more than one principal and if all his principals jointly authorise him to pool their goods and sell them and pay the sale price to them in the manner prescribed by them,. he does not cease to be an agent. [720 G-721 B] Accordingly the appeal must be allowed and the judgment of the High Court set aside. Rohtas Industries Ltd. v. State of Bihar, 12 S.T.C. 615 and Hafiz Din Mohd. Haji Abdulla v. State of Maharashtra, 12 S.T.C. 292, distinguished. S. Kanaru, Mangalore & Anr., 14 S.T.C. 4, approved. Ramachandra Rathore & Bros. v. Commissioner of Sales Tax, Madhya Pradesh, 8 S.T.C. 845 and Versova Koli Sahakari Vahatuk Singh Ltd. v. Slate of Maharashtra, 22 S.T.C. 116, held inapplicable. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2418 of 1968. Appeal by special leave from the judgment and order dated July 1, 1968 of the Gujarat High Court in Sales-tax Reference No. 1 of 1966. M. C. Chagla and I. N. Shroff, for the appellant. Urmila Kapoor and B. D. Sharma, for the respondent. S. T. Desai and P. H. Parekh, for the intervener. The Judgment of the Court was delivered by Hegde, J. This is an appeal by special appeal. It arises from the decision of the High Court of Gujarat in a Reference under s. 61(1) of the Bombay Sales Tax Act, 1959. That Reference was made by the Gujarat Sales Tax Tribunal at Ahmedabad. After stating the case, the Tribunal submitted the question "whether on the facts and in the circumstances of the case, the transactions are purchases of cotton by the Society from its members" to the High Court for its opinion. The High Court has answered that question in the affirmative. Aggrieved by that decision, the assessee has brought this appeal. The material facts are these :- Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 3 The assessee is a Co-operative society registered under the Bombay-Co-operative Societies Act, 1925 (to be hereinafter referred to as the Act. The assessee will hereinafter be referred to as the 'Society'. It carries on the business of ginning and pressing cotton brought by its members. During the assessment period viz. November 1, 1960 to October 31, 1961, the assessee received large quantity of cotton from its members and the same was sold by it either after ginning and pressing or without ginning and pressing. The Society is a registered dealer under the Bombay Sales Tax Act, 1959. It filed its return for sales tax for the year in question. But therein it did not show any purchase turnover. The Sales Tax Officer accepted the return submitted by it, ink assessed it on the basis of that return, as per his order dated May ,31, 1963. He did not levy any purchase tax on the Society. The Assistant Commissioner of Sales 'Fax, Range 111, Baroda, however, issued a notice dated August 6, 1963 under s. 57 of ,the Bombay Sales Tax Act, 1959 proposing to revise the assessment of the Society by levying purchase tax in respect of 200 bales of cotton sent by the society to Bombay for sale and also in respect of cotton and cotton seeds worth Rs. 3,56,105, sold after six months from the date on which the cotton was received by the Society on the ground that the Society purchased the said cotton from its members. Aggrieved by that ordered the Society moved the Gujarat Sales Tax Tribunal in revision. The Tribunal by its judgment dated July 1, 1964, dismissed the revision petition. Relying on the bye-laws of the Society particularly on bye-laws Nos. 37(7), 37(18) 37(19), 48, 49, 52, 53 and 55, the Tribunal came to the conclusion that the Society had purchased the cottton and cotton seeds in question from its members. It rejected the contention of the Society that it was merely functioning as the agent of its mebers while selling the cotton and cotton seeds referred to earlier. At the instance of the Society, the Tribunal submitted the question referred to earlier to the High Court for its opinion. Whether a particular agreement is an agency aggrement or an agreement of sale depends upon the terms of the agreement. For deciding that question, the terms of the agreement have got to be examined. The true nature, of a transaction evidenced by a written agreement has to be ascertained from the covenants and not merely from what the parties choose to call it. The terms of the agreement must be carefully scrutinised in the light of the surrounding circumstances-see the decision of this Court in Rohtas Industries Ltd. v. State of Bihar(1). In that decision, this Court further held that for considering whether a particular transaction is a sale or not, what the court has to consider is whether as a result of the transaction, the property in the goods passed to the assessee in return for price and whether the assessee sold those goods as its own. Bearing in mind these principles, we shall now proceed to examine the provisions of the Act as well as the relevant bye-laws which take the place of agreement between the parties. It is not the case of the State that the Society had in any manner acted in contravention of the bye-laws. Therefore all that we have to find out is the true effect of the bye-laws. In this case we are dealing with a case of Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 4 a "producers so- ciety". "Producers Society" is defined in s. 3 (h) (2) of the Act. That definition reads: "Producers' Society" means a society formed with the object of producing and disposing of goods as 'the collective property of its members and includes a society formed with the object of the collective disposal of the labour of the members of such society." The Society with which we are concerned in this case was evidently formed primarily with the object of selling the produce of its members as their collective Produce. The preamble to that Act says "Whereas it is expedient further to facilitate the formation and working of co-operative societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business and better methods of production and for that purpose to consolidate and amend the law relating to co-ope- rative socities in the Presidency of Bombay " Hence to of the objectives intended to be achieved by the Act were to provide for self help by the members of the society & for mutual aid amongst its members. We must examine the bye-laws in this case in the background of the preamble to the Act as well as the definition of "Producers' Society". We shall now refer to the relevant bye-laws of the Society. Those bye-laws are in Gujarath. They had been got translated (1) 12 S.T.C. 615. into English by the High Court. But as the appellant did not agree with that translation in respect of bye-laws 45 to 49, it got those bye-laws translated officially in this Court. Counsel for the respondent has not challenged the correctness of that translation. The Society is known as Khedut Sahakari Ginning and Pressing Society Ltd., Etola. From this it is clear that the Society is a co-operative Society of the farmers primarily constituted for the purpose of Ginning and Pressing cotton. The objects of the Society are mentioned in bye-law 2. That bye-law reads: "The objects of the Society are as under : 1. To Gin and get Ginned unginned cotton, to press ,or get pressed cotton into bales within the area of work of the society for the society and individual members and other customers and to use machinery for any work useful to other members. 2. To advance money against goods come in the possession of the society, to get unginned cotton, cotton and cotton seeds sold, to supply goods and if possible to get other agricultural produce sold and if required to make arrangements for storing other agricultural produce. Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 5 5. To make arrangement for advancing amounts to its members for necessary capital, to raise agricultural produce to come for sale through the society and I for manure and seeds etc. 6. To distribute profit to its members in proportion to the amount paid by its members for ginning and pressing of their goods according to the bye-laws and to use the whole portion or certain portion of the profit for works of social interest according to conditions laid down in bye-laws. From the above provisions, it is clear that the object of the 'Society is not to purchase or sell any cotton or cotton seeds on its ,own behalf. The membership of the Society is confined to farmers of the villages mentioned in bye-law 7 (a) and to co-operative societies of the Taluks mentioned therein. Bye-law 37 deals with the powers of the managing committee. For our present purpose only cls. 7, 14, 16 and 18 of that bye-law are relevant. CI. (7) says: "To fix the rates for ginning pressing and for other work that may be carried out according to the regulations and resolutions and to sell, purchase and get baled goods other than unginned cotton according to the instructions that may be given and to give facilities of every other kind." Cl. ( 14) reads: "To lend money against the security of goods come in possession of the society according to the convenience and if possible subject to the rules." CI. (16) reads "To get goods managed through the society and the machinery, building etc. of the society insured." Cl. (18) says "To arrange to sell agricultural produce other than cotton unginned cotton and cotton seeds of the members and produce of village industries which may have been brought for sale through the society and to make arrangements to purchase goods according to the requirements of the members on a request being made by the members." These provisions clearly go to indicate that the Society was selling the produce of others and not its own goods. Its duty is to arrange to sell the agricultural produce of its members. Bye-law 45(1) to the extent necessary for our present pur- pose reads thus : "An amount not more than 75 per cent of the estimated value at the market rate from time to time of the goods insured and entrusted to the society will be advanced Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 6 against security of goods if it will be convenient to do so. Ile rate of interest on advance will be as fixed by the managing committee from time to time...." This bye-law clearly indicates that the members of the Society are merely entrusting their goods to the Society and not selling them to the Society. That is made further clear by the fact that the Society may advance loans upto 75 per cent of the estimated value of the goods entrusted to it on the security of those goods and those advances will carry interest. If those goods are sold to the Society then there can be no question of any entrustment nor can the Society advance any money on the security of its own goods. If the transactions are sales in favour of the Society then the amounts to be paid by the Society would be purchase price. Such a payment cannot be made on the security of goods nor can that payment carry any interest. Some reliance was placed on behalf of the State on bye-law 45(2) which says : "This society shall have authority to borrow money against the goods which come in its hands for sale or for its management through the society by pledging them with a bank." We fail to see how this bye-law can lend any assistance in support of the case pleaded by the State. That bye-law makes it clear that the goods in question come into the hands of the Society for sale or for their management through the Society. But the person who entrusts those goods because of this bye-law is deemed to have empowered the society to pledge the same. Now we come to bye-law 49 which reads:-- "The unginned cotton, cotton and cotton seeds to be sold through the society shall be graded in the manner fixed by the general body and the society will get the same insured." This bye-law refers to goods to be sold through the Society and not to sale of Society's goods. Bye-law 48 is extremely important. That bye-law says "The goods of all the members will be gathered together either by grading according to the grades fixed by the general body or without grading and then sold either ginned or unginned. At the end of the season after making up the accounts the society will pay in full to all the members according to average, rates gradeor if grades are not made then generally after deducting the dues of the society and the charges for ginning, pressing the goods and expenses for sale etc." This bye-law refers to the goods of the members of the Society and not to the goods of the Society. Because of that bye-law the members of the Society, who are bound by that bye-law must be deemed to have authorised the Society to pool their goods, grade them, if necessary and sell them either after ginning or without ginning. That bye-law also prescribes the mode in which the price fetched should be distributed amongst the persons whose goods are sold. The Society is the agent of all its members. Its principals are many. Because of the various bye-laws, the several principals must be deemed to have appointed a common agent- the Society-for disposing of their goods in the manner most advantageous to them. To achieve that object they must be held to have empowered the Society Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 7 to pool their goods, grade them if necessary, and sell them either after ginning or without ginning. Such an authority in our opinion does not violate the law of agency. A person can be an agent for more than one principal and if all his principals jointly authorise him to pool their goods and sell them and pay the sale price to them in the manner prescribed by them, he does not cease to be an agent. The question whether when an agent with the authority of his principals pools together the goods of its principals grades them and sells them, ceases to be an agent and becomes a purchaser was considered by the Mysore High Court in Sherule Fazle and Co. v. Commercial Tax Officer, Additional Circle, S. Kanara, Mangalore and anr.(1). Therein the High Court held that he does not cease to be an agent. We agree with the ratio of that decision. By-law 52 says: "When it will be found proper to sell goods in other market or at other places outside the local market the manager will do the said work according to the order of the managing committee through the agent selected by the society or the union. A regular writing to the effect that the agent may get the possession of the goods thus sent for sale to other markets or _at other places should be kept in the record of the society." Because of this bye-law, authority is conferred on the Society by its members to sell their goods in outside markets as well. Bye-law 54 empowers the society to hedge goods by making forward sales against the balance goods that may have remained to be sold out of the goods that may have come in its possession. This power again must be deemed to have been conferred on the Society by its members. The only other bye-laws to which reference has been made at the bar are 72 and 73. Bye-law 72 prescribes : "The gross profit made in the last year will be declared in the annual meeting and the amounts as mentioned hereunder will be deducted therefrom (1) Interest to be paid on borrowing and deposits. (2) Expenses of the working of the society including the amount of honorarium. (3) The amounts not less than five per cent of the total amount spent on building and not less than (1) 14 S.T.C. 4. -L 3 Sup. C. I./72 ton per cent on machinery and not less than five per cent on other depreciating Property will be carried to depreciation fund. (4) If there be no balance in profit fund then the written off dues sanctioned by the managing committee. (5) Loss. The amount remaining over after deducting all the above mentioned amounts will be considered as net profit. Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 8 Bye-law 73 provides for the distribution of the net profits. Both bye-laws 72 and 73 deal with the profits of the Society and not any profits arising by the sale of goods entrusted to it by its members. Society has got its own sources of income. It charges for ginning and pressing. It has also other sources of income. It is that income that is dealt with in bye-laws 72 and 73. Our attention has not been drawn to any other bye-law from which we could conclude that the Society had purchased either cotton or cotton seeds from its members. We have earlier seen that the Tribunal had placed reliance on bye-laws 37(7), 37(18), 37(19) 48, 49, 52, 53 and 55 for arriving at the conclusion that the society had purchased cotton ,and cotton seeds from its members. We have already examined bye-laws 37(7), 37(18), 48, and 52. We have not been able to see how those bye-laws lend any support to the conclusion reached by the Tribunal and the High Court. Bye-law 37(19) empowers the Society to levy 'Haksai' on unginned cotton received from members upto Rs. 2/- per Bhar (Load). This bye-law merely provides for the collection of ginning charges. Bye-law 49 authorises the Society to grade the unginned cotton and cotton seeds in the manner specified by the general body. It also authorises the Society to get the goods insured. This bye-law again does not in any manner indicate that the cotton or cotton seeds had been purchased by the Society. Bye-law 53 says that : "If there may be some time for the season to start the managing committee can estimate the produce and make forward sale of the goods not more than I portion of it before the season starts." This again is an authority given by the members to the Society. Bye-law 55 provides "If it is found necessary and beneficial to sell goods which may be in stock by only other system which may be having connection with the forward market except the hedge system described in the above clause the managing committee can sell goods by the said system by making discussion with the officer of the union effecting the sale." This is also an authority given to the Society by its members to deal with their goods in a specified manner. It must be remembered that by and large the farmers are illiterate. They do not know the ways of business. The general belief is that taking advantage of the ignorance and illiteracy of the farmers, businessmen exploit them. To avoid such exploitation, the Act authorised the formation of co-operative societies of the farmers through which they can sell their goods. Those Societies merely function as agents for the farmers who are their members. By becoming members of those Societies and subscribing to their bye-laws, they had given large powers to their agents so that their produce may be sold in the best possible manner. None of the bye- laws of the Society goes to show that the society had purchased the goods entrusted to it by its members. The High Court has referred to a number of decisions for coming to the conclusion that under the bye-laws of the Society, the Society must be held to have purchased the cotton and cotton seeds sold by it. We see no basis for that conclusion. The question whether a particular agreement is an agreement of sale or an agreement of agency has to be decided on the basis of the terms of that agreement. Decisions rendered on the basis of other agreements may be useful for finding out the principles to be applied in finding out the true character of an agreement but those decisions cannot conclude the question before the Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 9 court as no two agreements are likely to be similar. The nature of each agreement has to be decided on its own terms. The Tribunal, the High Court as well as the Counsel for the State have placed great deal of reliance on the decision of this Court in Rohtas Industries Ltd.'s case (supra). Therein the assessee was a limited liability company manufacturing cement. The assessee and some other cement manufacturing companies entered into an agreement with the Cement Market* Company of India Ltd., whereby the marketing company was appointed as the 'sole and exclusive sales manager' for the sale of cement manufactured by the manufacturing companies and the manufacturing companies agreed not to sell directly or indirectly any cement to any person save and except through the marketing company. The manufacturing companies were entitled to be paid a certain sum per ton of cement supplied by them or at such other rate as might be decided upon by the directors of the marketing company. The marketing company was authorised to sell cement at such price or prices andon such terms as it might in its sole discretion think fit and it agreed to distribute to the manufacturing companies, in proportion to the number of tons of cement of every variety and kind supplied by the manufacturing companies, the whole of its net profit less 6 per cent, on its paid up capital. The question was whether the transactions between the assessee and the marketing company were sales or their relationship was that of agent and principal. The court held that the cement delivered, despatched or consigned by the assessee to the marketing company or to its orders or in accordance with its directions was sold by the assessee to the marketing company and the same was therefore liable to be taxed under the Bihar Sales Tax Act, 1944. This Court came to that conclusion on the basis of the various clauses in the agreement. One of the clauses in the agreement relied on by this Court for coming to the conclusion that the agreement in question was an agreement of sale was that the marketing company had to pay certain price for the cement supplied to it and that price was ordinarily required to be fixed having regard to the cost of production. Further the marketing company was entitled to fix price at which the cement was to be sold and such price could be even less than the cost of manufacture. It is true that some of the clauses in that agreement are similar to those we are considering in this case yet no clause in that agreement mentioned that the cement manufacturing companies were merely entrusting their cement to the marketing company nor was there any provision in that agreement for the marketing company to advance loans to the manufacturers on the security of the cement entrusted to it. Further the manufacturing companies were not required to pay any interest on the amount paid to them by the marketing company. Hence we are unable to agree with the High Court and the Tribunal that the ratio of, the decision in Rohtas Industries Ltd.'s case(1) governs the facts of this case. . The decision of this Court in Hafiz Din Mohd. Haji Abdulla v. State of Maharashtra(2), does not support the contention of the State. Therein this Court on an examination of various clauses in the agreement held that the relationship between the assessee and its representatives was that of agent and principal and not of vendors and purchasers. Therefore the State can seek no assistance from that decision. (1) 12 S.T.C. 615. (2) 12 S.T.C. 292 Counsel for the State relied on the decision of the High Court of Madhya Pradesh in Ramachandra Rathore and Bros. v. Commissioner of Sales Tax, Madhya Pradesh(1) and the Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 10 decision of the Bombay High Court in Varsova Koli Sahakari Vahatuk Sangh Ltd. v. State of Maharashtra(2) in support of the State's case. In our opinion the agreements considered in those decisions are wholly different in nature than the bye-laws with which we are concerned in this case. For the reasons mentioned, above, we allow this appeal, set aside the judgment of the High Court and discharge the answer given by the High Court and answer the question referred to the High Court in the negative and in favour of the assessee. The appellant-assessee is entitled to its costs both in this Court as well as in the High Court. G.C. Appeal allowed. Khedut Sahakari Ginning & Pressing ... vs State Of Gujarat on 14 September, 1971 11 | {
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Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 Equivalent citations: 1972 AIR 132, 1972 SCR (1) 846, AIR 1972 SUPREME COURT 132, 1972 TAX. L. R. 44 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, P. Jaganmohan Reddy PETITIONER: COMMISSIONER OF INCOME TAX, MADRAS Vs. RESPONDENT: M/S. KHODAY ESWARSA & SONS DATE OF JUDGMENT22/09/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. REDDY, P. JAGANMOHAN CITATION: 1972 AIR 132 1972 SCR (1) 846 1971 SCC (3) 555 CITATOR INFO : RF 1973 SC 22 (14) RF 1980 SC1146 (6) F 1992 SC 591 (2) ACT: Income-tax Act (11 of 1922), s. 28 (1) (c) Levy of penalty- Reason, in assessment proceedings-Weight to be attached to. HEADNOTE: In income-tax proceedings to the taxable income shown by the respondent in its return two items among others were added on the basis that there were illicit sales of alcohol and that certain sales bad not been properly accounted 'for. Thereafter, the Income-tax Officer, Special Investigation Circle, issued notice that he proposed to levy a penalty under s. 28(1) (r) of the Income-tax Act, 1922, as the Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 1 respondent had concealed particulars of its income and deliberately furnished inaccurate particulars. He rejected the explanation of the assessee and levied a penalty. In the order levying penalty the Income-tax Officer stated that the reasons for adding the disputed amounts in the total income of the assessee had been already discussed in the original order of assessment and that there was no need to repeat them. The Appellate Assistant Commissioner in appeal confirmed the penalty. His approach to the case was not different and was based upon a guess that because there were many contiguous dry areas the respondent would have surreptitiously sold alcohol. The Appellate Tribunal considered the circumstances under which the additions came to be made by the Department in the assessment proceedings, and the various points which were pressed before it and the Appellate Assistant Commissioner on behalf of the assessee, and held that though there might be certain doubtful transactions it could not be stated that assessee had made any deliberate attempt at concealment regarding its pharmaceutical section, and that, though there might be justification for making additions in the original assessment order those additions by themselves could not lead to the conclusion that the respondent had concealed its income or that it had furnished deliberately inaccurate particulars. On the basis of those findings the Appellate Tribunal set aside the order levying penalty. Thereafter, the Appellate Tribunal, holding that the reasons given by it for setting aside the penalty proceedings were all based on findings of fact and that no question of law arose out of those findings, rejected an application by the appellant for referring the question as to whether the Appellate Tribunal was right in cancelling the penalty. The appellant then filed an application under s. 66(2) of the Act but the High Court dismissed it on the same ground. Dismissing the appeal, HELD : The penalty proceedings being penal in character the Department must establish that the receipt of the amount in dispute constitutes income of the assessee. Apart from the falsity of any explanation given by the assessee the Department must have before it, be-fore levying a penalty, cogent material or evidence from which it could he inferred that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. The original assessment proceeding for computing the tax is evidence in the penalty proceeding, but the penalty cannot be levied solely on the basis-'of the reasons given in the original assessment order. [853 B-D] 847 In the present case, except the reasons given in the original assessment order for including the disputed items in the total income, the Department had no other material or evidence from which it could be reasonably inferred that the assessee had consciously concealed particulars of his income Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 2 or had deliberately furnished inaccurate particulars. The Appellate Tribunal made a correct and judicial approach in considering the question whether the penalty provisions were attracted as against the respondent. The conclusions drawn by the Appellate Tribunal were findings of fact recorded against the Department. Since on those findings of fact no question of law arose the High Court was justified in rejecting the application filed by the appellant under s. 66(2) of the Act. [852 B-E 853 E-F] Commissioner of Income-tax West Bengal-1 v. Anwar Ali, [1970] 76 I.T.R. 696, followed. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 648 of 1967. Appeal by special leave from the judgment and order dated October 3, 1966 of the Mysore High Court in Civil Petition No. 10 of 1966. R. H. Dhebar and J. Ramamurthi, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the Commissioner of Income-,tax, Madras, is against the judgment and order dated October 3, 1966 of the High Court of Mysore, rejecting the appellant's application filed under s. 66(2) of the Income-tax Act, 1922 (hereinafter to be referred as the Act) for directing the Income--tax Appellate Tribunal, Madras Bench to refer the question of law to the High Court. The question of law, which the appellant wanted to be referred was : "Whether on the facts and in the circumstances of the case the Appellate Tribunal was right. in cancelling the penalty of Rs. 3 5,000 levied under section 2 8 ( 1 ) (c) of the Indian Income-tax Act, 1922." The respondent was a firm carrying on business of manufac- turing silk, carbon papers, type-writer ribbons, liquor, spiriturous drugs and chemicals etc. In respect of the assessment year 1955-56, the respondent had sent a return showing Rs. 51,214 as taxable income. On looking into the accounts and other records, the Income-,Lax Officer made several additions to the amount shown in the return and ultimately fixed the total assessable income in the sum of Rs. 3,30,474. On appeal, the amount was reduced and the taxable income was fixed in the sum of Rs. 2,09,575. In the further appeal by the assessee to the Appellate Tribunal, there was no alteration in this figure. Only two items which were added to tilt income and which have been accepted by all the authorities required to be noticed. They are : Pharmaceuticals, section-Rs. 77,518.00 Chemicals section-Rs. 9,900.00. Relating to the pharmaceuticals section, it is the view of the Income-tax Officer that some of the sale bills produced by the respondent were found to be forged ones and some of the purchasers of tincture were also fictitious persons. There was no evidence Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 3 produced by the assessee to show that the Kolae powder, which was very essential for the manufacture of tincture had been purchased by it. Hence the Income-tax Officer drew an inference that the respondent had not really manufactured tincture and that on the other hand the firm must have sold all alcohol illicitly. It was on this basis that the Income-tax Officer held that the assessee must be considered to have omitted to show the sum of Rs. 77,588. Similarly, regarding chemical section, the Income-tax Officer found that the respondent has not accounted for a part of sale of Ethyl Acetate and that on verification it Was found that there has been a large deficit of rectified spirit. On this basis the Income-tax Officer drew an inference that the firm has again secreted a large quantity of rectified spirit under the cloak of manu- facture of chemicals. On the ground that certain sales had not been properly accounted for, the sum of Rs. 9,900 was added to the taxable income of the assessee. It was on the above basis that the two items were included in ,,,he total assessable income of the assessee firm. These reasons given by the Income-tax Officer have been, by and large, accepted by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. The Income-tax Officer, Special Investigation Circle A, Bangalore issued a notice under s. 28(1) to the respondent that it has concealed the particulars of its income and deliberately furnished inaccurate particulars in respect of the above amounts added to the total income and that the Income-tax Officer proposed to levy a penalty under S. 28 (1) (c) of the Act. No doubt, in the notice certain other items, which had already been added to the total income were also referred to. But those items have been deleted from the penalty proceedings by the Appellate Assistant Commissioner. Therefore, we are only concerned with the two items, referred to earlier. The assessee sent a reply stating that it has not concealed the particulars of 'its income nor has it deliberately furnished inaccurate particulars of such income. The explanation offered by theassessee was not accepted by the Income-tax Officer, and the latter by his order dated February 15, 1963 imposed a penalty of Rs. 35,000 on the ground that the respondent had concealed the particulars of its income. That amount of penalty was levied by the Income-tax Officer on the ground that over and above the two items relating to the Pharmaceuticals and Chemical sections, there has been a concealment of three more items totalling Rs. 32,267. They were Silk business; shortage in twisted silk yarn-Rs. 14,545.00 Shortage in Artificial silk Rs. 3,434.00 Carbons; Unaccounted consumption Rs. 14,288.00 It was on this basis that the total penalty was levied. On appeal to the Appellate Assistant Commissioner, the latter, no doubt deleted these three items totalling Rs. 32,267 from the penalty proceedings, but confirmed the order of the Income-tax Officer regarding the two other items holding that the omission by the assessee to include the said two items amounted to the firm concealing particulars regarding its income under s. 28(1) (c) of the Act. The penalty amount levied by the Income-tax Officer was also confirmed. Though the Appellate Assistant Commissioner reduced the quantum of concealment-even assuming that there has been a concealment-he did not make any Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 4 reduction in the penalty actually levied by the Income-tax Officer. The assessee carried the matter in appeal before the Income- tax Appellate Tribunal, Madras Bench. The main grievance made by the assessee was that there has been no independent consideration by the Income-tax Officer of the Appellate Assistant Commissioner whether even on the basis that there has been an omission by it to include certain items in its return, such omission came within s. 28 (1) (c) of the Act, so as to attract the levy of penalty. The assessee also contended that both the Income-tax Officer and the Appellate Assistant Commissioner have mainly relied on the reasons given in the order of assessment for adding these two items in the total income. According to the assessee there has been no proper exercise of jurisdiction under s. 28 of the Act. The Income-tax Appellate Tribunal by its order dated Novem- ber 13, 1964 set aside the order of the Income-tax Officer as confirmed by the Appellate Assistant Commissioner levying penalty on the respondent. The Commissioner of Income-tax filed an application under s. 66(1) of the Act, requiring the Appellate Tribunal to draw up a statement of the case and refer the question extracted in the earlier part of the judgment, to be referred to the High Court. The Appellate Tribunal by its order dated June 7, 1965 rejected the Said application on the ground that the reasons given by it for setting aside the penalty proceedings were all based on findings of fact and that no question of law arose out of those findings. The appellant filed an application before the High Court of Mysore, under s. 66(2) for directions being issued to the Appellate Tribunal to, state the case and refer the question of law,' which the Appellate Tribunal has refused to refer. A Division Bench of the High Court by its order dated October 3, 1966 dismissed the appellant's application on ,,he ground that the finding of the Appellate Tribunal that the Income-tax Department had failed to prove that the assessee had concealed its income or that it had deliberately furnished inaccurate particulars of its income are all on facts and that not question of law arises from the order of the Appellate Tribunal. Mr. Dhebar, learned counsel for the appellant, urged that the order of the High Court is erroneous. According to him the view of the High Court that the conclusions arrived at by the Appellate Tribunal are all on facts and that no question of law arises, is erroneous. The counsel urged that there has been an omission by the respondent to include in particular two items which are the subject of penalty proceedings and the order of assessment in that regard has become final. Hence it follows that this is a case where the assessee has concealed the particulars of its income or has deliberately furnished inaccurate particulars of its income. Both the Income-tax Officer as well as the Appellate Tribunal have in the penalty proceedings gone elaborately into this aspect before levying penalty. The approach made by the Appellate Tribunal when it set aside the orders levying penalty is not justified in law. Therefore, he urged that the High Court should have directed the Appellate Tribunal to state a case and refer Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 5 the question of law as prayed for by the Appellant. The respondent has not entered appearance before us. We have been taken through the entire proceedings leading up to the order levying penalty. We have also gone through the reasons given by the Income-tax Officer for levying penalty as well as the order of the Appellate Assistant Commissioner confirming the same. We cannot accept the contention of Mr. Dhebar that the Appellate Tribual has summarily interfered with the orders levying penalty. We have gone through the order of the Appellate Tribunal and we find that it has considered the circumstances under which the additions came to be made by the Department in the assessment proceedings as well as the points that were pressed before it, on behalf of the assessee as well as the Appelate Assistant Commissioner. It is the view of the Appellate Tribunal that theDepartment has not established that the assessee has not manufactured tincture and that it had sold only alcohol. This conclusion arrived at by the Income-tax Officer in the penalty proceedings is, according-to the Appellate Tribunal, purely one of conjecture or surmise. The Appellate Tribunal, no doubt, was prepared to accept the contention of the Department that there were a lot of doubtful circumstances. Notwithstanding these circumstances the Appellate Tribunal is of the view that when admittedly there are Excise authorities in the premises of the respondent, it is very difficult to hold that those officers would have permitted tile assessee to utilise the alcohol for other purposes. The Appellate Tribunal has also held that even the sale bills produced by the respondent, contain the proper per it numbers given by the Excise authorities and that the Income-tax Department have not made any inquiries from the Excise authorities whether those relevant sales hive been made without their authorisation. The Appellate rribunal has further held that there is no stock discrepancy in Kola Liquidum if the transactions art-- considered as a whole for the entire period. Therefore, regarding Pharmaceuticals section the Appellate Tribunal finally held that though there may be certain doubtful transactions, it cannot be stated that the, assessee has made any deliberate attempt at concealment. Regarding the Chemical section, the Appellate Tribunal is of the view that though there may be justification for making additions in the original assessment order to the amount shown in the return, those additions by themselves cannot lead to the conclusion that the respondent has concealed its income or that it has furnished deliberately inaccurate particulars. It was on the basis of these findings that the Appellate Tribunal has set aside the order levying penalty. One thing that strikes us when going through the order of the Income-tax Officer levying penalty and the order of the Appellate Assistant Commissioner confirming the said levy, is that there is not much of an independent discussion regarding the material question that has to be considered, namely, whether the firm has concealed the particulars of its income or whether it has deliberately furnished inaccurate particulars of such income. On the other hand, the Income-tax Officer after referring to the explanation furnished by the assessee to the show cause notice, clearly says that the facts relating to the unaccounted items have been fully discussed already in the relevant assessment orders for the concerned assessment year and that the reasons given therein need not be repeated again. Then there is only a very summary disposal of the plea raised by the respondent that he has Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 6 not concealed the particulars of his income, nor has it deliberately furnished inaccurate particulars, of its income. The approach made by the Appellate Assistant Commissioner is not far different from that of the Income- tax Officer. In fact the Appellate Assistant Commissioner makes a further guess that in view of the fact that there were very many dry areas bordering Mysore, the respondent would have surreptitiously sold alcohol that was supplied to it without using it for the purpose of making tincture. It is the view of the Appellate Assistant Commissioner that the mere fact that there are Excise authorities to control the activities, of persons like the assessee, is of no material consequence. From what we have stated above, it is clear that while there has been no proper approach made by either the Income-tax Officer when he levied penalty or by the Appellate Assistant Commissioner when he confirmed the order levying penalty, the Appellate Tribunal, on the other hand, has made a very correct and judicial approach in considering the question whether the penalty provisions are attracted as against the respondent. After a very fair and full consideration of the material circumstances, the Appellate Tribunal has set aside the order levying penalty. As rightly pointed out by the High Court, the conclusions drawn by the Appellate Tribunal are all on findings of fact recorded against ,"-he Department. On those findings of fact, there was no question of law arising for reference being made to the High Court. Under those circumstances, the High Court was perfectly justified in rejecting the application filed by the appellant under s. 66(2) of the Act. Before we conclude we may refer to the decision of this Court in Commissioner of Income-tax West Bengal I, and Another v. Anwar Ali(1), wherein it has been held that one of the principal objects in enacting s. 28 is to provide a deterrent against recurrence of default on the part of the assessee and that s. 28 is penal in the sense that its consequences are intended to be effective deter-rent which would put a stop to the practices which the legislature con- siders to be against the public interest. It has been further held that the Department must establish that the receipt of the amount in dispute constitutes the income of the assessee and if there is no evidence on record except the explanation given by the assessee, which explanation has been found to be false, it does not follow that the receipt constitutes its taxable income. It has been further held that as the proceedings under s. 28 are of a penal nature and the burden is on the Department that a particular amount is revenue receipt, it is legitimate to say that the mere fact that the explanation of the assessee is false, does not necessarily give rise to the inference that the disputed amount represents the income. It has been pointed out in the said decision that the finding given in the assessment proceeding for determining or computing the tax is not conclusive [1970] 76 I.T.R. 696. 85 3 though it may be good evidence. It has been further held by this, Court in the above decision : Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 7 "Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particu- lars." From the above it is clear that penalty proceedings being penal in character, the Department must establish that the receipt of the amount in dispute constitutes income of the assessee. Apart from the falsity of the explanation given by the assessee, 'he Department must have before it before levying penalty cogent material or evidence from which it could be inferred that- the assessee has consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that ,.the.- disputed amount is a revenue receipt. No doubt the original assessment proceedings, for computing the tax may be a good it,,, of evidence in the penalty proceedings; but the penalty cannot be levied solely on the basis of the reasons given'-in the original order of assessment. In the case before us we have already pointed out that in the order levying penalty the Income-tax Officer has categorically stated that the reasons for adding the disputed amounts in the total income of the assessee have been already discussed in the original order of assessment and that they need not be repeated again. The Appellate Assistant Commissioner, we have already pointed out, has made only a guess work. That clearly shows that except the reasons given in the original assessment order for including the disputed items in the total income, the Department had no other material or evidence from which it could be reasonably inferred that the assessee had consciously concealed the particulars of his income or had deliberately' furnished inaccurate particulars. For all the reasons given above, it follows that there is no merit in the appeal and it is accordingly dismissed. As the respondent has not appeared, there will be no order as to costs. V.P.S. Appeal dismissed. Commissioner Of Income Tax, Madras vs M/S. Khoday Eswarsa & Sons on 22 September, 1971 8 | {
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Raghunandan Prasad Mohan Lal vs The State Of U.P. And Ors. on 21 January, 1971 Equivalent citations: AIR1971SC2089, (1972)4SCC339, [1971]27STC469(SC), AIR 1971 SUPREME COURT 2089, 1972 4 SCC 339, 1971 TAX. L. R. 1358, 1974 SCC (TAX) 25, 27 S T C 468, 27 STC 469, 1971 U P T C 203 Author: K.S. Hegde Bench: J.C. Shah, A.N. Grover, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. This is an assessee's appeal by certificate, arising from a writ petition filed by the appellant in the High Court of Allahabad. The appellant is a partnership firm carrying on business of manufacturing flour etc. The dispute in this case relates to the sales tax levy on the appellant for four different periods, viz., from (1) April 1, 1956, to September 30, 1956 ; (2) October 1, 1956, to March 31, 1957 ; (3) April 1, 1957, to March 31, 1958; and (4) April 1, 1958, to March 31, 1959. 2. In the writ petition the assessee challenged the validity of two notifications issued by the Government of U. P. The first of those notifications was published as Notification No. ST-909/X dated March 31, 1956, and the second was published as Notification No. ST-6069/X-1097-56 dated September 30, 1956. The High Court came to the conclusion that though the first notification was struck down by that court earlier, it has now been revalidated by the U.P. Sales Tax (Validation) Act, 1958, and hence the validity of that notification is not open to challenge. It upheld the contention of the appellant that the second Notification No. ST-6069/X-1097-56 dated September 30, 1956, is invalid. But in view of its conclusion that the first notification has been properly revalidated, it held that the appellant was not entitled to any relief. It accordingly dismissed the writ petition. 3. The U.P. Sales Tax Act came into force on April 1, 1948. On June 7, 1948, the Province of U.P. issued Notification No. ST-119/X-928 under Section 4 of that Act exempting atta, maida, sooji and bran and all cereals from payment of sales tax with effect from April 1, 1948. Thereafter the Parliament passed the Essential Goods (Declaration and Regulation of Tax on Sale and Purchase) Act in order to give effect to Article 286(3) of the Constitution. That Act declared cereals, atta, maida, sooji and bran as essential goods. In view of that Act no law of a State Legislature imposing levy or authorising imposition of tax on sale or purchase of essential goods could take effect without the prior assent of the President. The U.P. Sales Tax (Amendment) Ordinance No. 9 of 1956 was promulgated with the prior assent of the President authorising the State Government to impose Raghunandan Prasad Mohan Lal vs The State Of U.P. And Ors. on 21 January, 1971 1 sales tax on essential goods from April 1, 1956. Thereafter the State Government issued Notification No. ST-909/X dated March 31, 1956, under Section 3 of the U.P. Sales Tax Act, 1948, imposing sales tax of six pies per rupee on sales of atta, maida and sooji. That notification was to take effect from April 1, 1956. As a result of that notification exemption given to atta, maida and sooji under Notification No. 911/X dated March 31, 1956, was withdrawn. The above Ordinance was replaced by an Act of the U.P. Legislature (Act No. 19 of 1956). That Act was known as U.P. Sales Tax (Amendment) Act, 1956. It was published in the U.P. Gazette extraordinary, dated May 28, 1956. On September 11, 1956, Article 286 of the Constitution was amended thereby taking away the requirement of obtaining the prior assent of the President. On September 30, 1956, the U.P. Government issued Notification No. ST-6069/X-1097-56 dated September 30, 1956, imposing single point tax on atta, maida and sooji with effect from October 1, 1956. That notification was purported to have been issued under Section 3-A of the U.P. Sales Tax Act, 1948. On January 5, 1957, the Central Act No. 52 of 1952 was replaced by the Central Sales Tax Act. U.P. Act No. 19 of 1956 referred to earlier was declared ultra vires the Constitution by the High Court of Allahabad on May 9, 1957. That Act and the notifications issued on March 31, 1956, were attempted to be validated by the U.P. Sales Tax (Amendment) Act, 1957 (Act No. 24 of 1957) which was published in the U.P. Gazette on September 3, 1957, after obtaining the assent of the President on August 31, 1957. That Act again was declared ultra vires the Constitution by the Allahabad High Court. Thereafter the U.P. Sales Tax (Validation) Act, 1958 (U.P. Act No. 15 of 1958) was enacted. It received the assent of the President on May 3, 1958. It was published in the U.P. Gazette on May 6, 1958. It was given retrospective effect as from March 31, 1956. The validity of Act No. 15 of 1958 has been upheld both by the Allahabad High Court as well as by this Court. This in short is the history of the legislations with which we are concerned in this case. 4. In this Court Mr. S.V. Gupte, learned Counsel for the appellant, challenged the validity of Notification No. 909/X dated March 31, 1956. That notification reads: In exercise of the powers conferred by the second proviso to Sub-section (1) of Section 3 of the U.P. Sales Tax Act, 1948, as amended from time to time, and in supersession of all previous notifications on the subject, the Governor of Uttar Pradesh is hereby pleased to order that with effect from April 1, 1956, the rate of tax on the turnover in respect of the goods specified in the List below shall be six pies per rupee at all points of sale. LIST 1. Foodgrains including cereals and pulses. 2. Atta, maida and sooji. 5. As mentioned earlier this notification has been validated by Section 3(1) of the U.P. Act No. 15 of 1958. 6. Section 3(1) of that Act reads : Raghunandan Prasad Mohan Lal vs The State Of U.P. And Ors. on 21 January, 1971 2 Notwithstanding any judgment, decree or order of any court, the notifications specified in Part A, Part B and Part C of the Schedule shall be deemed to have been issued in exercise of the powers conferred respectively by Section 3, Section 3-A and Section 4 of the U.P. Sales Tax Act, 1948, as if the said sections were in force on the date on which the notifications were issued in the form in which they were in force immediately before the commencement of this Act and all the said notifications shall be valid and shall be deemed always to have been valid and shall continue in force until amended, varied or rescinded by any notification issued under any of the said sections. 7. Item 1 of Part A of the Schedule mentions Notification No. F.D. (A & ST) Notification No. ST-909/X dated March 31, 1956. It is clear from Section 3(1) quoted above that this notification was revived and was given retrospective effect and that section further says that the same shall be in force "until amended, varied or rescinded by any notification issued under any of the said sections". But curiously enough item 1 of Part A of the Schedule reads : F.D. (A & ST) Notification No. ST-909/X dated March 31, 1956 subject to its supersession by F.D. (A&ST) Notifications No. ST-6068/X-1097-56 dated September 30, 1956 and No. ST-6069/X-1097-56 dated September 30, 1956. 8. One cannot understand how a notification can be revived subject to its supersession by some other notification. Obviously reference to supersession of the Notification ST-909/X dated March 31, 1956, is wholly inconsistent with the language of Section 3(1) of the U.P. Act No. 15 of 1958. It appears to be an error that has crept into the Act. As the intention of the Legislature is clear from the language of the provisions referred to earlier we must hold that Notification No. ST-909/X dated March 31, 1956, is revived with retrospective effect. Further, as seen earlier, Notification No. ST-6069/ X-1097-56 has already been struck down by the High Court as invalid. The same has not been revived by the Validation Act. Hence it does not exist in law. 9. For the reasons mentioned above we are in agreement with the High Court that Notification No. ST-909/X dated March 31, 1956, is in force. 10. The next contention taken by Mr. Gupte was that Notification No. ST-6068/X-1097-56 dated September 30, 1956, imposes excise duty and not sales tax and therefore the same is invalid. This question does not appear to have been argued before the High Court. Hence it is not advisable for us to go into that question though from a reading of the notification it is not possible to accede to the contention of Mr. Gupte that the levy in question is an excise duty and not sales tax. 11. The only other contention advanced on behalf of the appellant is that sales tax has been levied on some permit sales and the same was impermissible in law. He tried to base his argument on this part of the case on the decision of this Court in New India Sugar Mills Ltd. v. Commissioner of Sales Tax, Bihar [1963] supp. 2 S.C.R. 459; 14 S.T.C 316 (S.C.). The contention that a portion of the turnover related to sales of controlled articles appears to have been taken before the High Court at a late stage; yet the High Court permitted the appellant to place material before it to satisfy the court Raghunandan Prasad Mohan Lal vs The State Of U.P. And Ors. on 21 January, 1971 3 that the relevant transactions cannot be considered as sales. From the affidavit filed by the assessee, it is not possible to conclude that the transactions in question are not "sales". The affidavit does not speak of any control over the sales. It merely refers to certain controls over purchases. On the material before us it is not possible to hold that any of those transactions are not "sales". 12. In the result this appeal fails and the same is dismissed. In the circumstances of the case, we direct the parties to bear their own costs. It may be noted that the appellant has been assessed on the basis of Notification No. ST-6069/X-1097-56 dated September 30, 1956. In other words, sales tax has been levied On him at 3 pies per rupee and not 6 pies per rupee as prescribed in Notification No. 909/X dated March 31, 1956. In the circumstances of the case the counsel for the Government has agreed that the Government will not proceed to reopen the assessment and assess on the basis of Notification No. 909/X dated March 31, 1956. Raghunandan Prasad Mohan Lal vs The State Of U.P. And Ors. on 21 January, 1971 4 | {
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Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 Equivalent citations: 1971 AIR 1624, 1971 SCR 20, AIR 1971 SUPREME COURT 1624 Author: K.S. Hegde Bench: K.S. Hegde, P. Jaganmohan Reddy PETITIONER: SHEIKHUPURA TRANSPORT CO. LTD. Vs. RESPONDENT: NORTHERN INDIA TRANSPORT INSURANCE CO. DATE OF JUDGMENT16/03/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 1624 1971 SCR 20 CITATOR INFO : F 1977 SC1158 (11) D 1981 SC2059 (20,26) RF 1987 SC2158 (3,5,6) ACT: Motor Vehicles Act, 1939 s. 11OB and s. 95(2) (b)--Principles of compensation to be granted to legal representatives of person dying in accident under s. 11OB--Maximum amount of liability of insurer under s. 95 (2)(b). HEADNOTE: A passenger bus belonging to the appellant met with an accident, as a result of which two persons B and N died on the spot. The legal representatives of the deceased persons applied for compensation before the tribunal appointed under the Motor Vehicles Act. Their claim was opposed by the Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 1 appellant as well as by the insurance company. The tribunal found that the accident was due to the negligence of the driver and therefore the claimants were entitled to compensation. The tribunal computed the compensation due to the legal representatives of B at Rs. 18000. Out of that sum determined the compensation due to the widow at Rs. 8000; the compensation due to one of his daughters was fixed at Rs. 4000 and to the other at Rs. 6000. But as the daughters had not made their claims during the prescribed time, the Tribunal disallowed the compensation due to them and granted a decree in favour only of B's widow. In the case of N the tribunal computed the total compensation payable at Rs. 18000 and granted that sum to his legal representatives. It directed that the entire sum payable by the appellant should be paid by the insurance company. The insurance company as well as the legal representatives of the deceased persons appealed to the High Court. The High Court enhanced the compensation payable to the legal representatives of both B and N from Rs. 18000 to Rs. 36000. It condoned the delay in making the claim by the daughters of B and made the entire sum payable to his legal representatives. It also allowed the appeal of the insurance company and limited the amount payable by the insurance company to Rs. 2000 in the case of each of the deceased persons in accordance with s. 95(2) of the Motor Vehicles Act. By special leave appeals were filed in this Court. The appellant challenged (i) the amount of compensation as granted by the High Court, (ii) the condonation of delay in the case of B's daughters and (iii) the limiting of the amount payable by the insurance company to Rs. 2000. HELD: (i) Under s. 110B of the Motor Vehicles Act, 1939 the tribunal is required to fix such compensation as appears to it to be just. The power given to the tribunal is wide. The pecuniary loss to the aggrieved party would depend on data which cannot be ascertained accurately but must necessarily be an estimate or even partly a conjecture. The general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecuniary benefit, and on the other any pecuniary advantage which from whatever sources comes to them by reasons of the death, that is, the balance of loss and gain to a dependent by the death must be ascertained. [25B-D] Gobald Motor Service Ltd. v. R. M. K. Veluswami & Ors., [1962] 1 S.C.R. 929, relied on. The determination of the question of compensation depends on several imponderable. In the assessment of those imponderables there is likely to be a margin of error. If the assessment made by the High Court cannot 21 be considered to be unreasonable-and in the present case it could not be said to be unreasonable-it will not be proper Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 2 for this court to interfere with the same. Taking an overall assessment of the facts and circumstances of the present case it could not be held that the compensation awarded to the legal representatives of the deceased persons by the High Court was excessive. [24E] (ii) By the time B's daughters were impleadedthe time for filing applications for compensation by them had elapsed.It was conceded that Tribunal had jurisdiction to condone the delay in making the claim. The Tribunal had not chosen to condone the delay. But the High Court has in its discretion condoned the delay. The wife of B was an illiterate lady ; she was helpless and without assistance. In the circumstances this Court would not be justified in interfering with the discretion exercised by the High Court in condoning the delay in question. [23C-D] (iii)Reading together the provisions in ss. 95(1) (b), 95(2) and 96 of the. Motor Vehicles Act it is clear that the statutory liability of the insurer to indemnify the insured is as prescribed in s. 95(2). Under that section the maximum liability on an insurer in the case of a vehicle carrying more than six passengers is Rs. 2000 per passenger and the maximum total liability is Rs. 20000. In the, present case the vehicle was one in which more than six passengers were allowed to be carried. The limit of liabi- lity of the insurer prescribed under s. 95(2) (b) can be enhanced by a contract to the contrary. No clause of the policy issued to the appellant in the present cast provided for the payment of any amount higher than that fixed by s. 95(2) (b). The High Court was therefore right in its conclusion that the liability of the insurer in the present case only extended up to Rs. 2000. [24G, 25D, 26B, D] JUDGMENT: CIVIL APPELLATE JURISDICTION' Civil Appeals Nos. 501 to 504 of 1967. Appeals from the judgments and orders dated December 15, 1965 of the Punjab High Court in First Appeals from Order Nos. 145 and 155 of 1960 and 6 and 7 of 1961. S. K. Mehta, K. L. Mehta and K. R. Nagarala for the appellant(in all the appeals). Hardev Singh and H. L. Kapur, for respondent No. 1 (in C. A. Nos. 501 and 502 of 1967) respondent No. 4 (in C. A. No. 503/67) and respondent No. 10 (in C. A. No. 504 of 1967). S.K. Bagga, B. K. Bagga and S. Bagga, for respondent Nos. 2 (in C. A. No. 501 of 1967) respondent Nos. 1 to 8 (in C. A. No. 504 of 1967) respondent No. 2 (in C. A. No. 502 of 1967 and respondents Nos. 1 and 2 (in C. A. No. 503 of 1967). Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 3 The Judgment of the Court was delivered by Hegde, J. A passenger bus belonging to the appellant while travelling from Ludhiana to Rajkot met with an accident at about 9 a.m. on February 11, 1959. As a result of this accident, two persons namely Bachan Singh and Narinder Nath died on the spot and some others received minor injuries. The legal representatives of the deceased persons applied, for compensation before the tribunal appointed under the Motor Vehicles Act. Their claim was opposed by the appellant as well as by the insurance company. Overruling the objections of the appellant as well as the insurance company, the tribunal found that the accident was due to the negligence of the driver and therefore the claimants were entitled to compensation. The tribunal computed the compensation due to the legal representatives of Bachan Singh at Rs. 18,000. Out of that sum it determined the compensation due to the widow at Rs. 8,000; Rs. 4,000 to his daughter Harbans Kaur and Rs. 6,000 to his another daughter Balbir Kaur. But as the daughters had not made their claims within the prescribed time, it disallowed the compensation due to them and only granted a decree in favour of the widow of Bachan Singh. In the case of Narinder Nath, it computed the total compensation payable at Rs. 18,000/- and granted that sum to the legal representatives of Narinder Nath. It directed that the entire sum payable by the appellant should be paid by the insurance company. The insurance company as well as the legal representatives of the deceased persons. appealed to the High Court. The High Court enhanced the compensation payable to the legal representatives of both Bachan Singh and Narinder Nath from Rs. 18,000/- to Rs. 36,000/-. It condoned' the delay in making the claim by the daughters of Bachan Singh and consequently made the entire sum payable to his legal representatives. It also allowed the appeal of the insurance company and limited the amount payable by the insurance company to Rs. 2,000/- in the case of each one of the deceased persons. Aggrieved by the decision of the High Court, these appeals have been brought by special leave. Now coming to the enhancement made by the High Court both Bachan Singh and Narinder Nath were 42 to 43 years old at the time of their death; both the tribunal and the High Court have come to the conclusion that Bachan Singh had an annual income of about Rs. 9,000/-. Out of Rs. 9,000/-, Rs. 2,000/- was his income from immovable property; that income continued to accrue to the benefit of his wife and children; therefore only the income other than the income from immovable property which Bachan Singh was earning from his contract was taken into consideration. The High Court has come to the conclusion that Bachan Singh must have been spending at least Rs. 200/- on his family every month. It must be remembered that Bachan Singh had to marry two daughters. Therefore whatever he might have been able to save after meeting the family expenses and his own, the same would have been utilized for the marriage expenses of the daughters. Both the tribunal and the High Court have computed the loss to the family of Bachan Singh by capitalizing the benefit that the family was getting from him during his life time. The High Court did not accept the computation of the tribunal that Bachan Singh would have spent only Rs. 100/- on his family during his life time. We, think the High Court was right in its conclusion. Taking into consideration the total income of Bachan Singh as well as the requirements of the family, it is reasonable to hold that he would have spent at least Rs. 200/- per month on his family. We cannot also overlook the fact that Bachan Singh in all reasonable possibility would have been able to earn more in the years to come, if he had not died. It is true that Bachan Singh's daughters were not made parties to the petition filed by the widow of Bachan Singh, when she field that petition, but later on they were impleaded. By the time they were impleaded, the time for filing application for compensation by the daughters had elapsed. It is Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 4 conceded that under law, the tribunal had jurisdiction to condone the delay in making the claim. The tribunal had not chosen to condone the delay. But the High Court hag in its discretion condoned the delay. It is seen that the wife of Bachan Singh was an illiterate lady. She appears to have been quite helpless. In fact in her petition she specifically stated that she had no assistance and therefore she requested the court to give her the assistance of some lawyer. We do not think that we will be justified in interfering with the discretion exercised by the High Court in condoning the delay in question. In the case of Narinder Nath, the evidence adduced on behalf of the claimants clearly establishes that he was earning about Rs. 6,000/- per year as Commission Agent ;and that his income was going up from year to year. But yet the tribunal thought that his income could be computed at Rs. 5,000/- per year. There was no basis for such a conclusion. Further the tribunal held that Narinder Nath must have been spending about Rs. 100/- per month on his family. This conclusion is a wholly fallacious one. The evidence disclosed that he was spending on his family about two to three hundred rupees a month. The High Court has arrived at the conclusion that he must have been spending Rs. 200/per month on his family. Here again it may be noted-that he had the prospect of earning more in the years to come and consequently he would have spent more on his family if he had lived longer. On the basis that he was spending about Rs. 200/- per month on his family, the High Court has computed the total compensation at Rs. 36,000/- It has computed the compensation on the basis of 15 years' purchase of the benefits that were accruing to the family as in the case of Bachan Singh. It was contended on behalf of the appellants' that the computation of compensation was excessive and the High Court erred in not giving due deductions for circumstances like the widow remarrying, the possibility of the deceased persons dying before they reached the age of 58 years and the children of the deceased persons getting other source of income after they completed their education. Under S. 110B of the Motor Vehicles Act, 1939 the tribunal is required to fix such compensation which appears to it to be just. The power given to the tribunal in the matter of fixing compensation under that provision is wide. Even if we assume (we do not propose to decide that question in this case) that compensation under that provision has to be fixed on the same basis as is required to be done under Fatal Accidents Act, 1855 (Act 13 of 1855), the pecuniary loss to the aggrieved party would depend upon data which cannot be ascertained accurately but must necessarily be an estimate or even partly a conjecture. The general principle is that the pecuniary loss can be ascertained only by balancing on the one hand the loss to the claimants of the future pecu- niary benefit and on the other any pecuniary advantage which from whatever,sources come to them by reason of the death, that is, the balance of loss and gain to a dependent by the death must be ascertained see Gobald Motor Service Ltd. and anr. v. R.N.K. Veluswami and ors.(1) The determination of the question of compensation depends on several imponderables. In the assessment of those imponder- ables, there is likely to be a margin of error. If the assessment made by the High Court cannot be considered to be unreasonable and we do not think it to be unreasonable-it will not be proper for this Court to interfere with the same. Taking an overall assessment of the facts and circumstances of this case, we are unable to agree with the contention of the appellant's Counsel that the compensation awarded to the legal representatives of the deceased persons is excessive. Nor are we able to accept the contention that the High Court erred in Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 5 condoning the delay in the matter of the claim made by the daughters of Bachan Singh. This takes us to the question as to the extent of the liability of the insurance company. The measure of liability of the insurer has to be ascertained with reference to S. 95(2) of the Motor Vehicles Act. Section 94 of that Act requires that every passenger bus should be insured against third party risk. Section 95(1) prescribes the requirements of policies. The provision relevant for our present purpose is S. 95(2). That provision as it stood at the relevant time read thus : "Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits namely:- (a) where the vehicle is a goods vehicle, a limit of twenty thousand rupees in all including the liabilities, if any, (1) [1962]1 S. C. R. 929. arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to, employees (other than the driver), not exceeding six in number, being carried in the vehicle. (b) where the vehicle is- a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, in respect of persons other than passengers carried for hire or reward, a limit of twenty thousand rupees; and in respect of passengers a limit of twenty thousand rupees in all, and four thousand rupees in respect of an individual passenger, if the vehicle is registered to carry not more than six passengers excluding the driver or two thousand rupees in respect of an individual passenger. if the vehicle is registered to carry more than six passengers excluding the driver; (c) where the vehicle is a vehicle of any other, class, the amount of the liability incurred." In the present case we are dealing with a vehicle in which more than six passengers were allowed to be carried. Hence the maximum liability imposed under S. 95(2) on the insurer is Rs. 2,000/per passenger though the total liability may go upto Rs. 20,000/-. This is also the view taken by the High Court. The limit of insurer prescribed under S. 95(2)(b) of the Motor Vehicles Act can be enhanced by any contract to the contrary. Therefore we have to see whether the contract of insurance entered into between the appellant and the insurance company provided for the payment of enhanced amount in case the owner of the bus involved in an accident is required by the decree of a court to pay any higher amo- unt as compensation. The insurance policy issued by the insurer is marked as Exh. R. W. 3 /B. Clause (1) of that policy says : "Subject to the limit of liability the Company will indemnify the insured in the event of accident caused by or arising out of the use of the Motor Vehicle in a public place against all sums including claimants costs and ex- penses which the insured shall become legally liable to pay in respect of death of or bodily injury to any person." The opening words of the clause "subject to the limit of liability the Company" evidently refer to the limit prescribed under S. 95(2)(b) of the Motor Vehicles Act. No clause in the insurance policy specifically providing for the payment of any amount higher than that fixed under S. 95(2)(b) was Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 6 brought to our notice. The clause dealing with avoidance of certain terms and the right of recovery reads "Nothing in this policy or any endorsement thereon shall affect the right of any person indemnified by this policy or any other person to recover an amount under or by virtue of the provisions of the Motor Vehicles Act 1939 Section 96". This clause makes it abundantly clear that the extent of the right of the person indemnified is as prescribed in S. 96 of the Motor Vehicles Act. Under that provision the amount to be recovered is that covered by cl. (b) of sub-s. (1) of S. 95. Clause (b) of S. 95(1) says: "In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- (b)insures the person or classes of person specified in the policy to the extent specified in sub-section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place.............. Reading all these provisions together, it is clear- that the statutory liability of the insurer to indemnify the insured is as prescribed in. S. 95(2). Hence the High Court was right in its, conclusion that the liability of the insurer in the present, case only extends :up to Rs. 2,000 each, in the case of Bachan Singh and Narinder Nath. For the reasons mentioned above these appeals. fail and. they are dismissed with costs. G.C. Appeals dismissed. Sheikhupura Transport Co. Ltd vs Northern India Transport Insurance Co on 16 March, 1971 7 | {
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Tulsidas Paul vs The Second Labour Court, W.B. And Ors. on 3 February, 1971 Equivalent citations: [1971(22)FLR148], (1971)ILLJ526SC, (1972)4SCC205B, 1971(III)UJ308(SC), AIRONLINE 1971 SC 30 Author: J.M. Shelat Bench: C.A. Vaidialingam, J.M. Shelat, V. Bhargava JUDGMENT J.M. Shelat, J. 1. This appeal, by special leave, arises out of an industrial dispute between the appellant from and eight of its workmen represented by the All India Chhata Karkhana Muzdoor Union referred for adjudication to the Second Labour Court, Calcutta. The dispute was whether the dismissal of the said eight workmen by the appellant firm was justified ? The dispute arose from the following facts : 2. Prior to February 4, 1960, most of the workmen in the appellants' factory were members of the All India Chhata Karkhanna Muzdoor Union. Sometime prior to February 1960 they became members of the rival union, the Calcutta Chhata Karkhana Muzdoor Union The said eight workmen and two others, however, refused to join the rival union and that resulted in bad feelings between the two unions. On February 4, 1960, there was trouble in the factory when a procession of workers entered into the factory and began to throw brickbats and other missiles The appellants did not then take any action presumably because the trouble was amongst the workmen themselves owing to the said union rivalry. However, when the said eight workmen together with the said two others (with whom we are not concerned in this case) arrived at the factory, the rest of the workmen requested the appellant firm not to give work to them. It would seem that the appellants thereupon declined to give work to those workmen. According to the appellants, the workmen had passed a resolution asking the appellants not to give work to those workmen and had handed over that resolution to them. The workmen raised a dispute on the ground that the refusal to give them work amounted to dismissal which was sponsored by the All India Chhata Karkhana Muzdoor Union. 3. The Labour Court found, on the evidence before it, that the appellants had refused to give work to these workmen out of difference to the wishes of the rest of the workers. It held, however, that the action of the appellants in refusing work to those workmen amounted to their dismissal and since the dismissal was not for any misconduct and was made without holding any enquiry it was unjustified. In that view the labour Court ordered reinstatement and directed payment of all back Tulsidas Paul vs The Second Labour Court, W.B. And Ors. on 3 February, 1971 1 wages from February 5, 1960 till the date when they would be taken back in employment. 4. The appellants thereupon invited the High Court at Calcutta through a petition under Article 226 of the Constitution to quash the said order. A learned Single Judge of that High Court, who tried the petition, agreed, for the reasons given by him in his judgment, with the labour Court that the appellants' action in refusing work amounted to dismissal. He held that the decision of the Labour Court that it was not justified could not in the circumstances of the case be said to be wrong. But on the question as to what relief the workmen were entitled, he relied on the Punjab National Bank v. All India Punjab National Bank Employees Federation where it was held that though the general rule in cases of unjustified dismissal was reinstatement, "nevertheless, in unusual or exceptional cases the tribunal may have to consider whether, in the interest of the industry itself, it would be desirable or expedient not to direct reinstatement". The petition, according to the learned Judge, was that the appellants dismissed the eight workmen owing to the attitude taken by the majority of the workmen. He posed the question as to what was the remedy of the workmen dispute the fact of their dismissal being wrongful. He observed that reinstatement of these eight workmen might be taken by the other workers "with ill grace and may start fresh industrial hostilities", that such an eventuality had to be avoided, and therefore the Labour Court, in such exceptional circumstances shoud have considered the unusual circumstances and instead of reinstatement ought to have compensated the workmen with adequate monetary consideration. In addition, he held that the employment of the workmen was seasonal, that they did not establish any lien on their posts during the off season and since they were dismissed almost at the beginning of the 1960 season the compensation they would be entitled to what they would have earned during the 1960 season. In this view, he quashed the order of the Labour Court which had, as aforesaid, directed reinstatement. 5. The workmen took the matter further & filed a letters patent appeal. The only question which was canvassed in that appeal was whether the learned Single Judge was entitled to interfere with the order of the Labour Court and quash the relief of reinstatement granted by it. In dealing with this question the letters Patent Bench relied on the very same observations in the Punjab National Bank's case AIR 1960 S.C. 160 at 173 which were relied on by the learned Single Judge. But the Bench emphasised that before the Labour Court the appellants had not put the question of reinstatement in issue, nor raised any specific objection against the normal rule of reinstatement The Bench held that in the absence of any such specific contention, the Labour Court appeared to have thought that the dispute among the workers was a passing phase which would in course of time subside No plea was made before it that reinstatement might result in disturbance of industrial peace, a plea if satisfactorily proved, might have induced the Labour Court not to grant reinstatement. 6. The Division Bench also noted that the Labour Court was not unconscious of that the work in the factory was seasonal and also of the contention of the appellants that the workmen had no lien on the employment for the next season, and that therefore, there was no question of their being reinstated But there was the evidence of one of the partners of the appellant-firm that though there was no lien in the technical sense, the firm used to employ all those workmen who desired to continue and presented themselves for work at the commencement of the next season. The evidence was that the practice in the factory was to continue the workmen from season to season. It was, Tulsidas Paul vs The Second Labour Court, W.B. And Ors. on 3 February, 1971 2 therefore, not as if the Labour Court had disregarded or ignored any material circumstances or that its finding on that account was vitiated or suffered from any patent error justifying interference in the exercise of writ jurisdiction The Bench finally held that the question whether a wrongfully dismissed workman should be reinstated or not being a matter of discretion of the Labour Court, if that Court had ordered reinstatement after considering all the material aspects placed before it there would be no reason for interference with such exercise of discretion by the High Court. It, therefore, held that the Single Judge was not justified in quashing the order passed by the Labour Court. 7. The question raised by Counsel for the appellant firm before us was the same as was raised before the High Court, namely, whether the High Court could interfere with the direction of reinstatement passed in exercise of discretion by the Labour Court. Counsel did not raise the question whether in the circumstances of the case, refusal by the appellant firm to give work to the concerned workmen amounted to a wrongful dismissal. Such a question could not have raised at this stage because it was not raised before the Letters Patent Bench. We, therefore, refrain from going into that question. 8. It is well established that in exercise of its jurisdiction under Article 226, the High Court does not sit in appeal over the orders of industrial tribunals. Its jurisdiction is supervisory, and therefore, it interferes if the jurisdiction conferred on such tribunals is improperly, or in noncompliance of well established principles, exercised or for any such other person. 9. In Hindustan Steel Ltd. v. Roy we rencently, held after considering the previous case, law, that though the normal rule, in cases where dismissal or removal from service is found to be unjustified, is reinstatement, industrial tribunals have the discretion to award compensation unusual or exceptional circumstances where the tribunal considers, on consideration of the conflicting claims of the employer on the one had and of the workmen on the other, reinstatement inexpedient or nor desirable. We also held that no hard and fast rule as to which circumstances would constitute an exception to the general rule can be laid down as the tribunal in each case must, in a spirit of fairness and justice and in keeping with the objectives of industrial adjudication, decide whether it should, in the interest of justice, depart from the general rule. 10. It appears from the judgment of the learned single Judge that he was moved to interfere with the order of reinstatement, firately, on the ground that it would be received by the other workmen with ill grace and might result in fresh hostilities between the two groups of workmen, and secondly, that employment of workmen in this case being seasonal the employers were not bound to engage the same workmen in the next season.We find it difficult to sustain this reasoning. As observed by the Division Bench, the employers did not at any stage before the Tribunal place the question of reinstatement in issue. Nor did they establish that reinstatement would result in fresh industrial hostilities. In he absence of any proof that that would be the consequence of reinstatement, the conclus,on of the learned Single Judge that it would so result was only an assumption. It is true that the workmen could not have lien on the posts to which they were employed in tne technical sense of that term but, as aforesaid, there was evidence of the firm following the practice of engaging the same workmen when they presented themselves for work at the commencement of the next season. The appellant having failed to lead evidence as to a reasonable possibility of recurrence of trouble if the concerned workmen were to be reinstated or of their not being entitled to be employed at the Tulsidas Paul vs The Second Labour Court, W.B. And Ors. on 3 February, 1971 3 beginning of the next season, it was impossible to say that the case of an exception to the general rule of reinstatement was made out. The case before the High Court thus was not one where there was any error of law on the record, nor was it a case where the Labour Court had acted in excess of its jurisdiction or failed to exercise its jurisdiction. 11. In the circumstances there was no occasion for interference by the High Court and the Division Bench must, therefore, be held not to have erred in reversing the interference by the learned Single Judge. The appeal fails and is dismissed with costs. Tulsidas Paul vs The Second Labour Court, W.B. And Ors. on 3 February, 1971 4 | {
