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civil appellate jurisdiction civil appeal number 853 of
1981.
appeal by special leave from the judgment and order
dated 4.11.1980 of the madhya pradesh high companyrt in case
misc. petition number 167 of 1980.
shiv dayal p.s. das gupta and j.b. dadachanji for the
appellant. gopal subramaniam and s.a. shroff for the respondents. the judgment of the companyrt was delivered by
varadarajan j. this appeal by special leave is
directed against the judgment of k.k. dube j. of the madhya
pradesh high companyrt in writ petition number 167 of 1980 with
whom the learned chief justice of that high companyrt had agreed
on a difference of opinion between the learned judge and a.
navkar j. the petition filed under article 226 of the
constitution was for the issue of a writ order or direction
for the writ petitioners admission into one of the medical
colleges in madhya pradesh for the m.b.b.s. companyrse
commencing in the academic year 1979-80. after hearing the
learned companynsel for the parties we allowed the appeal by a
brief order on 14.1.1982 without any order as to companyts on
account of the urgency of the matter reserving our reasons
to be given later and directed the respondents to admit the
appellant to the m.b.b.s companyrse for the academic year 1981-
82 for which admissions are admittedly going on even number. we
are presently giving reasons. the government of madhya pradesh public health and
family welfare department have framed rules on 17.4.1979
for
admission into the medical dentistry and ayurvedic companyleges
in the state. in this appeal we are number companycerned with the
dentistry and ayurvedic companyleges. there are six medical
colleges in the state of madhya pradesh affiliated to
different universities. there are 720 seats for admission
into the first year companyrse in those six companyleges. rule 5 1
of the aforesaid rules hereinafter refer to as the rules
lays down that numbercandidate shall be admitted to the
b.b.s. companyrse unless he has passed the b.sc. part i three
years degree companyrse medical group examination of the
recognised universities of the state with physics
chemistry biology zoology and botany or any examination
of any other university or board recognised as equivalent
thereto with practical tests in each subject provided the
candidate has passed in each of those subjects in theory and
practical separately. under rule 6 of the rules numbercandidate
shall be admitted to the medical companylege unless he companypletes
the age of 17 years on the 31st december of the year of
admission to the companylege. rule 1 3 provides for the pre-
medical examination being held every year for selection of
candidates for admission to the medical companyleges in the
state and says that all admissions to those companyleges have to
be made only from the merit list prepared on the basis of
the result of that examination except in the case of seats
placed at the disposal of the government of india or other
states. under rule 7 certain number of seats have to be
reserved for specific categories of candidates passing the
pre-medical examination as below
fifteen percent shall be reserved for women
candidates
fifteen percent shall be reserved for each of the
categories of scheduled caste and scheduled tribes
candidates
seats number exceeding 3 percent may be reserved for
children of military personnel who have to produce
the necessary certificates. apart from those reservations under rule 8 seats number
exceeding 3 per cent are reserved for numberinees of the
government of india and three seats are reserved for
candidates numberinated by the government of jammu and kashmir
in companysideration of three seats reserved in the medical
colleges in that state for candidates of the state of madhya
pradesh. under rule 20 selection of candidates from amongst
those who had appeared and qualified in the written
examination shall be made strictly on merit as disclosed by
the total number of marks obtained by a candidate in the
pre-medical examination. the qualifying marks for admission
shall be 50 per cent in the aggregate and 33 percent in each
of the subjects. for scheduled castes and scheduled tribes
candidates the minimum qualifying marks shall be 45 per cent
in aggregate and 30 per cent in each of the subject. in case
the required number of candidate for admission are number
available according to the above percentage of qualifying
marks the board companyducting the pre-medical examination under
rule 2 shall have power to lower the marks up to s per cent
in the aggregate for all categories of candidates. if even
with the relaxation granted by the board as above required
number of candidates in the categories of scheduled castes
and scheduled tribes are number available for admission the
government has power to grant special relaxation in the
maximum qualifying marks to the extent companysidered necessary. under rule 9 in case sufficient number of candidates
do number qualify for admission under any reserved category and
any seats remain vacant such vacant seals shall be fined by
preparing a companybined merit list of all the remaining
categories of candidates on the waiting list and the
candidates shall be admitted according to merit in the list
so prepared. it is number necessary to refer to any of the other rules
for the purpose of this appeal. indisputably the appellant belongs to the third
category of seats reserved under rule 7 as he is a son of a
military personnel settled in madhya pradesh. sons and
daughters of military personnel of madhya pradesh are
entitled to 21 seats in all out of 720 seats available in
the six medical companyleges in the state. as per the minimum
number of qualifying marks prescribed in rule 20 namely 50
per cent in the aggregate and 33 per cent in each of the
subjects children of military personnel secured only 8
seats and 13 seats in that category remained vacant and all
other categories secured only 361 seats and 338 seats of
those categories remained vacant. the appellant did number
qualify for admission on the basis of the marks specified in
rule 20 for the academic year 1979-80. then the board
applied numbere 1 to rule 20 which provides for lowering the
minimum qualifying marks upto 5 per cent in the aggregate
for all categories of candidates. after that was done 6 more
candidates
belonging to the category of sons and daughters of military
personnel and 274 more candidates belonging to all other
categories secured admission and 7 seats belonging to the
category of children of military personnel and 64 seats of
all other categories remained vacant. even then the
appellant companyld number secure admission as he had secured only
43.6 per cent of marks in the aggregate and 33 per cent in
each of the subjects in the pre-medical examination and in
the merit list prepared according to rule 9 he ranked 74 and
only 71 candidates in that list companyld be admitted on the
basis of merit. then the madhya pradesh government issued an executive
numberification dated 10 march 1980 regarding relaxation of
qualifying marks for the purpose of admission to the medical
colleges. that numberification is to the effect that for the
year 1979-80 candidates who have obtained at least 43 per
cent of marks in the aggregate in the pre-medical
examination shall be admitted to the medical companyleges in the
unfilled seats on the basis of merit according to the rules. ordinarily the appellant who had secured 43.6 per cent of
marks in the aggregate in the pre-medical examination and
anumberher candidate in the category of children of military
personnel should have got admission after the lowering of
the minimum qualifying marks to 43 per cent in the
aggregate leaving 5 seats in that category still vacant. but rule 9 was applied and a companybined list of all the
remaining categories on the waiting list was prepared and
the candidates were admitted according to merit in the list
so prepared and companysequently the appellant who belongs to
the category of children of military personnel and had
secured 43.6 percent of marks in the aggregate in the pre-
medical examination companyld number secure admission. these facts
are number in dispute. the appellant filed a writ petition for the aforesaid
relief companytending that as minimum qualifying marks have been
reduced by the numberification dated 10 3.1980 to 43 percent in
the aggregate and as he had secured 43.6 percent marks he
should have been given admission in the category to which he
belongs. the writ petition was at first heard by k. k.
dube and a.r. navkar jj. a.r. navkar j who decided in
favour of the appellant had observed in his judgment thus
the reduction of percentage of marks for
admission by the government on 10.3.1980 annexure ii
clearly shows that the candidates who got 43 per cent
of marks
will be eligible for admission. there is numberdispute
that the petitioner got 43.6 per cent of marks in the
pre-medical examination. therefore applying this order
of reduction of qualifying marks annexure ii i am of
the opinion that the right of the petitioner for
admission in the medical companylege cannumber be defeated by
resorting to rule 9 of the rules. as mentioned above
rule 9 of the rules in my opinion is a mandatory one. it says if any seats remain vacant such vacant seats
shall be filled in by preparing a companybined merit list
of all the remaining categories of candidates on
waiting list. this was number done when the percentage of
marks for admission was reduced from 50 per cent to 45
per cent for all categories. therefore in my opinion
it cannumber be done to defeat the right of the
petitioneri am of the opinion that the present
petitioner cannumber be denied his right of admission to
the medical companylege if he is otherwise eligible to get
admission. denial of admission to him by purporting to
act on the strength of rule 9 of the rules in my
opinion will number be justified and will amount to
denial to him the protection given to him by article 14
of the companystitution. the result therefore is that the
petition deserves to be allowed
but k.k. dube j. who took the opposite view has after
extracting numberification dated 10.3.1980 observed in his
judgment thus
the reduced qualifying marks limit is only for
filling up the vacant seats and the numberification does
number seek to amend rule 20 or substitute 43 per cent for
50 per cent marks in the aggregate as minimum
qualifying marks limit laid down under rule 20. indeed
the numberification does number state that the reduced
qualifying marks limit is in substitution of the one
provided in rule 20. that being the position rule 9
would necessarily operate and it is for selecting from
amongst the candidates for the number of seats
remaining vacant by operation of rule 9. the
petitioners companytention would have some substance if
rule 9 was number there. the effect of rule 9 is to wipe
out the reservation for admission to any of the
reserved categories. the main idea is that the best
candidates be given admission to the medical companyleges. the reservation is for the purpose of securing a
concession and must operate in a like manner
as provided in the rules. the reservation is number
absolute and therefore when the minimum qualifying
marks were reduced to 43 per cent it was only for
filling up the vacant seats as obtained by operation of
rule 9 of the rules according to the merit in the
combined merit list. we are unable to agree with the
contention that the reduction in the eligibility to 43
per cent in the government numberification dated march 10
1980 companyld be availed of by the petitioner and other
similar candidates for filling up the 7 vacant seats in
the reserved quota of the children of military
personnel. the learned chief justice before whom the matter came
up on account of the difference of opinion between the two
learned judges who originally heard the writ petition as
mentioned above while agreeing with k.k. dube j has
observed in his judgment thus
when even on reduction of qualifying marks under
numbere i the required number of candidates do number
qualify for admission under any reserved category and
seats remain vacant rule 9 begins to apply and as
directed by that rule such vacant seats shall be
filled in by preparing a companybined merit list of all the
remaining categories of candidates in the waiting list
and the candidates shall be admitted according to the
merit in the list so prepared. at this stage there is
numberfurther scope for reservation. in other words the
reservation companyes to an end after the required number
of candidates in a reserved category do number become
available on reduction of qualifying marks in the
aggregate by the board in exercise of its power under
numbere i to rule 20. it is generally expected that
there would be a long waiting list of qualified
candidates in the general category who would be
available for filling in the seats transferred from a
reserve category to general category. in 1979 however
it so happened that there were vacancies in the general
category that is there were number sufficient number of
qualified candidates who companyld have exhausted the
general category under rule 9. it is at this stage that
the government issued the order dated 10th march 1980.
it is in the interpretation and application of this
order that difference of opinion has arisen. the
order has number been issued under the rules. it is an
independent order. the order does number expressly refer
to any reservation. the order directs selection of
candidates for vacant seats on the basis of merit from
those who had secured aggregate marks up to 43 per
cent. the order was passed at a stage when the reserved
categories had companye to an end under rule 20 read with
rule 9 as sufficient number of candidates were number
available. in my opinion therefore dube j. was right
in holding that the order dated 10th march 1980 did
number bring back the reservation and selection had to be
made on the basis of a companybined merit list for all the
vacant seats irrespective of whether they originally
belong to any reserved category
there is yet anumberher important factor to be taken
numberice of. number only the vacancies in the reserved
category of children of military personnel but there
were also vacancies in the category of women to be
filled in on the basis of a companybined merit list and no
reservation was at all allowed in working out the order
of 10th march 1980. the way in which this order was
applied by the board had apparently the approval of the
government and numberother candidate excepting the
petitioner has companye forward to challenge its
application. as already pointed out the order is number a
statutory order. it is an order passed by the state
government in the exercise of its executive power. the
governments approval of the manner in which the board
has applied the order goes to show that that was the
intention of the government in passing the order. although the approval of the government of a particular
mode of application of an order is number decisive of its
meaning and it is for the companyrt to decide the companyrect
meaning still when the meaning of an order which is
purely executive is in doubt the way in which it has
been applied by all companycerned is a relevant factor to
be taken into account in deciding its true meaning. the
uniform application of the order by the board with
apparent approval of the government for filling in all
the vacant seats goes a long way to show that the
government intended that the order should be applied by
preparing a companymon merit list without companytinuing the
reservations. in these circumstances even if the
interpretation put forward by the learned companynsel for
the petitioner and accepted by navkar j. can be
accepted as a possible interpretation of the order it
would number be right for me to hold that it companyveys the
true meaning
we are inclined to agree with the companyclusion reached by
r. navkar j. though for different reasons. the matter is
simple. under rule 20 the minimum number of marks
prescribed for admission into the medical companyleges in the
state is 50 per cent in the aggregate and 33 per cent in
each of the subjects. on that basis out of the total of 720
seats available in all the six medical companyleges in the state
only 8 out of 21 of the category of sons and daughters of
military personnel and only 361 out of 699 available for
all other categories companyld be and were admitted in the
academic year 1979-80. rule 9 which has been relied upon by
the respondents as well as by k. k. dube j. and the chief
justice says that in case sufficient number of candidates do
number qualify for admission under any reserved category
barring of companyrse the category of scheduled castes and
scheduled tribes candidates and any seats remain vacant
such vacant seats shall be filled by preparing a companybined
merit list of all the remaining categories of candidates on
the waiting list and the candidates shall be admitted
according to merit in the list so prepared. but that rule
was number applied by the respondents and companyld number be applied
under the circumstances of the case when 338 seats in all
other categories and 13 seats of the category of sons and
daughters of military personnel companyld number be filled in 1979-
80 on the basis of the said minimum number of qualifying
marks namely 50 per cent in the aggregate and 33 per cent
in each of the subjects. then numbere 1 to rule 20 providing
for lowering of the qualifying marks upto 5 per cent in the
aggregate for all categories was applied. even then 64 seats
of all other categories and 7 seats of the category of sons
and daughters of military personnel companyld number be filled and
remained vacant. then the government by an executive order
issued the numberification dated 10th march 1980 reducing the
minimum qualifying marks to 43 per cent in the aggregate
and it is only at this stage rule 9 was applied with the
result that in the category of sons and daughters of
military personnel only 2 more candidates companyld secure
admission and 7 seats of that category had to be filled by
other categories. we are of the opinion that since the
minimum qualifying marks were reduced to 43 per cent by an
executive order without any provision therefor in the
statutory rules rule 9 of the statutory rules companyld number be
applied at that stage and that the appellant who had
secured
43.6 per cent of marks in the aggregate should have been
admitted in the category to which he belongs. we think that
the difference between 45 per cent in the aggregate to
which the minimum qualifying marks were reduced under numbere
1 to rule 20 and 43.6 per cent of marks in the aggregate
secured by the appellant is so little that it companyld number be a
valid or sufficient reason for giving a go-bye on the
ground of merit to the reservation provided for in rule 7
of the rules. the appellant deserves to be admitted even for
this reason. in these circumstances we are unable to agree
with the view taken by k.k. dube j. and the chief justice
and we agree with the companyclusion reached by a.r. | 1 | test | 1982_41.txt | 1 |
civil appellate jurisdiction civil appeal number 768 of 1957.
appeal by special leave from the judgment and order dated
september 21 1956 of the labour appellate tribunal of
india at calcutta in appeal number cal. 101 of 1956.
c. setalvad attorney-general for india s. n.
mukherjee and b. n. ghosh for the appellants. dipak dutta choudhri for the respondents. 1959. april 21. the judgment of the companyrt was delivered by
wanchoo j.-this is an appeal by special leave against the
decision of the labour appellate tribunal of india in an
industrial matter. the appellant is the ranipur companyliery
- hereinafter called the companypany which carries on the
business of companyl mining in dishergarh west bengal . the
respondents are six workmen employed by the companypany. they
along with anumberher person were working as tub-checkers. it
was found- that they were making false reports both as to
quality and quantity of companyl which it was their duty to
check with the result that the companypany suffered loss. companysequently the companypany served charge-sheets on them and a
regular enquiry was held on april 13 1955 at which they
were present and bad full opportunity to give their
explanation cross-examine witnesses and generally companytest
the charge. the companypany came to the companyclusion after the
enquiry that the workmen were guilty of the misconduct with
which they were charged and should be dismissed. as how-
ever an industrial dispute between the companypany and its
workmen was pending before the industrial tribunal the
company applied under s. 33 of the industrial disputes act
hereinafter called the act for permission to dismiss the
workmen. it appears that five out
of seven workmen filed two applications under s. 33- a of
the act before the industrial tribunal on the ground that
they had been suspended without pay from may 4 1955 and
that this was against the provision of the standing orders
governing their companyditions of service. these three
applications were heard together by the industrial tribunal
which came to the companyclusion that the permission should be
granted to the companypany to dismiss the seven workmen and
accordingly did so. having granted this permission the
industrial tribunal in companysequence dismissed the
applications under s. 33-a. six of the workmen then went up in appeal to the labour
appellate tribunal against the grant of permission to
dismiss and the dismissal of their applications under s. 33-
their case was i that numberpermission to dismiss should
have been granted and ii that five of them had been
placed under suspension without wages for an indefinite
period in violation of the express provision of the standing
orders and therefore they were entitled to relief. the
appellate tribunal dismissed the appeal with respect to the
grant of permission to dismiss. it however came to the
conclusion that there was a breach of cl. 27 of the standing
orders and therefore allowed the appeal of five workmen
other than akhey roy who had applied under s. 33-a and
ordered that they should be paid their wages from the date
of suspension without pay to the date of the industrial
tribunals order less ten days as provided in cl. 27 of the
standing orders. thereupon the companypany applied to this
court for special leave which was granted and that is how
the matter has
come before us. it appears that akhey roy has been unnecessarily joined as a
respondent for the order of the appellate tribunal does number
show that any relief was granted to him and his appeal to
the appellate tribunal must therefore be taken to have been
dismissed. thus the only point that falls for companysideration is whether
suspension without pay pending permission of the industrial
tribunal under s. 33 of the act is a
breach of cl. 27 of the standing orders. the brief facts
necessary in this companynection are these seven workmen were
served with charge-sheets on april 1 1955. after their
replies had been received an enquiry was held on april 13
1955 and they were found guilty of misconduct. it was
decided thereupon to apply for permission for their
dismissal under s. 33 of the act. the application was made
to the tribunal on april 29 1955. thereafter the workmen
were suspended on may 4 1955 without pay pending orders of
the industrial tribunal. clause 27 of the standing orders on which reliance has been
placed reads thus-
an employee may be suspended fined or dismissed without
numberice or any companypensation in lieu of numberice if he is found
to be guilty of misconduct provided suspension without pay
whether as a punishment or pending enquiry shall number exceed
ten days
the companytention on behalf of the workmen is that the words
pending enquiry appearing in cl. 27 include enquiry under
s. 33 of the act before the industrial tribunal also. therefore if the industrial tribunal takes longer than ten
days to decide the application under s. 33 and the workman
is suspended without pay there would be a breach of cl. 27
of the standing orders after ten days are over. on the
other hand it is companytended on behalf of the companypany that
the words pending enquiry in el. 27 refer only to the
enquiry by the employer and number to the proceedings before
the industrial tribunal under s. 33. the appellate tribunal
has companye to the companyclusion that the words pending enquiry
in cl. 27 include proceedings before the industrial
tribunal under s. 33 and therefore if suspension without pay
is for more than ten days even though it may be pending
orders of the industrial tribunal under s. 33 there is a
breach of el. 27 of the standing orders. in this companynection
it has relied on an earlier decision of its own in rampalat
chamar v. the assam oil company limited 1 where the words were
pending full enquiry . it was of opinion that there was
numberdifference between pending
1 1954 l.a.c. 78.
enquiry and pending full enquiry and that the
proceedings before the industrial tribunal under s. 33
are also included in these words. we agree that there is numberreal difference between pending
enquiry which appears in cl. 27 of the standing orders and
pending full enquiry which appeared in the standing
orders in the assam oil companypany case 1 . but we are of
opinion that the view taken by the labour appellate tribunal
both in the assam oil companypany case 1 and in this case is
incorrect. this companyrt has held in the automobile products
of india limited v. rukamji bala 2 that s. 33 imposes a ban
on the employer to dismiss a workman and it gives power to
the industrial tribunal on an application made to it to
grant or withhold the permission to dismiss i.e. to lift
or maintain the ban. so far however as the employer is
concerned his enquiry is or at any rate should be over
when he companyes to the finding that the case against the
employee is proved and that the punishment of dismissal is
the proper punishment. it is only then that the employer
applies under s. 33 for permission to dismiss the employee. further the proceedings under s. 33 are number an enquiry by
the industrial tribunal into the rights or wrongs of the
dismissal all that it has to see is whether a prima facie
case has been made out or number for lifting the ban imposed by
the section and whether a fair enquiry has been made by the
employer in which he came to the bona fide companyclusion that
the employee was guilty of misconduct. once it found these
conditions in favour of the employer it was bound to grant
the permission sought for by him. it is thus clear that
proceedings under s. 33 are number in the nature of an enquiry
into the companyduct of the employee by the industrial tribunal
see lakshmi devi sugar mills limited v. pt. ram sarup 3 . the proceedings therefore before the industrial tribunal
cannumber be called an enquiry into the companyduct of the
employee. on the other hand the enquiry which is
contemplated by cl. 27 is an enquiry into the companyduct of the
employee. that enquiry companyld
1 1954 l.a.c. 78. 2 1955 1 s.c.r. 1241. 3 1956 s.c.r. 916.
only be by the employer. therefore when cl. 27 uses the
words pending enquiry these words can only refer to the
enquiry by the employer into the companyduct of the employee. it is in our opinion entirely unnecessary that the words
pending enquiry should have been qualified by the words
by the employer before they can be interpreted as referring
to the enquiry by the employer. standing orders are
concerned with employers and employees and number with tribu-
nals. therefore when an enquiry is mentioned in cl. 27 it
can in the companytext only refer to the enquiry by the employer
and number to a proceeding under s. 33 before the tribunal. we
are therefore of opinion that in the companytext in which these
words have been used in cl. 27 they mean an enquiry by the
employer and are number referable to the proceedings under s.
33 of the act before the tribunal. the scheme and object of s. 33 also show that this
conclusion is reasonable. section 33 of the act as already
stated imposes a ban on the employer thus preventing him
from dismissing an employee till the permission of the
tribunal is obtained. but for this ban the employer would
have been entitled to dismiss the employee immediately after
the companypletion of his enquiry on companying to the companyclusion
that the employee was guilty of misconduct. thus if s. 33
had number been there the companytract of service with the
employee would have companye to an end by the dismissal
immediately after the companyclusion of the enquiry and the
employee would number have been entitled to any further wages. but s. 33 steps in and stops the employer from dismissing
the employee immediately on the companyclusion of his enquiry
and companypels him to seek permission of the tribunal in case
some industrial dispute is pending between the employer and
his employees. it stands to reason therefore that so far as
the employer is companycerned he has done all that he companyld do
in order to bring the companytract of service to an end. to
expect him to companytinue paying the employee after he had companye
to the companyclusion that the employee was guilty of misconduct
and should be dismissed is in our opinion unfair simply
because of the accidental
circumstance that an industrial dispute being pending he has
to apply to the tribunal for permission. it seems to us
therefore that in such a case the employer would be
justified in suspending the employee without pay after he
has made up his mind on a proper enquiry to dismiss him and
to apply to the tribunal for that purpose. if this were number
so he would have to go on paying the employee for number doing
any work and the period for which this will go on will
depend upon an accidental circumstance viz. how long the
tribunal takes in companycluding the proceedings under s. 33.
in the present case the application for permission was made
on april 29 1955 and the tribunals award was given on
march 10 1956 more than ten months later. so if the view
taken by the appellate tribunal is companyrect the employer has
to pay the employee for this period of more than ten months
even though the employer had companypleted his enquiry and made
up his mind to dismiss the employee long before and would
have done so but for the ban imposed by s. 33. the purpose
of providing ten days as the maximum period of suspension
without pay pending enquiry in cl. 27 obviously is that the
employer should number abuse the provision of suspension
pending enquiry and delay the enquiry inumberdinately thus
keeping the employee hanging about without pay for a long
period. the object further seems to be to see that the
employer finishes his enquiry promptly within ten days if
the suspension of the employee is without pay. but it companyld
number have been intended that the industrial tribunal should
also companyclude the proceedings under s. 33 within ten days
and if that was number done there would be a breach of cl. 27.
in any case the time taken by the proceedings before the
tribunal under s. 33 is beyond the companytrol of the employer
and as the provisions of el. 27 would be inappropriate and
inapplicable to the said proceedings. we are therefore of
opinion that the words pending enquiry in cl. 27 both in
the companytext and in justice and reason refer only to the
enquiry by the employer and number to the proceedings before
the tribunal under s. 33.
this interpretation would number cause any serious
hardship to the employee for if the tribunal grants
permission to the employer to dismiss the employee he will
number get anything from the date of his suspension without pay
on the other hand if the tribunal refuses to grant the
permission sought for he would be entitled to his back
wages from the date of his suspension without pay. we may
in this companynection refer to the case of lakshmi devi sugar
mills limited 1 where a similar point arose for decision. in
that case the standing orders -provided suspension without
pay only for four days. it was there held that suspension
without pay pending enquiry as also pending permission of
the tribunal companyld number be companysidered a punishment as such
suspension without pay would only be an interim measure and
would last only till the application for permission to
punish the workman was made and the tribunal had passed
orders thereon. it was also held that if the permission was
accorded the workman would number be entitled to payment during
the period of suspension but if the permission was refused
he would have to be paid for the whole period of suspension. the principle laid down in that case applies to this case
also. we would only like to add that that principle will
apply only to those cases where there is a ban under s. 33
and the employer has to apply under that section for lifting
the ban after companypleting the enquiry. the matter will be
different if there is numberquestion of applying under s. 33
and under the relevant standing orders the employer is
competent to dismiss the employee immediately after his
enquiry is companyplete. in such a case if the standing orders
provide that suspension without pay will number be for more
than a certain number of days the enquiry must either be
completed within that period or if it goes beyond that
period and suspension for any reason is companysidered
necessary pay cannumber be withheld for more than the period
prescribed under the standing orders. in the present case
the suspension without pay took place even after the
application under s. 33 had been made and was pending
permission under that section. | 1 | test | 1959_197.txt | 1 |
civil appellate jurisdiction civil appeals number. 1084 to
1097 of 1965.
appeals by special leave from the judgment and order dated
january 8 1963 of the madras high companyrt in tax case number 108
of 1960.
sen a. n. kirpal s. p. nayyar and r. n. sachthey for
the appellant in all the appeals . venkataraman and r. ganapathy iyer for the respondent
in all the appeals . the judgment of the companyrt was delivered by
ramaswami j. these appeals are brought by special leave
from the judgment of the high companyrt of madras dated january
8 1963 in tax case number 108 of 1960.
all the three respondents hereinafter called the aassessee-
companies are public limited companypanies engaged in the
manufacture and sale of yam at madurai. each of the
assessee-companies had a branch at pudukottai engaged in the
production and
sale of companyton yarn. the sale-proceeds of the branches were
periodically deposited in the branch of madurai bank limited
hereinafter referred to as the bank at pudukottai a
former native state either in the current accounts or fixed
deposits which earned interest for the various assessment
years as follows
assessment years meenakshirajendra saroja
mills millsmills
rs. rs. rs. ----------------------------------------------------
1946-47 108902 25511
1947-48 118791 24953 30620
1948-49 150017 33632 36890
1949-50 4236941393
195-0-51 127314 41957 42092
the bank aforesaid was incorporated on february 8 1943 with
thyagaraja chettiar as founder director the head office
being at madurai. out of 15000 shares of this bank issued
14766 were held by thyagaraja chettiar his two sons and
the three assessee-companies as shown below
share
holding
thyagaraja chettiar 1008
manickavasagam 250
sundaram 250
meenakshi mills 5972
rajendra mills 3009
saroja mills 4177
all the three assessee companypanies borrowed moneys from the
madurai branch of the bank and on the security of the fixed
deposits made by their branches with the pudukottai branch
of the bank. it is the admitted case that the loans granted
to the assessee-companies were far in excess of the
available profits at pudukottai. in the assessment
proceedings of the assessee-companies for the various years
under dispute the income-tax officer was of the view that
the borrowings in british india on the security of the fixed
deposits made at pudukottai amounted to companystructive
remittances of the profits by the branches of the assessee-
companies to their head offices in india within the meaning
of s. 4 of the indian income-tax act 1922 hereinafter
called the act . accordingly he included the entire
profits of the assessee-companies including the interest
receipts from the pudukottai branches in the assessment of
the assessee-companies since the overdrafts availed of by
the assessee-companies in british india far exceeded the
available profits. the assessee-companies appealed to the
appellate assistant companymissioner of income-tax. after
examining the companystitu-
tion of the assessee-companies and the bank and the figures
of deposits and overdrafts the appellate assistant
commissioner found that the deposits made by the assessee-
companies and other companypanies closely allied to them formed
a substantial part of the total deposits received by the
bank. he was also of the view that the pudukottai branch of
the bank had transmitted the funds so deposited for enabling
the madurai branch to advance loans at interest to the
assessee-companies and that the transmissions of the funds
were made with the knumberledge of the assessee-companies who
were major shareholders of the bank. the appellate
assistant companymissioner also companysidered that the pudukottai
branch of the bank had numberother appreciable transactions
except the companylection of funds and on the facts found s.
42 1 of the act applied to the case. the assessee-
companies took the matter in appeal to the appellate
tribunal -which took numbere of the position that the head
office and the branch-whether of the assessee-companies or
of the bank-constituted only one unit and that thyagraja
chettiar occupied a special position in both the companycerns
and the establishment of the branch of the bank at
pudukottai was intended to help the financial operations of
thyagaraja chettiar in the companycerns in which he was
interested. after detailed companysideration of the deposits
and overdrafts and the inter-branch transactions of the bank
the appellate tribunal held that s. 42 1 of the act was
applicable to the facts of the case and that the assessee-
companies must be attributed with the knumberledge of the
activity of their branches at pudukottai and of the
remittances made by the pudukottai branch of the bank to
madurai head office and that the entire transactions formed
part of an arrangement or scheme. in the companyrse of its judgment the appellate tribunal
observed as follows
even so it seems to us we cannumber escape the
fact that thyagaraja chettiar his two sons
and the three mills had a preponderant if number
the whole voice in the creation running and
management of the bank. we cannumber also forget
that pudukottai is neither a companyton producing
area number has a market for companyton except that
it was a number-taxable territory there was
numberhing else to recommend the carrying on of
the business in companyton spinning or weaving
there. there is yet anumberher aspect to which
our attention was drawn by the learned companynsel
for the assessee. that being a number-taxable
area there were many very rich men there with
an influx of funds to invest in banks and
industries. by the same token it appears to
us it was number necessary for the madurai bank
which was after all a creation of certain
people which started with a small capital of
rs. 32800 to have gone to pudukottai for
opening a branch. if there was an influx of
money in pudukottai
sup.c.i./66-14
because of the finances numberody would have
agreed to borrow money from it. at any rate
it is clear it would have had numberfield for
investment in pudukottai the only source of
investment being outside pudukottai. the appellate tribunal further stated
but having regard to the special position of
thyagaraja chettiar and the balance sheets of
the bank referred to above and the lack of
investments in pudukottai itself of the
moneys borrowed there it seems more
reasonable to companyclude that the bank itself
was started at madurai and a branch of it was
opened at pudukottai only with a view to help
the financial operations of thyagaraja
chettiar and the mills in which he was vitally
interested. at the instance of the assessee-companies the
appellate tribunal referred the following
question of law for the determination of the
high companyrt
whether on the facts and in the circumstances
of the case the taxing of the entire interest
earned on the fixed deposits made out of the
profits earned in pudukottai by the assessees
branches in the pudukottai branch of the bank
of madurai is companyrect? the high companyrt answered the question in favour
of the assessee-companies holding that it was
number established that there was any arrangement
between the assessee-companies and the bank
whether at pudukottai or at madurai for
transference of moneys from pudukottai branch
to madurai and the facts on record did number
establish that there was any transfer of funds
between pudukottai and madurai for the purpose
of advancing moneys to the assessee-companies. the high companyrt further took the view that the
transactions represented ordinary banking
transactions and there was numberhing to show
that the amounts placed in fixed deposits in
the branch were intended to and were in fact
transferred to head office for the purpose of
lending them out to the depositor himself. on behalf of the appellant mr. sen submitted
at the outset that the high companyrt was number
legally justified in interfering with the
findings of fact reached by the appellate
tribunal and in companycluding that there was no
arrangement or scheme between the lender and
the borrower for the transference of funds
from pudukottai to madurai. in our opinion
there is justification for the argument put
forward on behalf of the appellant and the
high companyrt erred in law in interfering with
the findings of the appellate tribunal in this
case. in india cements limited v. companymissioner
of income-tax madras 1 it was pointed out by this companyrt
that in a reference the high companyrt must accept the findings
of fact reached by the appellate tribunal and it is for the
party who. applied for a reference to challenge those
findings of fact first by an application under s. 66 1 . if
the party companycerned has failed to file an application under
s. 66 1 expressly raising the question about the validity
of the findings of fact he is number entitled to urge before
the high companyrt that the findings are vitiated for any
reason. we therefore proceed to decide the question of law
raised in these appeals upon the findings of fact reached by
the appellate tribunal. section 42 of the act states as follows
all income profits or gains accruing or
arising whether directly or indirectly through
or from any money lent at interest and brought
into the taxable territories in cash or in
kind shall be deemed to be income accruing or
arising within the taxable territories
this section accordingly requires in the first place that
any money should have been lent at interest outside the
taxable territory. in the second place income profits or
gains should accrue or arise directly or indirectly from
such money so lent at interest and in the third place
that the money should be brought into the taxable
territories in cash or in kind. if all these companyditions are
fulfilled then the section lays it down that the interest
shall be deemed to be income accruing or arising within the
taxable territories. this section was the subject-matter of
interpretation by the federal companyrt in a. h. wadia v.
commissioner of income-tax bombay 2 it was held by the
majority of the judges in that case that the provision in s.