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S.M. Pandit And Ors. vs The State Of Gujarat And Ors. on 18 November, 1971 Equivalent citations: AIR1972SC252A, 1972LABLC155, (1972)ILLJ127SC, (1972)4SCC778, 1972(4)UJ234(SC) Bench: A.N. Grover, K.S. Hegde JUDGMENT 1. These are appeals by certificate. They raise one common question of law for consideration. That question is whether the second proviso to the rule relating to the appointments to the posts of Deputy Collectors in the Bombay Civil Services Classification and Recruitment Rules as well as Clause (3) of the Rules framed under Article 309 of the Constitution by the Governor of Gujarat relating to the appointments of Deputy Collectors are violative of Articles 14 and 16 of the Constitution. The High Court of Gujarat has come to the conclusion that those provisions are violative of Articles 14 and 16. Aggrieved by that decision the appellants have brought these appeals. 2. Till the year 1950, the posts of Deputy Collectors were filled by Bombay Government partly by direct recruitment and partly by promotion from the cadre of Mamlatdars. On February 6, 1950, the Government decided to fill up these posts only by promotion from the cadre of Mamlatdars. At the same time it decided to introduce the system of direct recruitment to the posts of Mamlatdars who in the first instance were to be on probation for two years and if found suitable would be confirmed It was further decided that 50 percent of the posts of Deputy Collectors will be reserved for promotion of direct recruits in the cadre of Mamlatdars and the other 50 percent for the promotee Mamlatdars In 1959, the Bombay Government introduced a change in the mode of recruitment to the posts of Deputy CollectOrs. In pursuance of the resolution of the Government of Bombay, the Bombay Civil Services Classification and Recruitment Rules were changed and the amended Rules read as follows : (1) Appointment to the posts of Deputy Collector shall be made either by nomination or by promotion of suitable Mamlatdars. Provided that the ratio of appointment by nomination and by promotion shall as far as possible, be 50: 50. Provided further that half the vacancies reserved for appointment by promotion shall be filled by directly recruited Mamlatdars who have put in at least seven years service in the post including the period spent on probation. (2) Appointment by nomination shall be made on the result of a competitive examination in accordance with the rules hereto appended as Annexure I, from among candidates who ; S.M. Pandit And Ors. vs The State Of Gujarat And Ors. on 18 November, 1971 1 (a) are not less than 20 and more than 25 years of age ; (b) possess a Bachelor's degree in Arts, Science, Agriculture, Commerce law, Engineering or a similar or higher degree of a recognised University ; and (c) Possess adequate knowledge of Marathi or Gujarati. (3) Candidates appointed by nomination shall be on probation for a period of two years, the probation being regulated according to the rules appended hereto as annexure 'II'. (4) x x x x. 3. As a result of the second proviso in Rule 2 referred to above, out of 60 percent of the promotees from the posts of Mamlatdars to those of the Deputy Collectors, 25 per cent was reserved for directly recruited Mamlatdars. In 1966, after the formation of the State of Gujarat, the Government of Gujarat slightly altered the recruitment rules relating to the posts of Deputy CollectOrs. The relevant rules may now be quoted : (1) Recruitment shall be made on temporary posts which are existing since two years and which are likely to be continued for one year and more excepting those posts which have been created for special work in Revenue Departments and all permanent posts in the cadre of Deputy CollectOrs. (2) Appointment on this post shall be made in either of the following ways: (a) By promotion of Mamlatdars of Gujarat Civil Service Class on proved merit and efficiency. (b) By direct selection on the result of competitive examination in accordance with rules made by Government. (3) The ratio of appointment in the available vacancies, by direct selection and promotion would be 50 : 50. But half the vacancies reserved for appointment by promotion shall be filled by directly recruited Mamlatdas, who have put in at at least seven year's service including the period spent on probation. 4. Rule 3 of these rules is similar to the second proviso to Rule I in the Bombay Civil Services Classification and Recruitment Rules framed in 1959. The question, as mentioned earlier, is whether the second proviso to Rule 1 of the Bombay Civil Services Classification and Recruitment Rules and Rule 3 of the Rules framed by the Gujarat Government are violative of Articles 14 and 16 of the Constitution. 5. The High Court accepting the contention of the writ petitioners came to the conclusion that the impugned Rules violated Articles 14 and 16. It opined that both the directly recruited Mamlatdars as S.M. Pandit And Ors. vs The State Of Gujarat And Ors. on 18 November, 1971 2 well as the promotees Mamlatdars formed one class. That being so, it was not competent for the Government to discriminate between the directly recruited Mamlatdars and the promotee Mamlatdars in the matter of their further promotion. In arriving at its conclusion, the High Court relied on the decisions of this Court in Mervyn Coulindo and Ors. v. Collector of Customs Bombay and Ors. and Rushanlal Tandon v. Union of India . 6. The learned Counsel for the appellants did not contest the proposition that if both the directly recruited Mamlatdars as well as the promotee Mamlatdars formed one class then the Impugned Rules will be violative of Articles 14 and 16 on the basis of the decisions of this Court referred to earlier. But he challenged the conclusion of the High Court that they formed one class or one cadre. According to him, the directly recruited Mamlatdars and the promotee Mamlatdars formed two difference classes The High Court rejected that contention and in our opinion rightly. Both the directly recruited Mamlatdars as well as the promotee Mamlatdars are designated as Mamlatdars. They have the same pay scale. They discharge same functions. The posts held by them are interchangeable. There is nothing to how that the two groups are kept apart. The only circumstance urged in support of the contention that they form two different classes is that before promotion to the post of Deputy Collector, the directly recruited Mamlatdars have to put in a certain minimum period of service. This condition, in our opinion, does not indicate that the two groups were kept apart. The High Court seeing to think that that condition is not a valid condition. We express no opinion on that question. Even if it is a valid condition, the same does not show that the directly recruited Mamlatdars formed a different class There is no material to show that the Government had prepared two separate seniority lists, one for the directly recruited Mamlatdars and the other for the promotee Mamlatdars. 7. The Counsel for the appellants sought to place some reliance on the decision of this Court in State of Mysore v. P, Narasing Rao . That decision is clearly distinguishable. In that case, according to the Rules framed by the Government, the non-matriculate (racers formed a separate cadre from those who had passed the matriculation examination. The two cadres had different pay scales. Hence there was no discrimination between the officers borne on the same cadre. 8. For the reasons mentioned above, we find no ground to interfere with the judgment of the High Court. These appeals are accordingly dismissed. But in the circumstances of the case, there will be no order as to costs in these appeals. S.M. Pandit And Ors. vs The State Of Gujarat And Ors. on 18 November, 1971 3 | {
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Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 Equivalent citations: AIR1971SC1891, 1971CRILJ1411, (1971)2SCC579, AIR 1971 SUPREME COURT 1891, 1971 CRI APP R (SC) 376, 1972 SC CRI R 9, 1971 SCD 1065 Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde JUDGMENT A.N. Grover, J. 1. This is an appeal from a judgment of the Punjab and Haryana High Court upholding the conviction of the appellants who are brothers under Section 302 read with Section 34 of the Indian Penal Code and confirming the sentence of death imposed on them by the learned Sessions Judge, Hissar. We have already, by a brief order dated May 7, 1971, set aside the conviction and sentence of the appellants under Section 302 read with Section 34 and have convicted them under Part I of Section 304, Indian Penal Code, for which a sentence of 7 years has been imposed on each of the appellants. We now proceed to give the necessary details and our reasons for making the aforesaid order. 2. H. C. Sethi is a practising advocate of Hissar. His son, Subhash Chander deceased was a Major in the Indian Army. His second son, Suresh Chander, is an advocate and the principal witness in the case. In February 1969 H. C. Sethi and his family appear to have purchased 125 acres of land in village Talwandi Rana, near Hissar. Possession had been obtained by the landlords of 80 Killas of land either by compromise with the tenants or by obtaining ejectment orders against them from the competent revenue courts. About 6 or 7 acres of land were stated to be still under the cultivation of appellant Tarachand. The purchasers made an application in the court of the Assistant Collector, Hissar for his ejectment in March 1969. Tarchand appeared on one date but he did not appear thereafter. On May 9, 1969 an ex parte order of ejectment was passed against him. According to the terms of the decree, however, he was to vacate the land in his possession only after he had been allotted some land out of certain surplus area. 3. According to the case of the prosecution the occurrence is alleged to have taken place on July 15, 1969 at about 6 p.m. in the evening on the Dhansu passage leading to the village Talwandi Rana near the house of Surja Kumar. Khasra No. 174/2 is situated at a distance of 10 or 11 feet from the place of occurrence. It may be stated that one of the main points for decision will be whether this Khasra number which admittedly was in possession of Tarachand appellant before the killabandi in the year 1952-53 continued to remain in his physical possession even after the consolidation Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 1 proceedings had started and it had been shown in the Khasra Girdawarl as the property of the village abadi deh. On behalf of the appellants it was claimed that it was in possession of Tarachand on the day of the occurrence. 4. We may now refer to the first information report which was registered without any delay. It was made by Pat Ram who is working as a clerk to H. C. Sethi, Advocate After Riving the necessary facts about the purchase of the land by the Sethi family he proceeded to state that the ex parte decree for ejectment which had been granted against Tarachand was passed without any compensation and for that reason he was nursing a grudge against the deceased Subhash Chander, Suresh Chander and others. At about 3 p.m. on the day of the occurrence the two brothers, Manphhul Singh a Siri and Patram (informant) went on a tractor to plough the land which was in their possession. After demarcating the area in their possession they were going back to village Talwandi Rana at about 6 p.m. on the kutcha Dhansu passage when the harrow got detached from the Tractor. After leaving the harrow and the tractor with Suresh Chander a party consisting of Subhash Chander, Patram and Manphul Singh started for village Talwandi Rana in order to bring a rod. Meanwhile Suresh Chander started attaching the harrow to the Tractor. The party consisting of Subhash and others had only covered a short distance and had reached near the house of Surja Khumar when the appellants came from the opposite side armed with jaillies. Tarachand raised a lalkara saying that they were going to teach a lesson for obtaining an ex parte eviction decree. Both the appellants then attacked Subhash Chander with their respective jaillies. Suresh Chander who was coming on the tractor took the licensed rifle of Subhash Chander and fired two shots in order to save his brother. Leaving Subhash Chander in an injured condition the appellants ran away to the village. Subhash Chander was taken in an unconscious state to the hospital at Hissar where he was declared dead at about 7 or 7.30 p.m. Tara Chand appellant was arrested on July 16, 1969. Siri Ram the other appellant was taken into custody on July 17, 1969. 5. The post mortem examination was performed by Dr. I. K. Chaudhury on July 16, 1969. There were as many as 15 injuries on the person of Subhash Chander out of which six were perforating wounds, one lacerated wound, three incised wounds the rest being abrasions. The injuries extended from the region of the eyes and the head to the chest and the abdomen, one arm being also involved Injury No. 3 was individually sufficient in the ordinary course of nature to cause death and the other injuries collectively combined with injury No. 3 were stated to have accelerated the death. Injury No. 3 was a lacerated wound on the back of the left pinna measuring 2 1/2 x 1 inches extending to the skull on temporal region for about 1" x 1/2" bone deep. The temporal bone was badly fractured and pieces were pressing on the brain which was lacerated. The fracture extended to the base of the skull. Tarachand appellant was examined by Dr. Jagdish Chander, Medical Officer, Barwala, after he had been arrested. He had six injuries. The first two injuries on the left upper arm were due to a gunshot. The other injuries were two contusion and two abrasion marks. According to a note made by the doctor the part of the shirt worn by Tarachand appellant covering the left upper arm was stained with dry blood and it was torn at two places. In the opinion of the doctor injuries Nos. 1 and 2 on Tarachand were due to a gunshot. 6. It may be mentioned at this stage that according to the statement of Tarachand before the committing Magistrate he was in his fields when Subhash Chander and another person with a beard Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 2 started plying the tractor in his land. They did not pay any heed to his protests. Subhash Chander came down from the tractor and fired a shot from the weapon which looked like a rifle or a gun and which hit Tarachand on his left forearm. Subhash Chander also hit him with the butt of the weapon. Tarachand then jumped forward and used his jailli in self defence. Siri Ram appellant was not present at the time of the occurrence. Suresh Chander and Patram as also Manphul Singh were also not present at the time of the incident. Tarachand changed his version slightly in the Sessions Court. There he stated that after Subhash Chander had fired the first shot from his rifle from a distance of 4 or 5 feet the rifle became defective and then Subhash Chander gave him blows with its butt-end. He gave jailli blows in self-defence. His wife who was present might have also given some blows to the deceased. The other appellant Sri Bam pleaded an alibi. 7. The investigation of this case proceeded, to say the least, in a most irresponsible and perfunctory manner. There were certain essential links without which the story of the prosecution was bound to suffer from serious infirmities. There were two rival versions and for the prosecution to succeed it was essential to establish that the harrow had got detached from the tractor because of a defect in the connecting rod. The position of the tractor and the harrow was also very material. No attempt whatsoever, was made to take into possession either the rod which was defective or the harrow soon after the occurrence. Nor was the rifle which is described as a carbine taken into custody. No attempt was made either to look for the empty cartridges or to ask Suresh Chander to hand over those empty cartridges to the police It is startling that it occurred to the Investigating Officer to take the harrow and. the rifle in possession 11 days later on July 26, 1969. If the carbine had been taken into custody at the proper stage it could have been sent to a ballistic expert who could have given a positive opinion whether it was defective and could not have been fired after the first shot. It must be remembered that apart from the injuries with the rifle shot on his arm Tarachand had other injuries which could not have been caused by a gun shot. A blunt weapon had been used and the prosecution had given no explanation for those injuries. It was necessary in these circumstances to place all the available material throwing some light on the point because according to Tarachand appellant he had not only been fired upon by the deceased but had also been inflicted injuries with the butt-end of the carbine. The prosecution has completely and utterly failed to explain those injuries, except that according to P.W. 2, Jagdish Chander injuries 4, 5 and 6 could be self-suffered. 8. Mr. A.S.R. Chari for the appellants has strongly criticised the approach and the findings of the High Court which had practically accepted the conclusion of the Sessions Judge on most of the points. As regards the eye witnesses whose evidence was accepted it has been submitted that Patram was only a clerk of both H.C. Sethi and his son Suresh Chander, He could not be expected to give a version different from the one given by Suresh Chander. The only witness of importance is Suresh Chander himself. His evidence must be regarded as interested and there are a number of matters on which he either furnishes no explanation or his version suffers from improbabilities. According to Suresh Chander the carbine of the Major used to remain in the family house at Hissar even when he was away on duty. But he had never taken It to his land because he had been taking his D. B. B. L. gun for which he held a licence. It has not been explained why instead of taking the gun the rifle was taken on that day. No reason has been furnished for taking a loaded carbine in the tractor when the object was to plough or demarcate the lands which were claimed to have been in the possession of the complainant party. Mr. Chari says that the High Court has made out a special case for the Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 3 complainant by referring to some tension prevailing among the landlords and tenants in respect of agricultural land. Neither Suresh Chander nor Patram has spoken to any such tension in village Talwandi Rana nor was it ever suggested by them or any other witness that any danger was apprehended from the tenants. As a matter of fact practically all the tenants of the Sethi family had peacefully surrendered possession and even the decree which had been obtained against Tarachand appellant was of such a nature that no Immediate eviction was possible. It is pointed out that according to Suresh Chander when the Police came and prepared the site plan on the following day he saw his tractor near the Kotha of the Sethi family in the village. As to how and in what circum stances and when the tractor had been removed and by whom is not at all clear. It was of the utmost importance that the tractor, the harrow etc. should have been allowed to remain at the place at which they originally were, according to the case of the prosecution, until a proper site plan had been prepared. The site plan prepared by the Investigating Officer Ex. PR is of a most unsatisfactory nature. In this plan all that has been shown about the tractor and the harrow is point No. 7. The explanatory note relating to point No. 7 in Hindi when translated into English reads, "it is that place where the harrow of the tractor became defective, the distance from the place of occurrence being five karams". Although according to the case of the prosecution (see also the statement of the Investigating Officer Ganga Ram, P.W. 15) a large area of land belonging to the complainants appeared to have been ploughed the same was not shown in the site plan Ex. PR. The omissions of the essential matters are so numerous that this plan is altogether worthless. The other site plan which is more detailed was prepared by the Patwari Sundardas P.W. 5. That plan also does not contain any more details about the respective positions of the harrow and the tractor. This plan, however, was prepared much later on August 6, 1969. The Patwari stated in cross-examination that when he went to the place of occurrence he did not care to notice any harrow or tractor. The evidence of Suresh Chander was that after the harrow had got detached from the tractor he was successful in attaching it by adjusting the rod. He had gone some distance when the harrow again got detached. He proceeded with the tractor leaving the harrow on the spot. On the next day of the occurrence when he went with the police to the spot the harrow was found lying at the place where it had been left by him. Curiously enough the plan does not show anything about the actual position of the harrow nor does it show the distance between the harrow and the tractor. Ganga Ram Sub-Inspector P.W. 15 who was incharge of investigation stated in cross-examination that he had seen the harrow lying at a distance of 100 yds towards the north of the place of the occurrence. He admitted that he did not indicate this in the site plan. He gave no explanation for the omission to do so. According to the evidence of Patram P.W. 3 the rod of the harrow did not break into two parts but had got bent He admitted that he did not show the bent rod to the police. All this, according to Mr. Chari, makes the testimony of Suresh Chander on the point of the episode of the harrow very weak and almost unbelievable. 9. It has next been urged that Suresh Chander made no attempt to explain or even mention the weapon by which those injuries had been caused on the person of Tarachand appellant which could not be attributed to the shot from the carbine. Al though it may not be an inflexible rule that the prosecution witnesses should explain or mention the injuries sustained by the accused persons but a good deal of importance has always been attached to this matter and the approach of the High Court cannot be regarded as correct with regard to the complete absence of explanation as to the injuries which could not have been inflicted by the gunshot and which, according to Tarachand appellant, Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 4 had been caused by the butt end of the rifle. There is at least one Injury which was a contusion which was extensive and was located on the antero-medial aspect of the upper one fourth of the left forearm of Tarachand which did require an explanation by the prosecution. The High Court while observing that Tara Chand did not stand in need of fabricating any injuries in order to put forward a plausible defence, went on to say that it was not beyond the range of possibility that he had suffered the contusion either before or after the occurrence. There was no material or evidence on which such a view could be reasonably taken. There are other matters also in the evidence of Suresh Chander to which our attention has been invited by Mr. Chari but it is unnecessary to refer to them in detail. 10. We find a good deal of substance in the criticism of Mr. Chari with regard to the evidence of Suresh Chander which it must be remember ed has to be accepted with care as he was undoubtedly an interested wit ness. We are also of the opinion that the High Court was not justified in the view it took about the failure on the part of the defence to get the carbine examined for any alleged defect in it. The carbine was not taken into possession immediately and even if any defect existed on the date of the occurrence it would have been pointless to get it examined after a lapse of a number of days during which period it had continued to remain in the possession of Suresh Chander who could have easily seen to it that the defect, if any, had been rectified. We are, by no means, satisfied that the version of Tarachand appellant with regard to the defect in the carbine can be accepted as correct in the absence of any evidence on the point. But in our judgment it was the duty of the prosecution in the circumstances of this case to have taken the carbine into custody together with the empty cartridges fired from it as also the unspent cartridges without any delay and to have obtained the opinion of a ballistic expert on material points. This not having been done no adverse inference could have been drawn from the omission on the part of the defence to get the carbine tested for any alleged defect in it. The evidence of Patram does not carry the matter further. 11. We are not impressed with the view of the High Court that a great deal of importance should be attached in the present case to the promptness with which the first information was lodged. Suresh Chander was an advocate and Patram was his clerk. They could certainly have quickly thought out what version to give. It is true that the importance of a first information report made promptly cannot be minimised. The object of Section 154, Criminal Procedure Code is to obtain early information of alleged criminal activity, to record the circumstances before there is time for them to be embellished or forgotten. But as we shall presently indicate, we are not satisfied that the version given by the prosecution as well as by the defence is correct with regard to the origin of the incident and the manner in which the occurrence took place. 12. There are certain features which present a good deal of difficulty. Firstly it is incomprehensible why both the appellants should launch a sudden and unexpected attack on the deceased Subhash Chander. It is not the case of the Prosecution that he had gone there along with his party to evict the two appellants or to interfere with their possession. Indeed that was not possible because according to the decree which had been obtained by the Sethi family the eviction could only take place after the allotment out of the surplus area to Tarachand had been made. It appears highly improbable that merely because such a decree had been obtained by the family of the deceased the two appellants should decide to kill him in the presence of his own brother Suresh Chander, Patram and Manphul Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 5 Singh. Secondly, even if the appellants had such a strong grievance it would naturally be against either the father or Suresh Chander who were lawyers and who must have obtained the decree from the law courts. The two appellants could possibly have no grievance of that nature against the deceased who had come home on leave only for a short time and who apparently has not been shown to have ever taken part in the court proceedings against Tarachand. On the other hand, the version of Tarachand with regard to the unprovoked shooting by the Major is equally unbelievable. If the deceased who was a trained officer in the Army holding a fairly high rank wanted to shoot Tarachand he could have done a swift 1ob of it with his automatic carbine. The story of Tarachand that the carbine became jammed or defective after the first shot is equally not convincing. In his statement before the committing magistrate he never mentioned anything about this defect. The suggestion that has been made by Mr. Chari is that in all likelihood the Major had gone with an armed carbine to threaten Tarachand into surrendering possession of the land in respect of which a decree for eviction had been obtained. The Major had no intention of killing Tarachand but in the course of a heated argument he might have given Tarachand some injuries with the butt-end of the carbine and later on even fired the shot aiming at the arm which was not a vital part but then Tarachand and his brother who had jaillies got the better of him and killed him. All this, however, leaves us in the realm of conjecture. Mr. Chari's emphasis on the evidence of Dr. Jagdish Chander, P.W. 2 with regard to the blackening near injury No. 2 on the arm of Tarachand can hardly be of much avail. On a careful perusal of his statement we are inclined to agree with the learned Sessions Judge for the reasons given by him that he has made a statement to suit the version of both sides. We are unable to find that the deceased received the injuries at the hands of TaraChand and his companion in exercise of the right of private defence of the person of Tarachand. 13. We may now deal with another aspect which will have a great deal of bearing on our final decision in this case. According to the defence Khasra No. 174/2 was in the possession of Tarachand. Its distance from the place of occurrence was only 10 or 11 feet. There were tractor marks on this Khasra number. This is borne out both by the evidence and by the site plan. The Sessions Judge and the High Court did not accept the case of the defence on the question of Tara Chand's possession of Khasra No. 174/2. It appears from the evidence of the Patwari, Sunder Das P.W. 5 as also the report made by him, Ext. PH dated July 17, 1969 that originally whole of Khasra No. 348 was in possession of Tara Chand appellant. His name was entered as its occupancy tenant upto the Rabi crop 1953. As a result of consolidation proceedings in 1952-1953 some part of this Khasra inside the Phirni (outer village road) came to be shown in the Revenue records as the property of the village Panchayat, the purpose being extension of Abadi-deh (residential part of the village) Khasra No. 174/2 was assigned to this portion inside the Phirni Khasra No. 174/2 is shown at point No. 4 both in the site plan, Ext. PG prepared by the Patwari and Ext PR made out by the Investigating Officer. Ex. PG shows that Tarachand was in cultivating possession of the Khasra numbers adjoining the area within which Khasra No. 174/2 is situated. 14. On behalf of Tarachand appellant it has been claimed that al though a portion out of the bigger old Khasra No. 348 which was admittedly in his possession had gone to the Panchayat (this portion being numbered 174/2) for extension of the Abadi-deh he continued to remain in Its physical possession as consolidation proceedings had been stayed by an order of the Punjab High Court in 1055. Reliance has also been placed on the procedure prescribed by Section 23 of the East Punjab Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 6 Holdings (Consolidation and Prevention of Fragmentation) Act 1948 for change of possession. It is pointed out that although In his report the Patwari had stated that the ownership of Khasra No. 174/2 had been transferred to the Panchayat the necessary orders relating to change of possession were not produced. 15. We do not consider that the absence of orders relating to change of possession can have much significance. The ownership of Khasra No. 174/2 was undoubtedly of the village Panchayat and the land was shown as Gair Mumkin (unploughable or uncultivable). It is well known that even when land is shown in Revenue records as Gair Mumkin some cultivation can be done on it by a person who is in actual possession. It is difficult to believe the Patwari that he did not know if Tara Chand was in possession of Khasra No. 174/2 on the date of the occurrence when he could say definitely that he was in possession of the other Khasra numbers in the immediate vicinity of Khasra No. 174/2. His answer about the sowing of certain crop (Taramira) by the wife of Tarachand in that Khasra No was equally vague and Indefinite. If there was no cultivation the Patwari could have said in positive terms that he never found any part of Khasra No. 174/2 under cultivation especially when he had gone to the spot on July 17, 1969. It was obvious that he was trying to suppress giving an information on a point which was material to the defence. At any rate, it was not necessary for the defence to prove that Khasra No. 174/2 was under the cultivating possession of Tarachand. The proved facts that originally this land was in his possession as a tenant and that the consolidation proceedings had been stayed coupled with other circumstances leave no doubt in our mind that Tarachand had continued to remain in actual possession of Khasra No. 174/2 even though as a result of consolidation it had been allotted to the village Panchayat for extension of Abadi-deh. It is significant and this circumstance carries much weight that there were tractor marks in Khasra No. 174/2. The prosecution failed to furnish any explanation for the tractor having gone to that Khasra Number. According to the case of the prosecution the tractor had been used only in the fields which were in the complainant's possession and which had nothing to do with the lands in the possession of Tarachand. The presence of tractor marks in Khasra No. 174/2 show that the party of the complainants took the tractor there and this lends support to the version of the defence that that was done because Tarachand was working there. The learned Sessions Judge attached importance to the fact that it had not been shown that this land had been purchased by the complainants. Even if that be so, the tractor did go to Khasra No. 174/2 which was in possession of Tarachand and he and his brother had a right of private defence of property, under Section 97 of the Indian Penal Code. That was, however, subject to the restrictions contained in Section 99. This right in no case extends to the inflicting of more harm than it was necessary to inflict for the purpose of the defence. 16. The injuries which were Inflicted on the deceased even if caused for defence of property were such as could never be justified. We cannot accept in its entirety the version of Tarachand about how the Major fired the shot and also caused the injuries to him with a blunt weapon. The number and the nature of injuries which were inflicted on the deceased by means of jaillies by the appellants clearly showed that they exceeded the right of private defence of property. It appears that even after the deceased had fallen down the appellants continued to injure him in a vindictive and revengeful spirit. The plea of alibi set up by Siri Ram has not been accepted and rightly so. No attempt was made before us to support that plea. There can be no manner of doubt about his presence as the number of assailants was bound to be more than one; otherwise so many injuries could not have Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 7 been inflicted on the deceased. 17. For the reasons given above the appeal is allowed to the extent that the conviction and sentence of the appellants under Section 302 are set aside and instead they are found guilty under Part I of Section 304, Indian Penal Code for which we consider that a sentence of 7 years' rigorous imprisonment will meet the ends of justice. Tara Chand And Anr. vs State Of Haryana on 21 July, 1971 8 | {
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Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 Equivalent citations: AIR1971SC2256, 1971CRILJ1547, (1971)1SCC503, AIR 1971 SUPREME COURT 2256 Author: P. Jaganmohan Reddy Bench: S.M. Sikri, P. Jaganmohan Reddy, I.D. Dua JUDGMENT P. Jaganmohan Reddy, J. 1. This appeal is by Special Leave against the Judgment of the Bombay High Court which reversed the order of acquittal of the Appellant passed by the Special Judge, Thana and convicted him of an offence under Section 161 I.P.C. as also under Section 5(1)(d) read with Section 5(2) of the Prevention of Corruption Act for demanding and accepting illegal gratification of Rupees 25/-. 2. The Complainant Bommayya Bondayya Dhanpilley, P.W. 1 was running a Hotel at Bhiwandi, where he would prepare and serve customers meals and tea for which a Hotel licence was obtained by him under the Public Entertainment Rules made under the Bombay Police Act. The licence was current for the year January 1, 1965 to December 31, 1965. According to P.W. 1 he entered into an agreement with his friend one Sidhu Korga Shetty P.W. 10 on the 18th January, 1965 Ex. 9 under which P.W. 10 agreed to take the Hotel on rent for 1l months from 11-1-65 at Rs. 100/-per month and to pay an advance of Rs. 1,000/-. It also appears that under Rule 5 of the Public Entertainment Rules a licence granted under Rule 3 was not transferable but was for the benefit only of the person to whom it was granted, so that even on the death of such person, it was deemed to have been revoked at once. Further under Rule 8 no person keeping a place of public entertainment shall be absent without the previous permission of the District Magistrate and no such person shall at any time permit any other person to act for Mm in the management of such place without the like permission similarly endorsed. 3. The case of the prosecution is that on 17-1-65 the Appellant who in the beginning of 1965 was working as Head Constable at Bhiwandi Police Station visited the Complainant's Hotel at about 6 p.m. where he found the Complainant at the Galla and Shetty standing by his side. The Appellant enquired whether Shetty's name was shown in the licence. The complainant then told the Appellant that Shetty was his friend so that he helps him in the Hotel affairs. The Appellant however, was not satisfied with this explanation and told the Complainant that he would file a case because Shetty was working as a Manager at the Galla though his name was not shown in the licence. It is further the Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 1 case of the prosecution that after some discussion the Appellant said that if he would pay Rs. 30/-per month until the name of Shetty was entered in the licence, he would be satisfied. The Complainant pleaded that his business was not such as to permit him to pay the amount demanded. On hearing this the Appellant went away. The next day P.W. 1 and P.W. 10 had gone to the Mamlatdar's office, gave an application for Sugar and were returning when the Appellant met them. He called the Complainant and informed him that he had filed a case against him and that he the Complainant should deposit Rs. 5/-as security for his appearance. Though at first the complainant pleaded that he had no money he, however, paid this amount and obtained a receipt in the name of Shetty. On 6-2-65 at about 4 p.m. P.W. 1 met the Appellant at Kalyan Naka when he was told by the Appellant that another case would be filed against him and his licence would be cancelled. P.W. 1 said that he was a poor man and could not pay so much but the Appellant insisted that Rs. 30/-should be paid. However the demand was reduced to Rs. 25/-p.m. which P.W. 1 promised to pay the next day. When the Appellant enquired when he should come to collect the money P.W. 1 replied that he should come on the 8th either in the morning or in the evening and the amount would be paid to him in the shop, after which they parted. P.W. 1 thereafter decided to inform the Anti-corruption authorities at Thana; so he came by Bus on 7-2-65 and narrated the incident to the Anti-corruption Officer who recorded his First Information Report as per Ex. 10. The Complainant P.W. 1 was asked to come the next morning and after he had come there as directed at 8 a.m. the Complainant narrated to the two Panchas, Harishchandra Katkar P.W. 3 and Pralhad Vishnu Patil P.W. 5 about the incident. He was then searched after which he produced 2 notes of Rs. 10/-and one note of Rs. 5/-before them, and a demonstration was given under ultra violet light before the anthracene powder was smeared and after. It appears that this anthracene powder glows a bluish colour under an ultra violet light. A Panchnama was prepared of what transpired. All the members of the raiding party washed their hands. After telling the Complainant that if the Appellant demanded the amount, it should be given and if he accepted the amount the Complainant was to inform the Anti-Corruption Officers in respect of this, the raiding party went to Bhiwandi. On reaching Bhiwandi the Complainant along with the two Panchas, P.W. 3 and P.W. 5 went ahead and sat in his Hotel, while the other members of the raiding party went inside the house of a relative of the Complainant. It is alleged that the Complainant and the two Panchas sat in the Hotel from 10 a.m. till 5 p.m. when the Appellant came to the Hotel, and sat there. The Appellant then asked the complainant if he had given the application for getting the name of P.W. 10 added in the licence to which the Complainant replied that he had. The Appellant then told the Complainant that he would be getting the application and said that when there is work for getting a licence people approach him and when the licence is given nobody cares or approaches the Police Officers. On his demanding the bribe of Rs. 25/-the Complainant took the notes and wanted to give to Appellant but the Appellant put forward an envelope which he was holding and told the complainant that he should put the amount in it. Accordingly the Complainant put inside Rs. 25/-through the mouth of the envelope which was opened by the Appellant but it appears that the upper portion of the notes were getting out so the Appellant who was holding the envelope in his right hand tapped them inside the envelope with his left hand, after which he kept the envelope on the table, took out his uniform cap with the left hand and put it on the envelope. It is claimed by P.W. 3 and P.W. 5 that they had seen everything that had transpired between the Appellant and the Complainant. Immediately after the Appellant kept his cap on, the envelope the Complainant went out and called the Anti-corruption Officers informing them that the Appellant had demanded the money and he had paid the amount Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 2 to him. The members of the raiding party led by P. S. I. Parab P.W. 12 then came there and it is said that the hands of the Appellant were examined under the ultra violet light when a thin line of white powder was seen on the three fore-fingers of the left hand of the Appellant. When the envelope was searched it contained Rs. 25/-, two ten Rupee Notes and one of Five Rupee note, which when examined showed anthracene powder. The envelope was examined and it also showed evidence of anthracene powder but when the cap of the Appellant was examined no powder was found on it The Complainant P.W. l's hands were also examined and it was found that there was powder on his right hand and also on his hip pocket. Panchanamas were drawn up in respect of these matters and other formalities completed such as the taking of the statements from Bhondu Bhiku Aire P. W.11 who was present there and who was asked to write it in his own hand which he did. Supplementary statements also were taken from P.W. 1 and P.W. 5 by about 7.15 p.m. while other statements were completed round about 9.30 p.m. after which the members of the raiding party returned to Thana and there found that the bottle containing the Anthracene powder with the seal was in tact. The statement of Panch Katkar P.W. 3 was recorded that night while that of Panch Patil P.W. 5 was recorded the next day and of the Head Constable Tukaram Jangam and the Clerk, Lax-man Rokade on 15-2-65. 4. The Appellant denied the story of the prosecution and according to him he was falsely implicated by the Complainant P.W. 1 and P.W. 5 and their common friend Shiddu Korga Shetty and Pappa Shetty all of whom have enmity with him. The Appellant's version is that on 17-1-65 while he was patrolling in Section 1 from 4 p.m. to 8 p.m. he went to P.W. l's Hotel to check up. At that time he found Shetty P.W. 10 at Galla but P.W. 1 was absent. When Appellant asked and obtained from Shetty the licence with a. view to verifying whether Shetty's name was there in the licence he found that Shetty's name was not written in it as the Manager of the Hotel. The Appellant asked Shetty to accompany him to the Police Station as a case has to be filed against him but Shetty said that as there was none else to manage the Hotel he would come next morning. A note to this effect was made by the Appellant in his diary. On the next day i.e. 18-1-65 at 2 P. M. Shetty came to the Police Station, the Appellant prepared the Report, as per Ex. 39 and he produced Shetty before the Thana Amaldar Tukaram Jangam P.W. 9 who took Rs. 5/-as security for Shetty's presence at the Police Station for which a receipt Ex. 41 was also issued in the name of Shetty. Orders were also given to the Appellant as per Ex. 39A by the Thana Amaldar, who required him to fill a form which was complied with on the same day. The Appellant has further stated that on 8-2-65 roundabout 4.30 and 4.45 p.m. when the Appellant came to the Hotel of the Complainant who was at the Galla asked him in Marathi to come in whereupon the Appellant went in, and was then requested to take tea but the Appellant refused and told him that he wanted water. He placed the envelope Ex. 11 which contained some arrest warrants and other official papers on the table and kept his cap over it and came out to wash his face. When he was washing his face he saw constable Aire, who told hind that he wanted to take tea and went in and sat on the chair. The Appellant also went and sat on the chair by his side. In the meantime the Complainant went outside and P. S. I. Parab and 2 Panchas and other members of the raiding party came in. Parab caught hold of the Appellant by his hand and told him that he has accepted the money and would see his hands. Parab then saw the hands of the Appellant under ultra violet light but there was no powder on his hands and fingers nor was there any powder on his clothes or on ant part of his body. Parab searched the Appellant but no bribe amount was found on him, he then said that the bribe amount is in the envelope but the Appellant Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 3 said that he knew nothing about it. He was then asked to sit outside the Hotel when Parab started preparing the Panchnama inside the Hotel. Statement of the Appellant was then recorded and a copy of the Panchnama was given to him at 9 p.m. The Appellant also says that the statement of Aire was not recorded by Parab in the Appellant's presence. However, he took Aire with him. According to the Appellant one Waman Kashinath had given an application against Papa Shetty and when the Appellant was investigating, he was asked by Complainant P.W. 1 and Sidhu Korga Shetty P.W. 10 to give a report in favour of Papa Shetty but he told them that he would write the true facts. After making enquiry the appellant gave report against Papa Shetty as per Ex. 51. In view of this Report both P.W. 1 and P.W. 10 were against him. Because of this also he had filed a case against Shetty P.W. 10 and so they became inimical to him and have concocted a false case against him through Anti-corruption Department. It is further alleged that the Complainant took advantage of the Appellant going out to wash his face outside the hotel, trapped and planted the currency notes in the envelope. 5. The Special Judge held that the story told by the Complainant was not established that while one of the Panchas P.W. 3 said there was no powder on the Appellant's hands, the other Panch P.W. 5 could not be relied upon and that there was no evidence of anthracene powder on the cap of the Appellant which he removed by his left hand with which he is said to have tapped the protruding notes inside the envelope. After considering these and other matters alleged against the Appellant in detail he was of the view that prosecution had not established that the Appellant demanded Rs. 25/-or accepted it and consequently acquitted him. Against this acquittal the State appealed to the High Court which as we have stated earlier reversed and set aside the order of the Special Judge and sentenced him to Rigorous Imprisonment for one year and a fine of Rs. 200/-and in default a further term of rigorous imprisonment for 3 months. The High Court in its judgment while recognising that Panch Harishchandra P.W. 3 has not supported the case of the prosecution thought that the Sessions Judge did not give a finding as to which of the two Panchas has to be believed in the light of the Panchnama, relied on the conversation which is alleged to have taken place between Appellant and Complainant on 6th February and also on the evidence of Panch Patil, Police Constable Aire and the Examination-in-chief of Panch Harishchandra that anthracene powder was found on the hands of the Appellant. 6. The learned Advocate for the Appellant submits that the High Court was in error in holding that the thin line said to have been found on Appellant's left hand fingers was a line of anthracene because none of the witnesses who deposed before the Special Judge ever said that there was a glow of blue light or even a glow of light. He further submits that no proper consideration was given to another important fact namely that according to the Complainant the Appellant had removed his cap with the left hand with which he had tapped the protruding notes inside the envelope which hand is supposed to have had a thin streak of anthracene powder. The learned Advocate therefore contends that if the streak of thin powder on the fingers was anthracene powder then when the Appellant removed the cap and placed it on the envelope in which the bribe money was kept then the cap would have shown evidence of anthracene powder on it The Panchnama Ex. 24 as well as the evidence of P. S. I. Parab clearly shows that though the cap was examined no anthracene powder was noticed. Apart from these 2 infirmities in the evidence of the Complainant P.W. 1 and the other witnesses bristles with contradiction and ought not to be relied upon to convict the Appellant. Even Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 4 on the probabilities of the case the learned Advocate submits that there was no reason for the Complainant to agree to pay a bribe or for the Appellant to demand a bribe because according to the case of the prosecution the Appellant had on the 17th January 1965 itself when he found that Shetty P.W. 10 did not have permission to manage the Hotel endorsed on the licence filed a complaint against him and on the 18th he had even made him deposit Rs. 5/-as security for his appearance. The meeting said to have taken place on 6-2-65 between the Appellant and the Complainant at which he is alleged to have demanded a bribe is also improbable because by that time namely on 1-2-65 itself P.W. 1 had filed an application along with Challan, for permission for entering the name of Shetty in the licence as the Manager of his Hotel. In these circumstances the learned Advocate says that there was no occasion for demanding Rupees 30/-per month as bribe or for the Complainant to agree to pay him Rs. 25/-p.m. At the most the Appellant could only favour the Complainant by giving a favourable report in which case the complainant would get the permission to allow P.W. 10 to act as a Manager endorsed on the licence which is all that was required to conform to the Rules. If so it is difficult to understand how anyone could ask for a monthly remuneration or would have accepted to pay it. It would be possible to comprehend a lumpsum bribe being asked in a situation of that nature. The Appellant's version, it is submitted is more probable and that the Complainant along with his friend had concocted a case against him because of enmity with him. 7. The learned Advocate for the Respondents on the other hand says that the approach of the Sessions Judge was erroneous as he has not taken into consideration the evidence of the Complainant, P. S. I. Parab and Aire and has merely taken into account what was stated by the Panch witnesses to disbelieve the prosecution case. Secondly he contends that the thin streak of powder was anthracene powder as according to him the witnesses had spoken to having seen a white line which could only be seen in ultra violet light, if it was anthracene powder and not any other. Thirdly the Appellant's case itself shows that the prosecution version is "probable and in fact is established because the Appellant says that when he went to wash his face he saw Aire coming in but no question was asked about the Appellant washing his face. On the other hand Aire says when he went in he saw Appellant sitting in the Hotel on a chair and he went and sat by his side in a chair. The learned Advocate therefore submits that the High Court was justified on the evidence in disagreeing with the conclusion arrived at by the Sessions Judge who acquitted the Appellant. 8. It appears to us that one important and salient piece of evidence has not been given due weight nor even considered by the High Court namely that according to the evidence of the Complainant P.W. 1 the Appellant had taken off his cap by the very same hand with which he had tapped the notes namely by the left hand which is said to have contained a thin line of anthracene on the finger tips. If so it is impossible not to detect anthracene on the cap. There is no way in which you could hold the cap with the left hand without any of the fingers of that hand coming into contact with the cap. The Appellant is entitled to complain that this very relevant and crucial evidence would have taken note of in considering his defence. We think there is force in this contention. While, the High Court did refer to the fact that the presence of anthracene powder was not noticed either on the cap or on any other part of the envelope it says that that is a circumstance which supports the Complainant but while saying so it merely examines the implication of the finding that no anthracene powder was noticed on the envelope Ex. 11 except at the opening, and does not anywhere Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 5 consider the significance of anthracene powder not being found on the cap which was a circumstance in favour of the Appellant. In fact in the Panchnama Ex. 24 it is recorded that the Appellant had denied even at that very stage when asked to produce the amount of bribe that he had accepted the money. It is pointed out that while the Panchnama says that the shining of the note and of envelope was faint blue, none of the witnesses in their deposition say that there was a glow or a shining blue. It is stated in the Panchnama that the Complainant put one folded ten Rupee note in the envelope with his right hand and when a little portion of the fold of the note could be seen outside, the Havaldar pushed it inside with his left hand, kept the envelope on the table and placed the cap on his head with his right hand over the envelope. The Complainant P.W. 1 however says in his deposition in the Cross-examination that the Appellant took out his cap with his left hand and placed it on the envelope which he had placed on the table. There is therefore an indication that when no powder was discovered on the cap in the Panchnama a statement that the Appellant had placed his cap on the envelope with his right hand has been made. It may also be noticed that Panchnama speaks only of one note of Rs. 10/-being put in the envelope and no other notes, while the case of the prosecution is that there were two notes of Rs. 10/-and one of Rs. 5/-that were placed by the complainant in the envelope. Some of these statements in the Panchnama which contradict the evidence of the Panch witnesses and the complainant were not put to them as such no notice can be taken of these contradictions. 9. The evidence of the Panch P.W. 3 is that he went to the Hotel along with the other Panch P.W. 5 and both of them were simply sitting in the Hotel during all that period namely from 10 a.m. to 5 p.m. He further said that when the Appellant came he was wearing a uniform cap and was having a cover Ex. 11 in his hands. There were papers in this envelope. The Appellant kept it on the table when he sat in the Hotel. The witness was sitting in the Hotel so also the other Panch till the end. Parab opened the cover Ex. 11 in his presence and asked him to open the envelope and when he did so he found Rs. 25/-inside the envelope and two warrants. He further says that Parab showed their hands in ultra violet light and there was no powder on their hands. Parab also showed his hands in ultra violet light and nothing was found. The hands of the Appellant were also seen under ultra violet light and there was nothing found even on them though witness says that there was powder found on the warrants Annexures 2 and 2A and also on Ex. 11. In cross-examination he admits that one other Constable was sitting by the side of the Appellant when Parab came. The Appellant was washing his face outside the Hotel when Parab came. At that time Appellant was neither wearing a cap nor he had envelope in his hand. When the Appellant was washing his face outside the Hotel the Complainant was inside the Hotel. The Complainant went to call Parab. He and the other Panch were both on the road when the Appellant was washing his face outside the Hotel. It was suggested to him that he came on the road from the room of Lingaya which suggestion he denied. It may be noted that this witness did not support the prosecution case even in the Examination-in-chief and yet no attempt was made by the prosecution for permission to cross-examine him. 10. The other Panch P.W. 5 does not know on what power the lamp under which the hands were seen for anthracene powder was working but is certain that it was not with electric current. He says that it is not correct that bluish colour would be noticed if hand is brought close to that light. The powder was white, but prior to this he had no occasion to see hands under that light, though it is the case of the prosecution that on the 8th January before they set out for Bhiwandi, at Thana both Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 6 Panchas were shown their hands under the light before and after the anthracene powder was dubbed on their hands and that the same glowed and gave a bluish light when anthracene powder was put on them. The witness at first stated that the Appellant did not ask the Complainant if he had sent the Hotel licence, though when confronted with the statement in the Panchnama he sought to resile from the original statement. If as a matter of fact the two Panchas and the Complainant were sitting in the hotel from 10 a.m. to 5 p.m. notice will certainly be taken of them by all those present in the Hotel which is comparatively a small one. Nor is it comprehensible that the Appellant would converse in this small area, with the Complainant when two persons one on either side was watching him as indeed according to one of them P.W. 5 the Appellant was looking at them all the time. The High Court thought that the learned Special Judge had compared the evidence of the two Panch witnesses but did not say whether Panch Harishchandra (P.W. 3) is a witness of truth or Panch Patil. This conclusion cannot be justified on the assumption implicit in the observation that "when the contents of such a document (the Panchnama) are proved and the evidence of Panch Harishchandra has gone counter to that document it was necessary for the learned Judge to consider in the first instance whether Harishchandra is a witness of truth or Panch Patil is a witness of truth". It may be pointed out that any statement made in the Panchnama cannot be used in evidence except for the purposes of contradicting the witness whose statement is contained in Panchnama but if it is intended to contradict him by the writing his attention must before the writing can be proved, be called to those parts of it which are to be used for contradicting him. This is what is required under Section 145 of the Evidence Act but even where a witness is confronted by his previous statement and given an opportunity to explain, that part of the statement that is put to him does not constitute substantive evidence. We think the High Court was not justified in its comment on the appreciation of the evidence of these witnesses by the learned Special Judge even though it observed that the better course would have been to seek permission to cross-examine Panch Harishchandra. 11. Then there is the evidence of Aire who admittedly came to the Hotel later and whose statement also was recorded, not on that day but the next day. It was suggested to him that Parab threatened him that unless he gave a statement as per his instructions he would also involve him in the case, which suggestion however was denied. 12. Sub-Inspector Parab who was conducting investigation says that the colour of the powder used in this case was whitish in colour, the fluorescein of the powder was light bluish. He also says natural oils and fats fluoresce in fingers and look whitish under violet light. It may also be noted that the witness says he does not remember whether all the lights were switched off when the hands of the Appellant were examined under it. One of the Panch witness P.W. 5 says that they created darkness by their own shadow, which implies that the lights were not switched off. On this aspect the comment of the learned Advocate for the Appellant was that without darkness anthracene powder cannot be seen under the ultra violet rays. We had already referred to Parab's statement that he does not remember whether he had switched off the lights. He also says that ultra violet lamp worked on electricity is more powerful than the one which he used. In these circumstances the Special Judge was not unjustified in his conclusion that it is doubtful whether there was a thin line on the three fingers indicating anthracene powder or that it was difficult to believe Panch Patil and the informant that with these fingers the Appellant put the notes inside the envelope Ex. 11. This conclusion of the Special Judge is further reinforced firstly by the evidence of Parab that natural oil Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 7 and fats fluoresce on fingers and look whitish under ultra violet lights; so that if a white line was seen it does not necessarily imply that it was anthracene powder marks, secondly by the omission to find any traces of anthracene on the cap which as we have said, must necessarily be found if it was removed by the hand which had on its fingers anthracene powder. In any case according to Parab when the hands were being inspected he knew where the amount was kept, that he knew that it was kept in the envelope but says he had not taken charge of the envelope as soon as he entered the Hotel or before he examined the hands of the Appellant. This statement would be consistent with the case of the prosecution as well as the defence because any prior knowledge of the notes being in the envelope could only come to him from the complainant. 13. The evidence of Aire was not relied on by the Special Judge on the ground that contrary to the provisions of Section 162 instead of his statement being recorded by Parab he was made to write it out in his own hand so that he may not at any time thereafter resile from it. The High Court however, did not consider this aspect and though it accepted the evidence of Aire in respect of his statement that anthracene was found on the fingers of the Appellant it rejected his evidence relating to the movements of the Appellant on 4th February between 4 to 8 p.m. which made the statement of the complainant that he had met the Appellant on that day at 4 p.m. as unreliable. The Special Judge came to the conclusion that the evidence of Aire on this aspect was reliable and believed the story that he and the Appellant were together on that day as such the Complainant could not have met the Appellant There were also many infirmities in the story of the Complainant about the conversation he is said to have had with the Appellant and the Appellant's demanding a bribe all of which were adverted to in great detail but have not been taken into consideration by the High Court. It appears to us that the story of the Complainant in some of the important aspects is not credible. The fact that the receipt for Rs. 5/-as security for appearance was given to Shetty and is in his name lends weight to the Appellant's version that on the 17th January he had not met the Complainant but had only met Shetty on the Galla. If the Complainant was on the Galla as stated by him there was no occasion for the Appellant to lodge a complaint against him merely because Shetty was standing near the Complainant. Again after the complainant had applied for per mission on the 1st February 1965 there was no occasion for the Appellant to come to the Complainant on the 6th February and threaten to prosecute him that too after he ascertained that the application for permission had been given, nor is the version that the Appellant demanded monthly remuneration believable. We cannot accept the contention of the learned Advocate for the Respondent that there is nothing incongruous in the Appellant demanding the amount because it would take some time before permission could be given and in the meanwhile the Complainant would be contravening the Rules. The simple answer to it is that the Complainant could easily have said that he will not permit Shetty to act as Manager till then. It was in the power of the Complainant to make the necessary adjustments with Shetty rather than plead poverty or agree to pay the bribe. There is nothing in the evidence to show that either the Complainant or Shetty showed the agreement of the 18th to the Appellant at any time, because for one thing on the 17th there was no agreement executed by the parties and for another no occasion arose subsequent to that date to show the Agreement. The High Court no doubt while accepting the case of the Appellant that Shetty was in-charge of the cash counter and was conducting the business on the 17th January 1965 none-the-less inferred that the Complainant must have also been there. It observed: "The accused denies the presence of the Complainant. As the complainant had admitted in the evidence before the Court that possession was delivered on Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 8 January 11, 1965, we have no doubt that Shetty must be at the counter but it is not impossible that the complainant would also be present. Both of them knew that a person has no right to sit at the counter and usually must be in-charge of the shop only when his name appears in the licence. They had applied to the Collector on January 18, 1965 and were awaiting the disposal of their application. It is therefore more natural that the Complainant would be formally present in the tea stall so that in case the presence of S. K. Shetty is challenged the Complainant would still be there to wriggle out of the situation. . The Appellant admits having paid a visit to the tea stall in the evening of January 17 and further alleges that he actually filed a criminal prosecution". 14. Now it may be mentioned that the learned Judges came to conclusion that the Complainant was present at the counter on the 17th January on a wrong premise namely that the application for permission was made on the 18th January while in fact it was not made till the 1st February. Again they hold that though It is not possible to explain how the entry regarding the application for sugar quota dated the 13th January was made on the 19th January in the Mamlatdar's office, they are satisfied in spite of this discrepancy that both the complainant and Shetty were present in the Mamlatdar's office and conclude that the association of the Complainant at every stage until legal transfer of the name, therefore, must be inevitable. 15. On a consideration of the evidence, we think that the reversal of the order of acquittal by the High Court was not warranted. Though the High Court has power on a review of the evidence to reverse the order of acquittal, yet in doing so it should not only consider all matters on record including the reasons given by the Trial Court in respect of the order of acquittal, but should particularly consider those aspects which are in favour of the accused and ought not also to act on conjectures or surmises nor on inferences which do not arise on the evidence in the case. In the view we have taken, the Appeal is allowed, the judgment of the High Court reversed and the Appellant acquitted. The Appellant being on bail, his bail bond is cancelled. Kanu Ambu Vish vs The State Of Maharashtra on 1 February, 1971 9 | {
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Muni Lal vs Delhi Administration on 30 March, 1971 Equivalent citations: 1971 AIR 1525, 1971 SCR 276, AIR 1971 SUPREME COURT 1525, 1972 MADLJ(CRI) 154, 1971 SCD 548, 1972 (1) SCJ 142 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, A.N. Ray PETITIONER: MUNI LAL Vs. RESPONDENT: DELHI ADMINISTRATION DATE OF JUDGMENT30/03/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. RAY, A.N. CITATION: 1971 AIR 1525 1971 SCR 276 1971 SCC (2) 48 CITATOR INFO : RF 1992 SC 604 (125) ACT: Prevention of Corruption Act (2 of 1947), s. 5A-If officer conducting investigation should take every step himself- Objection not taken during trial- Effect of irregularity or illegality-If conviction illegal. HEADNOTE: The appellant was charged with the offenses under s. 5(2) read with s. 5(1) (d) of the Prevention of Corruption Act, 1947 and s. 161, I.P.C. The investigation was conducted by the Dy. Superintendent of Police but some of the statements, reports and memoranda were written, not by the Dy. Superintendent of Police, but by the Sub-Inspector. The appellant did not raise any objection before or during the trial that an illegality or irregularity was committed during investigation. At the stage of argument, it was conte Muni Lal vs Delhi Administration on 30 March, 1971 1 nded that there was a violation of s. 5(A). The appellant was convicted and the conviction was confirmed by the High Court. In appeal to this Court, on the questions: (1) whether there was violation of s. 5(A) of the Prevention of Corruption Act, and (2) whether such violation rendered the trial and conviction of the appellant illegal, HELD:(1) The Dy. Superintendent of Police gave evidence that the entire investigation was done by him and that the statements and reports which were in the hand- writing of the Sub-Inspector were written by the latter on his dictation and under his supervision. The evidence in the case also established that the Dy. Superintendent of Police was in complete charge of the investigation giving necessary directions and, never withdrew from the case at any stage. Though s. 5A is mandatory that the investigation should be conducted by the officer of the appropriate rank it is not necessary that every one of the steps in the investigation should be done by him in person or that he could not take the assistance of his deputies or that he was bound to go through each one of the steps himself. Therefore, there was no irregularity or illegality in the conduct of the investigation. [280 F-G; 282A-B, F-H; 283B] (2)Where no objection was raised before trial commenced regarding any illegality or irregularity committed during investigation and where the cognizance of case in fact had been taken and the case had proceeded to termination the invalidity of the preceding investigation would not vitiate the result unless miscarriage of justice has been caused thereby and the accused has been prejudiced. [281A-B, C-D, G] H.N. Rishbud and Inder Singh v. State of Delhi, [1955] 1 S.C.R. 1150 and Munna Lal v. State of Uttar Pradesh, [1964] 3 S.C.R. 88, followed. State of Madhya Pradesh v. Mubarak Ali, [1959] Supp. 2 S.C.R. 201, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Criminal Appeal 23 of 1968. Appeal by special leave from the judgment and order dated September 18, 1967 of the Delhi High Court in Criminal Appeal No. 26-D of 1966. E. C. Agarwal, for the appellant. G. N. Dikshit and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J.-This appeal, by special, leave, is directed against the judgment and order dated September 18, 1967 of the Delhi High Court confirming the conviction of the appellant for offenses under Sections 5(2) read with Section (5) (1) (d) of the Prevention of Corruption Act, 1947 Muni Lal vs Delhi Administration on 30 March, 1971 2 (hereinafter to be referred as the Act) and Section 161 of the Indian Penal Code. The High Court also confirmed the sentence of one year's rigorous imprisonment. In addition to this the Special Judge had imposed a fine of Rs. 500; but the High Court reduced the fine to Rs. 100. This was the only modification effected by the High Court with regard to the sentence. The case for the prosecution was as follows The appellant was employed in August, 1965 as Head Constable attached to Hauz Qazi Police Station, Delhi. One Som Nath used to park his rehri in the chowk of Hauz Qazi and sell Kulchey and Chholey. Som Nath had been plying this trade for about 8 or 10 years without payment of the necessary tax to the Municipal Corporation and without taking any licence. The appellant used to harass and threaten Som Nath that unless he paid bribe to him, he will be prosecuted. In particular on August 25, 1965 the appellant demanded from Som Nath as bribe a sum of Rs. 20 per month for not harassing him for carrying on his business without the necessary licence. Som Nath expressed his inability to pay such a heavy amount and ultimately the appellant agreed to receive Rs. 10 per month. He promised to make the first payment on August 26, 1965 between 2 and 3 P. M. At about 11 A. M. on August 26, 1965, Som Nath approached Sri Hamaik Singh, Deputy Superintendent of Police, attached to the Anti, Corruption Department and reported about the demand made by the appellant and to his having ultimately agreed to pay a sum of Rs. 10 between 2 and 3 P. M. on that day., This complaint was reduced to writing by Harnaik Singh, who has given evidence as P. W. 6. P. W. 6, summoned two employees from the office of the Deputy Collector, Tees Hazari, Sri Navneet Lal (P. W.2) and Hari Kisban (P. W. 3) and in their presence took from P. W. I the currency note of Rs. 10 and after noting the number handed it over to P. W. I with the instruction to, give the same to the appellant on demand. P. W. I was also informed that the police party will be hiding nearby and that he should give a particular signal after paying the amount to the appellant. The police party headed by P. W. 6 together with the com- plainant and P. Ws. 2 and 3 proceeded near the rehri of P. W. I. While P. W. I went to the rehri, the police party and P. Ws. 2 and 3 remained behind in hiding. At about 2. 45 P. M. the appellant came to the rehri of P. W. I and told him "give, my thing to me". P. W. I placed the currency note on the palm of the appellant saying that he was 'Making the payment with considerable difficulty. On signal given by P. W. 1, the Deputy Superintendent of Police along with others immediately went to the rehri of P. W. I and on being told by P. W. 1 that he had paid Rs. 10/to the appellant, the latter was asked to produce the same. P. W. 6 made a search of the appellant and recovered the currency note Ex. P. I from his pocket. The number of the currency note was checked with the number already recorded and it tallied. P. Ws. 2 and 3 also witnessed the search and seizure made by P. W. 6. Accordingly the appellant was prosecuted for the offenses mentioned above. The prosecution relied mainly on the evidence of P. W. I Som Nath and the two persons who had witnessed the search and seisure P. Ws. 2 and 3 and the Deputy Superintendent of Police, P. W. 6. Certain other witnesses were also examined. The appellant denied that he had either demanded or received any bribe from P. W. I He pleaded that the alleged recovery of the currency note from him is false and that the witnesses had been tutored to give false evidence at the instance of Ved Prakash, Sub-Inspector of Police, who was his enemy. According to the appellant, he had declined to accede to the request of Ved Prakash to give false evidence against two Sub-Inspectors of Police, Phool Singh and Jeeva Singh, whom he wanted Muni Lal vs Delhi Administration on 30 March, 1971 3 to be implicated in a case. The appellant also examined two witnesses. D. W. 1 who was also having a rehri in the same chowk, had stated that the appellant had not received any bribe from P. W. I and that he also informed P. W. 6 about the same. D. W. 2 was the Secretary of the Rehri Labour Union and he has deposed to the fact that none of the members of the Union had ever complained against the appellant and that the latter had nothing to do with the prosecution of people under Section 34 of the Police Act. The, learned Special Judge accepted the evidence of P. Ws. 1, 2, 3 and 6, and rejected the evidence of D. Ws. 1, and 2. The view of the learned Special Judge was that D. W. I was giving false, evidence on account of business friendship and that D. W. 2 had said nothing about the incident in question. In this view the Special Judge found the appellant guilty of the offenses with which he was charged and sentenced him to undergo one year's rigorous imprisonment and to pay a fine of Rs. 500. On appeal to the High Court, the appellant pressed the objection that the investigation of the case was done in violation of the provisions of Section 5A of the Act. According to the appellant, instead of P. W. 6 conducting the investigation, it was done by the Sub-Inspector Ved Prakash and, therefore, no conviction could be based on such investigation, which had been made contrary to law. The appellant also pleaded that the evidence of P. W. 1 is that of an interested witness and that P. Ws. 2 and 3 were tools in the hands of the police and as such no reliance can be placed on the testimony of these three witnesses. His plea was that the evidence of D. Ws. 1 and 2 should have been accepted. The High Court has expressed the view that there is a cer- tain amount of irregularity in the investigation of the case inasmuch as the statements, reports and memos were all written by Ved Prakash and not by the Deputy Superintendent of Police, P. W. 6. But as there is only an irregularity and as the trial has not been vitiated, it cannot be said that the trial and other proceedings conducted against the appellant have to be set aside. The High Court agreed with the Special Judge that the evidence of P. Ws. 1, 2, 3 and 6 clearly establishes the case of the prosecution and as such the appellant has been rightly found to be guilty of the offenses with which he was charged. While confirming the conviction and the sentence of one year's rigorous imprisonment, the High Court, however, reduced the fine to Rs. 100. Mr. E. C. Agarwala, learned counsel for the appellant raised two contentions : (1) the trial and conviction of the appellant are illegal inasmuch as the investigation in this case has been conducted in violation of the provisions of Section 5A of the Act, and (2) the prosecution evidence should not have been accepted as the whole case has been engineered by the enemy of the appellant Ved Prakash, who has not appeared before the court. The second contention of Mr. Agarwala can be straightaway disposed of. Both the Special Judge as well as the High Court have accepted as true the evidence of P. Ws. 1, 2, and 3 supported as it was by the evidence of the Deputy Superintendent of Police, P. W. 6. The Evidence of D. W. I has been categorically rejected as false. D. W. 2 does not say anything about the incident and as such his evidence is of no assistance to the appellant. No doubt the appellant has stated when he was examined under Section 342 Cr. P.-C. that the prosecution witnesses Nos. 1, 2 and 3 are under the influence and threat of the police and that they have been prompted by Ved Prakash due to enmity to give false evidence against him. This plea has not been accepted by any of the courts. We are satisfied that the evidence adduced by the prosecution has been properly accepted by the courts. Muni Lal vs Delhi Administration on 30 March, 1971 4 This leaves us the consideration of the first contention that the investigation has not been conducted in accordance with Section 5A of the Act. We must frankly admit that the observation made by the High Court that there has been a certain amount of irregularity in the investigation of the case has given scope for this argument. According to the learned counsel for the appellant the entire investigation in this case has been done not by the Deputy Superintendent of Police P. W. 6, but by the Sub-Inspector of Police Ved Prakash, who has also not appeared before the court. The contention of the learned counsel in this regard is based upon the fact that some of the statements, reports and memos have been written not by P. W. 6 but by Ved Prakash. Mr. G. N. Dixit, learned counsel appearing for the Delhi Administration, has drawn our attention to the various reports, statements and memos exhibited in the case to show that the investigation has been done not by Ved Prakash, but by P. W. 6 and it is not violative of Section 5A of the Act. He has also placed considerable reliance on the evidence of P. W. 6 in this regard to show that the entire investigation was done by him. There is no controversy that the case before us could not have been investigated under Section 5A of the Act by any police officer below the rank of a Deputy Superintendent of Police. The only question is whether the investigation has been done by Ved Prakash as alleged by the appellant or by P. W. 6 as stated on behalf of the respondent The contention on behalf of the appellant is that some of the statements recorded appear to be in the hand writing of Ved Prakash and, therefore, the inference is that it is he who has conducted the investigation. It is true that Section 5A is mandatory and not directory and an investigation conducted in violation thereof is illegal. But as held by this Court in H. N. Rishbud and Inder Singh vs. The State of Delhi (1) if cognizance in fact has been taken on a police report in breach of the mandatory provi- sions relating to investigation, the results, which follow cannot be set aside unless the illegality in the investigation can be shown to have brought about a miscarriage of justice. It has been further emphasised in the said decision that an illegality committed in the course of a n investigation does not affect the competence and jurisdiction of the Court for trial. The same propositions have been reiterated in Munna Lal vs. State of Uttar Pradesh (2) (1) [1955] 1 S. C. R. 1150. (2.) [1964] 3 S. C. R. 88. From the above propositions it follows that where cognizance of the case has in fact been taken and the case has proceeded to termination, the invalidity of the preceding investigation will not vitiate the result unless miscarriage of justice has been caused thereby and the accused has been prejudiced. Assuming in favour of the appellant, that there was an irregularity in the investigation and that Section 5A of the Act was not complied with in substance, the trial by the Special Judge cannot be held to be illegal unless it is shown that miscarriage of justice has been caused on account of illegal investigation. The learned counsel for the ap- pellant has been unable to show us how there has been any miscarriage of justice in this case and how the accused has been prejudiced by any irregular investigation. Admittedly the appellant did not raise any objection before the trial commenced regarding any illegality or irregularity committed during the stage of investigation. On the other hand, the trial was allowed to proceed and it came to an end. That contention was raised only at the stage of arguments. In this connection we may also refer to the decision in The State of Madhya Pradesh v. Mubarak Ali(1), There the objection was taken before the trial began before the Special Judge, that the investigation has been carried on in breach of Section 5A of the Act. The matter was taken to the High Court and it directed that it in order to rectify the defects and cure the Muni Lal vs Delhi Administration on 30 March, 1971 5 illegality in the investigation, the Special Judge should have ordered the Deputy Superin- tendent of Police to carry on the investigation himself while the case remained pending in the court of the Special Judge. That order of the High Court was challenged and this Court confirmed it and declined to interfere on the ground that as the objection has been taken at the earliest stage before the trial began, the direction given by the High Court was justified as that will ensure a proper investigation being made and completed for the prosecution of the accused therein. Therefore the ratio of the. said decision cannot apply and the present case will be governed by the decision in The State of Madhya Pradesh v. Mubarak Ali(1). (1). But we make it clear that the above discussion has been made by us on the assumption that there has been an irregularity committed in the investigation in the case before us' But as we will presently show in the discussion to follow there is no such irregularity or illegality in the investigation as contended on behalf of the appellant. We are satisfied that the investigation in this case has been conducted not by Ved Prakash, Sub-Inspector of Police, but by the competent authority, namely, the Deputy Superintendent of 1. [1959] Supp. 2 S. C. R. 201 2. [1955] 1 S.C. R. 1150. Police. P. W. 6. It is no doubt true that some of the statements recorded during the investigation conducted by P. W. 6 are in the hand writing of Ved Prakash. But P. W, 6 has categorically stated in his evidence that the entire investigation was done by him and that any statements or reports which are in the hand writing of Ved Prakash were written by the latter on his dictation and under his supervision. That P. W. 6 is the officer who conducted the investigation is also borne out by the, various documentary evidence produced in. the case. Ex. PA has been given by P. W. 1 to P. W. 6 and it bears the signature of the latter. The endorsement Ex. P. A 1 also bears the signature of P. W. 6. It is clearly stated therein that on receipt of the complaint Ex. PA from P. W. I., the Deputy Superintendent of Police sent for P. Ws. 2 and 3, two employees from the office of the Deputy Commissioner to appraise them about the nature of the complaint given by P. W. I and also making them witnesses for receiving the ten rupee currency note as well as handing over the same to P. W. 1 to be given as bribe to the appellant. The detailed instructions are given by P. W. 6 in the endorsement and to the said two witnesses. There is a further endorsement that he as Deputy Superintendent of Police has arranged a raiding party consisting of himself and the persons mentioned therein and that they are leaving for conducting the raid along with the complainant. There is also a further endorsement Ex. PA/2 by P. W. 6 giving in detail the actual incident relating to the search and seizure of ten rupee currency note from the appellant. All these are done by P. W. 6 and after the seizure and search, P. W. 6 sends the necessary report to the concerned police station for registering the case. The actual seizure memo is also prepared and signed by P. W. 6. The various articles seized from the appellant are also written out in the memo prepared and signed by P. W. 6. Therefore, all the above facts clearly establish that the investigation was conducted by P. W. 6, Deputy Superintendent of Police, as required by law and there has been no violation of Section 5A of the Act. The High Court found irregularity in the investigation on the basis, as pointed out earlier, that some of the statements are. in. the hand writing of Ved Prakash. We are of the view that this was a wrong Muni Lal vs Delhi Administration on 30 March, 1971 6 approach made by the High Court. It is clear from the evidence that P. W. 6 was in complete charge and control of' the investigation and he has never withdrawn from the same at any stage. He was the officer who was controlling and giving necessary directions in the course of investigation. Though it is clearly implicit in section 5A that the investigation should be conducted by the officer of the appropriate rank, we do not think it is absolutely necessary that every one of the steps in the investigation has to be done by him in person or that he cannot take the assistance of his deputies or that he is bound to go through each and everyone of the steps in the investigation in every case. The above proposition also has been laid down by this Court in H. N. Rishbud and Inder Singh vs. The State of Bihar (1) are referring to the above aspect to emphasise that the mere fact that some of the statements have been written-by Ved Prakash to the dictation of P. W. 6 will not make the investigation as one not conducted by P. W. 6. Therefore, under the circumstances, we are not inclined to agree with the view of the High Court that there has been any irregularity or illegality in the conduct of the investigation. We however agree with the conclusions arrived at by the High Court holding the appellant guilty of the offence as well as the sentence imposed on him. In the result the appeal fails and is dismissed. The appellant will surrender his bail. V.P.S. (1) [1955] 1 S. C. R. 1150. Muni Lal vs Delhi Administration on 30 March, 1971 7 | {
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Puran Lal Sah vs State Of U.P on 21 January, 1971 Equivalent citations: 1971 AIR 712, 1971 SCR (3) 469, AIR 1971 SUPREME COURT 712 Author: P. Jaganmohan Reddy Bench: P. Jaganmohan Reddy, I.D. Dua PETITIONER: PURAN LAL SAH Vs. RESPONDENT: STATE OF U.P. DATE OF JUDGMENT21/01/1971 BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN DUA, I.D. CITATION: 1971 AIR 712 1971 SCR (3) 469 1971 SCC (1) 424 ACT: Contract-Claim on basis of quantum meruit-When sustainable. HEADNOTE: The Public Works Department of the respondent-State had issued a tender notice for the construction of a road. The appellant inspected the site, went to the place where stone for the construction was said to be available, and after satisfying himself submitted a tender below the estimates in the tender notice. It was accepted and a contract was signed. The estimates in the tender notice were prepared by the P.W.D. on the basis that stone was available at a distance of 26 chains from the work spot. In fact, stone was available at that distance in the Cantonment area but for its removal permission of the Cantonment authorities had to be taken. The appellant was not able to obtain the necessary permission and so, he bad to get the stone from a Much longer distance. He requested for a higher rate but Puran Lal Sah vs State Of U.P on 21 January, 1971 1 his request was rejected. Thereafter, he commenced work, and after the work was completed the Executive Engineer recommended his case for a higher rate. By a subsidiary contract the appellant undertook to execute some additional work for the department. The quantity of work which the appellant actually performed was far in excess of what was mentioned in the contract. He claimed a higher 'rate of payment for such extra work also. Since he did not get the higher rates he claimed, be filed a suit which. was dismissed by the High Court in appeal. In appeal to this Court, HELD : (1) (a) In- none of the clauses of the tender notice or conditions of contract or in any other document was there any assurance that if stone was not available at the distance of 26 chains the appellant would 'be paid higher rates. It was for the appellant to have satisfied himself before entering into the contract that the Cantonment authorities would permit him to take the stone. Since be commenced work after his request for higher rate was rejected, it could not be said that the appellant was in any way induced by any assurance. The Executive Engineer's letter was only recommendatory and did not establish any right to obtain a higher rate. [472 G-H; 473 G-H; 475 C.] (b) It could not be said that once stone was not available at a distance, of 26 chains, the contract was at an end and that because the appellant had done the work, he should be paid on the basis of quantum meruit. That remedy would be available only when the original contract had been discharged by the defendant in such a way as to entitle the plaintiff to regard himself as discharged from any further performance, and be elects to do so; but, where work is done under a contract persuant to its terms no amount can be claimed by way of quantum meruit. [475 G-H; 476 C-D] Adopi Parshad & Sons. Ltd. v. Union of India, [1960] 2 S.C.R. 793, followed. (2) On the second item also the appellant could not succeed, because of cl. 12 of the contract. Under the clause the appellant was bound to perform all additional work which was required of him on the same terms and conditions in which be undertook to do the main work. Further, 470 paragraph 5 of the special instructions which formed part and parcel of the original contract provided that unless he gave notice that he was not prepared to do any extra work in excess of the quantity of the wort: mentioned in the contract plus 30 per cent of that quantity of work, and settled fresh rates for such extra work over 30 per cent, the appellant could not claim anything other than the rates mentioned in the contract. [476 E-H] Puran Lal Sah vs State Of U.P on 21 January, 1971 2 JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1687 of 1966. Appeal from the judgment and decree dated March 8, 1965 of the Allahabad High Court in First Appeal No. 84 of 1954. G. N. Dixit and 0. P. Rana, for the respondent. The Judgment of the Court was delivered by P. Jaganmohan Reddy, J. This appeal is by a certificate under Art. 133(1) (a) of the Constitution against the judgment and decree of the Allahabad High Court dated 8th March 1965 setting aside the decree of the Trial Court and dismissing the suit of the ,plaintiff-appellant. The appellant had submitted a tender to construct mile 3 of Nainital-Bhowali Road at 13 per cent below the rates given in Schedule B to the notice issued by the Government of the United Provinces on the 30th September, 1946. This tender was accepted and a contract was signed on 20th November 1946. It is alleged by the appellant that the rates given in Schedule B were based ,on the calculation that stone required for the road construction work would be available at a distance of 26 chains while as a matter of fact no stone was available within that distance. The appellant had in fact to get stone from Gadhera and Bhumadar from ;a distance of 79 and 110 chains respectively. It is his contention that by reason of the non-availability of the stone and the definite understanding and assurance given by the local authorities of the P.W.D. that higher rates would be given for the extra work done ,over and above the work provided in the contract he carried on the work. It was also alleged that during the construction work,on the road very hard shale rock came in the way mot originally provided for in the contract, as such he was entitled to get the costs for the work so done at the current rates from the P.W.D. which was not paid to him. In respect of these items of work done as also due to his having done the work by bringing stone from a longer distance than was given in the estimates the appellant claimed Rs. 48,840-0-0 due as balance together with interest by way of damages at 12% amounting to Rs. 17,582-0-0, making a total of Rs. 66,422-0- 0. When this claim was rejected the appellant gave notice under Section 80 of the C.P.C. and thereafter filed a suit for the above amount. The defendant respondent resisted the suit and pleaded that no assurance was given to the appellant by officers of- the PWD as alleged; that the quantity of very hard shale shown in the plaint was incorrect and at any rate the contractor, under paragraph 5 of the special instructions must be prepared to execute the work at the original tender rate in excess of the given quantities of work upto 30% and if an increase in excess of 30% is ordered over the work. the contractor must intimate, to the Engineer-in-Charge in writing his willingness or refusal to do extra work at the original tendered rates. If he refuses to carry on at the original rates he is required to settle fresh rate for increased work over 30% before doing the work. On these averments the trial court held issues 1, 2, 6 and 7 in favour of the appellant while issues 3, 4 and 5 were decided against him. In the result a decree for a sum of Rs. 20,495/for extra lead plus Rs. 1,663-14-0 for extra work done under the item very hard shale and Rs. 4,155/- interest by way of da mages, on Rs. 22,158-14-0 making a total of Rs. 26,313-14-0 was passed with interest at 3 % per annum. In appeal the High Court reversed the decree holding that (I) the employment of the figure 26 chains in the estimate was for no other purpose. than that of calculation. . and if knowing that the same was available within 26 chains it (PWD) worked out its estimates on that basis, it could not be held' to have extended any assurance, Puran Lal Sah vs State Of U.P on 21 January, 1971 3 much less guarantee to the contractors that they would get stone within that distance; (2) the plaintiff appellant performed the work required of him without exercising his right under paragraph 5 of the special instructions which gives the option to do the extra work in excess of 30% but if he refuses to do the extra work at the originally tendered rates he should settle fresh rates for increased work over 30% before doing the work which he failed to do. In view of these findings against the appellant the appeal of the respondent was allowed and the suit dismissed but in the special circumstances of the case left the parties to bear their respective costs in both the Courts. The two main questions in this appeal are: (1) Whether the estimate of the PWD formed part of the contract so as to be binding on both parties and whether any assurances were given to the, appellant that he would be given higher rates for bringing the stone from places situated at 79 chains and 1 1 0 chains respectively; (2) Whether clause 5 of the special conditions of the contract was applicable to the extra item of work contained in Ex. B3 and whether he was entitled on the assurances given by the local officers to higher rate for the extra work done. Shri Bindra, learned Advocate for-the appellant has referred us to clauses 8, 11 and 14 of the notice calling for the tender as also to certain letters and passages in the evidence to substantiate his contention that the estimates of the PWD were part of the contract and that in any case assurances were given to the appellant that when he could not get stone from distance of 26 chains, to bring from chains 79 and 1 1 0 for which higher rates would be paid. It may be stated that the PWD of the United Provinces, as it then was, had issued a tender notice consisting of 16 paragraphs and the appellant was required to sign this tender notice in token of his having received it because ultimately under clause 34 of the conditions of the contract all papers signed by the parties to the contract and bond will be deemed to be part of the contract bond and have to be read as conditions to the contract. Clause 8, 11 and 14 of the notice to which reference was made are as follows : 8. All tenders should be on percentage rates above or below the rates given in the Schedule 'B'. 11. Items not provided in the Schedule B will be paid at current schedule of rate plus or minus the percent, age above or below as tendered by the contractor whose tender is accepted for this work. 14. Contractors are advised to see the estimate, plans, specifications, special conditions prescribed and site of work before tendering. It is obvious, from these clauses that the rates are given in Schedule B on the basis of certain plans and specifications. The person intending to tender for the work was required to examine this material and also inspect the site before tendering. These instructions were designed to make all those who were desirous of obtaining the contract responsible for their acts so that it cannot be said that any mis-represeneation was made or. they were misguided in any way. The contention of the learned Advocate for the appellant is that it was definitely stated in the estimates that stone was available at 26 chains which representation was binding ,on the respondents and if no stone was available within that distance he was entitled to claim higher rates if he had to get stone from places farther away. In fact the appellant alleges that the Engineers assured him that he would be paid Puran Lal Sah vs State Of U.P on 21 January, 1971 4 higher rates. We may here observe that in none of the clauses of the notice or conditions of contract or in any other document is there any specific mention that stone will be available at 26 chains nor is there any assurance that if stone was not available within that distance the contractor will be paid higher rates. The mere fact that the estimates were prepared by the PWD on the basis of the stone being available at 26 chains which respondents admitted as stated in the judgmen it of Civil Judge, Nainital, does not mean that there was any assurance or undertaking given that stone would be avail- able at that place. In fact it is not denied that stone was available within the distance of 26 Chaim but it was in the. area belonging to the Cantonment, for the removal of which permission of the Cantonment authorities had to be taken. Evidently the contractor was not able to obtain that permission. In our view it was upto the contractor to have satisfied himself before entering into the contract that the Cantonment authorities would permit him to take stone from its jurisdiction just in the same way as permission Will have to be taken from any private individual in whose land stone required for road building is found. If the contractor has failed successfully to negotiate with the, owners of land from which he could bring stone it cannot be said that the estimate prepared by the PWD on the basis that the stone was available at 26 Chains was a statement which amounted to an assurance or constituted a condition of the contract. The appellant as P.W. I stated in his evidence : "Before giving offer I saw the estimates and plan. In the estimate it was written that the stone would be found within 26 Chains. On this basis estimate was prepared through the PWD, I enquired this be available within 26 Chains. On this basis I prepared the estimate..............In the beginning of the year 1947 1 started work attempted to take out stone from within 26 Chains.', The moment I started to take out stones, the Cantonment authorities checked me. For this act I was challanged, but I was acquitted. The entire area within 26 Chains was of the Cantonment." Further on he says "I have seen the tender notice and I had gone through it; after that I signed it. Schedule B was attached to the notice. I signed it after going through it. I submitted tender 13% less than the Scheduled rate...... before giving the tender I went to that place and found that the stones were available within 26 Chins, when I wanted to take them out, I learnt that this was within the Cantonment boundary. I sought permission to take out stones from the Cantonment authorities, but, it was disallowed." It is clear from this evidence that the appellant before giving the tender inspected the site, went to the place where stone was said to be available and after satisfying himself that the stone was available he gave the tender. A perusal of the documentary evidence would also show that he actually commenced work after his request to allow him higher rate was rejected which was long after the time when under the contract he was required to start the work. In fact just before the date fixed for the completion of the work, he had under Ex. B4 dated the 12th June 1947 made the following representation : "That as agreed upon the contract deed of my contract Nainital Bhowali Motor Road Mile 3 the lead of stones for masonary work is given only about half a mile. On inspecting the place I find it very difficult to get a quarry there as there is no stone at all. I am getting the stones from near the K. E. Sanitorium which falls at a distance of Puran Lal Sah vs State Of U.P on 21 January, 1971 5 two and a half miles from may place, as has already been brought to your and the C.E.'s kind notice. Therefore, you are requested kindly to allow me a lead of two and a half miles distance." On this the concerned authorities seem to have made the endorsement: "As lead and royalty is provided in the schedule B of the tender, the request cannot be acceded to. Draft reply is put up". Accordingly by letter dated the 21st June 1947 he was informed as follows :, "Reference your application dated 12th June 1947. Please refer to item Nos. 6, 7, 8 and 9 of Schedule B attached with your tender and on which basis you tendered your rate in this connection. As the rates noted therein provides all lead and royalty and there is no mention there that the rate contains a lead for I 'a mile, your request cannot be acceded to". This correspondence shows that the appellant's claim to have extra lead was definitely rejected as untenable even before he started the work under the contract, as is apparent from Ex. B2 dated the 19th July '47. In that letter the appellant was being informed as follows:- "Please note that since you have signed the contract for the, above work, the work must be started now in con- sultation with the Overseer-in-charge, Nainital Section. The date of start and completion will be as follows Date of start-20 November 1946 Date of completion-19 July 1947". It cannot therefore be said that the appellant was in any way induced by any assurances given by the PWD authorities that they would give a. higher rate for the extra lead before he commenced work. The case of the appellant in these letters was that no stone was available within half a mile while in his,deposition he gave a contrary version altogether. Subsequently he seems to have become hopeful because in the letter of the Assistant Engineer dated 28th December 1948 it is stated "In the estimate lead for 26 Chains was provided on the assumption that stone Will be available within the distance from the quarries in Cantonment areas. Later on when the work was in progress the Cantonment authorities objected to quarrying stones from Cantonment, land ........" No doubt the Executive Engineer in his letter dated 15th June. 1950, Ex. 22 has recommended the case of the appellant for a higher rate as he says "When the stones were not available from the Cantonment area it seems that the contractor naturally was forced to bring them from quarries situated outside the Cantonment area" and he further says "If these quarries are the places from. where stones were actually obtained then naturally the contractor is entitled to get the lead for the, full quantity of stones brought by him to complete different items requiring the use of stones". This letter seems to be a recommendatory letter by a subor- dinate to the high officer but it does not in any way establish the right of the appellant to obtain a higher rate, nor does the evidence justify this conclusion. In our view neither the terms and conditions of the contract nor the oral or documentary evidence justify the conclusion that the appellant was entitled to any extra lead. Another argument was put forward by the learned Advocatefor the appellant which is also based on the same, assumption that the availability of the stone at 26 Chains was a condition of the contract namely that once stone was not available at 26 Chains the contract was at an end and that because the appellant had done the work he should be paid on the basis of quantum meruit. This in our view Puran Lal Sah vs State Of U.P on 21 January, 1971 6 is a far fetched argument and has no relation to the facts and circumstances of the case. Even assuming that the stand taken by the appellant that the availability of stone at 26 chains was a condition of the contract was justified, he had notwithstanding the rejection of his claim even before he started the work, acquiesced in the stand taken by the respondents that he is not entitled to any higher rates, carried on and completed the contract as if there was no such condition. We therefore cannot understand the contention of the appellant's Advocate as to how the contract came to an end and who put an end to it. Even if at that stage the contract had been put an end to by the respondents which is no one's case, as the appellant had not started the work no question of quantum meruit would arise. The principle of quantum meruit is rooted in English law under which there were certain procedural advantages in framing an action for compensation for work done. In order to avail of the remedy under quantum meruit, the original contract must have been discharged by the defendant in such a way as to entitled the plaintiff to regard himself as dis- charged from any further performance and he must have elected' to do so. The remedy it may be noticed is however, not available to the party who breaks the contract even though he may have partially performed part of his obligation. This remedy by way of quantum meruit is restitutory that is it is a recompense for the value of the work done by the plaintiff in order to restore him to the position which he would have been,in if the contract had never been entered into. In this regard it is different to a claim for damages which is a compensatory remedy aimed at placing the injured party, as near as may be in the position which he would have been in, had the other party performed the contract. This Court had in M/s. Alopi Parshad & Sons Ltd. v. The Union of India(1) observed at page 809 : "Compensation quantum meruit is awarded for work done or services rendered when the price thereof is not fixed by a contract. For work done or services rendered persuant to the terms of a contract compensation quantum meruit cannot be awarded where the contract provides for consideration payable in that behalf". Though in that case the basis of the principle was not explained, it nonetheless lays down that where work is done under a contract pursuant to the terms thereof no amount can be claimed by way of quantum meruit. In the view we have taken on the facts of the case we do not propose to examine the decisions cited at the Bar in this behalf. The claim of the appellant for higher rates which in fact was by way of damages has been rightly disallowed by the High Court. On the second question also the appellant cannot succeed be- cause under clause 12 of the contract Ex. B1. the, plaintiff was bound to perform additional work which was required of him on the same terms and conditions on which he undertook to do the work for which he tendered. It appears that by a subsidiary contract entered into between the appellant and the P.W.D. Ex. B3 on the 12th April, 1946, the appellant undertook to execute some additional work for the Department. The quantity of work which appellant actually performed was far in excess of what was mentioned in Ex. B.3. The appellant therefore claimed payment for the work done by him in excess of the quantity mentioned in the contract plus 30% at the current rate as against the stipulated rates. It was submitted on behalf of the State of U.P. before the High Court that under clause 1 2 of the contract Ex. B I and paragraph 5 of the special instructions the plaintiff was not entitled to any amount in excess of what he had already been paid. This contention was accepted because under the, aforesaid clause 1.2 the contractor was bound to perform all additional work Which was required of him on the same terms and conditions in which he undertook to do the main work. Paragraph 5 of the special instructions Puran Lal Sah vs State Of U.P on 21 January, 1971 7 further provides as follows : "Contractors must be prepared to do. at their original tender rate work in excess of the given quantities (1) [1960] 2 S.C.R. 793. of work upto 30% if an increase in excess of 30% is ordered over the work the contractor must intimate to the Engineer Incharge in writing his willingness or refusal to do extra work at the originally tendered rates. In the latter case he should settle fresh rate for increased work over 30% before doing the work". These instructions being part and parcel of the original contract Ex. B1 would govern the parties. As such the appellant unless he gave notice under that paragraph that he is not prepared to do the extra work over the 30% at normal rates, he cannot claim anything other than at the rates mentioned in the contract, unless he had settled fresh rates for that extra work. There is no evidence nor is it claimed by the appellant that he had given any notice as required under paragraph 5 of the special instructions and since he did the work without fulfilling these requirements he is not entitled to claim, any amounts at a higher rate for the extra work done. As neither of the contentions have force the appeal is dismissed but in the circumstances without costs. V.P.S. Appeal, dismissed. Puran Lal Sah vs State Of U.P on 21 January, 1971 8 | {
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Bankipur Club Ltd., Patna vs The C.I.T., Bihar And Orissa, Patna on 8 September, 1971 Equivalent citations: [1971]82ITR831(SC), (1972)4SCC386, 1972(4)UJ139(SC) Author: K.S. Hegde Bench: A.N. Grover, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. There are two sets of appeals in this case both arising from the same judgment. The first set of appeals came to be filed under the following circumstances : 2. Civil Appeals Nos. 2157-2160 of 68 were brought to this Court on the strength of certificates issued by the High Court of Patna. The High Court while granting those certificates did not give any reason in support of them. That being so, those certificates cannot be considered as having been given according to law. Hence the appeals brought on the strength of those certificates must be held to be non-maintainable. It is under those circumstances the assessee-appellant applied to this Court to grant special leave against the judgment of the High Court. We granted the special leave asked for. On the basis of the special leave granted by this Court Civil Appeals Nos. 1304-1307 of 71 have been filed. 3. The assessee is a Members' Club incorporated under the Indian Companies Act. We are concerned with its assessment for the assessment year 1956-57, 1957-58, 1958-59 and 1959-60 the corresponding accounting years being the calender years 1955, 1956, 1957 and 19.58. 4. In response to a notice issued by the Income-tax Officer under Section 22(2) of the Indian Income Tax Act, 1922 to be hereinafter referred to as 8th Act' the assessee filed Nil returns for all the four years. It claimed that it was not liable to pay income-tax as it was a Members' Club. Before the Income-tax Officer the Balance sheets and Profits and Loss Accounts of the assessee for the relevant accounting years were produced. After perusing those records, the Income-tax Officer came to the conclusion that the assessee was not liable to pay any tax in respect of the amounts realised by it from its Members. Sometime thereafter the Income-tax Officer issued notices to the assessee under Section 34(1)(b). In response to those notices the assessee again filed Nil returns but the Income-tax Officer did not accept those returns. He assessed 140 Bankipur Club Ltd. Patna v. The C.I.T., Bihar & Orissa, Patna U.J. (S.C.) 1972 the assessee for the assessment years 1956-57, 1957-58, 1958-59 and 1959-60 on Rs. 7,526/-, Rs. 3,521/., Rs. 5,313/-and Rs. 6,881/-respectively. He came to the conclusion that the amounts received from members of the Club as guests charges must be Bankipur Club Ltd., Patna vs The C.I.T., Bihar And Orissa, Patna on 8 September, 1971 1 considered as the incline of the assessee and that the same is liable to be taxed. 5. Aggrieved by the orders of the Income-tax Officer, the assessee took up the matters in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner affirmed the orders of the Income-tax Officer. A further appeal was taken by the assessee to the Income-tax Appellate Tribunal. The Tribunal upheld the contentions of the assessee and came to the conclusion that the notices issued under Section 34(1)(b) were incompetent notices as the Income-tax Officer cannot be said to have received any information after he made the assessments in questions. 6. As the instance of the department the Tribunal referred to the High Court under Section 66(1) of the Act, one question relating to the assessment year 1956-57 and two questions relating to the assessment years 1957-58, 1958-59 and 1959-60. In respect of the assessment year 1956-67, the question referred was: whether on the facts and circumstances of these cases the Tribunal erred in holding that the provisions of Section 34(1)(b) were not properly invoked and the re-assessment proceedings for the assessment years '956-57, were invalid. In respect of the remaining assessment eat years, the questions referred are : (1) Whether on the facts and circumstances of these cases the Tribunal was justified in holding that the re-assessment for the years 1957-58, 1958-59 and 1959-60 under Section 34 were invalid on the ground that the Income-tax Officer had passed no orders of assessment on the original returns ? (2) Whether on the facts and circumstances of these cases the Tribunal erred in holding that the provisions of Section 34 were not properly invoked and the re-assessment proceedings for the assessment years 1957-58, 1958-59, and 1959-60 were invalid ? 7. The High Court answered all those questions in favour of the Department. The learned Counsel for the assessee did not challenge the correctness of the answer given by the High Court in respect of question No. 1 relating to the assessment years 1957-58, 1958-59, and 1959-60. He submitted that the question is concluded by the decision of this Court in Commissioner of Income-tax, Calcutta v. Bidhu Bhusan Sarkar In view of that submission we do dot propose to go into that question. 8. Now coming to the question referred in respect of the assessment year 1956-57 and the second question referred in respect of the subsequent years the Income-tax Officer has not placed any material before the Tribunal to show that he received any fresh information either on questions of facts or on questions of law subsequent to the date he passed the original assessment orders. This court has repeatedly ruled that the information referred to in Section 34(1)(b) must be that the Income-tax Officer receives after he makes the original order of assessment. It must come to his knowledge subsequent to the assessment sought to be reopened. In these cases it is admitted that all the facts were placed before the Income-tax Officer when he passed the original orders of Bankipur Club Ltd., Patna vs The C.I.T., Bihar And Orissa, Patna on 8 September, 1971 2 assesssment. The fact that the Club had received certain amounts as guests charges from its members had been placed before the Income-tax Officer. It is not the case of the Income-tax Officer that he did not come to know all the relevant facts when he made the original orders of assessment. It is also not his case that at the time he made those orders he was not aware of the true legal position. It was for the Income-tax Officer to show that he had received some information subsequent to his passing the original orders of assessment. No such material was placed before the Tribunal. That being so, the Tribunal, in our opinion was right in holding that the Income-tax Officer was incompetent to initiate proceedings under Section 34(1)(b). The High Court has given no reason to come to the conclusion that there was any subsequent information on the basis which the Income-tax Officer could have re-assessed the assessee under Section 34(1)(b). 9. For the reasons mentioned above, we allow Civil Appeal Nos. 1304, 1307 of 1971 to the extent mentioned above, discharge the answer given in respect of the question relating to the assessment year 1956 57 as well as the answer given to the second question relating to the subsequent years and answer those questions in favour of the assessee. The answer given by the High Court in respect of the first question relating to the assessment years 1957-58, 1958-59 and 1959-60 stands. The assessee is entitled to its coats in these appeals in this Court. Hearing fee one set. 10. Now coming to Civil Appeals Nos. 2157-2160 of 68 they are dismissed as not being maintainable. In these appeals, there will be no order as to costs. Bankipur Club Ltd., Patna vs The C.I.T., Bihar And Orissa, Patna on 8 September, 1971 3 | {
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Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 Equivalent citations: 1971 AIR 696, 1971 SCR (3) 282, AIR 1971 SUPREME COURT 696 Author: J.M. Shelat Bench: J.M. Shelat, C.A. Vaidyialingam, P. Jaganmohan Reddy PETITIONER: ALLEN BERRY & CO. (P) LTD. Vs. RESPONDENT: UNION OF INDIA, NEW DELHI. DATE OF JUDGMENT05/01/1971 BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. VAIDYIALINGAM, C.A. REDDY, P. JAGANMOHAN CITATION: 1971 AIR 696 1971 SCR (3) 282 1971 SCC (1) 295 CITATOR INFO : F 1973 SC 683 (10) R 1987 SC2045 (7) R 1988 SC1166 (7) F 1988 SC1791 (10) R 1988 SC2018 (9) RF 1990 SC1340 (8) ACT: Arbitration Act (10 of 1940), s. 30-Setting aside award---Error apparent on the face of award-What is. HEADNOTE: The Director General of Disposals, through correspondence and sale notes, sold to the appellant-company, United States surplus was materials consisting of vehicles and other Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 1 stores. Disputes having arisen between the parties, both as regards the contents of and the quantity of the vehicles deliverable under the contracts, they were referred to arbitration as per cl. 13 of the general conditions of the contract between the parties. The disputes consisted of claims and counter claims and the umpire after deducting the amount of one claim allowed to the appellant, held that the appellant was liable to pay to the respondent Rs. 34,70,226.50 and costs amounting to Rs. 5,40,544,00. The award was filed in the District Judge's Court and the appellant applied for having it set aside on various grounds. The Court held that with respect to certain matters claimed by the respondent the umpire had no jurisdiction and remitted the award for reconsideration of those items and also for readjustment of the amount of costs. The High Court confirmed the judgment of the District Judge. In appeal to this Court, it was contended that the award was liable to be set aside, because : (1) the contracts of sale were misconstrued and the error appeared on the face of the award; (2) several documents bearing on the scope of the sales were not considered; (3) the umpire went beyond his jurisdiction when he awarded compensation to the respondent because the appellant removed certain vehicles; (4) that the umpire acted as a conciliator deciding matters on conjecture; (5) that the umpire fixed ground rent payable by the appellants without any evidence; and (6) that the costs awarded were totally disproportionate. HELD : (1) When parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon the law or the facts. Therefore, even when an arbitrator commits a mistake either in law or in fact in determining the matters referred to him. but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside. Whether the contract or a clause of it is incorporated in award is a question of construction of the award. The test is, did the arbitrator corn,--' to a finding on the wording of the contract. If be did, he can be said to have impliedly incorporated the contract or the relevant clause but a mere general reference to the contract in the award is not to be held as incorporating it. [288 F-H; 289 A] Union of India v. Bungo Steel Furniture Pvt. Ltd. [1967] 1 S.C.R. 324, followed. 283 Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd. [1923] A.C. 480, applied. Kelanton v. Duff Development Co. [1923] A.%'-. 395 and Giacomo Costa Fu Andrea v. British Italian Trading Co. Ltd. [1962] 2 All E.R. 53, 62. referred to. 2(a) The dispute in the present case being as to what was Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 2 sold and as to whether besides the sale-notes, the subsequent clarifications or. explanations given by various officers of the respondent formed part of the contract and were binding on the respondent, and both the questions having been referred to arbitration, the umpires findings on them would bind the parties unless he laid down any legal proposition such as a construction which is made the basis of the award and is on the face of the award erroneous. The award showed that the umpire had considered besides the sale-notes the oral and documentary evidence led by the parties as also the contentions urged by counsel. It could not, therefore, be contended that the several documents were not taken into consideration by the umpire. [291 E-F; 292 E- H] (b) The umpire laid down the legal proposition that the clarifications or assurances given subsequent to the dates of the sale-notes were not binding on the respondent and could not affect the scope of the sales; but the fact that he answered a legal point, which he had to decide while deciding the questions referred to him, did not mean that he incorporated into the award or made part of it a document or documents, the construction of which was the basis of the award. If there was an error in such a case it could not be said to an error appearent on the face of the award entitling the court to consider the various documents placed before the umpire but not incorporated in the award so as to form part of it, and then to make a search if they had been misconstrued by him. [293 B-E] (3) Once it was found that it was competent for the umpire to decide that the appellant company was not entitled to keep certain vehicles which it had removed, he must, to do justice between the parties, order the appellant either to return them or to pay compensation for them. Since the first course-was not possible because of lapse of time the second was the only obvious course. Clause 13 of the general conditions provides for reference to arbitration of all questions or disputes arising, under these conditions or in connection with this co-tract, and these words are wide and comprehensive. Therefore, the umpire did not go beyond his jurisdiction in accepting the respondent's counter claim for compensation. [295 D-E] (4) Merely because the umpire held that even though the appellant was not entitled to some vehicles claimed by it, yet the authorities had delivered a substantial number of them. without going into details, it could not be said that he bad acted without evidence or that he behaved in the matter as a conciliator, or gave findings on conjuncture and surmises, especially when the appellant withheld relevant evidence which was in its possession. [296 E-F] (5) Under the contracts of the sale. the appellant was bound to pay to the respondent ground rent and other charges which the respondent in its turn was liable to pay the Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 3 owners; and since it was not the appellant's case that the respondent had claimed a higher amount there was no sub- stance in the contention that the arbitrator fixed the ground rent without any evidence. [297 A-C] 284 (6) Considering the huge amounts claimed by the parties, the volume of evidence, adduced and the number of days occupied in recording that evidence and in arguing the case, it could not be said that the discretion of the umpire exercised in the matter of costs was exercised in breach of any legal provision or unreasonably. [297 C-D] JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2418 of 1966. Appeal by special leave from the judgment and order dated February 19, 1963 of the Punjab High Court, Circuit Bench, at Delhi in F.A.0. Appeal No. 123-D of 1961. R. L. Agarwal, K. L. Mehta, S. K. Mehta, P. N. Chadda. M. G., Gupta and K. R. Nagaraja, for the appellant. L. M. Singhvi, Badri Dass Sharma and S. P. Nayar, for the respondent. The Judgment of the Court has delivered by Shelat, J. By this appeal, under special leave, the appellantcompany challenges the correctness of the judgment of the High Court of Punjab, dated February 19, 1963 refusing to set aside an umpire's award, dated March 22, 1958. The award was in respect of certain disputes between the company and the Union of India in the matter of disposals of the United States surplus war materials left by the Government of the U.S.A. at the end of the last World War. These surplus materials, called the U.S. Surplus Stores, consisted of vehicles and other stores. It was said that these were sold to the company by the Director-General, Disposals through correspondence and sale-notes. These contracts of sale were subject to the General Conditions of Contract (Form Con. 117). Cl. 13 of these General Condi- tions provided that "In the event of any question or dispute arising under these conditions or any special conditions of contract or in connection with this contract-the same shall be referred to the award of an arbitrator to be nominated by the Director General and an arbitrator to be nominated by the contractor, or in the case of the said arbitrators not agreeing then to the award of an Umpire to be appointed by the arbitrators in writing before proceeding on the reference----. Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the arbitrators, or in the event of their not agreeing, of the Umpire appointed by them." Disputes having arisen between the parties both as regards the contents and the quantity of the vehicles delivered under the contracts, they were referred, in the first instance, to two arbitrators nominated by the parties, and ultimately to an umpire. The disputes were crystallized into nine claims by the appellant company totalling Ks. 6,73,34,500/-, and several counterclaims by the Government of India. At the end of the arbitration, the umpire, by his said award, disallowed all the claims made by the company, except one for which he awarded RS. 6,94,000/- and held, in respect Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 4 of the counter-claims filed by the Government of India, that the appellant-company was liable to pay to the Government in all Rs. 36,23,682.50 P. and costs amounting to Rs. 5,40,544/-. In the result, after deducting the claim allowed to the appellant-company, the company was held liable to pay to the Government Rs. 34,70,226.50 P. The award having been filed by the umpire in the Court of the, District Judge, Delhi and the Government of India having thereupon applied for a decree in term of the award, the company applied to the Court for setting aside the award urging several grounds for so doing. The District Judge by an elaborate judgment declined to set aside the award. He, however, held that the award suffered from an error apparent on the face of the award in respect of the appellant's claim No. 111(a), and further held that the counter-claims 11, IV, V and VI made by the Government were not covered by the reference, and consequently, the umpire had no jurisdiction to go into them. Declining, however, to set aside the award, he remitted it for reconsideration of the aforesaid items and also for readjustment of the amount of costs in the evert of enhanced compensation being awarded to the company in respect of its claim No. 111(a). Dissatisfied with the judgment of the court the company filed an appeal before the High Court. The Union of India also filed certain coss-objections. The High Court heard the appeal and the cross-objections together and by its aforesaid juggment dismissed both the anneal and the cross-objections and upheld the judgment of the District Judge. In support of the claim that the award was liable to be set aside, counsel for the company submitted the following six propositions for our acceptance : 1. that the contracts of sale entered into by the company were misconstrued by the umpire and such misconstruction appears on the face of the award: 2. that the umpire. as also the High Court, failed to take into consideration several documents while deciding the scope of the sales; 3. that in respect of claim No. VI and counter-claim No. VI of the Government, the umpire acted beyond his jurisdiction as those question,,; did not fall within the scope of the reference; 4. that the umpire did not act according to law but acted as a conciliator and based his award on mere conjectures and surmises; 5. that his conclusion on ground rent awarded to the Government was based on no evidence; and 6. that the costs awarded to the Government were altogether disproportionate. Before we proceed to consider these propositions, it is necessary to ascertain the scope of, S. 30 of the Arbitration Act 1940 and the principles underlying that section. The general rule in matters of arbitration awards is that where parties have agreed upon an arbitrator, thereby displacing a court of law for a domestic forum, they must accept the award as final for good or ill. In such cases the discretion of the court either for remission or for setting aside the award will not be readily exercised and will be strictly confined to the specific grounds set out in ss. 16 and 30 of the Act. In Hodgkinson vs. Fernie,(1) Williams, J. stated the principle as follows :- Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 5 "where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and fact .... The only exceptions to that rule are, cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think, firmly established, viz., where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of,-the award." This observation was recently cited with approval in Union of India v. Bungo Steel Furniture Pvt. Ltd. (2) The principle is that the Court, while examining an award-, will look at documents accompanying and forming part of the award. Thus, if an arbitrator were to refer to the pleadings of the parties so as to incorporate them into the award, the Court can look at them. In some cases, however, courts extended the principle and set aside the award on a finding that the contract, though only referred to but not incorporated into the award as part of it, had been misconstrued and such misconstruction had (1) (1857)(3)C.B.(N.S.)189, 202. (2) [1967] 1 S.C.R.324. been the basis of the award. Thus, in Landauer v. Asser(1) the dispute between buyers and sellers of goods was as to who was entitled to certain sums paid upon a policy of insurance upon the goods. This was referred to arbitration and the umpire made his award basing it on the construction he placed on the contract, namely, that as the parties to the contract were "by the terms thereof" principals, their interest and liability in insurance was defined to be the value of the invoice plus 5 per cent. On an application to set aside the award, the Court of Appeal held that inasmuch as the umpire had referred to the contract and the terms thereof, it was justified in looking at the contract, and having done so, found that he had based his decision entirely upon the terms of the contract. It also found that since the contract, if properly construed, did not justify the decision, the award was bad on the face of it and was liable to be set aside. A similar view appears also to have been taken in F.R. Absalom Ltd. v. Great Western (London) Garden Village Society Ltd . (2 ) where the award set out the relevant words and cl. 30 of the contract and also the conclusion of law on the meaning of those words. Lord Russel said that since the award recited the contract and referred in terms to the provisions of cl. 30, thereby incorporating it into the award, and then stated the construction which the arbitrator placed upon that clause, the Court was entitled to look at that clause to ascertain if the construction placed by the arbitrator was erroneous. The correctness of the decision in Landauer v. Asser(1) was challenged before the Privy Council in Chempsey Bhara & Co. v. Jivraj Balloo Spinning and Weaving Co. Ltd.(2) Lord Dune- din,, however, did not expressly overrule it but rested content by observing that that decision was not binding on the Board. But he formulated the principle thus : .LM15 " An error in law on the face of the award means, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous. It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties' rights depend to see if that contention is sound." (1) [1905](2) K.B. 184. Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 6 (2) 1933 A.C. 592. (3) [1923] A.C.480. The Privy Council upheld the award. stating that it was impossible to say what was the mistake on the face of the award which the arbitrators had made as they had not tied themselves down to any legal principle which was unsound. The mere fact that the court would have construed a document differently than the arbitrator would not induce the court to interfere unless the construction given by the arbitrator is such that it is against the well-established principles of construction. see Kelanton v. Duff Development Co.(1) I In an illuminating analysis of a large number of earlier decisions, including Landauer(2) and F. R. Absalom Ltd.(3) Diplock, L.J., in Giacomo Costa Fu Andrea v. British Italian Trading Co. Ltd. (4 ) recorded his conclusion thus "It seems to me, therefore, that, on the cases, there is none which compels us to hold that a mere reference to the contract in the award entitles us to look at the contract. It may be that in particular cases a specific reference to a particular clause of a contract may incorporate the contract, or that clause of it, in the award. I think that we are driven back to first principles in this matter, namely, that an award can only be set aside for error which is on its face. It is true that an award can incorporate another document so as to entitle one to read that document as part of the award and, by reading them together, find an error on the face of the award." The question whether a contract or a clause of it is incorporated in the award is a question of construction of the award. The test is, does the arbitrator come to a finding on the wording of the contract. If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case. But a mere general reference to the contract in the award is not to be held as incorporating it. The principle of reading contracts or other documents into the award is not to be encouraged or extender. (see Babu Ram v. Nanhemal & The rule thus is that as the parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon the law or the facts. Therefore. even when an arbitrator commits a mistanke either in law or in fact in determining the matters referred to him, but such mistake does not appear on the face of the (1) [1] 1923 A.C.395 (2) [1905] 2 K.B.184 (3) [1933] A.C. 592. (4) [1962]2 All E.R. 53, 62 (5) C. A. NO. 1 07 of 1966, Decided on 5-12-1968. award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake. In the light of the principle above stated, the first question calling for determination is, is there an error apparent on the award, in the sense that the umpire misconstrued the contracts of sale inasmuch as though those contracts were contained 'in sale-notes as well as in several letters, he considered the sale-notes only as containing the contracts of sale disregarding the corres- pondence which had taken place between the company and the Director-General, Disposals and his officers ? Such a question would undoubtedly be one of law. But the disputes referred to the umpire contained disputes both of fact and law. Ordinarily the decision of the umpire, even though it be on a question of law, would be binding on the parties. The court would only interfere if the case falls within the exceptions mentioned by Williams, J. in Hodgkinson v. Fernie(1) and reaffirmed by Diplock L. J., in Giacomo Costa Fu Andrea' v. British Italian Trading Co. Ltd.(2). There were in all three separate sales to the appellant- company,, which Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 7 according to the respondents were incorporated in sale notes Nos. 160,. 161 and 197. Before the sale-note 160 was issued on July 11, 1946, it is a fact that the company had written a letter dated July 10, 1946 which was also endorsed by two officers of the Director- General, Disposals. The letter contained three clauses, the first of which stated that "M/s. Allen Berry will buy the Moran Vehicles Depot 'as is where is for Rs. 1,80,00,000/". The two other clauses provided the manner and time of payment of the sale price. But the letter commenced. with the following words: "Pending detailed record of terms tomorrow the following are the broad heads of agreement, which will form the-basis of sale of surplus vehicles." The next day, i.e., July 11, 1946, the Department issued sale note 160, which in clear terms stated that what was purchased were "all vehicles and trailers lying in Moran Depot", which meant that the vehicles sold were only those that were actually lying in that depot on July 11, 1946, and not those outside it or those borne on the records of that depot, as contended by the company. It, however, appears from the judgment of the Trial Court (para 206) that on receipt of sale-note 160, the company wrote a letter on July 11, 1946 in which it contended that "We have purchased the entire vehicle depot of Moran". (1) [1857] 3 C.B. (N.S. 189,202. 57) (2) [1962] 2 All ER-53, 68. 7SupCI/71 It appears that in view of this difference of opinion, a meeting ,of representatives of the parties, was held on July 23, 1946, the minutes of which, as recorded by the Assam Controller, U.S.A.S.S., read as follows: (2) (a) The vehicles and trailers sold to Messrs. Allen Berry and Co. Ltd., are deemed to, include all vehicles which were or should have been held in Moran Depot on the 10th July, also those which have 'been issued on a Memorandum Receipt as follows :- (i) To the Americans, left behind by them in various camps and depots and not yet turned in by us. (ii) Vehicles issued on Memorandum Receipt to military units assisting the U.S.A.S.S. Organisation. (iii) Any surplus vehicles originally allotted to U.S.A.S.S. Units-for operational purposes and now no longer required by them." On September 17, 1946, a secraphone message was sent from New Delhi to Calcutta which stated "We have sold U.S. Army surplus vehicles presumed to be borne on Moran list, that is those actually in Moran Vehicle Depot or those that were intended to be moved to that depot, which was meant to be parking depot for surplus U.S. vehicles in Assam area." On September 26 1946, the Director-General,'Disposals, wrote to the company that "The vehicles sold to you in Assam are those U.S. Army surplus. vehicles actually in Moran Vehicle Depot or those that were intended to be moved to Moran Vehicle Depot. Any mobile engineering equipment, such as mobile cranes, tracked Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 8 tractors are, excluded from the sale to you." On December 10, 1946, the Controller issued a release order in respect of 1. All vehicles and trailers lying in Moran Depot on 10th July 1946 including all United States Army Surplus Stores, excluding land and buildings lying within Moran Depot and transferred to the Government of India from the Government of the United States. 2. Vehicles in operational use in Calcutta and Assam as and when no longer required by the U.S.A.S.S. Organisation." The question raised by counsel is that the umpire failed to consider all these documents while considering the scope and content of the contract of sale and relied on only sale-note No. 160, dated July 11, 1946, that the contract was not contained in the said note 160 alone, and that therefore, he misconstrued the contract, and that that misconstruction, which is a point of law, is apparent on the face of the award, as it was made the very basis of the award. The first three issues raised by the umpire were (1) whether the appellant was entitled to prove that any vehicles, stores etc. other than those mentioned in the sale-notes were sold to it; (2) whether the Government was bound by the clarifications, representation, explanations or assurances made or given by any officer or officers of the Department regarding the subjectmatter of the contracts of sale except those necessarily implicit in the sale-notes; and (3) whether the Government sold any vehicles except those lying in Moran Depot on July 11, 1946, or those intended to be moved thereto. The dispute between the parties, thus, clearly was that whereas the company claimed that the, sale was of all vehicles borne on the records of Moran Depot, irrespective of whether they were actually lying there on July 11., 1946 or not, the Government claimed that the company was entitled to those actually lying in the Depot. According to the respondents, the contract of sale was to be found in the sale-note, and therefore, any subsequent explanations or assurances given by any officer or officers of the Department could not vary or alter the terms of the contract. These expanations and assurances were given, only to remove the misunderstanding of the company over the question of the scope and extent of the sale made to it. The umpire set out part of the sale-notes 160 and 197 in the award and then observed "the language used in these sale letters is to my mind perfectly clear, explicit and unambiguous and excludes the possibility of any vehicles, trailers or stores lying on the dates in question outside the locations specified in the sale letters having been included in the two sales. The contention that they in fact include all vehicular stores in Assam in one case and in Bengal area in the other has been made in all seriousness and a good deal of evidence both oral and documentary has been produced in support of or against such contention. The point has also been argued at great length by learned counsel for the parties. I have given the whole matter my most serious and earnest consideration and my view is that apart from the language of the two saledeeds' being against such a contention, the evidence too considered as a whole does not support it. Accordingly, I hold that the stores sold to the claimants in the case of Assam were those actually located in Moran Depot on July 10,1946 and in the case of Bengal those actually located in Jodhpur and other depots specified in the sale letter on July 31, 1946." He next held : Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 9 "The alleged clarifications or representations made or explantions or assurances given by any officer or officers of the Disposals Department either verbally or in writing have been very carefully examined by me and I am of opinion that neither are they, considered as whole, capable of the interpretation sought to be put upon them by the claimants nor are the respondents bound by them. They are not in accordance with law and do not amount to legal contracts binding the respondents." These passages clearly show that the umpire had considered, besides the sale-notes, the oral and documentary evidence led by the parties as also the contentions urged on and as regards them by counsel for the company. It is impossible, therefore, to uphold the contention that the various documents, i.e., the letter of the company dated July 10, 1946, 'the subsequent correspondence, minutes of the meetings which too place after the salenote 160 was issued etc. were not taken into consideration by the umpire while coming to his conclusion as to what actually was sold to the company. The dispute, amongst other disputes, referred to the umpire and crystallized by him in the form of issues on the pleadings of the parties involved, as already stated, the question first as to what was sold, and secondly, arising out of that, the question whether besides the said sale- notes 160 and 197, the subsequent clarifications or explanations were binding on the Government. These were, no doubt, questions partly of fact and partly of law. But questions both of fact and law were referred to the umpire and prima facie his findings on them would bind the parties unless, as explained earlier, the umpire has laid down any legal proposition, such as a construction which is made the basis of the award and is on the face of the award an error. The point is, is this such a case ? True it is that this is not ,a case where a question of law is specifically referred to. It is clearly a case falling in the category of cases, like Kalanton v. Du# Development Co. Ltd. (1) wherein deciding the questions referred to him the umpire has to decide a point of law. In doing so, the umpire no doubt, laid down the legal propsition that the clarifications or assurances given subsequent to the dates of the said sale- notes by an officer or officers of the department were not binding on the respondents nor could they affect the scope of the sales. That answer the umpire, was entitled to give. But the fact that he answered a legal point does not mean that he has incorporated into the award or made part of the award a document or documents, the construction of which, right or wrong, is the basis of the award. The error, if any, in such a case cannot be said to be an error apparent on the face of the award entitling the court to consider the various documents placed in evidence before the umpire but not incorporated in the award so as to form part of it and then to make a search if they have been misconstrued by him. This, in our understanding, is the correct principle emerging from the decisions which counsel placed before us. In any event, this is not a case where the umpire, in the words of Lord Dunedin, "tied himself down to a legal proposition" which on the face of the award was unsound. The award ,makes it clear in so many words that he took into. account the entire evidence, including the documents relied on by counsel and then only came to the conclusion that it did not assist the company in its contention as to the scope of the sales. Contentions 1 and 2 raised by Mr. Agarwal, therefore, cannot be upheld. Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 10 Contention No. 3 relates to 547 vehicles said' to have been sold to the company under sale:-note 197, dated August 2,/6, 1946. There is no dispute that out of these vehicles the company removed 291 vehicles alleging that the delivery of the balance of 256 vehicles was withheld. The company made a claim being claim No. VI for the price of these 256 undelivered vehicles. The respondents contention was that the sale to the company was confined only to the U.S.A. Surplus Stores, that these vehicles did not fall within that category, but were Reverse Land Lease vehicles belonging to the Government of India under an agreement between the U.S.A. and India. On these allegations the respondents laid counter-claim No. VI claiming the price of the 291 vehicles admittedly removed by the company when they were lying in Jodhpur Depot, Calcutta. The umpire found that the expression "Reverse Land Lease" related to the reciprocal aid articles referred to in the said agreement. A reciprocal aid article, according to that agreement, (1) [1923] A.C. 395. meant an article transferred by the India Government to the U.S. Government under reciprocal aid under para 4-C of that agreement'. The U.S.A. Government was deemed to have acquired as on September 2, 1945 full title over such articles except that such reciprocal aid articles incorporated into installations in India were deemed to have been returned to India Government from the date when the U.S.A. forces relinquished possession of such installations. From the inventories produced before him, the umpire held that these 547 vehicles were incorporated into installations in India, and therefore, ownership in them vested in India Government on and after the U.S.A. forces relinquished possession of those installations. They could not, therefore, be regarded ,is U.S. Surplus Stores which alone were and could be the subject-matter of sale-note 197. Consequently, the company was not entitled to remove the said 291 vehicles which it did, much less could the company claim compensation for 256 vehicles which it alleged were not delivered to it. In the result, the umpire allowed the Government's counter-claim No. VI, which was for the price of 291 vehicles unauthorisedly removed by the company from Jodhpur Depot. The argument in connection with this part of the award was, firstly, that the findings of the umpire were vitiated as there was total lack of evidence on which they could be based, and secondly that in any event, the umpire had no jurisdiction to award compensation to the Government in respect of counterclaim No. VI. The first part of the argument need not detain us as the finding that these vehicles formed part of reciprocal aid articles, the ownership in which vested in the Government of India and were therefore not U.S.A.S.S. was based on the agreement between the two Governments and the inventories produced before the umpire from which he could hold that they belonged to the Government of India from the date when the installations in which they were incorporated were relinquished by the U.S. forces, and that therefore, they could not form the subject-matter of sale-note 197 which related only to the U.S. Surplus St-ores. The second part of the argument, however, requires conside- ration. The question is whether the arbitration clause included. a dispute relating to compensation in respect of the said 291 vehicles unauthorisedly removed by the company. Cl. 13 of the General Conditions of Contract, quoted earlier, provides for reference to arbitration of all questions or disputes "arising under these Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 11 conditions" or "in connection with this, contract". Dr. Singhvi referred us to cl. 10 of these Conditions also but it is clear that it can in no sense apply to the dispute relating to, compensation. But the words "arising under these conditions"' and "in connection. with this contract" are undoubtedly wide and comprehensive. it is, nonetheless, a question whether the dispute as to compensation on the ground of unauthorised appropriation of these vehicles by the company falls within cl. 13. In Vidya Sagar- Joshi v. Surinder Nath Gautam(1) the words "expenditure, in connection with election" used in s. 77 of the Representation of the People Act, 1951 were construed to mean "having to do, with". An arbitration clause wherein the words "in relation to or in connection with the contract" were construed not to contemplate a dispute raised by a contractor that he could avoid the- contract on the ground that it was obtained by a fradulent misrepresentation. (see Monro v. Bognor Urban District Coun- cil(2). But a claim for damages on the ground of negligence on. the part of the defendant in re-moving the plaintiff's furniture against a clause for due diligence in removing it was held to fall, within the arbitration clause. Woolf v. Collis Remo val Service (3) Counsel conceded that a dispute as to the interpretation of sale-note 197 would fall under the arbitration clause.. If that is so, it must follow that the umpire was competent to decide whether the said 547 vehicles fell within the purview of the sale-note or not. If in determining that question he came to the conclusion that they did not, the obvious conclusion would be that the company was not entitled to take away 291 vehicles admittedly removed by it from the Depot. If the company did that, would the question as to the return or of compensation in lieu of such vehicles, to which it was not entitled under the sale, be a question which arises out of or in connection with the contract ? Counsel went as far as to say that the umpire in deciding the company's claim No. VI and the Government's counter- claim No. VI could decide that the company was not entitled to those vehicles, but could not take the next step either to direct the return of them or payment of compensation in lieu of those vehicles. In our view, such an argument cannot be accepted. The reason is that once it is found that he was competent to decide the dispute as to whether the said 547 vehicles were not the subject-matter of the sale and 291 of them were removed unauthorisedly, he must, to do justice between the parties in respect of disputes referred to him, order the company either to return them or to pay compensation for them. Since the first course was not possible after all these years, the second was the only and the obvious course. The dispute raised by the respondents that 291 vehicles were not included in the sale was: co-extensive with and connected with the dispute that the com-- (1) A.I.R. 1969 S.C. 288. (3) [1947]2AllE.R.260. (2) [1915] (3) K.B.167. pany was bound to return them if it was found that they were not covered by the sale. On this reasoning it is not possible to say that the umpire went beyond his jurisdiction either in rejecting the company's claim No. VI or in accepting the corresponding counter-claim No. VI of the respondents. Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 12 Contention 4 relates to 600 vehicles which had been taken out of Moran Depot for operational purposes, but which the company claimed were part of the sale under sale-note 160. The umpire held (I that those vehicles having been taken out of the Depot for operational purposes did not fall within the sale, and (2) in the alternative, that the evidence disclosed that a substantial number of vehicles in operational use were delivered to the company even though strictly speaking it was not entitled to them as they were not lying in the, Depot on. July 10, 1946. The umpire further held that if some of them per chance were not handed over, the respondents had sufficiently compensated the company by handing over several non-operational vehicles from outside the depot to which the company-was not entitled. Counsel argued that this part of the award was vague and without any evidence to support it, and therefore, the umpire behaved in this respect more like aconcilliator than as an arbitrator. Having held that sale-note 160 covered only those vehicles which were actually lying in Moran Depot on July 10, 1946, it was not incumbent on the umpire to decide the number of operational vehicles outside the depot. Consequently, if he was satisfied that even though the company was not entitled to the said 600 vehicles claimed by it, yet the authorities had delivered a substantial number of them, and for any deficiency, had also delivered non-operational vehicles, there would be no purpose in going into the details of vehicles delivered to the company. Even though, as the judgment of the Trial Court discloses (para 223), there was evidence, both oral and documentary, that the company had collected a number of vehicles lying at places outside the Depot, and the vehicles so collected were recorded by the company, yet the company had withheld the production of those records. In view of these facts it is impossible to say that the umpire had acted without evidence, or that he behaved in the manner of a conciliator, or gave findings on conjectures and surmises. Our interference was invited next on the question of ground rent on the ground that the amount of such rent was fixed by the umpire without any evidence. There is hardly any substance in this contention. The sites, on which the various depots were situated, were requisitioned by the Government under the Defence of India Rules. The Government had a statutory obligation, therefore, to pay to the owners of those sites compensation as provided by those Rules. Under the contracts of sale the company was, bound to pay to the Government ground rent and other charges which the Government in its turn was liable to pay. It is, therefore, not correct to say that the umpire could award only that amount which the Government had actually paid and that the umpire should, therefore, have taken an account from the Government. It was never the case of the company that the Government had claimed ground rent higher than the compensation it was liable to pay. The last objection was that the amount of costs awarded by the umpire to the respondents was disproportionate. It appears from the award-that the umpire fixed the amount of costs after considering the statements of expenses incurred by the parties for the hearing before him tendered by the respective counsel for the parties. Considering the huge amounts claimed by the parties, the volume of evidence, both oral and documentary, adduced by them, the number of days occupied in recording that evidence and in arguing the case, we are not prepared to say that the discretion which the umpire. exercised in the matter of costs was exercised in breach of any legal provision or unreasonably which can justify the Court's intervention. Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 13 In our view, none of the six contentions urged by counsel can be upheld. The result is that the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed. Allen Berry & Co. (P) Ltd vs Union Of India, New Delhi on 5 January, 1971 14 | {