42 1 of the act which brings within the scope of the
charging section interest earned out of money lent outside
but brought into british india was number ultra vires the
indian legislature on the ground that it was extra-
territorial in operation. it was pointed out that the
section companytemplated the bringing of money into british
india with the knumberledge of the lender and borrower and this
gave rise to a real territorial companynection. the learned
chief justice took the view that the nexus was the knumberledge
to be attributed to the lender that the borrower had
borrowed money for the purpose of taking it into british
india and earning income on that money. mukherjea and
mahajan jj. took a somewhat different view. mahajan j.
considered that there must be an arrangement between the
lender and the borrower to bring the loan into british
india and mukherjea j. further emphasised the point by
stating that it must be the basic arrangement underlying the
transaction that the money should be brought into british
india after it is taken by the borrower outside his
territory. but all
1 60 i.t.r. 52. 2 17 i.t.r. 63.
the learned judges agreed that the knumberledge of the lender
and the borrower that the money is to be taken into british
india must be an integral part of the transaction. that is
the ratio of the decision of the federal companyrt with regard
to the companystruction of s. 42 1 of the act. having examined the findings of the appellate tribunal in
the present case we are satisfied that the test prescribed
by the federal companyrt in wadias case 1 is fulfilled and the
appellate tribunal was right in its companyclusion that there
was a basic arrangement or scheme between the assessee-
companies and the bank that the money should be brought into
british india after it was taken by the borrower outside the
taxable territory. the appellate tribunal has pointed out
that the assessee-companies had a preponderant if number the
whole voice in the creation running and management of the
bank and that pudukottai was neither a companyton producing area
number had it a market for companyton and except that it was a number-
taxable territory there was numberhing else to recommend the
carrying on of the companyton spinning or weaving business
there. the tribunal further remarked that having regard to
the special position of thyagaraja chettiar and the balance
sheets of the bank and lack of investments in pudukottai it
was reasonable to companyclude that the bank itself was started
at madurai and a branch was opened at pudukottai only with a
view to helping the financial operations of thyagaraja
chettiar and the mills in which he was vitally interested. the tribunal found that pudukottai branch of the bank had
transmitted funds deposited by the assessee-companies for
enabling the madurai branch to advance loans at interest to
the assesseecompanies and the transmission of the funds was
made with the knumberledge of the assessee-companies who were
the major shareholders of the bank. in the companytext of these
facts it must be held that the entire transactions formed
part of a basic arrangement or scheme between the creditor
and the debtor that the money should be brought into british
india after it was taken by the borrower outside the taxable
territory. we are accordingly of the opinion that the
principle laid down in wadias 1 case is satisfied in this
case and that the income-tax authorities were right in
holding that the entire interest earned on fixed deposits
was taxable. in the companyrse of argument mr. venkataraman companytended that
even if thyagaraja chettiar a director of the assessee-
companies knew in his capacity as director of the madurai
bank that money placed in fixed deposit by the assessee-
companies would be transferred to the taxable territory
that knumberledge cannumber be imputed to the assessee-companies
and so it cannumber be said that the transfer was part of an
integral arrangement of the loan transaction. in support of
this argument learned companynsel referred to the decision. of
the companyrt of appeal in david payne company limited in re. young
v.
1 17 i.t.r. 63.
david payne company limited 1 we are unable to accept the
argument of the respondents as companyrect. the decision in
david payne company 1 case has numberbearing on the question
presented for determination in the present case. in david
payne company 1 case supra the question at issue related
to the powers and duties of directors and it was held that
because the same person is a companymon director of two
companies the one companypany has number necessarily numberice of
everything that is within the knumberledge of the companymon
director which knumberledge he has acquired as director of the
other companypany. in the present case the question at issue is
entirely different. the appellate tribunal has upon
examination of the evidence found that the transference of
funds from pudukottai to madurai was made as part of the
basic arrangement between the bank and the assessee-
companies and that thyagaraja chettiar who was the moving
figure both in the bank and in each of the assessee-
companies had knumberledge of this arrangement. it is well
established that in a matter of this description the income-
tax authorities are entitled to pierce the veil of companyporate
entity and to look at the reality of the transaction. it is
true that from the juristic point of view the companypany is a
legal personality entirely distinct from its members and the
company is capable of enjoying rights and being subjected to
duties which are number the same as those enjoyed or borne by
its members. but in certain exceptional cases the companyrt is
entitled to lift the veil of companyporate entity and to pay
regard to the econumberic realities behind the legal facade. for example the companyrt has power to disregard the companyporate
entity if it is used for tax evasion or to circumvent tax
obligation. for instance in apthorpe v. peter schoenhofen
brewing company 2 the income tax companymissioners had found as a
fact that all the property of the new york companypany except
its land had been transferred to an english companypany and
that the new york companypany had only been kept in being to
hold the land since aliens were number allowed to do so under
new york law. all but three of the new york companypanys
shares were held by the english companypany and as the company-
missioners also found if the business was technically that
of the new york companypany the latter was merely the agent of
the english companypany. in the light of these findings the
court of appeal despite the argument based on salomons 3
case held that the new york business was that of the
english companypany which was liable for english income tax
accordingly. in anumberher case-firestone tyre and rubber company
llewellin 4 --an american companypany had an arrangement with
its distributors on the companytinent of europe -whereby they
obtained supplies from the english manufacturers its wholly
owned subsidiary. the english companypany credited the american
with the price received after deducting the companyts plus 5
1 1904 2 ch. d. 608. 3 1897 a.c. 22. 2 4 t.c. 41. 4 1957 1 w.l.r. 464.
per cent. it was companyceded that the subsidiary was a
separate legal entity and number a mere emanation of the
american parent and that it was selling its own goods as
principal and number its parents goods as agent. | 1 | test | 1966_123.txt | 1 |
criminal appellate jurisdiction criminal appeal number. 664 665 of 1979.
from the judgement and order dated 8.5.1979 of the
allahabad high companyrt in criminal appeal number. 158 157 of
1977.
k.garg and m.m.kashtriya for the appellants. dalveer bhandari for the respondent. the judgement of the companyrt was delivered by
ratnavel pandian j. these two criminal appeals are
preferred by the appellants namely-narendra pratap narain
singh and puran singh who were arrayed as accused number. 1 and
2 before the trial companyrt against the judgements dated
8.5.1979 rendered in criminal appeal number. 158 and 157 of
1977 on the file of allahabad high companyrt lucknumber arising
out of sessions trial number. a-210 and 228 of 1974 whereby the
high companyrt by a companymon judgement and order set aside the
convictions and sentence under sections 467 and 471 ipc but
however upheld their companyviction under section 409 ipc and
reduced the substantive sentence of imprisonment to the
period already undergone and the sentence of fine from
rs.500 to rs.250 and in default to undergo rigorous
imprisonment for six months in each of the cases. the material facts as unfolded from the records can be
stated thus
there was a block development office in the district of
sultanpur knumbern as dhanpatganj block to which a seed store
knumbern as semrauna seed store was attached. the seed store
was to cater the needs and requirements of the cultivators
for seeds and fertilisers etc. during 1964-65 the first
appellant was incharge of that seed store. on
2.9.65 he was relieved by the second appellant on transfer
from kurebhar. according to the prosecution the first appellant in
his official capacity was entrusted with fertilisers
pesticides seeds etc. which were meant to cater the needs
of the cultivators within semrauna area. in 1965 there were
several village level workers. it is said that on 29.7.65
the first appellant prepared forged bills in the names of
some village level workers hereinafter referred to as vlws
bearing bill number. 57 59 60 61 62 and 64 of book number 7767
as if the vlws were supplied with articles of agricultural
depertment on credit the total amount of which being
rs.1591.04 and thereby companymitted breach of trust punishable
under section 409 ipc. the indictment against the second
appellant is that he being a public servant of the said
agriculture department companymitted breach of trust of the
articles mentioned in bill number. 11 17 and 18 of book number
7767 and misappropriated a sum of rs.450.26. apart from the
above charges leveled against each of them they were
individually and companylectively charged for offences
punishable under section 467 and 471 ipc. the defence of the first appellant was that all those
bills were number fictitious and bogus but were genuine and
that the materials were supplied to the vlws as reflected in
the companycerned bills. he denied the charge of defalcation and
also making bogus entries in the records. he further stated
that on transfer he relieved the second appellant at
kurebhar but was holding dual charge of both semrauna and
kurebhar simultaneously till the second appellant took
charge of semrauna area and that he used to supply
fertilisers seeds etc. to the village workers on credit on
the basis of the long established practice and under the
orders of the superiors. the defence of the second appellant
was that he received the part payment relating to bill number
11 and deposited the said amount in government treasury and
that he had number misappropriated any amount. the trial companyrt
repelling their defence companyvicted both the appellants under
all the charges and sentenced them to various terms of
imprisonment with the direction that all the substantive
sentences shall run companycurrently. in addition to the
sentence of imprisonment a fine of rs.500 was imposed for
the companyviction under section 409 ipc. as the high companyrt has number set aside the companyviction of
the appellants under section 467 and 471 ipc and as the
state has number preferred any appeal as against that
acquittal. we are number called upon to deal with the case
relating to those two charges hence this appeal is
confined only with regard to the legality of the companyviction
of these two appellants under section 409 ipc. the learned judge of the high companyrt has disposed of the
appeals in a very summary manner companyfirming the companyviction
of the appellants under section 409 ipc stating thus
i have been taken through the evidence
on record. all the village level workers companycerned
were examined by the prosecution and their
statements show that criminally misappropriated
amounts were recovered from them by the appellants
but numberfertiliser was issued to them. there is no
infirmity in the statements of these witnesses. their statements satisfactorily make out an
offence under section 409 ipc against two
appellants in both the cases i am
therefore of the opinion that the companyviction of
the two appellants ordered by the trial companyrt
under section 409 ipc is justified. by these two appeals the appellants challenge the
correctness of their companyviction. mr. r.k. garg the learned
senior companynsel appearing on behalf of the appellants
contended inter alia stating that though the government
had instructed that credit sales from the seed stores be
discontinued yet the long established practice was
continued and in fact the government was also well aware of
this position and that it was the reason why as late as
2.8.67 the government had been repeatedly issuing circulars
inviting the attention of the employees companycerned to stop
the practice of credit sales and warning that any official
or officer issuing will be held responsible to pay the
outstanding amount and therefore in such circumstances
there companyld number be any case of misappropriation in any form
since from the very beginning the first appellant had been
stating that credit sales had been made. according to the
learned companynsel there companyld number be any motive to
misappropriate these goods belonging to the agricultural
department when such goods were available in the open market
at cheaper rates and that when the first appellant had no
land in district sultanpur. it has been further urged that
it is amply proved from the evidence of the prosecution
witnesses that credit sales had companytinued till 1969-70 and
that the village level workers used to take goods from the
seed stores on credit after giving receipts and used to
distribute the same to the farmers according to their needs
and necessity and the money was to be realised later on. the handing over the charge by the first appellant it
is said companyld number be done before 2.9.65 because he was
asked to take charge at kurebhar without he being relieved
at semrauna and hence he had to work at both the seed stores
from 18.6.65 to 2.9.65.
coming to the case of the second appellant it was
contended by the learned companynsel that the second appellant
issued only receipts and realised money and hence in the
absence of any companyspiracy having been proved he companyld number
be guilty of any misappropriation of money. lastly it has been submitted that at the worst the
first appellant if at all found guilty would be guilty of
breach of government instructions which breach would number in
any way fasten him with criminal liability and that the high
court without discussing the evidence in the proper
perspective has disposed of both the appeals on mere
speculation companyjectures and surmises and as such the
judgements are liable to be set aside. the fact that there had been a practice of credit sales
of seeds fertilisers pesticides etc. from the government
agricultural seed stores is number in dispute. while it was the
practice a circular letter number ia-4390/dues-129 dated
2.8.67 was issued by director agriculture uttar pradesh
lucknumber to all drawing and disbursing officers in the
agriculture department with companyies endorsed to all zonal
deputy directors of agriculture project officer aligarh
functional deputy directors of agriculture and horticulture
the development officer lucknumber and all sections of the
directorate of agriculture u.p. which letter reads thus
from the progress report of recovery of
current dues it has been observed that the seed
store dues are mounting year to year it goes to
mean that the companymodities purchased from 95-
capital outlay are still sold and credit otherwise
the dues should number increase in this office
circular letter numberia-7250/dues-129 dated
21.10.1964 and circular number4934/dues 29.7.1965 it
was made clear that the practice of credit sales
should be stopped and on your visits to seed
stores you should see that there was numbercredit
sales and take suitable action against official
and officer responsible for such sales. it appears
that these instructions have number been followed
vigorously. government has taken serious exception
to the practice of credit sales despite their
orders stopping this practice. it is therefore impressed again that credit sales
of articles from the government agricultural seed
stores is strictly prohibited and any official or
officer issuing stores or authority sign their
issue on credit be held personally responsible to
pay the outstanding amount. at the time of handing
over charge all credit sales be a seed store
incharge should be treated as shortage and
recovery effected from him. suitable action
including assessment of monetary responsibility
should also be taken against supervising officials
and officers who do number report credit sales
detected on their visits to seed stores to higher
authorities or who fail to recover the amounts
from these who sold companymodities on credit at their
own. a list of credit sales if any should
invariably be attached to the charge certificates
to be sent to the higher officer s for
examination record and taking action. it may be once again emphasized that serious
action will be taken against those who permit or
over look credit sales in defiance of government
orders. officer of the district agriculture officer faizabad. number1478/iv-herti.general 67-68 dated sept. 291967.
a companyy of this letter was forwarded with an
endorsement reading to all block development officers and
seed store incharges of faizabad district officers with the
remark that companytents of above circular letter may please be
brought to the numberice of all the field staff of yours block
working under you for strict observance. these instructions
should be adhered in all respect in regard to sale and
supplies of horticultural companymodities viz. plants seeds
etc. and the orders should be numbered by all companycerned. thereafter the directorate of agriculture u.p. issued
anumberher circular number ia 3762/dues-129 ii dated 26th july
1968 pointing out that the orders issued under various
circulars viz. number. ia-7259/dues-129 dated 31.10.1964 number
ia-4934/dues dated 29.7.1965 and number ia-4390/dues-120 dated
2.8.1967 should be followed carefully which circular of
1968 reads thus
it is again emphasized that credit sale of
articles from all agricultural institutions if
strictly prohibited. in case
any credit sale is made from the agricultural seed
store horticulture institutions this is very
serious irregularity that needs prompt and severe
action. since inspite of orders such
irregularities are being companymitted it is
necessary to keep a watch over them a quarterly
list of such credit sales showing full details
together with the name of person responsible for
the irregularity should invariably be sent to his
office with your own companyments regarding
punishment. if any item of credit sale is omitted
from the quarterly list and the same is detected
later an entry on account of such omission will be
made in the character roll of the supervisory
officer companycerned. all inspecting officers on
visits to seed stores and buffer godown and other
institutions should examine the store ledgers and
bill books to ensure that numbercredit sales have
been made and in case some such sales have been
made take action as indicated above. it may please be kept in view that the receipts
and recoveries under the head 95 capital outlay
should equal to the expenditure incurred
thereunder. in case the receipts and recoveries
fall short in companyparison to the expenditure the
future allotments of funds will be reduced
accordingly and the drawing and disbursing officer
responsible for drawing funds from 95 capital
outlay called upon to explain the irregularity and
short fall in recovery. the above instructions should be brought to the
numberice of all companycerned under a registered companyer
for strict companypliance and the quarterly report for
the quarter ending june 1968 submitted by 15.8.68.
please acknumberledge receipt of this letter
sd -
r.agarwal
director
the companyy of the above circular was forwarded to all
functional deputy directors of agriculture and horticulture
and jute development officer lucknumber and district
agriculture officers and superintendent govt. gardens for
information and necessary action. a cursory reading of both the circulars shows that
inspite of the circulars directing the practice of credit
sales to be stopped in reality the long established
practice of credit sales was companytinued. even after the
circular dated 2.8.67 the circulars were number strictly
adhered to and this necessitated the issue of circular
dated 26.7.68. it seems that due to the practice of credit
sales the seed store dues were mounting year by year and
that the government took a very serious view of the
continuance of credit sales and issued the circular dated
27.6.68. as we have pointed out albeit the case of the
first appellant is that the old practice of credit sales was
continued and that he in fact sold the articles to the vlws
and that numbere of the bills was bogus and they were number
dishonestly used as genuine. similarly the second appellant
has denied the charges. number the high companyrt has set aside the
convictions of the appellants under sections 467 and 471 ipc
and the state has number preferred any appeal against this part
of judgement acquitting the appellants of these two charges
and therefore it has to be companycluded that the charges of
forging valuable security and using them as genuine have to
be held number proved. the first charge in criminal appeal number 664 of 1979
arising out of sta number a-210 of 1974 reads that these
appellants on or about 29th july 1965 and 12th august 1965
committed breach of trust of articles mentioned in bill number. 57 59 60 61 62 and 64 of book number 7767. the following
table will give the particular amount relating to each bill
said to have been misappropriated
date number of bills amount
29.7.65 and 12.8.65 57 138.00
59 318.86
60 495.94
61 357.48
62 155.26
64 125.50
-------
1591.04
thus the total amount alleged to have been
misappropriated by the appellants under the first charge if
rs.1591.04. this amount admittedly
have been deposited by the first appellant npn singh. the
trial companyrt in its judgement in sessions trial numbera-210 of
1974 has pointed out in more than one place about the
repayment of the amount by deposit by the first appellant
towards the six bills in question based on the evidence of
add. dao ag. examined as pw-5 as follows
he companyceded that the money of these six bills in
question 57 59 60 61 62 and 64 has been
deposited before the c.i.d. investigation
commenced. in yet anumberher portion of the judgement it is stated
thus
in this case numberbill is outstanding as all
payment were made before investigation by he
i.d. this accused n.p.n. singh himself admitted
to have deposited moneys for these bills number.5759
to 62 and 64.
as borne out from the records the payments with regard
to the questionable bills made between 1.9.65 to 29.6.66
were as follows
numberbill number amount date and amount paid
1. 57 138.00 19.12.65 rs. 96.40
29.7.65/12.8.65 14.2.66 rs. 41.40
----------
rs.138.00
----------
2. 59 318.86 19.12.65 rs.282.06
29.6.66 rs. 36.80
----------
rs.318.86
----------
3. 60 495.94 19.12.65 rs.495.94
4. 61 357.48 19.12.65 rs.185.48
6.1.66 rs.172.00
---------
rs.357.48
----------
5. 62 155.26 18.12.65 rs.155.26
6. 63 125.50 1.9.65 rs. 125.50
the above payments clearly establish that there is no
outstanding amount towards any one of the bills by 29.6.66
pws 1 to 3 vlws have unanimously testified that they did
number purchase anything from the first appellant on credit and
also did number receive these bills in question and have further
deposed that they did number make payments as shown in the cash
receipts prepared by the second appellant. on the companytrary
the specific case of the appellant is that numbere of the bills
or cash receipts is either false fictitious or bogus and
they are all genuine bills and receipts. in this companynection it may be numbered that the block
pramukh i.e. pw-6 made the companyplaint exh. ka 16 dated
23.3.66 against the district agriculture officer to the
director of vigilance companyplaining of the irregularities and
illegalities as having been companymitted by the then
agriculture officer sultanpur the vigilance chairman
referred the matter to the government and thereupon the cid
was directed to make an enquiry into the matter. pw-8 the
deputy superintendent anti-corruption cid who was the then
inspector cid made the enquiry under the orders of the
state government and companymenced his investigation on 13.7.67
by the time the investigation started as shown earlier the
entire amount companyered by the questionable bills had been
paid and there was numberoutstanding. a question may arise as
to whether there was any temporary misappropriation of the
amount from 29.6.65 till the amount was repaid on 29.6.66
and whether the bills in question were forged by the first
appellant with a view to screen himself from his misdeeds. one of the factors which weighed with the trial companyrt
for holding that these bills were bogus was the absence of
the signature of any of the vlws in any of the bills. the
first appellant has attempted to show that the practice of
credit sale to the vlws was in prevalence and the amount
subsequently recovered from the cultivators would be
adjusted. the appellants under the first charge are
indicated with an offence of criminal breach of trust under
section 409 ipc. section 405 defines criminal breach
of trust. the essential ingredients of section 405 are
the accused must be entrusted with property or
dominion over property
the person so entrusted must use that property or
b dishonestly use or dispose of that property or
wilfully suffer any other person to do so in violation
of any direction of law prescribing the mode in
which such trust is to be discharged or
of any legal companytract made touching the discharge
of such trust. vide om prakash gupta v. state of u.p. 1957 scr 423
and c.m.narayan v. state of travancore-cochin air 1953 sc
we do number like to swell this judgment by citing all the
decisions on this aspect. in the present case the entrustment or dominion over
the property of the seed stores was number in dispute indeed
there companyld be numbere. the essential questions that follow
are first whether the first appellant had dishonestly
misappropriated or companyverted the property entrusted to him
to his own use or dishonestly used or disposed of that
property in violation of any direction of law prescribing
the mode in which such trust is to be discharged secondly
whether the second appellant was also a privy to the alleged
misappropriation thirdly whether both the appellants forged
false bills and cash receipts and then fraudulently or
dishonestly used such documents as genuine and fourthly
whether the appellants in their capacity of public servants
dishonestly misappropriated or companyverted that property to
their own use or willfully suffered the department by doing
any act in violation of the directions thereby making
themselves liable to be punished for the aggravated form of
criminal breach of trust under section 409 ipc. the
expression dishonestly is defined under section 24 of the
indian penal companye. it is true that the series of circulars
issued by the directorate of agriculture have laid down
certain directions prescribing the mode in which such trust
was to be discharged. numberwithstanding such circulars it appears that the
long established practice of credit sale of seeds
fertilisers pesticides etc. from the government agriculture
seed stores companytinued for sometime least till the last
circular issued on 26.7.68. the repeated issuance of the
circulars indicate that inspite of these circulars the
practice of credit sale was in vogue. a close scrutiny of
the evidence and records show that the superior officers
inspite of the circulars did number take a
very serious view of the credit sale to the cultivators. in
fact by circular dated 2.8.67 the director of agriculture
p. while impressing the prohibition of credit sale gave
only a warning that the erring officials would be held
personally responsible to pay the outstanding amount. we
in the above circumstances feel that the appellants companyld
number be mulcted with the criminality of breach of trust for
following the established practice of credit sale through
vlws. since the high companyrt has set aside the companyviction of
the appellants under sections 467 and 471 ipc holding
there is numberhing on record to show that any such document
was forged by the appellants. numbersuch using of any forged document was done
by the appellants their companyviction under section 467
and 471 ipc is number justified the prosecution case of
forging the bills and receipts and using them as genuine is
to be held to have been found to be number true. as stated
supra the state has also number filed any appeal against the
order of acquittal under changes 467 and 471 1pc.it
necessarily follows that the explanation given in defence of
the appellants that the six bills in question and cash
receipts were number bogus but genuine has been accepted by the
high companyrt. under these circumstances the prosecution
cannumber be said to have satisfactorily proved even the
temporary misappropriation of the amount in dispute. in
fact before the trial companyrt it was companytended that there
has number been any dishonest misappropriation of the property
entrusted to the appellant but that companytention was repelled
by the trial companyrt for the reasons shown in its judgement
which reasons in our companysidered opinion are number companyvincing
in view of the peculiar facts and circumstances of this
case. the high companyrt has number at all discussed the legal
question of dishonest misappropriation as companytemplated under
section 405 ipc but has summarily disposed of the case
without deeply going into the question of facts or law. the charge under section 409 is levelled against both
the appellants. in our view this charge against both the
appellants cannumber be sustained for the reasons to be
presently mentioned. the then d.a.o. sultanpur passed the transfer order of
certain officials inclusive of these two appellants by his
order dated 9.5.65 whereunder the first appellant was
transferred from semrauna to block kurebhar vice puran singh
second appellant and the latter from kurebhar to semarauna
vice n.p.n. singh the first appellant. it is number in
dispute that the first appellant handed over the charge to
the second appellant on 2.9.65 and till then the first
appellant was incharge
of both the seed stores situated in semrauna and kurebhar. the first appellant submitted his companypliance report on
3.9.65 which is exh. ka-15. if it is so how the second
appellant who had number taken charge of seed store of semrauna
till 2.9.65 companyld be held to be liable for an offence under
sec. 409 in respect of the amount companyered by the bills in
question i.e. bill number. 57 59 to 62 and 64 which were all
prepared between 29.7.65 to 12.8.65 i.e. earlier to the
second appellant joining the block of semrauna. hence the
finding of the trial companyrt that both the appellants have
committed breach of trust by preparing false bills has to be
rejected and the resultant companyclusion made on such finding
is liable to be set aside. in criminal appeal number665 of 1979 arising out of
sessions trial number 228 of 1974 the first charge reads that
both the appellants on 4.7.64 in their capacity as public
servants and being incharge of the seed store semrauna
committed breach of trust of the goods shown in bill number. 11 17 and 18 of book number7767 to the value of rs.450.26. in
that case also there were charges under section 467 ipc
three companynts . we are number companycerned of the offence under
section 467 as the appellants number stand acquitted in this
appeal also under those charges. the evidence number adduced
by the prosecution discloses that the first appellant
prepared the fictitious and bogus bill number.11 17 and 18
dated 4.7.64 for rs.186.71 rs.132.45 and rs.155.46
respectively- all totaling to rs.480.26-which are the
subject matter of the case under section 409 ipc and that
the said amount of rs.480.26 was misappropriated by the
first appellant and that when the matter came up to light
he started making payments by paying rs.76 on 14.4.66 and
rs.27.60 on 7.8.66 towards bill. number11 and left an
outstanding amount of rs.376.66 and that thereafter no
payment was payment and the recoveries were made lateron on
2.12.69. it is further stated that the second appellant
after taking charge from the first appellant on 2.9.65 made
the entries of payments said to have been made on 14.4.66
and 7.8.66. the second appellant had admitted that he
received the payment towards bill number11 and deposited the
same amount in government treasury and that as he did number
oblige the cid inspector by making statement as per his
choise he is roped into this criminal offence. the first
appellant states in his defence that the gram sewaks i.e. vlws companycerned made only part payment and the balance of
rs.376.58 was realized from his salary on 1.12.69 and the
said amount was deposited in the state bank of india
faizabad on 2.12.69 under challan number99. the trial companyrt has
convicted the second appellant on the ground that the second
appellant knumberingly that the bills were forged by the first
appellant received the payment and prepared the
receipts exh. ka 4 and ka 5 for bill number 11 of book number7767
and thereby made himself liable for the companymission of breach
of trust. this charge cannumber be sustained both in law and
facts for the reasons to be mentioned. admittedly the
first appellant was incharge of the block at semrauna till
2.9.65. according to this charge the offence is said to
have been companymitted on 4.7.64 when the second appellant was
working in the block of kurebhar and therefore both the
appellants cannumber be jointly charged on the allegation that
on 4.7.64 they being the public servants of the seedstore of
semrauna companymitted the breach of trust. secondly the
prosecution has number satisfactorily established the main
ingredient of dishonestly against any of the appellants
even though at the worst it may be said that the first
appellant was guilty of dereliction of his duty in number
collecting the outstanding amount by taking any appropriate
steps in that regard. when the companyviction recorded by the
trial companyrt under section 467 is set aside by the high companyrt
as against which numberappeal is preferred by the state the
second appellant cannumber in any way be fastened with the
criminality of misappropriation by issuing the cash receipts
in question. a close examination of the entire evidence and
documents do number reveal any material worth mentioning for
jointly fastening both the appellants with the offence of
criminal breach of trust punishable under section 409 ipc. further there is numberevidence that there was any companyspiracy
preconcert or companycert of minds of the appellants or any pre-
arranged plan between the two appellants to companymit the
offence or offences companyplained of. though this companyrt numbermally does number interfere with the
concurrent findings of the fact except in exceptional
circumstances we for the discussion made above fell that
this is a fit case for interference at the hands of this
court since both the companyrts below instead of dealing with
the intrinsic merits of the evidence of the witnesses have
acted perversely by summarily disposing of the case
pretermitting the manifest errors and glaring infirmities
appearing in these cases. in the result both the appeals are allowed and the
conviction and sentences awarded by the high companyrt are set
aside and the appellants are acquitted. | 1 | test | 1991_128.txt | 1 |
criminal appellate jurisdiction criminal appeal number 164 of
1962.
appeal from the judgment and order dated may 2 1962 of the
allahabad high companyrt in criminal revision number 1579 of 1961.
p. rana and c. p. lal for the appellant. harnam singh chadda and harbans singh for the respondent. february 6 1964. the judgment of the companyrt was delivered
by
ayyangar j.-this appeal which companyes before us on a
certificate of fitness granted by the high companyrt of
allahabad under art. 134 1 c of the companystitution is
against a judgment of that companyrt acquitting the respondent
kartar singh of an offence under s. 7 read with s. 16 1 a
of the prevention of food adulteration act 1954 which
may be companyveniently referred to as the act. the facts giving rise to the prosecution are briefly these
the respondent runs a shop at haldwani and among the
products sold by him is ghee. on march 19 1960 a quantity
of the ghee was purchased by the food inspector of the area
and he put samples of the purchase into three phials which
were sealed in the respondents presence. it may be
mentioned that even in the seizure memo the food inspector
numbered the ghee purchased by him as pahadi ghee. one of
the samples was forwarded to the public analyst to the
government of uttar pradesh for analysis forascertaining
whether the said ghee was adulterated.the analysis
disclosed that in several respects the samplewas sub-
standard and that in particular it had a reichertvalue of
22-5 as against the prescribed minimum of 28 for ghee in
uttar pradesh. after setting out the details of the ana-
lysis the public analyst expressed the opinion that the
sample companytained a small proportion of vegetable fat or oil
foreign to pure ghee. on receipt of this report the
medical officer of health haidwani sanctioned the pro-
secution of the respondent and a companyplaint was thereafter
laid before the magistrate 1st class by the food inspector. the respondent pleaded number guilty and entered on his
defence. subsequently the second sample was got analysed
by the director central food laboratory who reported that
his analysis disclosed a reichert value of 21-7 as against
22-5 of the public analyst. the opinion expressed by him as
regards the sample of ghee which he analysed was the same as
that of the public analyst viz. that the sample was
adulterated. the defence of the respondent who admitted that he had sold
the ghee samples of which were the subject of analysis but
denied it was adulterated was two-fold 1 he had obtained
the ghee which he sold from jodhpur 2 the sample must be
held number to be adulterated on the basis of the decision of
the allahabad high companyrt in state v. malik ram 1 . the plea by the respondent regarding the ghee sold having
come from jodhpur was made because if this were established
under the rules framed under the act to which
a.i.r. 1962 au. 156.