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Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 Equivalent citations: (1971)3SCC416, 1971(III)UJ369(SC) Author: I.D. Dua Bench: S.M. Sikri, P. Jaganmohan Reddy, I.D. Dua JUDGMENT I.D. Dua, J. 1. Masji Tato Rawoo), Janabai alias Rajani and Sahadeo Atmaram Rawool (original accused Nos. 1, 5 and 6) are the three appellants in this appeal by special leave. They challenge their conviction by the Bombay High Court on State appeal against their acquittal by the Additional Sessions Judge, Ratnagiri. Originally six persons, including the three appellants, were committed by the Civil Judge and Judicial Magistrate, First Class, Sawantwadi in Ratnagiri District for being tried Under Section 148, Section 302 read with Section 149 and Section 302 read with Section 34, I.P.C. Masji Tato Rawool was in addition charged Under Section 323, I.P.C. The occurrence in question lead resulted in the death of Shankar Timji Rawool. The prosecution story may now be briefly stated. 2. Tato Masji Rawool, accused No. 2 resided in his house in hamlet known as Dongar Maharchi Wadi in village Namale in Sawantwadi Taluka iq Ratnagiri District. With him lived his wife Bhagirathi, (accused No. 3), his two sons Masji accused No. 1) and Bakharam (accused No. 4) and his two daughters Mathubai, aged 12 years and Janabai (accused No. 5) who was married to Shantaram Mulik of Kondure. The deceased Shankar Timaji Rawool also belonged to the Rawool brotherhood and was distantly related to the accused persons being their Bhauband. He resided in his own house in the same Wadi along with his ailing mother, his brothers Shivram, Arjun and Hari and Shiv Ram's wife Vatsala. He had two more brothers by name Vasu and Sahadeo, who resided in Bombay. There was no love lost between the family of the deceased Shankar and that of the accused Nos. 1 to 5. These two families had since about 8 or 10 years been on inimical terms with each other. Accused No. 6, Sahadeo Atmaram Rawool had his own scores to settle with the family of the deceased and his enmity with that family could also be traced back to 8 or 10 years. About a fortnight before the occurrence in question Shankar, deceased, had lodged a complaint against accused No. 6 and his two brothers for having out stems from his (Shanker's) land. On December 8, 1964 Sahadeo (accused No. 6) came to the house of accused No. 2 & started abusing Shankar who was sitting in his own house When Shankar protested the other accused persons, namely, Tato, Sakharam and Masji sided with Sahadeo and challenged Shankar to come out, threatening him with death if he did so. Shankar keep quiet. On the following day at dawn Hari and Arjun, brothers of the deceased, went to their Kolamb land with plough Shivram left his house at about 6 a.m. and went to Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 1 his paternal aunt Shevantabai who lived at Kumbharwadi. At about 7 a.m. accused, Masji, Sakharam and Janabai (Nos. 1, 4 and 5 respectively) went towards their Mangar with sticks and after some time they and accused No. 6 also armed with a stick, came out of their Mangar and passed by the house of Sundarabai (P.W. 5), widow of Sonu Sawool. In the meantime Shankar also came out of his house and while going by the footway he was accosted by accused Nos. 1, 4, 5 and 6 near the spot known as Gothan. Seeing them he started running away in order to escape but they caught him and started beating him with sticks. As Shankar shouted for help, his sister-in-law Vatsalabai & other persons who were near about, hearing his call for help, came out. They saw the four accused (Nos. 1, 4, 5 & 6) beating him. Shankar, as a result of beating, fell down with his face upwards. By that time Shivram returned to his house and on being informed by his mother about the beating, he also went to the place where Vatsala was standing. In the meantime accused Nos. 2 and 3 also came out of their houses and went towards the place of occurrence. Bhagirathi (accussed No. 3) had brought with her two Palkovatas and Tato (accused No. 2) was armed with a stick. Bhagirathi gave one Palkovatas to her son Masji (accused No. 1) and the other to her daughter Janabai (accused No. 5). Janabai then gave blows with her Palkovata on the legs of the deceased. Masji (accused No. 1) gave four or five similar blows to the deceased on the right side of his chest. Hari, who also happened at that time to be coming by the road was noticed by accused No. 1 Masji who threw a stone at the former hitting him on his back. Hari fell down feeling giddy and was carried home by Vatsala and Shivnam. Shankar had by that time died on the spot. When Shankar was being attacked his black dog also came to the spot and was hit by accused No. 1. The dog was later examined by a veterinary doctor whose evidence was also recorded in the case. This, broadly speaking, is the prosecution story so far as relevant for our purpose. 3. The trial Court on appreciation of the evidence felt that only four accused persons (Nos. 1, 4, 5 and 6) were present at the alleged beating of the deceased with sticks and only they took part in such beating. They had encircled the deceased and given him at least 7 or 8 stick blows hitting him on the head and back. From this kind of attack, according to the trial Court, one would normally expect some weal marks or marks of contusion or some abrasions on the dead body. But none were found by the doctor as shown in her postmortem notes and her evidence in Court. On this reasoning the trial Court observed : So, this medical evidence is in direct conflict with the story of stick beating. It is difficult to believe that the beating of sticks by four persons and that too from all sides and holding the sticks in both the hands, would not leave any mark of contusion, abrasion or even a weal mark on the dead body. An attempt was made on behalf of the prosecution to suggest that the incised wounds which were seen on the dead body were caused, on the same part of the body where stick blows were given. Dr. Thakur stated in examination-in-chief, (vide paragraph 3) that if a blow was given with a stick on the same part a blow inflicted with Palkovata a fracture could be caused. But in cross-examination she has stated in clear terms that from the description of the injuries given in the postmortem notes (Ex. 22) she could not say whether stick blows were inflicted. She added that fractures were below the seat of injuries and this suggested that they must have been caused only by heavy cutting Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 2 instruments. So, the medical evidence completely falsifies the version about stick beating as narrated by the prosecution witnesses. In the inquest panchanama (Ex. 31) also there is no men ion of any contusion or weal mark However, one abrasion on the left wrist over an area of one inch by one inch is mentioned. Barring this, the rest of the injuries are shown to be incised wounds and the panchas have given their opinion that the injuries appeared to have been caused by cutting weapon. Assuming that there was one abrasion, it cannot be necessarily attributed to stick beating. It may have been as well caused by falling. At any rate, if the story of the witnesses about stick beating was to be believed, then there should have been some contusions or visible marks on the dead body. Their absence goes a long way to negative the version of the witnesses regarding stick beating. The Court continued : Then the second part of the prosecution story is about beating by Palkovatas, It is the say of these witnesses that after Shankar fell down, accused No. 8 Bhagirathibai and accused No. 2 Tato, who are both old, came to the spot and Bhagirathi had two Palkovatas in her hand and accused Tato had a stick. Now, it is the say of all these witnesses that none of the accused, who were beating Shanker with sticks, were shouting. So, one fails to understand as to why Bhagirathi & Tato should come out after Shankar had fallen on the ground ? Their further version that Bhagirathi gave one Palkovata to Janabai appears to be somewhat improbable. Let us assume for the sake of argument that she came with two Palkovatas. But it does not look probable that instead of giving the Palkovata to accused No. 4 Sakharam, or accused No 6 Sahadeo, she would give it to her young newly wedded daughter Janabai. The final conclusions of the trial Court on the charge of rioting and murder were expressed thus : Thus, the total effect of all the evidence adduced in this case is that the evidence only creates some suspicion against the accused, but at the same time it creates graver suspicion about the veracity of the statements of witnesses who are said to have actually witnessed the incident. It is rather doubtful that they have told the whole truth and nothing but the truth. There is some force in the argument advanced on behalf of the defence that the use of the word was purposeful with a view to seeing if any others could be as well roped in. In these circumstances I think it highly risky to depend on the evidence of the so called eye witnesses. As I stated above, it is clear that some incident took place in which Shankar received injuries and accused No, 4 also received injuiees. But that does not, therefore, mean that the story told by the prosecution witnesses is necessarily true. Even looking to the story itself it appears to be improbable that accused Nos. 2 and 3, who are old persons, and accused No. 5 who is a young married girl who had come to her parents only a few days before, would take part in an attack of the type described by the witnesses. So, I am not inclined to believe that all the accused in this case formed an unlawful assembly and Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 3 they went armed with sticks and Palkovatas and attacked Shankar as described by the witnesses. 4. All the accused were given benefit of doubt and acquitted of the offences charged: Sakharam, accused No 4, was found to have admitted that there was a scuffle between him and four persons (Shankar, deceased, Arjun, Hari and Shivram) and that he had inflicted on Shankar, deceased, two or three blows w ith Palkovata in the exercise of the right of private defence. According to this accused he had been taken unawares by the aforesaid four persons who were armed with Palkovatas and sticks. Apprehending death at their hands he snatched a Palkovata from them and gave Shankar, deceased, two or three blows with it. Thereafter throwing the Palkovata at that spot he ran home. According to his version the other accused persons were not present at the time and place of the scuffle. Out of the 14 injuries found on the body of the deceased six were fractures and three (Nos. 3, 6 and 7) were on vital parts of his body. Injury No. 8 was also grievous. This left four incised wounds, which were not grievous injuries. The plea of self-defence set up by accused No. 4 was not accepted. But he was given the benefit of being the author of only one or more of the incised injuries, not being grievous and was convicted Under Section 324, I.P.C. 5. The High Court on appeal agreed with the trial Court in rejecting the defence version given by accused No. 4 injury No. 1 on the person of the deceased Shankar was however, considered by the High Court to be stick injury which in its opinion could not be inflicted by a Palkovata. The Court then referred to some passages from Modi's Medical Jurisprudence and observed that from the nature of the injuries found on the person of the deceased at least some of them were impossible to have been caused by a Palkovata and that they were stick injuries. Injury No. 6 was one of such injuries, probably caused by a stick which may have momentarily stunned Shankar when he fell down. The evidence of the lady doctor who had conducted the postmortem examination was adversely criticised and it was observed that she was not sufficiently experienced. This criticism was mainly based on some passage found by the High Court in Modi's Medical Jurisprudence. That Court also observed that after rejecting the defence version the trial Court had no justification in refusing to accept the prosecution story as deposed by the eyewitnesses. The evidence of Hari and of the doctor who had examined the dog was also held to corroborate the prosecution story. Disagreetion with the trial Court, the High Court thus accepted the evidence of the eyewitnesses. But even while doing so, the Court felt that there being enmity between the two families it was safer to consider the case of accused Nos. 2 and 3 separately from that of the remaining four accused persons because, according to the witnesses, the former two accused persons had come to the spot after Shankar had fallen. These two persons were given benefit of doubt but the appeal against accused Nos. 1, 4, 5 and 6 was accepted and they were convicted Under Section 302, read with Section 34, I.P.C. The conviction of accused No. 4 was altered from Section 324 to one Under Section 302 read with Section 34. The accused persons convicted by that Court being less than five in number they were also acquitted of the offence Under Section 148, I.P.C. Accused No. 1 was also convicted Under Section 323, I.P.C and sentenced to rigorous imprisonment for six months. 6. The only question canvassed at the bar of this Court is whether the view taken by the High Court is correct and whether that Court was justified in reversing an appeal the trial Court's order of acquittal and in convicting the present appellants. The Principal point requiring determination by Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 4 us, therefore, is whether the version given by the eyewitnesses is consistent with the medical evidence in regard to the injuries found on the person of the deceased or it is so materially inconsistent with the medical evidence that the story given by them must be held unsafe to sustain the appellant's conviction This question assumes importance because of the admitted long-standing enmity between the two families. Such inimical relationship on the one hand provides notice for the offence and on the other it serves as an inducement to the members of one party to falsely implicate their enemies. Even when only some members of the rival group are involved in the offence quite often one finds a tendency also to falsely rope in some other members, or their relations who may be wholly innocent. In doing so the story is improved and modified to achieve this purpose. Exaggeration of the part played by the other side in the course of the incident is also quite common. The Court has, therefore, to be circumspect in the appreciation of evidence so that over-emphasis on the enmity factor does not cause either the innocent to be wrongly convicted or the guilty to be wrongly acquitted, for in either case justice would fail. Medical evidence in respect of the injuries suffered in such cases is helpful in appreciating the evidence of the witnesses to the occurrence. 7. Now the prosecution witnesses who claim to have seen the occurrence are unanimous and, as observed by the High Court, reference may be made to the evidence of only one witness. The High Court referred to the testimony of Sunderabai (P.W. 5) On the day of the occurrence she was tying bidis in her house at about 7 or 8 a.m. when she saw Shankar, deceased, going from his house towards the cast by footpath 10 or 20 paces away from her house. Accused Masji, Sakharam, Janabai and Sahadeo were going from their Mangar towards west with sticks. On the way they accosted Shankar who started running away but was chased & caught up.These persons beat him with sticks.As a result of the beating he fell down wi h his face upwards Thereafter Bha girathi came to the spot with two Palkovatag. Along with her came Tato, armed with a stick, Bhagirathi gave one Palkovata to Masji and one to Janabai. Masji gave two or four blows to Shankar with the Palkovata on the head and face: Janabai gave two blows on Shankar's legs. By that time Hari happened to come from his land. Masji threw a stone at him hitting at the back of his head. As Hari fell down he was removed by Vatsalabai and Shivram to their house. In cross-examination it was elicited that Shankar was given five or six blows with sticks. Each accused gave two blows Janabai who had a stick in her hand also gave stick blows to the deceased. The witnesses saw Shankar bleeding from his head. This evidence quite clearly makes out a case of merciless beating of the deceased by six persons mainly with sticks. Later the Palkovattas are said to have been used. Let us see how far the injuries found on his person on medical examination support this story. The injuries in the post-mortem report are described as follows: 1. Incised wound 3 "XXX" bone deep, transversely placed compound fracture of tibia, lower, third anterior aspect. 2. Incised wound 1-1/2" x 1/2 x 1/4" with avulsion of the skin, middle and anterior aspect of lef left. 3. Incised wound 2" x 1" x 2" deep transversely placed middle of right side neck directed upwards and backwards, Carotid vessels out. Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 5 4. Incised wound 1" x 1/2" x 1/4" near the back side of the right ear. 5. Incised wound 1/2" x 1/4" right ear lobule. 6. Incised wound 3" x 1" bone deep, verticle, near the right side of midline of vertex. 7. Incised wound 1-1/2" x 1/4" bone deep left side vertex near the midline. 8. Incised wound 1" x 1/2" bone deep transversely placed on right eye-brow, directed upward and backward destroying the right eye-ball. 9. Incised wound 1" x 1/2" x 1/4" nose with fracture of nasal bones and septum of the bone. 10. Incised wound 1" x 1/2" bone deep left side upper lip with compound fracture of maxilla. 11. Incised wound 1-1/2" x 1/2" bone deep right side chin with compound fracture of mandible. 12. Incised wound 2" x 1/2" bone deep left side chin with compound fracture of mandible. 13. Incised wound 3/4" x 1/2" bone deep left side mandible. 14. Incised wound 1" x 1/2" left side chin compound fracture mandible. Injury No. 1 was 1" wide as explained by Dr. Shakuntala Thakur who has appeared as P.W. 10 in the trial Court. She did so after referring to the office copy of the postmodern notes. She is a B.A. and Master of Surgery. In examination-in-chief she explained that injuries Nos. 1, 10, 11 and 12 on the body of the deceased could be caused by means of a stick if on the same part after hitting with a stick a blow is given with a weapon like Palkovata. As stated in the judgment of the High Court, a Palkovata is a curved implement with a blade in from and handle of about 5 or 6", with a bill like curve and sharp edges. In cross-examination the doctor firmly stated that the injuries on the deceased might have been caused by sharp-cutting instruments. She was, however, unable to say from the description of the injuries given in the postmortem notes if stick blows were given to the deceased. Fractures mentioned in col, 17 of post-mortem notes, which were below the seats of the injuries could, according to her be caused only by heavy cutting instruments. Injury no 6 was considered by the High Court to be a stick injury and in the opinion of that Court it was impossible to hold this injury to be caused by a Palkovata. This injury is described in the post-mortem report as an "incised wound 3" x 4" bone deep verticle, near the right side of middle vertex". Now, no question was put to Dr. Shakuntala if this injury was such as could only be caused by a stick blow and that it was impossible to cause it by a Palkovata. We are unable to appreciate the reasons given by the High Court in support of its conclusion in regard to this injury. This was a matter for the doctor to clarify Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 6 and explain and if the High Court had any doubt in regard to the medical evidence the doctor should have been again summoned as a witness and questioned on this point. Her testimony does not appear to us to be so patently erroneous as to justify its rejection by the High Court in disagreement with the opinion of the trial Court. The High Court relied on some passages from Modi's book on Medical Jurisprudence for the purpose of discrediting the medical testimony. This was hardly proper and was far from fair on just even to the doctor who had appeared as a witness but was not questioned with reference to those passages. The High Court seems also to have erroneously ignored that according to the prosecution version all the accused persons had virtually surrounded the deceased and started beating him with sticks. This kind of beating would have resulted in much large number of stick injuries than held by the High Court, even assuming the High Court is right in so holding on the basis of some passages from Modi's book. The main question before the High Court was if it was safe to rely on the prosecution version about the occurrence as given by the witnesses and not if some injuries could be considered to have been caused by sticks. The entire approach of the High Court seems to be erroneous and difficult to sustain. We do not consider it necessary to express any considered opinion with respect to the contents of the stomach found at the time of post mortem because that would be a matter of speculation in the absence of reliable evidence on the question as to when the deceased had his last meal and what that meal consisted of. 8. It is true that the High Court is entitled on appeal against acquittal to reappraise the evidence in the same manner in which it does on appeals against conviction with the only difference that in the former case it has to bear in mind the verdict of acquittal by the trial Court. It is also true that under Article 136 this Court does not ordinarily reappraise evidence for itself for determining whether or not the High Court has come to a correct conclusion on facts. But where the High Court has completely missed the real point requiring determination and has also on erroneous grounds discredited the medical testimony and has further failed to consider the fact that on account of long standing enmity between the party of the accused and that of the deceased there is a tendency to involve innocent persons and to exaggerate and lead perjured evidence in regard to the occurrence, this Court would be justified in going into the evidence for the purpose of satisfying itself that grave injustice has not resulted in the case. 9. In the final result this appeal succeeds and allowing the same we acquit the appellants. Our attention has been drawn to the fact that accused No. 4 which has not appealed was also convicted by the High Court Under Section 302 read with Section 34, I.P.C. It may be recalled that he had been convicted by the trial Court under sec, 324 and from the record it does not appear that he had appealed against that conviction. Having not appealed, we are unable to make any order in his favour and indeed we have not considered his case which seems to be distinguishable from that of the appellants in this Court. Masji Tato Rawool And Ors. vs State Of Maharashtra on 16 February, 1971 7 | {
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Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 Equivalent citations: 1971 AIR 1602, 1971 SCR 223, AIR 1971 SUPREME COURT 1602, 1971 LAB. I. C. 960 Author: A.N. Ray Bench: A.N. Ray, C.A. Vaidyialingam PETITIONER: HARKISHAN SINGH Vs. RESPONDENT: STATE OF PUNJAB & ORS DATE OF JUDGMENT25/03/1971 BENCH: RAY, A.N. BENCH: RAY, A.N. VAIDYIALINGAM, C.A. CITATION: 1971 AIR 1602 1971 SCR 223 1971 SCC (2) 58 ACT: Punjab Civil Medical Service Class I (Recruitment and Conditions of Service) Rules, rr. 2(c) 5 and 9(3)-Direct recruitment to Selection Grade--If permitted by rules- Fixation of seniority in absence of rules. . HEADNOTE: The appellant and the third respondent were members of the Punjab Civil Medical Service, Class I. The second Respondent, who was serving abroad, was offered the post of Civil Surgeon in the Punjab Civil Medical Service and he joined the post of Chief Medical Officer in the Punjab Civil Medical Service, Class 1, temporarily. Applications for filling up the post permanently were invited through the. Public Service Commission, and the second respondent was selected and appointed. Thereafter, he was appointed in the Selection Grade of the Punjab Civil Medical Service. Ten day,. later, the appellant and the third respondent were Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 1 also appointed. to the selection Grade. The appellant impeached the second respondent's appointment to the Selection Grade on two grounds: (1) that the appointment to the Selection ,Grade could only be by promotion from Punjab Civil Medical Service, Class 1, and not by direct appointment; and (2) even if the second respondent could be appointed direct to the Selection Grade his seniority should be below that of the appellant and the third respondent, on the ground that the appellant and the third respondent were senior to the second respondent in the time scale of Class I Service. HELD:(1) The Service as defined in r. 2(c) of the Punjab Civil Medical Service Class I (Recruitment and conditions of Service) Rules, means the Punjab Civil Medical Service Class I and the Selection Grade is a part and parcel of the Punjab Civil Medical Service Class I Therefore, when r. 5 specifically speaks of appointment to the Service by direct recruitment it embraces both Class I and the Selection Grade. The word appointment means both by promotion and by direct recruitment and is used in that sense in relation to the selection grade in r. 5 and in relation to the total number of appointments to the service in r. 9(3). Direct appointment to Selection Grade is not only contemplated in rr. 5 and 9(3) but is also implicit in them. Further, the rules contemplate direct appointment to Selection Grade in proper cases when there are no suitable persons in Class Itime scale who can be promoted to the Selection Grade. [226A; 228B-F] (2)The second respondent's appointment to the post of Chief Medical Officer was in consultation with the Punjab Public Service Commission as contemplated by r. 3, but the seniority list of the Class I service to which the appellant and the respondents belonged was not fixed. Where there are no specific rules in regard to the fixation of seniority in the Selection Grade in the case of direct appointment, the second respondent, having been recruited earlier than the appellant and the third respondent, his seniority should not be disturbed. [228G; 229C-F] 224 JUDGMENT: CIVIL APPELLATE JURISDICTION Civil Appeal No. 430 of 1970. Appeal by special leave from the judgment and order dated August 13, 1969 of the Punjab and Haryana' High Court in L.P.A. No. 288 of 1968. Jagjit Singh Chawla, K. L. Mehta and S. K. Mehta, for the appellant. H.L. Sibbal, Advocate-General, Punjab and R. N. Sachthey for respondent No. 1. Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 2 V.C. Mahajan, S. S. Khanduja and V. P. Kohlo, for res- pondent No. 2. The Judgment of the Court was delivered by Ray, J.--This.is an, appeal by special leave from the judg- ment dated 13 August, 1969 of the High Court of Punjab and Haryana. The appellant was appointed and confirmed in Punjab Civil Medical Service Class I with effect from 26 February, 1955. Respondent No. 3 Dr. S. S. Sekhon was confirmed in the same Class I service, oN 28 February, 1955. The time scale salary of Class I service is Rs. 600-40-800-50-900 with efficiency bar at 800/-. A class I officer on promotion to the selection grade is entitled to Rs. 1000/-. Dr. Pritam Singh is a Fellow of the Royal College of Surgeons. He obtained qualifications in various post graduate medical courses in England and America. In 1961 he was serving the Government of Uganda in Africa at a salary of Rs. 3000/p.m. in a permanent pensionable post. The Punjab Government in the year 1961 offered him the post of Civil Surgeon in the Punjab Civil Medical Service. Dr. Pritam Singh expressed his willingness to accept the post at a suitable salary. Respondent No. 2 Dr. Pritam Singh was appointed on 16 July, 1962 as Chief Medical Officer in the Punjab Civil Medical Service Class I in the scale of Rs. 800-50-1500 with a starting salary of Rs. 1000/- p.m. with such allowances as might be admissible under the rules. He joined the post with effect from 4 August, 1962. By an order of the Governor of Punjab dated 18 December, 1962 the post was directed to be in addition to the existing posts of Civil Surgeons both in the selection grade and ordinary grade. The Government of Punjab thereafter took steps of filling the post of the Chief Medical Officer, Chandigarh on a permanent basis through the Public Service Commission. A public notice inviting applications for the post was issued under the authority of the Commission in the month of April, 1963. Dr. Pritam Singh applied for the post. Neither the appellant nor respondent Dr. Sekhon applied for the post because they did not have the requisite qualification prescribed for the post. Dr. Pritam Singh was selected by the Punjab Public Service Commission. The order of appointment by the Governor was issued on 10 May, 1963. Dr. Pritam Singh was on probation for a period of two years with effect from the date on which he joined as Chief Medical Officer, namely, 4 August, 1962, and he was governed by the Punjab Civil Medical Service Class I Rules. On 30 August, 1963 a formal letter was issued to Dr. Pritam Singh that the Governor of Punjab in consultation with the Punjab Public Service Commission had allowed Dr. Pritam Singh the grant of higher starting pay of Rs. 1250/- p.m. on his appointment as Chief Medical Officer on a regular basis in the time scale of Rs. 800-50-1500 with effect from 17 April, 1963 as Principal Medical Officer, Chandigarh which was the name of the redesignated post of the Chief Medical Officer. On 9 December, 1965 Dr. Pritam Singh was confirmed with effect from 17 April, 1963 as Principal Medical Officer, Chandigarh. On 20 October, 1966 the respondent Dr. Pritam Singh was appointed by the President of India in the selection grade of Punjab Civil Medical Service in the scale of Rs. 1300-50- 1600 with effect from 20 October, 1966. The appellant impeached the order dated 20 October, 1966 appointing the respondent Dr. Pritam Singh in the selection grade to be in violation of the, Punjab Civil Medical Service (Recruitment and Conditions of Service) Rules, 1940 on two broad grounds; first, that the appointment to the selection grade of Punjab Civil Medical Service could be only by promotion from Punjab Civil Medical Service Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 3 Class I and not by direct appointment, and, secondly, even if Dr. Pritam Singh could be appointed direct to the selection grade his seniority would be below that of the appellant and Dr. Sekhon. When Dr. Pritam Singh was appointed to the selection grade he was placed at the bottom of the selection grade. The appellant and the respondent Dr. Sekhon were also appointed to the selection grade with effect from 1 November, 1966 10 days subsequent to the appointment of Dr. Pritam Singh. The appellant and Dr. Sekhon contended that they had been senior to Dr. Pritam Singh in the time scale of Class I Service and therefore the respondent Dr. Pritam Singh should not have been placed senior to them in the selection grade. 15-1 S.C. India/71 The punjab civil medical Service, Class I (Recruitment and Conditions of Service) Rules are 17 in number. Rule 2(c) defines the service to mean, the Punjab Civil Medical Service Class I. Rule 3 states that all appointments to the service shall be made by the Government on the advice of the Commission from time to time as required. The other relevant Rules necessary for the purpose of the present appeal are rules 5, 6, 7(1), 8 and 9 which are as follows:- "5. Appointment to the service shall be made either by promotion from the Class 11 service or by direct recruitment in India or in England and when any vacancy occurs or is about to occur, Government shall determine in what manner such vacancy shall be filled. Note:Except with the previous sanction of Government only such persons shall be eligible for direct appointment as are not already in Government service. 6.(1) The service shall consist of such number of posts of Civil Surgeons as may be determined by Government from time to time. (2)Not less than nine posts shall be filled by promotion from the Class 11 service. Provided that recruitment by promotion shall be made by strict selection and no member of the Class 11 serviceshall have any claim to such promotions of right. 7. (1) Members of the service who are appointed against permanent vacancies shall on appointment remain on probation for a period of two years if recruited by direct appointment and one year if recruited otherwise than by direct appointment. Explanation:Officiating service shall be reckoned as period spent on probation but no member of the service who is officiating in any appointment shall on the completion of his period of probation be entitled to be confirmed until he is appointed against a permanent vacancy. 8.The seniority of the members of the service shall be determined by the dates of their confirmation in the service : Provided that if two or more members are confirmed on the same date: (a) A member recruited by direct appointment shall be senior to a member recruited by promotion. Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 4 (b) in the case of members who are both or all appointed by promotion from the Class II service, seniority shall be determined according to the seniority of those members in that service and (c) in all other cases Government shall decide the seniority. 9.(1) A member of the service shall on appointment be entitled to a pay of a scale rising from Rs. 600 a month by an annual increment of Rs. 40 a month to Rs. 800 a month and then by an annual increment of Rs. 50 a month to Rs. 900 a month with an efficiency bar at Rs. 800 a month. In addition a member if he is of non-Asiatic domicile shall be entitled to receive such overseas pay as may be prescribed by Government from time to time. (2)Members of the service shall be eligible for promotion to a selection grade and on such promotion shall be entitled to a pay of Rs. 1000 a month. Provided that promotion to the selection grade shall be made strictly by selection and no member of the service shall be entitled as of right to such promotion. (3)The number of appointments in the selection grade shall not exceed 25 per cent of the total number of appointments in the service," Counsel for the appellant contended that rule 9(2) which ,stated that the members of the service shall be eligible for promotion to the selection grade meant that only the members of Class I service could be promoted to a selection grade and there could be no direct appointment to a selection grade. A direct appointment to the selection grade was said by the appellant to be an infraction of rule 9(2). The contention of the appellant with regard to rule 5 was that it spoke of appointment to the service either by Promotion from Class II or by direct recruitment and therefore there could be direct recruitment only to Class I service and not to the selection grade. It was emphasised that rule 5 did not specifically provide for direct appointment to selection grade. Rule 9(2) does not contain any restrictive word that only members of the service shall be eligible to promotion to a selection grade. The proviso to rule 9(2) contains a word of limitation and it is that no member of the service shall be entitled as of right to such promotion. To exclude appointment to selection grade would be to rob rule 5 as well as rules 9(2) and 9(3) of their ,content because rule 5 speaks of appointment to the service to be either by promotion or by direct recruitment. Rule 9(2) speaks of eligibility of members of the service for promotion to the selection grade and rule 9(3)speaks of the number of appointments in the selection grade not to exceed 25 per cent of appointments in the service. The service as defined in rule 2(c) means the Punjab Civil Medical Service Class I. Selection grade is the Punjab Civil Medical Service Class I. That is not disputed. Therefore rule 5 which specifically speaks of appointment to the service by direct recruitment embraces Class I and the selection grade which is a part and parcel of Class I. The word 'appointment' in rule 9(3) in Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 5 regard to selection grade as not exceeding 25 per cent of the total number of appointments in the service contemplates both promotion and direct appointments in, the service to the selection grade. The word "appointment" cannot mean only promotion. It means appointment both by promotion and by direct recruitment. That is why the word 'appointment' is used in that sense once in relation to selection grade and again in relation to the total number of appointments to the service. Direct appointment to selection grade is not only contemplated in the rules particularly rules 5, 9 (2) and 9 (3) but is also the implicit idea inherent in the words "direct recruitment and direct appointment" in Rule 5 for the purpose of attracting able and meritorious persons to the service including the selection grade. The fallacy in the appellant'& contention is that though selection grade will be within the definition of the service in rule 2(c), wherever the word "service" occurs, in rules 5 and 9, the construction put upon the words 'service' is members of the service who are in Class I on time scale appointment and who alone can be promoted to the selection grade and that there cannot be any direct appointment to selection grade. There is another reason as to why the rules contemplate direct appointment to selection grade in proper cases. If it appears that there are not suitable persons in Class I time scale who can be promoted to the selection grade persons of ability will have to be brought in to the selection grade from outside. A contention was advanced by counsel for the appellant that rule 3 contemplated appointment by the Government on the advice of the Public Service Commission and that the appointment of Dr. Pritam Singh was not made on such advice. The recruitment of Dr. Pritam Singh to the post of Chief Medical Officer was in consultation with the Punjab Public Service Commission. That appointment was made in the month of May, 1963. Being a direct recruit he was an probation for two years. He was confirmed thereafter. His starting salary was higher and at the time of confirmation he was getting a salary of Rs. 1,250 p.m. in the scale of Rs. 800- 50-1500. Dr. Pritam Singh prior to his appointment to the selection grade in the Punjab Civil Medical Service Class I was getting a salary of Rs. 1,250 p.m. which was higher than the limit of time scale pay in Class I service. The other contention on behalf of the appellant was that Dr. Pritam Singh should not have got seniority, over the appellant and the respondent Dr. Sekhon in the selection grade. Prior to the appointment of Dr. Pritam Singh to the selection grade the seniority list of Class I service to which the appellant and the two respondents belonged was not fixed because of representations made by various persons including the appellant and Dr. Sekhon. We are not called upon to go into the seniority list of Class I service because the only controversy now is with regard to the seniority list of the selection grade. The appointment of Dr. Pritam Singh to the selection grade was earlier than that of the appellant and Dr. Sekhon. Therefore, there cannot be any cause for complaint on ground of seniority. When Dr. Pritam Singh was appointed to the selection grade his position was last in the list. That was on 20 October, 1966. The appellant and Dr. Sekhon were promoted to the selection grade 10 days thereafter and their position would be in the ordinary course below Dr. Pritam Singh. It would be Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 6 unjust to hold that the appellant and Dr. Sekhon would be put at a place higher than Dr. Pritam Singh, in the selection grade. The High Court correctly expressed the view that there are no specific rules in regard to the fixation of seniority in the selection grade in the case of a direct appointment. If there are, no relevant rules with regard to fixation of seniority in the case of a direct appointment to the selection grade, Dr. Pritam Singh having been recruited by direct appointment earlier than the appellant and Dr. Sekhon, Dr. Pritam Singh's seniority cannot be disturbed. That will be unjust. For these reasons, the appeal fails and is dismissed. The parties will pay and bear their own costs. V.P.S. Appeal dismissed. Harkishan Singh vs State Of Punjab & Ors on 25 March, 1971 7 | {
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Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 Equivalent citations: 1972 AIR 580, 1972 SCR (2) 674, AIR 1972 SUPREME COURT 580 Author: K.S. Hegde Bench: K.S. Hegde, A.N. Grover PETITIONER: RAM AWADESH SINGH Vs. RESPONDENT: SUMITRA DEVI & ORS. DATE OF JUDGMENT03/12/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N. CITATION: 1972 AIR 580 1972 SCR (2) 674 CITATOR INFO : F 1973 SC 276 (5) RF 1976 SC1187 (31) D 1985 SC 847 (23) ACT: Representation of the People Act, 1951, ss. 33(4) and 36(4)--Nomination paper--Mistaken entry as to candidates' name in electoral roll--Mistake not substantial--Acceptance of nomination paper does not vitiate election. Evidence--If several instances of corrupt practice are not separately proved they have no collective effect. HEADNOTE: During the mid term election held in 1969 in Bihar the respondent and 11 others contested from the Arrah Assembly Constituency. The appellant was declared elected as having obtained the highest number of votes. His nearest rival Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 1 was the respondent.' The respondent filed an election petition challenging the election of the appellant on various. The principal ground taken was that the result of the election had been material affected by the improper acceptance of the appellant's nomination papers. It was alleged that nomination Paper showed that r the appellant's name was registered as an elector in the Arrah Constituency whereas at the relevant time it had been removed therefrom. The returning Officer was therefore wrong in accepting the nomination paper. The other allegations against the appellant related to corrupt practice. The High Court rejected the allegations as regards corrupt practice but it set aside the election of the appellant on the ground that the nomination paper had been improperly accepted and the election had been materially affected thereby.. In appeal to this Court, HELD : (i) The appellant was fully qualified to be nominated at the election. The only thing said against his nomination was that his nomination paper was not properly filled in. It was proved from the evidence that the Returning officer did look into the nomination paper but unfortunately he also did not notice that the name of the appellant had been re- moved from the electoral roll of Arrah constituency. If he had noticed F that fact he would have asked the appellant either to correct the mistake or to file a fresh nomination paper. The appellant filed his nomination paper on the 6th of January 1969 and the last date for filing the nomination paper was the 8th of that month. That being so there would have been no difficulty for him neither to correct the nomination paper filed or to file a fresh nomination paper. The appellant had with him a certified copy of the electoral roll of Sandesh Constituency where his name was enrolled and he had shown the same to the Returning Officer. Mistakes complained of occurred because both the appellant as well as the Returning Officer merely looked into the main voters' list in Arrah constituency but overlooked the deletion noted in a separate list [670 A-D] From a combined reading of ss. 33 and 36 of the Representation of the People Act, 1961 it is clear that a mis-description as to the electoral roll number of the candidate or of the proposer in the nomination paper is not to be considered as a material defect in the nomination paper. The High Court was accordingly not justified in allowing the election petition on the ground that the nomination paper of the appellant was improperly accepted. [681 A; 683 E] 675 In view of the above finding the further question whether the result of the election was materially affected did not survive for consideration. [683 E-F] (ii) The appeal of the respondent on the question of corrupt practice had no merit. The three instances mentioned were in the opinion of the High Court not established by the Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 2 evidence. Each instance of a corrupt practice pleaded has to be established separately. If every one of the instances was not proved all of them put together cannot be accepted as true because of the volume of evidence. [685 B-C] The election petition must therefore be dismissed. Karnail Singh v. Election Tribuna, Hissar & Ors., 10 E.L.R. 189, Rangilal Choudhury v. Dahu Sao & Ors., [1962] 2 S.C.R. 401, Namdeo Chimnaiji Tapre & Anr. v. Govindas Ratanlal Bhatia & Ors.. I.L.R. 1964 Bom. 114 and Wey Kanta Barooah v. Kusharam Nath & Ors,, XXI E.L.R. 459, applied. Narbada Prasad v. Chhagal Lal & Ors., [1967] I S.C.R. 499, Ram Dayal v. Brijrai Singh & Ors., [1970] I S.C. R. 530 and Brijendralal Gupta find Anr. v. Jawalaprasad & Ors., [1960] 3 S.C.R. 650, distinguished. Vashist Narainin Sharma v. Dev Chandra and Ors., [1965] S.C.R. 509, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1384 and 1584 of 1970. Appeals under Section 116-A of the Representation of the People Act, 1951 from the Judgment and Order dated May.22, 1970 of the Patna High Court in Election Petition No. 2 of 1969. J. P. Govat, Subhagmal Jain, S. P. Mukherjee, Pranab Chatterjee and G. P. Roy, for the appellant (in C.A. No. 1384 of 1970) and respondent No. 1 (in C.A. No. 1584 of 1970). V. M. Tarkunde, P. N. Tiwari, 0. C. Mathur, Ravinder Narain and J. B. Dadachanji, for respondent No. 1 (in C.A. No. 1384 of 1970) and the appellant (in C.A. No. 1584 of 1970). The Judgment of the Court was delivered by Hegde, J. These are cross-appeals under s. 116-A of the Representation of the People Act, 1951 (to be hereinafter referred to as the Act) arising from an election petition filed by the first respondent (who for the sake of convenience will hereinafter be referred to as the respondent), before the High Court of Patna. During the last mid term election for the Bihar Legislative Assembly held in the beginning of 1969, the appellant, the respondent and 1 1. other contested from the Arrah Assembly Constituency. The last date for filing the nomination was January 8, 1969 and the date of scrutiny was January 9, 1969. The poll took place on February 9, 1969 and the votes were counted on the next day. The appellant was declared elected as having obtained the highest number of votes i.e 13,556. His nearest rival was the respondent who secured 12,278 votes. The appellant was the nominee of the Socialist party and the respondent was the nominee of the Congress party. After the publication of the results in the official gazette, the respondent filed the election petition challenging the validity of the appellant's election on various grounds. The principal ground taken by her was that the result of the election had been materials affected by the improper acceptance of the appellant's nomination papers. She also charged the appellant with the commission of various Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 3 corrupt practices to which reference will be made at a later stage. The learned trial judge accepted the contention of the respondent that the result of the election had been materially affected by the improper acceptance of the appellant's nomination. He accordingly set aside the election of the appellant; but lie ,rejected the contention of the respondent that the appellant was guilty of any corrupt practice. Aggrieved by the decision of the High Court, the appellant has filed Civil Appeal No. 1384 of 1970 and the respondent has filed Civil Appeal No. 1. 5 84 of 1970. The principal questions that arise for decision are : (1) whether the defects found in the nomination paper of the appellant are, of " substantial character" within the meaning of that expression in s. 36(4) of the Act and (2) whether it in is established that the acceptance of the nomination of the appellant had materially affected the result of the election. After dealing with those questions, we shall proceed to consider the appeal of the respondent challenging the conclusion of the trial court regarding the corrupt practices alleged to have been committed by the appellant. Before proceeding to consider the relevant provisions in the Act, it is necessary to set out a few more facts. The appellant has been contesting from the Arrah constituency from about the year 1962. He represented that constituency before the dissolution of the Bihar Legislative Assembly. He was registered as on elector in the Sandesh Assembly Constituency of the Bihar State. His name continued to be on the electoral roll of that constituency even at the time he filed his nomination from the Arrah constituency on January 6, 1969 i.e. two days before the last date for filling the nomination. It appears that in 1968, his name was also entered in the electoral roll of Arrah constituency. But later on, evidently because. his name stood entered in the Sandesh constituency, the same was deleted from the Arrah constituency. But this deletion was done without notice to the appellant. The deletion was shown in a separate supplemented list. In the main electoral roll, his name continued to be shown in the Arrah constituency. According to the appellant when he came, to file his nomination paper, he was not aware of the fact that his name was entered in the electoral roll of the Arrah constituency. Therefore he had brought with him a certified copy of the electoral roll of the Sandesh constituency. But in the' morning of January 6, 1969 he came to know that his name was also in the Arrah constituency. At that time he did not notice the deletion of his name which was in a separate list. Therefore in his nomination paper, he entered his electoral roll No., as shown in the electoral roll of Arrah constituency. But at the, same time he showed to the Returning Officer the certified copy of the scrutiny, no one objected to the nomination of the appellant. The Returning Officer supports this version of the appellant. After checking the name of the appellant as well as his electoral number as found in the electoral roll of Arrah constituency, and also the names and electoral roll number of his proposers, the Returning Officer received the nomination paper filed by him. At the time of the scrutiny, no one objected to the nomination of the appellant. The Returning Officer accepted his nomination as a valid nomination. The objection to the acceptance of the nomination of the appellant was put forward for the first time, in the election petition. We have now to consider whether the appellant was validly nominated. Section 5 of the Act prescribes the qualifications for membership of a Legislative Assembly. It says that "A person shall not be qualified to be chosen to fill a seat in the Legislative Assembly of a State unless Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 4 (a) (b) (c) in the case of any other seat he is an elector for any Assembly constituency in that State" It is not denied that the appellant possesses all the qualifications prescribed either under the Constitution or under the Act and further that he has none of the disqualifications mentioned either under the Constitution or under the Act. All that is said against his nomination is that his nomination paper was not properly filled in. The law requires that the nomination of a candidate should be in the prescribed form and among others it should contain the name of the person nominated, his proposer's name as well as the electoral roll numbers of the candidate and his proposer. Sub-cl. (4) of s. 33 provides that : "On the presentation of a nomination paper, the returning officer shall satisfy himself that the names and electoral roll numbers of the candidate and his proposer as entered in the nomination paper are the same as those entered in the electoral rolls : Provided that no misnomer or inaccurate description or clerical, technical or printing error in regard to the name of the candidate or his proposer or any other person, or in regard to any place, mentioned in the electoral roll or the nomination paper and no clerical, technical or printing error in regard to the electoral roll numbers of any such person in the electoral roll or the nomination paper, shall affect the full operation of the electoral roll or the nomination paper with respect to such person or place in any case where the description in regard to the name of the person or place is such as to be commonly understood; and the returning officer shall permit any ,such misnomer or inaccurate description or clerical, technical or printing error to be corrected and where necessary, direct that any such misnomer, inaccurate description, clerical, technical or printing error in the electoral roll or in the nomination paper shall be overlooked." Sub-s. (5) of s. 33 provides that where a candidate is an elector ,of a different constituency, a copy of the electoral roll of that constituency or of the relevant part thereof or a certified copy of the relevant entries in such roll shall unless it has been filed along with the nomination paper be produced before the Returning Officer at the time of the scrutiny. Section 36 of the Act prescribes the mode of scrutiny of the nomination. Sub-s. (2) of that section says : "The returning officer shall then examine the nomination papers and shall decide all objections which may be made to any nomination and may, either on such objection or on his own motion, after such summary enquiry, if any, as he thinks necessary, reject any nomi- nation on any of the following grounds : Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 5 (a) that on the date fixed for the scrutiny of nomination the candidate either is not qualified or is disqualified for being chosen to fill the seat under any of the following provisions that may be applicable namely .- Articles 84, 102, 173 and 191 (b) that there has been a failure to comply with any of the provisions of section 33 or section 34; or (c) that the signature of the candidate or the proposer on the nomination paper is not genuine." Sub-s. (4) of that section commands the Returning Officer not to reject any nomination paper on the ground of any defect which is not of a substantial character. Sub-s. (6) of that section prescribes that : "The returning officer shall endorse on each nomination paper his decision accepting or rejecting the same and, if the nomination paper is rejected, shall record in writing a brief statement of his reasons for such rejection." The only other relevant provision which we need consider is sub-s. (1) of s. 100 which prescribes the grounds for declaring election to be void. That section reads : "Subject to the provisions of sub-s. (2) if the High Court is of opinion- (a) that on the date of his election a returned candidate was not qualified, or was disqualified, to be chosen to fill the seat under the Constitution or this Act or the Government of Union Territories Act, 1963; or (b) that any corrupt practice has been committed by a returned candidate or his election agent or by any other person with the consent of a returned candidate or his election agent; or (c) that any nomination has been improper rejected; or (d) that the result of the election, in so far as it concerns a returned candidate, has been materially affected- (i) by the improper acceptance of any nomination. or (ii) by any corrupt practice committed in the interests of the returned candidate by an agent other than his election agent or (iii) by the improper reception, refusal or rejection of any vote or the reception of any vote which is void, or (iv) by any non-compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act, the High Court shall declare the election of Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 6 the returned candidate to be void." The first question that we have got to decide is whether the defects found in the nomination paper of the appellant are of substantial character. As mentioned earlier, the appellant was fully qualified to be nominated for the election. The only thing said against his nomination is that his nomination paper was not properly filed in. We have earlier seen that a duty is imposed on the Returning Officer by sub-s. (4) of S. 33 to look into the nomination' paper when it is presented and to satisfy himself that the names and the electoral roll numbers of the candidate and that of the proposer as entered in the nomination paper are the same as those entered in the electoral roll. In this case it is proved that the Returning Officer did look into the nomination paper but unfortunately he also did not notice that the name of the appellant had been removed from the' electoral roll of Arrah constituency. If lie had noticed that fact, he, would have asked the appellant either to correct the mistake or to file a fresh nomination paper. We have earlier noticed that the appellant filed his nomination paper on the 6th of January 1969 and the last date for filing the nomination paper was the 8th of that month. That being so, there would have been no difficulty for him either to correct the nomination paper filed or to file a fresh nomination paper. We have earlier noticed that the appellant had with him a certified copy of the electoral roll of the Sandesh constituency and he had shown the same to the Returning Officer. Mistakes complained or occurred because both the appellant as well as the Returning Officer merely looked into the main voters' list but overlooked the deletion noted in a separate list. But the implication of S. 33 (4) is that a wrong entry in a nomination paper as regards the name of the candidate or the proposer or their electoral roll numbers is not a matter of substantial importance. That is why the legislature requires the Returning Officer to look into them and if there are any mistakes to get them corrected. What is of importance in an election is that the candidate should possess all the prescribed qualifications and that he should not have incurred any of the disqualifications mentioned either in the Constitution or in the Act. The other information required to be given in the nomination paper is only to satisfy the Returning Officer that the candidate possesses the prescribed qualification and that he is not otherwise disqualified. In other words those information relate to the proof of the required qualifications. It may also be noted that the legislature itself has made distinction between the acceptance of a nomination and the rejection of a nomination. The Returning Officer is required to give reasons for rejecting a nomination whereas he is not required to give reasons for accepting a nomination. Further sub-s. (2) of S. 36 says that "he may reject the nomination paper". It is further seen that the proviso to sub-c. (4) of S. 33 says that no inaccurate description in regard to the name of the candidate or his proposer or in regard to any place mentioned in the nomination paper shall affect the full operation of the nomination. From a, combined reading of ss. 33 and 36, it is clear that a mis-description as to electoral roll number of the candidate or of the proposer in the nomination paper is not to be considered as a material defect in the nomination paper. In Karnail Singh v. Election Tribunal, Hissar and ors.(1), the tribunal held that the nomination paper of one of the candidates was wrongly rejected on the ground that column No. 8 in the nomination paper was not duly filled up. The only defect pointed out was that the name of the sub- Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 7 division was not stated therein'. But on the evidence it was quite clear that there was no difficulty in identifying the candidate and the candidate himself pointed out to the returning officer the entry of his name in the electoral roll. Agreeing with the tribunal this Court held that the defect in those circumstances was a technical one and the tribunal was perfectly right in holding that the defect was not of a substantial character and that the nomination paper should not have been rejected. In Rangilal Choudhury v. Dahu Sao and ors. (2) this Court held that the fact that the name of the constituency was wrongly, mentioned as 'Bihar' instead of 'Dhanbad' in the nomination paper did not vitiate the nomination as it was clear from a reading of the entire nomination paper that the respondent was seeking election from the Dhanbad constituency. In reaching that conclusion this Court referred to the requirements, of S. 3 3 (4), S. 3 6 (2) (b) and (4). After referring to those provisions this Court observed "The result of these provisions is that the proposer and the candidate are expected to file the nomination papers complete in all respects in accordance with the prescribed form; bat even it there is some defect in the nomination paper in regard to either the names of the electoral roll numbers, it is the duty of the returning officer to satisfy himself at the time of the presentation of the nomination paper about them and if necessary to allow them to be corrected, in order to bring them into conformity with the corresponding entries in the electoral roll. Thereafter on scrutiny the returning officer has the power to reject the nomination paper on the ground of failure to comply with any of the provisions of s. 33 subject however to this that no nomination paper shall be rejected on the ground of any defect which is not of a substantial character." In Namdeo Chimanji Tapre and anr. v. Govinddas Ratanlal Bhatia and ors. (1), the High Court of Bombay held that as the (1). 10, E.L.R. 189. (2) [1962] 2. S.C.R. 401. (3). I.L,R. 1964 Bom, 114. identity of the candidate was not in dispute, the rejection of the nomination paper by the Returning Officer was not valid having regard to the provisions in s. 33 and s. 36 of the Act. In Dev Kanta Barooah v. Kusharam Nath and ors. (1), a nomination paper for the Nowgong constituency of the Assam Legislative Assembly contained a recital in the heading that the respondent was thereby nominated as a candidate for election "from the Assembly constituency", but against column No. 2 of nomination paper relating to the electoral roll number of the proposer and column No. 5 relating to the electoral roll number of the candidate, the entry was "Assam Legislative Assembly constituency, Part No. 10 of the Electoral Roll of village Phulaniati, Mouza Hatichung, Police Station Sadar, Nowgong, Roll No.. . . . . " The Returning Officer rejected the nomination paper on the ground that the name of the constituency to which the elec- toral roll related was not mentioned in columns 2 and 5 as required section 33 (4) of the Act. This Court agreeing with the tribunal and the High Court held that the rejection of the nomination was improper. Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 8 Our attention has not been invited to any decision either of this Court or of any High Court or even of a tribunal where the Returning Officer had accepted the nomination paper of a qualified candidate, the same was found to be improper because of some defect in the nomination paper. The case of rejection of a nomination paper by the Returning Officer stands on a footing different from that of an acceptance of a nom ination paper. In the latter case the main though not the only question to be considered is whether the candidate is qualified to be a candidate. The very fact that the law requires the Returning Officer to look into the nomination paper, when filed and get any mistake regarding the name or electoral number of the candidate or his proposer corrected shows that the mistake regarding them is not a material defect. Learned Counsel for the respondent has sought to place reliance on some decisions of this Court in support of his contention that the appellant's nomination paper was improperly accepted. We shall now refer to the decisions relied on by him., In Narbada Prasad v. Chhagan Lal and ors. (2) a candidate's nomination paper was rejected by the Returning Officer on the round that he did not produce the proof required under s. 33(5) of the Act. That rejection was upheld by this Court. We fail to see how that decision lends any support to the respondent's case. Without the required proof, the Returning Officer could not satisfy himself that the candidate was qualified to seek election. (1) XXI, E.L.R. 459. (2) [1969] 1, S.C.R.499 Reliance was next placed on the decision of this Court in Rana Dayal v. Brijraj Singh and ors. (1) Therein the proposer of the candidate was an illiterate person. He had not got authenticated or attested the mark put by him in the nomination paper by one of the designated officers as required by the relevant provisions of the Act and the rules framed thereunder. Hence the nomination paper was rejected by the Returning Officer. That rejection was upheld both by the High Court as well as by this Court. No nomination can be held to be valid unless the candidate is duly proposed. If the mark put by the proposer is not authenticated in the manner required by law, it cannot be said that the candidate has been properly nominated. In Brijendralal Gupta and ant-. v. Jwalaprasad and ors.(2), this Court observed that the word 'defect' in s. 36(4) included an omission to satisfy the details prescribed in the nomination. It further observed that the distinction laid down in English cases between "omission and "inaccurate description" depended on the specific provisions of the English statute which did not obtain under the Indian law. This decision, again has no bearing on the point in issue. For the reasons mentioned above we are of the opinion that the defect in the appellant's nomination paper was not a substantial defect. Hence the High Court was not justified in allowing the election petition on the ground that his nomination was improperly accepted. In view of the conclusion reached above, it is not necessary for us to go into the question as to the true interpretation of s. 100(1) (d). We shall merely notice the arguments advanced on either side on that question. According to the appellant th@e legislature has made a clear distinction between improper rejection and improper acceptance of a nomination. In the case of improper rejection, the High Court shall declare the election of the returned candidate to be void but in the case of improper acceptance before the election of the returned candidate can be declared void, the election petitioner will have to establish that the result of the election in so far as it concerns the returned candidate has been materially affected. At this stage we, may notice that prior to the amendment of the Act in 1956, improper rejection and improper acceptance were placed in the same category. Clause (c) of s. Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 9 100(1) as it stood then read : "If the Tribunal is of opinion. (c) that the result of the election has been materially affected by the improper acceptance or rejection of any nomination. (1) [1970] I S.C.R. 530. (2) [1960] 3 S.C.R. 650. the Tribunal shall declare the election to be wholly void." This Court in Vashist Narain Sharma v. Dev Chandra and ors. (1) observed in the course of its judgment that where the person whose nomination has been improperly accepted is the returned .candidate himself, it may be readily conceded that his nomination has materially affected the result of the election. This observation was not the ratio of that decision. That apart, after this observation was made, the Parliament has amended the relevant provision and has made a distinction between improper rejection and improper acceptance of a nomination. It was urged on 'behalf of the ,appellant that in view of the amendment the observation made by this Court in Vashist Narain Sharma's case (supra), can no more govern the point in issue. According to the learned Counsel, clause (d) of s. 100(1) as it now stands definitely requires that in the case of improper acceptance of any nomination, the election petitioner must establish that the result of the election in so far as it concerns the returned candidate has been materially affected. He urged that the word "any" in s. 100(1)(d) (1) means every .nomination. On the other hand it was urged on behalf of the respondent that the amendment of s. 100(1) did not affect the correctness of the observation made by this Court and that observation had been quoted by this Court in two cases arising under the amended provision. In view of our earlier finding about the validity of the appellant's nomination, it is not necessary to decide the controversy relating to the interpretation of s. 100 (1) (d). For the reasons mentioned above, differing from the view taken by the I earned trial judge, we have come to the conclusion that the nomination of the appellant was properly accepted. This takes us to the appeal filed by the respondent. As mentioned earlier, the High Court has rejected the charges of corrupt practices levelled by the respondent against the appellant. Those charges were sought to be established only by oral evidence. The learned trial judge was unable to accept the evidence adduced in support of the alleged corrupt practices. Ordinarily this Court does not reappropriation Oral evidence. Our attention has not been ,invited to any exceptional circumstances in this case requiring us .to go into the evidence afresh. It is well known that the factious feelings generated during elections continue even after the election and hence the contesting parties are able to produce before court large (number of witnesses, some of whom may be seemingly disinterested' But that by itself is no guarantee of the truth of the .evidence adduced. Mr. Tarkunde, learned Counsel for the respondent put forward three broad contentions in support of the (1)[1955] S.C.R. 509. Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 10 appeal preferred by the respondent. They are : (1) that the High Court failed to take an overall view of the evidence adduced; it merely contented itself by examining evidence relating to each one of the instances, (2) the High Court erred in not relying on the evidence relating to an instance when the same is spoken to by a single witness and (3) the High Court erred in rejecting the testimony of some of the witnesses on the ground that they were chance witnesses. None of these contentions appear to have any merit. Each instance of a corrupt practice pleaded had to be established separately. If every one of those instances are not proved, all of them put together cannot be accepted as true because of the volume of evidence. Now coming to the instances sought to be proved by the evid- ence of a single witness, the learned trial judge observed in the course of his judgment that those instances were not seriously pressed by the Counsel for the respondent. Evidently these charges were given up. In appreciating evidence of the witnesses, the courts have to take into consideration the probability of their being present at the time of the alleged incident. Courts have always viewed with suspicion. the evidence of chance witnesses. There was nothing wrong in the learned judge not being able to place much reliance on the evidence of chance witnesses. Hence we see no merit in the appeal filed by the respondent. For the reasons mentioned above we allow Civil Appeal 1384 of 1970 and dismiss Civil Appeal No. 1584 of 1970. In the result the election petition stands dismissed with costs both in the High Court as well as in this Court-in this Court the appellant is entitled to only one hearing fee. G.C. C.A. No. 1384/70 allowed. C.A. No. 1584/70 dismissed., Ram Awadesh Singh vs Sumitra Devi & Ors on 3 December, 1971 11 | {
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Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 Equivalent citations: 1972 AIR 1140, 1972 SCR (2) 409, AIR 1972 SUPREME COURT 1140, (1972) 1 SCJ 272, 1972 2 SCR 409, 1972 2 SCJ 272, 1972 MADLJ(CRI) 527 Author: P. Jaganmohan Reddy Bench: P. Jaganmohan Reddy, D.G. Palekar PETITIONER: JAGE RAM, INSPECTOR OF POLICE & ANR. Vs. RESPONDENT: HANS RAJ MIDHA DATE OF JUDGMENT18/11/1971 BENCH: REDDY, P. JAGANMOHAN BENCH: REDDY, P. JAGANMOHAN PALEKAR, D.G. CITATION: 1972 AIR 1140 1972 SCR (2) 409 1972 SCC (1) 181 ACT: Judgment Expunging of remarks against authorities whose conduct comes into consideration before courts-Principles to be followed Habeas Corpus-Duty of Court. HEADNOTE: The High Court in its order disposing of a habeas corpus petition stated that the detenu had been taken into custody on the 5th of May, 1968, that his arrest "had surreptitiously been" sworn to have taken place on the 10th of May, 1968, and that he was subjected to torture resulting in injuries. The appellants filed appeal in this Court to expunge these statements. Dismissing the appeal, HELD: In State of U.P. v. Mohammad Naim, [1964] 2 S.C.R. Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 1 363, this court has observed that the matters which have to be kept in view in considering whether the remarks made in judgments against authorities whose conduct comes into consideration before the courts of law in cases to be decided by them are disparaging are : (a) whether the party whose conduct is in question is before the Court or has any opportunity of explaining or defending himself; (b) whether there is evidence on record bearing on that conduct justifying the remarks; and (c) whether it is necessary for the decision of the case, as an integral part thereof, to animadvert on that conduct. It has also been recognised that judicial pronouncements must be judicial in nature and should not normally depart from sobriety, moderation and reserve. [420 D] On the facts of the case and the evidence on record, none of the remarks to which exception has been taken could be described as unwarranted, unnecessary or irrelevant or can be characterised as generalisation or of a sweeping nature. The appellants had opportunity of filing their affidavits to give their own version, which, they have done in great detail, showing that they knew what the allegations against them were. If they wanted to produce any other person in support of their stand that the accused was only arrested on the 10th and not on the 5th or that the injuries found on the accused were old and were not fresh, they could have done so. In a habeas corpus petition where allegations are made that a citizen of this country is in illegal custody, it is the duty of the Court to safeguard the freedom of the citizen which has been guaranteed to him by the Constitution and to immediately take such action as would ensure that no person, however high or low, acts in contravention of the law or in a high handed arbitrary or illegal manner. While no doubt it is the duty of the Court to safeguard against any encroachment on the life and liberty of individuals, at the same time, it has to be recognised that the authorities who have the_ responsibility to discharge their functions vested in them under the law of the country should not be impeded or interfered with without justification. In furtherance of this duty the High Court passed the orders which in the circumstances of the case was fully justified. [419 F] 410 JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeal no. 35 of 1969. Appeal by special leave from the judgment and order dated May 20, 1968 of the Punjab and Haryana High Court in Criminal Original No. 50-M of 1968. Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 2 R. N. Sachthey, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by P. Jagammohan Reddy, J. This appeal is for expunging certain remarks made against Appellants in the order of the Punjab & Haryana High Court on a Habeas Corpus Petition filed by one Hans Raj Midha for the production of his son Prem Prakash Midha who is said to have been detained illegally by the Central Investigation Agency (C.I.A.) Staff Kamal. In an investigation of an offence of theft committed on 1-4-68 of a Cash Box containing Rs. 10667/87 from the Head Post Office, Kamal where the said Prem Prakash Midha was working as a Clerk Incharge in the Savings Bank Section. It appears from the Habeas Corpus Petition presented to the High Court on 10-5-68 that after Prem Prakash who was working in the Bank, had gone out to meet his wife and came back he found the cash box missing. Immediately he reported the loss to the Assistant Post Master. It also appears from the affidavit filed on the return made by the appellant Jage Ram that a report of the theft of Rs. 10667/87 belonging to the Postal Department was given on the same day over the telephone, an F.I.R. was issued under Sec. 380 IPC by the Police Station, City, Karnal. After tie Police had investigated the offence the investigation was handed over to the CIA Karnal under the orders of Superintendent of Police, Karnal on 24-4-68. The Petitioner's father alleged in his Habeas Corpus petition that his son Prem Parkash was interrogated in his house before the case was entrusted to the CIA but nothing incriminating was discovered; that on 5- 5-68 at about 5 p.m. he was taken away by ASI Dyal Chand and a foot constable as Prem Parkash was wanted by Shri Jage Ram, Inspector CIA; that Shri Ravinder Mehta the brother-in- law of the accused went to the CIA Staff office at Model Town and found him in their custody, but he was not allowed to meet him that day. The next day on 6-5-68 the father went to the Police Station at Model Town to see him but he was not allowed to enter the premises nor was he allowed to interview his son. While the father was there he heard the cries of his son who was obviously being tortured. Ravinder Mehta also visited the CIA staff on 7th and 8th and 9th May 1968 and heard the cries and wailing of Prem Prakash who was being tortured. The father of the petitioner had also visited the Police Station from 7th to 9th when he heard the hue and cry of Prem Prakash. It was alleged that Jage Ram, Inspector CIA and Dyal Chand, ASI were torturing Prem Prakash brutally and illegally and prayed that "a search warrant may be issued and a Court officer may be deputed to effect the search of Prem Prakash at the CIA Staff, Model, Town Karnal or at any place pointed out by the father of Prem Prakash, his wife or his brother-in-law Ravinder Mehta;" that a rule for the production of Prem Prakash may be issued and that he may also be medically examined immediately. On the petition being presented on 10-5-68 the same day Jindra Lal, J. sitting singly passed the following order "Rule returnable on Monday the 13th May, 1968. On the request of the learned Counsel I appoint Shri Sadhu Ram Gupta, my Reader to accompany the petitioner and to search the office of the C.I.A. Staff Kamal, or any other place where the detenu is alleged to be confined. If the detenu is really in the custody of the Respondents, he must be produced before this Court on the 13th May, 1968, also if he is really in the custody of the Respondents or any other detaining authority in Kamal he must be forthwith medically examined by the Chief Medical Officer, Kamal, or in his absence from Kamal, the Officer next in Charge". Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 3 In compliance with these orders, according to the report of Shri Sadhu Ram Gupta the Reader of the learned Judge, he reached the C.I.A. Staff Office at 8.30 P.M. on the same day accompanied by the father of the accused and one Shri Narinder Singh an Assistant in the Criminal Branch of that Court whom he took after obtaining verbal permission of the Judge as he has been going on such raids previously. After reaching the Police Station they saw one Kashmiri Lal constable (No. 267) who on enquiry told them that the Inspector and the Asstt. Inspector had gone to take their meals. They then entered the main building and asked the petitioner to call out the detenu by his name and heard the faint voice of Prem Prakash Midha coming from a room. They lit the torch and opened the shutters and found Prem Prakash Midha lying on a gunny carpet spread on the floor and saw that his feet were swollen and he had some injuries on his head. The accused told them that he had been called on the 5th May 1968 by Dyal Chand and some constables and was detained in the C.I.A. Staff since then. He was not allowed to move out nor any of his relatives were allowed to see him. He also told them that he had been daily administered beating with a chanda by both the respondents. On their enquiry Kashmiri Lal told them that there were no papers relating to enquiry in connection with which the detenu had been detained nor was 13-L 500 Sup CI/72 there any daily diary register maintained in the C.I.A. staff office. In the meantime when another constable Uma Datt in plain clothes reached there he was taken aside by constable Kashmiri Lal who asked him to inform the Respondents i.e. the Inspector and the Asstt. Sub. Inspector about the purpose of their arrival. At about 9.10 p.m. the said constable came and told that he had informed the Respondents and that they would reach soon. At 9.25 p.m. one person in plain clothes came in the courtyard on a cycle and when asked if Respondent No. 1 namely the Inspector had come, he told him that he would just go and bring him. As soon as he had asked him to go some relatives of the petitioners who were in the courtyard told him that he was ASI Dyal Chand Respondent No. 2, add immediately the Court Reader asked him not to go but in spite of it he went away on his cycle. Al 10.50 p.m. Jage Ram Respondent 1 reached the office and told him that the detenu was under their legal arrest. When he was requested to show him the papers concerning the arrest of the accused Respondent 1 told him that the papers were with Respondent 2 and he directed Kashmiri Lal to ask Dayal Chand to bring the relevant papers. At about 11.15 p.m. someone out of the relatives of the petitioner had told them that Respondent 2 was busy writing some papers in a nearby house and he therefore asked Shri Narinder Singh to go and find out the matter. Within ten minutes Shri Narinder Singh came back with ASI Dayal Chand and told him in the presence of the Respondent No. 1 that the ASI was preparing a Zimini and that he had taken out the carbon papers in his presence and that further the ASI had tagged those papers along with the police life. Respondent No. 2 handed over the file to Respondent I which related to the FIR No. 88 dated 1-4-68 P. S. Saddar Karnal for an offence under Sec. 380 IPC. It was neither indexed nor page marked. The last zimini was No. 25 which Narinder Singh told him he had seen Respondent 2 writing and it was tagged in his presence. This Zimini in which the reasons for the detenu being an accused and his arrest are was dated 10-5- 68, and it did not bear any time there on given initialled by the Court Reader. The Court Reader further says that no remand order was shown to him but an application for remand and forwarding endorsement of the Government Pleader dated 10-5-68 was shown to him which he, initialled on being asked by Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 4 Respondent No. 1 to do so. Thereafter he served the notices on both the Respondents. After the notices served Respondent 1 asked Respondent 2 to take the detenu to Duty Magistrate for his remand. The Court Reader asked the Respondents to get the detenu medically examined before the remand was taken but they did not care and took him on their cycle to the residence of the Magistrate at 11.35 p.m. The Court Readers and other followed them and found them talking with the Duty Magistrate in the gate of his residence. The Court Reader brought the order of the Hon'ble High Court to the notice of the Magistrate and also gave him a copy of the orders as desired by him. Upon this the learned Magistrate ordered the remand of the detenu to the judicial custody upto 13th May 1968 and also directed the Appellant to get him medically examined by the Chief Medical Officer, Karnal. Respondent No. 2 took the detenu to Civil hospital and wanted to get the detenu examined from the Doctor on night duty but on their reaching the hospital and showing the orders of the High Court the Doctor declined to examine and asked the Police and themselves to take the detenu to the residence of the C.M.O. The C.M.O. was awakened during the night at 1.35 a.m. and was shown the orders of the High Court and after going through the same he made an endorsement that he would himself examine the detenu in the morning after looking at the injuries and ordered that the detenu be admitted in the hospital in the night. Al 8.45 a.m. on 11-5-68 the C.M.O. himself examined the detenu in their presence and handed over two copies of Medical Iegal report which were enclosed with the report of the Court Reader. On 13th May 1968 the detenu was produced before R. P. Khosla, J. alongwith the returns filed by Jage Ram, Inspector and Dayal Chand, ASI. According to Dayal Chand's affidavit he was associated with the investigations along with Jage Ram Inspector from 4.5.68 to 9-5-68. On enquiry made from the Post office it was revealed that Prem Prakash accused had not marked his attendance in the Post Office and he had sent the report that the accused was out of station and on 8-5-68 the deponent himself went to the house of the accused but could not find him there. It was on 10-5-68 when he sent constable Bhagwan Dass No. 788 to the house of the accused he came back and reported that the accused had met him and promisedto come and join the investigation; accordingly at about 1 1.30 a.m. the accused came. At that time Partap Singh, Inspector Weights and Measures and one Jaswant Rai were present. The Respondent interrogated the accused from 11.30 to 12.25 noon and thereafter arrested him at 12.30 noon. At the time of arrest the person of the accused was searched and a memo relating to the search was prepared which was attested by Shri Partap Singh and Jaswant Rai. Another Memo was prepared giving the visible injuries on the person of the accused. The deponent then wrote down the case diary for 10.5.68 from 2 p.m. to 6 p.m. incorporating the entire investigation for the day up to that time. As there was a paucity of constables in the CIA as they were mostly on election duty the only constable who was available at the time of the arrest of Prem Prakash accused was the Moharir constable Kashmiri Lal. The deponent left Prem Prakash accused in the custody of Kashmiri Lal and at about 6.15 p.m. went in search of his immediate officer Jage Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 5 Ram,, Inspector whom he contacted at about 7.30 p.m. and got the, remand papers relating to the accused forwarded by him. Then he went in search of H. P. Tiku, Prosecuting Inspector whom he could contact only at 9. p.m. when the remand papers were shown to him and got them forwarded by him also. Thereafter with these remand papers and the case diary in the basket of the cycle the deponent came to the office of the C.I.A. staff with the intention of taking Prem Prakash to the Illaqa Magistrate for remand. It may be useful to give his version thereafter in his own words "But hardly had he entered the compound of the office when a gentleman who informed the deponent that he had come from the High Court asked the deponent to bring Inspector Jage Ram to him. The deponent told that gentleman that the Inspector was on election duty and that the deponent would search him out and bring him. The deponent thereupon went in search of the Inspector on a cycle. The deponent did not hear any 'call of the reader from behind may be because of the suffering of hard of hearing. The Inspector was found in P.W.D. Rest House at about 10 p.m. and informed him that some gentleman from the High Court had come and wanted to see him. Inspector Jage Ram thereupon left for the office of the C.I.A. Staff. That from the P.W.D. Rest House after informing Inspector Jage Ram of the arrival of the gentleman from the High Court the deponent went to find out whether the duty Magistrate was at his residence. Finding the duty Magistrate at his residence the deponent came back to the office of C.I.A. Staff where he came to know that the gentleman who had come from the High Court was the Reader of Hon'ble Mr. Justice Jindra Lal and had come with an order of the Hon'ble Judge in the Habeas Corpus Petition of Prem Prakash accused. The order was served upon the deponent and deponent signed it in token of service at 10.35 p.m, After that the deponent showed the case diaries and the remand papers to the Reader, who signed both of them but without mentioning the time. Before the duty Magistrate the reader again signed the case diaries and mentioned a time underneath the signatures." The return of Inspector Jage Ram gives some facts which he came to know as a result of his investigation of the charge against the accused which is not relevant for the purposes of this appeal. It however, appears that even according to him the accused could not be traced till 10.5.68 when on that day, because he was busy in election arrangements he had directed ASI Dayal Chand to carry on the investigation on that day and make an possible efforts to join the accused Prem Prakash Midha with the investigation. He was informed at about 7.30 p.m. by ASI Dayal Chand that the accused had been arrested at 12.30 noon and was also shown the reasons of arrest written in the case diary and got the remand papers forwarded from him. At about 10 p.m. Dayal Chand again contacted and informed the deponent at the P.W.D. Rest House that a gentleman from the High Court whom Shri S. M. Mehta who is the brother-in-law of the accused seemed to have brought as 'Safarshi' wanted to see the deponent. He further mentioned that previously also on 2-5-68 Ravinder Mehta accompanied by one other person had come to the deponent with two letters from Shri Gurdian Singh Nurpuri who was a Magistrate at Gidarabha when the deponent was posted there as Inspector in 1965-66 and tried to influence the deponent in favour of the accused. He enclosed the copies of these two letters. Thereafter the deponent proceeds to say as follows "On receiving this information from ASI Dial Chand the deponent proceeded to the office of the C.I.A. Staff Kamal. There Shri Sadhu Ram Reader to the Hon'ble Mr. Justice Jindra Lal introduced himself to the deponent and served upon him the orders of the Hon'ble Judge at about 10.30 P.M. The deponent thereupon Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 6 informed the reader that the accused was arrested at about 12.30 noon on the same day by ASI Dial Chand. His remand could not be taken so far due to preoccupation with election work but ASI Dial Chand had already got the application for remand endorsed from the deponent at about 7.30 P.M. and the accused was shortly going to be produced before a Magistrate for purposes of obtaining remand. After about 5 minutes ASI Dial Chand also reached the C.I.A. Office and showed the case diaries and remand papers to the Reader, who signed both of them. At that time the Reader had not given any time underneath his signature. Later on when the remand papers and case diaries were produced before the Magistrate Shri N. K. Jain the Reader again put his signature on the case diary and mentioned the time as 11.15 p.m. underneath." In short both these officers deny the allegations made in the Habeas Corpus petition of the father of the accused. From the affidavits the case of the appellants was that they had not arrested the accused on 5-5-68 as alleged nor had they kept him in their custody without obtaining a lawful order of remand for their custody, but had arrested him only on 10-5 -68 at about 12.30 p.m. In so far as the order for remand to their custody from a Judicial Magistrate is concerned it is clear from their statement that-it was got only after the High Court's orders for the production of the accused were served on them, though no doubt they say that because they were busy, the papers could only be prepared and the Public Prosecutor's endorsement forwarding them could only be obtained by about 9 p.m. on that day. Secondly they do not deny that there were no injuries on the accused, but it is only contended that they were old injuries which were noted down. Thirdly there is a divergence in the statements of Dayal Chand and Jage Ram that while Dayal Chand says as soon as he was asked by some gentleman from the High Court to call Jage Ram he went away and that he did not hear anything further due to his being hard of hearing even though he was called back by that gentleman. While Jage Ram says that Dayal Chand had told him that a gentleman from the, High Court whom Shri Mehta, who is the brother-in-law of the accused seems to have brought as 'Safarshi' wanted to see the deponent. If as Dayal Chand says he did not hear even his being called back how did he in the first instance know he was called back and secondly since there was no talk between him and the gentleman from the High Court how he could have informed Respondent 1 that Shri Mehta, the brother-in-law of the accused seems to have brought him for Safarash. These are not explained. There is nothing in Dayal Chand's affidavit that he had said that Mehta who came was the brother-in-law or that he had brought the gentleman from the High Court for 'Safarash'. Even according to Respondent 1's statement what Respondent 2 told him was one S. M. Mehta had come while the brother-in-law is Ravinder Mehta. It is however contended by Shri Sachthey, the learned Advocate for the two Appellants that previously certain 'Safarashi' letters had been brought by Shri S. M. Mehta an employee of the High Court and Ravinder Mehta who is the brother-in-law of the accused from one Gurdial Singh Nurpuri the Judicial Magistrate of Gidarabha and so he thought that Mehta had brought the gentleman from the High Court for 'Safarash'. This explanation in our view is naive but however that does not explain how Dayal Chand came to know of this when he did not have time to have a talk with any of the persons who had accompanied the Court officer, which fact is also evident from the report of the Court Officer who said that as soon as he asked to see Jage Ram the person on the cycle namely Dayal Chand got on his cycle and went away in spite of the fact that immediately thereafter he recalled him back but he did not return. If as Dayal Chand says that the person who told him that he was from the High Court is true that person would not have failed to disclose the purpose of his visit namely that he had got orders from the High Court. it will be difficult to believe that a Police Officer will merely rush to call Jage Ram without further enquiry if he was merely informed that he had come from the High Court Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 7 and assume that the purpose of his visit was only Safarash. No police officer would be inclined to be in such a great hurry to rush to call his superior if he merely believed that a gentleman from the High Court was there only for the purpose of 'Safarash' and not on an official duty. If it was however the former and if he was so inclined to send for the officer without ascertaining the purpose for which that gentleman came he would have sent a constable instead of himself rushing to bring Inspector Jage Ram. The haste with which he left the scene even without paying any attention when he was called back indicates that he must have known the purpose why the person from the High Court had come. While we are on this topic we may pause to refer to a matter which is being sought to be utilised as a justification for the inference that the gentleman from the High Court had also come for 'Safarashi' work. This has reference to the letters written by Gurdial Singh Nurpuri Judicial Magistrate, Gidarabha which were enclosed with the return filed by Jage Ram. Though they may look innocuous if given by any friend of the Inspector in as much as they merely ask him to help Prem Parkash Midha the accused who is said to have been the complainant in a theft case to trace the real culprit, but coming as they do from a Judicial Magistrate to a police officer in a state where we are informed by Mr. Sachthey on instructions there is a separation of judiciary from executive are not proper and are likely to be understood as interference in the discharge of duties by the police officers. It would appear from the second letter that the Judicial Magistrate had shown special interest because he seems to have personally come to Kamal from Gidarabha for the purpose of talking to the Appellant Jage Ram but as he found him away he gave that letter. In any case whether these letters at the time when he received them were treated by the addressee as interfering with his duties or not they undermine the confidence in the judiciary by giving rise to the comment that such judicial officers may equally be susceptible to influence in the discharge of their duties by parties who are likely to appear before them. It is in the best interest of Judicial officers not to indulge in such practices. This matter may also be brought to the notice of the High Court for such action as it may think necessary to take. Now coming back to the narration of what happened when he was produced in Court it is apparent from the order of Khosla, J. who after setting out the purport of the report of his reader Gupta and after perusing the affidavit filed by the two Appellant Police Officers says that the detenu wanted to make a statement and was accordingly examined. This is what the learned Judge has stated : "Reading of the statement made by the, detenu together with the allegations projected in the instant petition supported by the averments in the accompanying affidavits and the report submitted by Shri Gupta point un-mistakenly to the contention of the learned coun sel that detenu had been taken into custody by the Karnal local police on 5th of May 1968, passed on to the C.I.A. staff for investigation and interrogation and was maltreated by the respondents. His arrest had surreptitiously been sworn to have taken place on 10th of May 1968. The affidavits sworn by the Respondents of course denied all accusations had it was maintained that the detenu was called in, on 10th of May 1968 and duly arrested. He had on his person two old injuries that were noted. The allegations that some third degree methods had been employed to illicit confession or information were equally emphatically traversed. Upon hearing counsel at some length and examining the material placed on the record with due care I have no hesitation in finding that the Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 8 detenu had been taken into custody on some date before the 10th of May and tortured by the Respondents. The examination carried out by the Chief Medical Officer, Karnal Hospital on the morning of llth May showed that the detenu had on his person injuries more than two. The detenu was in Court and I found him suffering grievously from the after effects cumulatively of those injuries. His version of torture administered by the Respondents at diverse occasions stood materially corroborated. I also find that though the confinement of the detenu was illegal till 10th of May 1968, he is at present in proper judicial custody. He must thus be remitted to the same custody. He is accordingly directed to be taken back to the Hospital Kamal and to await further order of the learned Magistrate. The Report submitted by Shri Gupta, Officer of this Court discloses in no uncertain terms that Respondent No. 2 at least showed scant respect for the orders of this Court and when asked to show the papers relating to the case adopted evasive attitude and also by sneaking away subsequently completed police papers spuriously. I cannot but abhor such conduct and disapprove of the mentality. otherwise too, I have no doubt whatever that the affidavits sworn by the Respondents in this Court did not represent the true state of affairs calculated falsehood had been imported in material particulars. For these and other illegalities committed by the Respondents, the detenu is left to his remedies at law". After making these observations the learned Judge rejected the petition for interim bail as he had no occasion to examine the merits of accusations laid against him as also because a theft of large sums of money was involved. He however left it open to the Magistrate to consider the question of bail as and when suitably moved by the accused in that behalf. The learned Advocate Shri Sachthey has strenuously contended that these remarks are unjustified and besides impeding the investigatory process which the Police as a matter of their duty have to undertake, it effects the career of the Police officers concerned. He also contends that it is not true that the accused was arrested on the 5th May 68 or an any date prior to 10th and the remarks that they were in illegal custody and were brutally ill treated were also unjustified in that they had been arrived at without any opportunity being given to the Appellant officers or without holding any enquiry thereon. We are unable to appreciate these contentions. In a Habeas Corpus Petition where allegations are made that a citizen of this country is in illegal custody it is the duty of the Court to safeguard the freedom of the citizen which has been guaranteed to him by our Constitution and to immediately take such action as would ensure that no person however high or low acts in contravention of the law or in a high-handed, arbitrary or illegal manner. While no doubt it is the duty of the Court to safeguard against any encroachments on the life and liberty of individuals, at the same time we recognise that the authorities who have the responsibility to discharge their functions vested in them under the law of the country should lot be impeded or interfered with, without justification. In furtherance of this duty the High Court passed the orders which in the Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 9 circumstances of the case was fully justified. There was some comment on the learned Judge directing his reader to contact the petitioner to trace out the accused and also on the oral instructions as appeared from the report to have been given by the learned Judge to take the assistance of Narinder Singh an Assistant in the Criminal Branch because he had been going on such raids previously as indicating that the High Court was directing such raids previously. We are not in a position to say whether this comment is justified because all the information necessary is not available to us, as such we do not wish to draw any inference on this aspect of the case. If the procedure was objected to in the High Court as it has been done before us it would have itself ascertained what was the basis for the reader's statement that Narinder Singh was being sent previously on such raids. We do not personally think that such raids are conducted but if in any particular case where there is urgency there is every justification for the procedure-followed by the High Court to be adopted. In any case ordinarily, Courts are not powerless as they can have recourse to the provisions of the Criminal Procedure Code which provides for directions being given to the Magistrates to deal with such matters by conducting an enquiry and making a report to the Court. On the question whether the several remarks of the learned Judge are justified or not we may refer in this connection to the observations of S. K. Das, J. in State of U.P. v. Mohammad Naim(1) as to the matters which have to be kept in view in considering whether the remarks made in judgments against authorities whose conduct comes into consideration before Courts of law in cases to be decided by them are disparaging. These are : (a) whether the party whose conduct is in question is before the Court or has any opportunity of explaining or defending himself, (b) whether there is evidence on record bearing on that conduct justifying the remarks; and (c) whether it is necessary for the decision of the case, as an integral part thereof, to animadvert on that conduct. It has also been recognised that judicial pronouncements must be judicial in nature, and should not normally depart from sobriety, moderation and reserve. What we must now see is, keeping in mind the above criteria whether the remarks made by Khosla, J. are unjustified. The first of these which are assailed concerns the validity of the finding that the accused was arrested earlier than the 10th of May '68 and that he was tortured. We have pursued the statement of the arrested person given before the learned Judge and it appears therefrom that none other than the Advocate General of the State had cross-examined him in respect of the allegations made by him against the appellant Police officers. The detenu stated that on 5-5-68 ASI Dayal Chand accompanied by a foot constable in plain clothes came to his house at about 5 p.m. and took him to the CIA staff situated in Model Town Karnal. The said Dayal Chand Respondent 2 was present in Court. He further says that Jage Ram was not present in the CIA office when he reached there at about 9 p.m. that he was questioned about the missing cash box and on his showing ignorance was kept under guard (1) [1964] (2) S.C.R. 363, 374. who was changing every 3 hours. Ms hands were raised out and legs stretched out. The Second Respondent remained with, him till about 12 mid night. At about 6 a.m. he was taken to another room and was made to stand in the said posture. On 6.5.68 at about 10 p.m. both Respondent Jage Ram and Dayal Chand came. to that room and again interrogated him about the theft. He pleaded innocence and denied that they interrogate other colleagues serving in the Post office. Thereafter he described the. manner in which he was tortured on the several days and states what happened on Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 10 the 10th May 68 when Sadhu Ram Gupta, Narinder Singh and his father and brother-in-law Ravinder Mehta came to him and what he had told them. It appears from the cross- examination of the learned Advocate General that he was questioned about the theft and later it was put to him that he. was absent between 5th to 10th from Karnal and remained at Chandigarh to get some recommendations for getting the course of investigations changed, which suggestion however was denied. He was further asked whether he did not appear before Respondent 2 on 10th at 1 1 a.m. on his own volition, which suggestion was also denied. He denied that there was any search of his person effected or any memo prepared and also denied that he had been giving false version of being tortured with a view to escape the liability of the theft. It was also put to him that before presenting himself before ASI Dayal Chand on 10-5-68 he' had made arrangements with the help of his relatives in filing a Habeas Corpus petition so that he would secure release, which In suggestion also was described by the accused as entirely false and untrue. This latter suggestion of the learned Advocate General would answer the contention of the learned Advocate before us that it is only after the accused was arrested at 12.30 p.m. on the 10th May at Karnal that the Petition was filed at Chandigarh, which is said to be 60 miles away. This contention would appear to be also not tenable because of the distance and time gap which will not make it possible for a petition to be filed before the Court closed. That the petition was filed much earlier on the other hand is apparent from the report of the Court Reader who said he left Chandigarh by bus at 4.30 p.m. which he could only do if the order was passed much earlier to enable him to get copies and make arrangements for him to travel by bus at 4.30 p.m. On the question whether the remarks that accused was injured are justified, we have also pursued the medical report of the Chief Medical Officer dated 11-5-68 from which it is evident that he had found 6 injuries on the accused and one of them was such that he advised X-Ray though later it was found that there was no fracture. The nature of these injuries as well as the condition of the accused at the time when he was produced before the learned Judge fully justify the conclusions that the accused when produced before the Court was found "suffering grievously from the after effects cumulatively of those injuries". In our view there is no warrant for the submission that the Appellants were not given an opportunity to explain nor that no enquiry was made against them in respect of the allegations made in the petition or by the accused. We do not know what other enquiry could be made. The appellants had opportunity of filing their affidavits and to give their version which they have done in ,great detail, which shows that they knew what the allegations against them were. If they wanted to produce any other person in support of their stand that the accused was only arrested on the 10th and not on the 5th or that the injuries found on the accused were old and were not fresh they could have done so. They do ,not deny that the Chief Medical Officer examined the accused nor is it possible for them to say how the injuries found on the accused some of which were fresh could be caused. They were certainly not old injuries nor is it their case that when the accused was arrested on the 10th he was found to be suffering from swollen feet or injuries which were fresh. None of the remarks to which exception has been taken, in our view could be described as unwarranted, unnecessary or irrelevant or can be characte- rised as generalisation or of a sweeping nature. There is, therefore no ground for granting the Prayer for expunging any of the remarks in the order of the High Court. In this view the Appeal is dismissed. K.B.N. Appeal dismissed. Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 11 Jage Ram, Inspector Of Police & Anr vs Hans Raj Midha on 18 November, 1971 12 | {
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Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 Equivalent citations: 1971 AIR 2410, 1972 SCR (1) 736, AIR 1971 SUPREME COURT 2410, 1971 TAX. L. R. 1743, 1972 (1) SCJ 385, 82 ITR 599, 1972 (1) ITJ 240, 1972 (1) SCR 736 Author: K.S. Hegde Bench: K.S. Hegde, A.N. Grover PETITIONER: COMMISSIONER OF GIFT TAX, MADRAS Vs. RESPONDENT: N. S. GETTY CHETTIAR DATE OF JUDGMENT16/09/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N. CITATION: 1971 AIR 2410 1972 SCR (1) 736 ACT: Gift Tax Act, 1958-Section 2(xii) and 2(xxiv)--Coparcener taking lesser share and allotting greater share to other members-If makes "gift"-Partition, if "transfer of property". HEADNOTE: In a partition of the properties of a joint Hindu Undivided Family a coparcener took as his share less than what he was entitled to and allotted greater share to the other members of the coparcenery. On the question whether the coparcener could be held to have made a "gift" of a portion of his share of the property to the other members and was liable to tax under the Gift Tax Act, 1958. HELD:(i) A coparcener in a Hindu Undivided Family has no definite share in the family property. His share gets Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 1 determined only when there is a division of status or a division by metes and bounds. It is not necessary that in every case of partition in a Hindu Undivided Family there should first be a division in status and thereafter a division by metes and bounds. In the present case there is no material to show that there was any division of status before the properties were actually divided. Therefore, it is not necessary to consider what would be the position in law if there was just a division of status and the same was followed by a division by metes and bounds. [738 H-739E] (ii)The partition of the joint Hindu Family property is not a transfer Commissioner of Income-tax, Gujarat v. Keshavlal Lallubhai Patel, 55 I.T.R. 637, followed. (iii)A partition is not a "disposition" "conveyance" "assignment" "settlement" "delivery" "payment" "or other alienation of property" within the meaning of those words s. 2(xxiv) of the Act. These words are used as some of the modes of transfer of property and have to be understood in the setting in which those terms are used and the purpose they are intended to serve. [742-G] It cannot be considered a "transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person" within the meaning of cl. (d) of s. 2(xxiv), because, a member of a Hindu Undivided Family who has no definite share in the family property before division cannot be said to diminish directly or indirectly the value of his own property and to increase the value of the property of another person. Further, the transaction referred to in cl. (d) of s. 2(xxiv) takes its colour from the main clause i.e., it must be transfer of property in some way. [742 H-743 C] JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 128 of 1968 and 1341 of 1971. Appeals by certificate/special leave from the judgment and order dated December 10, 1965 of the Madras High Court in Tax Case No. 65 of 1967 (Reference No. 18 of 1963). Jagadish Swarup, Solicitor-General, A. N. Kirpal, R. N. Sachthey and B. D. Sharma, for the appellant (in both the appeals). Uttama Reddy and D. N. Gupta, for the respondent (in both the appeals). The Judgment of the Court was delivered by Hegde, J. Both these appeals by the Commissioner of Gift Tax arise from the same judgment. The former one is by certi- ficate and the latter by special Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 2 leave. Civil Appeal No. 1341 ,of 1971 came to be filed because the certificate given by the High Court not being supported by any reason, the appeal brought on the strength of that certificate (Civil Appeal No. 128 of 1969) became unsustainable. That is why instead of one appeal, there are two appeals before us in respect of the same decision. The decision appealed against was rendered by the High Court of Madras in its advisory jurisdiction, in a reference under s. 26(1) of the Gift Tax Act, 1958 (to be hereinafter referred to as the Act). The Income 'Tax Appellate Tribunal, Madras Bench referred the question a, "Whether there was gift by N. S. Getti Chettiar of Rs. 2,46,377 on which he is liable to pay gift tax" to the High Court seeking its opinion. The High Court answered that question in the negative. The Commissioner of Gift Tax not being satisfied with that decision has brought these appeals. The facts of the case are not many though the question of law arising for decision is by no means easy. The respondent, N. S. Getti Chettiar (who will hereinafter be referred to as the assessee) was karta of his undivided Hindu family consisting of himself, his son Govindaraju Chettiar and six sons of the asid Govindaraju Chettiar. There was a partition of the immovable properties of the family through a registered deed executed on January 17, 1958 and the movable properties were divided on April 13, 1958 on which date the necessary entries in the account books were made. The assessee claimed recognition of that partition under s. 25A of the Act. That was granted by the Department on November 29, 1958. The total value of the properties so divided was Rs. 8,51,440/- but under that partition the assessee took properties worth only Rs. 1,78,343/-. The remaining properties were allotted to his son and grandsons. The Gift Tax Officer overruling the objection of the assessee, came to the conclusion that the assessee by allotting greater share to the other members of the coparcenary than to which they were entitled, must be held to have made a 'gift' of a portion of his share of the property to the other members and hence was liable to be taxed under the Act. He, opined that the partition in question is a transaction entered into between the assessee and the members of his family with intent thereby to diminish the value of assessee's own property and increase the value of the property of his son and grandsons. Aggrieved by that order, the assessee went up in appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that as no member of an undivided Hindu Family had a definite share in the family assets, on partition, when the joint enjoyment came to an end, there was no need to have arithmetical equality between the shares of the various coparceners. He accordingly held that the assessee was not liable to pay any gift tax in respect of the properties that fell to the shares of his son and grandsons. The Department appealed against this decision to the Tribunal. It was contended before the Tribunal 'that the transaction in question came Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 3 within s. 2 (xii) and s. (xxiv), in particular it came within cl. (d) of s. 2 (xxiv), as property included any interest in property and partition constituted a transaction; the assessee had, by relinquishing a portion of what was his due, transferred such interest and properties in favour of the other members of the family for no consideration and consequently the Gift Tax was properly leviable. This contention was not accepted by the Tribunal. It held that the interest that the assessee had in his Hindu Undivided Family property was not definable, and therefore s. 2(xxiv) was not attracted to the facts of the case. The High Court agreed with the conclusions reached by the Assistant Appellate Commissioner and the Tribunal. It came to the conclusion that the partition in the family of the assessee did not come within the mischief either of s. 2(xii) or s. 2(xxiv). It also opined that under the partition, there was no deemed 'gift' as contemplated by s. 4 of the Act. Mr. Solicitor-General appearing for the Commissioner of Gift Tax did not place any reliance before us on s. 4 of the Act. Therefore we need not consider the scope of s. 4 of the Act. All that Mr. Solicitor General contended was that the case came either under s. 2(xii) or under s. 2(xxiv). He built up his arguments thus A partition in a H.U.F. invariably involves two steps, first there is a division of status and thereafter there is a division by metes and bounds. A coparcener's share is fixed according to law as soon as there is a division of status. Therefore, if at the time of division by metes and bounds he chooses to take a share less than to which he is entitled to under law, then the same: would amount to a 'gift' of the balance of property to which he was entitled, to the other coparceners. We are unable to agree with Mr. Solicitor General that in every case of partition in a H.U.F. there' should first be a division of a status and thereafter a division by metes and bounds. There are innumerable cases where a partition takes place without there being earlier any division of status. Coming to the facts of the case, there is no, material before us to show that there was any division of status before the properties were actually divided. The Tribunal has, not found that there was any division of status amongst the members of the family before they divided the properties. The partition deed is not before us nor are the account books showing the division of the movable properties is before us. It is not known whether under the registered partition deed, there was only a partial partition or a complete disruption of the family. That being so, we have to proceed on the basis of the facts found by the Tribunal and apply the law to the facts so found. The argument that there was first a division of status and the same was followed up by a division by metes and bounds does not appear to have been urged before the Tribunal. Under these circumstances, it is not necessary for us to consider what would be the position in law if there was first a division of status in a H.U.F. and the same was followed up by division by metes and bounds in which division one of the coparceners takes properties, less than to what he is entitled to under law. Before proceeding to examine the relevant provisions of the Act, it is necessary to mention that according to the true notion of an undivided Hindu family, no individual member of that family, whilst it remains undivided, can predicate of the joint and undivided property, that he, that particular member, has a certain definite share namely a third or a fourth. All the coparceners in a Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 4 Hindu joint family are the joint owners of the properties of the family. So long as the family remains joint, no coparcener can predicate what his share in the joint family is. His share gets determined only when there is a division of status or a division by metes and bounds. Therefore it is not correct to assume that a coparcener in Hindu joint family has any definite share in the family property, before its division. Having stated that much, let us now proceed to consider the relevant provisions of the Act. Section 3 of the Act is the charging section. It says: "Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of April 1958, a tax (hereinafter referred to as gift-tax) in respect of the gifts, if any, made by a person during the previous year (other than gifts made before the 1st day of April 1957) at the rate or rates specified in the schedule." 'Gift' is defined in S. 2(xii). That sub- clause says: " "gift" means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money's worth, and includes the transfer of any property deemed to be a gift under section 4." The expression 'transfer of property' is defined in S. 2(xxiv) That provision reads : " "transfer of property" means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and,' without limiting the generality of the foregoing, includes- (a) the creation of a trust in property; b) the grant or creation of any lease, mortgage, charge, easement, licence, power, partnership or interest in property; (c) the exercise of a power of appointment of property vested in any person, not the owner of the property, to determine its disposition in favour of any person other than donee of the power; and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person.' We shall first examine whether the partition with which we are concerned in these appeals can be considered as transfer of property under the general law. Thereafter we shall proceed to consider whether it comes Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 5 within the extended meaning given to that expression in s. 2(xxiv). It is now settled by the decision of this Court in Commis- sioner of Income-tax, Gujarat v. Keshavlal Lallubhai Patel(1) that a partition of joint Hindu family property cannot be considered as transfer in the strict sense-the sense in which all legal expressions are understood and more particularly in tax (1) 55 I.T.R. 637. laws. In the course of that judgment Sikri, J. (as he then was) speaking for the Court observed : "But, is a partition of joint Hindu family property a transfer in the strict sense? We are of the opinion that it is not. This was so held in Gutta Radhakrishnavya v. Gutta Sarasamma(1). Subba Rao, J., (then a judge of the Madras High Court) after examining several authorities came to the conclusion that " partition is really a process in and by which a joint enjoyment is transformed into an enjoyment in severalty. Each one of the shares had an antecedent title and, therefore, no conveyance is involved in the process, as a conferment of a new title is not necessary." The Madras High Court again examined the question in M. K. Stremann v. Commissioner of Income-tax (2) with reference to section 16(3)(a)(iv). It observed that "obviously no question of transfer of assets can, arise when all that happens is separation in status, though the result of such severance in status is that the property hitherto held by the coparcenary is held thereafter by the separated members as tenants-incommon. Subsequent partition between the divided members of the family does not amount either to a transfer of assets from that body of the tenants-incommon to each of such tenants-in- common." The Punjab High Court came to the same conclu- sion in Jagan Nath v. State of Punjab(3). Agreeing with these authorities, we hold that when the joint Hindu family property was partitioned, there was no transfer of assets within section 16(3)(a)(iii) and (iv) to the wife or the minor son." We are bound by the ratio of that decision and if we may say so, we respectfully agree with the statement of the law quoted above. Hence we hold that the partition in the family of the assessee did not effect any transfer as generally understood in law. This takes us to to s. 2 (xxiv). The opening words of the provision refer to 'transfer of property'. That clause enumerates several types of transfers and not to any other transactions. It is also necessary to attach significance to the words "or other alienation of property" immediately after setting out the various (1) I.L.R. 1951 Mad. 607. (2) (1961) 41 I.T.R. 297. (3) (1962) 64 P.L.R. 22. types of transfers. 'If we read the clause as a whole, it is clear that it deals with transfer of properties in various ways. As observed in Craies on Statute Law (6th Edn. p. 213) that an interpretation clause which extends the meaning of a word does not take away its ordinary meaning. An interpretation clause is not meant to prevent the word receiving its ordinary, popular and natural sense whenever that would be Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 6 properly applicable, but to enable the word as used in the Act, when there is nothing in the context or the subject matter to the contrary to be applied to some things to which it would not ordinary be applicable. Bearing in mind these principles, let us now examine the scope of s. 2(xxiv). That provision speaks of "disposition", " conveyance", "assignment", "settlement", "delivery", " payment" or "other alienation of property". A reading of this section clearly goes to show that the words "disposition", "conveyance", "assignment", "settlement", "delivery" and "payment" are used as some of the modes of transfer ,of property. The dictionary gives various meanings for those words but those meanings do not help us. We have to understand the meaning of those words in the context in which they are used. Words in a section of a statute are not to be interpreted by having those words in one hand and the dictionary in the other. In spelling out the meaning of the words in a section, one must take into consideration the setting in which those terms .are used and the purpose that they are intended to serve. If so understood, it is clear that the word "disposition" in the context means giving away or giving up by a person of something which was his own, "conveyance" means transfer of ownership, "assignment" means the transfer of the claim, right or property to another, "settlement" means settling the property, right or claim conveyance or disposition of property for the benefit of another, "delivery" contemplated therein is the delivery of one's property to another for no consideration and "payment" implies gift of money by someone to another. We do not think that a partition in a H.U.F. can be considered either as "disposition" or "conveyance" or "assignment" or "settlement" or "delivery" or "payment" or "alienation" within the meaning of those words in s. 2 (xxiv). This leaves us with cl. (d) of S. 2 (xxiv) which speaks of a transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of another person. A member of H.U.F. who, as mentioned earlier, has no definite share in the family property before division, cannot be said to diminish directly or indirectly the value of his property or to increase the value of the property of any other coparcener by agreeing to take a share lesser than what he would have got if he had gone to court to enforce his claim. Till partition, his share in the family property is indeterminate. He becomes entitled to a share in the family property only after the partition. Therefore there is no question of his either diminishing directly or indirectly the value of his own property or of increasing the value of the property of anyone else. The "transaction" referred to in cl. (d) of s. 2 (xxiv) takes its colour from the main clause viz., it must be a transfer of property in some way. This conclusion of ours gets support from sub-clause (a) to (c) of clause (xxiv) of s. 2, each of which deals with one or the other mode of transfer. If the parliament intended to bring within the scope of that provision partitions of the type with which we are concerned, nothing was easier than to say 2. In interpreting tax laws, courts merely look at the works of the section. If a case clearly comes within the section, the subject is taxed and not otherwise. For these reasons, we agree with the view taken by the High Court of Madras,, the' Tribunal and the Assistant Appellate Commissioner that the assessee made no "gift" under the partition deed in question. Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 7 In the result these appeals fail. Civil Appeal No. 1341 of 1971 is dismissed on merits and Civil Appeal No. 128 of 1969 is dismissed as being not maintainable. The assessee is entitled to his costs-Fee one set. K.B.N. Appeals dismissed. Commissioner Of Gift Tax, Madras vs N. S. Getty Chettiar on 16 September, 1971 8 | {
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State Of U. P vs Rahmatullah on 23 April, 1971 Equivalent citations: 1971 AIR 1382, 1971 SCR 494, AIR 1971 SUPREME COURT 1382, 1973 ALL. L. J. 481 Author: I.D. Dua Bench: I.D. Dua, S.M. Sikri, P. Jaganmohan Reddy PETITIONER: STATE OF U. P. Vs. RESPONDENT: RAHMATULLAH DATE OF JUDGMENT23/04/1971 BENCH: DUA, I.D. BENCH: DUA, I.D. SIKRI, S.M. (CJ) REDDY, P. JAGANMOHAN CITATION: 1971 AIR 1382 1971 SCR 494 1971 SCC (2) 113 ACT: Foreigners Act (31 of 1946), s. 14-Prosecution under-No determination by Central Government of accused's nationality under Citizenship Act, 1955, before prosecution- Legality of prosecution. HEADNOTE: The respondent was a citizen of India at the commencement of the Constitution in 1950. He entered India on April 1, 1955, with a Pakistani passport dated March 15, 1955, and overstayed in India beyond the permitted period. He was arrested in 1963 and was charged with an offence under s. 14 of the Foreigners Act, and convicted. While the criminal proceedings were pending, the Central Government, under s. 9(2) of the Citizenship Act, 1955, read with r. 30 of Citizenship Rules, 1956, determined on November 5, 1964, that the respondent had acquired citizenship of Pakistan State Of U. P vs Rahmatullah on 23 April, 1971 1 after January 26, 1950, and before March 15, 1955. The High Court set aside the conviction. On appeal to this Court, HELD: (1) The respondent was not a 'foreigner' within the meaning of the Foreigners Act before its amendment in 1957. [500 G-H] (2) Having been a citizen of India at the commencement of the Constitution and not being a foreigner under the Foreigners Act at the date of his entry, till the Central Government determined the question of the respondent having acquired Pakistan nationality and thereby lost Indian nationality, he could not be treated as a foreigner and no penal action could be taken against him. [497 G; 501' A-B] (3) The order of the Central Government dated November 5, 1964 determining that the respondent was a Pakistani was final, but the determination by the Central Government could not have the effect of retrospectively rendering his stay in India before that date a penal offence. It was not as if he was given any directions after November 5, 1964, which were disobeyed by him entailing his prosecution. [501 C-E] JUDGMENT: CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 167 of 1968. Appeal from the judgment and order dated January 18, 1968 of the Allahabad High Court in Criminal Revision No. 1482 of 1966. O. P. Rana, for the appellant. Bashir Ahmed and S. Shaukat Hussain, for the respondent. The Judgment of the Court was delivered by Dua J.-The State of U.P. has appealed to this Court on certificate of fitness granted by the Allahabad High Court from that court's order dated January 18, 1968, acquitting the respondent of an offence punishable under s. 14 of the Foreigners Act (Act No. 31 of 1946). This appeal was originally heard by us on January 11 & 14, 1971, when it was considered desirable to send for the original records of the case from the courts below and also to call for the Me relating to the inquiry held by the Central Government under s. 9(2) of the Citizenship Act (Act No. 57 of 1955) into the question of the acquisition of citizenship of Pakistan by the respondent. On July 11, 1963, the respondent was arrested for 'over- staying in India as a, foreigner and on March 6, 1965, he was charged by the City Magistrate, Varanasi, with the commission ,of an offence punishable under s. 14 of the Foreigners Act (Act No. 31 of 1946). The charge reads : "I, D. S. Sharma, City Magistrate, Varanasi, hereby charge you Rahmatullah as follows :- State Of U. P vs Rahmatullah on 23 April, 1971 2 That you being a Pakistani Citizen entered into India on 1-4-55 on Pakistani Passport No. 283772 dated 15-3-55 and Indian visa No. 16326 Category C dated 22-3-55 and got your extension to stay in India up to 25-5-56 after which date you are overstaying in India illegally without any passport and visa : and thereby committed an offence punishable u/s 14 of Foreigners Act within my cognizance, and hereby I direct you to be tried on the said charge by me." According to the prosecution case against the respondent as put in the Trial Court, he was a Pakistani national and had on April 1, 1955, entered India on a Pakistani passport dated March 15, 1955, and an Indian Visa dated March 22, 1955, obtained by him as a Pakistani national, but even after the expiry of the permitted period he was overstaying in India without a valid passport or visa). The original visa, it is not disputed, expired on June 21, 1955, but it was extended thrice, the last extension being valid only up to May 25, 1956. Thereafter the respondent went underground and has since been residing in India illegally. He was treated after several years and was arrested on July 11, 1963. The respondent pleaded in defence that though he had entered India on a Pakistani passport he was not a Pakistani national. On the contrary he claimed to be an Indian citizen and therefore rightfully living in India. According to him he had been born in India of Indian parents in 1932 and was an Indian citizen under the Constitution. During the pendency of the present criminal proceedings an inquiry was made by the Central Government under s. 9(2) of the Citizenship Act read with r. 30 of the Citizenship Rules, 1956, and by means of an order dated November 5, 1964, it was determined that the respondent had acquired citizenship of Pakistan after January 26, 1950, and before March 15, 1955. March 15, 1955 was apparently fixed because on that date the respondent had secured his Pakistani passport. In that inquiry the respondent was given full opportunity of adducing proof in support of his plea. The respondent was informed of the determination of the Central Government on March 29, 1965 in the Trial Court. The City Magistrate, Varanasi, trying the case came to the conclusion that the respondent had voluntarily gone to Pakistan and had stayed there for 8 or 9 months. The fact that he had obtained a Pakistani passport was in the opinion of that court an indication of his intention to have gone to that country with the object of becoming a Pakistani national. The argument that the determination in regard to the respondent's citizenship was made by the Central Government after the commencement of the present proceedings was considered by the Trial Court to be irrelevant because the determination by the Central Government was immune from challenge and whether it was made before or after the framing of the charge was immaterial. The respondent was held to be a Pakistani national and as it was not denied that he had entered India on a Pakistani passport and also that on the expiry of the period for which he had been permitted to stay in India including the extended period, he had stayed on in this country without obtaining valid permit, he was convicted of an offence under s. 14 of the Foreigners Act. He was sentenced to rigorous imprisonment for 18 months and to pay a fine of Rs. 200/- and in default of payment of fine to rigorous imprisonment for a further period of three months. The Sessions Judge dismissed the respondent's appeal holding that the charge had been framed against him several months after the determination by the Central Government that he was a Pakistani national. According to that court the order of the Central Government was dated State Of U. P vs Rahmatullah on 23 April, 1971 3 November 5, 1964, and it was communicated by the Sahayak Sachiv, U. P. to the Senior Superintendent of Police, Varanasi, on December 28, 1964. On revision the High Court disagreed with the view of the courts below. According to the High Court the respondent was not a foreigner when he entered India though he had obtained a Pakistani passport. Having not entered as a foreigner the respondent's case was held to be outside para-7 of the Foreigners Order, 1948, made under S. 3 of the Foreigners Act. The High Court held the respondent to be a foreigner when he was prosecuted for an offence under S. 14 of the Foreigners Act. But in its opinion that fact could not attract para-7 of the Foreigners Order, 1948 made under S. 3 of the Foreigners Act. On this reasoning the respondent's conviction was set aside and he was acquitted. In this Court, to begin with, it was argued on behalf of the State that S. 2(a) of the Foreigners Act defines a "foreigner" to mean a person who is not a citizen of India. If, therefore, the respondent is not a citizen of India, then being a foreigner his prosecution and conviction under S. 14 of the Foreigners Act was unassailable, contended Shri Rana. The order of the High Court acquitting the respondent was, therefore, contrary to law, he added. This submission is misconceived. The definition of the word "foreigner" relied upon by the counsel was substituted for the earlier one by the Foreigners Law (Amendment Act 11 of 1957) with effect from January 19, 1957. Quite clearly the new definition is of no assistance in determining the status of the respondent at the time of his entry into India in 1955. The word "foreigner" according to the definition as in force in 1955 meant, a person who (i) is not a natural-born British subject as defined in sub-sections (1) and (2) of section 1 of the British-Nationality and Status of Aliens Act, 1914, or (ii) has not been granted a certificate of naturalization as a British subject under any Jaw for the time being in force in India, or (iii) is not a citizen of India. The Citizenship Act, 1955, having been published in the Gazette of India on December 30, 1955, was also not in force at the time when the respondent entered India. We may, therefore, turn to the Constitution to see if the respondent was a citizen of India at the time of the commencement of the Constitution. Clause (a) of Article 5 clearly covers the case of the respondent who was born in the territory of India, and had his domicile in this territory at the commencement of the Constitution. Being a citizen of India at the commencement of the Constitution in 1950, unless he lost his citizenship under some law between the commencement of the Constitution and his entry into India in 1955, the respondent would continue to be an Indian citizen till such entry. Even on behalf of the appellant no serious attempt was made to show that the respondent had lost his Indian citizenship in any other manner except on the basis of his having obtained a Pakistani passport and on the basis of the determination of the question of his citizenship by the Central Government on November 5, 1964. Indeed after some faint argument the appellant's learned counsel based his case exclusively on the determination 32-1 S. C. India/71 by the Central Government, and in our opinion on the existing record rightly so. According to his submission the determination made by the Central Government under S. 9(2) of the Citizenship Act is final and since the respondent has been held to have acquired citizenship of Pakistan before March 15, 1955, his entry into India after that date and his subsequent continued stay in this country after the expiry of the extended period on May 22, 1955, would amount to an offence punishable under S. 14 of the Foreigners Act. As will presently be shown the real question which arises for our decision lies in a short compass and the relevant facts essential for the decision are no longer in dispute. When the respondent entered India on April 1, 1955, he was in possession of a Pakistani passport and a visa to which no objection was taken by the Indian authorities. He did not enter India clandestinely, and he is not being tried for having entered India in violation of any law. Indeed his visa was, admittedly State Of U. P vs Rahmatullah on 23 April, 1971 4 extended by the appropriate authority up to May 22, 1965. As he was clearly a citizen of India at the commencement of the Constitution and the question arose whether he had lost Indian citizenship thereafter, the Central Government had to determine under S. 9 of the Citizenship Act the question of the acquisition of Pakistan nationality by the respondent. This Court in Government of Andhra Pradesh v. Syed Mohd. Khano after referring to its earlier decision in lzhar Ahmad Khan v. Union of India(1) made the following observation : "Indeed, it is clear that in the course of the judgement, this Court has emphasised the fact that the question as to whether a person has lost his citizenship of this country and has acquired the citizenship of a foreign country has to be tried by the Central Government and it is only after the Central Government has decided the point that the State Government can deal with the person as a foreigner. It may be that if a passport from a foreign Government is obtained by a citizen and the case falls under the impugned Rule, the conclusion may follow that he has "acquired the citizenship of the foreign country"-, but that conclusion can be drawn only by the appropriate authority authorised under the Act to enquire into the question. Therefore, there is no doubt that in all cases where action is proposed to be taken against persons residing in this country on the ground that they have acquired the citizenship of a foreign State (2) [1962] Supp. 3 S. C. R. 235. (1) [1962] Supp. 3 S. C. R. 288. and have lost in consequence the citizenship of this country, it is essential that question should be first considered by the Central Government. In dealing with the question, the Central Government would undoubtedly be entitled to give effect to the impugned R. 3 in Sch. III and deal with the matter in accordance with the other relevant Rules framed under the Act. The decision of the Central Government about the status of the person is the basis on which any further action can be taken against him." In that case an argument was raised on the authority of lzhar Ahmad Khan's case(1) that as soon as a person acquired a passport from a foreign Government his citizenship of India automatically came to an end, but it was repelled. in Shuja-Ud-Din v. The Union of India and Another(2) this pondent there was born in India in 1924 and had lived in this 'Country all along tiff about the end of 1954. At the end of 1954 or the beginning of 1955 he went to Pakistan from where he-returned on January 20, 1955 on a passport granted by the Pakistan Government which had a visa endorsed on it by the Indian authorities permitting him to stay in this country upto April 1955. He applied to the Central Government for extension of the time allowed by the visa, but there was no material to show what orders, if any, were made on it. The respondent having stayed in this country beyond the time specified in the visa, on September 3, 1957 he was served with an order under s. 3(2)(c) of the Foreigners Act, requiring him to leave India. On his failure to comply with this order he was prosecuted under s. 14 of the Foreigners Act. His defence was that he was an Indian national. The Magistrate trying him rejected his defence and convicted him holding that he had disowned Indian nationality by obtaining a Pakistan passport and that by refusing to extend the time fixed by the visa the Central Government had decided that the respondent was a foreigner under s. 8 of the State Of U. P vs Rahmatullah on 23 April, 1971 5 Foreigners Act and that such a decision was final. He was convicted by the Trial Court and the conviction was upheld by the Sessions Judge. The High Court in revision set aside his conviction. On appeal this Court held that neither the Magistrate nor the Sessions Judge was competent to come to a finding of his own that the respondent, an Indian national, had disowned his nationality and acquired Pakistan nationality for under s. 9(2) of the Citizenship Act that decision could only be made by the prescribed authority. The respondent in that case, according to this Court, had become an Indian citizen under Art. 5(a) of. the Constitution when it (1) [1962] Supp. 3 S. C. R. 233 (2) [1962] 1 S., C. R. 737. came into force and there being no detention by the Central Government that he had lost his nationality thereafter. the order of the High Court acquitting him was upheld. in Shuja-Ud-Din v. The Union of India and Another (1) this Court speaking through Gajendragadkar, J. as he then was, said: "it is now well settled that the question as to whether a person who was a citizen of this country on January 26, 1950, has lost his citizenship thereafter, has to be determined under the provisions of section 9 of the Citizenship Act, 1955 (No. LVII of 1955). There is also no doubt that this question has to be decided by the Central Government as provided by Rule 30 of the Rules framed under the Citizenship Act in 1956. The validity of section 9 as well as of Rule 30 has been up- held by this Court in the case of Izhar Ahmad Khan and Ors. v. Union of India and Ors. It has also been held by this Court in The State of Madhya Pradesh v. Peer Mohd. and Anr. (Crl. Appeal No. 12 of 1961 decided on Sept. 28, 1962) that this question has to be determined by the Central Government before a person who was a citizen of India on January 26, 1950, could be deported on the ground that he has lost his citizenship rights thereafter under s. 9 of the Citizenship Act. Unless the Central Government decides this question, such a person cannot be treated as a foreigner and cannot be deported from the territories of India." In Abdul Sattar Haji Ibrahim Patel v. The State of Gujarat(2), Gajendragadkar, C. J., speaking for a bench of five Judges approved the decisions in the cases of Izhar Ahmed Khan(3) and Syed Mohd. Khan(4), it being emphasized that the decision of the Government of India is a condition precedent to the prosecution by the State of any person on the basis that he has lost his citizenship of India and has acquired that of a foreign country. That an inquiry under s. 9 of the Citizenship Act can only be held by the Central Government was again reaffirmed by this Court in Mohd. Ayub Khan v. Commissioner of Police, Madras (5). In view of these decisions it seems to us to be obvious that till the Central Government determined the question of the respondent having acquired Pakistan nationality and had thereby (1) C. A. No. 294 of 1962 decided on Oct. 30, 1962. (2) Cr. A. No. 153 of 1961 decided on Feb. 17,1964. (3) [1962] Supp. 3 S. C. R.235. (4) [1962] SUPP. 3 S. C. R. 288. (5) [1965] 2 S. C. R. 884. State Of U. P vs Rahmatullah on 23 April, 1971 6 lost Indian nationality, he could not be treated as a foreigner and no penal action could be taken against him on the basis of his status as a foreigner, being national of Pakistan. It is not the appellant's case-before us that any directions under the law governing foreigners were given to the respondent after November 5, 1964, which were disobeyed entailing his prosecution, and indeed it is admitted that he was not even informed of the decision of the Central Government till March 29, 1965. It is also noteworthy that at the time when the Central Government determined his nationality he was being tried in this country by the criminal court after having been arrested and bailed out, and he was not free to leave this country for proceeding to Pakistan. In the background of these facts it appears to us that the wide charge as framed against him was misconceived and he could not be convicted of overstaying in this country at least till he was duly found to be a Pakistani national and to have ceased to be an Indian citizen. The order of the Central Government is clearly final, and it has remained unchallenged by the respondent even after he was informed of this order on March 29, 1965. We have seen the proceedings of the Central Government and we find that the respondent had been given full opportunity of putting forth his case. The binding nature of that order was not, and indeed it could not be, questioned before us. The determination by the Central Government in this case could not have the effect of retrospectively rendering a penal offence an act which was not so at the time of its commission. The respondent even though held to be a Pakistani, and therefore a foreigner, before the charge was framed against him is entitled to the protection of our laws. As a result of the foregoing discussion, the High Court was in our opinion right in setting aside the respondent's conviction on the charge framed. It will of course be open to the Central Government to take such suitable action against the respondent under the Foreigners Act or under any other provision of the law which may be applicable to him, for the purpose of either deporting him or otherwise dealing with him as is thought fit. This appeal, however, must fail. Y.P.S. Appeal dismissed. State Of U. P vs Rahmatullah on 23 April, 1971 7 | {
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State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 Equivalent citations: 1972 AIR 971, 1972 SCR (2) 838, AIR 1972 SUPREME COURT 971, 1972 2 SCR 838, 1972 MPLJ 641, 1972 2 SCJ 653 Bench: S.M. Sikri, J.M. Shelat, I.D. Dua, Hans Raj Khanna PETITIONER: STATE OF M.P. & ORS. Vs. RESPONDENT: M/S. CHHOTABHAI JETHABHAI PATEL & CO. & DATE OF JUDGMENT10/12/1971 BENCH: MITTER, G.K. BENCH: MITTER, G.K. SIKRI, S.M. (CJ) SHELAT, J.M. DUA, I.D. KHANNA, HANS RAJ CITATION: 1972 AIR 971 1972 SCR (2) 838 1972 SCC (1) 209 ACT: Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964 Section 5-Whether restrictions on transport of tendu leaves imported from outside the State is violative of Part XIII of the Constitution. HEADNOTE: The respondent, a partnership firm of which the second respondent was a partner, carried on business as manufacturers of bidis at various places in the State of Madhya Pradesh. Being unable to secure sufficient tendu leaves locally, the firm took leases for the collection of such leaves in Bihar & Maharashtra. They actually imported tendu leaves under two railway consignments from Bihar. They informed the Divisional Forest Officer about the same and asked permission for transport of the leaves and to State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 1 utilise them in their factories. By letter, the D.F.O. informed the respondents that the leaves must not be moved for bidi manufacture until permission is given. Respondents obeyed the order; but in spite of that, the Sub-divisional Forest Officer seized two quantities of such leaves and filed a complaint alleging contravention of s. 5 of Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964. The respondent filed a petition under Art. 226 of the Constitution for a writ of certiorari quashing the complaint. The contention of the respondents was that the Act did not prohibit import of tendu leaves from outside nor- was there any restriction on a manufacturer to consume the same for the manufacture of bidis or the Rules made under the Act did not regulate the transport of the tendu leaves imported from outside. The State however, contended that transport of tendu leaves whether grown locally or imported from outside was completely prohibited under s. 5 of the Act, except by a license-holder in terms of a permit issued. S.5(1) provides that no person other than the State Government or an Officer of the State Government etc. shall purchase or transport tendu leaves. Further, the Act did not prohibit import of tendu leaves and so the Act is not violative of Arts. 31, 301 and 304 of the Constitution and the control of movement of tendu leaves after their import was in no way repugnant to Arts. 301 and 304 of the Constitution. The State contended that unless the State had the power to check the purchase of tendu leaves from outside the State and to restrict the transport thereof within the State, the monopoly of State trading in tendu leaves would not be effective. The High Court rejected these contentions of the State and hence the appeal. Dismissing the appeal, HELD : (1) All the relevant provisions of the Act and the rules made thereunder show that the legislature intended that everybody growing leaves within the State should offer the same to it to its agents in different units for sale and the State was bound to purchase every single lot of usable tendu leaves. Prima facie trade in tendu leaves could consist of dealing in those leaves, i.e., their purchase and sale but transport 'of the leaves once purchased or sold would not prima facie be an organic or integral part of dealing in those leaves. [842 D] 839 Vrajlal Manilal v. M.P. State [1970] 1 S.C.R. 400, followed. (ii) In the present case, the transport of tendu leaves purchased outside but consigned to places within the State to be used for the manufacture of bidis is not integrally connected with the State monopoly as envisaged in the Act. The Act ought not to be construed so as to ban import of tendu leaves from outside the State or restrict their movement once they are within the State unless clear language was used in that behalf. [844 C] Akadasi Padhan v. State of Orissa, [1963] Supp. 2 S.C.R. State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 2 691, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 684 of 1968. Y. S. Dharmadhikari, Advocate-General for the State of Madhya Pradesh and 1. N. Shroff, for the appellants. M. C. Setalvad, Rameshwar Nath and S. K. Dholakia, for respondent No. 1. The Judgment of the Court was delivered by Mitter, J. This is an appeal from a judgment of the Madhya Pradesh High Court quashing the proceedings initiated on the complaint filed by the Divisional Forest Officer, Saugor in the Court of the Magistrate of the First Class Saugor for imposition of a penalty on the respondents. The matter arises thus. Chhotahhai Jethabhai Patel, a partnership firm of which the second respondent, Jhaverbhai Bhulabhai Patel is a partner, carried on business on a fairly large scale as manufacturers of bidis at various places in the State of Madhya Pradesh including Saugor. Being unable to secure sufficient quantities of tendu leaves grown in the forest units in the State, the firm took leases for the collection of such leaves in the States of Bihar Maharashtra. They actually imported tendu leaves under two railway consignments from Bihar to Saugor. They informed the Divisional Forest Officer about the same and asked for permission for transport of the leaves and to utilise the said leaves for manufacture of bidis in their factories. By letter dated July 27, 1965 the said Forest Officer intimated the firm that the imported leaves were not to be moved for bidi manufacture until permission was accorded for so doing. The respondents' grievance was that notwithstanding the above communication and in spite of the fact that they had not moved the imported leaves from their godowns, the Sub Divisional Forest Officer Saugor seized two quantities of such leaves of 9007 bags imported from Garwah Road, Bihar and 256 bags of tendu leaves imported from Bindoumaganj, Bihar and followed the same up by filing a complaint alleging contravention of s. 5 of the Madhya Pradesh Tendu Patta Wyapar Viniyaman) 84 0 Adhiniyam, 1964, hereinafter referred to as the Act. The respondents filed a petition under Art. 226 of the Constitution before the High Court for the issue of a writ of certiorari quashing the complaint. The contention of the respondents (importers of the leaves) before the High Court was that the Act did not prohibit the import of tendu leaves from places outside the State nor was there any restriction on a manufacturer importing such leaves with the express object of consumption of the same, in his factory for the manufacture of bidis and in any event the Act or the Rules made thereunder did not purport to regulate the transport of tendu leaves imported from places outside the State. On behalf of the State it was contended that transport of tendu leaves whether grown in the State or outside the State was completely prohibited by s. 5(2) of the Act and regulation and control of transport of such imported leaves was necessary for the successful working of the State monopoly in the trade of tendu leaves envisaged by the Act. Further the Act did not prohibit the import of tendu leaves and was not therefore violative of Arts. 31, 301 and 304 of the Constitution and the control of movement of tendu leaves after their import from another State was in no way repug- nant to Arts. 301 and 304. The High Court rejected the contentions of the State. Hence the appeal. State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 3 In order to find out whether the action of the Forest Officer was justified, we have to look into the relevant provisions of the Act and the rules framed thereunder. The Act as its preamble shows is one to make provision for regulating in the public interest the trade of tendu leaves by creation of State monopoly in such trade. By s. 1(2) it was to extend to the whole of the State and under sub-s. (3) of s. 1 it was to come into force in such area or areas and on such date or dates as the State Government may, by notification, specify. The broad scheme of the Act appears to be as follows. Under s. 3 the State Government was empowered to divide every specified area defined in cl. (h) of s. 2 into such number of units as it may deem fit. S. 4 empowered the State Government to appoint agents in respect of different units for the purpose of purchase of and trade in tendu leaves on its behalf. Under s. 5(1); "On the issue of a notification under sub- section (3) of section 1 in any area no perso n other than- (a) the State Government; (b) an officer of State Government authorised in writing in that behalf; or (c) an agent in respect of the unit in which the leaves have grown; shall purchase or transport tendu leaves." The two Explanations to this subsection show that purchase of tendu leaves from the State Government or its officers or agents was not to be deemed to be a purchase in contravention of the Act and a person having no interest in a holding but acquiring the right to collect tendu leaves grown on such holding was to be deemed to have purchased such leaves in contravention of the Act. Sub-s. (2) of the section allowed a grower of tendu leaves to transport them from any place within the unit wherein such leaves had grown to any other place in that unit and tendu leaves purchased from the State Government or any officer or agent of the Government by any person for manufacture of bidis within the State or by any person for sale outside the State could be transported by such person in accordance with the terms and conditions of a permit to be issued in that behalf. S. 7 empowered the State Government to fix prices at which tendu leaves were to be, purchased by it or its agent and under s. 9 the State Government or their authorised officer or agent was to be, bound to purchase at the price fixed under s. 7 leaves offered for sale at the depot, subject to the right of rejection of such leaves as were not fit for the manufacture of bidis. Under s. 1 1 all manufacturers of bidis and all exporters of tendu leaves had to get themselves registered in such manner as might be prescribed. S. 12 enabled the State Government to sell or dispose of tendu leaves purchased by it or its agent as therein prescribed. Under s. 1 5 any person contravening any of the provisions of the Act or the rules thereunder was liable to punishment, both with imprisonment and fine and tendu leaves in respect of which such contravention took place were liable to forfeiture by Government. S. 19 gave the Government power to make rules to carry out the provisions of the Act. Rule 4 framed under the Act lays down the kinds of transport permits which may be issued. They are to be, of four types State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 4 (i) for transport from collection depot to storage godown; (ii) for transport from one storage godown to another or to distribution centre; (iii) for transport from a distribution centre to Sattedars or Mazdoors' and (iv) for transport outside the State. The application for a transport permit is to be under rule 9 in form 'M' and the permit to be issued is to be in form 'M. Form 'M' gives the quantity of tendu leaves purchased, the place or places where they were stored, the destination to which they were to be transported and the place or places where transported leaves were to be stored. Similar particulars are to be contained in a permit in form 'N'. It was contended on behalf of the State that the High Court had gone wrong in taking the view that the object of the Act was confined to trading in tendu leaves grown in the State as disclosed by the above provisions. It was urged that the embargo on purchase and transport of tendu leaves by s. 5 was necessary for creation and preservation of the State monopoly in tendu leaves. It was submitted that there was nothing in the Act, which on the face of it showed that tendu leaves mentioned in the different provisions were to be confined to leaves grown in the State. It was further submitted that unless the State had the power to check the purchase of tendu leaves from outside the State and in any event to restrict the transport thereof within the State, the monopoly would not be effective. It was urged further that transport of goods within the State was so essentially integrated with the trade in the goods that the restriction on transport should be upheld in the interest of the State monopoly. We find ourselves unable to accept the contentions put forward by counsel on behalf of the State. All the relevant provisions of the Act and the rules referred to above show that the legislature intended that everybody growing leaves within the State should offer the same to it or its agents in different units for sale and the State was bound to purchase every single lot of tendu leaves unless the same could be said to be unfit for the manufacture of bidis. Prima facie trade in tendu leaves as was held by this Court in Vrajlal Manilal v. M. P. State(1) would consist of dealing in those leaves i.e. their purchase and sale but "transport of the leaves once purchased or sold would not prima facie be an organic or integral part of dealing in those leaves." It was further held in that case: :..a permit system which regulates the movement of leaves purchased by a manufacturer of bidis from the unit where they are purchased to his warehouse, then to the branches and to the sattedars cannot up to that stage be regarded as unreasonable in the light of the object of the Act, the economic conditions prevailing in the State, and the mischief which it seeks to cure. At the same time to expect the manufacturer to get permits issued to his sattedars for distribution by them to the innumerable mazdoors of comparatively small quantities of these leaves would not only be unreasonable but frustrating." In that case there was no question of import of any tendu leaves from outside the State or the issue of any permits in that regard. What was objected to was the insistence upon transport permits for the leaves to be distributed by the manufacturers to his innumerable sattedars and mazdoors under s. 5 of the Act. It was held that though the section "is couched in apparently wide language, (1) [1970] 1 State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 5 S.C.R. 400 at 408. the very object of the Act, as disclosed by its long title, contains inherent limitations against an absolute or as strictly regulated a ban as it would at first reading of the section appear." Though the Court there upheld the provisions relating to the creation of the monopoly in the public interest in the matter of sale and purchase of tendu leaves, it was not disposed to uphold the restrictions on movement to the extent it was sought to be enforced by the State in that case. In coming to the above conclusion the Court relied on the dictum in Akadasi Padhan v. State of Orissa(1) "A law relating to a State monopoly cannot, in the context, include all the provisions contained in the said law whether they have direct relation with the creation of the monopoly or no the said expression should be construed to mean the law relating to the monopoly in its absolutely essential features. If a law is passed creating a State monopoly, the Court should enquire what are the provisions of the said law which are basically and essentially necessary for creating the State monopoly. It is only those essential and basic provisions which are protected by the latter part of Art. 19(6). If there are other provisions made by the Act which are subsidiary, incidental or helpful to the operation of the monopoly, they do not fall under the said part and their validity must be judged under the first part of Art. 19(6). In other words, the effect of the amendment made in Art. 19(6) is to protect the law relating to the creation of monopoly and that means that it is only the provisions of the law which are integrally and essentially connected with the creation of the monopoly that are protected. The rest of the provisions which may be incidental do not fall under the, latter part of Art. 19(6) and would inevitably have to satisfy the test of the first part of Art. 19(6)." It is settled law that where two constructions of a legislative provision are possible one consistent with the constitutionality of the measure impugned and the other offending the same, the Court will lean towards the first if it be compatible with the object and purpose of the impugned Act, the mischief which it sought to prevent ascertaining from relevant factors its true scope and meaning. It was in the light of this principle that the High Court observed : "If s. 5 of the Act or any of its provisions were to be construed as prohibiting the import of tendu leaves into (1) [1963] Supp. 2 S.C.R. 691. the State or restricted within the State of imported leaves, then the provision would clearly be invalid as violative of Arts. 301 and 304 of the Constitution." Without expressing our views on the subject we hold that the entire provisions of the Act and the rules are consistent with and aim at the State monopoly in the trade of tendu leaves in case of leaves grown or _produced in the State and the legislature never intended that the monopoly should be operative even to the extent of banning import of tendu leaves from outside or stalling the tendu leaves once they found their way into the State from outside. The transport of tendu leaves purchased outside but consigned to places within the, State to be used for the manufacture of bidis is not integrally connected with the State monopoly as envisaged in the Act. It stands to reason that manufacturers of bidis in the State of Madhya Pradesh would not think of importing tendu leaves State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 6 from distant places like, Bihar and Maharashtra if they could help it and it must be the exigencies of the situation which drives a manufacturer of bidis to such course of action. In any event, the Act ought not to be construed so as to ban import of tendu leaves from outside the State or restrict their movement once they were within the State unless clear language was used in that behalf. If and when such express embargo is imposed, a question may arise as to whether it offends the different provisions of Part XIII of the Constitution. In the result the appeal fails and is dismissed with costs. S.C. Appeal dismissed. State Of M.P. & Ors vs M/S. Chhotabhai Jethabhai Patel & Co. & on 10 December, 1971 7 | {