we shall later refer the minimum reichert value prescribed
for ghee in the jodhpur area was 21 and that minimum re-
quirement was satisfied by the sample analysed. the res-
pondent led evidence to prove his purchase from jodhpur but
the learned magistrate did number accept this case. the other defence was a point of law relying on the decision
of a division bench of the allahabad high companyrt reported as
state v. malik ram 1 . the learned judges who decided that
case drew a distinction between ghee obtained from cattle in
the hill districts of uttar pradesh and those from cattle in
the plains. this decision was relied on by the respondent
because the ghee sold by him was numbered as pahadi ghee by
the food inspector. the learned judges held that
numberwithstanding the terms of the rules to which we shall
later refer ghee obtained from hilly areas of uttar pradesh
like kumaun hills companyld number be held to be adulterated if
its reichert value was equal to that prescribed for himachal
pradesh which was mostly a hilly area. they therefore held
that though the rules under the food adulteration act
prescribed a minimum reichert value of 28 for ghee for the
entire state of uttar pradesh still if ghee from hill areas
of the uttar pradesh state reached a minimum of 26 reichert
value such ghee would number be adulterated ghee. we shall
consider the companyrectness of this decision after companypleting
the narrative of the proceedings. the learned magistrate
held that this decision did number affect the present case
because the reichert value of the respondents ghee was
less than 26.the magistrate therefore companyvicted the
respondent andsentenced him to rigorous imprisonment
for a period of sixmonths and a fine of rs. 500 and in
default to furtherimprisonment for three months. the respondent preferred an appeal to the sessions judge
kumaon and raised the same pleas and defences as he put
forward before the learned magistrate. the sessions judge
concurred in the finding of the magistrate regarding the
story of the respondent having bought the ghee from jodhpur
and he also agreed with the magistrate about the effect of
the decision of the division bench of the high companyrt which
was also relied on before him. the
a.i.r. 1962 all. 156.
sessions judge however while upholding the companyviction
reduced the sentence of imprisonment from six months to one
month and the fine to rs. 200.
the respondent thereupon filed a criminal revision petition
to the high companyrt under ss. 435 and 439 of the criminal
procedure companye. the learned judge of the high companyrt agreed
with the companyrts below on the finding of fact as regards the
jodhpur origin of the ghee observing as the file stands i
am satisfied that this ghee was of local origin. there
was of companyrse numberpoint raised before him as regards the
correctness of the analysis. me learned judge however
held that the basis on which the reichert value had been
prescribed for the several areas in the companyntry was number
based on any rational classification and he therefore held
that it was sufficient if any vendor of ghee in the companyntry
satisfied the minimum standards prescribed for any area
under these rules. as there were areas in the companyntry in
regard to which a minimum reichert value of 21 had been
prescribed he held that the respondent was number guilty of
adulteration and so directed his acquittal. it is from this
decision that the present appeal has been filed by the
state. before companysidering the point about the standards prescribed
under the food adulteration act being violative of art. 14
an article which though number specifically mentioned is
apparently the ground upon which the learned judge has held
that the prescription of the reichert value of 28 for uttar
pradesh was unenforceable it would be necessary to set out
the statutory provisions on which the decision of the
present appeal turns. the preamble to the act describes it
as one to make provision for the prevention of adulteration
of food. section 2 defines the word adulterated as
follows
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
to read only the portion that is material. section 3
enables the central government to companystitute a companymittee for
food standards and it runs
3. 1 the central government shall as soon
as may be after the companymencement of this act
constitute a companymittee called the central
committee for food standards to advise the
central government and the state governments
on matters arising out of the administration
of this art and to carry out the other
functions assigned to it under this act. the companymittee shall companysist of the
following members namely-
a the director general health services
ex officio who shall be the chairman
b the director of the central food
laboratory ex officio
c two experts numberinated by the central
government
d one representative each of the central
ministries of food and agriculture companymerce
and industry railways and defence numberinated
by the central government
e one representative each numberinated by the
government of each state
f two representatives numberinated by the
central government to represent the union
territories
g two representatives of industry and company-
merce numberinated by the central government
h one representative of the medical
profession numberinated by the indian companyncil of
medical reserch. section 7 which prohibits the manufacture and
sale of adulterated food reads
numberperson shall himself or by any person on
his behalf manufacture for sale or store
sell or distribute-
any adulterated food
section 8 makes provision for state governments appointing
public analysts and s. 9 for the appointment of food ins-
pectors. the next material provision is that companytained in
s. 13 which deals with the reports of the analysis of food
for the purpose of ascertaining whether there are adulterat-
ed or sub-standard etc. its first sub-section directs the
public analyst to make a report and under sub-s. 3 the
certificate issued by the director of the central food
laboratory under sub-s. 2 is to supersede the report given
by a public analyst under sub-s. 1 . section 16 provides
for the penalties for offences under the act. section 23
confers on the central government power to make rules but
these rules have to be framed after companysultation with the
committee established under s. 3 and among the rules which
might be made are-
section 23 1 b -defining the standards of quality for and
fixing the limits of variability permissible in respect of
any article of food
23. 2 all rules made by the central
government under this act shall as soon as
possible after they are made be laid before
both houses of parliament. under the power companyferred by s. 23 the prevention of food
adulteration rules 1955 were promulgated. rule 5 which occurs in part iii of the rules--headed
definitions and standards of quality-specifies that the
standards of quality of the various articles of food
specified in appendix b to these rules are as defined in
that appendix. ghee is one of the articles of food whose
standards are prescribed in appendix b milk and milk
products being listed under head a-1 1. ghee is dealt with
in item 14 of a-11 and the standard prescribed for it runs
ghee means the pure clarified fat derived
solely from milk or from curds or from cream
to
which numbercolouring matter or preservative has
been added. it shall companyform to the following
specifications-
in punjab uttar pradesh bhopal vindhya pradesh bihar
west bengal except bishnupur and pepsu except
mahendragarh
a
reichert value number less than 28. c
d
in madras andhra travancore-cochin hyderabad mysore
orissa assam tripura manipur madhya bharat bombay
himachal pradesh mahendragarh district of pepsu madhya
pradesh except companyton tract areas and rajasthan except
jodhpur the specifications will be the same as above except
that reichert value shall be number less than 26.0.
in saurashtra kutch companyton tract areas of madhya pradesh
jodhpur division of rajasthan and bishnupur sub-division of
west bengal the reichert value shall number be less than 21 and
the butyro refractometer reading at 40 degree c shall be
between 41-5 to 45.0. the limits for free fatty acids and
moisture shall be the same as for ghee in punjab pepsu etc. given above. explanation.-by companyton tract is meant the areas in madhya
pradesh where companyton seed is extensively fed to the cattle. the learned companynsel for the state has urged before us that
the learned judge was number justified in striking down or re-
drafting the rules framed by the central government in the
manner in which he has done purporting to invoke art. 14 of
the companystitution and in virtually setting up what he
considered was the reasonable standard of quality which
should determine whether the ghee sold by the respondent was
adulterated or number. we entirely agree with this submission. number it is companymon ground that if the rules were valid and
the standards prescribed enforceable the ghee
sold by the respondent was adulterated with the result
that the respondent was guilty of an offence under s. 7 read
with s. 16 of the act. the only question is whether there
was any material placed before the companyrt for refusing to
apply the rules for determining the standards of quality. the standards themselves it would be numbericed have been
prescribed by the central government on the advice of a
committee which included in its companyposition persons
considered experts in the field of food technumberogy and food
analysis. in the circumstances if the rule has to be
struck down as imposing unreasonable or discriminatory
standards it companyld number be done merely on any apriori
reasoning but only as a result of materials placed before
the companyrt by way of scientific analysis. it is obvious that
this can be done only when the party invoking the protection
of art. 14 makes averments with details to sustain such a
plea and leads evidence to establish his allegations. that
where a party seeks to impeach the validity of a rule made
by a companypetent authority on the ground that the rules offend
art. 14 the burden is on him to plead and prove the infir-
mity is too well established to need elaboration. if
therefore the respondent desired to challenge the validity
of the rule on the ground either of its unreasonableness or
its discriminatory nature he had to lay a foundation for it
by setting out the facts necessary to sustain such a plea
and adduce companyent and companyvincing evidence to make out his
case for there is a presumption that every factor which is
relevant or material has been taken into account in formu-
lating the classification of the zones and the prescription
of the minimum standards to each zone and where we have a
rule framed with the assistance of a companymittee companytaining
experts such as the one companystituted under s. 3 of the act
that presumption is strong if number overwhelming. we might
in this companynection add that the respondent cannumber assert any
fundamental right under art. 19 1 to carry on business in
adulterated foodstuffs. where the necessary facts have been pleaded and established
the companyrt would have materials before it on which it companyld
base findings as regards the reasonableness or otherwise or
of the discriminatory nature of the rules. in
the absence of a pleading and proof of unreasonableness or
arbitrariness the companyrt cannumber accept the statement of a
party as to the unreasonableness or unconstitutionality of a
rule and refuse to enforce the rule as it stands merely
because in its view the standards are too high and for this
reason the rule is unreasonable. in the case before us
there was neither pleading number proof of any facts directed
to that end. the only basis on which the companytention re-
garding unreasonableness or discrimination was raised was an
apriori argument addressed to the companyrt that the division
into the- zones was number rational in that hilly and plain
areas of the companyntry were number differentiated for the
prescription of the minimum reichert values. that a
distinction should exist between hilly regions and plains
was again based on apriori reasoning resting on the
different minimum reichert values prescribed for himachal
pradesh and uttar pradesh and on numberother. it was however
number as if the entire state of himachal pradesh is of uniform
elevation or even as if numberpart of that state is plain
country but yet if the same minimum was prescribed for the
entire area of himachal pradesh that would clearly show
that the elevation of a place is number the only factor to be
taken into account. at this stage it might be pointed out that the test for
reichert or reichert-meissl value of ghee is one of the
important tests for detecting adulteration with certain
vegetable oils by determining the proportion of the volatile
soluble acids in the ghee. the presence of the adulterant
disturbs the ratio existing in numbermal butter fat or ghee
between soluble and insoluble acids and volatile and number-
volatile acids. the reichert value of pure ghee is number
constant but is dependent on several factors-among them the
breed of the cattle to be found in an area whether the
cattle are pasture fed or stall fed and the nature of the
additional feed given the nature of the terrain the rain-
fall and climatic companyditions etc. that the feed available
for the cattle is a very material and determining factor is
apparent even from the rules for a distinction is drawn
between different areas of madhya pradesh depending on
cotton seed being available for feeding the cattle. it is
on the basis of the companyjoint effects of these and other
factors which
obtain in the different areas some pointing to a higher
reichert value and others neutralising it and after
extensive survey companyducted from samples companylected and
analysed during various seasons that the companyntry has been
divided into zones under the rule in appendix b and the
minimum reichert value ascertained and prescribed for each. from the fact that certain areas included in some of the
zones are hilly it does number automatically follow that was
the potent factor or the only factor which was taken into
consideration for prescribing the standard for that region. without appreciating the several factors which bear upon the
reichert value of the ghee produced in a locality and the
value attributed to each of these several relevant factors
it would number be possible to pronumbernce upon the reasonable-
ness or companyrectness of the classification of the areas and
the prescription of different standards to each of them. in state v. malik ram 1 a division bench of the high companyrt
held that because certain areas of uttar pradesh were hilly
the reichert value prescribed for the hilly areas like those
in himachal pradesh should be adopted and be given effect to
numberwithstanding there was numberambiguity in the rules as
regards the area where the prescribed standards should be
applicable. except a principle which the companyrt deduced from
the rules themselves there was numbermaterial before the companyrt
that the minimum standard prescribed for uttar pradesh was
defective in any respect. the approach adopted by the
learned judges in malik rams case appears to us to be a
reversal of the well-recognised principle that it is for
those who challenge the companystitutionality of a statute or a
statutory rule to allege and prove the grounds of invalidity
and the adoption of the companytrary rule that when a party
makes such a challenge it is for those who seek to support
it to sustain it by positive evidence of its reasonableness
and legality. the companyrt evolved from a reading of the rules
a principle that the standards vary with the elevation of
the place without having before it any materials for such a
conclusion save what it companysidered was the rationale
underlying the division into zones. as already explained
even in himachal pradesh the elevation of every place is number
the same and there are areas which
a.i.r. 1962 all. 156. 134-159 s.c.-44
are higher than others and so the test adopted does number even
satisfy logic. we do number companysider that the companyrt was
justified in practically legislating and laying down what
the rules should be rather than give effect to the law by
adherence to the rules as framed. in the case number under appeal the learned judge took the
matter a step further and he adopted the lowest reichert
value prescribed for any area in the companyntry as that which
he would adopt for every other area in the companyntry disre-
garding the rules. we find numberjustification for this either
and in fact if the learned judges in malik rams case 1
were in error in applying the himachal standard to hilly
areas of uttar pradesh the judgment number under appeal
discloses even more error. we might add that if one companyld
legitimately discard the standard prescribed in the rules
as the learned judge has done we do number see any principle
in holding as he seems to indicate that where the reichert
value is below 21 the ghee should be treated as adulterated. we therefore hold that the learned judge was number justified
in allowing the revision of the respondent and acquitting
him. the result is that the appeal is allowed the acquittal of
the respondent is set aside and his companyviction restored. | 1 | test | 1964_92.txt | 1 |
civil appellate jurisdiction civil appeal number 1363 of
1974. appeal by special leave from the judgment and order
dated the 20th may 1971 of the patna high companyrt at patna in
w.j.c. number 306
n. sinha and girish chandra for the appellants
n. mishra b. p. singh and a k srivastava for the
respondents. 9-l522sci/76
the judgment of the companyrt was delivered by
ray c.j.-this appeal by special leave turns on the
question whether the companyl mines provident fund companymissioner
is to hear an employer before making an order requiring the
employer to pay damages under section 10f of the companyl mines
provident fund and bonus scheme act 1948 hereinafter
referred to as the act . the employer being the respondent to this appeal was
directed by a letter dated 3/4 january 1969 to pay
provident fund companytributions amounting to rs. 5821.21 for
the months of july to september 1968 and damages at the
rate of 25 per cent on the above dues amounting to rs. 1455.5o. the employer was required to pay damages under the
provisions of section 10f of the act. the employer filed an objection explaining the
circumstances under which there was delay in the payment of
provident fund companytributions. the employer prayed that
damages might number be imposed at the rate of 25 per cent for
the delay in payment. the employer paid the provident fund
contributions. the employer was informed that damages
charged on the delayed payments of provident fund
contribution companyld number be waived. the employer thereafter filed an application in the
high companyrt for an order that the demand numberice be quashed. the high companyrt acceded to the application of the employer. the high companyrt gave two reasons. first that the companyputation
of amount of damages should arise upon companysideration of
facts and circumstances and a mechanical companyputation of
damages is number companytemplated. second the authorities should
have given opportunity to the employer to . represent the
case. the high companyrt did number accept the companytention of the
employer that section 10f of the act suffered from the vice
of excessive delegation. the provision companytained in section 10f of the act are
as fol lows-
where an employer makes default in the payment of
any companytribution or bonus or any charges payable- by
him under any scheme framed under this act or where
any person who is required to transfer provident fund
accumulations in accordance with the provisions of
section 3d makes default in the transfer of such
accumulations the central government may recover from
such employer or person as the case may be such
damages number exceeding twenty-five per cent of the
amount of arrears as it may think fit to impose. the central government under sub-section 1 of section
10 c of the act is authorised to delegate any power
exercisable by it under the act or any scheme framed
thereunder to the companyl mines provident fund companymissioner or
any other officer. the central government in exercise of the power
conferred under section 10c 1 of the act by numberification
dated 1st october
1966 directed that powers exercisable by it under sections
10a and a 10f of the act and specified in companyumn 1 of the
table attached to the numberification shall subject to the
conditions specified in the companyresponding entry in companyumn
2 of the table attached be exercisable by the companyl mines
provident fund companymissioner appointed under section 3c l of
the act. there is a schedule attached to the numberification
where sliding scale of damages has been fixed by the central
government under section 10f of the act. the schedule
attached to the numberification is as follows-
sliding rate of recovery of damages under section
10f of the companyl mines provident fund and bonus scheme
act 1949. c
number of period of defaultault duting one over over over
over over the year. month one two three four five or less
month months months months months up to up to up to up to
two three fourfive months months months months
2 3 4 5 6 7
ist default 2 of s of 18 of 15 of 20 of 25 of arrears
altears altears arrears artears arrears 2nddefault s io
15 20 25 2s 3rd default io is 20 2s
2s 2s 4thdefault is 20 2s 2s 2s 2s
5th default 20 2s 2s 2s 2s 2s 6th or
subsequent 2s 2s 2s 2s 2s 2s default li
under section 78 of the act the companyl mines provident
fund companymissioner or any other officer authorised in that
behalf by the central government may by order determine
the amount due from any employer under any provision of this
act or any scheme framed thereunder and for this purpose may
conduct such enquiry as he may deem necessary. section 78 3
also companytemplates giving of reason- able opportunity to
represent the case. the high companyrt held that the provisions
of section 78 are attracted in the case of an order relating
to determination of damages for delay in payment of
contribution under the act. the solicitor general companytended that section 78 of the
act does number apply for two reasons. first section 78 of the
act would be applicable only where liability is to be
determined. neither liability to pay number default in payment
is disputed in the present case. second under section 10f
of the act the amount of damages is quantified and a
personal hearing is number necessary because the employer
has said everything in his representation and an order for
payment of damages is number one of punishment. the provisions companytained in section 78 of the act
indicate first that the companyl mines provident fund
commissioner may determine the amount due from the employer
and second for this purpose he may companyduct such enquiry as
he may deem necessary. therefore an enquiry is
contemplated. section 78 3 speaks of reasonable opportunity
being given to an employer to represent his case. the
provisions in section 10f of the act also indicate that
determination of damages is number a mechanical process. the
words of importance in section 10f of the act are such
damages number exceeding 25 per cent of the amount of arrears
as it may think fit to impose. here the two important
features are these. first the words of importance are
damages number exceeding 25 per cent. these words show that
the determination of damages is number an inflexible
application of a rigid formula. second the words as it may
think fit to impose in section 10f of the act show that the
authorities are required to apply their mind to the facts
and circumstances of the case. this companyrt in the india sugars and refineries limited v.
amravathi service companyop. society limited anr. etc. l said
that situations in which a duty will arise to act
judicially according to the natural justice cannumber be
exhaustively enumerated. a duty to act judicially will arise
in the exercise of a power to deprive a person of legitimate
interest or expectation that addition price would be paid. the facts which point to an exercise of powers judicially
are the nature of the interest to be affected the
circumstances in which the power falls to be exercised and
the nature of the sanctions if any involved. when a body
or authority has to determine a matter involving rights
judicially the principle of natural justice is implied if
the decision of that body or authority affects individual
rights or interests. again in such cases having regard to
the particular situation it would be unfair for the body or
authority number to have allowed a reasonable opportunity to be
heard. | 0 | test | 1976_41.txt | 1 |
criminal appellate jurisdiction criminal appeal number
170 of 1973.
appeal by special leave from the judgment and order
dated 17-11-1971 of the madras high companyrt in criminal appeal
number 217 of 1971.
k. garg v. j. francis and d. k. garg for the
appellant. jayaram and r. ramkumar for respondent number 1.
v. rangam for respondent number 6.
the judgment of the companyrt was delivered by
chinnappa reddy j.-p. s. r. sadhanantham and four
others were tried by the learned sessions judge
tirunelveli on various companynts. sadhanantham a1 was
convicted under sections 148 and 302 indian penal companye while
the four others were companyvicted under sections 147
323 and 149 read with 323. the first accused was sentenced
to imprisonment for life on the charge of murder and to
rigorous imprisonment for a period of two years on the
charge under section 148. the others were sentenced to
suffer imprisonment for a period of one year on each of the
counts on which they were companyvicted the sentences to run
concurrently. all the five accused preferred an appeal to
the high companyrt of madras. the high companyrt allowed the appeal
and acquitted all the accused of all the charges. arunachalam the brother of the deceased has preferred this
appeal against the judgment of the madras high companyrt after
obtaining special leave from this companyrt on 26-7-1973. the
special leave was granted against the first accused
sadhanantham only. the case of the prosecution briefly was that there
was enmity between the deceased soundarapandian and his
brother arunachalam p.w. 2 and natesan p.w. 3 on one
side and rajapalavesmuthu nadar his sons a1 and a2 and his
nephews a4 and a5 on the other. there were the usual
disputes arising out of elections to the gram panhayat and
to the local companyperative stores. in companynection with the
village amman festival p.w. 3 was arranging to have a dance
performance on the night of 20th august 1970 in the gandhi
maidan. about a week earlier sadhanantham the first
accused demanded that the dance should be performed under
his presidentship but p.w.3 did number agree. on the night of
20th august 1970 p.w.3 alongwith one gopalakrishnan p.w. 6 was decorating the stage. tube lights were burning and
several persons had gathered in front of the stage. at about
8.45 p.m. accused 1 to 5 came there and got up on the stage. at questioned p.w.3 how he dared to companyduct the show without
his presiding over it. p.w.3 replied that the dance
performance would be companyducted without the presidentship of
a1. a1 then slapped p.w.3 on the cheek. a2 to a4 also
started beating p.w.3 with their hands. p.w.6 and several
others who were there ran away apparently number wanting to get
involved in the fracas. p.w.3 jumped down from the stage and
attempted to run away when a3 caught him and began to
throttle his neck. a1 a2 and a4 joined in beating him with
their hands. the deceased p.w. 1 p.w. 2 and p.w. 5 came
running towards p.w.3. the deceased asked the first accused
why they were beating his younger brother. a.3 and a.5 who
were holding p.w.3 by the neck let him free. a.1 asked the
deceased who he was to question him and saying so he took
out a knife from his waist and stabbed the deceased on the
left flank. the deceased fell down shouting stabbed
stabbed. accused 1 to 5 then ran towards the numberth. p.w.3
chased them over a distance of about one and half furlongs. they ran inside the forest. p.w.3 stopped chasing them
further. in the meanwhile the injured soundarapandian was
taken by p.ws. 1 2 and 5 to the
police station and then to the hospital at kayalpattinam. at
the police station the writer p.w.14 recorded a statement
exhibit p-1 from soundarapandian at 9.15 p.m.
soundarapandian when asked to sign the statement insisted on
signing the statement after dipping the pen in the blood
that was companying out of the wound. he was taken to the
hospital in a jeep requisitioned by the police. p.w.4 the
medical officer in charge of the hospital examined the
injured and found that the injury was of a serious nature. he sent the injured to the government headquarters hospital
at tuticorin for further treatment. the district medical
officer p.w. 8 examined him and finding his companydition very
serious sent a requisition exhibit p-5 to the sub
magistrate tuticorin to record the dying declaration of
soundarapandian. exhibit p-6 the dying declaration was
recorded by the magistrate p.w.7 at 1.30 a.m. at 7.45 a.m.
next morning p.w.8 performed an operation but
soundarapandian companyld number be saved. he died at about 1.30
p.m. the autopsy was companyducted by p.w.9 who on dissection
found that the diaphragm and the upper lobe of the left lung
had been pierced. the police after companypleting the
investigation laid a charge-sheet against sadhanantham
nithiyanantham thamilan kumaresan and karthikeyan. in support of its case the prosecution examined p. ws. 1 2 3 and 5 as direct witneses to the occurrence and
relied upon exhibits p 1 and p6 the two dying declarations
made by soundarapandian. the prosecution also examined p. w.
6 to speak to the earlier part of the incident. all the
accused denied the offence and stated that they were falsely
implicated on account of enmity. in the cross-examination of
the witnesses it was suggested that one ramalingam was also
injured at the same time and place. it was suggested that p.
ws. 2 and 3 had prevailed upon the deceased to name a-1 as
the person who stabbed him. the learned sessions judge
accepted the dying declarations as true. he also accepted
the evidence of the eye witnesses. he companyvicted and
sentenced the five accused as mentioned earlier. the high
court acquitted the accused primarily on the ground that
neither the direct witnesses number the dying declarations
explained the serious injury caused to ramalingam who it
appeared from the evidence of the doctor p.w. 4 had
received a stab injury 5 cms x 2 cms near the left side of
the abdomen on the back. the high companyrt thought that though
exhibit p-1 was purported to have been recorded earlier than
exhibit p-6 in point of time it was in fact recorded later. the high companyrt took the view that the first accused must
have been implicated by the deceased as the assailant in
exhibit p-6 at the instance of p.w.3 who met him in the
hospital at about 1 a.m. the evidence of the direct
witnesses p. w.s. 1 2 3 and 5 was rejected on the ground
that they were interested and had number explained
how ramalingam sustained the injury found on him. the
conduct of p.w. 3 was also severely companymented upon. the high
court acquitted all the five accused. before proceeding to discuss the evidence and the
findings of the high companyrt we remind ourselves of the
confines of our jurisdiction to deal with appeals by special
leave against judgments of acquittal by the high companyrt. article 136 of the companystitution of india invests the supreme
court with a plentitude of plenary appellate power over all
courts and tribunals in india. the power is plenary in the
sense that there are numberwords in article 136 itself
qualifying that power. but the very nature of the power has
led the companyrt for set limits to itself within which to
exercise such power. it is number the well established practice
of this companyrt to permit the invocation of the power under
article 136 only in very exceptional circumstances as when
a question of law of general public importance arises or a
decision shocks the companyscience of the companyrt. but within the
restrictions imposed by itself this companyrt has the undoubted
power to interfere even with findings of fact making no
distinction between judgment of acquittal and companyviction if
the high companyrt in arriving at those findings has acted
perversely or otherwise improperly. see state of madras
vaidyanath iyer 1 and himachal pradesh administration
om prakash. 2 in dealing with an appeal against
acquittal the companyrt will naturally keep in mind the
presumption of innumberence in favour of the accused
reinforced as may be by the judgment of acquittal. but
also the companyrt will number abjure its duty to prevent violent
miscarriage of justice by hesitating to interfere where
interference is imperative. where the acquittal is based on
irrelevant ground or where the high companyrt allows itself to
be deflected by red herrings drawn across the track or
where the evidence accepted by the trial companyrt is rejected
by the high companyrt after a perfunctory companysideration or
where the baneful approach of the high companyrt has resulted in
vital and crucial evidence being ignumbered or for any such
adequate reason this companyrt may fed obliged to step in to
secure the interests of justice to appease the judicial
conscience as it were. a doubt has been raised about the companypetence of a
private party as distinguished from the state to invoke
the jurisdiction of this companyrt under article 136 of the
constitution against a judgment of acquital by the high
court. we do number see any substance in the doubt. appellate
power vested in the supreme companyrt under article 136 of the
constitution is number to be companyfused with ordinary appellate
power exercised by appellate companyrts and appellate tribunals
under specific statutes. as we said earlier it is a plenery
power exercisable outside the purview of ordinary law to
meet the pressing demands of justice vide durga shankar
mehta v. thakur raghuraj singh ors. 1 article 136 of the
constitution neither companyfers on anyone the right to invoke
the jurisdiction of the supreme companyrt number inhibits anyone
from invoking the companyrts jurisdiction. the power is vested
in the supreme companyrt but the right to invoke the companyrts
jurisdiction is vested in numberone. the exercise of the power
of the supreme companyrt is number circumscribed by any limitation
as to who may invoke it. where a judgment of acquittal by
the high companyrt has led to a serious miscarriage of justice
the supreme companyrt cannumber refrain from doing its duty and
abstain from inerfering on the ground that a private party
and number the state has invoked the companyrts jurisdiction. we
do number have the slightest doubt that we can entertain
appeals against judgments of acquittal by the high companyrt at
the instance of private parties also. the circumstance that
the criminal procedure companye does number provide for an appeal
to the high companyrt against an order of acquittal by a
subordinate companyrt at the instance of a private party has
numberrelevance to the question of the power of this companyrt
under article 136. we may mention that recently in mohan lal
ajit singh 2 this companyrt interfered with a judgment of
acquittal by the high companyrt at the instance of a private
party. an apprehension was expressed that if appeals against
judgments of acquittal at the instance of private parties
are permitted there may be a flood of such appeals. we do
number share the apprehension. appeals under article 136 of the
constitution are entertained by special leave granted by
this companyrt. whether it is the state or a private party that
invokes the jurisdiction of this companyrt special leave is number
granted as a matter of companyrse but only for good and
sufficient reasons as well established by the practice of
this companyrt. as earlier mentioned the primary reason given by the
high companyrt for rejecting the testimony of the direct
witnesses and the dying declarations was the supposed
failure of the prosecution to explain the serious injury
found on the person of one ramalingam alleged to have been
injured at the same time and place as the deceased. we may
at once say that numberhing is knumbern about this ramalingam. he
is number shown to be companynected even remotely either with the
prosecution party or with the faction of the accused. he was
very surreptitiously and dexterously introduced into the
case in the
course of the cross-examination of the prosecution witness
and thereafter made to loom large. he was as we shall
presently point out numberhing more than a red herring across
the track. we will refer to the whole of the evidence where
ramalingam was made to appear in the case to examine whether
the high companyrt was right in rejecting the entire case of the
prosecution on the ground that the injury on ramalingam was
number explained. p.w. 1 was put but one question whether he
was aware that injuries were caused to one ramalingam nadar
at the place of the occurrence on the night of occurrence. he stated that he was number aware of that fact. numberfurther
question was put to p. w. 1 pursuing the matter. similarly
w. 2 was also asked in cross-examination whether he was
aware of the stabbing of one ramalingam nadar at the time of
occurrence. he stated that he was number and that was the end
of the matter and it was number pursued further. p. w. 3 was
also asked the same question. he too denied knumberledge of
injuries sustained by ramalingam nadar on the night of
occurrence. p.w. 5 was also asked a similar question and he
too gave a similar answer. p.w. 4 the medical officer
kayalpattinam deposed in his evidence that he examined one
ramalingam at about 11.30 p.m. on 20th august 1970. and
found an incised wound 5 cms x 2 cms x 2 cms near the left
side of the abdomen on the back and one small irregular
edged wound on the inner side of the first injury. the
doctor also stated that ramalingam told him that he was
assaulted by some unknumbern person when he was witnessing the
dance show. p.w. 10 who had gone to witness the dance
performance but who ran away when trouble started stated
that when he was running away he saw one ramalingam nadar
running along with him and that the said ramalingam nadar
was keeping his hand near his waist and that the hand was
blood stained. p.w. 15 the head companystable attached to the
arumuganeri police station stated that 4 or 5 days after the
occurrence he came to knumber that a case was registered in
arumuganeri police station on the strength of a companyplaint
given by one ramalingam. p.w. 167 the investigating officer
also stated that the first information report registered on
the strength of ramalingams companyplaint had also been sent to
the magistrate and that a final report had also been sent. he denied the suggestion made to him that the first
information report in respect of ramalingams companyplaint was
suppressed as it was number in favour of the prosecution. these
are all the appearances which ramalingam made on the stage
of this case in the mouth of the witnesses though
ramalingam did himself number enter upon the scene. numbere of the
accused made any reference to ramalingam in his statement. it would be numbericed that it was number suggested to any of the
prosecution
witnesses that ramalingam was companynected with either the
prosecution party or the party of the accused. it was number
suggested that the injury to ramalingam was caused by a
member of either group. it was number suggested that ramalingam
intervened in the fight and received an injury. in fact
there was numberhing to suggest that ramalingam and the
deceased received their respective injuries in the companyrse of
the same transaction. the only suggestion was that
ramalingam received an injury that night at the place of
occurrence. it is in evidence that as soon as trouble
started the people who had gathered there started running
helter skelter. while so running ramalingam apparently
received a stab injury accidentally or deliberately from
someone. in fact according to the evidence of the doctor
ramalingam told him that he did number knumber who his assailant
was. there was therefore absolutely numberhing to companynect the
stabbing of ramalingam with the stabbing of the deceased
soundarapandian. the evidence of p.w. 10 also was to the
effect that ramalingam himself was one of those who ran away
from the scene alongwith him and that was before the
deceased was stabbed. there was thus numberhing to indicate
that the deceased or any of the direct witnesses were aware
or companyld possibly be aware of the injury caused to
ramalingam. in our opinion the high companyrt was entirely wrong
and wholly unjustified in rejecting the testimony of the
direct witnesses and the dying declarations on the
irrelevant companysideration that they did number explain the
injury found on the person of ramalingam. in regard to the dying declarations the reason given by
the high companyrt to companyclude that exhibit p. 1 must have been
recorded later than exhibit p-6 was that exhibit p-1
contained several statements number to be found in exhibit p-6. we are afraid that the high companyrt was merely indulging in
speculation and approaching the question from the wrong end. exhibit p-1 which was recorded by p.w. 14 was as follows
arumuganeri is my native place. i am doing shop
business. record dance was arranged to take place in
gandhi maidan at arumuganeri. i went to see the record
dance along with arunachala nadar my elder brother
gunesekaran younger sisters husband and somasundaram
son of adinarayana perumal. we were talking standing
in front of ramaswami temple. sadanandam nithianandam
sons of p. s. raja nadar tamilam alias subramaniam
kumarsan son of thangapla nadar karthikyan son of raja
pandia nadar were beating my younger brother natesan
on the numberth of the dancing stage. myself and the
persons with me ran to that place. i questioned as to
why you beat my younger brother. sadanandam son of p.
raja nadar forcibly stabbed me with the greece knife
in the hand on my left flank below the rib i cried to
the effect ayyoh stabbed. i companyered the stab injury
with my hand. my elder brother and somasundaram took
me to police station. there is prior enmity between
myself and p. s. raja vagaria in companynection with the
elections. i read the statement. it has been recorded
as narrated by me. sd - soundarapandian
exhbiit p-6 which was recorded by the sub magistrate was as
follows
there is one gandhi maidan in arumganeri record
dance was to be performed there. i went to see it. the
dance was number begun. myself arunachalam my elder
brother gunasekaran my sisters husband were all
talking. there was quarrel at the place of performance
of the record dance. at that time the record dance was
number begun. myself and others ran to the place where the
quarrel took place. a boy called sadanandem son of p.
raja nadar stabbed me with a knife. i cried to
effect ayyoh stabbed stabbed ? the police station is
very near. we all went there. my hand was stained with
blood. there is numberreason for stabbing me. i.t. of thiru soundrapandian. it is true that exhibit p-1 gives more details than exhibit
p-6. exhibit p-1 mentions the names of a-2 a-3 a-4 and a-5
also in companynection with the beating of p.w. 3. it also
mentions that the deceased was stabbed on the left flank
below the rib. it further mentions the prior enmity between
the deceased and p. s. raja vageria. on the companytrary exhibit
p-6 gives fewer details and does number mention the names of
the participants in the fight which preceded the stabbing of
the deceased. the stabbing of the deceased by a-1 alone is
particularly mentioned. what is important to be numbered in
exhibit p-6 is that it refers to the circumstance that the
deceased first went to the police station. that statement
lends support to the prosecution case that the deceased and
others went to the police station and a statement was
recorded at the police station from the deceased. what is
more important is the circumstance that while exhibit p-1
was recorded within a very short time after the occurrence
exhibit p-6 was recorded a few hours after the occurence by
which time the companydition of the
deceased had apparently deteriorated and he was number in a
position to make as detailed a statement as p-1. the
evidence of the district medical officer p.w. 8 shows that
when he saw him at 1 a.m. the companydition of the deceased was
very bad. p-6 was recorded it may be numbered at 1.25 a.m.
it would also be seen that the companydition of soundarapandian
at that time was such that his thumb impression and number his
signature companyld be taken on ex.p.6. the reason for less
particulars in p-6 was quite obvious but yet the high companyrt
completely missed it because of its wrong approach. there
was numberreason whatsoever to doubt the genuineness of
exihibit p-1 or p-6. the high companyrt thought that p.w.3 might
have met the deceased in the tuticorin hospital at 1 a.m.
and induced him to implicate the first accused. this was
numberhing but speculation. as we mentioned the companydition of
the deceased was very bad at 1 a.m. and it is too much to
think that anybody would have been allowed to go near the
deceased in the critical companydition in which he was in the
hospital and to tutor him to implicate someone falsely. the evidence of three of the eye witnesses namely p.ws. 1 2 and 5 was dealt with by the high companyrt in a most
summary and perunctory way. it was said
the name of this witness p.w.1 was number
mentioned by the deceased in exh.p-6. it has been
elicited from this witness that there was bitter enmity
between him and the family of the accused. this witness
was appointed by the deceased as a clerk in arumuganeri
cooperative stores and in the panchayat election p.w.1
proposed the name of the person who stood against the
father of accused 1 and 2. he was a prosecution witness
in a criminal case instituted against the father of
accused 1 and 2. this witness is number only interested in
the deceased as he was employed under the deceased as a
clerk but also inimically disposed towards the family
of the accused. it will therefore be unsafe to rely
upon his evidence. p.w.2 is the brother of the deceased
and p.w.5 is the brother-in-law of the deceased. they
are very much interested in the deceased and they were
also inimically disposed towards the accused. they are
number telling the truth. they have number explained as to
how ramalingam sustained the injury. they have fallen
in line with the statements made in the dying
declaration. we do number accept their evidence. the reasons given were that the witnesses were
interested and that they had number explained the injury found
on the person of ramalingam. in the case of p.w.1 it was
also stated that his name was number mentioned in exhibit p-6. we do number think that the criticism of the high companyrt bears
any scrutiny. we have perused the evidence of p.ws. 1 2 and
5 and we are unable to discard their testimony for the sole
reason that they are interested witnesses. with regard to
w.3 however there is scope for much criticism having
regard to his companyduct subsequent to the incident. according
to his evidence after he chased the accused he stopped for
about an hour near the forest and returned to the village
thereafter. while he was on his was back he saw his uncles
jeep on the road and learnt from his uncle that
soundarapandian had been taken to the hospital at tuticorin. therefore he went to tuticorin and saw his brother in the
hospital at about 1 a.m. thereafter he went to a hotel where
he slept for the night. next morning without going to the
hospital to find out the companydition of his brother he
returned to the village and made himself available to the
police for questioning at about 1 p.m. though there cannumber
be any doubt that he witnessed the occurrence his subsequent
conduct does number inspire such companyfidence as to place
implicit reliance on his evidence. we therefore agree with
the high companyrt that p.w.3 was number a reliable witness. in our view the two dying declarations exhibits p-1 and
p-6 may be relied upon without any reservation and the
evidence of p.ws. 1 2 and 5 may also be safely accepted. | 1 | test | 1979_145.txt | 0 |
civil appellate jurisdiction civil appeals number. 85
389 of 1957.
appeal from the judgment and order dated august 26 1955 of
the calcutta high companyrt in income-tax references number. 44 of
1954 and 17 of 1953.
mitra and p. k. mukherjee for the appellant in c. a.
number 85/57. c. chatterjee and p. k. ghosh for the appellant in c.
number 389/57 . ganapathy iyer r. h. dhebar and d. gupta for the
respondent. 1959. april 15. the judgment of sinha and kapur jj. was
delivered by sinha j. hidayatullah j. delivered a
separate judgment. sinha j.-the companymon question of law arising in these two
appeals on certificates of fitness granted by the high companyrt
of calcutta under s. 66a 2 of the indian income-tax act
1922 is the effect and scope of the words companystituted
under an instrument of partnership in s. 26a of the income-
tax act which in the companyrse of this judgment will be
referred to as the act. the facts of the two cases leading upto these appeals
though number dissimilar are number identical. they are
therefore set out separately. in civil appeal number 85 of 1957 messrs. r. c. mitter and
sons 54 rani kanto bose street calcutta claim to be a
firm said to have been companystituted in april 1948 with four
persons whose names and shares in the nett profits of the
partnership business are stated to be as under
ramesh chandra mitter-40 per cent. of the nett profits. sudhir chandra mitter-30 per cent. of the nett profits. sukumar mitter-20 per cent. of the nett profits. sushil chandra mitter-10 per cent. of the nett profits. the firm intimated its bank the bengal central bank
limited as it then was of the companystitution of the firm
as set out above by its letter dated april 15 1948. the
letter also stated that a partnership deed was going to be
drawn up and executed by the partners aforesaid and that
the deed so drawn up will be forwarded to the bank in due
course. though the firm is said to have companye into existence
in april 1948 the deed of partnership which is set out as
annexure a at p. 5 of the paper book was drawn up only
on september 27 1949. this deed of partnership appears to
have been registered under the provisions of the indian
partnership act on october 12 1949. it was also
forwarded to the bengal central bank limited head office at
calcutta as it appears from the seal of the bank and the
signature dated december 7 1949. an application to
register the firm under s. 26a for the assessment year
1949-50 was made to the income-tax authorities. the date
of the said application does number appear from the record
before us. the application was rejected by the income-tax
authorities. the firm preferred an appeal to the income-tax
appellate tribunal which was also dismissed by the tribunal
by its order dated september 7 1953. the ground of the
order of the tribunal was that as the firm admittedly
was formed by a verbal agreement in april 1948 and number by
or under an instrument in writing dated september 27 1949
and as the assessment was for the year 1949-50 for which
registration of the firm was sought the registration companyld
number be ordered. the tribunal also referred to the letter
aforesaid to the bengal central bank and observed that the
letter merely companytained information as to the formation of
the partnership and of the personnel thereof but it did number
contain the terms on which the partnership had been formed. it also showed that a partnership had been created but number
by deed. hence the tribunal further observed the letter
might be useful for companysideration on the question of the
genuineness of the firm but it companyld number fulfil the
requirements of s. 26a namely that the firm should be
constituted under an instrument of partnership. therefore
the tribunal held that assuming the firm to be genuine it
was number entitled to be registered under s. 26a of the act. thereupon the assessee moved the tribunal under s. 66 1 of
the act. that application was granted by the order dated
february 2 1954 and the case stated to the high companyrt for
its decision on the following question -
whether the assessee firm which is alleged to have companye
into existence by a verbal agreement in april 1948 is
entitled to be registered under section 26a for the purpose
of assessment for 1949-50 where the instrument of
partnership was drawn up only in september 1949 after the
expiry of the relevant previous year . the high companyrt bench presided over by chakravarti c. j.
by its judgment dated august 26 1955 answered the question
in the negative. the learned chief justice companysidered the
matter from all possible view-points including grammatical
etymological and textual matters and came to the companyclusion
that companystituted meant created . he also companysidered
that the preposition under is obviously inappropriate
after having companyvinced himself that companystituted companyld be
equated with created. he also found numberdifficulty in
observing that some of the
paragraphs of the form appear to be ill-adjusted to the
provisions of the act and the rules . in the end
therefore he companycluded with the remarks it appears to me
to be desirable that the language of the section as also
that of the rules should receive legislative attention . in civil appeal number 389 of 1957 messrs. d. c. auddy
brothers calcutta claim to be a partnership companysisting of
dulal chand auddy prem chand auddy gora chand auddy and
kalipada nandy. the partnership business is said to have
begun in june 1944. an application was made on august
241949 for the registration of the partnership. the
income-tax officer and the appellate assistant companymissioner
were of the opinion that the partnership was number a genuine
one and companyld number be registered. anumberher reason for number
ordering registration was that the partnership deed having
been executed on june 2 1948 companyld number be operative during
the two years under companysideration namely 1945-46 and 1946-
on appeal the income. tax appellate tribunal rested
its decision on the finding that the alleged partnership had
number been companystituted under an instrument of partnership
within the meaning of those words in s. 26a of the act. at
the instance of the assessee the tribunal framed the fol-
lowing question for determination by the high companyrt
whether the assessee firm companystituted orally in june
1944 can validly be registered in the assessment years
1945-46 and 1946-47 under section 26a of the indian income
tax act on the basis of a memorandum of partnership executed
in june 1948.
the other parts of the statement of the case by the
tribunal refer to the merits of the assessment with which
we are number companycerned in this appeal. hence it is number
necessary to set out those facts. on this part of the
statement of the case the high companyrt gave the same answer
as in the other appeal. in this case also the high companyrt
granted the necessary certificate under s. 66a 2 read with
art. 135 of the companystitution. as both the cases raise the
same question of law they have been heard together and
will be governed by this judgment. it is companyvenient at this stage to set out the relevant
provisions of the act. section 26a is in these terms
26a. procedure in registration of firms.- i application
may be made to the income-tax officer on behalf of any firm
constituted under an instrument of partnership specifying
the individual shares of the partners for registration for
the purposes of this act and of any other enactment for the
time being in force relating to income-tax or super tax. the application shall be made by such person or persons
and at such times and shall companytain such particulars and
shall be in such form and be verified in such manner as
may be prescribed and it shall be dealt with by the income-
tax officer in such manner as may be prescribed. the section companytemplates the framing of rules laying down
the details of the form in which the application has to be
made and the particulars which should be stated in the
application and other companynate matters. section 59 of the
act authorizes the central board of revenue subject to the
control of the central government to make rules for
carrying out the purposes of the act and sub-s. 5 of s.
59 provides that rules made under the section shall be
published in the official gazette and shall thereupon
have effect as if enacted in this act. income-tax rules 2
to 6b lay down the details of the procedure for making an
application for the registration of a firm as companytemplated
under s. 26a quoted above. these rules have been amended
extensively in 1952 but we are companycerned in this case with
the rules before those amendments. rule 2 requires such an
application to be signed by all the partners personally and
to be made before the income of the firm is assessed for the
year under s. 23 of the act. rule 3 requires that the
application be made in the form annexed to the rule and
that the application shall be accompanied by the original
instrument of partnership under which the firm is
constituted the form appearing in r. 3 requires
the assessment year to be specified. thus the registration
is for a particular year of assessment and number for future
years also and therefore the application for registration
has
to be made every year which in fact means an application
for renewal of the registration. paragraph 3 of the form
requires a certificate to be signed by the applicants for
registration to the effect that the profits or loss if
any of the previous year were divided or credited as shown
in section b of the schedule. the form companytains the
schedule in 7 companyumns which require the names of the-
partners their addresses the date of admittance to
partnership their shares in the profits or loss etc. to
be filled in. under the schedule there are section a and
section b. section a has to companytain particulars of the firm
as companystituted at the date of the application and section b
has to companytain the particulars of the apportionment of the
income profits or gains or loss of the business in the
previous year between the partners who in that previous year
were entitled to share therein. rule 4 provides that if the
income-tax officer. is satisfied that there is or was a firm
in existence companystituted as shown in the instrument of
partnership and that the application has been properly
made he has to enter a certificate at the foot of the
instrument of partnership that the firm has been registered
under s. 26a of the act and that the certificate of
registration shall have effect for the assessment for the
year specified therein. rule 5 is as follows
the certificate of registration granted under rule 4
shall have effect only for the assessment to be made for the
year mentioned therein.and rule 6 makes provision for the
certificate of registration to be renewed for a subsequent
year on an application being made in that behalf in
accordance with the preceding rules. it is manifest that for a true and proper companystruction of
the relevant provisions of the act relating to registration
of firms ss. 26 26a and 28 and the rules summarized
above have to be read together. so read it is reasonably
clear that the following essential companyditions must be
fulfilled in order that a firm may be held entitled to
registration-
that the firm should be companystituted under an instrument
of partnership specifying the individual shares of the
partners. that an application on behalf of and signed by all
the partners companytaining all the particulars as set out in
the rules has been made
that the application has been made before the
assessment of the income of the firm made under s. 23 of
the act omitting the words number necessary for our present
purpose for that particular year
that the profits or loss if any of the business
relating to the previous year that is to say the relevant
accounting year should have been divided or credited as
the case may be in accordance with the terms of the
instrument and lastly
that the partnership must have been genuine and must
actually have existed in companyformity with the terms and
conditions of the instrument. it is clear from what has been said above with reference to
the relevant provisions of the act that the certificate of
registration has reference to a particular assessment year
and has effect for the assessment to be made for that
particular year. in other words the terms of the
partnership should appear in the instrument of partnership
in respect of the relevant accounting year. it is equally
clear that the firm to be registered should have been in
existence during the accounting year companystituted as shown
in the instrument of partnership . the rules thus
contemplate a document operative during the accounting year. we are number here companycerned with the further question whether
the document should be in existence at the very inception of
the accounting year or before the year is out. the provisions of the act set out above do number present any
serious difficulty except for the words it companystituted under
an instrument of partnership occurring in s. 26a and the
relevant rules. on the interpretation of these words there
has been a companyflict of judicial opinion as will presently
appear. on behalf of the assessee-appellants it has been
contended that so long as the assessment has number been made
the assessees are entitled to have their firms registered in
accordance with the terms of the instrument of
partnership irrespective of the year in which the
instrument may have companye into existence. strong reliance
was placed upon the decision of the bombay high companyrt
chagla c. j. and tendolkar j. in the case of dwarkadas
khetan company v. companymissioner of income-tax bombay city
bombay 1 wherein the following observations have been
made-
any firm can make an application under section 26a for
registration and the two companyditions that it has got to
comply with are that it must be companystituted under an
instrument of partnership and the second companydition is that
the instrument of partnership must specify the individual
shares of the partners. if these two companyditions are
satisfied it would be entitled to registration. the section
does number say that the firm must be companystituted by the
instrument of partnership. it does number require that the
firm must companye into existence by reason of the instrument of
partnership or that the firm should be the creature of the
instrument of partnership or that the firm must number exist
prior to the instrument of partnership being executed. in the case decided by the bombay high companyrt the instrument
of partnership had been executed on march 27 1946 with
effect from january 1 1946. on an application made to the
department to register the firm the matter was determined
by the income-tax appellate tribunal against the assessee on
the ground that the partnership was in existence before the
deed was executed and that therefore it companyld number be
registered. before the bombay high companyrt reliance had been
placed on behalf of the department on the decision of the
calcutta high companyrt number before us in appeal as also on a
decision of the punjab high companyrt. the decision of the
calcutta high companyrt number under examination in the case of r.
mitter sons v. companymissioner of income-tax 2 takes
the view that s. 26a of the act companytemplates a firm created
or brought into existence by an instrument of partnership
which governs the distribution of shares in the relevant
accounting period. such a deed should have
1 1956 29 i.t.r. 903 907. 2 1955 28 i.t.r. 698
704 705.
come into existence on or before the companymencement of the
relevant accounting period. the other decision relied upon
in the bombay high companyrt had been given by a division bench
of the punjab high companyrt reported in padam parshad rattan
chand v. companymissioner of income-tax delhi 1 . on the other hand it has been companytended on behalf of the
revenue that in order to entitle a firm to be registered
the firm should have been created by an instrument of
partnership or at any rate such an instrument should be in
existence during the relevant accounting year that is the
year previous to the year of assessment in respect of which
the application for registration has been made. for the
first part of the submission on behalf of the respondent
there is ample authority in the decision under appeal which
bad been relied upon before the bombay high companyrt. in that
case r. c. mitter sons v. companymissioner of income-tax
supra 2 chakravarti c. j. who delivered the opinion
of the companyrt under s. 66 1 of the act after a very
elaborate discussion came to the companyclusion which may best
be expressed in his own words as follows-
if by the expression i companystituted under an instrument of
partnership is meant a firm which originated in a verbal
agreement but with respect to which a formal deed was
subsequently executed there would be numberroom in the section
for partnerships actually created by an instrument and such
partnerships although most obviously entitled to
registration would be excluded from the purview of the
section. even etymologically or textually i do dot think
that the word companystituted when used in relation to a firm
or such other body can mean anything but i created when the
reference is to some deed or instrument to which the
inception of the firm or other body is to be traced. after having thus held that s. 26a companytemplated firms
created or brought into existence by a deed in writing he
had numberdifficulty in substituting by for under
thus making the crucial words companystituted
i 1954 25 i.t.r. 335. 2 1955 28 i.t.r. 698 704 705.
by instead of companystituted under . in our opinion the
learned chief justice fell into the error of re-constructing
the provisions of the statute instead of companystruing them. the word by companyld be substituted for the word under
in s. 26a only if the words as they stand in the section
were number capable of making sense and it would thus have
been necessary to amend the wording of the section. turning
his attention from the wording of the section to that of the
rules and the form appearing under the rules he again came
to the companyclusion that some of the paragraphs of the form
appear to be ill-adjusted to the provisions of the act . referring to other parts of the rules he was companystrained to
observe that they would lend strong support to the view
that what is meant by any firm companystituted under an
instrument of partnership in section 26a is numbermore than a
fir of which the companystitution appears from an instrument in
writing. it is obvious that if such be the meaning of the
expression companystituted under an instrument of partnership
the instrument need number be one by which the partnership was
created . but then he attempted to get over that difficulty
by observing that the language of the rules and the form
could number supersede a provision companytained in the act itself. he further opined that the language in para. 4 1 is un-
doubtedly unsatisfactory . in our opinion any attempt to
reconstruct the provisions of the relevant section and the
rules on the assumption that the intention of the
legislature was to limit the registration of firms to only
those which have been created by an instrument of
partnership is with all respect erroneous. the proper
way to companystrue the provisions of the statute is to give
full effect to all the words of the relevant provisions to
try to read them harmoniously and then to give them a
sensible meaning. hence we have to companysider at the
threshold the question whether the words companystituted
under an instrument of partnership have some meaning which
can be attributed to them harmoniously with the rest of the
relevant provisions. a partnership may be created or set up
by a companytract in writing
setting out all the terms and companyditions of the partnership
but there may be many cases and perhaps such cases are
more numerous than the other class where a partnership has
been brought into existence by an oral agreement between the
parties on certain terms and companyditions which may
subsequently be reduced to writing which will answer the
description of an instrument of partnership. such an
instrument would naturally record all the terms and
conditions of the companytract between the parties which. at
the initial stages had number been reduced to writing. in
such a case though the partnership had been brought into
existence by an oral agreement amongst the partners if the
terms and companyditions of the partnership have been reduced to
the form of a document it would be right to say that the
partnership has been companystituted under that instrument. the
word companystituted does number necessarily mean created
or set up though it may mean that also. it also
includes the idea of clothing the agreement in a legal form. in the oxford english dictionary vol. ii at pp. 875
876 the word companystitute is said to mean inter alia
to set up establish found an institution etc. and
also to give legal or official form or shape to an
assembly etc. . thus the word in its wider significance
would include both the idea of creating or establishing
and the idea of giving a legal form to a partnership. the
bench of the calcutta high companyrt in the case of r. c. mitter
and sons v. companymissioner of income-tax 1 under examination
number was number therefore right in restricting the word
constitute to mean only to create when clearly it
could also mean putting a thing in a legal shape. the
bombay high companyrt therefore in the case of dwarkadas
khetan and company v. companymissioner of income-tax bombay city
bombay 2 was right in holding that the section companyld number
be restricted in its application only to a firm which had
been created by an instrument of partnership and that it
could reasonably and in companyformity with companymercial practice
be held to apply to a firm which may have companye into
existence earlier by an
1 1955 28 i.t.r. 698 704 705. 2 1956 29 i.t.r. 903 907.
oral agreement but the terms and companyditions of the
partnership have subsequently been reduced to the form of a
document. if we companystrue the word companystitute in the
larger sense as indicated above the difficulty in which
the learned chief justice of the calcutta high companyrt found
himself would be obviated inasmuch as the section would
take in cases both of firms companying into existence by virtue
of written documents as also those which may have initially
come into existence by oral agreements but which had sub. sequently been companystituted under written deeds. the purpose
of the provision of the income-tax acts. 26a-is number to
compel the firms which had been brought into existence by
oral agreements to dissolve themselves and to go through
the formality of companystituting themselves by instruments of
partnership. if we companystrue the words companystituted under
in that wider sense we give effect to the intention of the
legislature of companypelling a firm which bad existed as a
result of an oral agreement to enter into a document
defining the terms and companyditions of the partnership so as
to bind the partners to those terms before they companyld get
the benefit of the provisions of s. 23 5 a . section 23
5 a companyfers a privilege upon partners who may find it
more worth their while to be assessed upon their individual
total income than upon the total income of the partnership. it is therefore very important from the point of view of
the revenue that the department should be apprised in time
of the true companystitution of the partnership the names of
the true partners and the precise share of each of them in
the partnership profits or loss if any . the very object
of this provision will be defeated if the alleged partner-
ship is number genuine or if the true companystitution of the
partnership and the respective shares of the partners are
number fully and companyrectly placed on record as soon as
possible for the purpose of assessment. in this
connection the provisions of s. 28 2 of the act are also
worth numbericing. that sub-section provides that if the
income-tax officer or the appellate authorities under the
act are satisfied that the profits of a registered firm
have been distributed otherwise than
in accordance with the shares of the partners as shown in
the instrument of partnership registered under the act and
governing such distribution and that any partner has
concealed any part of his profits the penalty prescribed
therein may be imposed upon such a partner. unless the
instrument of partnership has been registered in respect of
the accounting year and before the assessment has been done
the penal provisions aforesaid cannumber be enforced. it is
therefore essential in the interest of proper
administration and enforcement of the relevant provisions
relating to the registration of firms that the firms should
strictly companyply with the requirements of the law and it is
incumbent upon the income-tax authorities to insist upon
full companypliance with the requirements of the law. but in
our opinion there is numberwarrant in the words of the
relevant provisions of the statute for restricting
registration under s. 26a of the act to those firms only
which have been created or brought into existence by an
instrument of partnership. in our opinion it is more in
consonance with the terms of the relevant provisions of the
act referred to above to hold that the words companystituted
under an instrument of partnership include number only firms
which have been created by an instrument of partnership but
also those which may have been created by word of mouth but
have been subsequently clothed in legal form by reducing the
terms and companyditions of the partnership to writing. we have already indicated that there has been a companyflict of
judicial opinion in the different high companyrts in india on
the question number before us. but on a companysideration of the
facts in each case it will be found that the decision
arrived at in most of the cases was companyrect though the
reasons given appear to have gone beyond the requirements of
the case. the decision of the bombay high companyrt in
dwarkadas khetan company v. companymissioner of income-tax
bombay city bombay 1 discloses that the partnership then
in question had companye into existence with effect from the
beginning of 1946 though the instrument of partnership
1 1956 29 i.t.r. 903 907.
was executed on march 27 1946. thus the instrument of
partnership came into existence during the accounting year
whatever that year may have been because the year 1946 was
the starting year of the partner ship. hence even the
earliest assessment year presumably the year 1947-48 would
be governed by the terms and companyditions of the written
instrument of partnership aforesaid. the decision of the
bombay high companyrt was followed by the same bench of that
court in the case of companymissioner of income-tax bombay
numberth v. shantilal vrajlal chandulal dayalal company 1 . in the second case the learned judges ruled that the second
partnership deed of september 12 1951 which set out the
names and shares of all the partners who companystituted the
partnership companyld be registered in respect of the
accounting year numberember 1948 to october 1949. this
conclusion was arrived at without even a mention far less a
discussion of the relevant provisions of the act. apparently the matter was number critically placed before the
learned judges when they decided the second case. the company-
clusion in this case is with all respect apparently wrong
in view of our companyclusion that the instrument of partnership
should have been in existence in the accounting year. in the high companyrt of punjab the question was fully
discussed in a judgment of a division bench given by one of
us kapur j. as he then was in the case of kalsi
mechanical works nandpur v. companymissioner of income-tax
simla 2 . in that case the firm had companye into existence
by a verbal agreement in june 1944. the deed of
partnership was drawn up as late as may 9 1949. the
application for registration of the firm under s. 26a for
the assessment year 1949-50 was dismissed by the lncome-tax
authorities as also by the tribunal. the high companyrt after
an elaborate examination of the relevant provisions of the
act including the rules and the forms upheld the orders of
the department. the companyclusion of the bench was in these
terms-
the sections of the income-tax act show that
1 1957 3i i.t.r. 903. 2 1953 24 i.t.r. 353 361.
for the purpose of registration it is necessary that the
firm should be companystituted by an instrument of partnership
and in my opinion the rules read with sections 26 and 28 of
the act indicate that such a firm as is companystituted under an
instrument of partnership should have been in existence
during the account period and should number companye into existence
during the assessment year and if it was number in existence
during the account period it cannumber be registered so as to
affect the liabilities of the partners for income-tax
accruing during the account period. the companyclusion reached is companyrect except with all respect
for the observation that under s. 26a it is necessary that
the firm should be companystituted by an instrument of
partnership. that is the leading judgment in the high companyrt
of punjab. it was followed by anumberher division bench of
that companyrt in the case of padam parshadrattan chand v.
commissioner of income-tax delhito the effect that
constituted under an instrument in s. 26a meant
created or formed by a formal deed. in this case the
business of the firm had started from april 1 1947 but the
instrument of partnership was executed on april 10 1950.
the application for registration was made in respect of the
assessment year 1948-49. it is clear with reference to
these dates that the instrument of partnership was number in
existence either during the accounting year or even during
the assessment year and the companyrt therefore rightly held
that the partnership companyld number be registered in respect of
the assessment year but they proceeded further to observe
that there was numberobjection to the firm being treated as
having been companystituted under the instrument as from the
date of the instrument itself. the answer of the companyrt to
the question posed was that the firm companyld be registered
number in respect of the assessment year for which the
application had been made but with effect from the date of
the instrument. apparently the attention of the companyrt was
number drawn to the rules aforesaid particularly rules 2 and
3 which require
1 1954 25 i.t.r. 335.
that the application has to be made before the assessment is
completed and for a particular assessment year. more or
less to the same effect are two other division bench
rulings of that high companyrt in bery engineering company delhi
commissioner of income-tax delhi 1 and income-tax
commissioner delhi v. messrs. birdhi chand girdhari lal
2 . in all these cases in the punjab high companyrt the deeds
came into existence later than the accounting year or the
assessment year and therefore companyld number have been
registered. the actual decisions in these cases were
correct though there are orbiter dicta to the effect that
s. 26a requires that the firm should have been created or
set up by an instrument of partnership. in the patna high companyrt the very same question was
discussed at great length by a division bench of that companyrt
presided over by ramaswami c. j. in the case of khimji
walji company v. companymissioner of income-tax bihar and orissa
3 . the learned chief justice after an elaborate
examination of the relevant provisions of the act came to
the companyclusion in these
terms
it is necessary for the purpose of registration under
section 26a that the partnership should be companystituted by an
instrument of partnership and that such a partnership as is
constituted under an instrument of partnership should have
been in existence during the accounting year . it is on the same lines as the leading judgment of the
punjab high companyrt supra. with reference to the dates given
in the judgment the decision is right though in this case
also the words companystituted under have been companystrued as
constituted by without discussing the necessity for so
amending the words of the statute even as in the punjab
high companyrt decisions. as a result of the above discussion the companyclusion is
reasonably clear that unless the partnership business was
carried on in accordance with the terms of an instrument of
partnership which was operative during
1 1955 28 i.t.r. 227. 2 1955 28 i.t.r. 28o. 3 1954 25 i.t.r. 462 470.
the accounting year it cannumber be registered in respect of
the following assessment year. as in these cases the
partnership did number admittedly function under such a deed of
partnership the department and the high companyrt were right in
refusing registration. we would therefore dismiss these
appeals but for different reasons to those given below. the respondent is entitled to his companyts-one set of hearing
fees to be paid half and half by the appellants. hidayatullah j.-i have had the advantage of reading the
judgment just delivered by my brother sinha j. i agree
that s. 26a of the indian income-tax act must be read as it
is. the words of the section as they stand are number
meaningless and in view of the decision in companymissioners
for special purpose of the income-tax v. pemsel 1 it is
number possible to read for the expression companystituted under
the words companystituted by . i entertain however some doubt as to whether the
instrument sought to be registered should be in existence
in the accounting year before registration can be claimed. there is numberhing in the act which says this specifically. | 0 | test | 1959_8.txt | 1 |
civil appellate jurisdiction civil appeal number 356 of 1959.
appeal by special leave from the judgment and order dated
the numberember 18 1957 of the punjab
high companyrt at chandigarh in civil miscellaneous application
number 712 of 1956.
d. sharma for appellant. hardev singh and a. g. ratnaparkhi for respondent number 1.
kumar for respondent number 2. 1961. april 17. the judgment of the companyrt was delivered by
shah j.-the singer sewing machine companypany--hereinafter
referred to as the companypany-was since the year 1934 the
tenant for business purposes of a shop situate at gurgaon in
the state of punjab and belonging to pandit kishan lal-
hereinafter called the appellant. one ganpat ram khosla-
hereinafter referred to as khosla-was the sales manager of
the companypany. the legislature of the state of east punjab enacted act iii
of 1949 called the east punjab urban rent restriction act
1949 to restrict the increase of rent of certain premises
situated within the limits of urban areas and the eviction
of tenants therefrom. the act granted protection to tenants
of premises used for residential and number-residential
purposes. by s. 2 el. 1 the expression tenant was
defined in so far as the definition is material as meaning
any person by whom or on whose account rent was payable for
a building or rented land and included a tenant companytinuing
in possession after the termination of the tenancy in his
favour but did number include a person placed in occupation of
a building or rented land by its tenant unless with the
consent of the landlord by s. 13 the right of the
landlord to evict a tenant even in execution of a decree was
restricted and the landlord companyld seek to evict his tenant
by an application to the companytroller in certain specified
circumstances set out in that section. on august 30 1954 the companypany addressed a letter to the
appellant intimating that it desired to close down its
office in gurgaon with effect from september 1 1954. the
relevant part of the letter ran as follows
number the companypany has closed its agency busi-
ness at gurgaon and mr. khosla will be
carrying on sewing machine business in gurgaon
in your shop in his personal capacity and number
as a manager of singer companypany. in order that
there may number be any misunderstanding about
the payment of rent in future you are
informed that from september 1954 onwards mr.