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Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 Equivalent citations: 1971 AIR 2366, 1972 SCR (1) 291, AIR 1971 SUPREME COURT 2366, 1972 3 SCC 639, 1972 SCC(CRI) 684, 1973 2 SCJ 484, 1971 RENCJ 959 Author: S.M. Sikri Bench: S.M. Sikri, A.N. Ray, D.G. Palekar PETITIONER: HARIDAS GIRDHARDAS & ORS. Vs. RESPONDENT: VARADARAJA PILLAI & ANR. DATE OF JUDGMENT18/08/1971 BENCH: SIKRI, S.M. (CJ) BENCH: SIKRI, S.M. (CJ) RAY, A.N. PALEKAR, D.G. CITATION: 1971 AIR 2366 1972 SCR (1) 291 ACT: Madras City Tenants Protection Act, 1921 (as amended in 1955)--Applicability of s. 12 proviso. HEADNOTE: The plaintiffs who were landlords leased to defendant No. a plot of land in Madras under a duty registered lease deed dated November 17, 1938 for a period of 15 years 3 months from March 1, 1939 at a rent of Rs. 560 per month on the terms and conditions set out therein with an option for renewal in favour of defendant No. 1 for a period of 10 years from March 1, 1954 but at an enhanced rent of Rs. 630 per month, and subject to the other stipulations except the clause for renewal. Under cl. 2 of the deed defendant No. I was entitled to raise a cinema building and other structures Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 1 at a cost of not less than Rs. 50,000. Clause 4(d) provided that at the expiration or sooner determination of the tenancy the lessors had the option of buying the buildings in question for a slim of Rs. 50,000, less depreciation. This option was to be exercised within one week of the termination of the tenancy. Defendant No. 1 in accordance with the stipulations in the lease deed constructed, a theatre oil the said plot and exercised his option to renew the lease for a further period of 10 years from March 10, 1954. Shortly before the expiry of The period of lease on March 1, 1964 the plaintiffs exercised the option of buying the buildings erected on the demised land and sent by cheque to defendant No. I the amount of, Rs. 50,000 mentioned in cl. 4(d) of the deed, waiving their claim to deduction of depreciation. Defendant No. I however refused to -accept the preferred sum. In the consequent suit the question for determination was whether cl. 4(d) of the deed could be enforced by the plaintiffs in view of the Madras City Tenants' ,Protection Act, 1921 as amended by the Amending Act of 1955. HELD: The Madras City Tenants' Protection Act, 1921 was passed in 1922 to give protection to certain classes of tenants who had constructed buildings on others' land in the hope that they would not be evicted as long as they paid fair rent for the rent. It was not the object of the Act to cover a hope if the 'hope' was entertained contrary to express stipulations as to erection of building. Accordingly proviso to s. 12 exempted any stipulations made by the tenant in writing registered as to the erection of buildings in so far as they related to buildings erected after the date of the contracts [296F-G] Clauses 2 and 4 of the lease deed amounted to a stipulation as to the erection of buildings and consequently the proviso to s. 12 was applicable to the case. Accordingly the plaintiffs were entitled to enforce cl. 4 (d) of the deed against defendant No. 1. [296A-B] Mylapore Hindu Permanent Fund Ltd. v.K. S. Subraniania Iyer, A.I.R. 19 70 S.C. 1683 at 1691-92, applied. 292 N. Vajranani Naidu V. New Theatre Carnatic Talkies, [1964] 6 S.C.R. 1015, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 74 of 197 1. Appeal from the judgment and order dated June 17, 1970 of the Madras High Court in O. S. Appeal No. 35 of 1967. M. C. Chagla, R. V. Pillai and P. Kesava Pillai, for the appellants. K. Parasaran, K. Rajendra Chawdhary and Hari Singh for respondent No. 1. Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 2 A. V. Rangam, for respondent No. 2. The Judgment of the Court was delivered by Sikri, C.J. This appeal is directed against the judgment of the Madras High Court (Veeraswami, C.J., and Gokula- krishnan, J.) dismissing the appeal filed by the plaintiffs- appellants against the judgment and decree of Kunhamed Kutti, J., dated February 20, 1967, made in the exercise of the ordinary original civil jurisdiction of the Madras High Court. The plaintiffs had filed a suit on the following allegations. The plaintiffs who were landlords leased to defendant No. the plot of land on Mount Road, Madras, under a duty registered lease deed dated November 17, 1938, for a period of 15 years 3 months from March 1, 1939 at a rent of Rs. 560/- per month on the terms and conditions set out therein with an option for renewal in favour of defendant No. 1 for a further period of 10 years from March 1, 1954 but at an enhanced rent of Rs. 630/- per month, and subject to the other stipulations except the clause for renewal. For our purpose the -following clauses are important. "2. The Leasee covenants with the Lessors as follows (c) Within a reasonable period from the date hereof, at his own cost and charges, under the supervision of the Lessors and in accordance with plans, elevations,/ sections and specifications to be first approved by the Lessors erect, cover in and complete in a substantial and workmen like manner on the demised plot of land, a theatre with all proper 2 9 3 officers and out buildings such as bazars, restaurants,, motor and dunamo sheds etc., and fences, drains, sewers to be used for production and exhibition of films and for staging Drama therein and to, expend in building such theatre a sum of not less than Rs. 50,0001-. The Lessee shall be at liberty to put up other buildings in addition to. the above. (d) Not to have an entrance for the theatre going public from the General Peters Road, so long as the Police authorities do not permit such access from the said road. (f) In the erection and completion of such buildings to do all acts and things required by and perform the works conformably in all respects with the provisions of the statutes applicable thereto and with the by laws and regulations of the Corporation of Madras to pay and keep the Lessors indemnified against all claims for the fees,, charges, fines, penalties and other payments whatsoever which during the progress of the works may become payable or be demanded by the said authoritarian in respect of the said works or of anything done under the authority herein contained and from time to time discharge and pay all claims, assessments, out goings now or at any time hereafter chargeable against an owner by Statute or otherwise in regard to the said plot of land or any buildings thereof, save and except the property tax and quit rent levied on the demised plot of land which alone shall be one by the Lessors.. (g) Not at any time to cause or permit any public or private nuisance in or upon the demised plot of -land or anything which shall cause unnecessary annoyance inconvenience or disturbance to the Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 3 Lessors' or to the occupiers of any adjoining or neighbouring premises or which shall lead to interference by the Police or Local authorities and at all times to comply with all Municipal and Police requirements. (n) Not to install or cause to be installed on the dimised land or any part thereof any petrol pump, without getting the Lessor's previous permission in writing and without providing sufficient safeguards to the Lessors' neighbouring owners and their other tenants. (o) Not to put up a compound wall on the southern side of the demised plot but to put up only iron railings or bars with a low wall' if necessary, not exceeding three feet in height." It was further agreed between the lessor and lessee: ". (d) At the expiration or sooner determina- tion of the tenancy, the Lessors shall have the ,option of buying the buildings to be erected on the demised land the basis of valuation being as follows The buildings shall be valued at Rs. 50,0001- irrespective of the actual cost of construction and the Lessee shall allow a depreciation of 3 per cent per annum, the period being calculated for the purpose of this valuation from 1st March, 1939. If within a week from such termination of tenancy the Lessors do not signify their willingness to purchase the building or erections at the aforesaid valuation from the Lessee, the Lesee shall within three months thereafter remove and carry away any buildings or erections on the demised plot of land and shall cause to be restored to its original or natural level state and condition the demised plot of land." Defendant No. 1 in accordance with the stipulations -in the lease deed, constructed a theatre on the said plot ;and the same has been used for exhibition of cinema films by him. Defendant No. I exercised the option of renewal ,,of lease for the further period of 10 years from March 1, 1954 and has been continuing in possession for- a full further term of 10 years from March 1, 1954 expiring with ,the month of February, 1.964. In accordance with the terms of clause 4 (d) of the lease deed, the plaintiffs exercised the option of buying the buildings erected on the demised land by letter dated Feb- ruary 27, 1964 and sent alongwith the full amount of Rs. 50,000/- by cheque in payment for all the superstructures without deducting any amount for depreciation, as provided in the said clause of the lease deed, stating that 29 5 they had decided not to stand on their strict legal rights to deduct depreciation but to pay the full price of Rs. 50,000/as the buildings had been maintained and kept in good repair. Defendant No. I however, refused the sum of Rs. 50,0001- and contended that the plaintiffs were not entitled to claim any rights on the footing of clause 4 (d) of the lease deed or to offer the sum of Rs. 50,0001- as the price for purchasing the superstructure put up by him on the land leased to him. The question that arises before us is whether the plaintiffs were entitled to enforce clause 4 (d) of the lease deed in view of the Madras City Tenants' Protection Act, 1921, as amended by the Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 4 Amending Act of 1955. This Court construed the said Act and its various provisions in N. Vajranani Naidu v. New Theatre Carnatic Talkies(1) and in The Mylapore Hindu Permanent Fund Ltd. v. K. S. Subramania Iyer(2). The second decision was not before the High Court when the Letters Patent Bench rendered its judgment. It seems to us that the case is covered by the judgment in the Mylapore Hindu Permanent Fund case(2). In that case Vaidialingam, J., speaking for the Court, observed : "Therefore, in our opinion, the decision in Vajranani's case (supra) has been misunderstood. by the learned Judges of the Letters Patent Bench and the said decision is no authority for the proposition that the stipulation contained in the lease deed before us cannot come within the proviso to section 12. The case before us is not one under which the tenant has in any manner contracted himself out of the rights conferred on him by the statute. On the other hand, by allowing the building to stand on the property and agreeing to receive the amount of compensation provided for in the lease deed, the object of the legislation is fully satisfied. It must also be emphasized that the first part of Section 12 protects a tenant against the deprivation or limitation of his rights under the Act and the rights conferred by the Act do not directly relate to covenants relating to erection of buildings." (1) [1964]6 S.C.R. 1015. (2) A. 1. R. 1970 S. C. 1683 at 1691-92. Considering the facts of that case this Court held that clause 2, in the deed, read with clause 4, amounted to sti- pulations as to the erection of buildings and, in this view the proviso to S. 12 applied. We have set out the relevant clauses of the lease deed in this case and it seems to us that these clauses amount to a stipulation as to the erection of buildings and consequently the proviso to S. 12 applies. Mylapore Hindu Permanent Fund case(1) was sought to be distinguished by the learned counsel for the respondent on the ground that in the present case the defendant was entitled to put up the building beyond the value of Rs. 50,0001-. But clause 2 (c) of the lease deed, set out above, clearly shows that the plaintiffs required "a theatre with all proper offices and out buildings such as bazars, restaurants, motor and dunamo sheds etc., and fences, drains, sewers to be used for production and exhibition of films and for staging drama therein" to be erected. The plaintiffs wanted to ensure that the cost of the building would not be less than Rs. 50,0001- in order that the building would be of a proper quality of construction. There is no evidence as to what other buildings the defendant had put up. On these facts we cannot say that these were not stipulations as to the erection of buildings within the meaning of the proviso to S. 12. It must be remembered that the Madras City Tenants' Protection Act, 1921, was passed in 1922 to give protection to certain classes of tenants who had constructed buildings on others' lands in the hope that they would not be evicted so long as they Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 5 paid a fair rent for the land. It was not the object of the Act to cover a hope if the 'hope' was entertained contrary to express stipulations as to erection of buildings. Accordingly proviso to S. 12 exempted any stipulations made by the tenant in writing registered as to the erection of buildings, in so far' as they related to buildings erected after the date of the contract. The plaintiffs-appellants applied for amendment of their plaint dated April 15, 1964, by adding the following words in the Prayer Clauses "(a) after the words : as from 1-3-1964 (1) A.I.R. 1970 S.C. 1683. 29 7 and direct the defendant No. 1 to deliver possession to the plaintiffs of the sites leased out to the defendant No. 1 under the aforesaid lease deeds and the buildings and superstructures built thereupon in good and satisfactory condition." (b) Delete Prayer, (b) and in its place substitute the following : "That the defendants do pay the plaintiffs the sum of Rs. 12,000 (twelve thousand) per month as mesne profits for use and occupation of the buildings and superstructures built upon the demised premises from 4-8-1968 " till possession is handed over to the plaintiffs." We allowed the amendment to be made. The learned counsel for the defendant objected to the prayer regarding mesne profits but as the plaintiffs are limiting the mesne profits for use and occupation from August 4, 1968, i.e. three years before the date of the application for amending the plaint, the defendant can have no just cause to complain. In the result the appeal is allowed, the judgments of the Single Judge and the Division Bench set aside and the suit decreed in terms of prayers (a) and (b) as amended. The case will now go back to the Trial Judge to determine the mesne profits for use and occupation from August 4, 1968 till the possession is handed over to the plaintiffs in accordance with law. The parties will bear their own costs throughout. Possession will be handed over within six months from today. In the meantime respondent No. 1 will not induct any tenant or other person or otherwise' create any interest' in the property. G.C. Appeal allowed. Haridas Girdhardas & Ors vs Varadaraja Pillai & Anr on 18 August, 1971 6 | {
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The Managing Director (Mig) Hindustan ... vs Ajit Prasad Tarway on 5 November, 1971 Equivalent citations: AIR1973SC76, 1973LABLC407, (1972)ILLJ170SC, (1972)3SCC195, 1972(4)UJ195(SC), AIR 1973 SUPREME COURT 76, 1972 3 SCC 195, 1973 LAB. I. C. 407, 41 FJR 207, 1972 23 FACLR 355, 1972 (1) SCWR 55, 1972 SCD 161, 23 FAC L R 355, 1973 S C D 161, 1972 (1) LABLJ 170 Bench: A.N. Grover, H.R. Khanna, K.S. Hegde JUDGMENT 1. These are appeals by special leave. They arise from the order made by the High Court of Andhra Pradesh in two connected revision petitions. 2. The material facts of the case are as follows. The respondent-plaintiff is serving in the company of defendant-appellant. The defendant company framed charges against him in respect of certain matters. Pending enquiry of those charges the plaintiff was placed under suspension Immediately he was placed under suspension, the plaintiff rushed to the court and filed a suit challenging the validity of the enquiry ordered against him. He also challenged the validity of his suspension. He pleaded that the proceedings against him were initiated on malicious grounds. His case was that the General Manager of the defendant company was inimically disposed towards him and that was the reason for proceeding against him. In the suit he applied for an interim order staying the operation of his suspension as well as the proceedings in the enquiry directed against him. The learned trial Judge issued an interim ex-parte order as prayed for by him, but at later stage he revoked that order after hearing both the parties. 3. Aggrieved by that decision, the plaintiff went up in appeal. The appellate court modified the order of the trial court. It directed defendant to refrain from proceeding with the enquiry ordered till the decision of the suit but as regards suspension of the plaintiff it sustained the order of the trial court, 4. Aggrieved by this decision both the plaintiff and the defendant went up in revision to the High Court of Andhra Pradesh. The Court accepted the revision petition of the plaintiff but rejected that of the defendant. It stayed the operation of the suspension order as well as the proceeding in the enquiiy. It is as against that decision these appeals have been brought. 5. In our opinion the High Court had no jurisdiction to interfere with the order of the first appellate court. It is not the conclusion of the High Court that the first appellate court had no jurisdiction to make the order that it made. The order of the first appellate court may be right or wrong ; may be in accordance with law or may not be in accordance with law ; but one thing is clear that it had jurisdiction to make that order. It is not the case that the first appellate court exercised its jurisdiction cither illegally or with material irregularity. That being so, the High Court could not The Managing Director (Mig) Hindustan ... vs Ajit Prasad Tarway on 5 November, 1971 1 have invoked its jurisdiction under Section 115 of the Civil Procedure Code: See the decisions of this Court in Pandurang Dkoni Chougule v. Maruti Hari Madhav , D.L.F. Housing & Construction Company Private Ltd., v. Samp Singh and Ors. 6. For the reasons mentioned above, we allow appeal No. 840 of 1971 and dismiss No. 841 of 1971. The resulting position is that the order of the High Court is set aside and that of the first appellate Court restored. In the circumstances of the case we make no order as to costs in this Court. The Managing Director (Mig) Hindustan ... vs Ajit Prasad Tarway on 5 November, 1971 2 | {
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Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 Equivalent citations: 1972 LAB. I. C. 702, (1972) 1 SCR 428, (1971) 2 LAB LJ 491, 24 FAC L R 264, 40 F J R 81 PETITIONER: MANAGEMENT OF THE KIRLAMPUDI SUGAR MILLS LTD. Vs. RESPONDENT: INDUSTRIAL TRIBUNAL, A.P. & ANR. DATE OF JUDGMENT26/08/1971 BENCH: ACT: Industrial Dispute-Recommendations of Central Wage Board for sugar whether vitiated by fact that it had fixed uniform wages region wise without further classification within each region-Tribunal's jurisdiction to go into question of financial capacity of company to implement recommendations of Wage Board--Company whether had financial capacity. HEADNOTE: The Kirlampudi Sugar Mills Ltd. was started in 1951 as a small unit and later was increased to a larger crushing capacity of 1000 tons. By 1963 the factory got into financial embarrassment. in the middle of that year the- present management took over the factory on the specific assurance of the Government that they would provide for and give all facilities to enable them to run the factory. After the management was taken over there were disputes between the management and workers with the result that they referred various matters for adjudication including the claim for implementation of the recommendations of the Central Wage Board for sugar. The disputed items related to categorisation of workers their fitments, fixation of work load, the demand for increase of Rs. 10 to be given to every worker over the basic wage implementation of weight age, dearness allowance. the demand for giving grades and for giving retrospective effect etc. On issue No. IA the Tribunal held that categorisation of workers and their fitments and work load should be in accordance with the recommendations of the Wage Board; it decided in favour of the management in respect of certain categories of workers Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 1 but in respect of some others it gave relief to the workers. The Tribunal further held in respect of issue. 2 and 5 before it that the financial capacity of the Appellant was not such as to justify an increase of Rs. IO to all the workers over the basic wage and dearness allowance or the payment of Rs. 5 to workmen for implementation of the weightage recommended by the Wage Board. Appeal No., 1602 of 1966 was filed in this Court by special leave by the management against the Award of the Tribunal in respect of issue IA in so far as it went against them. Appeal No. 1603 of 1966 was filed by the workers against the Tribunal's decision on issues 2 and 5 and that part of issue IA which went against them. The questions that fell for considera- tion were : (i) whether the recommendations of the Wage Board were vitiated by the fact that they had fixed the wages uniformly region-wise without further classification within each region; (ii) If they were valid, whether the Tribunal could go into the question of the financial capacity of the company to implement them; (iii) whether the company had the financial capacity to implement the recommendations. HELD : The Wage Board following the principles laid down by this Court has considered the capacity of the industry region-wise and has also fixed wages different from region to region having regard to the difference in the capacity of the Industry region wise. Further it has given good reason for not furnishing a criteria for further classification of the industry within the region. In these circumstances prescribing the same wage for all units of industry in the same region was justified and the fact that the 429 industry in the region had not been divided into classes could not vitiate he recommendation of the Wage Board. [441 F-G] Workmen of Shri Bajrang Jute Mills Ltd. v. Employers of Shri Bajrang lute Mills Lid., [1969] 2 S.C.R. 593, explained and distinguished. Express Newspaper (P) Ltd. v. Union of India & Ors., [1959] S.C.R. 12 and French Motor Car Co. Ltd. v. Workmen, [1963] Supp. 2 S.C.R. 16, referred to However, notwithstanding the fact that a fair wage has been fixed by the Board which would be applicable to all the units in the region for which wage has been fixed, it may be open to any particular unit to plead that in fact its financial position is not such that it can bear the burden of implementing the recommendations. The justification of the plea of want of financial capacity will depend upon the evidence of its financial position over a period of years, to show that it cannot bear the burden or that it is only a temporary or fortuitous situation with every possibility of financial improvement in the immediate future [442 E; 443 C] Ahmedabad Mill Owners' Association etc. v. Textile Labour Association, [1966] 1 S.C.R. 382, relied on. Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 2 The Appellant's balance sheets for the years 1960 to 1970 for a period of 10 years showed that except for the year ending 30-6-69 the company was not in a position to declare any dividends. Though the factory appeared to have been expanded after 1964 to 300 tons capacity it did not show uniform net profits; on the other hand losses continued. The profits that it made in any year seemed to be consumed by losses of the previous years. Various factors contributed to financial unsteadiness. [448 G-H] This being the position the Tribunal was justified in holding that the Appellant did not have the financial capacity to bear the burden of payment of Rs. 10 increase and Rs. 5 as weightage in accordance with the re- commendations of the Wage Board. On this conclusion and also on an examination of the relevant material it was evident that the company was not in a financial position to meet the burden of implementing the recommendations of the Wage Board. Despite this the company had implemented the award in respect of a large number of workers both as to categorisation and fitment except in regard to four categories. The claim, of the Respondent workmen for categorisation and fitment in accordance with the Award in regard to these could not, in the circumstances, be accepted. [448 H-449 G] JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1602 and 1603 of 1966. Appeals by special leave from the Award dated November 19, 1965 of the Industrial Tribunal, Andhra Pradesh, Hyderabad in I.D. No. 23 of 1965. K. Srinivasamurthy, Naunit Lal and Swaranjit Sodhi for the appellant (in C.A. No. 1602 of 1966) and 'the respondent in C.A. No. 1603 of 1966). M. K. Ramamurthi and Vineet Kumar, for respondent No. 2 (In C.A. No. 1602 of 1966) and the appellant (in C.A. No. 1603, of 1966). 840Sup.CI/71 The Judgment of the Court was delivered by P. Jaganmohan Reddy, J. These are two appeals by Special Leave. Civil Appeal No. 1602 of 1966 is by the Management against the Award passed by the Industrial Tribunal on a reference made by the Government for categorisation of workers, ,their fitments, fixation of work load, the demand for increase of Rs. 10/- to be given to every worker over the basic wage, implementation of weightage, dearness allowance, the demand for giving grades and for giving retrospective effect etc. Civil Appeal' No. 1603 of 1966 by the Workmen is against the same Award for disallowing. the increase of Rs. 10/- and the weightage of Rs. 5/and also against the fitment of certain categories of workers. The Tribunal held that the financial Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 3 capacity of the Appellant was not such as to justify an increase of Rs. 10/- to all the workers over the basic wage and dearness allowance. On the same grounds it also disallowed the payment of Rs. 5/- to workmen for implementation of the weightage recommended by the Wage Board for Sugar Industry. These were the subject matter of issue 2 and 5 of the reference made to the Tribunal. So far as issue IA is concerned, it held that categorisation of workers and their fitments and work load should be in accordance with the recommendations of the Wage Board for Sugar and even as to these it decided in favour of the management in respect of certain categories of workers but in respect of some others, it gave relief to the workers. The employers appealed against that part of issue 1A which was decided against them, while the Workmen's Appeal is against the finding of issues 2, 5 and part of IA which was against them. We will first take up the appeal of the Management. It appears that the Kirlampudi Sugar factory was started in 1951 as a small unit and later was increased to a larger crushing capacity of 1,000 tons which according to the Tariff Commission would not be considered economically profitable, though according to the Sugar Wage Board it would be. By 1963 the factory got into, financial embarrassment as it had to pay heavy debts to the Government on account of Sugar cess, cane prices payable to the growers and Income-tax. These demands it is alleged practically brought the factory to a stop, when in the middle of 1963 the present management took over the factory on the specific assurance from the Government that they will provide for and give all facilities to enable them to run the factory. After the management was taken over there were disputes between the Management and workers with the result that they referred various matters for adjudication including the claim for implementation of the wage Board's recommendation which was alleged to have been implemented by the former management as early as 1961-62. It was the case of the workers that implementa- tion was not satisfactory and it was their demand that the sugar wage board's recommendations should be implemented. The management raised a specific objection before the Industrial Tribunal that the reference relates to a wholesale promotion of workers from one grade to the other under the guise of fitment under the Wage Board's recommendations which is illegal and without jurisdiction; and in any case the question of promotion, categorisation and fitment is a managerial function in which the Tribunal cannot interfere unless it can be established that the management acted mala fide or it resorted to unfair practices. It was further pleaded that the factory had not the financial capacity to implement the demand. One of the grievance of the Appellant was that though the Tribunal found that it had not the financial capacity to meet the additional burden of the demands made by the workmen it granted large scale promotions which it had no jurisdiction to grant. Despite this the management states that it had implemented the Award in most of the cases and challenged it in respect of some only. It may be mentioned that the Central Wage Board for Sugar was appointed in terms of paragraph 25 of Chapter XXVII of the Second Five Year Plan. This Wage Board for Sugar Indus- try divided India into 4 regions and each region included every State containing even a single unit unlike that adopted by the Tariff Commission which in its Report on the cost structure left out some of the States from the 4 divisions. It then considered the wage structure, categorisation etc. for each of the said regions, in relation to a fair cross-section of the Industry in each of the regions. In comparison with this Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 4 method, the Jute Wage Board had taken India as a whole and fixed a uniform rate for the Jute industry. The first contention which has been urged is that the recommendations of the Wage Board were not binding in view of the fact that it was not a statutory board but was only a recommendatory one and the Tribunal could not implement them as a whole because it had recommended that fitments and categorisation should be affected by recourse to Tripartite machinery. The case of Workmen of Shri Bajrang Jute Mills Ltd., v. Employees of Shri Bajrang Jute Mills Ltd.(1), is cited as an authority for the proposition that as the procedure prescribed therein was not valid, the recommendations of the Wage Board were declared to be invalid and inapplicable to the Jute Industry. The learned Advocate on behalf of the Respondents raised a preliminary objection to the maintainability of this contention as this issue had neither been referred to the Tribunal, nor has it been urged before it nor had a ground been taken in the Special Leave Petition. He seeks to distinguish the case of the Bajrang (1) [1969] 2 S.C.R. 593. Mills, as in that case there was a specific issue while there is none in this case. In answer it is pointed out that the contention raised on behalf of the Respondents is implicit in issue 1 (a) which is as follows : 1(a) "Whether the demand for categorisation of workers and their fitment and work load should be in accordance with the recommendations of the Wage Board for Sugar industry is justified". The Appellant had in its statement before the Tribunal in para 9 categorically challenged the recommendations of the Wage Board in these words : "It may be noticed even though the Wage Board recommendations are not binding, in spite of huge losses the management went out of the way and implemented the same". In the Special Leave Petition also in paragraph 2 the Appellant had challenged the jurisdiction of the Tribunal "to go into the question of the capacity to pay of an individual unit in respect of one of the recommendations of the Wage Board for Sugar industry when such recommendations had been made for the industry as a whole and agreed to by the Management itself". It is therefore contended that if the financial capacity is taken into account for placing fitments on the basis of Bajrang Jute Mills, no other question arises. In the Bajrang Mills case(1) it was held that fixation of fair wage depends on the financial capacity but once when the Tribunal had held that the Appellant did not have the financial capacity the categorisation and fitments directed by it in its Award are invalid. The Tribunal is concerned with the implementation of the Wage Board recommendation forgetting that it cannot do so when the implementation of those recommendations relating to categorisation and fitment cannot be effected without recourse to the Tripartite machinery. It is also contended that categorisation and fitment is a managerial function and requires technical knowledge of the various duties ,and functions which each of the category of workmen have to discharge. The following contentions have been urged, namely : (1) The Wage Board recommendations having regard to the case of Bajrang Jute Mills are invalid and cannot be enforced, inasmuch as it has fixed a uniform wage for the Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 5 entire region without further dividing the industry in the region into classes of units according to their capacity namely region-cumindustry for fixation of the wage structure for those classes of units. At any rate since what is prescribed in the report is ,only recommendatory, unless there is a capacity to pay, no one can claim its implementation as of right. (1) [1969] 2 S.C.R. 593. (2) The Appellant has not the financial capacity to imple- ment the Award which has been held by the Tribunal to be a fact. On this score itself it cannot implement the Award. (3) In para 263 of the Wage Board recommendation of 1960 that when there is a difference between management and labour regarding fitment the Tripartite machinery should be brought into existence. The Tribunal was wrong in thinking that the Wage Board was giving an example of border-lines cases where there may be a difference of opinion and it is only in those cases that the Tripartite machinery in the case of fitment is to be resorted to. (4) Fitment is a managerial function and unless the Tribunal finds that the Act of the management is mala fide or it has resorted to unfair practices it is not justified in interfering with the fitments effected by the management. (5) In any case in respect of certain specific fitments the Tribunal was in error and acted without evidence. Before dealing with these contentions it is necessary to consider the preliminary objection raised on behalf of the Respondents that before the Tribunal the Appellant did not object to the implementation of the Wage Board on the ground that its recommendations were not industry-cum-region wise or that it had not divided the industry into various classes and fixed a wage for those classes in that region, and in any case no such issue was referred to the Tribunal unlike in the Bajrang Jute Mills case(1). In that case what was referred to the Tribunal was whether the demand of the workmen in Shree Bajrang Mills Ltd., for implementation of the recommendations of the Central Wage Board for Jute Industry is justified, and if so, to what extent. In this case issue IA did not specifically raise an objection to the implementation of the Sugar Wage Board's recommendations in general terms but issues 1, 2, 4, 5 & 6 did raise the question whether the Board was justified in its recommendations regarding categorisation of workers, fitment, increase of Rs. 10/- to every worker over the basic wage, dearness allowance, the minimum wage, the demand for fixation of work-load and the demand for implementation of weightage. Apart from this a question seems to have been raised that the Tribunal could not implement the Wage Board recommendations because it had envisaged the implementation of the categorisation etc. through the Tripartite machinery, as such as Tribunal had no jurisdiction to implement it. It would appear from the Award that the learned Advocate for the Appellant had challenged the jurisdiction of the Tribunal to fix the workload or undertake the fitments in view of the recommendations in paragraph 263 of the Wage Board's report (1) [1969] 2 S.C.R. 593. that fitments have to be effected by the Tripartite machinery to be appointed by the Government. Even in the statement of claim filed on behalf of the management it was said that though the Wage Board's recommendations are not binding in spite of the huge losses the management went out of the way and implemented the same. The fact that it was said that the Wage Board recommendations Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 6 are not binding is pressed into service to- support the contentions that the validity of the recommendations of the Wage Board was challenged. While we are inclined to agree with the submission of the learned Advocate for the Respondents that no where except in the statement of the case before this Court has a specific plea that the recommendations of the Wage Board not being in accordance with the well accepted principles laid down by this Court in the several cases to which reference has been made cannot be implemented and on that account the Tribunal has no jurisdiction to implement those recommendations it may nonetheless be pointed out that issue 1A and other issues in terms challenge the implementation of the recommendations. Even if we permit the learned Advocate for the Appellant-and we think there is justification for it-to challenge the Wage Board's recommendations generally, for reasons which we will presently give, those recommendations do not suffer from any vice but on the other hand the Board has fixed a fair wage for the industry in accordance with the principles laid down by this Court. Since a good deal of argument is based on the recommenda- tions of the Wage Board it may be profitable to examine generally the factors which were taken into consideration in fixing the wage structure for the industry. The Wage Board as has already been noticed adopted the method employed by the Tariff Commission by dividing the country into four zones or regions but unlike it included every State in each region which had even one unit. It further took these regions which were considered for fixation of price structure of sugar also for wage structure in this industry. In adopting this course the Wage Board took into consideration the seasonal nature and the duration, the sucrose content of sugar cane and its yield which varies from region to region. It was noticed that the duration of seasons vary somewhat widely from area to area depending on the availability of cane and the year to year variation. As a consequence of some of the factories in the South owning their own sugar-cane farms while this is not so in the North, the Southern factories do not suffer from the handicap of Northern factories which have to get sugar cane from nearby growers depending on the conditions of the crop in the vicinity which is not destroyed by pest or is unsuitable for any other reason, for otherwise to get the sugar-cane from growers from long distance would involve transport costs. This disadvantage the Southern factories do not have. The quality of cane as determined by the sucrose content varies from area to area depending on climatic conditions, irrigation facilities and cane development activities. Factories in Maharashtra and to some extent those in the North enjoy these advantages. Their recovery percentage is higher than in the North. Thus the average percentage of recovery of sugar in Maharashtra was noted to be the highest as against those in U.P. and Bihar and also as compared with the All India average. The variation in the yield of cane per acre was also taken into consideration; for instance in Bombay it is much higher than in the North. The Board indicated the main factors responsible for variation in the yield of sugar cane in different regions due to : (1) Improved variety of cane; (2) irrigation facilities; (3) ecological factors; and (4) improved methods of cultivation. The difference in the case of yield in ,the various areas has been one of the factors which the Board said had persuaded it to divide the country into four regions. Though the industry is rural based, it was stated the price of essential commodities in townships where sugar factories are located, did not vary appreciably from the urban areas. In spite of the urban amenities not being available in these factory areas, the Board noted that while the impact of the wages it worked out, on the economy of the country has been taken into account, it was not Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 7 proper to take agricultural wages as the prevailing rate of wages for comparison. Further it appeared to the Board that the Sugar industry was a highly regulated industry where the minimum cane price is fixed by the State and higher price depending upon the quality of the cane is to be paid according to the price linking formula laid down by the State and that even the ex-factory price for the finished product is fixed by the State in the North and some other States have fixed prices at least for one of its by-products and molasses. The price 'fixation in the North it is observed has its effect on the price of sugar in the South where normally sugar cannot be sold for a price higher than fixed in the North plus the freight. The Board also set out the procedure followed by it in as- certaining the financial capacity and profitability of the industry region-wise by calling for the balance-sheets of all the factories for a period of 10 years and undertook detailed studies for 8 years beginning from 1951 which corresponds to the beginning of the First Five Year Plan. However, out of the balance-sheets of 118 Companies, balance-sheets for 8 years were available in respect of 87, 8 Companies supplied balance-sheets for 7 out of 8 years and among the rest balance-sheets were available for one or more years. The Board thought that this data is fairly well, if not absolutely, comparable from year to year. Where a Company owned two or more factories in the same State or region it was decided to consider only the combined balance sheets for the number of factories covered, because splitting the combined balance-sheets over the number of factories did not serve the end in view. However, where a Company had under its management two or more factories in different States but in ,the same region, it was decided to exclude it from State-wise study and include it in the regional total. It also took into consideration some of the Companies which along with the sugar manufacture carried other manufacturing activities. Then it also applied 'the dividend tests, examined the main profitable ratio, considered the total dividend as coverage by paid up capital, compared gross profits and total capital employed and profits and profitability in relation to per day crushing capacity from 1955-58. A region-wise analysis of financial data was made and the same was also distributed in different ranges of daily crushing capacity. In so far as South region is concerned in which the Appellant's unit is located it was observed that "the factories seem to have been more or less evenly distributed among all the regions". Analysis of financial data region-wise was also made according to different crushing capacity ranges for each of the years 1955 to 1958 under different heads namely, gross profits, sales, total capital employed, profits after tax, ordinary dividend, ordinary paid up capital total dividends, total paid up capital, profits before tax, taxation provision, retained profits and net worth. After taking into consideration the several factors in detail the conclusions of the Tribunal are summed up as under : (a) "the profit margin whether on sales or on total capital employed, or on the net worth does not appear to bear any set relationship increase or decrease consistently-with the size of the Company. The trends are mixed and irregular. This observation is equally applicable 'to other ratios and also to the allocation of profits. It does not seem possible from these studies to locate any optimum size of the factory in respect of any region. The reason probably is that profits depend not only on the size of the factory but on various other factors e.g. efficiency of management, condit ion of machinery, availability of raw materials and efficiency of workers; Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 8 (b) However, considering the overall position it is evident that with no outside competitor in the field, with a consuming public increasing and with national income which is rising, the industry has a good future., In spite_of high taxation, high Government imposts 'by way of cess rise in price of raw material rise in freight charges and in some regions higher labour charges owing to recent revision of wages the demand for white sugar has been increasing and most of the existing sugar mills have been fairing well. Many of them have expanded their capacity and new units are fast coming into operation. Progress of the industry has been rapid.... but the increase in taxes has hit the retained earnings particularly in the case of North and Central region companies. (c) Taken region-wise, the' financial position of Maharashtra is the best. It has natural advantages. The yield of cane per acre is higher. Its quality is better. A large number of the factories have their own farms. The cooperative have also assured supply of cane. The cane growers are the share-holders. Then comes the South region. North region occupies the third position and Central region the last. In cess: Punjab, West Bengal, Madhya Pradesh, Rajasthan, Madras and Kerala enjoy some advantage with no or lower rates per maund of cane.... It may be added here that recovery in some of these States is lower than the average of the country'. It would appear therefore that the Board took into consideration the special features of the sugar industry and all the relevant factors with great care and perspicuity and fixed a fair wage for the industry in each of the regions. What is was called on to, assess is the fair wage which as it may be noticed according to the Report of the fair wage Committee was that which whiledetermining the capacity of an industry to pay, it considered it to be wrong to take the capacity of a particular unit or the capacity of all industries in the country, into account. The relative- criterion should be the capacity of a particular industry in a specified region and as far as possible same wages should be prescribed for all units in that region. It will obviously not be possible for the wage fixation Board to measure the capacity of each of the units of an industry in a region, as such the only practical method is to take into consideration a fair cross section of that industry. This is what in fact the Board has don,--. The minimum wage that has to be paid is as interpreted by this Court in Express Newspapers (Pvt.) Ltd. v. the Union of India & Ors.(1) different from the subsistence wage "which has got to be paid to the workers irrespective of the capacity of the industry to pay while the minimum wage is something more than the bare mini- (1) [1959] S.C.R. 12. mum or subsistence wage. It further observed "The minimum wage thus contemplated postulates the capacity of the industry to pay and no fixation of wages which ignores this essential factor of the capacity of the industry to pay could ever be supported". In that case the Court also observed at page 90 : "that the capacity of an industry to pay should be gauged on an industry-cum-region basis after taking a fair cross section of that industry. In a given case it may be even permissible to divide the industry into appropriate classes-and then deal with the capacity of the industry to pay class-wise" the classification into classes, it will be seen is not an obligatory one but is required only in cases where otherwise a fair wage cannot be determined. Any injunction that the industry in a region Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 9 should in all cases be divided into classes in determining a fair wage for that industry would on the other hand likely to introduce greater disparity. A reference has been made to the case of French Motor CarCo. Ltd. v. Workmen(1) for the proposition that large units ought not be compared with small units even where the Board is considering the wage structure on industry-cum-region basis. No doubt in that case the Tribunal had gone into the history of the wage revision in the undertaking and having regard to- a large increase in the cost of living found that a case for further revision was made out notwithstanding the fact that wage scales were the highest in the industry. In Appeal this Court held that it was settled law that in fixation of wage scales, dearness allowance and similar conditions of servic an industrial Court has to proceed on industry-cum-region basis and compare similar concerns in the region which would be those in the same line of business as the concern in dispute. But such comparison must not be between a small struggling concern and a large flourishing one. These cases were considered in Worknen v. Bajrang Jute Mills(2) to which one of us was a party (Vaidialingam, J.). That case was considering the Report of the Jute Wage Board which in making recommendations for the industry adopted a different approach. The Wage Board took the whole of India. as one unit while in fact almost all the Jute Mills were situated in West Bengal and a few in Bihar and still fewer in Andhra Pradesh. What the Wage Board did was to compare 20 Mills from West Bengal and 9 mills from the rest of India as representing a fair cross section of the industry. The Respondents have a fairly small unit in Andhra Pradesh which was considered as a comparable unit with two larger mills in the State and with some of the prosperous Mills in West Bengal. The management of the Mill refused to accede to the demand of the workman (1) [1963] Supp. 2 S.C.R. 16. (2) [1969] 2 S.C.R. 593. to pay the wages in accordance with the recommendations of the Wage Board, fixing uniform wage scale for the industry on the plea that the Mill had no financial capacity to bear the burden of the wage scale' On the dispute being referred to the Tribunal it upheld the claim of the management. This Court in Appeal sustained the Award of the Tribunal that the payment of the workmen for implementation of the, recommendation of the Wage Board is not justified. In this connection at page 609-610 it was observed by reference to the manner in which the Wage Board had laid down uniform scales for the entire industry irrespective of where its several units were situate and of the different conditions prevailing in various areas, that it would have been better if it had "considered the units in each area separately and deter-' mined the wage-scales for each such area by taking from that area a representative cross.-section of the industry where possible or where that was not possible by taking comparable units from mother industries within that area, thus following the principle. of industry-cum-region". It was further observed : "It is true that in doing so uniformity of wage scales for the entire industry would not have been attained. But in a vast country like ours, where conditions differ often radically from region to region and even the index of living differs within a fairly wide range, such a target cannot always be just or equitable. If the wage scales had been Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 10 determined by the Board in the manner aforesaid, even though the Board is not a statutory body and consequently its decision are of a recommendatory character, it would be possible for industrial tribunals to give due weight to its recommendations as such recommendations would have been in conformity with the principle of industry-cum-region, a principle binding on the tribunals. It would be difficult in that event for any unit in the industry in that region to propound a grievance that its capacity to pay was not taken into account as the scales so framed would have been determined after taking into consideration scales prevailing in comparable units, whether in that industry or other industries in that region depending on whether in a particular area the accent was on the in- dustry part or the region part of the principle of industry-cum-region". The learned Advocate for the Appellant lays stress upon the observation contained at page 607 where while dealing with the Express Newspapers case, this Court had observed : the requirement of considering the capacity of each individual unit to pay may not become neces- sary if the industry is divided into different classes. Even if the industry is divided into different classes it will AM be necessary to consider the capacity of the respective, classes to bear the burden imposed on them. For this purpose a cross-section of these respective classes may have to be taken for careful consideration for deciding what burden the class considered as a whole can bear". These observations must be read in the light of what was earlier stated namely "as the Wage Board was fixing a fair wage for the entire jute industry it may not have been strictly necessary to consider the financial capacity of each individual unit". There is nothing in the Bajrang Jute Mills case(1) which makes it obligatory on a Wage Board to divide the industry into regions as well as classes or to examine the financial capacity of every unit in that industry in the region, irrespective of the conditions prevailing in the different regions of that industry. As long as all relevant factors appertaining to that 'industry, industry-wise and region-wise have been considered and the capacity of a fair cross section of that industry to pay in that region has been ascertained, ,the recommendations of the Wage Board cannot be held to be invalid. It is not in every case that a division into classes in the same region, on a unit-wise capacity should be made before re- commendations of the Wage structure, dearness allowance or other conditions of service in that industry could be held to be fair and within the financial capacity of the industry in that region. The criteria on which the recommendations of the Jute Wage Board were held not to be in accordance with the principle laid down by this Court in Bajrang Mills case do not form the basis of the recommendations of the Sugar Wage Board. The Sugar Wage Board not only divided the industry into regions as already pointed out but on the other hand found that there was no great disparity in the region nor did the size of the unit make any difference. It standardised the wage structure, it adopted a standardisation of nomenclature by taking note of the various nomenclatures used in the industry and Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 11 defined the qualification for each of the categories. The predominant conditions for wage structure which weighed with the Board were that firstly in view of the great unemployment nothing should be done to reduce the existing employment but on the other hand efforts should be made to increase it. Secondly the need for increase in production was paramount and any action likely to reduce it should be studiously avoided as far as possible. Thirdly the capital should not be idle for if a wage structure is evolved which leads to the closure of any unit or units, a number of persons will be thrown out of employment, production will be (1) [1960] 2 S.C.R.595 reduced and capital invested in them will become idle. Keeping these considerations in view the Board determined the wage Structure which it recognised may be lower than norms laid down by the Fifteenth Labour Conference but the fact that there is a tremendous rush for employment in factories is proof that the wages recommended by it are higher than the rates fixed under the minimum Wages Act in industries to which that Act applies or those prevailing in the open market. It also took into consideration the economic units in the regions which as accepted by it is a unit having a crushing capacity of atleast 800 to 1000 tons thought it has noted that the majority of sugar factories have a crushing capacity higher than this and several of those having uneconomic size have already applied for expansion. According to the Board there were only 38 factories which were below 800 tons crushing capacity but a good many of them were making profits. However, there are some which are running at loss and for them the Board recommended that some consideration should be given to adjust themselves which should be the same as these given to new factories. This is what the Board stated in Chapter XIII at page 111 : "The conclusion is that except some cases other units below 800 tons are making profits. The examination is set out in the Annexure to this Chapter. The Board is of the view that relaxation in wages is not the real remedy for those uneconomic units. They will have to fall in line with the scheme of wages recom- mended by the Board. The real remedy for them is to expand themselves into economic units". It would therefore appear that the Wage Board following the principles laid down by this Court has considered the capacity of the industry region-wise and has also fixed wages different from region to region having regard to the difference in the capacity of the industry region-wise. Further it has given good reason for not furnishing a criteria for further classification of the industry within the region. In these circumstances prescribing the same wage for all units of industry in the same region is in our view justified and the fact that the industry in the region has not been divided into classes cannot vitiate the recommendations of the Wage Board. It is contended on behalf of the Appellant that while this is so and the wage fixed is a fair wage for the industry in that region and cannot be challenged nonetheless the Tribunal is not precluded from considering a plea by any particular unit that in fact its financial position is such that it cannot bear the burden of implementing the recommendations of the Wage Board. The learned Advocate for the Respondents however, counters this on the ground that once a wage has been fixed by the Board as a fair wage on industry-cum-region basis, whether those recom- mendations are statutory or otherwise, no plea by any individual unit that it has not the capacity to implement the Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 12 recommendations, can be entertained. He asks whether an Industrial Tribunal to which a dispute regarding the fixation of wage is referred fixes a wage structure, is it open to any particular unit to say that it is unable to pay ? If this is not so, on the same parity of reasoning it is contended that no unit in a region can be permitted to plead that it has not the financial capacity to implement the Wage Board's recommendations. It appears to us that if in law it, is open to the unit to plead financial inability to implement the recommendations of the Wage Board the hypothesis on which the question has been posed will not be relevant because in such a contingency as is envisaged there would be a specific issue and a determination of the wage structure by the Tribunal will be on the evidence produced before it according to the financial capacity of the unit. Once this is finally determined, the unit cannot continue to assert that it has no financial capacity to implement the Award. In our view there is warrant for the submission of the learned Advocate for the Appellant that notwithstanding the fact that a fair wage has been fixed by the Board which would be applicable to all the units in the region for which wage has been fixed, it may be open to any particular unit to plead that in fact its financial position is not such that it can bear the burden of implementing the recommendations. In Ahmedabad Mill Owners' Association etc. v. The Textile Labour Association(1), the observations of this Court at page 421 lend support to our conclusions. Gajendragadkar J, delivering the Judgment of this Court observed at page 421 "The other aspect of the matter which cannot be ignored is that if a fair wage structure is constructed by industrial adjudication, and in course of time, experience shows that the employer cannot bear the burden of such wage structure, industrial adjudication can, and in a proper case should, revise the wage structure, though such revision may result in the reduction of the wages paid to the employees. It is true that normally, once a wage structure is fixed, employees are reluctant to face a reduction in the content of their wage packet but like all major problems associated with industrial adjudication, the decision of this problem must also be- based on the major consideration that (1) [1966] 1 S.C.R. 392 the conflicting claims of labour and capital must be harmonised on a reasonable basis; and so, if appears that the employer cannot really bear the burden of the increasing wag.-, bill, industrial adjudication, on principle, cannot refuse to examine the employer's case and should not hesitate to give him relief, if it is satisfied that if such relief is not given the employer may have to close down his business. It is unlikely that such situation would frequently arise but, on principle, if such situations arise, a claim by the employer for the reduction of the wage structure cannot be rejected summarily". Of course the justification of the plea of want of financial capacity will depend upon the evidence of its financial position over a period of years, to show that it cannot bear the burden or that it is only a temporary or fortuitous situation with every possibility of financial improvement in the immediate future. It is accordingly contended that an examination of the financial position would show that the Appellant is not in a position to implement the recommendations and that even the Tribunal had recognised this position when it refused to implement an increase of Rs. 10/- to all the workers over the basic wage and' dearness allowance, and Rs. 5/- as weightage to certain categories of workers. It would appear from the statement of the, Company as evidenced by Ex. M. 51 that it had secured and unsecured debts for each of the four years as follows Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 13 ---------------------------------------------------------- Debts Debts secured unsecured ----------------------------------------------------------- Rs. Rs. 1960-61 73,59,3448,13,263 1961-62 67,78,2702,64,982 1962-63 32,31,43828,06,000' 1963-64 32,99,59918,71,522 --------------------------------------------------------- 207,68,651 57,55,767 ----------------------------------------------------------- The details of debts would show that they are far in excess of the paid up share capital and even taking the profit and development rebate reserves and other reserves into account the financial position of the Company is certainly bad. A reference has also been made to the notices issued by the Revenue Divisional Officer, Ex. M. 53 for showing that on 30th December 1962, a sum of Rs. 15,91,777-11 ps. was due towards Sugar cane cess for 1958-62 and a sum of Rs. 11.66, 718.37 ps. towards cane price in accordance with the details given thereunder. Subsequently it would appear from Ex. M. 53/1 that notices under Sec. 53 of the Revenue Recovery Act were also issued by the Revenue Divisional Officer, Kakinada for the recovery of these amounts. There were also other notices and a press note published in the Indian Express showing that the Government was going to auction the Sugar Mills for recovering its dues. The Minister concerned is reported to have said that its Department was taking action to collect its dues as arrears of land revenue. It is on the other hand contended that the Appellant's unit is an economic unit and has been expanded into a 1000 ton unit in 1956 and there is nothing to show thereafter what its financial ,position was. In any case the profit and loss figures for the four years starting with 1960 would indicate that there was loss only in one year whereas in all the other three years there was profit and from this we are asked to conclude that the Appellant company was in a sound financial position. No doubt any unusual profits or losses in any year due to advantageous circumstances should not be allowed to cloud the decision one way or the other. In Ahmedabad Mill Owners Association case it was observed at ,page 420-421 as follows "It is a long-range plan; and so, in dealing with this problem, the financial position of the employer must be carefully examined. What has been the progress of the industry in question; what are the prospects of the industry in future; has the industry been making profits; and if yes, what is the extent of profits; what is the nature of demand which the industry expects to secure; what would be the extent of the burden and its gradual increase which the employer may have to face ? These and similar other considerations have to be carefully weighed before a proper wage structure can be reasonably constructed by industrial adjudication, vide Express Newspapers (Private) Ltd., and Another v. Union of India & Others. Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 14 Unusual profit made by the industry for a single year as a result of adventitious circumstances, or unusual loss incurred by it for similar reasons, should not be allowed to play a major role in the calculations which industrial adjudication would make in regard to the construction of a wage structure. A broad and overall view of the financial position of the employer must be taken into account and attempt should always be made to reconcile the natural and just claims of the employees for a fair and higher wage with the capacity of the employer to pay it; and in determining such capacity, allowance must be made ,for a legitimate desire of the employer to make a reasonable profit". Bearing these observations in mind, it is necessary to determine what the position of the Appellant is ? The conclusion of the Tribunal in respect of the claim for increase of Rs. 10/- is that having regard to the balance- sheets ",the profits made in the 4 years are about Rs. 4 lakhs and the loss sustained in 1962-63 is of Rs. 16 lakhs and after wiping it off to some extent by sale of debentures it is about Rs. 9 lakhs. This will show that the financial position of the concern is not satisfactory". After noting that except for this one year the concern has always been making profits, it went on to observe : "Still, to judge the financial position of a concern, it is always relevant to see what are its reserves. It appears from the balance- sheet that the reserves have never risen beyond Rs. 8 lakhs or so. In the circumstances, it appears to me that it will be difficult to hold that the financial position of the Company is sound. 1, therefore, agree with learned Advocate, that it has not the financial capacity to implement this increase of Rs. 10/- over and above the fitment in the grade recommended by the Board. I hold accordingly". The comment of the learned Advocate for the Respondent is that these losses did not preclude the management from accepting the recommendations of the Wage Board and willingly agreeing to its implementation. In a letter dated the 18th December '61 to the President of the Workers Union, the Management stated that as per their talks on 10th December '61, it accepts the implementation of the Wage Board recommendations and will pay from December '61 onwards salary as per fitments made by it. Final figures and fitments will be made after the Government Tripartite Committee comes and discusses with it and the Union and arrives at a decision. It also promised to pay the difference in the wage as per wages paid till the month of November 1961 and the Wage Board fitments as made by them will be paid to the workers before the end of March 1962. Again in the agreement between the Management and the employees under see. 18(1) of the Industrial Disputes Act dated 19-9-63 it was Specifically stated that "the question of fitments will be taken up as per the Sugar Board's recommendations in the month of January 1964 and finalise before the end of the 1963-64". Even at that stage it was never the case of the Management that the Wage Board's recommendations could not be implemented. Even the new management in its letter of September 5, 1964 addressed to the Union (Ex. W. 36) stated: "With a view to arrive at an amicable settlement with regard to fitments a discussion had taken place between the members of the Tripartite Committee constituted by the Commissioner of Labour and it was agreed during the discussions among other matters, that 10-LI340 Sup. CI/71 (1)Wherever there is a standard nomenclature in the Wage Board Report corresponding to the previous designation held by an individual before November 1960, he will be given that designation provided the duties and responsibilities of the individual are similar to the duties assigned by the Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 15 Wage Board. (2)In other cases, where no standard nomenclature can be applied to the existing cadre, the cadre will be fixed with reference to duties and responsibilities and the time scale of pay attached to the cadre in factory before November 1960". From the several exhibits it would appear that both old and the new management were anxious to implement the Wage Board's recommendation but according to the fitments made by it. But the employees as represented by the Workers Union were not prepared to accept those fitments and wanted fitments in a higher cadre and other advantages according to their reading of the Wage Board's recommendations which the management felt, it is not able to accommodate not only because those recommendations did not justify it but on the ground of financial incapacity. No doubt it is for the management to show what its financial position is and how it is going to place undue or impossible burden upon it to implement the recommendations. That burden it seeks to discharge by production of the balance- sheets which have not been challenged and the contents of which are, therefore deemed to have been accepted. We find from the balance sheet and the Directors Report for the period ending 30-6-60 that a sum of Rs. 6,15,254/- had to be written off against the old losses leaving a balance of Rs. 40,774/- in the profit and loss account. The Directors thought that the Company's financial position has now been stabilised and all the old losses have been wiped off but that hope was only short lived as the subsequent balance- sheets for the period ending 30th June '61 would show. According to the report for 1961 though there was a net profit of Rs. 1,08,005/- which together with the carry forward profit of the previous year of Rs. 40,774/- amounted to Rs. 1,48,779/- and after making provision for reserve for development rebate of Rs. 38,788/- a balance of Rs. 1,09,991/- was ,carried forward to next year's account. For that year no dividends were declared and the Managing Agents also waived their remuneration. For the year ending 30th June 1962, the position is more or less the same-the net profit for the year amounted to Rs- 30,616/- which together with the profits of the previous year of Rs. 1,09,991/- amounted to Rs. 1,40,607/-. This amount was again recommended by the Directors to be carried forward for the next year. No dividend was declared and the Managing Agents also waived their remuneration. In 1963 the position had become critical the loss incurred was Rs. 16,12,196 which wiped out the previous year's profits. There was no question of declaration of any dividends but Managing Agent's remuneration of Rs. 30,000/- (minimum) was drawn. These losses would have the effect of eating into the capital of the Company, unless it could borrow and tide over them. In the year ending 30th June '64 a loss of Rs. 6,61,386/- was carried forward to next year. It may be noted that in that year in June 1964 the Government of India had approved the change in the Constitution of the Managing Agency of the Company and it is stated that because of the efforts of the new Management who borrowed large sums on their personal security for putting the Appellant in better shape, large sums were in fact advanced to the Appellant. As could be seen from the statement M. 51 that for the years 1960-61, 1961-62, 1962-63 and 1963-64 the Secured and un- secured debts were approximately Rs. 81 lakhs, Rs. 70 lakhs, Rs. 61 lakhs and Rs. 51 lakhs respectively. It is stated that the losses were coming down and therefore the financial position is getting better but in our view this by itself does not mean that ,the Company is in a sound financial position. What was happening evidently is as suggested by the learned Advocate for the Appellant that the Sugar stocks pledged were being sold Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 16 and therefore the debts were getting less. It is no doubt true that attachment orders which were made in 1962 must have been paid off and the attachment withdrawn. That again is not an indication of the soundness of its financial position because there is evidence to show that the new management had to secure a large loan of about Rs. 30 lakhs on its personal security to pay these demands and that is why Rs. 16 lakhs loss is paid off and hence in the year 1962-63 the unsecured debt is shown as Rs. 28 lakhs. The Tribunal was therefore justified in coming to the conclusion that the Company was not in a sound financial position to implement the recommendations of the Wage Board- to increase Rs. 10/- on the basic wage and the dearness allowance or Rs. 51- as weightage. Apart from these losses the general reserves are very negligible. Each year about Rs. 3,000/- is being provided for. In all Rs. 8 lakhs reserves were accumulated from its inception which is not very encouraging. While this is so having regard to its working we had called for the balance-sheets subsequent to 1964-65 to assess the financial prospects of the Appellant during this period. These reveal the following position The balance-sheet for the year ending 30-6-65 Showed a profit of Rs. 12,72,126/- before depreciation. After deducting Rs. 5,25,545/- towards depreciation and Rs. 1,16,138/- as reserve towards development rebate and after adjusting the loss brought forward from last year, a loss of Rs. 30,943/- was carried forward to the next year. The balance-sheet for the year ending 30-6-66 showed a pro- fit of Rs. 3,23,789/-. After setting apart depreciation a sum of Rs. 2 .27,942/- was the loss carried forward and in the balance sheet for the period ending 30-6-67 there was shown a loss of Rs. 5,10,771/- and after providing for depreciation there was a loss of Rs. 9,90,526/-. It may also be noticed that in the year of account the Company had to provide a sum of Rs. 2,16,353/towards additional cane price payable to the cane growers for the seasons 1958-59 and 1959-60. After allowing for this there was a total loss of Rs. 14,23,505/- which was carried forward ,to the next year. In the balance-sheet for the year ending 30-6-68 there was a gross profit of Rs. 13,22,932/- and after providing for depreciation and adjustment of loss brought forward there was a balance, of loss of Rs. 5,93,620/- carried forward to the next year. The year ending 30-6-69 was one year in which dividend of 7.15% was paid on the 5- 1/2% income-tax Free Cumulative Preference shares. The profits for the year after adjusting all the losses and providing for depreciation, payment of bonus to staff and taxation it showed a balance of Rs. 2,27,430/- out of which dividend was declared as aforesaid. For the year ending June '70 there was again a loss of Rs. 5,96,913/- after providing for depreciation. The Directors explained this loss due mainly to high rates of interest charges, provision for depreciation and the passing on of the entire realisable profit on 1968-69 season production for the benefit of the cane growers in that year. The balance-sheets for the years 1960 to 1970-for a period of 10 years show that except for the year ending 30-6-69 the Company was not in a position to declare any dividends. ,Though the factory appears to have been expanded after 1964 to 1300 tons capacity it did not show uniform net profits; on the other hand losses continued. The profits that it made in any year seem to be consumed by losses of the previous years. In some years the yield of cane seem to be slightly over 100% the average being a little over 9% which no doubt is encouraging but in spite of it there are various factors which seem to contribute to its financial unsteadiness. Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 17 This being the position we think that the Tribunal was justified in holding that the Appellant did not have the financial capacity to bear the burden of payment of Rs. 10/- increase and Rs. 51- as weightage in accordance with the recommenda- tions of the Sugar Wage Board. On this conclusion and also on an examination of the relevant material it is evident that the Company is not in a financial position to meet the burden of implementing the recommendations of the Wage Board. The claim of the Respondent for categorisation and fitment in accordance therewith cannot in the circumstances be accepted. The Appeal of the Respondents which challenges the Award of the Tribunal rejecting their claim, for an increase of Rs. 10/and a weightage of Rs. 5/- and for the categorisation and fitments in respect of the heirarchy of supervising category namely Assistant Cane Organisers, Liaison Field Supervisors and Field Supervisors as also in respect of Head Panman, and Panman Incharge of shift, Panman, Asstt. Panman, Bench Chemists and Cane analysists and Canteen Supervisor are all dependent upon the financial capacity of the Respondent Company to implement the Wage Board's recommendations which we have held it has not. As stated earlier the Company which is the Appellant in Civil Appeal No. 1602 of 1966 has already implemented the Award of the Tribunal in respect of a large number of workers both as to categorisation and fitment. It is in respect of fitment of only four categories that it has not implemented, namely Welders, Turbine Engine Drivers, Switch Board Attendants and Boiler Mason's that the Appellant has objected to the award on the ground that the Tribunal has acted without evidence and in some cases contrary to the recommendations. The learned Advocate for the Respondents felt that he could not really challenge the contention in respect of the Switch Board Attendants and Turbine Engine Driver, as it would appear that the Tribunal has acted without any evidence. Why we have referred to these specific cases objected to by the Company in their Appeal is to indicate that, notwithstanding the finding that the Wage Board's recommendations in the circumstances, cannot be implemented, the Company has given effect to the Tribunals Award, which will remain in force till a revision takes place. In the view we have taken the Appeal of the Appellant is allowed subiect to the above directions and that of the Respondents dismissed. We make no order as to costs. G.C. Appeal No. 1602 of 1966 allowed, Appeal No. 1603 of 1966 dismissed. Management Of The Kirlampudi Sugar ... vs Industrial Tribunal, A.P. & Anr on 26 August, 1971 18 | {