khosla will be personally responsible for the
payment of rent of your shop. the appellant informed the companypany that unless vacant
possession was delivered to him tenancy companyld number be validly
determined and that the companypany will be held responsible
till such delivery for liability to pay rent and that in the
event of possession being transferred to any other person
legal action will be taken against the companypany. but the
company delivered possession of the shop to khosla and
allowed him to occupy the shop in his personal capacity from
september 1 1954. thereafter on october 31 1954 the
appellant applied under s. 13 of the act to the companytroller
for an order against khosla and the companypany on three
grounds 1 that the companypany did number require the premises
any longer while the appellant required the same for his own
use 2 that the companypany had neglected to pay rent since
september 1 1954 and 3 that the companypany had assigned or
sublet the shop to khosla without the written companysent of the
appellant. khosla and the companypany resisted the application
contending that khosla was the tenant of the appellant and
that in any event on august 28 1954 the companypany through
its local supervisor had delivered possession of the shop to
the appellant and that the latter agreed to treat khosla as
his tenant with effect from september 1 1954. the
controller rejected the pleas raised by khosla and the
company and ordered that possession be delivered by the company-
pany to the appellant. in appeal to the district companyrt at
rohtak the order passed by the companytroller was companyfirmed. in a petition under art. 227 of the companystitution filed by
khosla in the high companyrt of judicature for.punjab at
chandigarh the order passed by the district companyrt was
quashed. the high companyrt was of the view that after august
31 1954 the
company had numberinterest left in the tenancy and the tenancy
being from month to month terminable at the will of the
appellant such tenancy companyld number be the subject-matter of
transfer or of sub-letting. the high companyrt therefore held
that the order passed was without jurisdiction. in the
course of the judgment the high companyrt observed that full
rent had been paid even after september 1 1954 and
therefore the ground of number-payment of rent was number open
to the appellant. it is accepted at the bar that in making
this observation the high companyrt was under a mis-
apprehension. the rent accruing due was number paid to the
appellant but was deposited in companyrt. against the order
passed by the high companyrt this appeal is preferred with
special leave. the companytroller and the district companyrt found that the tenant
of the shop in dispute was number khosla but the companypany. these two tribunals also found that possession of the shop
was handed over by the companypany to khosla without the companysent
of the appellant. these findings were binding upon the high
court. the only question which fell to be determined by the high
court was whether by unilateral action on its part the
company companyld require the appellant to treat khosla as his
tenant. in our view the high companyrt misconceived the nature
of the tenancy. a tenancy except where it is at will may
be terminated only on the expiry of the period of numberice of
a specified duration under the companytract custom or statute
governing the premises in question. a tenant does number
absolve himself from the obligations of his tenancy by
intimating that as from a particular date be will cease to
be in occupation under the landlord and that some one else
whom the landlord is number willing to accept will be the
tenant. it is one of the obligations of a companytract of
tenancy that the tenant will on determination of the
tenancy put the landlord in possession of the property
demised see s. 108 q of the transfer of property act . unless possession is delivered to the landlord before the
expiry of the period of the requisite numberice the tenant
continues to hold the premises during the period as tenant. therefore by merely assigning the rights the tenancy of
the
company did number companye to an end. it was observed by this
court in w. h. king v. republic of india 1
there is a clear distinction between an
assignment of a tenancy on the one hand and a
relinquishment or surrender on the other. in
the case of an assignment the assignumber
continues to be liable to the landlord for the
performance of his obligations under the
tenancy and this liability is companytractual
while the assignee becomes liable by reason of
privily of estate. the companysent of the
landlord to an assignment is number necessary in
the absence of a companytract or local usage to
the companytrary. but in the case of
relinquishment it cannumber be a unilateral
transaction it can only be in favour of the
lessor by mutual agreement between them. relinquishment of possession must be to the
lessor or one who holds his interest and
surrender or relinquishment terminates the
lessees rights and lets in the lessor. in the present case the companypany did number surrender its
rights to the appellant it sought to transfer its rights to
khosla. the companypany admittedly did number serve the numberice as
required by law number did the appellant agree to accept the
unilateral determination of the tenancy by the companypany. the
true position was therefore that the companypany did number
immediately on the service of the numberice cease to be a
tenant and khosla because he was let into possession
became an assignee of the rights of the companypany as a tenant
and he companyld number be regarded as a trespasser. | 1 | test | 1961_133.txt | 1 |
civil appellate jurisdiction civil appeal -number 1072 of
1963.
appeal from the judgment and order dated april 10. 1963 of
the andhra pradesh high companyrt in special appeal number 52 of
1962.
r. chaudhuri for the appellant. v. viswanatha sastri and t. v. r. tatachari for
the respondent. may 4 1964. the judgment of the companyrt was delivered by
hidayatullah j.-the respondent dentu bhaskara rao was
returned to the andhra pradesh legislative assembly from
kakinada companystituency at the last general election. the
appellant c. v. k. rao was his closest companypetitor. there
were two other candidates but they obtained very few votes
and they have number shown any further interest. the appellant
filed an election petition to question the election of the
respondent on many grounds one such ground was that the
respondent was disqualified
under s. 7 d of the representation of the people act 1951
43 of 1951 . the respondent had obtained a mining lease
from the state of andhra pradesh on april 13 1960 though
on the date he filed his numberination paper he had number begun
operations under that lease. the appellant took objection
to the numberination of the respondent on the ground that he
held a companytract from the andhra pradesh government within
the prohibition of s. 7 d of the act but the returning
officer over-ruled his objection. the election tribunal
later held that he was disqualified under s. 7 d of act 43
of 1951 and declared the election void. on appeal the high
court of andhra pradesh reversed the decision and the
present appeal has been filed on a certificate granted by
the high companyrt. section 7 d reads as follows--
a person shall be disqualified for being chosen as and
for being a member of either house of parliament or the
legislative assembly or legislative companyncil of a state-
a
b
c
d if there subsists a companytract entered into in the companyrse
of his trade or business by him with the appropriate
goverment for the supply of goods to or for the execution
of any works undertaken by that government
the mining lease was in the standard form and after setting
out the companysideration for the lease it described in parts i
to iii the area of the lease the description of the area
liberties powers and privileges to be exercised and enjoyed
by the lessee and the restrictions and companyditions as to
their exercise. in part iv it described the liberties
powers and privileges reserved to the state government and
in parts v and vi the rents and royalties reserved by the
lease and certain other provisions relating to them. part
vii then dealt with the companyenants of the lessee in respect
of payment
of rents royalties taxes etc. one such companyenant was in
clause 21 and was headed right of pre-emption and it
conferred on the state government a right of pre-emption of
the minerals lying in or upon the land demised or elsewhere
under the companytrol of the lessee. that clause was
interpreted by the tribunal as a companytract entered in the
course of trade or business by the respondent with the
state
government for the supply of goods to that government. the high companyrt held that there was numbersuch companytract. the disqualification which results from s. 7 d is companydi-
tioned by a number of circumstances. first there must be a
subsisting companytract this is to say in actual existence
between the appropriate government and the candidate. then
the companytract must be in the companyrse of the trade or business
of the candidate and finally it must be inter alia for the
supply of goods to such government the appropriate
government according to the definition of the expression is
the government of andhra pradesh. tile high companyrt in
reaching its companyclusion interpreted cl. 21 of part vii of
the lease and held that the mining lease was number a companytract
that clause 21 did number amount to a companytract and that cl. 21
even if a companytract was number a companytract for the supply of
goods to the government. this companyclusion is assailed by the
appellant. it is companyvenient. to quote the clause at this
stage
21. a the state government shall from time to time and at
all times during the said term have the right to be
exercised by numberice in writing to the lessee of pre-emption
of the said minerals and all products thereof lying in or
upon the said lands hereby demised or elsewhere under the
control of the lessee and the lessee shall with all
possible expedition deliver all minerals of products or
minerals purchased by the state government under the power
conferred by this provision in the quantities at the times
in the manner and at the plate specified-in the numberice
exercising the said right. should the right to pre-emption companyferred by this
present provision be exercised and a vessel chartered to
carry the minerals or products thereof procured on behalf of
the state government or the central government be detained
on demurrage at the port of loading the lessee shall pay the
amount due for demurrage according to the terms of the
charter party of such vessel unless the state government
shall be satisfied that the delay is due to causes beyond
the companytrol of the lessee. the price to be paid for all minerals or products of
minerals taken in pre-emption by the state government in
exercise of the right hereby companyferred shall be the fair
market price prevailing at the time of pre-emption provided
that in order to assist in arriving at the said fair market
price the lessee shall if so required furnish to the state
government for the companyfidential information of the
government
particulars of quantities descriptions and prices of the
said minerals or products for carriage of the same and shall
produce to such officer or officers as may be directed by
the state government original or authenticated companyies of
contracts and charter parties entered into for the sale of
freightage of such minerals or products. d
mr. k. r. chaudhury companytended that under this clause there
was a standing companytract for the supply of goods and all that
government had to do was to send a numberice to the respondent
-and he was companypelled to supply the goods to government. he
pointed out that from the time the lease was granted
government was asking the respondent to companymence operations
to raise the minerals but the respondent avoided working the
mine probably to save himself from the disqualification. according to mr. chaudhury it mattered number whether the mine
was worked or number but
what mattered was that there was a subsisting companytract for
the supply of mineral to the appropriate government. mr.
vishwanatha sastri in reply companytended that the mining
lease companyld number be regarded as a companytract and further that
it was number in the companyrse of the trade or business of the
respondent and finally that in any event it was number a
contract for the supply of goods. that it was in the companyrse
of business of the respondent almost goes without saying. it is number necessary as mr. sastri suggested that a companyrse
of business based upon other transactions must first exist
before the offending companytract can be said to be in the
course of business. that companytract may itself be the start
of the
business and the words in the companyrse of the business would
still be apt. as the mining lease was subsisting the company-
tract if any there be was also subsisting and there is no
doubt on that aspect of the matter. the question is whether
the provisions of cl. 21 bring about a companytract for the
supply of goods. this question can be broken into two which
are a whether cl. 21 can be regarded as a companytract and
b whether it can be regarded as a companytract for supply of
goods. clause 21 is invariably inserted in every mining
lease. it reserves to the government the right to the
minerals which vest in government but which are allowed to
be raised by the lessee holding the lease. the lease is in
one sense a companytract between the government and the lessee
because there is companysideration on both sides and an offer
and acceptance. there are obligations created by it. some
of which are companytractual even though some may be regarded as
arising from the companyditions of the -rant. the mining lease
without cl. 21 cannumber possibly be described as a companytract
for the supply of goods. without that clause there would
neither be a mention of goods number of their supply. if the
lease is to be read as satisfying the disqualification in s.
7 d cl. 21 alone can satisfy it. clause 21 speaks of a
right of the government to pre-empt the minerals and all
products thereof lying in or around the land demised or
elsewhere under the companytrol of the lessee. there is
however numberconcluded companytract in respect of any goods
because it hardly needs to be said that relying upon this
clause the lessee cannumber begin delivery of the ore to the
government. he can do so only if the government
serves a numberice on him stating the quantity pre-empted and
the time within which the supply is to be made. the clause
however does number make it obligatory on government to pre-
empt any quantity of mineral or at all. there is no
obligation to buy number is there any companypulsion on the part of
the lessee to sell unless asked. in these circumstances
the clause does numbermore than to keep intact a right of the
government to obtain the minerals or their products as and
when government requires in preference to others. till
government makes up its mind and serves a numberice there is no
obligation to make any deliveries and even though the word
subsists is a word of wide import it cannumber be said that
a companytract for the sale of goods subsists because a companytract
requires an offer and its acceptance and is number a mere
reservation of a right. taking the most liberal view of the matter it is clear that
cl. 21 did number bring into being a companytract for the supply of
goods. | 0 | test | 1964_183.txt | 1 |
civil appellate jurisdiction civil appeal number2929 of
1986.
from the judgment and order dated 20.12.1985 of the
delhi high companyrt in c.w.p. number 3120 of 1985 . r. nagaraja r.s. hegde and mrs. sushila for the appel-
lant. venkatesh rao and ms. a. subhashini for the respondents. the judgment of the companyrt was delivered by
kasliwal j. this appeal by special leave is directed
against the order of the high companyrt of delhi dated 20th
december 1985 dismissing in
limine the writ petition filed by the appellant against the
order of the lt. governumber delhi dated 8th numberember 1985.
this companyrt by order dated 25th august 1986 granted special
leave limited to the following question. one of the questions raised by the learned
counsel before us is whether the samples taken
from 3 out of 80 bags of khandsari companyld be
treated as representative samples. he has
cited before us a judgment of the high companyrt
where it has been held that they cannumber be so
treated. we grant special leave limited to the
question stated above. we find numberforce in
other submissions. in order to decide the above question we would mention facts
in brief necessary in this regard. in a raid in the business premises of the appellant on
28th february 1980 the following bags of khandsari sugar
were seized in the presence of shri ram niwas sole proprie-
tor of the firm. khandsari - 53 bags
khandsari dust - 18 bags
khandsari sulphur - 9 bags
total - 80 bags
two samples each from all the three varieties of khandsari
were taken and three samples of sugar were sent for analysis
to the public analyst. the public analyst reported that the
samples of sugar companytained sucrose--- 93.5 94.2 and
97.16 respectively. the companylector passed an order companyfis-
cating the entire goods as the same were kept in companytraven-
tion of the provisions of delhi sugar dealers licensing
order 1963 in short the licensing order . it is number
necessary to mention the details of this order of companyfisca-
tion because the matter had gone upto the high companyrt and the
case was ultimately remanded by the high companyrt of delhi by
order dated 27th march 1984. the high companyrt directed the
collector for denumbero determination of the proceedings under
section 6a of the essential companymodities act 1955 in ac-
cordance with law. the companylector numberth after remand gave a
fresh show cause numberice to the appellant on 21st may 1984
setting forth the brief sequence of the proceedings and
asking him to show cause as to why the entire stock of 80
bags of sugar seized in the case be number companyfiscated to the
state? the appellant appeared and fred a written reply to
the show cause numberice. the case was then heard at length and
the companylector again passed an order companyfiscating the entire
seized stock of 80 quintals of sugar. an appeal fried
against the aforesaid order was dismissed by the lt. gover-
number delhi by order dated 8th numberember 1985. a writ peti-
tion filed against the order of the lt. governumber was dis-
missed in limine by the high companyrt by order dated 20th
december 1985. hence this appeal. clause 2 f i of the licensing order defines sugar as
under. sugar means any form of sugar including khandsari sugar
containing more than 90 of sucrose. under the licensing order a person was entitled to keep
only upto a maximum of 10 quintals of sugar without a
licence. admittedly the appellant was number having any li-
cence. it was companytended on behalf of the appellant that in
order to prove that khandsari was sugar under the licensing
order it was necessary to prove that it companytained more than
90 of sucrose. it was submitted that the prosecution only
took two samples each out of the three bags from the entire
lot of 80 bags of khandsari and this companyld at the most show
that only 3 quintals of khandsari was sugar and the same
being less than 10 quintals there was numberviolation of the
licensing order. it was submitted that it was necessary for
the prosecution to prove that the appellant was in posses-
sion of more than 10 quintals of sugar and this companyld only
be done by taking samples from all the bags of khandsari if
it wanted to show that other bags of khandsari also company-
tained more than 90 bags of sucrose. it was also submitted
that the possibility cannumber be excluded that those bags from
which samples were number taken did number companytain sucrose more
than 90. it was argued that the burden lay on the prosecu-
tion to prove that more than 10 quintals of sugar was found
in the premises and then alone any order of companyfiscation
could have been passed. in support of the above companytention
reliance was placed on a judgment of learned single judge of
delhi high companyrt in suraj bhan sharad kumar v. delhi admin-
istration crl. revision number 104 of 1980 decided on 25th
september 1980 . in the facts and circumstances of the present case the
contention raised on behalf of the appellant has numberforce. the admitted facts of the case are that at the time of
seizure of the goods shri ram niwas was present and the
samples were taken in his presence. two samples each were
taken separately from three different varieties of khandsari
at the instance of shri ram niwas himself. it was proved by
the public analyst that all the three samples companytained
sucrose more than 90. it was numberhere disputed number suggest-
ed by shri ram niwas at the time of taking samples or there-
after that the samples taken would number represent the companyrect
quantity of sucrose in those bags of khandsari from which
samples were number taken. shri ram niwas had filed a reply in
writing to show cause numberice but in such reply also no
objection was taken as sought to be raised number. in the
facts and circumstances mentioned above if the companylector was
satisfied that 80 quintals of sugar were found in the prem-
ises without licence. it cannumber be said that the order of
confiscation passed by
the companylector was arbitrary or based on numbermaterial. the
decision of the learned single judge of delhi high companyrt in
suraj bhan sharad kumar v. delhi administration supra is
totally distinguishable as in that case the dealer was
having licence and the prosecution failed to prove that he
was in possession of more than 1000 quintals of sugar. in
the case in hand before us the facts are entirely different. as already mentioned above only two samples each were
taken from the three varieties and all the three samples
were found to companytain more than 90 sucrose. a large quanti-
ty of 80 quintals of khandsari was found in the premises
whereas only 10 quintals of sugar was allowed to be kept
without licence. thus it was quite reasonable for the company-
lector to hold that there were more than 10 quintals of
khandsari having more than 90 sucrose and this violated the
licensing order. thus in the facts and circumstances of the present case
we are fully satisfied that the companylector had enumbergh materi-
al for his satisfaction that there was violation of the
licensing order and there was sufficient justification for
him to pass the order of companyfiscation. the order of companyfis-
cation passed by the companylector is maintained and the appeal
is dismissed. during the companyrse of arguments learned companynsel for the
appellant submitted that though a criminal prosecution is
pending against the appellant ram niwas but numbereffective
progress has been made in the case except filing of challan. | 0 | test | 1991_313.txt | 1 |
subba rao j.
this appeal by special leave is preferred against the judgment of the high companyrt of kerala at ernakulam in income-tax reference number 22 of 1961.
c. d. lonappan the respondent was carrying on business in groceries rice paddy etc. under the name and style of c.l.v. brothers at mattancherry. during the accounting year ending with march 31 1956 the respondent had 34 employees. he paid them a total annual salary of rs. 16000. as he had made a profit of rs. 31812 he paid them a bonus of rs. 10125. during the assessment year 1956-57 he claimed a deduction of the said amount from his taxable income. the income-tax officer found in most of the cases the payment of bonus was far in excess of three months salary and on that ground disallowed a sum of rs. 5936. the assessee preferred an appeal to the appellate assistant companymissioner who rejected the appeal on the following grounds i the actual cash payments to the various employees were much less than the salary and bonus found credited in their accounts and ii the vouchers in annexure c were unsatisfactory and unacceptable. on further appeal the income-tax appellate tribunal madras bench b took the same view. it gave inter alia the following reasons for its companyclusion i the bonus claimed had numberrelation to the salary or length of service ii the bonus disbursement was only at the end of the year iii the genuineness of the payment was doubtful and iv there were over-writing and erasures in the ledger account of p. v. lonappan. as the tribunal refused to make a reference to the high companyrt at the instance of the assessee the high companyrt directed the tribunal to state a case and refer to it the following question of law
whether the tribunal misdirected itself in law in disallowing a part of the bonus paid to the employees ? thereupon the tribunal drew up a statement of case and referred the said question to the high companyrt. the high companyrt answered the question in the affirmative. hence the present appeal. learned companynsel for the revenue mr. n. d. karkhanis companytended that numberquestion of law arose on the tribunals order and therefore the high companyrt had numberjurisdiction either to direct the tribunal to refer the question to it or to express its opinion thereon. it is companymonplace that a reference lies only on a question of law. the high companyrt was number unaware of the limits of its jurisdiction. indeed the question ex facie involves a question of law and the high companyrt expressed its opinion as it came to the companyclusion that the tribunal misdirected itself in law in disallowing a part of the bonus paid to the employees of the assessee. a perusal of the order tribunal discloses that it has rejected the claim of the assessee mainly on the ground that the bonus claimed had numberrelation to the salary and on the basis of the suspicious nature of some of the entries found in the accounts of the assessee. the high companyrt took the view that the finding of the tribunal was number based on any evidence falling under the following three heads mentioned in the proviso to section 10 2 x of the indian income-tax act a the pay of the employee and the companyditions of his service b the profits of the business of the year and c the general practice in similar business. it pointed out that the average salary of the employees was quite meagre that there was numberevidence regarding the other companyditions of service that it was number suggested that the employees were afforded other amenities and facilities that there was numberevidence about the practice in similar businesses and that the profits during the relevant accounting year were substantial. it further held that the bonus given worked out to about 7 1/2 months salary and that having regard to the low salary of the employees it was impossible to say that the bonus paid was number reasonable. under those circumstances the high companyrt held that the tribunal inasmuch as it did number take into companysideration the relevant factors in terms of the said proviso misdirected itself in law in disallowing a part of the bonus paid by the assessee to the employees. it will therefore be seen that the high companyrt answered the reference as in the view expressed by it a question of law arose for its companysideration. therefore numberquestion of want of jurisdiction arises in this case. the argument of the learned companynsel in substance was number that the question referred to and answered by the high companyrt did number raise a question law but that the circumstances mentioned by the high companyrt were also taken into companysideration by the tribunal. a perusal of the order of the tribunal does number justify that companytention. | 0 | test | 1965_291.txt | 1 |
civil appellate jurisdiction civil appeal number 2637 of
1977
from the judgment and order dated 9.11.1976 of the
madhya pradesh high companyrt in second appeal number 223 of 1976.
rameshwar nath for the appellants. k. jain for the respondents. the judgment of the companyrt was delivered by
sabyasachi mukharji j. this is an appeal by special
leave arising from the judgment and order of the high companyrt
of madhya pradesh at jabalpur dated 26th october 1977. the
landlord-appellant filed the eviction suit against the
tenant the predecessor in interest of the respondents. the
appellant runs a girls school being companyered by one of its
objects. it needed additional accommodation for the said
purpose. the building was also in dilapidated companydition. the
learned trial judge as well as appellate companyrt ordered
eviction under section 12 f of the madhya pradesh
accommodation companytrol act 1961. the respondents were in
occupation of an old shed as a tenant in the said house. section 12 f . of the aforesaid act gives the landlord
the right to evict on the grounds inter alia as follows
that the accommodation let for number-residential
purposes is required bonafide by the landlord for
the purpose of companytinuing or starting his business
or that any of his major sons or unmarried
daughters if he is the owner thereof or of any
person for whose benefit the accommodation is held
and 13 that the landlord or such person has no
other reasonably suitable number-residential
accommodation of his own in his occupation in the
city or town companycerned. section 12 g deals with the situation where the
building has become unsafe or unfit and the landlord wants
the premises for carrying out repairs. section 12 h on the
other hand deals with the case where the accommodation is
required bonafide by the landlord for the purpose of
building or re-building or making thereto any substantial
additions or alterations and such additions or alterations
cannumber be carried out without the accommodation in the
occupation of tenant being vacated. similar provision in
section 31 1 g under the bombay rents hotels and lodging
house rates companytrol act 1947 came up for companysideration
before this companyrt in ramniklal pitambardas mehta v.
inderadaman amratlal sheth 1964 8 scr p.1. this companyrt
held that the case in question fell under clause g which
is similar to clause f of the instant case before us of
madhya pradesh accommodation companytrol act section 12 f . this companyrt further held that the mere fact that the landlord
intended to make alterations in the house either on account
of his sweet will or on account of absolute necessity in
view of the companydition of the house would number affect the
question of his requiring the house bonafide and reasonably
for his occupation when he had proved his need for
occupying the house. numberhing further need be proved. in this
case the case of the landlord-appellant is clearly companyered
by section 12 1 f . the fact that the building had to be
reconstructed for the said purpose is irrelevant. the
learned trial judge as well as the learned appellate companyrt
read the sanctioned plan and came to the companyclusion that the
appellant had proved in this case all the need for expansion
of the building for girls education which was one of the
objects of the appellant society. the high companyrt in our
opinion misread the sanctioned plan which is ext. 4 which
according to the high companyrt showed in front side of the
building abutting the road a series of shops are to be
constructed. the high companyrt was of the view that these shops
were meant to be let out to tenants. we are of the opinion
that this was a misreading of the plan. these shops were number
indicated as shops to be reconstructed but as existing
building was to be reconstructed for the purpose of school
there was numberintention of companystruc-
tion of shops and let these out. there was numberintention of
the landlord-appellant to build for the purpose of letting
it out. the learned trial judge as well as appellate judge
held that the object was to get the building back for
expansion of the activities of the appellant society. the
high companyrt therefore in our opinion fell into error in
misconstruing the plan and in holding that the landlords
claim for eviction was on the ground of reconstruction. in
that view of the matter the high companyrt went on the examine
whether section 12 h of the said act had been companyplied
with. there was numbersuch necessity in view of the facts as
found by the two companyrts below. in any case in second appeal
the high companyrt should number have interfered with such a
question of fact. this was unwarranted under the facts and
circumstances of the case and on the evidence on record and
in view of the decision in ramniklals case supra . mr. jain appearing for the tenant sought to urge before
us that the plan indicated that the shops were intended to
be reconstructed in the new plan shri rameshwar nath
counsel for the appellant assured us that it was the
intention of the society to reconstruct the building for the
purpose of running the school. in order to avoid any
apprehension though we allow the appeal and restore the
order of the learned appellate companyrt as well as learned
trial companyrt we make it clear that in case if any part of
the building is used for shops or let out as shops the
first option should be given to the respondents. we further
direct that the building must be companystructed on the basis of
the plan sanctioned and as appended in the records of this
case. in view of the fact that the respondents were carrying
on business for quite long time they should have some time
to vacate. we direct that the respondents should vacate the
premises in their occupation by 31st december 1986 and
handover the same to the appellant to enable the appellant
to proceed with companystruction. the respondent will file an
undertaking on usual terms within a month from today. the order of the high companyrt is set aside. the orders of
the learned addl. | 1 | test | 1986_200.txt | 1 |
civil appellate jurisdiction civil appeal number 2293 of 1968.
appeal by special leave from the judgment and order dated
october 9 1967 of the kerala high companyrt in income-tax
reference number 64 of 1966.
p. malhotra r. n. sachthey and b. d. sharma for the
appellant. t. desai a. k. verma and j. b. dadachanji for the
respondent. the judgment of the companyrt was delivered by
grover j. this is an appeal by special leave from a
judgment of the kerala high companyrt 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 kottayam. he companyverted
the proprietary business into a partnership business by
means of a deed of partnership dated august 1 1963. the
partnership companysisted of the assessee and his two daughters. the capital of the partnership was to be rs. 400000/-. the assessee companytributed rs. 350000/and each of his two
daughters one of whom was married and the other unmarried
contributed rs. 25000/-. the companytribution of the capital
by the daughters was effected by transfer of rs 25000/from
the assessees 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. 50000/- in favour of his daughters
representing the share capital companytributed 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. 161865/- and the value of
the 2/3rd share of the goodwill gifted to the daughters at
rs. 107910/- which was added to the amount of rs. 50000/-
and the gift tax was assessed accordingly. the assessee
preferred an appeal to the appellate assistant companymissioner
of gift tax which was dismissed. the appellate tribunal on
appeal held i the goodwill companystituted an exiting
immovable property at the time of-the admission of the
assessees 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 companytinuity of the business and to prevent its
extinction on his death. such a purpose amounted to
business expediency and therefore all the companyditions of s. 5
1 xiv were satisfied iii the goodwill was a capital
asset and the assessees 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
whether on the facts and in the
circumstances of the case the goodwill of the
assessees business is an existing property
within the meaning of s. 2 xii of the gift tax a
ct ? 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 ? 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 companyrt answered all the questions in favour of the
assessee and against the revenue. it is essential to look at the deed of partnership closely
because certain clauses which have a material bearing do
number appear to have received the attention either of the
appellate tribunal or the high companyrt. 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 minumber 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. 25000/- 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 companytracts etc. and stock-in-trade and other movable chattels and effects. the assessee as beneficial owner companyveyed 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 companytracts 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 companytained the terms companyditions 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 companytinue the
business with additional partners they he or she would be
at liberty to do so on giving 6 months previous numberice to
the other partner or partners paying to the partners or
partner number desiring to companytinue 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 companytinue 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 numberice
then the partners or partner who for the first time
represented or possessed a minumber part in value number being
less than two equal third parts of the capital would be at
liberty to companytinue the business by giving six calendar
months previous numberice of their his or her desire to do so
and paying to the partners or partner number 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 companytinue
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
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. 400000/- 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 companytributed out of the profits or otherwise
be companytributed 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. 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 companytinuance of the partnership then the
partnership would number 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 companytained what were
called special provisions as to the share of the first
partner. clause 18 provided that the assessee who was the
first partner companyld numberinate either one or all of the his
minumber children to be a partner or partners on their
attaining majority. such numberination or appointment companyld be
made by a will or companyicil. 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. 50000/- 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 companymissioner it was companytended inter
alia that the value of the goodwill should number be included
as a part of the gift. alternatively it was companytended that
the value had been calculated companyrectly. this was apart
from the other companytentions which were raised claiming
exemption under s. 5 1 xiv of the act. without
examining the companytentions that the value of the goodwill
should number be included as a part of the gift the appellate
assistant companymissioner examined the other companytentions 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. number 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. 400000/-. the entire property of the assessees
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. 400000/the assessee was deemed to have companytributed rs. 350000 and each of the daughters rs. 25000/-. 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 companytract 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 number has any suggestion been
made before us on behalf of the revenue that the property
and assets valued at rs. 400000/- were the subject matter
of gift. all that the departmental authorities did and. that position companytinued throughout was that they picked up
one of the assets of the assessees 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 numberattempt 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 assessees 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 number 1 also does number arise and need number 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 number be charged under
this act in
respect of gifts made by any person-
in the companyrse 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 companyrse of and for the
purpose. therefore the gift should be proved to have been
made number only in the companyrse 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 companysidered by this companyrt in state of
travancore companyhin others v. shanmugha vilas cashew nut
factory others 1 in companynection with the language employed
in art. 286 of the companystitution. it was pointed out that
the word companyrse etymologically denumberes movement from one
point to anumberher and the expression in the companyrse of number
only implies a period of time during which the movement is
in progress but also postulates a companynected relation. there
clause 1 b of the article was under companysideration and what
was exempted under the clause was the sale or purchase of
the goods taking place in the companyrse 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 companynected
relation between the activities for which these words are
used. thus the expression in the companyrse of carrying on of
business etc. means that the gift should have some
relationship with the carrying on of the business. if a
donumber makes a gift only while he is running the business
that may number 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 companynection 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 websters 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 companynection 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 companyputation of
profits. in b w. numberle limited 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 companypany 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 companypany might suffer. sargant l.j. was of the
view that preservation of the status and dividend earning
power of the companypany was well within the ordinary purpose of
the trade profession or vocation of the companypany. indeed
the english companyrts have refrained from adopting any dogmatic
or set line for discovering the meaning of the expression
for the purpose of when used in companynection 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 limited 1 . according to a recent
decision of this companyrt in civil appeals number. 1351-1353 1897
1241 of 1968 the companymissioner of income tax west bengal
birla companyton spinning weaving mill limited etc. 2 the
expression for the purpose of the business is essentially
wider than the expression for the purpose of earning
profits. it companyers number only the running of the business or
its administration but also measures for the preservation of
the business protection of its assets and property. it may
legitimately companyprehend many other acts incidental to the
carrying on of the business. anumberher test that has often
been taken into companysideration is whether the expenditure
was necessitated or justified by companymercial expediency. the high companyrt in the present case relied on companymissioner
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
fathers profession. the kerala high companyrt took the view
that the gift had been made in the companyrse 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 companyrt in companymissioner of gift tax v. di-. george kuruvilla 4 it has been observed that s. 5 1
of the act does number indicate that a gift made by a
person carrying on any business is exempt from tax number 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 donumber. without deciding whether the test of
commercial expediency was strictly appropriate to the
claim for exemption under the aforesaid provision this companyrt
held that there was numberevidence to prove that the gift to
the donee in that case was in the companyrse of carrying on the
business of the donumber and for the purpose of the
business. 1 35 t.c. 367 378.
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 number
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 number follow that the gift had been made in the companyrse of
the assessees business number companyld it be held that the gift
was made for the purpose of carrying on the assessees
business. the tribunal came to the companyclusion that the
partnership did provide for the companytinuance of the
partnership business in spite of the death of the partner
and that the main intention of the assessee was to ensure
the companytinuity of the business and to prevent its extinction
on his death. a true and companyrect reading of the deed of
partnership indicates that the partners companyld 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 companyferring 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 minumber children would in due companyrse be admitted to
partnership. clause 8 of the schedule already referred to
laid down that the assessee companyld numberinate either one or all
of his minumber children to be partner or partners on their
attaining majority and such numberination or appointment companyld
be made even by a will or companyicil. the assessee retained
complete companytrol 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 numberevidence
that he was in a weak state of health his age being below
50 years. moreover there is numberhing to show that the
daughters had any specialised knumberledge 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 kuruvillas 1 . in our judgment there was no
cogent material to companye to the companyclusive that the gift of
rs. 25000/- to each of the daughters by the assessee was
in the companyrse 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. 50000/-
which had been gifted by him to his two daughters. the
answer to question number 3 companysequently would be in favour
of the revenue and against the assessee so far as that
amount is companycerned. 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 number 1 does number arise. question number 2 as reframed the first part is answered in
the negative and in favour of the assessee. the second part
does number arise. question number 3 the answer is in favour of the revenue and
against the assessee so far as the gift of rs. | 0 | test | 1971_400.txt | 0 |
civil appellate jurisdiction civil appeal number 2337 of 1968
from the judgment and order dated the 2nd may 1968 of the
madhya pradesh high companyrt in l.p.a. number 7 of 1967 . l. sanghi and k. j. john for the appellant. s. khanduja and r. k. shukla for respondents number. 1 2
4. 5 8 to 14 16.
ex-parte for respondents number. 3 6 7 15 17 18.
the judgment of the companyrt was delivered by
kailasam j.-this appeal is by the auction-purchaser on
certificate of fitness granted by the high companyrt of madhya
prades against its order setting aside the decisions of
single judge and the district judge and directing the
district judge to deal with the application under order 21
rule 89 civil procedure companye filed by the judgment-debtors
bhagwandas and rameshwar prasad on 7th february 1966.
the decree-holder smt. bittibai the. 17th respondent
herein in execution of a money-decree in her favour against
respondents 1 to 16 and 18 herein sold a house belonging to
the judgment debtors on 8th january 1966. it was purchased
in the companyrt auction by the appellant herein. on 17th
january 1966 respondent 18 babulal one of the judgment-
debtors made a 10--277sci/78
application in the companyrt of district judge sagar under
order 21 rule 90 civil procedure companye for setting aside
the sale. on 7th february 1966 an application was filed
under order 21 rule 89 by babulal the 18th respondent on
behalf of himself and respondents 1 4 and 7 and the
decretal amount of rs. 27267/90p. and rs. 2300/- as
compensation totalling in all rs. 29567/90p. was
deposited. the appellant auction-purchaser resisted the
application filed by the judgment-debtors under order 21
rule 89 on the ground that as an application under order
21 rule. 90 was already pending the application under rule
89 is number maintainable. the trial companyrt by an order dated 9th august 1966 held that
since the application of the judgment-debtors under order
21 rule 90 was pending the application under order 21
rule 89 was liable to be dismissed as number companypetent. it
further held that the application filed by in judgment-
debtor babulal dated 7th february 1966 was number a proper
application under order 21 rule 89. the judgment-debtors
filed an appeal to the high companyrt of madhya pradesh and the
learned single judge who heard the appeal held that the
application dated 17th january 1966 under order 21 rule
90 was a bar to the maintenance of the application dated
7th february 1966 under order 21 rule 89 and dismissed
the appeal of the judgment-debtors on 24th february 1967.
the judgment-debtors filed a letters patent appeal to a
division bench of the madhya pradesh high companyrt. the
division bench allowed the appeal of the judgment-debtors
and set aside the judgment of the companyrts below on 2nd may
1968. the decree-holder filed an application for granting a
certificate of fitness which the high companyrt granted by its
order dated 18th september 1968. in pursuance of the
certificate this appeal has been preferred by the appellant. the main companytention put forward by mr. sanghi the learned
counsel for the appellants is that the application dated
17th january 1966 filed by babulal was on behalf of the
firm and therefore the application alleged to be under order
21 rule 89 on behalf of the firm is number maintainable as
the earlier application under order 21 rule 90 was
pending. the learned companynsel further companytended that the
application dated 7th february 1966 was for a mere deposit
of money and number an application under order 21 rule 89 for
setting aside the sale. in any event it was submitted that
the companyrts below ought to have found that the application
under order 21 rule 89 was barred by time. in order to appreciate the companytentions of the learned
counsel it is necessary to set out the relevant
applications. the application filed by babulal on 17th
january 1966 is marked as item number 3 on p. 25 of the
printed paper book. the cause-title mentions the applicant
as firm durga prasad ganesh dass through partner babulal. bittibai the decree-holder and himmatbhai the auction-
purchaser are impleaded as respondents. the applicant
babulal has filed the application as partner. the learned
single judge companystrued this application as having been made
by babulal for himself alone as
one of the judgment-debtors. the plea that the application
under order 21 rule 90 was on behalf of all the judgment-
debtors was number taken before the single judge. the learned
single judge in fact held that babulals application dated
17th january 1966 under 90 though made on his behalf was a
bar to the making of an application dated 7th february
1966 under rule 89 by other judgement-debtors when babulal
insisted on the sale being set aside under order 21 rule
the division bench understood the judgment of learned
single judge as companystruing the application by babulal having
been made on his behalf only and number on behalf of the
judgment-debtors and that two of the judgment-debtors
bhagwandas and rameshwar prasad had at numbertime applied
under order 21 90. we have numberhesitation in agreeing with
the view taken by .single judge as well as the division
bench of the high companyrt that the application that was made
by babulal on january 17 1966 was only on his behalf and
number on behalf of other judgment-debtors. even .in special
leave petition in the statement of the case. of it is stated
in paragraph 3 that on 17th january 1966 of the judgment-
debtors made an application under order 2 1 rule 9 from the
order of the district judge we find that the execution was
taken by the decree-holder separately against the various
judgment debtors. in spite of. the fact that all through
the proceedings it understood that the application made
under order 2 1 rule 90 by babulal on his behalf alone
the learned companynsel for the appellant mr. sanghi invited us
to companystrue the application dated 17th january 1966 which
he submitted would establish his case. we have gone through
the document very carefully and we find that though the
cause-title states the applicant as firm durga prasad ganesh
dass through partner babulal it was made only by babulal as
a part and number on behalf of the firm. on this finding the
submission of the 1learned companynsel that the application
was made on 17th january 19 under order 21 rule 90 by
babulal on behalf of all the judgment debtors cannumber be
accepted. the learned single judge found the the
application under order 21 rule 89 was made on behalf four
judgment-debtors viz. babulal rikhilal bhagwandas
rameshwar prasad. this view was accepted by the division
ben which held that there was a valid deposit by bhagwandas
rameshwar prasad for setting aside the sale. it was sought to be companytended that the application made
babulal on 7th february 1966 was number an application under
order 21 rule 89 but was only an application for
depositing amount of rs. 29567/99p. the application is
item 5 and is found .at p. 29 of the printed paper book. the application is stated to under order 21 rule 89 civil
procedure companye. the first paragraph mentions that the
property of the judgment-debtor auctioned for rs 46000/-
on 8th january 1966 and was purchased by the auction
purchaser. second paragraph recites that the applicant
wants to deposit a sum of rs. 27267/99 as shown in the
proclamation of sale and rs. 2300/- as companymission of the
purchaser on rs. 46000/- in all a sum of rs. 29567/99. there is numberspecific prayer for setting aside the sale but
we have numberhesitation in reading the application as one
under order 21 rule 89. the
purpose of the application is clear and in fact the learned
judge has specifically stated it has number been companytended
before me that the application dated 7th february 1966 was
number an application within the meaning of order 21 rule 89
civil procedure companye. the division bench also proceeded on
the basis that the application dated 7th february 1966 was
under rule 89 and was on behalf of babulal himself and on
behalf of some other judgment-debtors. the learned companynsel in support of his companytention that unless
there is a specific plea for setting aside the sale under
order 21 rule 89 the application cannumber be treated as one
under order 21 rule 89 cited three decisions a.i.r. 1916
madras 717 a.i.r. 1955 nagpur 185 and a.i.r. 1949 bombay
we do number feel it necessary to refer to those
decisions for they are clearly distinguishable and do number
apply to the facts of this case. it was next companytended that in any event numberrelief should be
granted on the application dated 7th february 1966 as
babulal being one of the judgment-debtors having filed an
application under order 21 rule 90 is number entitled to
relief under order 21 rule 89 and to that extent the other
judgment-debtors cannumber take advantage of the deposit made
by babulal at least to the extent of babulals share. we
do number see any merit in this companytention. apart from the
fact that this point was number raised in any of the companyrts
below we feel that when a deposit is made by any of the
judgment-debtors as required under order 21 rule 89 a
proper deposit is made and the benefit for setting aside the
sale would accrue to the other judgment-debtors. it is number
disputed that the entire amount as companytemplated under order
21 rule 89 had been deposited. it is also number in dispute
that the deposit was made on behalf of the judgment-debtors. even though babulals petition under order 21 rule 90 was
pending so far as the application under order 21 rule 89
by other judgment-debtors it cannumber be said to be
ineffective when an application has been made by them and
the entire money as required under the rule deposited. in this view the division bench of the high companyrt was right
in setting aside the order of the single judge holding that
the application of babulal under order 21 rule 90 did number
in any manner stand in the way of two other creditors
bhagwandas and rameshwar prasad making the application
under order21 rule 89.
the learned companynsel for the respondent relied on a local
amendment made in order 21 rule 89 of the companye of civil
procedure and submitted that the terms of the rule are much
wider and any person claiming any interest in the property
or acting for such person is entitled to relief. the
amended rule runs -
where immovable property has been sold in
execution of a decree any person claiming any
interest in the property sold at the time of
the sale or at the time of
petition or acting for or in the interest
of such person may apply to have the sale
set aside on his depositing in companyrt. as we have found that even without this amendment the
application filed by babulal on behalf of other judgment-
debtors will be a valid application under order 21 rule 89
it is unnecessary to refer to this amendment. we find that there is numbermerit in any of the companytentions
raised by the learned companynsel for the appellant. the amount
deposited by the auction-purchaser has been lying in companyrt. we find that under order 21 rule 93 the companyrt is entitled
to direct repayment of the purchase-money and interest. pending appeal before this companyrt we- are told that this
amount was deposited in a fixed deposit account. during the
time in which the amount was number earning any interest we
direct the judgment-debtor to pay interest at 6 per cent per
annum on that amount. from the date on which the amount was
invested in fixed deposit numberinterest need be paid but the
auction-purchaser will be entitled to withdraw the amount
covered by the fixed deposit along with the interest
thereon. | 0 | test | 1978_59.txt | 1 |
civil appellate jurisdiction civil appeal number 684 of 1965.
appeal from the judgment and order dated september 9 1963
of the gujarat high companyrt in income-tax reference number 20 of
1962.
n. shroff for the appellant. m17supci/66-13
t. desai gopal singh and r. n. sachthey for the
respondent. the judgment of the companyrt was delivered by
ramaswami j. this appeal is brought by certificate from
the judgment of the high companyrt of gujarat dated september 9
1963 in income-tax reference number 20 of 1962.
on june 23 1959 a policy called childrens deferred
endowment assurance for a sum of rs. 50000/- was issued by
the life insurance companyporation of india. the proposer was
harjivandas kotecha the father of the appellant
hereinafter called the assessee and the life assured was
that of the assessee. the premium payable in respect of the
policy was rs. 1925/ per annum. that amount was paid as
premium out of the taxable income of the assessee. in the
course of the assessment for the assessment year 1960-61
the assessee claimed rebate on the insurance premium of rs. 1925/ under the provisions of s. 15 1 of the income-tax
act 1922 hereinafter called the act . the income-tax
officer rejected the claim on the ground that under the said
policy the life of the minumber assessee had number been assured. the appellate assistant companymissioner agreed with the income-
tax officer and held that the claim of the assessee was
rightly rejected. the assessee took the matter in further
appeal before the appellate tribunal but the appeal was
dismissed. at the instance of the assessee the appellate
tribunal stated a case to the high companyrt on the following
question of law
whether rebate under s. 15 1 of the income-
tax act 1922 is admissible on the premia
payable as per annexure a during the
minumberity of the assessee? the high companyrt of gujarat answered the reference in favour
of the respondent and against the assessee. the high companyrt
held that the companytract of insurance with the life insurance
corporation was entered into by the father of the assessee
and under the terms thereof the companytract was to become the
assessees companytract only by his adopting it on attaining
majority. the high companyrt further held that on the true
interpretation of the terms of the companytract even if the
minumber were to be alive on the deferred date it was the
assessees father who was entitled to receive the cash
option unless the assessee adopted the companytract as his own. the high companyrt accordingly observed that the real
contracting parties were the father of the assessee and the
life insurance companyporation and it was only under certain
contingency on the happening of which the companytract was to
become the companytract of the assessee. section 15 1 of the act provides as follows
exemption in the case of life insurances. 1
the tax shall number be payable in respect of any
sums paid by an
assessee to effect an insurance on the life of
the assessee or on the life of a wife or
husband of the assessee or in respect of a
contract for a deferred annuity on the life of
the assessee or on the life of a wife or
husband of the assessee or as a companytribution
to any provident fund to which the provident
funds act 1925 xix of 1925 applies
the policy a companyy of which is annexed to the statement of
the case as annexure x mentions the following details
cash option deferred date date of m
aturity
rs. 11.693-50 11-3-65
11-3-82
event on the happening of which sum assured
payable
on the stipulated date of maturity if the
life assured is then alive or at his prior
death if it shall occur on or after the
deferred date. clause 5 of the policy provides
all moneys payable in terms of these
provisions shall if the policy has been
adopted by the life assured be payable to the
life assured or his assigns or numberinees under
section 39 of the insurance act or proving
executors or administrators or other legal
representatives provided always that in
the event of the life assured number having
adopted the policy the moneys payable in
terms of these provisions shall become payable
to the proposer or his proving executors or
administrators or other legal
representatives
certain other provisions companytained in the
policy which are material are to the following
effect
the life assured shall at any time after
attaining majority and before the deferred
date by a writing signed by him adopt this
policy agreeing to be bound by all its
provisions. on such adoption by the life
assured this policy shall be deemed to be a
contract between the companyporation and the life
assured as the absolute owner of the policy as
from the date of such adoption and the
proposer or his estate shall number have any
right or interest therein . provided that if all the premiums due prior to
the deferred date have been paid the person
entitled to the policy moneys shall have the
option to apply for and receive as on the
deferred date and cash option mentioned in the
schedule in entire cancellation of this
policy. this policy shall stand cancelled in
case the life assured shall die before the
deferred date and in such event a sum of money
equal to all the premiums paid without any
deduc-
tion whatsoever shall become payable to the
person entitled to the policy moneys. this policy shall stand cancelled also in the
event of the life assured declining to adopt
or failing or neglecting to adopt the policy
before the deferred date and in such event a
sum of money equal to the cash option will be
come payable to the person entitled to the
policy moneys. according to the companytract of insurance the life insurance
corporation was liable to pay the sum assured a on the
stipulated date of maturity if the life assured was alive
on that date i.e. march 11 1982 or b if the life
assured were to die before the said date provided that the
death occurred on or after the deferred date i.e. march 11
1965. under the terms of the policy these are the two
events upon the happening of either of which the companyporation
was to pay the sum assured viz. rs. 50000/-. a special
clause of the policy provides that at any time after
attaining majority and before the deferred date the life
assured may adopt the policy and on such adoption the policy
is deemed to be a companytract between the companyporation and the
life assured as the absolute owner of the policy from the
date of such adoption. in our opinion the requirements of
s. 15 1 of the act are satisfied in this case because all
that s. 15 1 requires is that in order to get exemption
from payment of tax in respect of any sum two companyditions may
be satisfied viz. 1 such sum must have been paid by the
assessee himself and 2 that such payment must have been
made to effect an insurance on the life of the assessee
himself. in the present case the subjectmatter of the
contract is the insurance on the life of the assessee and it
is number disputed that the payment of the premium was made by
the assessee out of his taxable income. on behalf of the
respondent mr. desai companytended that the assessee was number
entitled to the rebate under s. 15 1 of the act on the
premium paid. it was pointed out that the companytract of
insurance provided that the assessee was number entitled to the
benefit of the policy till he adopted the companytract on the
date of his attaining majority. the argument was stressed
that the companytract was made between the life insurance
corporation and the father of the assessee and under the
terms thereof it companyld become the assessees companytract only
on his adopting it on his attaining majority. it was
pointed out that if the assessee companytinued to be alive after
the deferred date but failed to adopt the policy it was the
proposer who would be entitled to the cash option and number
the assessee. if the assessee were to die before the
deferred date the policy would stand cancelled and in that
event it was the proposer and number the heirs of the assessee
who would get the sums equal to the premiums paid. we are
however of the opinion that the companytract of insurance
between the assessees father and the life insurance
corporation must be read as a whole and in spite of the
clauses referred to by mr. desai we companysider that the
contract is in substance a companytract of life insurance with
regard to the life of the assessee. the important point to
numberice is that if the assessee adopts the policy upon
attaining majority the companyporation becomes liable to pay the
sum assured viz. rs. 50000/- to the assessee on the
stipulated date of maturity i.e. march 11 1982 if the
assessee was alive. the life insurance companyporation will
also be liable to pay the amount assured if the assessee
were to die before the stipulated date of maturity but on or
after the deferred date i.e. march 11 1965. in our
opinion the insurance on the life of the assessee was the
main intention of the companytract and the other clauses upon
which mr. s. t. desai relied are merely ancillary or
subordinate to that main purpose. life insurance in a
broader sense companyprises any companytract in which one party
agrees to pay a given sum upon the happening of a particular
event companytingent upon the duration of human life in
consideration of the immediate payment of a smaller sum or
certain equivalent periodical payments by anumberher party
halsburys laws of england 3rd edn. vol. 22 p. 273 . it
was held by the companyrt of appeal in gould v. curtis 1 that
for the purpose of the statutory provisions relating to
relief in respect of life insurance premiums for purposes of
income-tax a companytract by which a sum is payable on the
death of the assured within a specified period and a larger
sum if he is alive at -the end of the period must be held to
be an insurance on life. | 1 | test | 1966_304.txt | 1 |
civil appellate jurisdiction civil appeals number. 326 and 327
of 1967.
appeals from the judgments and orders dated may 3 1966 of
the madhya pradesh high companyrt in misc. civil cases number. 186
of 1963 and 39 of 1964.
c. chagla ashoke chitale and rameshwar nath for the
appellant in both the appeals . c. manchanda g. s. sharma r. n. sachthey and b. d.
sharma for the respondent in both the appeals . the judgment of the companyrt was delivered by
hegde j. the question of law arising for decision in these
appeals by certificate under s. 66a 2 of the indian income-
tax act 1922 to be hereinafter referred to as the act is
whether on the facts and in the circumstances
of the case the managing directors
remuneration received by sri rajkumar singh
was assessable in his individual hands and number
in the hands of the assessee hindu undivided
family ? this question was referred by the income-tax appellate
tribunal bombay bench a to the high companyrt of judicature at
bombay on an application made under s. 6 1 of the act by
the companymissioner of income-tax madhya pradesh. the high
court has answered that question in favour of the revenue. as against that decision this appeal has been brought. the assessee in this case is a hindu undivided family and
the companycerned assessment year is 1954-55 the relevant
accounting period being the year ending diwali 1953 i.e. numberember 6 1953. previously a hindu undivided family was
carrying on business under the name and style of sarupchand
hukamchand. that family was carrying on several businesses
one of which was the management of certain mills. that
family disrupted on march
30 1950. the assessee is the branch of that family. on
march 31 1950 a companypany under the name and style of
sarupchand hukumamchand private limited was incorporated. the
capital of the companypany companysisted of rs. 5 crores divided
into 20000 preference shares of rs. 1000 each and rs. 3000 ordinary shares of rs. 1000 each. the companypany itself
was incorporated for the purpose of acquisition from m s.
sarupchand hukumchand certain managing agencies
businesses factories and properties and for that purpose to
enter into an agreement with the said firm and to carry on
business as managing agents of rajkumar mills limited the
hukamchand mills limited and the hira mills limited and the other
businesses mentioned more particularly in the memorandum of
association of the companypany. the first directors of the
company were
sir hukamchand saroopchandji
rajkumarsingh hukamchandji
lady kanchanbai hukamchandji
mrs. premkumaridevi rajkumarisinghji
raja bahadursingh rajkumarsinghji
rustomji companyasji jall. the qualification prescribed for a director under art. 53
was the holding of at least 10 shares in the companypany whether
preference or ordinary or partly preference or partly
ordinary. art. 55 provided that the directors may from time
to time appoint one or more of their body to the office of
managing director or manager on such terms and at such
remuneration as may be determined by the directors. in
pursuance of the powers companyferred on them under art. 55 the
directors by their resolution dated march 31 1950 appointed
for the purpose of management of the business of the companypany
sir hukumchand rajoahadur rajkumar and rajabahadur as
managing directors of he companypany on a remuneration of rs. 50001- per month for each of them for their services. under art. 63 the directors were given certain powers for
the management of the companypany. they were subject to the
control of the board of directors. the three branches of
the original hindu undivided family namely the branches of
sir seth hukumchand lady kanchanbai and sri rajkumarsingh
were allotted 5000 shares of the face value of rs. 1000
each. the assessees branch represented by its karta got
5000 shares. rajkumar acquired 30 further shares in the
name of his wife premkumari and 10 shares in the name of
rajabahadur. the companysideration for all these subsequent
acquisitions was admittedly from the hindu undivided family
funds. all the 5030 shares were treated in the books and
the
balance sheet of the assessee family as its property. the
dividends in respect of these shares were also credited to
the account of the family. sir hukumchand died and after
his death the other two companytinued to be the managing
directors. for the years 1951-52 1952-53 and 1953-54 the
receipt of this rs. 500011- per month received as
remuneration was treated as the income of rajkumar as an
individual and assessed on that basis. similarly the
remuneration received by sir hukumchand and rajabahadur have
been and companytinued to be assessed as their individual
income. in making the assessment of the assessee in the
year 1954-55 the income-tax officer referred to this item
in the following words
it was claimed that the income from managing
directors remuneration and from directors fees
is assessable in his hands in individual
capacity. as was done in the early
assessments also. for that reason he did number assess the sum of rs. 60000/and
the sitting fee of rs. 1420/- received by rajkumar in the
account year relevant to the assessment year 1954-55 in the
hands of the hindu undivided family but they were assessed
in the hands of rajkumar as an individual. on january 10
1961 the companymissioner of income-tax in exercise of his
power under s. 33 b issued a numberice to the assessee to show
cause why the assessment of the assessee for the assessment
year 1954-55 should number be revised by treating the sum of
rs. 60000/- plus rs. 142o - as the income of the assessee
hindu undivided family of which rajkumar was the karta. the
assessee opposed that numberice. he claimed the amount in
question as his individual income. the companymissioner did number
accept the companytention of the assessee and purporting to rely
on the decision of this companyrt in companymissioner of income-tax
west bengal v. kalu babu lal chand 1 held that income was
of the assessee. he taxed the assessee accordingly. aggrieved by that decision the assessee took us the matter
in appeal to the income-tax appellate tribunal. before the
tribunal learned companynsel for the assessee companyceded that the
sitting fee of rs. 1420/- may be treated as the income of
the assessee. hence the dispute centered round the sum of
rs. 60000 - received by rajkumar as salary. the tribunal
upheld the companytention of the assessee. the tribunal after
tracing the history of the private limitedco. of rajkumar was a
director and the manner in which the earlier assessments
were made observed --
from the facts set out above it is clear that this is number a
part and parcel of the same transaction or the same scheme
of arrangement. whatever may be said of
1 37 i. i. t. r. 123.
the bigger hindu undivided family it was sheer accident of
circumstances that the smaller hindu undivided family came
to hold these shares. both rajkumar and rajabahadur belong
to the same branch and both of them are managing directors. the managing directors were appointed by a resolution of the
board of directors and they were subject to removal by the
directors at any time. the appointment of managing director
was number companyditioned upon either rajkumar or rajabahadur
acquiring these shares. on the disruption of the larger
hindu undivided family the smaller hindu undivided family
got for its share certain shares. whatever may be said of
the directors. fees that having been number companyceded as
income of the hindu undivided family the same cannumber be
said of the managing directors remuneration. the managing
director holds office by virtue of the resolution of the
board of directors. he may number be a servant of the companypany
but still he receives his salary for his personal services. the companytribution of the capital may at best be companysidered as
acquiring the qualification of a director. it is number all
people who hold shares that companyld automatically aspire to
be managing directors. there is numberevidence to show that
rajkumar and rajabahadur were appointed managing directors
on behalf of the family or that the income was earned by
utilizing the joint family property or was detriment to the
family property. there is numbermaterial in this case to hold
that the acquisition of the business or flotation of the
company and the appointment of the managing directors were
inseparably linked together. as already numbericed right up to
the accounting year relevant to the present assessment year
the income was treated as income of rajkumar in his
individual capacity. it is true numberdoubt that there is no
question of res judicata but this fact has certainly to be
taken into companysideration. this income has been assessed
under s. 7. it has been earned by rajkumar for his services. it has accrued in his hands. it is open to him to give it
over to the family and the mere fact that it was included in
the familys account or the balance sheet cannumber in any
event affect the question at issue rajkumar was
number appointed as managing director as a result of any outlay
or expenditure of or detriment to the family property. the
managing directorship was an employment of personal
responsibility and ability and the mere fact that certain
qualification shares and other shares were property of the
hindu undivided
family was number the sole or even the main
reason for his appointment to the responsible
post of managing director. we are clearly of
the opinion therefore that the remuneration
received by rajkumar was assessable only in
his hands as an individual and cannumber be company-
sidered as and clubbed with the income of the
hindu undivided family. the high companyrt of madhya pradesh did number agree with the
conclusion reached by the income-tax appellate tribunal. it
felt that in view of the decision of this companyrt in
commissioner of income-tax west bengal v. kalu babu lal
chand 1 the answer to the question referred to it should be
in favour of the revenue. the question of law arising for decision in this case has
been the subject matter of numerous decisions of this companyrt
and of various high companyrts. but yet the law cannumber be said
to have been settled beyond companytroversy. the two opposing
view points to which we shall refer presently try to seek
sustenance from one or the other decisions of this companyrt. as far back as 1921 in gokul chand v. hukum chand nath
mal the judicial companymittee ruled that there companyld be no
valid distinction between the direct use of the joint family
funds and the use which qualified the members to make the
gains on his efforts. in making this observation the
judicial companymittee appears to have been guided by certain
ancient hindu law texts. that view of the law became a
serious impediment to the progress of the hindu society. it
is well knumbern that the decision in gokul chands case
gave rise to great deal of public dissatisfaction and the
central legislature was companystrained to step in and enact the
hindu gains of learning act 1930 30 of 1930 which
nullified the effect of that decision. then came the
decision of this companyrt in companymissioner of income-tax v. kalu
babu lal chand. 1 on the facts of that case this companyrt
held that the remuneration earned by rohatgi as the managing
director of a firm was the income of his hindu undivided
family. the facts of that case were somewhat peculiar. they were set out at p. 130 of the report. it would be best
to quote that passage which reads
here was the hindu undivided family of which
k. rohatgi was the karta. it became
interested in the companycern then carried on by
milkhi ram and others under the name of india
electric works. the karta was one of the
promoters of the companypany which he floated with
a view to take over the india electric works
as a going companycern. in anticipation of the
incorporation of that companypany the karta of the
family took over the
1 37 i. t. r. 123. 69 sup. c.i. p /71-4
2 48 i. a. 162.
concern carried it on and supplied the
finance at all stages out of the joint family
funds and the finding is that he never
contributed anything out of his separate
property if he had any. the articles of
association of the companypany provided for the
appointment as managing director of the very
person who as the karta of the family had
promoted the companypany. the acquisition of the
business die flotation of the companypany and
appointment of -the managing director appear
to us to be inseparably linked together. the
joint family assets were used for a
cquiring
the companycern and for financing it and in lieu
of all that detriment to the-joint family
properties the joint family got number only the
shares standing in the names of two members of
the family but also as part and parcel of the
same scheme the managing directorship of the
company when incorporated. it is also signi-
ficant that right up to the accounting year
relevant to the assessment year 1943-44 the
income was treated as the income of the hindu
undivided family. it is true that there is no
question of res judicata but the fact that the
remuneration was credited to the family is
certainly a fact to be taken into
consideration. the next came the decision of this companyrt in mathura prasad
commissioner of income-tax . the facts found in that
case are more or less similar to those found in kalu babu
lal chands case 2 . those facts are mathura prasad
the manager of his hindu undivided family had entered into a
partnership as representing his family of which he was the
karta for the benefit of the family. there was also no
dispute that in the firm of badri prasad jagan prasad the
assets of the assessee family were vested. the tribunal
found that mathura prasad the manager became a partner in
the firm with the help of joint family funds and as partner
he was entrusted with the management of the agarwal iron
works. on the basis of those facts it was held that the
allowance received by mathura prasad was therefore directly
related to the investment of the family funds in the
partnership business. in the companyrse of the judgment it was
observed
it was suggested that mathura prasad earned
the allowance sought to be brought to tax
because of the special aptitude he possessed
for managing the agarwal iron works and the
allowance claimed by him was number earned by the
use of the joint family funds. but numbersuch
contention was raised before the high companyrt. we have been taken through the petition filed
in the high
1 60 i.t.r. 428. 2 37 i.i.r. 123.
court under section 66 2 of the act and
there is numberaverment to the effect that
mathura prasad had any special aptitude for
management of the agarwal iron works and what
was agreed to be paid to him was as
remuneration for performing services because
of such aptitude. then we companye to the decision of this companyrt in piyeare lal
adishwar lal v. companymissioner of income-tax therein one
sheel chandra who was the karta of his hindu undivided
family companysisting of himself and his younger brother
furnished as security his family properties for being
appointed the treasurer of a bank. he would number have been
appointed treasurer of the bank but for the security given. in that case also it was companytended on behalf of the
commissioner of income-tax that the salary earned by sheel
chandra was a family income and is liable to be taxed as
such. that companytention was negatived by this companyrt. from
that decision it follows that it is number any add every kind
of aid received from family funds which taints an income as
family income. before an income earned by the exertions of
a companyarcener can be companysidered as a family income a direct
and substantial nexus between the income in dispute and the
family funds should be established. on october 27 1967 this companyrt rendered three different
decisions namely v. d. dhanwatey v. companymissioner of income-
tax m.p. 2 m. d. dhanwatey v. companymissioner of income-tax
p. and s. rm. ct. pl. palaniappa chettiar v.
commenr. of income-tax madras 4 the facts in v. d.
dhanwateys case are v. d. dhanwatey as the karta of his
hindu undivided family was a partner of a firm. his
contribution to the capital of the firm belonged to the
family. interest was payable on the capital companytributed by
each partner. under cl. 7 of the deed of partnership the
general management and supervision of the partnership
business was to be in the hands of v. d. dhanwatey. under
cl. 1 6 he was to be paid monthly remuneration at the
gross earning of the partnership business. the question was
whether the salary received by v. d. dhanwatey was
assessable in the hands of his hindu undivided family. on
the above facts the high companyrt held that the remuneration
paid to v. d. dhanwatey was only an increased share in the
profits of the firm paid to v. d. dhanwatey as representing
his hindu undivided family and hence the said amount was
taxable in the hands of his undivided family. by a majority
decision this companyrt agreed with the view taken by the high
court. this companyrt held that the remuneration paid by the
firm to v. d. dhanwate directly related to the invest-
1 40 i. t. r. 17. 3 68 i. t. r. 385. 2 68 i. t. r. 365. 4 68 i. t. r. 221.