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Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 Equivalent citations: 1971 AIR 1920, 1971 SCR 6, AIR 1971 SUPREME COURT 1920, 1972 4 SCC 188 1972 (1) SCJ 129, 1972 (1) SCJ 129 Author: J.M. Shelat Bench: J.M. Shelat, C.A. Vaidyialingam PETITIONER: REGINA Vs. RESPONDENT: ST. ALOYSIUS HIGHER ELEMENTARY SCHOOL & ANR. DATE OF JUDGMENT16/03/1971 BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. VAIDYIALINGAM, C.A. CITATION: 1971 AIR 1920 1971 SCR 6 1972 SCC (4) 188 ACT: Madras Elementary Education Act (8 of 1920), s. 56(2) (h) and Part II, Rules--If statutory Rules or administrative instructions--Purpose of Rules--Right of teacher against management of Elementary School--If governed by contract or Rules. HEADNOTE: The appellant, who was working as the Headmistress in the respondent school was reduced to the position of an Assistant Teacher. Her appeal to the District Educational Officer under. 13(2)(vi) of Part 11 of the rules published by the State Government in the Gazette on August 29 1939, was rejected, but on a further appeal by her to the Divisional Inspector of Schools, the management of the school was directed to restore her to the position of Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 1 Headmistress. As the management did not do so, she filed a suit for the issue of a mandatory injunction to the respondent and for damages. On the question whether the rules under which the appeal was filed and the order was made were only administrative instructions by the Government to its educational officers and not statutory rules which would give rise to a remedy enforceable at law at the instance of an employee of a school aggrieved against the management, HELD: (1) Section 56 of the Madras Elementary Education Act, 1920, authorized the Government to make rules to 'carry out all or any of the purposes of this Act', and under sub- s. 2(h) for declaring the conditions subject to which schools may be admitted to recognition or aid, and rules were framed in 1922. The Act was amended by Amendment Act of 1939, by which Chs. 11, IV, VI and s. 55 were deleted. The existing rules therefore could not be continued as they could not be regarded as rules for 'carrying out the purposes of the Act.' Hence they were reframed and published in the Gazette in 1939 in two parts. [13F, H; 14D]. (a) The first part contained rules dealing with matters provided for in the various sections. The rules in Part II could not refer to any section because, they related to matters such as recognition and aid dealt with in sections and Chapters which were repealed by the 1939-amendment, and hence, Part II rules did not set out or refer to any section of the Act. [14E]. (b) The rules in Part I were headed 'Rules framed under the Madras Elementary Education Act, 1920', but the Rules in Part 11 were not given any such heading or title. [14F]. (c) There was no previous publication of the rules in Part 11 as required by s. 56(1). [14F-G]. (d) The rules in Part 11 could not be claimed to have been made under s. 56(2) (h) dealing with the conditions subject to which schools may be admitted to recognition or aid, because they did not satisfy the condition precedent for such rule-making, namely, that they could be made only 'to carry out all or any of the purposes of the Act', [16D-F]. 7 Therefore, the rules in Part 11 could not be said to be statutory rules framed under s. 56. [16F] (2) But the Government had the power de hors the Act to lay down conditions under which it could recognise and grant aid. To achieve uniformity and certainty in the exercise of such executive power and to avoid discrimination, Government could frame rules which would however only be administrative instructions to its officers. [17B-D] The rules in the present case, relating to recognition and aid, thus governed the terms on which Government would grant recognition and aid and Government could enforce the rules on the management by the denial or withdrawal of such recognition or aid, if there was a breach or noncompliance of the conditions laid down in the rules. But the Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 2 enforcement of such rules was a matter between the Government and the management, and a third party, such as a teacher aggrieved by same order of the management, could not derive from the rules any enforceable right against the management on the grounds of a breach of or non-compliance with any of the rules. [17D-E; 19B-C] (3) The relation between the management of the elementary school and the teachers employed in it would be governed by the terms of the contract of employment and the law of master and servant in the absence of any statute or statutory rules controlling or abrogating such a contract and providing to the contrary. [16F-G] The result is that the relations between the managements and the teachers even in a recognised elementary school have to be regarded as being governed by the contracts of employment and the terms and conditions contained therein. Part II Rules, which cannot be regarded ,is having the status of statutory rules made under s. 56 cannot be said to have the effect of controlling the relations between the management of a school and its teachers. [16H; 17A-B] Therefore, the appellant could not be said to have had a cause of action for enforcing the directions given by the Divisional Inspector to restore her as the Headmistress in the appeal filed by her. Appeals against orders passed by the management against a teacher are provided for under r. 13 so as to enforce the satisfaction of conditions under which recognition and aid would be granted or withdrawn, and not for regulating as between the teacher and the management, the relations of master and servant arising under the contract of employment. [18B-C] Chandrasekharan Nair v. Secretary to Government of Kerala, A.I.R. 1965 Ker. 303, A. Ramaswami Ayyangar v. State of Madras, (1962) 1 M.L.J. 269, and Moss. v. The Management, (1970) 2 A.W.R. 157, approved. Govindaswami v. Andhra, (1962) (1) An. W. R. 283, overruled JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 500 of 1966. Appeal by special leave from the judgment and order dated July 27, 1965 of the Mysore High Court in Second Appeal No. 235 of 1960. B. R. L. Iyengar and E. C. Agrawala, for the appellant. R. Gopalakrishnan, for the respondent. The Judgment of the Court calling for a report was delivered by Shah, J. The appellant was appointed on April 10, 1949, HeadMistress of St. Aloysius Higher Elementary School, Urva then in State of Madras. On June 1, 1955, the Manager of the School reduced her to the post of an Assistant Teacher. Her appeal to the District Educational Officer, South Kanara, against the action of the Manager was rejected. In second appeal, the Divisional Inspector of Schools, Coimbatore, by order Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 3 dated July 5, 1956, allowed the appeal and directed the District Educational Officer to issue instructions to the Management of the School to reinstate the appellant as Head Mistress. But no effect was given to that order by the Management. On June 26, 1957, the appellant filed the suit out of which this appeal arises claiming a, mandatory injunction directing the Management of the School to reinstate her to the post of Head Mistress and damages for loss resulting from the wrongful action of the Management. It was the appellant's case that the school was receiving grantin-aid from the Government of Madras and was subject to the supervision and control of the Education Department of the Government of Madras, and since the reorganization of the States, of the Mysore Government of the affairs of the school, said the appellant, were conducted according to the rules and regulations framed by the Government and embodied in the rules relating to the elementary schools framed under the Madras Elementary Education Act, 1920, and on that account the order passed by the Manager removing her from the post of Head Mistress stood vacated, and refusal of the Manager to reinstate her was illegal, because the Manager was bound by rr. 13 & 14 framed under the Madras Elementary Education Act to obey the order passed by the Divisional Inspector of Schools on an appeal preferred by her. The suit was resisted by the Management. They contended that they were not bound by the Madras Elementary Education Act or the rules framed thereunder; that the Manager alone was responsible for the "efficiency, strength and progress" of the school and for the internal discipline, which were all matters left to his discretion and the Management could not be compelled to reinstate the appellant as Head Mistress when she did not command their confidence. The Trial Court held that the appellant was not entitled to claim reinstatement as Head Mistress, because the action of the Management removing the appellant's from the post of Head Mistress was not illegal. The Trial Court also held that the orders passed by the Educational authorities were not binding on the Manager and the action taken by the Manager "though severe", could not be declared illegal. In appeal the District Court reserved the Judgment passed by the Trial Court and decreed the appellant's suit and issued a mandatory injunction directing the Management of the School to reinstate the appellant as Head Mistress of the School. Against that decree a Second Appeal was preferred to the High Court of Mysore. The High Court reversed the decree passed by the District Court and ordered that the appellant's suit do stand dismissed. Against that order this appeal is preferred with special leave. The principal question which fell to be determined before the High Court was whether the rules framed under the Madras Elementary Education Act, 1920, which conferred authority upon the educational authorities of the State, were statutory and enforceable at the instance of a person prejudicially affected by breach thereof. The Madras Elementary Education Act 8 of 1920 which originally contained 56 sections has been amended from time to time by Madras Acts 2 of 1932, 2 of 1934, 11 of 1935, 13 of 1938, 2 of 1939, 15 of 1951, 28 of 1943, 8 of 1946 and 23 of 1950. As a result of these amending Acts a large number of the provisions of the Madras Elementary Education Act, 1920, have been modified or repealed. Section 41 which provided for the recognition of elementary schools and S. 42 which provided for admission of elementary schools to grant-in- Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 4 aid, stood repealed by Act 2 of 1939. By s. 56 the State Government was authorized to make rules not inconsistent with the Act to carry out all or any of the purposes of the Act, and by sub-s. (2) of s. 56 it was provided : "In particular and without prejudice to the generality of the foregoing provisions they may make rules- (f) laying down the registers, statements, reports, returns, budgets and other information to be maintained or furnished by local authorities, by panchayats, and by managers of elementary schools under private management and the time within which any statement, report, return, budget or other information shall be furnished; (h) declaring the conditions subject to which schools may be admitted to recognition or aid." Rules were framed under the Act for the first time by the Govt. of Madras in 1922. These rules provided for the grant of recognition and aid to elementary schools, and for prescribing conditions of service and qualifications of teachers and the authority of the District Educational Inspector and higher authorities. The provisions relating to the recognition of the elementary schools and admission of primary elementary schools to grantsin-aid were, as stated earlier, repealed by Act 2 of 1939, but the power to frame rules, especially for the purpose of declaring the conditions subject to which schools may be admitted to recognition or aid, was retained. It also appears that even after Act 2 of 1939 which repealed Ch. IV was enacted, rules relating to the power of the Educational authorities were republished on August 29, 1949, and Part II of the Rules dealt with matters relating to recognition of schools and grant-in-aid. In the view of the High Court, after repeal of ss. 41 & 42 of the Act, those rules could only have effect as executive instructions. On this question it appears that there has been some difference of opinion in the High Courts. A Full Bench of the Kerala High Court in Chandrasekharan Nair and others v. Secretary to Govt. of Kerala and others,(1) approving their earlier judgment in Joseph Valamangalam v. State of Kerala(1) held that the rules contained in Part II headed "Rules for grant of recognition and aid to Elementary Schools" framed under the Madras Elementary Education Act, 1920, were mere executive directions having no statutory authority. The High Court of Andhra Pradesh in Jalli Venkatswamy V. The Correspondent, Kasturiba Gandhi Basic Senior School kenetipuram(3) was apparently of the view that these rules had statutory operation. The High Court of Madras in A. Ramaswami Ayyangar v. State of Madras (Education Department)(1) held that the rules were administrative and not statutory in their effect, and the management could dispense with the services of its employee (a teacher) after giving three months' notice in the usual course, without assigning any special reason, and the employee could not invoke the aid of the Court for an order to quash the proceedings of the management dispensing with his services on the ground of non-compliance with those rules. (1) A. I. R. 1961 Kerala 303. Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 5 (3) A. I. R. 1961 A. P. 178. (2) A. I. R. 1958 Kerala 290. (4) A. I. R. 1962 Mad. 387. In this case, the question whether an. order made by the Educational authorities in exercise of the powers conferred upon them by rules is liable to be enforced by action in a civil court at the instance of s person affected by the action of the school authorities falls to be determined. It is unfortunate that counsel have not been able to place before us the Act, and the rules in force at the material time. Counsel appearing at the Bar are also unable to inform us about the authority in the exercise of which the rules were originally framed and were reissued after the repeal of Ch. IV of the Act. Before we can decide this appeal, we must have before us a copy of the relevant rules in force at the material time, and evidence about the authority under which the rules were framed and continued, the sanction behind the enforcement of the rules, if any, and the manner in which the rules were being administered by the Madras Government and thereafter by the State of Mysore when the District of South Kanara merged with that State under the States Reorganization Act, 1956. We direct that the papers be sent down to the Trial Court and that the Trial Court do report to us after taking evidence on the questions set out earlier. The Trial Court may, if so advised, issue a summons to the Educational authorities of the State of Madras or take other steps to ensure production of the documents bearing on the questions on which report is directed to be made. Enquiry may especially directed to the question whether the State of Madras, or the state of Mysore, have on any earlier occasion enforced the orders passed by the Educational authorities in appeals and the power in exercise of which they have been enforced. The Trial Court to submit the report within six months from the date on which the papers reach that Court. The judgment of the Court after receipt of the report was delivered by Shelat, J.- Prior to June 1, 1955, the appellant was working as the Head Mistress in the respondent school. On April 22, 1955, the management of the School served certain charges on her and called upon her to reply to the same. Her reply was found to be unsatisfactory, and thereupon, by an order passed by the management on June 1, 1955 she was reduced to the position of an Assistant Teacher. She thereafter filed an appeal against the management before the District Educational Officer, South Kanara. Her appeal was rejected. A further appeal by her before the Divisional Inspector of Schools, Coimbatore, succeeded and the Divisional Inspector directed the management to restore her to her original position as the Head Mistress. The management declined to do so and she filed the suit from which this appeal arises. The suit was on the basis: that since the school had obtained recognition and grant-in-aid under the Madras Elementary Education Act, VIII of 1920, and the rules made therefore by the Government, it was under the supervision,first of the Education Department of the Madras Government,and. after reorganization of States, that of the Mysore Government. According to her, the Act and the said rules were binding on the school and gave her a right to enforce against the management the said order of the Divisional Inspector. The order reducing, her to the position of an assistant teacher stood vacated by the order of-the Divisional Inspector and the respondent school, therefore, was bound to comply with that order and restore her to the position of the Head Mistress, The management contested the suit, maintaining that the order of reduction passed by it was within its Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 6 power, that there was nothing in the Act or the rules which warranted any interference with its right of internal management of the school and gave no right to the appellant to enforce in, a court of law the order passed by the Divisional Inspector, that order being only a matter between the Education Department and the management. The Trial Court accepted the school's contention and dismis- sed the suit. In an appeal against that dismissal, the District Judge took a different view and held that the order of the Department was legally enforceable by the appellant since it was passed in an appeal provided by the said rules. He set aside the dismissal of the suit and passed a decree in favour of the appellant. On a second appeal by the school, the High Court went into the legislative history of the Act and on an examination of the rules accepted the contention of the management that the relations-hip between the parties was that of master and servant and no mandatory injunction could be issued directing restoration of the appellant as the Head Mistress as that would be tantamount to specific performance of a contract of personal service not permissible under s. 21(b) of Specific Relief Act, 1877. The High Court also held that the rules, under which the appellant had filed the said appeal and the said order was made, were only administrative instructions by the Government to its educational officers and not statutory rules which would give rise to a remedy enforceable at law at the instance of an employee of a school aggrieved against its management. Against this judgment, the appellant obtained special leave from this Court and filed this appeal. The appeal first came up for hearing in March 1970 before Shah, J. (as he then was) and Grover, J. Not satisfied with the record before them, the learned Judges postponed the hearing of the appeal and called for a report from the Trial Court on certain matters found wanting in the record, In accordance with that order, the Trial Court took additional evidence, both oral and documentary, and dispatched its. report along with a copy of the rules, the Madras Gazette in which they were published and certain other materials. From; those materials as also from the judgment of the Kerala High Court reported in Rev. Fr. Joseph v. Kerala(1) it is possible to, trace the charges which the Act and the rules have undergone from time to time. Such a legislative, history of the Act is important to a certain extent as it throws light on the character of the rules and the power under which they were framed from time to time. Counsel for the appellant urged that in spite of the changes made from time to time in the Act, the rules with which we are concerned in this appeal have retained their original character of being statutory rules., They must, therefore, be, held to have been made under s. 56 and particularly under cl. (h) of its sub-s. (2), which empowers the Government to make rules in respect. of recognition as an elementary school and the aid which the Government gives to it from public funds. The argument was that despite the changes in the Act, particularly the deletion of certain provisions of the Act, to which we shall presently come, the definition of an 'elementary school' in the Act takes in schools recognised by the Director of Public Instruction of the State Government, and since such a recognised school is the essence of the scheme of elementary education provided by the Act, the rules have to- be treated as statutory rules made,under, cl. (h) of s. 56(2) which is still retained in the Act. Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 7 Before we proceed to. consider these contentions it is necessary to examine briefly the Act and its legislative history. The Act was, first passed as Madras Act, VIII of 1920, and then contained seven chapters with 56 sections. It underwent several changes. from, time to time, and particularly when the Madras Elementary Education (Amendment Act. II of 1939 was passed by which Chapter II, IV, VI and s. 55 in Ch. VII. were deleted. The Act was passed with the object of making better provisions for elementary education and envisaged imparting of such education through elementary schools, including those run by private managements, but recognised by the Government through its Education Department. Sec. 3(vi) of the Act defines such an elementary school as one recognised by the Director of Public Instruction or by such authority as may be empowered by him in that behalf. sec. 56 authorized the Government to make rules not inconsistent with the provisions of the Act "to carry out all or any of the purposes (1) A. I. R. 1958 Kerala 290. of this Act", and in particular cl. (h) of sub-s. (2) for "declaring the conditions subject to which schools may be admitted to recognition or aid." Ch. II, before its deletion in 1939, provided for the constitution of District Educational Councils, their duties, their funds, budget and audit. Ch. VI, by ss. 41 to 43 in it, dealt with recognition of schools and admission of private managed schools to grant-in-aid. These chapters, as stated earlier, were repealed in 1939. The Rules were first framed in 1922 under S. 56 and contained provisions regarding recognition and aid. These Rules were clearly statutory rules. Curiously, although Chs. 11 and IV were deleted in 1939, cl. (h) of s. 56(2) was allowed to remain in the Act. It appears that the rules regulating recognition and aid were framed in 1922 because so long as Chs. 11 and IV were in the Statute, they had to be made to implement the purposes set out in those chapters. But with the repeal of those chapters, those Rules could not be continued as they could no longer be regarded as rules for carrying out the purposes of the Act as S. 56(1) enjoins The Madras Government appears to have appreciated such a re- sult arising from the repeal of those chapters and therefore, reframed the rules and published them in the Gazette of August 29, 1930. The new Rules were divided into two parts. The first part contained rules dealing with matters provided for in ss. 3(i)(v) and (viii), S. 36(1) and (2), S. 44, S. 48, S. 50(iii) and (v) and S. 51. Part II Rules did not set out or refer to any of the sections in the Act as Part I Rules did. The reason was that rules in Part 11 dealt with recognition and aid in respect of which there were, after the 1939 amendment, no corresponding provisions in the Act. It is also of some significance that when published in 1939 the rules in Part I were headed "Rules framed under the Madras Elementary Education Act, 1920", while the rules contained separately in Part II were not given any such heading or title. Further, it appears that when these Part II Rules were published in August 1939 there was no previous publication of them as required by S. 56(1) of the Act. Ch. I in Part II Rules deals with recognition. The power to grant or withdraw such a recognition is conferred on the officers of the Education Department. Under r. 5, applications for recognition of schools or additional standards in such schools are to be made to the District Educational Officer. Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 8 An appeal is provided against his decision before the Divisional Officer. The rules then lay down certain requirements on the basis of which recognition would be given or withheld. Rule 13(1) provides, inter alia, for the maintenance of a teacher's service register by the manager of the school specifying therein the terms of service under which a teacher is recruited. The register would include particulars showing whether a teacher is appointed temporarily or on probation or on a permanent basis, his salary, the scale of pay, if any, etc. Under the rule, the manager has to get the register countersigned by the Deputy Inspector of Schools. The rule further provides that no qualified teacher can be appointed on ;a temporary basis or for a stipulated period. All appointments to permanent posts have initially to be made on probation and on expire of the probation period the teacher would be deemed to be permanent. Cl. (2) of r. 13 provides that no teacher can leave the service of a school without giving three months' notice, or three months' salary in lieu thereof. Under sub- cl. (ii) of cl. (2) of that rule, the management has the power to terminate the service of any member of the staff, whether permanent, temporary or probationary, without any notice on the grounds set out therein. But, three months' notice would be required if the termination of service is for reasons other than those set out in sub-cl. (ii), e.g., for wailful neglect of duty, serious misconduct, gross insubordination, incompetence etc. The first provision to sub-cl. (ii) requires, however, that before such notice of termination is given the teacher has to be informed in writing of the charges against him and a reasonable opportunity to be heard has to be given to him. The second proviso to that subclause requires the management to consult the Deputy Inspector and obtain his approval about the propriety of the action proposed against a teacher. The rule then provides : "When, on a teacher's appeal, the District Educational Officer orders reinstatement, the management shall forthwith reinstate him within 10 days of the receipt of the orders, notwithstanding a further appeal submitted or proposed to be submitted by the management to the Divisional Inspector and shall inform in writing the Deputy Inspector of Schools and the District Educational Officer of the fact of having done so. Failure to comply with such orders of the District Educational Officer may entail action against the management under rule 14 below." Sub-cl. (vi) of r. 13(2) provides for appeals, first, before the District Educational Officer, and then, before the Divisional Inspector of Schools. Under r. 14, the Director of Public Instructions has the power to declare, after enquiry, a teacher to be unfit for employment in a recognised school. Under r.. 14-A, he can refuse or withdraw recognition from a school in which is employed a teacher whom he has declared to be unfit, or when the school is under the management of a person declared unfit by him. Recognition can also' be withdrawn under rr. 26 to 28, 28-A and 28-B on the grounds set out therein. Ch. 11 of Part II Rules contain rules in regard to aid, such as teaching grants, maintenance grant etc., and Ch. III contains rules with regard, to grants for school buildings, building sites and play-grounds. Chs. II and IV of the Act, which contained provisions for recognition and aid, having been repealed, these rules, reissued and published afresh in August 1939, cannot be said to be rules "to,, carry out all or any of the purposes of this Act", as provided by S. 56(1). No doubt, cl. (h) of sub-S. (2) of S. 56 was still retained even after Chs. 11 and IV were deleted, and therefore, the Government could perhaps claim to have the power to frame statutory rules "declaring the conditions subject to which schools may be admitted to recognition or aid". But even if the Government were to claim to have framed rules under the sanction contained in cl. (h) of Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 9 S. 56(2), such rules would not satisfy the condition precedent for such rule-making, namely, that they can be made only "to carry out all or any of the purposes of this Act"., Such rules, therefore, even if made, would not be rules made under S. 56. Besides, the fact is that when Part 11 Rules were published in the gazette of August 28, 1939, they were not claimed to have been made under the power reserved to the Government under S. 56. If they were claimed to have been so made, they would, firstly, have been pre-published as required by S. 56(1), and secondly, the Government would not have made the distinction between Part I and Part II Rules, which it did, by giving a title to the former, namely, that they were made under the Act, and omitting to give such a title to the latter. These facts support the contention of the respondent-school that Part 11 Rules cannot be said to be statutory rules framed under S. 56, although the power to make such rules is still retained with the Government by reason of cl. (h) being still there in S. 56(2). Ordinarily, the relations between the management of an ele- mentary school and the teachers employed in it would be governed by the terms of the contract of employment and the law of master and servant in the absence of any statute controlling or abrogating such a contract of employment and providing to the contrary. The mere fact that such a school has obtained recognition and aid from the education department would not mean that the relationship between its management and its employees has ceased to be governed by the contracts of employment under which the employees are recruited and by the law of master and servant unless there is some provision in the Act overriding that law as one finds in statutes dealing with industrial disputes and similar other matters. There is in fact no such provision in the Act and none was pointed out to us. The result is that the relations between the management and the teachers even in a recognised elementary school have to be regarded as being governed by the contracts of employment and the terms and conditions contained therein. Part II Rules, which cannot be regarded as having the status of statutory rules made under S. 56, cannot be said to have the effect of controlling the relations between the management of a school and its teachers or the terms and conditions of employment of such teachers or abrogating the law of master and servant which ordinarily would govern those relations. But it cannot also be gainsaid that as the Government has the power, to admit schools to recognition and grants-in- aid, it can, de hors the Act, lay down conditions under which it would grant recognition and aid. To achieve uniformity and certainty in the exercise of such executive power and to avoid discrimination, the Government would have to frame rules which, however, would be in the form of administrative instructions to its officers dealing with the matters of recognition and aid. If such rules were to lay down conditions, the Government can insist that satisfaction of such conditions would be condition precedent to obtaining recognition and aid and that a breach or non-compliance of such conditions would entail either the denial or withdrawal of recognition and aid. The management of school, therefore, would commit a breach or non-compliance of the conditions laid down in the rules on pain of deprivation of recognition and aid. The rules thus govern the terms on which the Government would grant recognition and aid and the Government can enforce those rules upon the management. But the enforcement of such rules is a matter between the Government and the management, and a third party, such as a, teacher aggrieved by some order of the management, cannot derive from the rules any enforceable right against the management oh the ground of a breach or noncompliance of any of the rules. To illustrate the point, suppose the management of a school were to terminate the service of a teacher after giving one month's notice, or one month's salary in lieu thereof in 'accordance with the contract of employment between the feather and the management, such a termination would be valid. But the 'Government can insist that since its rules provide for three months' 'notice, the Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 10 management cannot terminate the service of a teacher by giving only one month's notice. Though in the absence of 'statutory provision having the effect of controlling or superseding the contract of employment agreed to between the parties, the termination would in law be valid, nevertheless, the Government can withdraw, under Part II Rules, the recognition and aid it has given to the school since its rules governing recognition and aid were riot complied with. But that does not mean that Part II Rules confer upon a third party, viz., an aggrieved employee of a school, any remedy enforceable at law in the event of the management of an elementary school refusing to comply with these rules which, inter alia, enjoin upon a school to abide by the directions given thereunder by the education officers of the Government named therein. in the absence of any provision in the Act governing the relations between the management and a teacher employed by it or controlling the terms of employment of such a teacher and Part II Rules not being statutory rules, the appellant could not be said to have had a cause of action for enforcing the directions given by the Divisional Inspector to restore her as the Head Mistress in the appeal filed by her. Appeals against orders passed by the management against a teacher are provided for under r. 19 so as to enforce the satisfaction of conditions under which recognition and aid would be granted or withdrawn, and not for regulating, as between the teacher and the management, the relations of master .and servant arising under the contract of employment. In Rev. Fr. Joseph v. Kerala,(1) the Kerala High Court had to consider the question of these rules being statutory or not as one of, the schools, whose writ petition among others it was trying, was governed by the Madras Elementary Education Act, 1920 and the rules made, by the Madras Government. After tracing legislative,, history of the Act, as also of the rules, the High Court held that Part II Rules did not have any statutory origin and were, therefore, only administrative instructions by the Government to its educational officers, and therefore, did not vest in the school any, statutory right for grant-in-aid. This decision was later approved by a full-bench of that High Court in Chandrasekharan Nair v. Secretary to Government of Kerala(2) where that Court once again held that Part II Rules were administrative rules. Similarly, in A. Ramaswami Ayyangar V. Madras,(3) the High Court of Madras negatived the contention that these rules, dealing with recognition and aid, could be invoked by an, employee against the management of a private elementary school to enforce a right allegedly arising under the rules. The High Court held that the rules were, not statutory , rules, and that therefore. they could not enlarge the scope of the contract of employment between such an employee of, the school and the management embodied in the school register, and that the rules affected the relations between the school and the Government, and not a third party. In Govindaswami v. Andhra,(1) a learned Single Judge of the Andhra High Court, took the view that the powers and functions of the State's educational officers under these rules in relation to recognition a ad aid were quasi judicial and held that these rules were Statutory (1) A. 1. R. 1958 Kerala 290. (3) 1962(1) M. L. J. 269. (2) A. I. R. 1961 Kerala 303. (4) 1962(1) An. W. R. 263. Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 11 rules. But this view was on an assumption that even Part II Rules were made under S. 56(2)(h) of the Act. Such an assumption was made without any enquiry whether they were so made and without taking into account the fact of the deletion of Chs. II and IV from the Act in 1939, and its impact on the rule-making power of the Government, the re- issuance of the rules thereafter and the distinction made by the Madras Government itself between Part I and Part 11 Rules in the headings which it gave to those two parts. The more recent view of the Andhra High Court, however, is reflected in Moss v. The Management(1) where a Division Bench of that High Court has held that Part 11 Rules relating to recognition and aid are not statutory rules but are only executive instructions, and therefore, are not legally enforceable in a court of law. On the reasons aforesaid, the suit filed by the appellant must be held to be misconceived, and consequently, the High Court righty dismissed her suit. The appeal fails and is dismissed. But in the circumstances of the case, we decline to make any order as to costs. V. P. S. Appeal dismissed. (1) 1970(II) An. W. R. 157. Regina vs St. Aloysius Higher Elementary School & ... on 16 March, 1971 12 | {
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Commissioner Of Income-Tax, U.P. vs Bharat Engineering And Construction ... on 8 September, 1971 Equivalent citations: [1972]83ITR187(SC), 1972(4)UJ137(SC) Author: K.S. Hegde Bench: A.N. Grover, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. The controversy in this appeal is whether a question of law arises from the order of the Tribunal. The Tribunal came to the conclusion that the cash credit entries totalling Rs. 2,50,000 brought to tax by the Income-tax Officer on the ground that they represented the income of the assessee-respondent from undisclosed sources was not correct. It came to the conclusion that, though the explanation given by the assessee in respect of those cash credit entries is not true, yet from the proved circumstances those cash credits could not be the income of the assessee. Aggrieved by the decision of the Tribunal, the Commissioner of Income-tax moved the Tribunal under Section 66(1) of the Indian Income-tax Act, 1922, to refer certain questions to the High Court for its opinion. The Tribunal rejected the application on the ground that its findings are findings of fact and that no question of law arose from them. Thereafter, the assessee moved the High Court under Section 66(2). That application was rejected by the High Court. Against that decision this appeal has been brought by special leave. 2. The assessee-company is an engineering construction company. It commenced business in May, 1943. In their account books, there are several cash credit entries in the first year of its business. We are concerned with only five of those cash credit entries. On June 1, 1943, there is a cash credit entry of Rs. 1,00,000. On July 6, 1943, there is a cash credit entry of Rs. 50,000. On August 30, 1943, there is a cash credit entry of Rs. 50,000. On December 2, 1943, there is a cash credit entry of Rs. 15,000 and on March 15, 1944, there is a cash credit entry of Rs. 35,000. These cash credit entries total up to Rs. 2,50,000. The Income-tax Officer called upon the assessee to explain those cash credit entries. The explanation given by the assessee was found to be false by the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal. But, all the same, the Tribunal felt that these cash credit entries could not represent the income or profits of the assessee-company as they were all made very soon after the company commenced its activities. In our opinion, though the order of the Tribunal is not happily worded, its finding appears to be that in the very nature of things the assessee could not have earned such a huge amount as profits very soon after it commenced its activities. A construction company takes time to earn profits. It could not have earned a profit of Rs. 1,00,000 within a few days, after the commencement of its business. Hence, it Commissioner Of Income-Tax, U.P. vs Bharat Engineering And Construction ... on 8 September, 1971 1 is reasonable to assume that those cash credit entries are capital receipts though for one reason or other the assessee had not come out with the true story as regards the person from whom it got those amounts. It is true that in the absence of satisfactory explanation from the assessee the Income-tax Officer may assume that cash credit entries in its books represent income from undisclosed sources. But what inference should be drawn from the facts proved is a question of fact and the Tribunal's finding on that question is final. 3. The High Court alter careful examination of the various findings reached by the Tribunal has come to the conclusion that the Tribunal's findings are findings of fact. We agree with that conclusion. 4. In the result this appeal fails and is dismissed. In the circumstances of the case, we make no order as to costs. Commissioner Of Income-Tax, U.P. vs Bharat Engineering And Construction ... on 8 September, 1971 2 | {
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Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 Equivalent citations: 1972 AIR 1168, 1972 SCR (2) 141 Author: K.S. Hegde Bench: K.S. Hegde, Hans Raj Khanna PETITIONER: SITA RAM BISHAMBHER DAYAL & ORS. Vs. RESPONDENT: STATE OF U.P. & ORS. DATE OF JUDGMENT21/10/1971 BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. KHANNA, HANS RAJ CITATION: 1972 AIR 1168 1972 SCR (2) 141 CITATOR INFO : RF 1973 SC1461 (17,63) R 1974 SC1660 (21,36) R 1975 SC1007 (15) RF 1979 SC 321 (42) R 1979 SC1475 (23) RF 1982 SC 710 (55) F 1985 SC 421 (25) RF 1990 SC 560 (13,33) ACT: U.P. Sales Tax Act, 1948, s. 3D(1)--Its validity--Whether delegation of authority under the section excessive and bad in law--Is the section violative of Art. 14 of the Constitution. HEADNOTE: The appellants are dealers in Rab. The State Government under s. 3D(1) of the U.P. Sales Tax Act, 1948, levied purchase tax in respect of their, dealings in Rab. Section Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 1 3D(1) of the Act, inter alia, provides that for each assessment year, there shall be levied and paid a tax on the turnover of first purchases made by a dealer or through a dealer in respect of such goods, at such rates not exceeding 2 paise per rupee in the case of foodgrains and 5 paise in respect of other goods and in the explanation it is provided that "in the case of purchase made by a registered dealer through a licensed dealer, 'the registered dealer shall be the, first purchaser and in every other case of fresh purchase, the dealer through whom the first purchase is made shall be deemed to be the first purchaser. The appellants challenged the vires of s. 3(d)(1) of the Act before the High Court but the High Court held against the appellants. In appeal this Court, it was contended by the appellants that in empowering the Government to, levy tax on goods other than foodgrains at a rate not exceeding 5 paise in a rupee, the legislature had given an unduly wide power to the executive. Such a delegated power was, therefore, excessive and bad in law and secondly, s. 3D(1) infringed Art. 14 of the Constitution because it discriminated between registered dealers who purchased through licensed dealers and the registered dealers who purchased through other dealers. Dismissing the appeals, HELD: (i) The power to fix the rate of tax is a legislative power, but if the legislature lays down the legislative policy and provides the necessary guidelines that power can be delegated to the executive., Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various social and economic factors are to be considered and since the legislatures have very little time to go into details, they have to delegate certain powers to the Executive. This Court has ruled that if a reasonable upper limit is prescribed, the legislature can always delegate the power of fixing the rate of purchase 'tax or sales tax. [143 E] Devi Days Gopal Krishnan v. State of Punjab, 20 S.T.C. 430, followed. In the present case, taking into consideration the legislative practice in this country and the rate of tax levied or leviable under the various sales tax laws in force in this country, it cannot be said that the power delegated to the. executive is excessive and in the absence of any material, it cannot be said that the maximum rate fixed under s. 3D(1) is unreasonably high. 144 E-F] (ii) Section 3D is not violative of Art. 14 of the Constitution. In the present case, there is nothing wrong for the legislature to make a classification between licensed dealers and dealers who are not licensed. A licensed dealer has to maintain true and correct accounts and other particulars of 142 purchasers whereas dealers who are not registered are not Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 2 required to maintain any accounts. Hence, if registered dealers are permitted to make purchases through dealers who are not licensed and those dealers are themselves not liable to be taxed, then opportunity for evasion of tax becomes larger. Under the circumstances, the classification is not unjustified. [145 G] State of Madras v. Gannon Dunkerlay & Co. (Madras) Ltd., [1959] S.C.R. 379 and Devi Deo Gopal Krishna v. State of Punjab, 20 S.T.C. 430, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 62 and 1672 of 1969. Appeals from the judgments and orders dated May 17, 1968 of the Allahabad High Court in Writ Petitions Nos. 310 and 627 of 1968. J. P. Goyal and Sobhag Mal Jain, for the appellants (in both the appeals). L. M. Singhvi and O. P. Rana, for the respondents (in both the appeals). The Judgment of the Court was delivered by Hegde, J. These are appeals by certificate. They raise a common question of law for decision. The only contention arising for decision in these appeals is as to the vires of s. 3-D(1) of the U.P. Sales Tax Act, 1948 (to be hereinafter referred to as the Act). The validity of that section has been assailed on two different grounds viz. (1) that the power delegated to the executive under S. 3-D(1) is excessive and as such bad in law and (2) Section 3-D infringes Art. 14 of the Constitution in as much as it discriminates between the registered dealers who purchase through the agency of licensed dealers and the registered dealers who purchase through other dealers, The appellants are dealers in Rab. In respect of their dealings in Rab, they have been levied purchase tax as per the notification issued by the Government under s. 3 (D) (1) of the Act. They are challenging the validity of the levy on the grounds mentioned above. The High Court has repelled both the above contentions. The High Court has come to the conclusion that the power con- ferred on the State Government under s. 3-D is a valid power. It opined that the conferment of power on the executive to fix the rate of tax within the limits laid down in the section is not impermissible. Further it held that the section is not hit by Art. 14 of the Constitution. Before proceeding to consider the correctness of the conten- tions advanced on behalf of the appellant, it is necessary to read S. 3-D(1). It says: "Except as provided in sub-section (2), there shall levied and paid, for each assessment year or part thereof, a tax on the turnover, to be determined in such manner as may be prescribed, of first purchases made by a dealer or through a dealer, acting as a purchasing agent in respect of such goods or class of goods, and at such Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 3 rates, not exceeding two paisa per rupee in the case of foodgrains, including cereals and pulses, and five paisa per rupee in the case of other goods and with effect from such date, as may, from time to time, be notified by the State Government in this behalf. Explanation.-In the case of a purchase made by a registered dealer through the agency of a licensed dealer, the registered dealer shall be deemed to be the first purchaser, and in every other case of a first purchase, made through the agency of a dealer, the dealer who is the agent shall be deemed to be the first purchaser." It is true that the power to fix the rate of a tax is a legislative power but if the legislature lays down the legislative policy and provides the necessary guidelines, that power can be delegated to the executive. Though a tax is levied primarily for the purpose of gathering revenue, in selecting the objects to be taxed and in determining the rate of tax, various economic and social aspects, such as the availability of the goods, administrative convenience, the extent of evasion, the impact of tax levied on the various sections of the society etc. have to be considered. In a modem society taxation is an instrument of planning. It can be used to achieve the economic and social goals of the State. For that reason the power to tax must be a flexible power. It must be capable of being modulated to meet the exigencies of the situation. In a Cabinet form of Government, the executive is expected to reflect the views of the legislatures. In fact in most matters it gives the lead to the legislature. However, much one might deplore the "New Despostism" of the executive, the very complexity of the modern society and the demand it makes on its Gov- enment have set in motion forces which have made it absolutely necessary for the legislatures to entrust more and more powers to the executive. Text book doctrines evolved in the 19th Century have become out of date. Present position as regards delegation of legislative power may not be ideal, but in the absence of any better alternative, there is no Escape from it. The legisla- tures have neither the time, nor the required detailed information nor even the mobility to deal in detail with the innumerable problems arising time and again. In certain matters they can only lay down the policy and guidelines in as clear a manner as possible. In State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd.(1) this Court observed : "Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be levied, the rate at which it is to be charged in respect of different classes of goods and the like". It was not contended before us that the power delegated to the executive to select the goods on which the purchase tax is to be Ievied was an excessive delegation nor was it contended that the power granted to the executive to determine the rate of tax by itself amounts to an excessive delegation. All that was said was that in empowering the Government to levy tax on goods other than foodgrains at a rate not exceeding 5 paise in a rupee, the legislature parted with one of its essential legislative functions as the power given to the executive is an unduly wide one. We are Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 4 unable to accede to this contention. Whether a power delegated by the legislature to the executive has exceeded the permissible limits in a given case depends on its facts and circumstances. That question does not admit of any general rule. It depends upon the nature of the power delegated and the purposes intended to be achieved. Taking into consideration the legislative practice in this country and the rate of tax levied or leviable under the various sales tax laws in force in this country, it cannot be said that the power delegated to the executive is excessive. In Devi Dass Gopal Krishnan and ors. v. The State of Punjab and ors(2) this Court ruled that it is open to the legislature to delegate the power of fixing the rate of purchase tax or sales tax if the legislature prescribes a reasonable upper limit. We are unable to accept the contention of Mr. Goyal, Iearned Counsel for the appellant that the maximum rate fixed under S. 3-D is unreasonably high. At any rate there is no material before us on the basis of which, we can come to that conclusion. This takes us to the contention that s. 3-D is ultra vires Art. 14 of the Constitution. The argument on this question proceeds thus : The explanation to s. 3-D provides that in 'the case of (1) [1959] S.C.R. 379. (2) 20 S.T.C. 430. purchase made by a registered dealer through the agency of a licensed dealer, the registered dealer would be deemed to be the first purchaser whereas in every other case of a first purchase made through the agency of a dealer, the dealer who is the agent would be deemed to be the first purchaser. This difference according to Mr. Goyal is discriminatory in character. He urged that there was no justification for making an agent liable to pay sale tax merely because he is an unlicensed agent. According to him there is no rational distinction between the purchases made through licensed dealers and those made through unlicensed dealers. The power to levy tax includes within itself the power to provide against evasion of tax. A licensed dealer has to function according to the conditions of his licence. He is bound to maintain true and correct accounts of his day to day transactions Of sales and purchase of goods notified in sub-s. (1) of s. 3-D in an intelligible-form and in such manner, if any, as may be prescribed and further he must furnish to the assessing authority the details of the aforesaid transactions together with the name and parti- culars of the purchaser and the number and date of the registration certificate filed by the purchaser under s. 8A and such other information regarding the transactions as may, subject to rule, if any, in this behalf be required. Hence whenever a purchase is made through a licensed agent, the authorities have the opportunity to know what purchases have been made and from whom those purchases were made but that would not be the case when purchases are made through dealers who are not licensed. They are not required by law to maintain any accounts or submit any returns. Hence if registered dealers are permitted to make purchases through dealers who are not licensed and those dealers themselves are not liable to be taxed then opportunity for evasion becomes larger. The rule of discrimination does not rule out classification. The power of classification under a fiscal law is larger than in the case of other laws. Hence there was nothing wrong in the legislature making a classification between licensed dealers and dealers who are not licensed. Even when a dealer who is not licensed is liable to pay purchase tax, the ultimate burden falls on his principal. For these reasons, we do not see any Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 5 basis for the contention that s. 3-D is violative of Art. 14. For the reasons mentioned above these appeals fail and they are dismissed with costs-one set. S.N. Appeals dismissed. Sita Ram Bishambher Dayal & Ors vs State Of U.P. & Ors on 21 October, 1971 6 | {
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Bankey Lal And Ors. vs State Of U.P. on 4 February, 1971 Equivalent citations: AIR1971SC2233, 1971CRILJ1540, (1971)3SCC184, 1971(III)UJ330(SC), AIR 1971 SUPREME COURT 2233, 1971 UJ (SC) 330 1971 SCD 400, 1971 SCD 400 Author: K.S. Hegde Bench: A.N. Grover, K.S. Hegde JUDGMENT K.S. Hegde, J. 1. 23 persons including the 9 appellants were tried before the Additional Sessions Judge, Badaun for various offences. All of them were convicted by the learned Sessions Judge Under Section 302/149, I.P.C., 307/149 I.P.C, as well as Under Sections 148 and 147 I.P.G. Under those heads they were sentenced to various terms of imprisonment, the maximum being the imprisonment for life Under Section 302/149 I.P.C. The various sentences were ordered to run concurrently. In appeal the High Court of Allahabad acquitted 14 of the 23 accused giving them the benefit of doubt. The convictions imposed on the others and the sentences awarded to them were confirmed Thereafter this appeal has been brought after obtaining special leave from this Court. 2. It has been found by both the Courts below and that finding had not been challenged before us that there was enmity between the first appellant Bankey Lal, his relations and friends on one side and the deceased Bhullan, Rameshwar and injured P.W. 5, Ram Chandra and the members of their families on the other. There appears to have been a long standing dispute between these two groups. Sometime before the occurrence, the first appellant appears to have purchased a grove which he wanted to convert into an agricultural land. That grove was adjoining the lands of Ram Chandra. At the time of conversion of the grove into an agricultural land, the first appellant claimed that a portion of the land belonging to him had been encroached upon by Ram Chandra. Ram Chandra denied that allegation. On the day prior to the occurrence viz. on June 29, 1964 which Ram Chandra was ploughing his lands, the first appellant accompanied by some others came and obstructed him from ploughing the land. Then the parties agreed that the dispute between them may be decided by the Lekhpal. The first appellant was to get the Lekhpal the next day. Till about 9 a.m. on the next day, the Lekhpal did not turn up. Thereafter according to the prosecution Ram Ghandra and his men began to plough the land & at that time the appellants and others came armed to that place, attacked and killed Bhullan and Rameshwar and seriously injured P.W. 5 The defence version is that when the first appellant and his men were digging the roots of the trees in the grove purchased by the first appellant, the two deceased persons, Ram Chandra and their party men came and attacked them at that time in self defence the first appellant and two others attacked the party of Ram Bankey Lal And Ors. vs State Of U.P. on 4 February, 1971 1 Chandra, as a result of which Bhullan and Rameshwar died and Ram Chandra sustained injuries. 3. It is established that at the time of the incident both the parties had sustained injuries. So far as Ram Chandra is concerned he had received as many as eighteen injuries, out of which four were incised wounds, six were punctured wounds, four were contused wounds and the rest were contusions and abrasions Deceased Rameshwar had received twenty three injuries out of which one was an incised wound, another a punctured wound and the rest were contusions or abrasions. The deceased Bhullan had received nine injuries out of which eight were contusions and one was a stab injury. On the side of the appellants the first appellant Bankey Lal had received some gun shot injuries. Some pellets appear to have grazed his body. None of them was a serious injury. He had sustained two minor abrasions also. Some of his party men had received some minor injuries. 4. According to the prosecution the party of Ram Chandra were first attacked in the field ploughed by him. At that place Ram Chandra dropped down having been injured. Thereafter Rameshwar, Bhullan and some children from the house of Ram Chandra tried to run away but the party of the appellant pursued them they intercepted Rameshwar at about 60 paces from the original place of attack and severely attacked him he dropped down at that place but Bhullan escaped his attackers at that place and ran towards the river which is about six furlongs from the first place of attack but the appellants party pursued him and got at him near the bank of the river. There they attacked him severely and he was killed at that place. The further case of the prosecution is that after killing Bhullan the appellants and others came back to the peace where Rameshwar was lying injured and again attacked him. Thereafter they came to the place where Ram Chandra was lying injured and attacked him again. 5. The prosecution case that the party of Ram Chandra had been attacked at three different places receives satisfactory corroboration from the fact that the Investigating Officer found large amount of blood at three different places. There was blood in the field of Ram Chandra; there was considerable blood at a place about 60 paces from that place and again there was large amount of blood near about the river where Bhullan is said to have been attacked. The Investigating Officer had sent the blood stained earth to the Chemical Examiner and Serologist who found that the blood in question is human blood. 6. The prosecution has examined six witnesses to speak to the occurrence. They are (1) P.W. 5, Ram Chandra; (2) P.W. 2 Ramesh Chandra; (3) P.W. 3, Ram Deo; (4) P.W. 6, Sharda; (5) P.W. 8 Munshi; (6) P.W. 9, Jwala Prasad and C.W. 1 Janki. 7. So far as P.Ws. 5, 6 and C.W. 1 are concerned they are interested witnesses. They are the close relations of the injured persons. The presence of Ram Chandra and Jwala Prasad at the time of the occurrence is not disputed. There can be no doubt that P.Ws. 6 and C.W. 1 also could have witnessed the occurrence. P.Ws. 2 and 3 claim to have passed by that side at the time of the occurrence. Both the Courts i.e. the trial Court as well as the High Court have come to the conclusion that these witnesses have witnessed the occurrence but none of these witnesses has explained how Bankey Lal came to be injured. The trial Court as well as the High Court were unable to come to a positive conclusion as to how the incident started and who were the aggressOrs. But both those Courts have Bankey Lal And Ors. vs State Of U.P. on 4 February, 1971 2 accepted the prosecution case as regards the attack on Rameshwar at about 60 paces from the field of Ram Chandra and on Bhullan near the river. 8. So far as the attack on Bhullan near the river is concerned there is satisfactory evidence. P.W. 8 speaks to the same. He is an independent witness. He is not shown to have been friendly with Ram Chandra's party or inimically disposed towards the appellants. He claims to have been cutting grass near the river when the incident took place. He has identified all the assailants of Bhullan. The two criticisms directed against his evidence are (a) that he is not likely to have gone near the river for cutting grass as he and the members of his family owned large tracts of land near about his house and (2) that in his evidence he had implicated all the 23 accused as those who attacked Bhullan but the High Court has not accepted his evidence as regards 14 of those accused. There is no substance in either of these two criticisms. According to him he went to the river side for cutting grass because at the place good grass is available. This is a satisfactory explanation. As regards the other criticism, the High Court has given the benefit of doubt and acquitted 14 accused solely on the ground that in the dying declaration given by Ram Chandra he had not mentioned their names. We must bear in mind that when Ram Chandra gave his dying declaration he was hovering between life and death. 9. So far as the attack on Rameshwar is concerned the prosecution evidence receives corroboration from the blood found at that place. Both the trial Court and the High Court have accepted the evidence relating to that attack. We see no reason to disagree with the finding reached by those Courts. 10. It was urged by Mr. Garg, learned Counsel for the appellants that as the prosecution has not explained the injuries found on the person of Bankey Lal, we must discard the entire prosecution evidence and in this connection he invited our attention to the decisions of this Court in Mohar Rai v. State of Bihar and in Ugar Ahir and Ors. v. State of Bihar . In the first case on the fact of that case the Court came to the conclusion that the failure on the part of the prosecution witnesses to explain injuries on the person of the accused persons went to show that the prosecution witnesses were not truthful witnesses and further on the material on record this Court held that the possibility of self defence cannot be ruled out. In the second case all that this Court ruled was that the maxim falsus in uno, falsus in omnibus is neither a sound rule of law nor a rule of practice. We fail to see how these decisions are of any assistance to the appellants. It is true that if prosecution witnesses are proved to have not deposed truly in all respects their evidence is required to be scrutinised with care. Both the trial Court and the High Court have not accepted the prosecution evidence as regards the attack in Ram Chandra's field on the ground that those witnesses did not explain the injuries found on the person of Bankey Lal. But so far as their evidence regarding the attack on Rameshwar is concerned, the same is corroborated by the blood found at that place. Further there is no valid criticism so far as the evidence of P.W. 8 is concerned when he speaks to the attack on Bhullan. No question of self defence can arise so far as those two incidents are concerned. 11. It was urged, that the prosecution case that there were attacks at three different places is neither supported by the first information report nor by the dying declaration given by Ram Chandra. Hence we should not accept that version. So far as F.I.R. is concerned, it was given by Head constable Anwar Hussain. This Head constable appears to have gone on some duty to a village near Bankey Lal And Ors. vs State Of U.P. on 4 February, 1971 3 by the village where the incident took place. At that place he got information that there was a riot going on near the scene of occurrence. Hence he went to that place. By the time he reached that place, the dead body of Bhullan as well as the injured persons Rameshwar and Ram Chandra had been taken to the house of Ram Chandra. There he went straight to the house of Ram Chandra. There he learnt about the incident from the persons who had gathered there including some of the relations of Ram Chandra. Thereafter he sent a brief report about the incident. The material portion of the report reads thus : The two parties fought each other badly. As a result of the injuries received Bhullan died and the condition of Ram Chandra and his son Rameshwar was serious. The others had managed to run away with their lives. The occurrence had been witnessed by the village people and also outsiders. 12. We attach no significance to the fact that this report did not mention that there were attacks at three different places. It must be remembered that the report was not given by any injured person or by any of those who witnessed the occurrence. The Head constable collected the information from those who were there and sent a brief intimation to the police station. A reading of the report shows that the information contained therein was the gist of the information gathered by the head constable from those who were there in the house of Ram Chandra. Now coming to the dying declaration of Ram Chandra, here again it is cryptic one. There is no surprise about it because at the time the dying declaration was given Ram Chadra's condition was precarious. It is unlikely that at that time he would have been in a condition to give a detailed version. 13. It was next contended that the first to inform about this incident was Bankey Lal and no-one on the side of Ram Chandra took the trouble of informing the police about the incident and from that circumstance we are asked to draw an inference that the prosecution story is unreliable. We are unable to appreciate this contention. So far as Bankey Lal's party is concerned they had sustained some trivial injuries. The incident had taken place at about 1 O'clock in the afternoon. Bankey Lal gave the information to the police at about 5-10 P.M. and in that information he did not say a word about the injuries sustained by Bhullan, Rameshwar and Ram Chandra. He merely stated that he and a few of his friends had been attacked by the party of Ramchandra. So far as Ram Chandra's side is concerned, Bhullan had died at the spot itself. Rameshwar and Ram Chandra were in precarious condition. Therefore their relations were more concerned with attending on them rather on going to the police station. Further within a few hours of the incident, the Head constable Anwar Hussain had come there and he had gathered the information. Therefore there was no need for them to send the information to the police. 14. We are unable to agree with the learned Counsel for the appellants that the trial Court and the High Court have not properly appreciated the evidence on record. This Court does not review the evidence in a criminal case unless it is shown that the High Court had failed to take into consideration any material piece of evidence or had approached the case from a wholly wrong point of view. None of the criticisms leveled against the High Court's judgment is valid. 15. In the result this appeal fails and the same is dismissed. Bankey Lal And Ors. vs State Of U.P. on 4 February, 1971 4 | {
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Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 Equivalent citations: 1971 AIR 1439, 1971 SCR 381, AIR 1971 SUPREME COURT 1439 Author: I.D. Dua Bench: I.D. Dua, J.M. Shelat PETITIONER: KUMARI N. VASUNDARA Vs. RESPONDENT: STATE OF MYSORE & ANR. DATE OF JUDGMENT15/04/1971 BENCH: DUA, I.D. BENCH: DUA, I.D. SHELAT, J.M. BHARGAVA, VISHISHTHA CITATION: 1971 AIR 1439 1971 SCR 381 CITATOR INFO : R 1984 SC1420 (8,16,19) ACT: Constitution of India, Art. 14-Equality-Rules for selection of candidates to Pre-Professional course in the Government Medical Colleges in the State of Mysore framed in 1970- Admission based on domicile arid residence for not less than 10 years prior to application-Reasonableness. HEADNOTE: Rule 3 of the rules for selection of candidates for admission to the pre-professional course leading to M.B.B.S. in the Government Medical Colleges in the State of Mysore provided that "no person who is not a citizen of India and who is not domiciled and resident in the State of Mysore for not less than ten years at any time prior to the date of the application for a seat, shall be eligible to apply". The petitioner's application for admission was rejected on Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 1 the ground that she had not resided in the State for a period of ten years as required by r. 3. She challenged the constitutional validity of r. 3 on the ground of violation of right to equality guaranteed by Art. 14 of the Constitution. It was contended that the impugned rule, by imposing the condition of residence in addition to the condition of being domiciled in the State created an artificial classification which suffered from, unconstitutional discrimination. In support of the validity of the rule it was urged that by the rule the State only attempted to select those students who were more likely to serve as doctors in the State and it was for the State to determine the sources from which to select candidates. Dismissing the petition, HELD:The word "domicile" in r. 3 is used to convey the idea of intention to reside or remain in the State of Mysore. If classification based on residence does not impinge upon the principle of equality, as held by this Court in D. P. Joshi v. State of Madhya Bharat, then the further condition of residence in the State for at least ten years would also be equally valid unless it is shown that selection of the period of ten years makes the classification so unreasonable as to render it arbitrary and without any substantial basis or intelligible differentia. The object of framing the impugned rule is to impart medical education to the best talent available, out of the class of persons who are likely, so far as it can reasonably be foreseen, to serve as doctors the inhabitants of the State. The State has to formulate with reasonable foresight a just scheme of classification for imparting medical education to the available candidates which would serve the object and purpose of providing broad---based medical aid to the people of the State and to provide medical education to those who are best suited for such education. Prover classification inspired by this consideration and selection on merit from such classified groups, therefore, cannot be challenged on the ground of inequality violating Art. 14. The petitioner has not shown that they impugned rule suffer from the vice of unreasonableness. [388 D-389 C] 382 There is likelihood of some casts of hardships under the impugned rule. But cases of hardships are likely to arise in the working of almost any rule which may be framed for selecting a limited number of candidates for admission out of a long list. This would not render the rule unconsti- tutional. [389 E] D.p. Joshi v. The State of Madhya Bharat and Anr., [1955] 1 S.C.R. 1215, relied on. Chitra Ghosh & Anr. v. Union of India and Ors., [1970] 1 S.C.R. 413 and Minor P. Rajendran v. State of Madras & Ors., [1968] 2 S.C.R. 786, referred to. Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 2 JUDGMENT: ORIGINAL JURISDICTION: Writ Petition No. 606 of 1970. Petition under Art. 32 of the Constitution of India for en- forcement of fundamental rights. R. B. Datar, for the petitioner. Niren De, Attorney-General and S. P. Nayar, for the respon- dents. The Judgment of the Court was delivered by Dua, J.-The only question raised in this writ petition under Art. 32 of the Constitution relates to the constitutional validity of r. 3 of the Rules for Selection of candidates for admission to the Pre-Professional/B.Sc. Part 1 Course leading to M.B.B.S. in the Government Medical Colleges and for certain seats in the private Medical Colleges in the State of Mysore framed by that State on July 4, 1970 (hereinafter called "the Selection Rules"). The petitioner Kumari N. Vasundara claims to have passed the Pre-University Examination of the Bangalore University with physics, chemistry and biology as optional subjects securing 78% marks in these subjects. She applied for admission to the Pre-Professional Course leading to the M.B.B.S. in the Government Medical Colleges, but the Selection Committee, after interviewing her on September 14, 1970, rejected her application on the ground that she bad not resided in the State of Mysore for a period of ten years prior to the date of her application as required by r. 3 of the Selection Rules. It is not disputed that but for the condition requiring residence in Mysore State for a period of ten years prior to the date of her application she was otherwise eligible for admission under the Selection Rules in another respects. Rule 3 reads as under: domiciled and resident in the,State of Mysore for not less than ten years at any, time prior to the date of the application for a seat, shall be eligible to apply Provided that this provision shall not apply (a) in the case of persons applying for seats referred to in clauses (a), (b) (c) (d) and (e) of sub-rule (1) of rule 4, (b) in the case of children of Central Government employees. serving on duty in the State on the date of making the application and (c) in the case of children of Mysore Government employees including children of members of all India Services borne on the Mysore State Cadre who- (i)are serving or have, served outside the State of Mysore on deputation during the relevant period, and (ii)are in the service of the State on the date of making the application or have retired from service not more than four years prior to the date of making the application." Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 3 Shri Datar, the learned counsel for the petitioner, challenged the constitutional validity of r. 3 on two grounds. The first challenge is founded on the ground of violation of the right to equality guaranteed by Art. 14 of the Constitution. According to his argument the impugned rule has, by imposing the condition of residence for a minimum period of ten years in the State of Mysore in addition to the condition of being domiciled in that State, created an artificial classification which suffers from unconstitutional discrimination, between the Indian citizens domiciled in the State of Mysore who have resided there for ten years or more and those who have resided there for less than ten' years. The period of ten years of residence selected in this rule is not only arbitrary but is highly unreasonable, based on no rational or intelligible principle, said the counsel. Its unreasonableness was illustrated by submitting that students normally pass the Pre-University Examination at the age of 16 or 17 years. To expect such students to have resided in the State of Mysore for ten years in order to, be eligible for admission to the Pre-Professional/B.Sc. Part 1 Course leading to M.B.B.S. would mean that the children of those Indian citizens having their domicile in the State of Mysore who happen, for compelling reasons, to reside in other States in the Indian Union before their children have completed ten years of residence in the State of Mysore would be deprived of the opportunity of having medical education in their own State of domicile. This argument was elaborated by submitting that if all other States in the Union were also to frame similar rules insisting on residence for ten or more years then the children of' those citizens, who are compelled by the necessity of earning their livelihood, to shift their residence from one State to another at short intervals, without completing ten years of residence in any one State, would never be able to get admission in any State. Fixing a period of ten years of residence in the State' according to Mr. Datar, is arbitrary and fanciful having no rational relationship or nexus with the object or purpose of framing the rules, namely, of selecting the best talent or the most meritorious students for admission to the Medical Colleges. The Attorney-General on behalf of the respondents sub that by the impugned rule the State Ms attempted to select those students who are more likely to serve as doctors in the State after they pass out. In this connection our attentions was drawn to the counter-affidavit filed by the State. The Attorney-General further contended that it was for the- State to determine the sources from which to select candidate and the selection so made deserves to be, upheld. in support of the validity of the rule he drew our attention to the decision of this Court in Chitra Ghosh & Another v. `Union of India and Others(1) and to a decision of the Mysore High Court in K. Shivashankar v. University of Mysore & Others(2). This Court in Minor P. Rajendran v. State of Madras & Ors.(3) while dealing with the rules made by the State of Madras for the selection of candidates for admission to the First Year integrated M.B.B.S. course, struck down, as violative of Art. 14, the rule which allocated seats on district-wise basis. A bench of five judges observed in that case: "The question whether district-wise allocation is violative of Art. 14 will depend on what is the object to be achieved in the matter of admission to medical colleges. Considering the fact that there is a larger number of can- didates than seats available selection has got to be made. The object of selection can only be to secure the best possible material for admission to colleges subject to the provision for socially and educationally backward classes. Further whether selection is from the socially and educationally backward classes or from the general pool, the object. of selection must Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 4 be to secure the best (1) [1970] 1 S. C. R. 413. (2) [1970] 1 Mys.L.J. 475. (3)[1968] 2 S. C. R. 786. possible talent from the two sources. If that is the object it must necessary follow that that object would be defeated if seats are allocated district by district. it cannot be and has not been denied that the object of selection is to secure the WA possible, talent from .the two sources so that the country may have the "best possible doctors". If that is the object, the argument on behalf of the petitioners/appellant is that that object cannot possibly be served by allocating seats district wise' It is true that Art. 14 does not forbid classification, but the classification has to be justified on the basis of the nexus between the classification and the object to be achieved, even assuming that territorial classification may be a reasonable classification. The fact however that the classification by itself is reasonable is not enough to support it unless there is nexus between the classification and the object to be achieved. Therefore, as the, object to be achieved in a case of the kind with which we are concerned is to get the best talent for admission to professional colleges, the allocation of seats districtwise, hat no reasonable relation with the object to be achieved. If anything, such allocation will result in many cases in the object being destroyed, and if that is so, the classification. even if reasonable, would result in discrimination, inasmuch as better qualified candidates from one district may be X X rejected while less qualified candidates from other districts may be admitted from either of the two sources. The argument that candidates coming from various districts would settle down in those districts to serve the people there was not accepted, because there was no material on the record giving facts and figures suggesting that candidates from a particular district would generally settle down in that district. It was not even so stated in the affidavit filed on behalf of the State of Mysore, in that case. The Court, however, took care to clarify the legal, position by adding: "We may add that we do not mean to say that territorial classification is always bad under all circumstances. But there is no doubt that district-wise classification which is being justified on a territorial basis in these cases is violative of Art. 14, for no justification worth the name in support of the classification has been made out." In Chitra Ghosh's case (1) this Court said: "TThe main purpose of admission to a medical college is to impart education in the theory and practice of me-- (1) [1970] 1 S. C. R. 413. 25-1 S.C. India/71 dicine. As noticed before the sources from which students have to be drawn are primarily determined by the authorities who maintain and run the institution, e.g., the Central Government in the present case. In Minor P. Rajendran v. State of Madras-(1968) 2 S.C.R. 786it has been stated that the object of selection for admission is to secure the best possible material. This can surely be achieved by making proper rules in the matter of selection but there can be no doubt that Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 5 such selection has to be confined to the sources that are intended to supply the material. If the sources have been classified in the manner done in the present case it is difficult to see how that classification has no rational nexus with the object of imparting medical education and also of selection for the purpose" The decision in Minor P. Rajendran's case C) was distinguished on the ground that in that case the classification made district wise had been considered to possess no reasonable relation with the object sought to be achieved. It was also observed in Chitra Ghosh's case (2). "It is the Central Government which bears the financial burden of running the medical college. It is for it to lay down the criteria for eligibility. From the very nature of things it is not possible to throw the admission open to students from all over the country. The Government cannot be denied the right to decide from what sources the admission will be made. That essentially is a question of policy and depends inter alia on an overall assessment and survey of the requirements of residents of particular territories and other categories of persons for whom it is essential to provide facilities for medical education. If the sources are properly classified whether on territorial, geographical or other reasonable basis it is not for the courts to interfere with the manner and method of making the classification." According to this observation which merely re-affirms the settled law, if the sources are properly classified on reasonable basis, then courts are not expected to interfere with the manner and method of making the classification. Reasonable basis of course must mean that the basis is not arbitrary or fanciful, but bears a just, rational and intelligible relation with the object sought to be achieved by the classification. (1) [1968] 2 S.C.R. 786. (2) [1970] 1 S.C.R. 413. in D. P. Joshi v. The State of Madhya Bharat and Another this Court had while upholding by majority the rules, made by the State of Madhya Bharat, for admission to the Mahatma Gandhi Memorial Medical College, Indore, charging capitation fee from non-Madhya Bharat students laid down that in those ,rules the word "domicile" was used in its popular sense conveying the idea of residence. Venkatarama Ayyar, J., speaking for the majority said: "It was also urged on behalf of the respondent that the word "domicile" in the rule might be. construed not in its technical legal sense, but in a popular sense as meaning "residence and the following passage in Wharton's Law Lexicon, 14th Edition, page 344 was quoted as supporting such a construction: "By the term 'domicile', in its ordinary acceptation, is meant the place where a person lives or has his home-. In this sense the place where a person has his actual resi- dence, inhabitancy, or commorancy, is some times called is domicile". Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 6 In Mcmullen v. Wadsworth (1880) 14 A. C. 631'it was observed by the Judicial Committee that "the -word 'domicil' in article 63 (of the Civil Code of Lower Canada) was used in the sense of residence, and did not refer to international domicile". What has to be considered is whether in the present context "domicile" was used in the sense of residence. The rule requiring the payment of a capitation fee and providing for exemption therefrom refers only to bona fide residents within the State. There is no reference to domicile in the rule itself, but in the Explanation which follows, clauses (a) and (b) refer to domicile, and they occur as part of the definition of "bona fide resident". In Corpus Juris Secundum, Volume 28, page 5, it is stated: "The term 'bona fide residence' means the residence with, domiciliary intent." There is therefore considerable force in the contention of the respondent that when the rule making authorities referred to domicile in clauses (a) and (b) they were thinking really of ;residence. In this view also, the contention that the rule is repugnant to article 15(1) must fail." (1) [1955] 1 S.C.R. 1215. Under the impugned rule in that case no capitation fee was to charged from the students who ,were bona fide residents of Madhya Bharat, and the, expression "bona #de resident" for the purpose of the rule'. was defined as (to quote the relevant portion): "one who is-- (a) a citizen of India whose original domicile is in Madhya Bharat, provided he has not acquired a domicile elsewhere, or (b) a citizen of India, whose original domicile is not in: Madhya Bharat but who has acquired a domicile in Madhya Bharat and has resided there for not less than 5 years at the date-. on which he applies for admission, or (c) a person who migrated from Pakistan before September 30, 1948 and intends to reside in Madhya Bharat permanently, or (d)........................ In our view the word "domicile 'a used in r. 3, in the present case is also used to convey the idea of intention to reside or remain in the State of Mysore. If classification based on residence does not impigne upon the principle of equality enshrined in Art. 14 as held by this Court in the decision already cited which is binding upon us, then the further condition of the residence in the State being there for at least ten years would also seem to be equally valid unless it is shown by the petitioner that selection of the period of ten years makes the classification so unreasonable as to render it arbitrary and without any substantial basis or intelligible differentia. The object of framing the impugned rule seems to be to attempt to impart medical education to the best talent available out of Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 7 the class of persons who are likely, so far as it can reasonably be foreseen, to serve as doctors, the inhabitants of the State of Mysore. It is true that it is not possible to say with absolute certainty that all those admitted to the medical colleges would necessarily stay in Mysore State after qualifying as doctors: they have indeed a fundamental right as citizens to settle anywhere in India and they are also free, if they so desire and can manage, to go out of India for further studies or even otherwise. But these possibilities are permissible and inherent in our constitu- tional set-up and these considerations cannot adversely affect the constitutionality of the otherwise valid rule. The problem as noticed in Minor P. Rajendran's case (1) and as revealed by a large number of cases which have recently come to this Court Is that the number of candidates desirous of having medical educa- (1) [1968] 2 S.C.R. 786. tion is very much Luger than the number 'of seats available in medical colleges. The need and demand for doctors in our country is so great that young boys and girls feel, that in medical profession they can both get gainful employment and serve the people. The State has therefore to formulate with reasonable foresight a just scheme of classification for imparting medical ,education to the available candidates which would serve the object and purpose of providing broad- based medical aid to the people of the State and to provide medical education to those who are best suited for such education. Proper classification inspired by this consideration and selection on merit from such classified groups therefore cannot be challenged on the ground of inequality violating Art. 14. The impugned rule has not been shown by the petitioner to suffer from the vice of unreasonableness. The counter-affidavit filed by the State on the other hand discloses the purpose to be that of serving the interests of the residents of the State by providing medical aid for them. The petitioner's argument that candidates whose parents have ,of necessity to remain out of Mysore State and who have also by ,compelling reasons to shift their residence frequently from one State to another without completing ten years in any one State, would suffer because their parents cannot afford to arrange for their children's residence in Mysore State for ten years during the first 17 years of their age, merely suggests that there is a likelihood of some cases of hardship under the impugned rule. But ,cases of hardship are likely to arise in the working of almost any rule which may be framed for selecting a limited number of candidates for admission out of a long list. This, however, would not render the rule unconstitutional. For relief against hardship in the working of a valid rule, the petitioner has to approach elseWhere because it relates to the policy underlying the rule. Redress for the grievance against the wide. gap between the number of ,seats in the medical colleges and the number of candidates aspiring to become doctors for earning their own livelihood and for serving the needs of the country, is also to be sought elsewhere and not in this Court, which is only concerned with the constitutionality of the rule. For the aforesaid reasons this petition fails and is dismissed but without costs. K. B. N. Petition dismissed. Kumari N. Vasundara vs State Of Mysore & Anr on 15 April, 1971 8 | {