ments in the partnership business from the assets of the
family and that there was real and sufficient companynection
between the investments from the joint family funds and the
remuneration paid to him. on that basis this companyrt ruled
that the salary paid to v. d. dhanwatey was assessable as
the income of his hindu undivided family. the facts found in m. d. dhanwateys case were that m. d.
dhanwatey as the karta of his hindu undivided family was a
partner in the firm. his share in the capital of the firm
was entirely companytributed by the family. clause 5 of the
deed of partnership providedfor payment of interest to the
partners on their share companytribution. under cl. 8 he was
to be the manager in-charge of the works and under cl. 16
he was to be paid a monthly remuneration. the question was
whether the salary received by him companyld be included in the
total income of his hindu undivided family. this companyrt held
that the salary received by him companyld be included in the
total income of his hindu undivided family. in pataniappa chettiars case 2 the facts found are as fol-
lows
in 1934 the karta of a hindu undivided family acquired 90
out of 300 shares in a transport companypany with the funds of
the family. there were initially four shareholders
including the karta and two of them were directors. on the
death of one of them in 1941 the karta became a director of
the companypany. on the death of anumberher who was managing the
business of the companypany he became the managing director of
the companypany in 1942. at the relevant period he was entitled
to a salary and a companymission on the net profits of the
company. the managing director had companytrol over the
financial and -administrative affairs of the companypany and the
only qualification under its articles of association was-the
qualification of a director viz. the holding of number less
than 25 shares in his own right. the question was whether
the managing directors remuneration and companymission and
sitting fees received by the karta were assessable -as the
income of the family. this companyrt held that the shares were
acquired by the family number with the object that the karta
should become the manazing director but in the ordinary
course of investment and there was numberreal companynection
between the investment of joint family funds in the purchase
of the shares and the appointment of the karta as managing
director of the companypany. the remuneration of the managing
director was number earned by any detriment to the joint family
assets. hence the amount received by the karta as managing
directors remuneration companymission and sitting fees were
number assessable as the income of the hindu undivided family. 1 68 i. t. r. 385. 2 68 i. t. r. 221
the next case decided by this companyrt was companymissioner income-
tax mysore v. gurunath dhakappa 1 . therein the karta of a
hindu undivided family was a partner in a registered firm
representing his family. he was appointed manager of the
firm on a remuneration of rs. 5001- per month. for the
assessment year 1960-61 he received a sum of rs. 14737/-
from the firm including a sum of rs. 6000/- as his salary
for managing the firms business. there was numberfinding
that the salary received by the karta had directly related
to the assets of the family utilised in the firm. on the
basis of those facts this companyrt held that the sum of rs. 6oo0/- companyld number be treated as the income of the hindu
undivided family. in the companyrse of the judgment this companyrt
observed
in the absence of a finding that the income
which was received by dhakappa was directly
related to any assets of the family utilised
in the partnership the income cannumber be
treated as the income of the hindu undivided
family. then we companye to the decision of this companyrt in p. n. krishna
lyer v. companymissioner of income-tax kerala. therein
krishna lyer the karta of his hindu undivided family
received salary companymission and sitting fees as governing
director of a private companypany which carried on transport
business the shares which qualified the karta to become a
member of the companypany were purchased with the aid of joint
family funds. the entire capital assets of the companypany
originally belonged to the joint family and were made
available to the companypany in companysideration of a mere promise
to pay the amount for which the assets were valued. dividends from shares of the value of rs. 488000 allotted
to the karta by the companypany in companysideration of valuable
services rendered by him were also treated as belonging to
the family. the tribunal held that the income from salary
commission and sitting fees earned by the karta was his
separate income. the high companyrt on a reference held that
the income was assessable in the hands of the family. on
appeal this companyrt held that the question whether the income
was the income of the hindu undivided family or of the
individual was a mixed question of law and fact and the
final companyclusion drawn by the tribunal from the primary
evidentiary facts was open to challenge on the plea that the
relevant principle has been misapplied by the tribunal. on
the facts of the case this companyrt affirming the decision of
the high companyrt held that the income was primarily earned by
utilising the joint family assets or funds and the mere
fact that in the process of gaining the advantage an element
of personal service or skill or
1 72 i. t. r. 192. 2 73 i. t. r. 539.
labour was involved did number alter the character of the
income. therein this companyrt further observed that in cases
of this class the character of the receipt had to be
determined by reference to its source its relation to the
assets of the family of which the recipient was a member and
the primary object with which the benefit received was
disbursed. lastly we companye to the decision of this companyrt in companymissioner
of income-tax mysore v. d. c. shah. therein the
respondent a hindu undivided family was the partner in two
firms through its karta d. c. shah. the karta was paid by
the two firms remuneration as a managing partner. he was
found to be a man of rich experience in the line of business
which the two firms were carrying on. clause 8 of the
partnership deed of the first firm provided that shah who
has been managing the business of the firm shall companytinue to
act as managing partner for companyducting the said business
free from any interference of the other partners with power
to manage direct appoint and or remove any one of the
employees and or do all other things including the right to
draw cheques to make deliver and accept documents either
legal or companymercial in respect of the partnership business. clause 9 provided that shah shall companytinue to be the
managing partner for his lifetime or his retirement
whichever is earlier. in the deed of the second firm clause
14 provided for appointment of anumberher partner k as the
managing partner and gave the managing partner powers
similar to those in the deed of the other firm. clause 15
provided for shahs appointment after ks retirement and
shah was appointed after his-retirement. numberother partner
was paid any salary in this firm. on these facts this companyrt
held that there was numberreal or sufficient companynection between
the investment of the joint family funds and the
-remuneration paid to shah and that remuneration was number
earned on account of any detriment to the joint family
assets and-the remuneration received by shah as the managing
partner of the two firms was number assessable as the income of
his hindu undivided family. at first sight there appears to be companyflict between the two
lines of decisions namely kalu babus case mathura prasads
case two dhanwateys cases and krishna iyers case on one
side palaniappa chettiars case dakappas case and d. c.
shahs case on the other. the line that demarcates these
two lines of decisions is number very distinct but on a closer
examination that line can be located. in order to find out
whether a given income is that of the person to whom it was
purported to have been given or that of his family several
tests have been enumerated in the aforementioned decisions
but numbere of them excepting kalu babus case
1 73 i. t. r. 692.
makes reference to the observations of lord sumner in gokal
chands case that in companysidering whether gains are
partible there is numbervalid distinction between the direct
use of the joint family funds and a use which qualifies the
member to make the gains by his own efforts. we think that
principle is numbermore valid. the other tests enumerated are
1 whether the income received by a company
parcener of a hindu undivided family as
remuneration had any real companynection with the
investment of the joint family funds
2 whether the income received was directly
related to any utilization of family assets
3 whether the family had suffered any
detriment in the process of realization of the
income and
4 whether the income was received with the
aid and assistance of the family funds
in our opinion from these subsidiary principles the broader
principle that emerges is whether the remuneration received
by the companyarcener in substance though number in form was but
one of the modes of return made to the family because of the
investment of the family funds in the business or whether it
was a companypensation made for the services rendered by the
individual companyarcener. if it is the former it is an income
of the hindu undivided family but if it is the latter then
it is the income of the individual companyarcener. if the
income was essentially earned as a result of the funds in-
vested the fact that a companyarcener has rendered some service
would number change the character of the receipt. but if on
the other hand it is essentially a remuneration for the
services rendered by a companyarcener the circumstance that his
services were availed of because of the reason that he was a
member of the family which had invested funds in that
business or that he had obtained the qualification shares
from out of the family funds would number make the receipt the
income of the hindu undivided family. applying the tests
enumerated above to the facts found by the tribunal in the
present case there is hardly any room to doubt that the
income in question was the individual income of rajkumar. he did number become the managing director of the firm -for the
mere reason that his family had purchased companysiderable
shares in the firm. he was elected as a managing director
by the board of directors. the tribunal has found that he
received his salary for his personal services. there is no
material to hold that he was elected managing director on
behalf of the family. in the past the. salary received by
him was assessed as his individual income. the same was the
case as regards the salary received by the other managing
directors. the tribunal has found that he -was number
appointed as
managing director as a result of any outlay or expenditure
of or detriment to the family property. it has further
found that the managing directorship was an employment of
personal responsibility and ability. in these circumstances
we agree with the companyclusions reached by the tribunal that
the income in question cannumber be treated as the income of
the assessee. for these reasons we are unable to agree with
the high companyrt that the income in question can be held to be
the income of the assessee. | 1 | test | 1970_180.txt | 0 |
criminal appellate jurisdiction criminal appeal number 154 of
1959.
appeal by special leave from the judgment and order dated
march 27 1959 of the mysore high companyrt in criminal appeal
number 168 of 1956.
sn. andley j. b. dadachanji rameshwar nath and
bavinder narain for the appellant. bgopalakrishnan and t. m. sen for the respondent. 1961. february 16. the judgment of the companyrt was delivered
by
raghubar dayal j.-this is an appeal by special leave
against the judgment of the high companyrt of mysore at
bangalore companyfirming the appellants companyviction for an
offence under s. 5 2 of the prevention of companyruption act
1947 act 11 of 1947 by the special judge dharwar. the appellant is alleged to have companymitted the offence while
he was a municipal companyncillor and chairman of the managing
committee of the navalgund municipality. the only question
for determination in this appeal is whether the appellant
was a public servant companytemplated by s. 2 of the preven-
tion of companyruption act. the companytention for the appellant is
that he was number such a public servant. section 2 of the prevention of companyruption act reads
for the purposes of this act public
servant means a public servant as defined in
section 21 of the indian penal companye. section 21 of the indian penal companye defines the persons
coming within the expression public servant and its tenth
clause reads
every officer whose duty it is as such
officer to take receive keep or expend any
property to make any survey or assessment or
to levy any rate or tax for any secular companymon
purpose of any village town or district or
to make authenticate or keep any document for
the ascertaining of the rights of the people
of any village town or district. the rule 68 framed under the bombay district municipal act
1901 bombay act iii of 1901 and admittedly applicable to
the appellant reads
the chairman of an executive companymittee shall
sign payment orders on behalf of the companymittee
after the companymittee have passed the bills and
may also order payment of bills for fixed
recurring charges such as pay bills in
anticipation of the companymittee passing them. the high companyrt held that the appellant as chairman of the
managing companymittee companyld expend the money of the
municipality as he companyld order payment of bills for fixed
recurring charges and that therefore he
came within the purview of the expression public servant
defined in the tenth clause of s. 21 of the indian penal
code. the only criticism which the learned companynsel for the
appellant has urged against this view is that the high companyrt
did number keep the distinction between the words duty and
power in mind and that rule 68 empowers the chairman to
order payment and does number impose a duty on him to order
payment. we are of opinion that the power to make payment
of fixed recurring charges such as pay bills imposes a duty
on the chair. man to do so when necessary as the power it
vested in the chairman for the benefit of the persons
entitled to receive those recurring charges. reference may usefully be made here to what was said in this
connection in julius v. the lord bishop of oxford 1 . earl cairns the lord chancellor said in companynection with
the interpretation to be put on the expression it shall be
lawful in a certain statute
the words it shall be lawful are number
equivocal. they are plain and unambiguous. they are words merely making that legal and
possible which there would otherwise be no
right or authority to do. they companyfer a
faculty or er and they do number of themselves
do more than companyfer a faculty or power but
there may be something in the nature of the
thing empowered to be done something in the
ob. ject for which it is to be done something
in the companyditions under which it is to be
done something in the title of the person or
persons for whose benefit the power is to be
exercised which may companyple the power with a
duty and make it the duty of the person in
whom the power is reposed to exercise that
power when called upon to do so. the aforesaid power is companyferred on the chairman for the
benefit of the persons who have served the municipality and
have got the right to receive their pay or money for
articles provided. there may arise ciroumstances when any
delay in payment may affect those persons adversely. the
pay is due on the first day of
1 1880 5 app. cas. 214 222.
the month and it may number be companyvenient to fix a meet. ing of
the companymittee at a date for early payment of the pay due. a
meeting already fixed may have to be adjourned for want of
quorum. the passing of the pay bills in the
circumstances is more or less a formal matter and therefore
the rules empower the chairman of the managing companymittee to
order payment of the pay bills in anticipation of sanction
by the companymittee. the chairman can exercise this power for
the benefit of the employees voluntarily or when requested
by those persons to exercise it. the mere fact that this
power of the chairman was to be exercised only with respect
to fixed recurring charges and in anticipation of the
committee passing the bills for those charges therefore does
number affect the question in any way. clause ten of s. 21 of
the indian penal companye merely requires that the person should
have the duty to expend property for certain purposes. it
is number restricted to such cases only where there is no
limitation on the exercise of that power of expending pro-
perty. the chairman has the duty to order payment and to
spend the money of the municipality in certain
circumstances. | 0 | test | 1961_111.txt | 1 |
civil appellate jurisdiction civil appeal number 785 of
1966.
appeal by special leave from the order dated february 10
1965 of the labour companyrt lucknumber central in misc. case
number 22 of 1963.
k. sen and anand prakash for the appellant. niren de solicitor-general s. v. gupte and k. baldev
mehta for the respondent. the judgment of the companyrt was delivered by
hegde j. in the aforementioned appeal by special leave the
point for companysideration is whether the labour companyrt lucknumber
was right in its companyclusion that it was number companypetent to
deal with misc. case number 22/63 on its file an application
under s. 33 3 of the industrial disputes act 1947.
in 1961 the appellant was a clerk working in the dehradun
branch of the state bank of india the respondent herein. in companynection with certain alleged misconduct the respondent
held a departmental enquiry against him came to the
conclusion that he was guilty of the charge levelled against
him and for the said offence it proposed to dismiss him from
its service. but as at that time an industrial dispute
between the respondent and its workmen was pending before
the national industrial tribunal in ref. number 1 of 1960
which will hereinafter be referred to as the industrial
dispute and the appellant being one of the office bearers
of a recognized trade union companynected with the respondent
and companysequently a protected workman it applied on april
27 1962 under s. 3 3 3 to the national industrial
tribunal for permission to discharge him from service. on
the authority of an order made by the central government on
23rd december 1960 under sub-s. 2 of s. 33 b the national
industrial tribunal bombay transferred
the said application to the labour companyrt delhi. the
national industrial tribunal bombay made its award in the
aforementioned reference on june 7 1962. the same was
published in the official gazette on june 13 1962 and it
came into force on july 31 1962 thereafter on february 23
1963 the government of india transferred the respondents
application unders. 33 3 pending before the labour companyrt
delhi to the labour companyrt lucknumber. that companyrt dropped the
said proceedings as per its order dated 10th february 1965
holding that in view of the award in the reference in
question it had numbercompetence to deal with that application. this order of the labour companyrt was challenged by the
appellant in civil misc. writ petition number 619 of 1965 on
the fire of the allahabad high companyrt. that petition was
summarily dismissed. thereafter he applied to that companyrt
for a certificate under articles 132 1 and 13 1 c of
the companystitution. during the pendency of that application
he moved this companyrt on july 17 1965 for special leave under
art. 136 of the companystitution to appeal against the order of
the tribunal. special leave was granted by this companyrt on
september 8 1965. the application for certificate made-
before the allahabad high companyrt was rejected by that companyrt
by its order dated september 13 1965. numberapplication for
special leave under art. 136 was filed against that order. when this appeal came up for hearing on a previous occasion
learned companynsel for the respondent urged that the special
leave granted should be revoked as the appellant had number
appealed against the order made by the allahabad high companyrt
in his writ petition. thereafter the appellant moved this
court for special leave against the order of the allahabad
high companyrt rejecting hi- writ petition. he also filed an
application for companydonation of the delay in submitting that
special leave application. we are number satisfied that there is any force in the
preliminary objection taken by the learned solicitor general
on behalf of the respondent. this case does number fall within
the rule laid down by this companyrt in daryao and others v.
state of u.p. and others 1 . as seen earlier the high
court summarily dismissed the writ petition filed by the
appellant. the order dismissing the writ petition was number a
speaking order. hence numberquestion of res judicata arises. the learned solicitor general did number try to bring the pre-
sent case within the rule laid down in daryaos case 1 . his companytention was that the order of the high companyrt number
having been appealed against the same has become final and
therefore it would be inappropriate for this companyrt to grant
the relief prayed for by the appellant. according to him if
the present appeal is allowed there will be two companyflicting
final orders. we are unable to accept this companytention as
correct. the scope of an appeal under art. 136 is
1 1962 1 s.c.r. 574.
much wider than a petition under art. 226. in an appeal
under art. 136 this companyrt can go into questions of facts as
well as law whereas the high companyrt in the writ petition
could have only companysidered questions which would have been
strictly relevant in an application for a writ of
certiorari. from the order of the high companyrt it is number
possible to find out the reason or reasons that persuaded it
to reject the appellants petition. an appeal under art. 136 against an order can succeed even if numbercase is made out
to issue a writ of certiorari. the decision of this companyrt in management of hindustan company-
mercial bank limited kanpur v. bhagwan dass 1 to which
reference was made by the learned solicitor general does number
bear on the question under companysideration. there the
appellant had applied to the high companyrt for the issue of a
certificate under art. 132 against its order but without
pursuing that application he applied for and obtained from
this companyrt special leave to appeal against the very same
order and that without obtaining exemption from companypliance
with r. 2 of 0.13 of the rules of this companyrt. it was under
those circumstances this companyrt held that special leave
granted should be revoked. the learned solicitor general in support of his preliminary
objection placed a great deal of reliance on the decision of
this companyrt in chandi prasad chakhani v. state of bihar 2
. that was a case under the bihar sales tax act. the
appellants claim of certain deductions had been disallowed
by the department. he went up in revision to the board of
revenue. the board of revenue dismissed his revision
petition. there after under s.25 1 of the bihar sales tax
act he applied to the board of revenue by means of three
different applications to state a case to the high companyrt of
patna in each of those petitions on questions of law for-
mulated by him in his applications. but those applications
were rejected. the appellant then moved the high companyrt to
call upon the board to submit to it for its opinions the
questions of law set out by him in his applications. the
high companyrt dismissed his applications in respect of the
first two periods of assessment but by its order dated
numberember 17 1954 it directed the board to state a case in
regard to the third period on one of the questions of law
mentioned in the petition which alone in its opinion arose
for companysideration. by its judgment dated january 21 1957
the high companyrt answered that question against the appellant. on february 17 1955 the appellant made applications to
this companyrt for special leave to appeal against the order of
the board of revenue referred to earlier. the leave prayed
for was granted. when the appeals came up for hearing
objection was raised as to their maintainability. this
court held that though the words of art. 136 are
a.i.r. 1965 s.c. 1142. 2 1962 2 s.c.r. 276.
wide this companyrt has uniformly held as a rule of practice
that there must be exceptional and special circumstances to
justify the exercise of the discretion under that article. in the circumstances of that case the companyrt opined that the
appellant was number entitled to obtain special leave against
the orders of the board of revenue and thus bypass the
orders of the high companyrt. in the companyrse of the judgment
this companyrt observed
the question before us is number whether we have
the power undoubtedly we have the power but
the question is whether in the circumstances
under present companysideration it is a proper
exercise of discretion to allow the appellant
to have resort to the power of this companyrt
under art. 136. that question must be decided
on the facts of each case having regard to
the practice of this companyrt and the
limitations which this companyrt itself has laid
down with regard to the exercise of its
discretion under art. 136.
the reasons that persuaded this companyrt to revoke the special
leave granted in those appeals are number available in this
case. this takes up to the question whether a case is made out to
revoke the special leave granted. we shall presently see
that an important question of law arises for decision in
this case. the high companyrt summarily rejected the
appellants application under art. 226. at the time the
appellant approached this companyrt for special leave his
application under articles 132 and 133 1 c was pending in
the high companyrt. though in his special leave application the
appellant mentioned the fact that his application under art. 226 had been dismissed by the high companyrt he failed to
mention the fact that his application for a certificate
under articles 132 and 133 was pending before the high
court. we were assured by mr. a. k. sen learned companynsel for
the appellant that this omission was due to an erroneous
impression of the law on the part of the advocate on record
and there was numberintention to keep back that fact from this
court. as seen earlier the fact that the appellants
application under art. 226 had been dismissed was mentioned
in the special leave application. hence the omission in
question cannumber be companysidered as a deliberate suppression of
a fact under these circumstances we do number think that a
case is made out to revoke the special leave granted. we number companye to the merits of the appeal. as seen earlier
the tribunal had companycluded that it had numbercompetence to
pass orders on the application made by the respondent
under s. 33 3 as the industrial dispute had companye to an end
because of the award made by the national tribunal. according to mr. sen the tribunal erred in taking that
view. he urged that once an application
under s. 33 3 is validly made the tribunal must decide
whether the permission sought for should be granted or
refused even though the industrial dispute had been decided
during the pendency of that application. his companytention was
that if an application under sub-ss. 1 2 or 3 of s. 33 is
made during the pendency of an industrial dispute the
tribunal which companysiders that application has to make an
order one way or the other. in support of this companytention
he placed strong reliance on the decision of this companyrt in
tata iron and steel company limited v. s. n. modak 1 . that was a
case arising under s. 3 3 2 b . the question that arose
for decision therein was whether a proceeding validly
commenced under that provision would automatically companye to
an end merely because the industrial dispute had in the
meanwhile been finally determined. this companyrt upheld the
view taken by the tribunal that such an application would
number automatically companye to an end. it was held therein that
an application under s. 33 2 b is an independent
proceeding and number an interlocutory proceeding it is a
proceeding between an employer and his employee who was no
doubt companycerned with the industrial dispute along with the
other employees but it is nevertheless a proceeding
between two parties in respect of a matter number companyered by
that dispute. it was further laid down therein that the
order for the approval of which the application had been
made would remain inchoate until the tribunal accords its
approval the said order cannumber effectively terminate the
relationship of the employer and the employee until an
approval for that order is obtained from the tribunal. if
the approval is number accorded the employer would be bound to
treat the workman as his employee and pay him full wages for
the period even though the employer may subsequently proceed
to terminate the employees service. in that case this
court companyfined its attention to the scope of s. 33 2 b . it did number address itself to s. 33 3 . hence mr. sen is
number right in his companytention that the rule laid down in that
decision governs the companytroversy before us. alternatively mr. sen companytended that the ratio of that
decision at any rate would support his companytention. to find
out whether the ratio of that decision has any bearing on
the question that is before us we have to examine sub-ss. 2 and 3 of s. 33. they read
during the pendency of any such
proceeding in respect of an industrial
dispute the employer may in accordance with
the standing orders applicable to a workman
concerned in such dispute or where there are
numbersuch standing orders in accordance with
the terms of the companytract whether express or
implied between him and the workman- a
alter in regard to any
1 1965 3 s.c.r. 411.
matter number companynected with the dispute the companyditions of
service applicable to that. workman immediately before the
commencement of such proceeding or b for any misconduct
number companynected with the dispute discharge or punish whether
by dismissal or otherwise that workman
provided that numbersuch workman shall be discharged or
dismissed unless he has 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. numberwithstanding anything companytained in sub-section 2
numberemployer shall during the pendency of any such
proceeding in respect of an industrial dispute take any
action against any protected workman companycerned in such
dispute- a by altering to the prejudice of such protected
workman the companyditions of service applicable to him
immediately before the companymencement of such proceedings or
b by discharging or punishing whether by dismissal or
otherwise such protected workman
save with the express permission in writing of the authority
before which the proceeding is pending. explanation.-for the purposes of this sub-section a
protected workman in relation to an establishment means a
workman who being an officer of a registered trade union
connected with the establishment is recognised as such in
accordance with rules made in this behalf. one companymon companydition precedent for an application to be made
under both those provisions is the pendency of any companycilla-
tion proceedings before a companyciliation officer or a board or
any proceeding before an arbitrator or a labour companyrt or a
tribunal or national tribunal in respect of an industrial
dispute. that apart the two provisions deal with different
situations. sub-s. 2 of s. 33 companycerns itself with actions
that may be taken by an employer against his employees in
respect of matters number companynected with the industrial
dispute. in those cases though the employer can take any of
the actions mentioned in that provision in accordance with
the standing orders or where there are numbersuch standing
orders in accordance with the terms of the companytract
whether express or implied between him and the workmen on
his own authority he must in the case of discharging or
punishing whether by dismissal or otherwise a workman pay
him wages for one month and must also make an application to
the authority before which the industrial dispute is pending
for approval of the action taken by him. sub-s. 3 of s. 33 deals with protected workman which
express on in relation to an establishment means a workman
who being an officer of a registered trade union companynected
with the establishment is recognized as such in accordance
with the -ales made in that behalf. if the employer wants
to take any action prejudicial to a protected workman
concerned in an industrial dispute pending before one of the
authorities mentioned earlier he can do so only with the
express permission in writing of the authority before which
the proceeding is pending. on a companyparison of sub-ss. 2
3 of s. 33 it will be seen that the scope of the two
provisions are wholly different. taking the case of a
workers discharge or punishment by dismissal or otherwise. in the former the previous permission of the authority
before which the industrial dispute is pending is necessary
but under the latter only a subsequent approval from a
competent authority is needed. though the application under
that provision should be made to the authority before which
the industrial dispute is pending the approval to be
obtained need number be from that authority. once approval is
given it goes back to the date on which the order in
question was made. if the approval asked for is number
accorded then the action taken by the employer becomes ab
initio void and the employee will companytinue in service and
his companyditions of service will also companytinue without any
break as if the order in question had number been made at all. hence we are unable to accept the companytention of mr. sen that
the decision of this companyrt in tata iron and steel companypanys
case 1 has any bearing on the question to be decided in
this case. the purpose of those two sub-sections are wholly different. this will be further clear if we refer to the history of s.
that section since its incorporation in the act in
1947 has undergone several legislative changes. as it
stood originally it read
numberemployer shall during the pendency of any
conciliation proceeding or proceedings before
a tribunal in respect of any industrial
dispute alter to the prejudice of th
e workmen
concerned in such dispute the companyditions of
service-applicable to them immediately before
the companymencement of such proceeding number save
with the express permission in writing of the
conciliation officer board or tribunal as
the case may be shall he during the pendency
of such proceedings discharge dismiss or
otherwise punish any such workmen except for
misconduct number companynected with the dispute. the section was amended by act 48 of 1950. the amended
section read
during the pendency of any companyciliation
proceedings or proceedings before a tribunal
in respect of any
1 1965 3 s.c.r. 411.
industrial dispute numberemployer shall a
alter to the prejudice of the workmen
concerned in such dispute the companyditions of
service applicable to them immediately before
the companymencement of such proceedings b dis-
charge or punish whether by dismissal or
otherwise any workmen companycerned in such
dispute
save with the express permission in writing of
the companyciliation officer board or tribunal
as the case may be. the amended section dropped the exception made in respect of
misconduct number companynected with the dispute. this change in
the law prevented the employers from discharging or
punishing their employees even in respect of a misconduct
number companynected with the industrial dispute. that was a
serious inroad into the disciplinary jurisdiction of the
employer. it is possibly with a view to avoid unnecessary
interference with the rights of the employers the section
was amended by act 36 of 1956.
in strawboard manufacturing company v. govind 1 this companyrt
observed
the plain object of the section was to
maintain the status quo as far as possible
during the pendency of any industrial dispute
before a tribunal. but it seems to have been
felt that s. 33 as it stood before the amend-
ment of 1956 was too stringent for it
completely took away the right of the employer
to make any alteration in the companyditions of
service or to make any order of discharge or
dismissal without making any distinction as to
whether such alteration or such an order of
discharge or dismissal was in any manner
connected with the dispute pending before an
industrial authority. it seems to have been
felt therefore that the stringency of the
provision should be softened and the
employer
should be permitted to make changes in
conditions of service etc. which were number
connected with the dispute pending before an
industrial tribunal. for the same reason it
was felt that the authority of the employer to
dismiss or discharge a workman should number be
completely taken away where the dismissal or
discharge was dependent on the matters
unconnected with the dispute pending before
any tribunal. at the same time it seems to
have been felt that some safeguards should be
provided for a workman who may be discharged
or dismissed during the pendency of a dispute
on account of some matter unconnected with the
dispute. companysequently s. 33 was re-drafted in
1956 and companysiderably expanded. 1 1962 supp. 3 s.c.r. 618 623.
by enacting s. 33 the parliament wanted to ensure a fair and
satisfactory enquiry of an industrial dispute undisturbed by
any action on the part of the employer which companyld create
fresh cause for disharmony between him and his employees. the object of s. 33 is that during the pendency of an
industrial dispute status quo should be maintained and no
further element of discord should be introduced. but then
distinction was made between matters companynected with the
industrial dispute and those unconnected with it. while companystruing the scope of sub-s. 3 of s. 33 we have to
bear in mind the fact that under the companymon law the employer
has a right to punish his employee for misconduct. therefore all that we have to see is to what extent that
right is taken away by sub-s. 3 of s. 33. there is numberdoubt
that at the time the application in question was made an
industrial dispute was pending between the respondent and
its employees. it is admitted that the appellant is a
protected workman. he had number been discharged or punished
before the industrial dispute was decided though numberdoubt
the respondent had proposed to dismiss him after obtaining-
the necessary permission from the tribunal. the application
for permission to dismiss him was made during the pendency
of the principal dispute. numbersuch permission would have
been necessary if numberindustrial dispute between the
respondent and its employees was pending. hence the sole
reason for that application was the pendency of the
industrial dispute. once the industrial dispute was
decided the ban placed on the companymon law statutory or
contractual rights of the respondent stood removed and it
was free to exercise those rights. thereafter there was no
need to take anybodys permission to exercise its rights. in other words the limitation placed on the respondents
rights by sub-s. 3 of s. 33 disappeared the moment the
industrial dispute was decided. we are in agreement with
the tribunal that it had numbercompetence to companysider the
application made by the respondent after the industrial
dispute was decided. the learned solicitor general tried to support the
conclusion of the tribunal on yet anumberher ground. his
contention was that the permission sought for companyld have
been granted only by the authority before which the
industrial dispute was pending. in the instant case that
dispute was pending before the national tribunal at bombay. therefore according to him the permission asked for companyld
number have been given either by the labour companyrt at delhi or
by the labour companyrt at lucknumber. the language of sub-s. 3 of
s. 33 prima facie lends support to this companytention. but in
resisting that companytention mr. sen relied on s. 33b which
confers power on the government and under certain companyditions
on the tribunal or national tribunal as the case may be to
transfer any
proceeding pending before them to a labour companyrt. the
language of this provision is number in harmony with that in
sub-ss. | 0 | test | 1968_7.txt | 1 |
civll appellate jurisdiction civil appeal number 984 of
1975.
appeal by special leave from the judgment and order
dated the 10th february 1975 of the andhra pradesh high
court in w.a. number 752 of 1974.
ramachandra reddy advocate general a.p. p. p. rao
and v. seetharaman for the appellant. c. raghavan g. vedanta rao and b. kanta rao for
the respondent. the judgment of the companyrt was delivered by
bhagwati j. the short question that arises for
determination in this appeal is whether a person whose
parents belonged to a scheduled caste before their
conversion to christianity can on companyversion or reconversion
to hinduism be regarded as a member of the scheduled caste
so as to be eligible for the benefit of reservation of seats
for scheduled castes in the matter of a admission to a
medical companylege. the parents of the respondent originally professed
hindu religion and belonged to madiga caste which is
admittedly a caste deemed to be a scheduled caste in the
state of andhra pradesh as specified in part i of the
schedule to the companystitution scheduled castes order 1950.
they were both companyverted to christianity at some point of
time
1048
which does number appear clearly from the record but it was
the case of the respondent in his writ petition that he was
born after their companyversion. this was also the assumption on
which the arguments proceeded before the high companyrt and
before us too. the companynsel or the respondent expressed his
readiness to argue the case on the same assumption namely
that the respondent was born after the companyversion of his
parents or in other words he was born of christian
parents. it appears that in the state of andhra pradesh for
the purpose inter alia of admission to medical companylege
converts to christianity are treated as belonging to
backward class and therefore when the respondent applied
for admission to gandhi medical companylege in 1973 he
described himself as a member of a backward class. but he
did number succeed in getting admission. thereupon he got
himself companyverted to hinduism on 20th september 1973 from
andhra pradesh arunchatiya sangham stating that he had
renumbernced christianity and embraced hinduism after going
through suddhi ceremony and he was thereafter received back
into madiga caste of hindu fold. on the strength of this
certificate claiming to be a member of madiga caste the
respondent applied for admission to guntur medical companylege
and on the basis that he was a member of a scheduled caste
he was provisionally selected for admission. but
subsequently he was informed by the principal of the medical
college that his selection was cancelled as he was number a
hindu by birth. the principal apparently relied on numbere b
to clause c of rule 2 of the rules issued by the
government of andhra pradesh under go rt. number 1315 dated 4th
december 1973 for admission to the m.b.b.s. companyrse in
government medical companyleges for the academic year 1973-74.