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State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 Equivalent citations: 1972 AIR 999, 1972 SCR (2) 686, AIR 1972 SUPREME COURT 999 Author: A.N. Grover Bench: A.N. Grover, K.S. Hegde, A.N. Ray PETITIONER: STATE OF GUJARAT & ANOTHER Vs. RESPONDENT: ZINABHAI RANCHHODJI DARJI & ORS. DATE OF JUDGMENT07/12/1971 BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S. RAY, A.N. CITATION: 1972 AIR 999 1972 SCR (2) 686 1972 SCC (1) 233 ACT: Gujarat Panchayats Act 1961--s. 310 A--Sub-section 1 of s. 310A--Its Scope--Bombay Provincial Municipal Corporations Act 1949--S. 3(3) and S. 493--Its Scope and Gujarat Municipalities Act 1963--S.279(2)--Its scope and their interpretation. HEADNOTE: In a Taluka Panchayat election in 1968, Respt. No. 1 was elected as a member and he was elected president of the Taluka Panchayat. Thereupon, he became ex-officio member of the Surat district Panchayat under S. 15(i)(A)(i) of the Gujarat Panchayats Act 1961. He was ultimately elected President of the Surat District Panchayat. He ceased to hold his office of President of the Taluka Panchayat. The State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 1 district in question consists of several Talukas; one of such Talukas was called 'C' Taluka for which a Taluka Panchayat was constituted under the provisions of the Panchayat Act. Two areas known as 'R' & 'A' were subject to the authority of the District Panchayat and the 'C' Taluka Panchayat 'R' had a Nagar Panchayat and 'A' bad a Gram Panchayat. In 1970, the State Govt. by a notification under S. 3(3),of the Bombay Provincial Municipal Corporations Act, 1949, included the local areas of 'R' & 'A' within the limits of the Surat Municipal Corporation and by this notification, it was declared that the local area of 'R' shall cease to be a Nagar and that of 'A' shall cease to be a Gram. The result was that 'R' & 'A' stood excluded from the limits of 'C' Taluka Panchayat & the Surat District Pan- chayat from January 1971 with a direction that the members of the dissolved Panchayat shall vacate offices and that the Taluka & the District Panchayat shall be reconstituted with members specified in clause 3 of the order read with Schedule 1 and 2. Respondent No. 1 having ceased to hold office as President of the Taluka Panchayat when he was elected Is President of the District Panchayat, could not act as an ex-officio member of reconstituted Surat District Panchayat because he had ceased to be an ex-officio member as such. He was not an elected member of the Surat District Panchayat and was rot appointed a member under S. 310A (2) (b) of the Panchayat Act. He, therefore, ceased to be a member of the Surat District Panchayat as reconstituted. This led to the cessation of his holding the 'office of the President of that Panchayat. He filed a petition under Art. 226 of the Constitution challenging the validity of the order of dissolution and reconstitution made by the Development Commissioner. The High Court allowed the petition on the ground that by reason of' the exception contained in S, 310A(10) of the Panchayats Act. Commissioner had no power to dissolve the panchayat Sub-s. (i) of that section. On appeal the question arose provisions of S. 310A(10) would apply to the Municipal which had been converted into a city with effect from HELD : (i) The Appellant had no right to dissolve the 'C' Taluka Panchayat under sub-S. (1) because S. 310A(10) of the Panchayat Act provides that nothing in the foregoing provisions of the section shall apply or shall be deemed ever to have applied to the alteration of the limits of a district or a taluka by reason of the inclusion in or exclusion from the district taluka of any area as a result of the alteration of the 687 limits of a municipal borough or conversion of a municipal borough into a Gram or Nagar or the establishment of or the alteration of the limits of a contonement. [693 F] (ii) The Municipal borough under Sec. 310(10) of the panchayat Act, would have the meaning of the word 'City' within the meaning of para 1 of Appendix IV of the State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 2 Corporation Act. Therefore when the 'C' Taluka Panchayat was included into the Municipal borough of Surat which was declared as a city, Sub section (1) of Section 310(A) will have no application. [692 H] (iii) In the matter of interpretation of enactment which are in force in a particular state, this Court generally attaches a good deal of value to the views of the High Court of that State, particularly, when they have been fully considered by it, because that Court is expected to be sufficiently conversant with the provisions of the various local enactment. [694 G] JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 405 of 1971. Appeal from the judgment and order dated February 17th 18th 1971 of the Gujarat High Court in Special Civil Application No. 77 of 1971. M. C. Setalvad and B. D. Sharma, for the Appellant. B. Sen, K. L. Hathi and P. C. Kapur, for Respondent No. 1. The Judgment of the Court was delivered by Grover, J. This is an appeal by certificate from a judgment of the Gujarat High Court in which the legislation which came up for interpretation has been characterized by the High Court as confused and obscure. The facts may be succinctly stated. In the elections to the Vyara Taluka Panchayat which took place in 1968 respondent No. 1 was elected as a member. At the first meeting of the Taluka Panchayat he was elected as its President. Thereupon he became ex-officio member of the Surat District Panchayat by virtue of S. 15(1)(A)(i) of the Gujarat Panchayats Act 1961, hereinafter called the 'Panchayats Act'. He was ultimately elected as President of the Surat District Panchayat. He ceased to hold his office of President of the Taluka Panchayat. Surat district consists of several Talukas; one of such Talukas is called Chorashi Taluka for which a Taluka Panchayat was constituted under the provisions of the Panchayats Act. Two areas known as Rander and Adajan were subject to the authority of the Surat District Panchayat and the Chorashi Taluka Panchayat. Rander had a Nagar Panchayat and Adajan had a Gram Panchayat. On January 16, 1970 a notification was issued by the State Government under S. 3 (3) of the Bombay Provincial Municipal Corporations-Act 1949, to be referred to as the 'Corporations Act' by-which the local areas of Rander and Adajan were included within the limits of the Surat Municipal Corporation. This was followed by a notification dated January 21, 1970 under S. 9(2) of the Panchayats Act declaring that the local area of Rander shall cease to be a Nagar and that oil Adajan shall cease to be a Gram with effect from February 1, 1970. The net result was that Rander and Adajan stood excluded from he limits of the Chorashi Taluka Panchayat and the Surat District Panchayat. A notification was issued on June 13, 1963 by the Development Commissioner in exercise of the powers conferred on the State Government under s. 31O(A) of the Panchayats Act and delegated to him dissolving the Chorashi Taluka Panchayat and the Surat District Panchayat with effect from January 11, 1971 with a direction that the members of the dissolved Panchayat shall vacate offices and that the Taluka and District Panchayats shall be reconstituted with members specified in clause 3 of the Order-read with Schedules 1 and State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 3 2. Respondent No. 1 having ceased to hold office as President of the Vyara Taluka Panchayat when he was elected as President of the Surat District Panchayat could not be an ex-officio member of the reconstituted Surat District Panchayat because he had ceased to be an ex-officio member as such. He was not an elected member of the Surat District Panchayat and was not appointed a member under s. '310A(2)(b) of the, Panchayats Act. He, therefore, ceased to be a member of the Surat District Panchayat as reconstituted. This led to the cessation of his holding the office of the President of that Panchayat. He filed a petition under Art. 226 of the Constitution challenging the validity of the order of dissolution and reconstitution made by the Development Commissioner. Before the High Court two main grounds were taken on behalf of respondent No. 1. The first was that the Development Com- missioner as a delegate of the State Government had no power to dissolve the Chorashi Taluka Panchayat and the Surat District Panchayat under S. 310A(1) of the Panchayat Act by reason of the provisions contained in sub-s. (10) of that section. The second point was that the order had been made by the Development Commissioner mala fide. The High Court decided the first question against the State and held that by reason of the exception contained in S. 310A(1O) of the Panchayats Act the Development Commissioner had no power to dissolve the Panchayat in question under sub-s. (1) of that section. The second point was not gone into as it was considered unnecessary to decide it. There are three enactments the provisions of which will have to be considered in order to decide the controversy between the, parties. The first is the Panchayats Act, the second is the Corporation,-, Act and the third is the Gujarat Municipalities Act, 1963, hereinafter referred to as the 'Municipalities Act'. We may first refer to the material provisions of the Panchayats Act. This Act. according to the preamble, was enacted to consolidate and amend the law relating to village panchayat and district local boards in the State of Gujarat etc. Section 1 provides : S. 1 (1) This Act may be called the Gujarat Panchayats Act, 1961. (2) It extends to the whole of the State of Gujarat. (3) This section shall come into force at once; and all or any of the remaining provisions of this Act shall come into force (in respect of such class of Panchayats, in such district and on such dates as the State Government may, by notification in the Official Gazette, appoint; and different dates may be appointed in respect of different districts and different provisions". By various notifications issued under sub-s. (3) of s. 1 the provisions of the Panchayats Act were brought into force. Section 310A did not exist in the Panchayats Act as enacted. It was subsequently introduced by Gujarat Act 26 of 1962 which came into force on August 18, 1962. By a notification dated February 7, 1963 under s. 1(3), s. 310A was brought into force in all the districts of the State of Gujarat except the district of Dangs. Subsection (1) of s. 310A provides that when on account of the constitution of a new district or Taluka under the Land Revenue Code or for any other reason the limits of a district or a taluka are, during the term of office of the members of the District Panchayat State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 4 or the 'Taluka Panchayat altered the State Government may by order dissolve such District Panchayat or Taluka Panchayat from a date specified in the order and direct reconstitution of the District Panchayat or the Taluka Panchayat or the establishment of a District Panchayat or Taluka Panchayat for a new district or a new taluka which has been constituted. Sub-s. (1) which was not to be found in the original section was introduced with retrospective effect by Gujarat Act 7 of 1966. According to sub-s. (10) nothing in the foregoing provisions of the section shall apply or shall be deemed ever to have applied to the alteration of the limits of a district or a taluka by reason of the inclusion in or exclusion from the district or taluka of any area as a result of the alteration of the limits of a municipal borough or conversion of a municipal borough into a Gram or Nagar or the establishment of or the alteration of the limits of a cantonment. An Explanation was added to the sub-section to the following effect "EXPLANATION.-Municipal borough if means a municipal borough constituted or deemed to be constituted under the Gujarat Municipalities Act, 1963". Section 10 of the Panchayats Act provides for the formation of districts and talukas for the purpose of that Act. According to s. 8(2) a Taluka Panchayat or a District Panchayat shall have no authority over that portion of the area in the taluka or the district which for the time being is within the limits of a city, municipal borough, municipal district, notified area or cantonment. The Corporations Act was enacted on December 29, 1949. Section 3 (1) provides that the local areas within the limits specified by the State Government by notification shall constitute the city of Ahmedabad. The notification constituting the city and a municipal corporation thereof came into force on July 1, 1950. Section 3(2) empowers the State Government by a notification to constitute any other local area lying within such limits as are specified to be a City. Section 490 provides that the Bombay District Municipalities Act 1901, the Bombay Municipal Boroughs Act 1925 and the Bombay Village Panchayats Act 1923 shall cease to apply except as provided in the Act to any area included in the city. According to s. 493 the, provisions of Appendix IV shall apply to the constitution of the Corporation and other matters specified therein. Para 1 of Part 1 of that Appendix is in the following terms : "References in any enactment other than the Bombay District Municipal Act, 1901, the Bombay Municipal Boroughs Act 1925, and the Bombay Local Fund Audit Act 1930 in force on the date immediately preceding the appointed day in a City or in any rule, order, or notification made or issued thereunder and in force on such date in the said City to municipal districts municipal boroughs, municipalities or borough municipalities con- stituted under the Bombay District Municipal Act 1901 or the Bombay Municipal Boroughs Act, 1925, shall, unless a different intention appears, be construed as references to the City or to the Corporation of the said City, as the case may be, and such enactment, rule, order or notification shall apply to the said City or Corporation". The expression "appointed day" is defined by S. 2(2). It means with reference to any local area the day on which such area is constituted the city of Ahmedabad or any other city under S. 3 It may be mentioned that Surat which was originally a municipal borough was constituted a city with effect from October 1, 1966 by means of a notification issued under s. 3(2) of the Corporations Act. Prior to State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 5 the enactment of the Municipalities Act there were in force in the State of Gujarat the Bombay District Municipalities Act 1901 and the Bombay Municipal Boroughs Act 1925. The first enactment provided for the constitution of a municipal district and a municipality for, each such district; the second enactment provided for the constitution of a municipal borough and a borough municipality for each such borough. By s. 279(1) of the Municipalities Act these two statutes were repealed. Section 279(2) of the aforesaid Act made the following provisions : "(2) Notwithstanding the repeal of the said Acts,- (i) any local area declared to be either a municipal borough or municipal district immediately before the date on which this Act comes into force (hereinafter referred to as "the said date") shall be deemed to be a muni- cipal borough under this Act; (ii) the municipalities constituted under the said Acts immediately before the said date (hereinafter called the old municipalities") shall be deemed to be municipalities of the respective boroughs (hereinafter respectively called "the new municipalities" and "the new boroughs"); (iii)................................ As has been pointed out by the High Court if the city of Surat which was originally a municipal borough constituted under the Bombay Municipal Boroughs Act 1925 became a municipal borough under the deeming provisions of the Municipalities Act there would have been no difficulty in applying s. 310A (10) and its provisions would-have excluded the applicability of sub-s. (1) of s. 310A when the limits of Chorashi Taluka and the Surat district were altered by reason of Rander and Adajan having been excluded from. the same and included in the city of Surat as a result of the notification dated January 16, 1970. But the municipal borough of Surat had been converted into a city with effect from October 1, 1966 as noticed before under the provisions of the Corporations Act. This immediately led to the question whether the applicability of s. 310A(10) would be attracted by virtue of s. 493 read with Appendix IV, Para 1 of the Corporations Act. The approach of the High Court appears to have been that the word 'district' in s. 1(3) must me-an a revenue district and not a district as defined in s. 2(6) of the Panchayats Act. The opening words of the definition section are " unless the context otherwise requires". Section 1(2) of the same Act declares that it extends to the whole of the State of Gujarat. Sub-section (3) provides that s. 1 shall come into force at once. It further provides that all or any of the remaining provisions of the Panchayats Act shall come into force in respect of such class of panchayats in such districts and on such dates as the State Government may by notification appoint. The State Government can appoint different dates in respect of different districts and different provisions From this the High Court concluded that the word "district" in S. 1(3) must mean a revenue district. The main reason which prevailed with the High Court was that the word "district" in that provision could not be construed to refer to a district which was yet to be formed under s. 2(6) of the Panchayats Act particularly when that provision could come into force only when the notification had been Issued under s. 1(3). Thus a district under the Panchayats Act could be formed only if its provisions were brought into State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 6 force. It may be useful to give the conclusion of the High Court in its ,own words :- "........ how can a notification be issued by the State Government under section 1 sub-s. (3) bringing into force the provisions of the Panchayats Act in a district which can exist legally as well as conceptually only after the provisions of the Act are brought into force ? Section 1 sub-s. (3) applies at a stage prior to the formation of the district under the Panchayats Act........" The High Court also referred to the provisions of s. 9 of the Panchayats Act and. illustrated how the State Government could not invoke its provisions for the purpose of declaring a revenue village or group of revenue villages to be a Nagar or a Gram. It was only if S. 9 was in force in the local area comprising such revenue village or group of revenue villages that the State Government could acting under that section declare such local area to be a Nagar or a Gram. Similar would be the case with reference to S. 307 of the Panchayats Act which is to found in Chapter XVI which makes provisions for conversion of municipality into a Panchayat and for amalgamation and division of Panchayats. Section 310A was applied by means of a notification dated February 7, 1963. The High Court construed the notification to mean that it was applied to the revenue district of Surat which would include the municipal borough of Surat. Now Para 1 of Appendix IV in the Corporation Act lays down that reference in any enactment other than the three enactments mentioned therein which were in force on the date preceding the appointed day in a city to municipal boroughs etc. shall, unless a different intention appears, be construed as references to the City. If S. 310A of the Panchayats Act was in force in the revenue district of Surat it applied to the municipal borough of Surat prior to that borough becoming a City with effect from October 1, 1966. The Panchayats Act was thus in force in the municipal borough of Surat immediately preceding October 1, 1966 on which date Surat became a City. It follows that "municipal borough" in S. 310A(10) of the Panchayats Act would have the meaning of the word "City". Before us no attempt was made on behalf of the State to demolish all the steps in the above process of reasoning and in particular the conclusion of the High Court that s. 310A(10) of the Panchayats Act was applicable to a revenue district which included the borough of Surat before it became a city. It was suggested on behalf of the State that the provisions of the Panchayats Act with the exception of s. 1 (2) were to be applied in respect of' such class of panchayats in such districts and on such dates as the State Government may by notification appoint. The provisions of the Panchayats Act could thus be made applicable only in respect of panchayats. What s. 1(3) however provides is that the provisions of the Act can be brought into force in such districts as the State Government may by notification in the Official Gazette appoint. Indeed the notification dated February 7, 1963 provided that the provisions of s. 310A shall come into force in all the districts of the State of Gujarat except the district of Dangs. The principal argument that has been addressed to us is that the provisions contained in Appendix IV of the Corporations Act referred to above clearly employ the language "unless a different intention appears". A great deal of emphasis has been laid on the Explanation appearing in s. 310A State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 7 in which municipal borough is confined only to a municipal borough constituted or deemed to be constituted under the Municipalities Act. The omission of the word "city" from the Explanation, it is said, is significant and it would be wholly impermeable to travel beyond the Explanation which contains the key to the meaning of the word "municipal borough" as employed in the sub-section. It also shows a contrary intention which rules out the applicability of Para 1 of Appendix IV of the Corporation Act. It has also been urged that the words "conversion of a municipal borough into a Gram or a Nagar" in sub-s. (10) of s. 310A of the Panchayats Act could not possibly take in a city which would ordinarily have a population of more than two lakhs. By reading the word 'city" in place of the word " municipal borough" by applying Para 1 of Appendix IV of the Corporations Act the result would be so absurd that it would be contrary to all, canons of interpretation to do so. It does appear somewhat unusual that the draftsmen of s. 310A and in particular sub-s. (10) of that section should have omitted the word "city" from the principal part of that subsection. as also the Explanation. But it is equally possible that the applicability of Appendix IV (Para 1) of the Corporations Act was kept in view and it was considered unnecessary to expressly mention the word "city" in s. 310A(10) of the Panchayats Act. The High Court was of the opinion with regard to the second limb of the argument on this point that although it would be impossible to conceive of a situation where a city might be converted into a Gram or a Nagar but that would only mean that no occasion would arise to invoke the words "conversion of a municipal borough into a Gram or a Nagar". These words would not be rendered meaningless as they would continue to apply to a situation where a municipal borough (within the meaning of the Municipalities Act) and not a city was converted into a Gram or Nagar. There is a good deal of force in the following reasoning of the High Court with regard to the applicability of paragraph 1 of Appendix IV: "The principle underlying Paragraph 1 seems to be that where an enactment was in force in a local area and applied in relation to it, it must continue to apply notwithstanding that the local area is converted from a municipal borough into a City. Here in the present case if the local area of Surat had continu ed to be a municipal borough which it was when sub- section (1 0) of section 310A came into force and the alteration of the limits of Chorashi Taluka and Surat District had taken place as a result of the inclusion of Brander and Adajan in the limits of the Municipal Borough of Surat, sub-section (10) of section 310A would have applied, then is there any reason from the point of view of Section 310A why the Legislature should have intended that a different consequence shall ensue if the same alteration takes place at a time when the Surat Municipal Borough is converted into the City of Surat. There is no conceivable reason why the consequences which would have followed from the alteration of the limits of the local area of Surat when it was a Municipal Borough should not follow when the same alteration takes place in the limits of the same local area of Surat after it is constituted into a City". After fully considering the contentions raised on behalf of the State we are not satisfied that there is any such infirmity in the judgment of the High Court which makes it erroneous or would justify our taking a different view. It must,be remembered that in the matter of interpretation of enactments which are in force in a particular State this Court generally attaches a good deal of value to the views of the High Court of that State, particularly when they have been fully considered by it, because that State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 8 court is expected to be sufficiently conversant with the provisions of the various local enactments. In the result this appeal fails and it is dismissed with costs S.C. Appeal dismissed. State Of Gujarat & Another vs Zinabhai Ranchhodji Darji & Ors on 7 December, 1971 9 | {
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State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 Equivalent citations: 1972 AIR 1530, 1972 SCR (2) 864, AIR 1972 SUPREME COURT 1530, 1972 JABLJ 185, 1972 MPLJ 349, 1972 SCD 1084, 1972 2 SCR 864 Author: C.A. Vaidyialingam Bench: C.A. Vaidyialingam, Kuttyil Kurien Mathew PETITIONER: STATE OF MADHYA PRADESH & ORS. Vs. RESPONDENT: SARDAR D. K. JADHAV DATE OF JUDGMENT14/12/1971 BENCH: VAIDYIALINGAM, C.A. BENCH: VAIDYIALINGAM, C.A. MATHEW, KUTTYIL KURIEN CITATION: 1972 AIR 1530 1972 SCR (2) 864 1972 SCC (1) 402 ACT: Madhya Bharat Abolition of Jagirs Act Samvat 2008. (Act 28 of 1951), ss. 2(1)(ix) and 5(c)-'Occupied land' what is- Protection of s, 5(c) whether available where area of tanks is partly occupied by Jagirdar and ,partly by tenants. HEADNOTE: Under s. 5(c) of the Madhya Bharat Abolition of Jagirs Act Samvat 2008 (Act 28 of 1951) all tanks, trees etc. in or on 'occupied lands' belonging to or held by the Jagirdar or any other person were excluded from vesting in the State by virtue of s. 4. The respondent filed a writ petition in the High Court claiming that certain tanks built by himself and his predecessor-in-title were on 'occupied land' and therefore came within the protection of s. 5(c). The State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 1 original order passed by the High Court in the writ petition was set aside, by this Court and the High Court was directed to decide afresh the claim made by the writ petitioners under s. 5(c) of the Act. After considering the evidence before it on this question the High Court held that the' tanks in question were saved under s. 5(c) and they had not vested in the State under the Abolition Act. In appeal by the State to this Court, HELD: 'Occupied land' as defined in s. 2(1) (ix) of the Act comprises broadly two types of lands : (1) four categories of land held under the tenures enumerated in sub- clauses (a) to (d); and (2) comprised in Khud-Kasht and 'homestead'. To attract cl. (c) of s. 5 the tank must be shown in the first instance to be on occupied land that is on land comprised under the tenures enumerated in sub- clauses (a) to (d) or in the land held as Khud-kasht and homestead. It is not necessary that the entire tank should be exclusively situated in the land held as khud-kasht and land comprised in homestead. The requirement of "he tanks in question being an occupied land will be satisfied even if part of the tank is situated in one or the other of the tenures mentioned in sub-clause,,; (a) to (d) of cl. (ix) of s. 2(1) and the rest or it is included in the land held as khud-kasht and the land comprised in a homestead. That is, the ,entire area of the tank must be comprised in either the tenures or the khud-kasht or homestead or in both. Therefore it was not possible to accept the contention advanced on behalf of the appellant State that only those tanks which are on khud-kasht land of the Jagirdar are saved to him. Acceptance of such a contention will be ignoring the clear working of cl. (ix) of s. 2(1) which takes in also lands held on the various tenures referred to therein. [871 D-G] Therefore in the present case the mere fact that a part of the tanks was in the occupation of the tenants as tenure- holders did not detract from the operation of the saving cl. (c) of s. 5. The expression 'any other person' is comprehensive enough to take in the persons who were holding the land on one or the other of the tenures enumerated in subclauses (a) to (d) of s. 2(1)(ix) of the Abolition Act. Whatever may be the extent of the tanks in the possession of the respondent, as his khud-kasht or homestead and in the possession of the tenure-holders the position ultimately was that the entire extent of the tanks was in :occupied land' belonging to or held by the Jagirdar or any other person. [872 H,873 B] 865 The judgment of the High Court must accordingly be upheld. JUDGMENT: State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 2 CIVIL APPELLATE JURISDICTION: Civil Appeal No. 32 of 1971. Appeal from the judgment and order dated March 12, 1970 of the Madhya Pradesh High Court in Miscellaneous Petition No. 184 of 1965. I. N. Shroff, for the appellants. V. S. Desai, S. K. Mehta, K. L. Mehta, V. K. Sapre and K. R. Nagaraja, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. The short question that arises for consideration in this appeal, on certificate, is whether the High Court has complied with the directions given by this Court in its judgment dated January 25, 1968 in Civil Appeals Nos. 1244 and 1245 of 1967 and adjudicated upon the question whether the claim made by the respondent that the tanks and wells in question were constructed on "occupied I- and" belonging to the Jagirdar within the meaning of s. 5(c) of the Madhya Bharat Abolition of Jagirs Acts, Samvat 2008 (Act 28 of 1951) (hereinafter to be referred as the Abolition Act). The facts leading up to the present decision of the High Court may be stated: In Samvat 1885 the Ruler of the erstwhile Gwalior State conferred on the predecessor in title of the respondent the Jagir of Mauza Siroli situated in Pargana Gwalior. The Abolition Act came into force on December 4, 1952. Section 3 provides for resumption of Jagir-lands by the Government. Under sub-section (3), the date appointed under s. 3 as the date for resumption of Jagir-lands is "the date of resumption'. After the issue of notification under s. 3, appointing a date for resumption, all the property in the Jagirdar including Jagir-lands, forest, trees, fisheries, wells, tanks, ponds etc. stood vested in the State under s. 4 of the Abolition Act. But under s. 5 (c) all tanks, trees, private wells and buildings in or on the occupied lands, belonging or held by the Jagirdar or any other person, were excluded from vesting. After the abolition of Jagirs under the Abolition Act, proceedings were initiated for determining the compensation payable to the respondent and the same was determined. Out of the amount, so determined, certain loans were deducted and the balance amount was paid. The Madhya Pradesh Land Revenue position ultimately was that the entire extent of the tanks was in 'occupied as the Code) came into force on October 2, 1959. Section 251 of the Code provided for vesting in the State Government all ranks situated on unoccupied lands, in the circumstances mentioned therein. The said section made provision for claiming compensation in the manner laid down therein. The respondent on April 5, 1961 made an application to the Collector, Gwalior under s. 251 of the Code claiming com- pensation for tanks which, according to him, had been built by himself and his predecessor in title over an area of 1679 bighas and 18 biswas of land. There were various orders passed by the authorities in connection with the said claim for compensation. The respondent moved the Madhya Pradesh High Court under Art. 226 of the Constitution by two writ petitions to quash two orders of the Collector of Gwalior and two orders of the Additional Commissioner, Gwalior Division. The writ petitions were opposed by the State on the ground that the four tanks claimed by the writ petitioner were really not tanks and in any case the tanks were not on "occupied land" State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 3 within the meaning ,of s. 5 (c) of the Abolition Act and the wells claimed by him had also vested in the State under S. 4(1)(a) of the Abolition Act. The High Court by its judgment dated November 30, 1966 allowed the writ petitions and quashed the four orders, referred to above, on the ground that the claim made by the respondent that the tanks were on "occupied land" under s. 5(c) of the Abolition Act, has to be decided by the Jagir Commissioner in the manner required under s. 17 of the said Act. The State challenged before this Court in Civil Appeals Nos. 1244 and 1245 of 1967, the decision of the Madhya Pradesh High Court. 'Me contention raised on behalf of the State was that s. 17 of the Abolition Act had no application and that it was the function of the Jagir Commissioner alone to inquire whether the claim of the writ petitioner under s. 5(c) of the Abolition Act was well founded on merits and then refer the matter for the final decision of the Government under s. 17 of the Abolition Act. After a consideration of the scheme of the Abolition Act and in particular of s. 17, this Court accepted the contention of the State and held that the inquiry contemplated under s. 17 by the Jagir Commissioner relates to compensation to be paid to the Jagirdar whose Jagir is vested in the State Government and once the compensation is determined and paid, no further inquiry under s. 17 is contemplated. In this view, by its judgment dated January 25, 1968, this Court set aside the orders passed by the High Court. This Court further held that the writ petitioner, namely, the present appellant before us" is, not left without any remedy to agitate his claim that the, tanks and wells claimed by him were constructed on occupied land and that they have been saved from vesting in the Government under s. 5(c) of the Abolition Act. It was held that if the writ petitioner was able to establish this plea, the State Government will have no power or authority to take possession of such tanks and wells, as the title thereto did not vest in it in view of s. 5 (c) of the Abolition Act. It was further held that s. 5 (c) has an over-riding effect on s. 4 of the Abolition Art. In this view this Court held that it was the duty of the High Court to have decided the jurisdictional fact as to whether the tanks and wells claimed by the present respon- dent belonged to the Jagirdar within the meaning of s. 5(c) of the Abolition Act and that, if the High Court accepted the said contention, the High Court was competent to issue a writ under Art. 226 of the Constitution directing the State to hand over possession of the said tanks and wells to the writ petitioner. Ultimately, for all the reasons given in its judgment, this Court set aside the decision of the High Court and remanded the proceedings for deciding afresh the claim made by the writ petitioner under s. 5(c) of the Abolition Act. Liberty was given to the parties to place before the High Court such further evidence, oral and documentary, as they may desire to give on the point at issue. The main judgment was given in Civil Appeal No. 1245 of 1967. For the same reasons given in the said judgment, Civil Appeal 1244 of 1967 was also remanded in accordance with the directions given in Civil Appeal No. 1245 of 1967. The said decision of this Court is reported in State of Madhya Pradesh State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 4 and others v. Sardar D. K. Jadhav(1). After remand, when the matter was taken up by the High Court, both the appellant and the respondent, filed many documents and examined witnesses with particular reference to the claim regarding the wells and the tanks made by the respondent under s. 5(c) of the Abolition Act. The respondent laid his claim on the ground that the tanks and wells had been constructed on lands which were his Khud- kasht lands as also on lands held on tenure by other persons. But ultimately his claim was on the basis that the wells and tanks were all on occupied land belonging to the Jagirdar or any other person, as laid down under s. 5(c) of the Abolition Act. The State, on the other hand, denied the right of the respondent to claim any right in the said tanks and wells on the ground that they were not located on occupied land belonging to the Jagirdar, but were situated on lands which were in the possession ,of tenants. Hence, according to the State, the said tanks and (1) [1968] 2 S.C.R 823. wells were not saved to the respondent under s. 5 (c) of the Abolition Act, and that they have vested in the State, as rightly held by the Revenue authorities. In short, the contention of the State appears to have been that only those tanks and wells, which are on occupied land belonging to the Jagirdar and in his possession as Khudkasht land alone are saved under s. 5 (c) of the Abolition Act. At this stage we may mention that though the respondent laid claim to certain wells also in addition to the tanks, it is seen from the judgment of the High Court that during the stage of arguments, it was represented on his behalf that three out of five wells were already in his possession and that no adjudication is necessary regarding those wells. Regarding the other two wells, it is also seen that the respondent abandoned his claim before the High Court. Therefore, the entire controversy, which the High Court had to decide centred round the claim, regarding the tanks, made by the respondent under s. 5 (c) of the Abolition Act. Though various maters have been adverted to by the High Court in its judgment, its material findings are as follows : That the four tanks_ as also the pick-up weir are tanks within the meaning of the Abolition Act. The four tanks as also the pick-up weir belonged to the respondent at the time of the resumption of Jagirs under the Abolition Act, namely, December 4, 1952; Section 5 (c) is clearly attracted it the right of ownership or possession of the tanks belonged either to the Jagirdar or to any other person as against the said right belonging to the community at large or the State. The fact that a part of the bed of the tanks may be in the occupation of tenants is of no consequence in holding in favour of the respondent under s. 5 (c) of the Abolition Act; The entire area of the tanks in the possession of the respondent must as his Khud Kasht land and also in the occupation of the tenants are both saved under s. 5 (c) and do not vest in the State under s. 4 of the Abolition Act. On these findings, the High Court accepted the contention of the respondent and held that the tanks claimed by him are saved under s. 5 (c) and they have not vested in the State under the Abolition Act. We may state at this stage that the High Court has not thought it necessary to consider the precise area of each one of the tanks as the tenants were not parties to the proceedings. Ultimately, the High Court held that on resumption of Jagirs under the Abolition Act, the four tanks and the pick-up weir are saved to the respondent under s. 5(c) of the Abolition Act, subject to certain observations contained in the judgment. In consequence, the High Court quashed the four orders of the Revenue State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 5 authorities, referred to, in the judgment. Though Mr. I.N.Shroff, learned counsel for. the State, has raised several contentions, in our view, most of them do not survive in view of the specific directions contained in the order of remand passed by this Court. The only two contentions that have been advanced by him and require to-be considered are : (1) That the High Court has not complied with the directions given by this Court in its order of remand; and (2) The High Court has not found that the said tanks are situated on "occupied land" so as to be saved under s. 5(c)of the Abolition Act. The counsel has, no doubt, pointed out certain other circumstances, which, ,according to him, constitute an infirmity in the judgment of the High Court. On the other hand, Mr. V., S. Desai, learned counsel for the respondent, has pointed out that the directions of this Court have been fully complied with and that after a very elaborate consideration of the materials placed before it by both the parties, the High Court has recorded a finding that the tanks claimed by the respondent are on "occupied land" belonging to or held by the Jagirdar or any other person as required under s. 5 (c) of the Abolition' Act. The fact that the High Court has not considered is necessary to adjudicate upon the exact area of the tanks is of no consequence because that is a matter to be decided as between the Jagirdar and the other tenure-holders, if any. Once the requirement that the tanks are on occupied land and that they belong to the Jagirdar or to,any other person is satisfied they are saved under s. 5(c) of the Abolition Act. That was the only point that the High Court was, directed to adjudicate upon and on. that aspect clear findings have been recorded by it. Before we deal with the contentions of the learned counsel on both sides, it is necessary to refer the material provisions of the Abolition" Act. The expressions "Homestead" and "Occupied land" are defined in sub-clauses (iv) and (ix) of s. 2(1) and they are as follows: "2 In this Act unless the: context otherwise requires- (iv)"Homestead" means a dwelling-house together with any court-yard, compound or attached garden or bari and includes any out- building used for agricultural purposes and any tank or well appertaining to the dwelling- house. (ix) "Occupied land" means land held immediately the following tenures, namely, -L36 SupCI/72 (a) Ex-proprietary; (b) Pukhta Maurusi; (c) Mamuli Maurusi; State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 6 (d) Gair Maurusi; and includes land-held as Khud-kasht and land comprised in a homestead;" Section 3 deals with resumption of Jagir lands by the Government. As we have already mentioned the date of resumption is December 4, 1952. Section 4 enumerates the various items which vest in the State, unless the contrary has been provided in the Abolition Act. Section 5 saves, from vesting certain items arid clause (c), which is material is as follows: "Section 5 : Private wells, trees, buildings, house-sites and enclosures.-Notwithstanding anything contained in the last preceding section- (c) all tanks, trees, private wells and buildings in or on occupied land belonging to or held by the Jagirdar or any other person shall continue to belong to or, be held by such Jagirdar or other person. Regarding the first contention we are satisfied that the High Court has complied with the directions given by this Court in its remand order. The High Court was directed to decide the jurisdictional fact as to whether the tanks and wells claimed by the respondent belonged to the Jagirdar and were saved under S. 5(c) of the Abolition Act. Therefore, the only investigation that had to be made by the High Court was on the point, referred to above. In fact, it is seen that the High Court has been very considerate when it allowed the appellant to raise various other questions, such as, the locus standi of the respondent, to file the writ petition, the question of non-impleading of the tenants in possession of lands over which part of the tanks are situated and the undue delay in filing the writ petition. Further, the High Court has allowed the appellant to raise the question that the respondent is estopped from seeking relief regarding the tanks under s. 5(c) in view of the stand taken by him before the Revenue authorities in his application for award of compensation. These matters should not have been permitted to have been raised by the appellant. If these contentions were available to the appellant, they should have been raised be-fore this Court in the appeals, referred to earlier. Any how the High Court has gone into those matters and held against the appellant. Therefore, far from not complying with the directions given by this Court, it has even allowed the appellant to raise certain contentions which were. not available to it at the stage when the matter was being considered after remand. Therefore, the first contention will have to be rejected straightaway. Regarding the second contention, it is also clear from the judgment of the High Court that it has very elaborately considered the various aspects presented; to it, both by the appellant as well as the respondent. After a consideration of the materials so placed before it and having due regard to the provisions of the Abolition Act, the High Court, as we, have pointed out earlier, has considered, as directed by this Court, the main question whether the tanks are saved under s. 5(c) of the Abolition Act. In that connection the High Court had naturally to consider the scope of the definition of "Occupied land" under s. 2 (1) (ix) of the Abolition Act. It is after a consideration of all these aspects that the High Court has found that the four tanks belonged to the respondent at the time of resumption. and the said tanks were on occupied land belonging to the Jagirdar or any other person. State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 7 Therefore, it considered the question properly as per the remand order and has given a finding on the same. As to whether the said finding is correct or not, is a different matter. But the criticism that it has not considered the point regarding the saving of the tanks under s. 5(c) of the Abolition Act, cannot be accepted. Now coming to the merits, it is clear that as and from the date of resumption, the consequences enumerated under s. 4 will have full effect. Except as otherwise provided in the Abolition Act, normally under cl. (a) of Section 4(1) the right, title and interest of every Jagirdar and of every other person claiming through him in his Jagir lands including among other items, tanks, shall stand resumed to the State. The saving is provided under s. 5. If the respondent is able to establish that the tanks in question are on occupied land belonging or hold by the Jagirdar or any other person, then those tanks are saved in favour of the respondent under s. 5 (c) of the Abolition Act. It may be mentioned at this stage that though the items are, all described as tanks, it is in evidence that they get submerged at times and at other times portions of the same are being cultivated either by the respondent or by other s under certain tenures. That is, parts of the tanks are included and held by the respondent as khud kasht and rest of it is held by the tenure-holders, who have got tenancy rights over them. As the other tenure-holders, namely, the tenants, were not parties before the High Court, the question of the extent of the area of the tanks was not decided and it was left open. But the entire extent of the tanks had been given by the respondent as 1679 bighas and 18 biswas of land and this claim was fully known to the Revenue authorities, who raised the specific plea that the said tanks are not on occupied land. Therefore, the circumstance that the High Court did not adjudicate upon the question of the extent of the tanks, is of no consequence and it is not material for the point in dispute. In order to get the tanks in question saved under S. 5 (c) of the Abolition Act, the respondent will have to establish They were on occupied land; and (b) They belonged to or were held by the Jagirdar or any other person. We have already extracted the definition of "occupied land'. The essential ingredient of such land is that it must have been held immediately before the commencement of the Abolition Act under one or other of the four tenures mentioned in sub-cls. (a) to (d). We have not been shown about the, existence of any other type of tenure. The occupied land will also include as per the definition lands held by the Jagirdar as khud kasht as well as the land com- prised in a homestead. Therefore, occupied land comprises broadly of two types of lands: (1) four categories of land held under the tenures enumerated in sub-clauses (a) to (d); and (2) comprised in khud-kasht and "Homestead". To attracted cl. (c) of S. 5, the tank must be shown' in the first instance, to be on occupied land, that is, on land comprised under the tenures enumerated in sub-clauses (a) to (d) or in the land held, as khud-kasht and homestead. In our opinion, it is not necessary that the entire tank should be exclusively situated in one or other of the tenures enumerated in sub-clauses (a), to (d) of s.2 (1) (ix) on exclusively in the land herd as khud-kasht and land- comprised' in homestead. The requirement of the tanks in question being ;on occupied land, will be satisfied even State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 8 if, part; of the: tanks is situated in one or other of the tenures mentioned in sub-clauses (a) to (d) of cl. (ix) of s. 2 (1 ) and the rest of it is included in, the land held ;Is khud-kasht and land comprised in a homestead. That is the entire area of the tank must be comprised in either the tennures of the khudkasht and homestead or in both. Therefore, it is not. possible, to: accept the contention advanced: on behalf if the appellant State that only those tanks', which are on khud-kasht land of the Jagirdar are saved to him.' Acceptance of such a contention will be ignoring the clear wording of cl (ix) of s. 2(1), which takes in also lands held on the various tenures referred to therein. From this, it follows that the mere fact that a part of the tanks is in the occupation of 'the tenants as' tenure- holders does not detract from operation of the saving cl.(c) of's. 5. There is no controversy that at the material date the occupied lands on which tanks are situated belonged to or were held by the Jagirdar or any other person. The expression "any other person" is comprehensive enough to take in the persons who were holding the land on one or other of the. tenures, enumerated.in sub- clauses (a) to (id) of s. 2(1) (ix) of the Abolition Act. Whatever may be the extent of the tanks in the possession of the respondent, as his khud-kasht or homestead and in the possession of the tenure-holders, the position ultimately is, that the-entire extent of the tanks is in "occupied land" belonging to or held by the Jagirdar or any other person. The actual extent and the area held by the Jagirdar and the tenure holders can be worked out only in the presence of both those parties. To conclude, we are satisfied that the High Court has appealed the correct test. to find out whether the. tanks are saved under s. ) of the Abolition Act. We, are also in agreement with the finding of the High Court that the four tanks and the pick-up weir are saved to the respondent under s. 5(c) of the Abolition Act. In the result, the judgment and order of the High Court are confirmed and this,appeal dismissed with costs G. C. Appeal dismissed. State Of Madhya Pradesh & Ors vs Sardar D. K. Jadhav on 14 December, 1971 9 | {
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State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 Equivalent citations: 1972 AIR 1660, 1972 SCR (2) 434, AIR 1972 SUPREME COURT 1660, 1972 2 SCR 434, 1972 SCC(CRI) 123, 1972 SCD 89 Author: I.D. Dua Bench: I.D. Dua, S.M. Sikri, J.M. Shelat PETITIONER: STATE OF WEST BENGAL Vs. RESPONDENT: ASHOK DEY & ORS. ETC. ETC. DATE OF JUDGMENT19/11/1971 BENCH: DUA, I.D. BENCH: DUA, I.D. SIKRI, S.M. (CJ) SHELAT, J.M. MITTER, G.K. CITATION: 1972 AIR 1660 1972 SCR (2) 434 1972 SCC (1) 179 CITATOR INFO : RF 1972 SC1670 (11) RF 1972 SC1924 (1,5) R 1974 SC 613 (10,33,52) ACT: Constitution of India, Arts. 22(4) and 22(7)-Power of State Legislature to make law providing for preventive detention for more than three months under Art. 22(4) is concurrent with that of Parliament under Art. 22(7) -West Bengal (Prevention of Unlawful Activities) Act, 1970 (President's Act 19 of 1970), ss. 10 to 13-Sections are not violative of Art. 22(7) and are valid-Article 22(7) is permissive- President's Act, 19 of 1970 is not violative of Art. 19(1)(d) of Constitution--S. 3(2)(c) of Act, construction of. State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 1 HEADNOTE: The respondents were detained under the West Bengal (Prevention of Violent Activities) Act, 1970. In writ petitions before the High Court they challenged the constitutional validity of the Act on the following grounds: (1) that it was not a law made by Parliament as contemplated by Art. 22(7) of the Constitution with the result that the extension of the detention for a period longer than three months was unconstitutional. Sections 10 to 13 of the Act were described as violative of Art. 22(4) and (7) of the Constitution; (2) that the restrictions both in respect of substantive law and in respect of procedure imposed by the Act on detenus' right guaranteed Art. 19(1)(a) were unreasonable and, therefore, the Act was unconstitutional; and (3) that the Act was violative of Art. 14 of the Constitution in as much as it gave arbitrary. unguided and uncanalised power to the State Executive without prescribing any guidelines for its exercise. The High Court held that the Act was not a law made by Parliament in terms of Art. 22(7) of the Constitution. It further held that the Provisions contained in ss. 11 and 13 of the Act relating to the procedure before the Advisory Board in respect of the person detained for a longer period than three months were ultra vires Art. 22(7) of the Constitution because under the said Article, Parliament alone has been invested with jurisdiction to legislate on these matters. On the question of applicability of Art. 19(1) the High Court came to the conclusion that it Was not applicable to the impugned Act. The challenge on the basis of Art. 14 of the Constitution was also repelled as the classification contemplated by the Act could by no means be considered unreasonable. Appeal to this Court was filed by the State. HELD : (1) Article 22(7)(b) and (c) are not mandatory. Clause of the Article on its plain reading merely authorises or enables the Parliament to make a law prescribing (i) the circumstances under which a person may be detained for a period longer than three months (ii) the maximum period for which a person may in any class or classes of cases be detained under the law providing for preventive detention and (iii) the procedure to be followed by the Advisory Board in an inquiry under cl. (4)(a) of this Article. The respondents' contention that 'may' in the opening part of this Article must he read as "shall" in respect of sub-,cis. (b) and (c) though it retains its normal permissive character in so far as cl. (a) is concerned, in the absence of special compelling, reasons can be supported neither on principle nor by precedent. On the other hand this Court in Krishnan's case as well as in Gopalan's case held sub-cl. (b) of cf. (7) to be permissive. [439 H-440 B] 435 S. Krishnan v. State of Madras, [1951] S.C.R. 621, 639 and State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 2 Gopalan v. State of Madras, [1950] S.C.R. 88, relied on. The power of the State Legislature under Art. 246 with respect to preventive detention enumerated in Entry 3 of List III is co-extensive with that or Parliament with respect to such preventive detention and it must necessarily extend to all incidental matters connected with preventive detention as contemplated by this entry, subject only to the condition that it does not come into conflict with a law made by Parliament with respect to the same matter. There is no provision of the Constitution nor of any other law which would justify limitation on the power of the State Legislature to make a valid law providing for detention under Art. 22(4) for a period beyond three months on the ground of absence of law made by Parliament permitting detention for such period. Had the Constitution intended such a result it would certainly have made express provision to that effect. Security of a State, maintenance of public order, and of supplies and services essential to the community demand effective safeguards in the larger interest of sustenance of peaceful democratic way of life. [440 G-441 F] Majority view in Pooranlal Lakhan Pal v. Union of India, [1958] S.C.R. 460, held binding. (2) (a) The restrictions on the citizen's freedom as embodied in Art. 19(1) (d) of the Constitution placed by the Act must be held to be eminently in the interest of general public. This Court can and should take judicial notice of the historical events which led to the President's rule. Those events fully demonstrate the necessity in the interest of the general public to brings on the statute book the pro- visions of the Act. The challenge to cls. (a), (b), (d) and (e) of s. 3(2) of the Act was prima facie unfounded for there can be no two opinions about the acts covered by these clauses being reasonably likely to be prejudicial to the maintenance of public order. That, disturbance of public order in a State may in turn prejudicially affect its security it also undeniable. Fairly close and rational nexus between these clauses and the maintenance of public order and security of the State of West Bengal is writ large on the face of these clauses. [443 C-D; 445 E-F] (b) When one closely examines the circumstances in which the Act was passed, the mischief intended to be remedied by its enactment, and the purpose and object of enacting it, cl. (c) of sub-s. (2) considered in the background of sub-s. (1) of s. (3) must be construed to mean causing insult to the Indian National Flag or to any other object of public veneration in such a situation as reasonably exposes the act, causing such insult to the view of those, who hold these objects in veneration or to the public view, and it would not cover cases when the Indian National Flag or other object of public veneration is mutilated, damaged, burnt defiled or destroyed, completely unseen or when incapable of being seen, by anyone whose feelings are likely to be hurt State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 3 thereby. The act causing insult referred to in cl. (c) must be such as would be capable of arousing the feelings of indignation in someone and that can only be the case when insult is caused in the circumstances just explained. So construed, cl.(c) would, be clearly within the expression "acting in any manner prejudicial to the maintenance of public order". This restricted construction of cl. (c) is admissible on the statutory language and the legislative scheme. On this construction the challenge to cl. (c) on the basis that insulting an object of public veneration in privacy could have no rational nexus with the disturbance of public order or security of the State, must fail. [445 H-446 D] 436 JUDGMENT: CRIMINAL APPELLATE JURISDICTION : Criminal Appeals Nos. 217 to 233 of 1971. Appeals from the judgment and order dated September 13, 1971 of the Calcutta High Court in Criminal Misc. Cases Nos. 169, 177, 222, 224, 229, 230, 231, 237, 285, 236, 287, 316, 328, 329, 330 and 331 of 1971. Niren De, Attorney-General, D. N. Mukherjee and G. S. Chaterjee, for the appellant (in all the appeals). Niren De, Attorney-General, R. H. Dhebar, Ram Panjwani and S. P. Nayar, for the Attorney-General for India (in all the appeals). Somnath Chatterjee, D. K. Sinha, Rathin Das, and Indira Jai Singh, for the respondents (in Cr. As. Nos. 219, 223 and 225 to 227 of 1971). Aruk Prakash Chatterjee, Rathin Das, Dalip K. Sinha and Indira Jai Singh, for the respondents (in Cr. As. Nos. 228 and 230 to 233 of 1971). The Judgment of the Court was delivered by Dua, J.-These appeals have been presented to this Court pursuant to certificate of fitness granted by the Calcutta High Court under Art. 132(1) of the Constitution from a common judgment of that Court allowing 17 writ petitions presented on behalf of the persons detained under the West Bengal (Prevention of Violent Activities) Act, 1970 (President's Act 19 of 1970) (hereafter called the Act). In the High Court the constitutional validity of the Act was challenged on the grounds :(1) that it was not a law made by Parliament as contemplated by Art. 22(7) of the Constitution with the result that the extension of the detention for a period longer than three months was unconstitutional. Sections 10 to 13 of the Act were described as violative of Art. 22(4) and (7) of the Constitution; (2) that the restrictions both in respect of substantive law and in respect of procedure imposed by the Act on detenus' right guaranteed by Art. 19(1)(d) were unreasonable and, therefore, the Act was unconstitutional; and (3) that the Act was violative of Art. 14 of the Constitution inasmuch as it gave arbitrary, unguided and uncanalised State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 4 power to the State Executive without prescribing any guidelines for its exercise. The High Court held that the Act was not a law made by Parliament in terms of Art. 22(7) of the Constitution. This conclusion is not questioned by the learned Attorney General before us and indeed he has conceded that the Act is not a law made by Parliament as contemplated by Art. 22(7). The High Court then considered the question of the effect of the Act, if it is to be deemed to be an Act passed by the West Bengal Legislature. On this point it came to the conclusion that the provisions contained in ss. 1 1 and 13 of the Act relating to the procedure before the Advisory Board in respect of the person detained for a longer period than three months was ultra vires Art. 22(7) of the Constitution because under the said Article, Parliament alone has been invested with jurisdiction to legislate on these matters. The State Legislature was accordingly held to be incompetent to make a law prescribing procedure for the Advisory Board and also to make a law providing for detention for more than three months. On the question of applicability of Art. 19(1) the High Court came to the conclusion that it was not applicable to the impugned Act and, therefore, the Act could not be struck down as violative of Art. 19(1)(d) or under any other clause of Art. 19(1). The challenge on the basis of Art. 14 of the Constitution was also repelled as the classification contemplated by the Act could by no means be considered unreasonable. In the final result on the ground of invalidity of ss. II and 13 the writ petition was allowed with respect to the detention of the detenus beyond the period of three months. In this Court the learned Attorney General has concentrated his attack on the impugned judgment on the argument that Art. 22(7) of the Constitution does not confer exclusive jurisdiction on the Parliament to make a law for valid detention of persons for a period longer than three months and that the State Legislature is fully competent, to make laws for detention, to prescribe procedure for the Advisory Board and also to make law for the detenus beyond the period of three months. In order to appreciate the legal position it is desirable to reproduce Art. 22 of the Constitution : "22. Protection against arrest and detention in certain cases : (1) No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice. (2) Every person who is arrested and detained in custody shall be produced before the nearest magistrate within a period of twenty-four hours of such arrest excluding the time necessary for the journey from the place of arrest to the court of the magistrate and not such person shall be detained in custody beyond the said period without the authority of a magistrate. (3) Nothing in clauses (1) and (2) shall apply- (a) to any person who for the time being is an enemy alien; or State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 5 (b) to any person who is arrested or detained under any law providing for preventive detention. (4) No law providing for preventive detention shall authorise the detention of a person for a longer period than three months unless- (a) an Advisory Board consisting of persons who are, or have been, or are qualified to be appointed as, Judges of a High Court has reported before the expiration of the said period of three months that there is in its opinion sufficient cause for such detention : Provided that nothing in this sub-clause shall authorise the detention of any person beyond the maximum period prescribed by any law made by Parliament under sub-clause (b) of clause (7); or (b) such person is detained in accordance with the provisions of any law made by Parliament under sub-clauses (a) and (b) of clause (7). (5) When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order. (6) Nothing in Clause (5) shall require the authority making any such order as is referred to in that ,clause to disclose facts which such authority considers to be against the public interest to disclose. (7) Parliament may by law prescribe- (a) the circumstances tinder which, and the class or classes of cases in which, a person may be detained for a period longer than three months under any law providing for preventive detention without obtaining the opinion of an Advisory Board in accordance with the provisions of sub-clause (a) of clause (4); (b) the maximum period for which any person may in any class or classes of cases be detained under any law providing for preventive detention; and (c) the procedure to be followed by an Advisory Board in any inquiry under sub-clause (a) of clause (4)." It is clear that cl. (4) of this Article only prohibits a law providing for preventive detention, to authorise detention of a person for more than three months unless an Advisory Board as State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 6 contemplated by sub-cl. (a) of the said clause has, before the expiry of three months of detention, reported that in its opinion there is sufficient cause for such detention, or unless such person is detained in accordance with the provisions of any law made by Parliament under sub-cl. (a) and (b) of cl. (7). Again, even when an Advisory Board has, under sub-cl. (a) of cl. (7), reported the existence of sufficient cause, detention cannot exceed the maximum period prescribed by a law made by Parliament under sub-cl. (b) of this clause. The expression "such detention" in sub-cl. (a) of cl. (4), according to the majority view in Pooranlal Lakhan Pal v. Union of India(1) refers to preventive detention and not to any period for which such detention is to continue because the decision about the period of detention can only be taken by the detaining authority. Now, the argument raised in the High Court and accepted by it and repeated before us by Shri S. N. Chatterji on behalf of the respondents is that cl. (7) (b) of Art. 22 makes it obligatory for the Parliament to prescribe by law the maximum period for which a person may be detained as also the procedure to be followed by the Advisory Board in holding the enquiry under cl. (4) (a) of this Article. According to the submission, in the absence of such a law by Parliament no order of detention can authorise detention of any person for a period longer than three months and at the expiry of three months all persons detained under the Act must be released. We are unable to accept this construction of cl. (7) of Art. 22. It is noteworthy that Shri Chatterji, learned counsel for the respondents, expressly conceded before us that Art. 22(7) is only an enabling or a permissive provision and it does not impose a mandatory obligation on the Parliament to make a law prescribing the circumstances under which a person may be detained for more than three months as stated therein. But according to him sub-cl. (b) and (c) of cl. (7) do contain a mandate to the Parliament which is obligatory. In our view, cl. (7) of this Article on its plain reading merely authorises or enables the (1) [1958] S.C.R. 460. Parliament to make a law prescribing, (i) the circumstances under which a person may be detained for a period longer than three months, (ii) the maximum period for which a person may in any class or classes of cases be detained under any law providing for preventive detention and (iii) the procedure to be followed by the Advisory Board in an enquiry under cl. (4) (a) of this Article. The respondents' contention that "may" in the opening part of this Article must be read as "shall" in respect of subclauses (b) and (c) though it retains its normal permissive character in so far as cl. (a) is concerned, in the absence of special compelling reasons can be supported neither on principle nor by precedent of which we are aware. On the other hand this Court has in S. Krishnan v. State of Madras(1), agreeing with the observations of Kania C.J. in Gopalan v. State of Madras 2 held sub-cl. (b) of cl. (7) to be permissive. This opinion is not only binding on us but we are also in respectful agreement with it. Apart from the exclusive power of the Parliament to make laws in respect of "preventive detention for reasons connected with defence, foreign affairs or security of India; persons subject to such detention" (vide Art. 246 (1 ) and Entry 9 List I, Seventh Schedule), Parliament and State Legislatures have both concurrent powers to make laws in respect of "preventive detention for reasons connected with the security of a State, the maintenance of public order, or the maintenance of supplies and services essential to the community; persons subject to such detentions" (vide Art. 246(2) and Entry 3 in List III of Seventh Schedule). A law made by State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 7 Parliament in respect of preventive detention falling under Entry 3 of List III has to prevail over a State law on the subject to the extent to which it is repugnant lo the State law unless the State law is covered by Art. 254(2). Parliament, however, is not debarred by cl. (2), as is clear from the Proviso. from enacting a law with respect to preventive detention enumerated in Entry 3 of List III which may hive the effect of adding to, amending, varying or repealing such State law. The State Legislature has thus plenary power to make a law providing for preventive detention within the limitations imposed by the Constitution just noticed. The power of the State Legislatures under Art. 246 with respect to preventive detention enumerated in Entry 3 of List III is co-extensive with that of Parliament with respect to such preventive detention and it must necessarily extend to all incidental matters connected with preventive detention as contemplated by this entry, subject only to the condition that it does not come into conflict with a law made by Parliament with respect to the same matter. There is no provision of the Constitution to which our attention has been drawn nor has any principle of law or precedent been brought to our notice, which would (1) [1951] S.C.R. 621 at 639. (2) [1950] S.C.R. 88. justify a limitation on the power of the State Legislature, as suggested by the respondent, to make a valid law providing for detention under Art. 22(4) for a period beyond three months on the ground of absence of a law made by Parliament permitting detention for such period. Had the Constitution intended such a result it would certainly have made an express provision to that effect. Since Art. 22 covers the subject of preventive decision both under the law made by Parliament and that made by State Legislatures, if State Legislatures were intended by the Constitution to function under a limitation in respect of the period of detention one would have expected to find such a limitation expressly stated in this Article. But as we read cl. (7) of Art. 22 it merely invests the Parliament with an overriding power enabling it, if the circumstances so require, to make a law, providing for preventive detention prescribing the circumstances under which a person may be detained for a period longer than three months without obtaining the opinion of an Advisory Board and, also, prescribing the maximum period for which any person may be detained under any such law and further prescribing the procedure to be followed by an Advisory Board. It does not prohibit the State Legislature from making a law either providing for preventive detention for a longer period than three month-, when there is a provision for securing the opinion of an Advisory Board or prescribing procedure to be followed by such Advisory Board. Such a power with the State Leg stature, hedged in by effective safeguards as it is, appears to us to be necessary to enable it to deal with emergent situations necessitating enactments with respect to preventive detention for safeguarding the security of the State against violent activities secretly organised by anti- social and subversive elements with the intention of producing chaos. Security of a State, maintenance of public order and of supplies and services essential to the community demand effective safeguards in the larger interest of sustenance of peaceful democratic way of life. Article 22, therefore, must be construed on its plain language consistently with the basic requirement of preventing anti- social subversive element's from imperiling the security of States or the maintenance of public order or of essential supplies and services therein. State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 8 On behalf of the respondents some stress was laid on the dissenting opinion of Sarkar J., (as he then was) in Pooranlal Lakhan Pal's case(1). The majority view in that case is, however, not only binding on us but we are in respectful agreement with that view. Shri A. P. Chatterjee also appearing for the respondents addressed elaborate arguments in support of the submission that, after the decision in R. C. Cooper v. Union of India(2) the view (1) [1958] S.C.R. 460 (2) [1970]3 S.C.R. 530. taken in Gopalan's case (supra), that Art. 22 is exhaustive on the subject of preventive detention and Art. 19(1)(d) is wholly out of the picture, is no longer good law. On this premise he attempted to develop his attack on the reasonableness of the restrictions imposed on the fundamental right of a person detained under the Act, to move freely throughout the territory of India. According to his submission the restrictions imposed on the persons detained under the Act are not in the interest of the general public with the result that the Act must be struck down as violative of Art. 19 (1) (d). On behalf of the appellants this argument was countered on the ground that Cooper's case (supra) was strictly confined only to the right of property and that the right to personal freedom was not directly involved. In the alternative, according to the learned Attorney General, the restrictions imposed on a person who is detained with a view to preventing him from acting in any manner Prejudicial to the security of the State or the maintenance of public order, as the impugned Act purports to do, cannot be considered not to be in the interest of the general public. In our opinion, assuming that Art. 19(1)(d) of the Consti- tution is attracted to the case of preventive detention, restrictions imposed by the Act on the fundamental rights of a citizen, who has been detained under the Act, to move freely throughout the territory of India, with a view to preventing him from acting in any manner prejudicial to the security of the State of West Bengal or maintenance of public order, are clearly in the interest of the general public. The Act, it has to be borne in mind, was brought on the statute book by the President because of a feeling of "increasing anxiety over the continuing violent activities in West Bengal of the 'Naxalites', other similar extremist groups and antisocial elements operating with them." (vide Reasons for the enactment). The existing laws, as "Reasons for enactment" also expressly point out, were "found to be inadequate for dealing with the situation" and it was considered "necessary to vest the State administration with powers to detain persons in order to prevent them from indulging in violent activities". To complete the historical background, it may, at this stage, be pointed out, that on March 19, 1970 a proclamation had been issued by the President under Art. 356 of the Constitution from which it is clear that he was satisfied that a situation had arisen in which the Government of that State could not be carried on in accordance with the provisions of the Constitution and the President assumed to himself all the functions of the Government of that State. Pursuant to that proclamation on April 29, 1970 the Parliament passed the West Bengal State Legislature (Delegation of Powers) Act, 17 of 1970 whereby the power of the Legislature of the State of West Bengal to make laws was conferred on the President. This would clearly show that the situation in the State of West Bengal was not normal when the Act was enacted. It is of course undemable that in considering, statutes like the one before us this Court ought to shove the greatest concern and solicitude in upholding and safeguarding the fundamental right of liberty of the citizen. But as against that, we must not forget the historical background in which the necessity for enacting the Act was felt by the President. It is State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 9 also noteworthy that before enacting this Act the Committee constituted under the proviso to S. 3(2) of Act 17 of 1970 was also duly consulted. Keeping in view the times we are living in particularly the present situation in the State of West Bengal, where lawlessness and sabotage has since a long time been rampant to an extent hitherto unknown, it seems to us that the restrictions on the citizens freedom, as embodied in Art. 19 (1) (d) of the Constitution, placed by the Act, must be held to be eminently in the interest of the general public. This Court can and should take judicial notice of the historical events which led to the President's rule. Those events, in our view, fully demonstrate the necessity in the interest of the general public to bring on the statute book the provisions of the Act. The general argument challenging the vires of the Act is thus wholly without substance. Shri A. P. Chatterjee next directed his attack to the validity of the various clauses of sub-s. (2) of s. 3 of the Act. According to the submission these clauses arbitrarily extend the scope of the expression "acting in any manner prejudicial to the security of a State or the maintenance of public order." Let us turn to s.3 to see how far the respondents' attack is substantiated. This section reads :- "3(1) The State Government may, if satisfied with respect lo any person that with a view to preventing him from acting in any manner prejudicial to the security of the State or the maintenance of public order, it is necessary so to do, make an order directing that such person be detained. (2) For the purposes of sub-section (1), the expression 'acting in any manner prejudicial to the security of the State or the maintenance of public order' means- (a) using, or instigating any person by words, either spoken or written or by signs or by visible representations or otherwise, to use, any lethal weapon- (i) to promote or propagate any cause or ideology, the promotion or propagation of 16-L500 Sup Cl/72 which affects, or is likely to affect, adver- sely the security of the State, or the main- tenance of public order; or (ii) to overthrow or to overawe the Govern- ment established by law in India. Explanation.---In this clause, 'lethal weapon' includes fire-arms, explosive or corrosive substances, swords, spears, daggers, bows and arrows; or (b) committing mischief, within the meaning of section 425 of the Indian Penal Code, by fire or any explosive substance on any property of Government or any local', authority or any corporation owned or controlled by Government or any University or other educational institution or on any public building, where the commission of such mischief disturbs, or is 'likely to disturb, public order; or (c) causing insult to the Indian National Flag or to any other object of public veneration, whether by mutilating, damaging, burning, defiling, destroying or otherwise, or instigating any person to do so. State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 10 Explanation.-In this clause, 'object of public veneration' includes any portrait or statute of an eminent Indian, installed in a public place as a mark of respect to him or to his memory; or (d) committing, or instigating any person to commit, any offence, punishable with death or imprisonment for life or imprisonment for a term extending to seven years or more or any offence under the Arms Act, 1959 or the Explosive Substances Act, 1908, where the commission of such offence disturbs, or is likely to disturb, public order; or (e) in the case of a person referred to in clauses (a) to (f) of section 110 of the Code of Criminal Procedure, 1898, committing any offence punishable with imprisonment where the commission of such offence disturbs, or is likely to disturb, public order. (3) Any of the following officers, namely (a) District Magistrates, (b) Additional District Magistrates specially empowered in this behalf by the State Government,. (c) in the Presidency-town of Calcutta, the Commissioner of Police, Calcutta, may, if satisfied as provided in sub-section (1), exercise the power conferred by the said sub-section. (4) When any order is made under this section by an officer specified in sub-section (3), he shall forthwith report the fact to the State Government together with the 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 shall remain in force for more than twelve days after the making thereof unless, in the mean time, it has been approved by the State Government. (5) 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 G overnment together with the grounds on which the order has been made and such other particulars as, in the opinion of the State Government have a bearing on the necessity for the order." The challenge to cl. (a), (b), (d) and (e) is prima facie unfounded for there 'can be no two opinions about the acts covered by these clauses being reasonably likely to be prejudicial to the maintenance of public order. That, disturbance of public order in a State may in turn prejudicially affect its security, is also undeniable. Fairly close and rational nexus between these clauses and the maintenance of public order and security of the State of West Bengal is writ large on the face of these clauses. In view of the clear language of these clauses we consider it wholly unnecessary to deal with them at greater length. In regard to cl. (c) Shri Chatterjee laid emphasis on the fact that causing insult to the Indian National Flag or to any other object of public veneration, as clarified in the explanation, need not always result in an act which may- be considered prejudicial to the security of the State or the maintenance of public order. Insulting the object of public veneration in privacy without the act causing insult being noticed by anyone who holds them in veneration, it was argued, could have no rational nexus with disturbance of public order or security of a State. The argument stated in the abstract is attractive. But when one closely examines the circumstances in State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 11 which the Act was passed, the mischief intended to be remedied by its enactment, and the purpose and object of enacting it, cl. (c) of sub-s. (2), considered in the background of sub-s. (1) of s. 3 must, in our opinion, be constru- ed to mean causing insult to the Indian National Flag or to any other object of public veneration in such a situation as reasonably exposes the act, causing such insult, to the view of those, who hold these objects in veneration or to the public view, and it would not cover cases where the Indian National Flag or other object of public veneration is mutilated, damaged, burnt, defiled or destroyed, completely unseen or when incapable of being seen, by anyone whose feelings are likely to be hurt thereby. The act causing insult referred to in cl. (c) must be such as would be capable of arousing the feelings of indignation in someone and that can only be the case when insult is caused in the circumstances just explained. So construed, cl. (c) would, in our view, be clearly within the expression 'acting in any manner prejudicial to the maintenance of public order'. It would perhaps have been better if this aspect had been clarified in the Act, but legitimately imputing to the law- maker the intention to enact a valid provision of law within the constitutional limitations designed effectively to achieve its object and purpose, the construction of cl. (c), in our view, must be restricted as just explained, such restricted construction being admissible on the statutory language and the legislative scheme. On this construction the challenge must fail. Before concluding we may mention that originally this appeal was heard by a Bench of five Judges, including our learned brother late Mr. Justice S.C. Roy and before his sudden tragic death he had expressed his agreement with our decision and approved the draft judgment. Unfortunately, before the judgment could be announced the cruel hand of death snatched him away from our midst. This appeal was, however, again formally placed,for rehearing this morning before us. The result is that these appeals must be allowed and the judgment of the High Court set aside. As the counsel for the respondents state that there are some other points on the merits which require determination, the writ petitions will now be heard and disposed of by the High Court on those points. G.C. Appeals allowed. State Of West Bengal vs Ashok Dey & Ors. Etc. Etc on 19 November, 1971 12 | {
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