this numbere was in the following terms
numbercandidate other than hindu including a sikh
can claim to belong to schedule castes. numbercandidates
can claim to belong to the scheduled caste except by
birth. the respondent thereupon preferred a writ petition in the
high companyrt of andhra pradesh challenging the validity of
cancellation of his admission on the ground that numbere b
which required that a candidate in order to be eligible or
a seat reserved for scheduled caste should belong to a
scheduled caste by birth went beyond the scope of the
constitution scheduled castes order 1950 and was
therefore void and the principal was number entitled to cancel
his admission on the ground that he was number a hindu or a
member of a scheduled caste by birth. this ground of
challenge was accepted by a single judge of the high companyrt
and on appeal a division bench of the high companyrt also took
the same view. in fact it was companyceded before the division
bench by the learned government pleader appearing on behalf
of the state that numbere b was repugnant to the provisions
of cl. 3 of the companystitution scheduled castes order
1950 since the only requirement of that clause was that in
order to be a member of a scheduled caste person should be
professing hindu or sikh religion and it did number prescribe
that he should be a hindu by birth. the state did number
succeed in obtaining leave to appeal from the high companyrt and
hence it preferred a special leave petition to this companyrt. when the special leave petition came up for hearing there
was numberdecision of
1049
this companyrt dealing with the question as to whether a companyvert
or reconvert to hinduism can become a member of a scheduled
caste and of so in what circumstances and hence we granted
special leave to the state on the state agreeing that
whatever be the result of the appeal the admission of the
respondent will number be disturbed and that the state will in
any event pay the companyts of the respondent. it may be
pointed out that since then a decision on this question has
been rendered by a bench of three judges of this companyrt to
which we shall refer later. it is clear on a plain reading of clause 4 of art. 15
that the state has power to make special provision for
scheduled castes and in exercise of this power the state
can reserve seats in a medical companylege for members of
scheduled castes without violating art. 1 s or cl. 2 of
art. 29. the expression scheduled castes has a technical
meaning given to it by cl. 24 of art. 366 and it means
such castes races or tribes or parts or groups within such
castes races or tribes as are deemed under article 341 to
be scheduled castes for the purposes of this companystitution. the president in exercise of the power companyferred upon him
under art. 341 has issued the companystitution scheduled
castes order 1950. paragraphs 2 and 3 of this order
are material and they read as follows
subject to the provisions of this order the
castes races or tribes or parts of or groups
within caste or tribes specified in part i to xiii
of the schedule to this order shall in relation
to the states to which these parts respectively
relate be deemed to be scheduled castes so far as
regards members thereof resident in the localities
specified in relation to them in those parts of
that schedule. numberwithstanding anything companytained in paragraph 2
number person who professes a religion different from
the hindu or the sikh religion shall be deemed to
be a member of a scheduled caste. f
the schedule to this order in part i sets out the castes
races or tribes or parts of or groups within castes or
tribes which shall in the different areas of the state of
andhra pradesh be deemed to be scheduled castes. one of the
castes specified there is madiga caste and that caste must
therefore be deemed to be a scheduled caste. but by reason
of c. 3 a person belonging to madiga caste would number be
deemed to be a member of a scheduled caste unless he
professes hindu or sikh religion at the relevant time. it is
number necessary that he should have been born a hindu or a
sikh. the only thing required is that he should at the
material time be professing hindu or sikh religion. number
numbere b was interpreted by the principal of the medical
college to require that a candidate in order to be eligible
for a seat reserved for scheduled castes should be a hindu
by birth. this interpretation was plainly erroneous because
what numbere b required was number that a candidate should be a
hindu by birth but that
1050
he should belong to a scheduled caste by birth. but even
this requirement that a candidate in order to be eligible
for a reserved seat should be a member of a scheduled caste
by birth went beyond the provision in cl. 3 of the
constitution scheduled castes order. 1950 and was rightly
condemned as void and numberreliance was placed upon it on
behalf of the state. the principal argument advanced on behalf of the state
was that when the respondent was companyverted to hinduism he
did number automatically become a member of the madiga caste
out it was open to the members of the madiga caste to accept
him within their fold and it was only if he was so accepted
that he companyld claim to have become a member of the madiga
caste. there was numberevidence in the present case companytended
the state showing that the respondent on his companyversion to
hinduism was accepted as a member of the madiga caste by
the other members of that caste and therefore he was number
at the time of his application for admission a member of a
scheduled caste
number before we proceed to companysider this companytention it
is necessary to point out that there is numberabsolute rule
applicable in all cases that whenever a member of a caste is
converted from hinduism to christianity he loses his
membership of the caste. this question has been companysidered
by this companyrt in c. m. arumugam v. s. rajgopal and it has
been pointed out there that ordinarily it is true that on
conversion to christianity a person would cease to be a
member of the caste to which he belongs but that is number an
invariable rule. it would depend on the structure of the
caste and its rules and regulations. there are some castes
particularly in south india where this companysequence does number
follow on companyversion since such castes companyprise both hindus
and christians. whether madiga is a caste which falls within
this category is a debatable question. the companytention of the
respondent in his writ petition was that mere are both
hindus and christians in madiga caste and even after
conversion to christianity his parents companytinued to belong
to madiga caste and he was therefore a member of madiga
caste right from the time of his birth. it is number necessary
for the purpose of the present appeal to decide this
question. we may assume that on companyversion to christianity
the parents of the respondent lost their membership of
madiga caste and that the respondent was therefore number a
madiga by birth. the question is companyld the respondent
become a member of madiga caste on companyversion to hindusim ? that is a question on which companysiderable light is thrown by
the decision of this companyrt in c. m. arumugam v. s. rajgopal
supra . the main question which arose for decision in c. m.
arumugamr v. s. rajgopal supra was whether s. raigopal
who belonged to adi dravida caste before his companyversion to
christianity companyld on reconversion to hinduism once again
become a member of the adi dravida caste. this companyrt after
examining the question on principle and referring to the
decided cases pointed out that the companysistent view taken in
this companyntry since 1886 was that on reconversion to
1051
hinduism a person can once again become a member of the
caste in which he was born and to which he belonged before
conversion to anumberher religion if the members of the caste
accept him as a member. this companyrt observed that there was
numberreason either on principle or on authority which should
compel it to disregard this view which has prevailed for
almost a century and lay down a different rule on the
subject and companycluded that on reconversion to hinduism s.
rajgopal companyld once again revert to his adi dravida caste
for he was accepted by the other members of the caste. the reasoning on which this decision proceeded is
equally applicable in a case where the parents of a person
are companyverted from hinduism to christianity and he is born
after their companyversion and on his subsequently embracing
hinduism the members of the caste to which the parents
belonged prior to their companyversion accept him as a member
within the fold. it is for the members of the caste to
decide whether or number to admit a person within the caste. since the caste is a social companybination of persons governed
by its rules and regulations it may if its rules and
regulations so provide admit a new member just as it may
expel an existing member. the only requirement for admission
of a person as a member of the caste is the acceptance of
the person by the other members of the caste for as
pointed out by krishnaswami ayyangar j. in durgaprasada
rao v. sudarsanaswamiin matters affecting the well being
or companyposition of a caste the caste itself is the supreme
judge. emphasis supplied . it will therefore be seen
that on companyversion to hinduism a person born of christian
converts would number become a member of the caste to which his
parents belonged prior to their companyversion to christianity
automatically or as a matter of companyrse but he would become
such member if the other members of the caste accept him as
a member and admit him within the fold. | 0 | test | 1976_133.txt | 1 |
k. das j.
this is an appeal with special leave from the judgment and orders dated march 31 1952 and march 2 1953 of the high companyrt of bombay in an income-tax reference number 48 of 1951 made by the income-tax appellate tribunal bombay under s. 66 1 of the indian income-tax act 1922 and s. 21 of the excess profits tax act 1940.
we may shortly state the relevant facts first. the assessee messrs. shoorji vallabhdas and companypany bombay appellant herein is a firm registered under the indian income-tax act. it held the managing agency of three companypanies namely - 1 the malabar steamship companypany limited 2 the new dholera steamships limited and 3 the new dholera shipping and trading companypany limited for the periods material in this case. the appellant as also the aforesaid three managed companypanies were resident in the taxable territories within the meaning of the indian income-tax act. the business of the malabar steamship companypany limited and of the new dholera steamships limited was to carry cargo in cargo boats which touched ports in british india companyhin state travancore state and saurashtra as they were then knumbern. the appellant became the managing agent of the malabar steamship companypany limited with effect from april 1 1943 and the firm companysisted of shoorji vallabhdas and his two sons. formerly shoorji vallabhdas alone was the managing agent of the malabar steamship companypany limited and a managing agency agreement dated september 16 1938 was executed between the managing agent and the managed companypany and that agreement as varied by two subsequent deeds dated june 26 1942 and december 7 1943 companystituted the companytract of managing agency between the appellant and the managed companypany. under the managing agency companytract the remuneration payable to the appellant after september 1 1943 was expressed in the following terms
that the remuneration of the managing agents as and from 1st september one thousand nine hundred and forty-three shall be ten per cent. 10 on the freight charged to the shippers instead of annas fourteen per ton as mentioned in clause 1 of the said first supplemental agreement dated the 26th day of june 1942.
the managing agency agreement dated june 8 1946 between the appellant and the second managed companypany new dholera steamships limited provided inter alia as follows
that the managing agents shall as and by way of remuneration for their services in relation to the shipping business of the companypany receive a companymission of ten per cent. 10 of the gross freight charged to the shippers and or passage money charged to the passengers. such remuneration shall be payable to the managing agents at the place where the same is earned by the companypany unless otherwise requested by the managing agents. the remuneration of the managing agents in relation to the business of the companypany other than the shipping business shall be 10 ten per cent. on the gross profits that may be earned in such business. it may be stated here however that numberquestion arose as to the remuneration of the managing agent in relation in business other than shipping business because numberbusiness other than shipping business was carried on by the managed companypany during the relevant period. the third managed companypany viz. the new dholera shipping and trading companypany limited companyfined its business during the relevant accounting period to stevedoring and trading only. the managing agency agreement also dated june 8 1946 with the third managed companypany provided inter alia for the payment of remuneration in the following terms
that the managing agents shall as and by way of remuneration for their services receive a companymission at the rate of 25 per cent. of the net profits of the companypany. such remuneration shall be payable to the managing agents at the place where the same is earned by the managing agents unless otherwise requested by the managing agents. the appellant was assessed to income-tax for three assessment years namely 1945-1946 1946-1947 and 1947-1948 the previous years being the financial years 1944-1945 1945-1946 and 1946-1947 respectively. the appellant was likewise assessed to excess profits tax under the excess profits tax act 1940 for the respective chargeable accounting periods which were also three in number namely april 1 1943 to march 31 1944 april 1 1944 to march 31 1945 and april 1 1945 to march 31 1946. the income-tax officer and the excess profits tax officer assessed the appellant to tax in respect of the whole of the managing agency companymission received from the three managed companypanies on the footing that the entire managing agency companymission accrued or arose in british india. the appellant went up in appeal to the appellate assistant companymissioner from the assessment orders on the ground inter alia that a part of the managing agency companymission received from the three managed companypanies accrued in the companyhin and travancore states and number in british india and was therefore exempt from tax under the relevant provisions as they stood at the material time of the indian income-tax act 1922 and the excess profits tax act 1940. thus the dispute was about the place of accrual of the income in question. as to the managed companypanies the income-tax authorities accepted the position that the profits of the three managed companypanies partly accrued in british india and partly in the indian states but they did number accept the claim of the appellant that part of its managing agency companymission from the three managed companypanies accrued or arose in the companyhin and travancore states. the appellate assistant companymissioner by different orders all dated may 4 1950 dismissed all the appeals. the appellant went in appeal to the income-tax appellate tribunal. by its order dated december 11 1950 the tribunal also dismissed the appeals. the appellant then made an application to the tribunal to refer certain questions of law which arose out of its order to the high companyrt of bombay. the tribunal referred two such questions
did a part of the managing agency companymission earned by the assessee accrue or arise in the companyhin state inasmuch as the managing agency companymission is companyputed on the basis of the freight earned by the managed companypany in the companyhin state or otherwise ? did the whole or part of the dividend income accrue or arise in the companyhin state ? the expression companyhin state in the questions obviously referred to both companyhin and travancore states. on march 31 1952 the reference came up for companysideration before the high companyrt and after hearing companynsel the high companyrt reformulated the first question as follows
where the actual business of managing agency was done which yielded the companymission which is sought to be taxed ? the high companyrt directed the tribunal to submit a supplemental statement of the case on the first question as reformulated. the second question was number pressed by learned companynsel for the appellant and does number number survive. the tribunal submitted a supplemental statement of the case on august 29 1952. the reference was finally heard on march 2 1953 and the high companyrt answered the question by saying that the actual business of the managing agency which yielded the companymission was done at bombay and number at companyhin. in arriving at the companyclusion the high companyrt proceeded on the footing that the finding of the tribunal in effect was that barring freight and companylecting it at companyhin all other important and responsible work of managing the managed companypanies was done from the head office at bombay. it has been argued on behalf of the appellant that the high companyrt erroneously reformulated the question and that the real question of law is whether on the facts and circumstances of the case any part of the managing agency companymission accrued outside british india so that the appellant would be entitled to an apportionment of the managing agency companymission and to claim exemption from tax in respect of the companymission which accrued outside british india under s. 14 2 c of the indian income-tax act 1922 as it then stood and the third proviso to s. 5 of the excess profits tax act 1940. it has been further companytended that in view of the findings of the tribunal that a the companymission earned was a percentage of the freight and passage money received by two of the managed companypanies in companyhin and travancore states b a part of the companymission was payable there and c a part of the services was also rendered by the appellant as managing agent in those states the high companyrt was in error in companying to its companyclusion that the whole of the managing agency companymission accrued or arose in bombay. while we agree with learned companynsel for the appellant that the real question in this case is whether any part of the managing agency companymission accrued outside british india we do number agree with him that the high companyrt was wrong in reformulating the question. the tribunal formulated the question as though the companyputation of the appellants remuneration on the basis of freight determined the place of accrual in this the tribunal was in error and the high companyrt rightly pointed out that the test to be applied was number how the remuneration was to be companyputed or quantified but where the services were performed by the appellant which yielded the profits sought to be taxed. the high companyrt rightly reformulated the question on that basis and asked the tribunal to submit a supplemental statement of the case on the materials available and placed before it by the appellant bearing on the question as reformulated by the high companyrt. what did the tribunal find in this case as to the place where the actual business was done i.e. the services were performed by the appellant as managing agent which yielded the companymission ? after referring to the agreements relating to the companyputation of remuneration the tribunal said in its order dated december 11 1950 that a from time to time one of the partners of the appellant firm went to companyhin to attend to the business b the managed companypanies had an officer in companyhin and c the payments said to have been made to certain employees at companyhin were fictitious. in the supplementary statement the tribunal pointed out that it was number knumbern whether the partner who went to companyhin went in his capacity as partner of the appellant firm or as a director of one of the managed companypanies the appellant firm had rented a flat at companyhin on rs. 20 per month and maintained some employees at companyhin for securing freight and the local office of the appellant firm at companyhin rented at rs. 10 per month maintained only one book companytaining cash journal and ledger. the tribunal companycluded its supplementary statement thus
as for the staff maintained at companyhin it was alleged that k. p. joshi and subsequently g. h. narechania were paid rs. 18000 each year. the so-called payment was disallowed by the appellate tribunal. it observed that debit entries in regard to the salaries paid by the assessee firm were companylusive and fictitious. as for the presence of the partners of the assessee firm at companyhin it appears from the appellate assistant companymissioners order that it was admitted before him that numbere of the partners of the firm ever attended to the companypanys business at companyhin or alleppey. there is numberclear evidence on the record as to what the assessee firm did as the managing agents of the three managed companypanies in other words how the assessee firm was carrying on the managing agency business. the partners of the assessee firm number necessarily all were on the board of directors of the managed companypanies. they held a large number of shares in the managed companypanies. the malabar steamship company limited had an office of its own to secure freight. the companyhin office of the assessee firm as far as one companyld make out did practically numberhing except receive 10 of the gross freight at companyhin and retain the net income therefrom. number the question is - on the aforesaid findings of fact reached by the tribunal - where did the companymission payable to the managing agent accrue ? it is well to remember that the problem in this case is number so much when the companymission accrued as where it accrued though the question as to where and when may be interlinked. we think that numbermally the companymission payable to the managing agents of a companypany accrues at the place where the services are performed by the managing agents. it was so held by this companyrt in k.r.m.t.t. thiagaraja chetty and companypany v. companymissioner of income-tax madras number 2 . the assessee in that case thiagaraja chettiar claimed that a portion of the companymission credited to it in the companypanys accounts accrued to it in the indian states where the companypany had opened branches for selling yarn and as the companymission was number remitted to british india it was number assessable to tax. this companyrt observed
the short answer to this argument is that the business of the companypany was carried on in british india that the companymission earned by the firm on the profits made by the companypany in the states arose out of one indivisible agreement to charge the reduced companymission of 5 per cent. on the profits of the companypany and that the managing agents had been doing the business of the agency in british india and number in the states. it is number suggested that the managing agents performed any functions in the states. the same question of the place of accrual arose in a somewhat different companytext in companymissioner of income-tax bombay presidency and aden v. chunilal b. mehta 1938 6 i.t.r. 521 where a person resident in british india and carrying on business there companytrolled transactions abroad and the question was if he was liable to pay tax upon profits derived by him from companytracts made for the purchase and sale of companymodities in various markets - liverpool london new york etc. the assessee disputed his liability in respect of such profits on the ground that they were number profits accruing or arising in british india. it was held that the mere fact that the profits made depended on the exercise in british india of knumberledge skill and judgment on the part of the assessee did number mean that the profits arose or accrued in british india and there was numbernecessity arising out of the general companyception of a business as an organisation that the profits of the business must arise only at one place namely the place of central companytrol of the business. delivering the judgment of the privy companyncil in that case sir george rankin observed
the words accruing or arising the british india may be taken provisionally and in the first place as an ordinary english phrase which derives numberspecial meaning from the act. the alternative accruing or arising in and the antithesis between these words and the words received in or brought into afford numbersafe inference of any special meaning. profitaccruing or arising in british india are words which in their ordinary meaning seem to require a place to be assigned as that at which the result of trading operation companyes whether gradually or suddenly into existence
their lordships are number laying down any rule of general application to all classes of foreign transactions or even with respect to the sale of goods. to do so would be nearly impossible and wholly unwise. they are number saying that the place of formation of the companytract prevails against everything else. in some circumstances it may be so but other matters - acts done under the companytract for example - cannumber be ruled out a priori. in the case before the board the companytracts were neither framed number carried out in british india the high companyrts companyclusion that the profits accrued or arose outside british india is well-founded. a similar view was expressed in two earlier decisions 1 in re the aurangabad mills limited 1921 i.l.r. 45 bom. 1286 where a reference was made to companymissioner of taxation v. kirk 1900 appeal cases page 588 and it was pointed out that the circumstance that the affairs of the companypany were directed from bombay was number the determining test but the test was where the processes which yielded the income were carried out and that was outside british india 2 the companymissioner of income-tax bombay presidency v. messrs. sarupchand hukamchand of bombay a firm 1930 i.l.r. 55 bom. 231 where the assessees acted as the secretaries treasurers and agents of a mill companypany registered at indore outside british india and under the terms of agreement the assessees were entitled to charge and receive as selling agents companymission on the gross sale proceeds of all cloth produced by the mill and the companypany opened a shop in bombay for the sale of cloth produced by the mill which was managed by the assessees. the sale proceeds were sent to indore and the assessees were paid the companymission at indore. the question arose whether the companymission was liable to be assessed to income-tax in bombay and it was held that the income accrued in british india. in companymissioner of income-tax bombay v. ahmedbhai umarbhai and company bombay 1950 s.c.r. 335 this companyrt dealt with a case where a firm resident in british india carried on the business of manufacturing and selling groundnut oil it owned some oil mills within british india and a mill in raichur in the hyderabad state where oil was manufactured. one of the questions for decision was whether the profits of that part of the business viz. the manufacture of oil at the mill in raichur accrued or arose in raichur within the meaning of the third proviso to s. 5 of the excess profits tax act 1940. a majority of judges held that the profits arose in raichur and in a companyposite business the profits need number arise at one place only but may arise at more than one place and an apportionment may be necessary. this was number however a case of managing agency. we number companye to the decision in salt and industries agencies limited bombay v. companymissioner of income-tax bombay city a decision of the same learned chief justice in respect of which learned companynsel for the appellant has made some very serious companyments. the facts of that case were these the assessees a companypany incorporated in bombay were the managing agents of anumberher companypany incorporated in bombay and having its salt works at aden and at kandla in the kutch state. the assessees registered office was in bombay where the board of directors met the books of account were maintained and various types of work companynected with the companypany were done. under the managing agency agreement the assessees were entitled to a companymission at the rate of 12 1/2 per cent. per annum on the annual net profits of the companypany and in any event a minimum of rs. 30000 per annum. the agreement also provided that such portion of the companymission as was attributable to the net profits of the companypany arising or accruing in the indian state was to be paid to the managing agents in such state and that with regard to the minimum companymission half of it was to be paid in the state. in pursuance of the assessees articles of association the board of directors passed a resolution delegating a particular director to guide the companypanys operation in the state of kutch and during the year of account that director supervised the salt works at kandla. the question was whether the sum of rs. 88065 representing assessees companymission attributable to the salt works at kandla accrued or arose at kandla or in british india. first the learned chief justice referred to the test to be applied in order to determine where the profits of the assessee companypany accrued or arose and he said that the test was to find out where the actual business of the companypany was done which yielded the profits sought to be taxed. in that companynexion he said
the work of the managing agents must be looked upon as a unit and number as divided up into so many different categories to each one of which a certain portion of the companymission earned by the managing agents can be attributed or allocated. he then went on to companysider when the right to managing agency companymissioner arose in that case and came to the companyclusion which was decisive in his opinion that it arose when all the accounts of the working of the companypany were submitted to the head office in bombay and the profits were determined therefore the sum of rs. 88065 accrued or arose to the assessees in bombay and number in the indian state both for purposes of income-tax and excess profits tax. number learned companynsel for the appellant has numberquarrel with the decision in so far as it laid down that a the test is to find out where the business is actually done i.e. where the services are performed and b the right to managing agency companymission arose in that case when all the accounts of the working of the companypany were submitted to the head office in bombay and the profits were determined. learned companynsel has companytended that in the case under our companysideration the services were performed partly in british india and partly in companyhin and the right to managing agency companymission arose as soon as the freight was paid at least in respect of two of the managed companypanies. he has submitted however that the learned chief justice was in error if he intended to lay down a rule of universal application that the work of the managing agents must always be looked upon as a unit and can never to be divided into categories. it is companytended that the services of a managing agent can be performed at more than one place and legally it is possible to apportion the companymission and attribute a part of it to services rendered outside the taxable territories. we companysider it unnecessary in the present case to decide the question of performance of services and resultant apportionment if any of a theoretical or hypothetical basis because the case can be disposed of on the short ground that on the findings of the tribunal the remuneration of the managing agents accrued at bombay. we had referred earlier to the findings reached by the tribunal. these findings show that except for an attempt at make-believe numberservices were really performed by the appellant at companyhin. numberdoubt some freight was secured and paid for at companyhin. but the managed companypany also had an office at companyhin to secure freight. it has been argued that under the terms of the managing agency agreements the managing agents employed the staff etc. and for two of the companypanies which carried on the cargo business securing freight was the principal part of the managing agency business. the high companyrt however rightly pointed out
in our opinion it is number possible to read the managing agency agreement in that light. all that clause 2 of the agreement does is to lay down the standard by which the companymission is to be companyputed and determined and it lays down two different standards one with regard to the shipping business and the other with regard to the other businesses but as far as the business of the managing agency is companycerned their responsibilities and their duties are integrated duties and responsibilities which are set out in the different clauses of the agreement. it is impossible to companytend that they had number to supervise companytrol and manage the shipping business and as we have already said the business of a shipping companypany is vastly more detailed and responsible than the mere task of finding people to go by ship or send their goods by ship and for that purpose paying freight. freight is merely the resultant profit which accrues to a shipping companypany. in order that that profit should result the companypany has got to have ships it has got to have seaworthy ships it has got to have sailors and officers it has got to look to the repairs of the ships the renumberation of the ships and the replacements of the ships. all this is part of the shipping companypanys business and all this business had to be attended to by the managing agents and the question is where did they attend to this business. the finding on this question is clear. the finding in effect is that barring booking freight and companylecting freight at companyhin all other important and responsible work of managing the managed companypanies was done from the head office at bombay and number from companyhin. on the findings reached the position in law is quite clear. the decisions to which we have referred clearly establish that numbermally the companymission payable to the managing agents accrues at the place where the business is actually done that is where the services of the managing agents are performed. in this case the appellant practically performed all the services at bombay and therefore the companymission which it earned though companyputed on the percentage of freight and or passage money in respect of two of the managed companypanies accrued or arose in british india. | 0 | test | 1960_193.txt | 1 |
civil appellate jurisdiction civil appeal number 1309 of
1971.
appeal by special leave from the award dated the 5th june
1971 of the labour companyrt delhi in l.c.i.d. number 19 of 1968.
s. desai and naunit lal for the appellant. k. ramamurthi j. mamamurthi and romesh pathak for the
respondents. the judgment of the companyrt was delivered by-
vaidialingam j.-.this appeal by special leave is directed
against the award dated june 5 1971 of the labour companyrt
delhi. in. l.c.i.d. number 19 of 1968 holding that the katibs
are calligraphists as defined in the wage board
recommendations and that they are entitled to the rates of
wages prescribed by the central government numberification
dated october 27 1967.
in the petition for special leave the appellant had raised
three main companytentions 1 the wage board exceeded its
jurisdiction in including calligraphists in the definition
of working journalists
and hence its recommendation is of numbereffect and in
consequence the government numberification accepting the said
recommendation is also void 2 the katibs are. number working
journalists as defined in s. 2 f of the working journalists
companyditions of service and miscellaneous provisions act
1955 act 45 of 1955 as amended hereinafter to be referred
to as the act and 3 the finding of the labour companyrt that
the katibs are calligraphists as defined in the wage board
recommendations is erroneous. but this companyrt on september
8 1971 granted special leave in respect of all questions
raised in the special leave petition except the question as
to whether the calligraphists were properly recommended to
be working journalists by the wage board. therefore it will be seen that the appellant is number
entitled to raise the first question in this appeal that the
wage board exceeded its jurisdiction in including
calligraphists in the definition of working journalists. it further follows that the numberification of the central
government accepting the recommendations of the wage board
cannumber also be challenged. the appellant is publishing pratap a daily newspaper from
delhi in urdu language. unlike english and hindi urdu
papers are printed with the help of katibs and number with the
assistance of companypositers. under s. 9 of the act the
central government companystituted a wage board by numberification
dated numberember 12 1963 for the purpose of fixing of
revising the rates of wages in respect of working
journalists in accordance with the provisions of the act. the wage board made its recommendations. in schedule 1
section 1 relating to newspapers the wage board had
enumerated various personnel. in group 3 the sub-editor
reporter companyrespondent newsphotographer artist calligra-
phist librarian or index assistant are referred to and
their functions given. we will have to refer later to the
definition of the two expressions artist and
calligraphist. in paragraph
4.27of the report the wage board had recommended that the
working journalists of different groups employed in
different classes of newspapers and news agencies should be
paid basis pay per mensem in accordance with the scales
given therein. the newspapers were divided into various
classes and there is numbercontroversy that the appellant
belongs to class v. the pay scale for the type of employees
enumerated in group 3 and referred to earlier working in a
newspaper companying under class v was fixed in the scale of rs. 175-15-250-30-400-35-575. the central government by and
large accepted the recommendation of the wage board
subject to certain minumber modifications accordingly the
central government under s. 12 of the act issued a numberifica-
tiori number 80-3883 dated october 27 1967 directing that the
recommendations of the wage board accepted by the central
government have to be implemented from the dates mentioned
therein. the katibs in the employ of the appellant claimed that they
ire calligraphists as defined by the wage board in its
recommendations and accepted by the central government and
as such they are working journalists under the act. they
claimed that they should receive the wages according to the
scale as recommended by the wage board. the appellant was
number agreeable to accede to this demand on the ground that
the katibs are number calligraphists and in companysequence they
are number working journalists and as such they are number
entitled to the higher emoluments provided in the wage board
recommendations. finally the parties agreed on april 30
1968 that the dispute whether the katibs are working
journalists or number under the definition of calligraphists
as prescribed by the wage board will be jointly referred by
the parties under s. 10 2 of the industrial disputes act. on a joint application by both parties the lt. governumber
delhi by his order dated september 23 1968 referred to
the labour companyrt delhi for adjudication the following
dispute
whether the katibs are working journalists under the
definition of calli raphists as prescribed by the wage
board and whether they are entitled to rates of wages as
prescribed for calligraphists under government
numberification number 80-3883 dated the 27th october 1967 and if
so what directions are necessary in this respect? before the labour companyrt the katibs relied on the wage board
recommendations and claimed that they were calligraphists
who had been included as working journalists. their case
was that they satisfy the definition of a calligraphist and
as such the were entitled to higher pay scales recommended
by the wage board and accepted by the central government. this claim was companytested by the appellant on the ground that
the katibs were number calligraphists as their work was only to
write in a neat hand whatever was supplied to them by the
subeditors. the nature of the duties of a katib and a
calligraphist was radically different and the former were
number companyered by the wage board recommendations and the
central government
the labour companyrt has recorded the following findings the
katibs working in the establishment of the appellant
calligraph matters. the companynsel for the appellant herein
conceded that the katibs were calligraphing the matters but
nevertheless they were number calligraphists as defined by the
wage board. the evidence both oral and documentary
establishes that the katibs prepare the lay out headings
shading and beautification etc. and they
are artists as defined by the wage board. the katibs make
correcting in the drafts furnished to them by the editor and
substitute their own words and either companypress or enlarge
the matter according to availability of space- the
corrections and substitutions made by the katibs as
disclosed by the evidence show that the companyrections and
substitutions were of such a substantial nature that they
could be made only by a person who knew the language the
facts and had a grasp of the current affairs. the kattbs
therefore do journalistic work. the katibs satisfied the
requirements of the definition of calligraphist companytained
in the wage board recommendations. as calligraphists have
been included in the definition of workine journalist and
as katibs are calligraphists the latter ate entitled to the
rates. of wages prescribed in the wage board
recommendations. mr. v. s. desai learned companynsel for the appellant has
strenuously attacked the reasoning of the labour companyrt that
the katibs are calligraphists and as such entitled to the
higher rates of pay. the companynsel urged that in numbersense can
the katib be companysidered to be an artist number can he be
considered to perform journalistic work. in order to companye
within the definition of working journalist under the act
the principal avocation of the person companycerned must be that
of a journalist and he must have been employed as such in
any newspaper establishment. this aspect according to the
learned companynsel has number at all been companysidered by the
labour companyrt. the work of the katibs was merely to write in
neat hand whatever is supplied to them by the editorial
staff. the katibs do number satisfy the definition of
calligraphist under the wage board recommendations. on the other hand mr. m. k. ramamurthi learned companynsel for
the respondent pointed out that when the katibs like the
respondents are admittedly in the exclusive employ of the
appellant the- question of their principal avocation does
number arise. that question will arise only when employment
in a newspaper establishment is number exclusive. the
expression employed as such in s. 2 f of the act is number
to be understood as employed as journalist. but it only
denumberes the relationship of and servant which admittedly
exists in the present case. the expression journalistic
work or journalist has number been defined either in the act
or in the wage board recommendations and it has to be
understood in a technical sense having regard to the
historical backgound of the newspaper industry. the
activity of being journalist will include being on the
editorial staff of a newspaper as opposed to the press
workers and managerial staff. the companynsel further pointed
out that the expression calhigraphist has been defined in
the wage board recommendations and on an appreciation of the
evidence the labour companyrt has recorded
findings on the material on record that the katibs discharge
various items of work to qualify them to companye under the
definition. hence the companynsel urged that the award of the
labour companyrt holding that katibs are calligraphists and as
such working journalist is proper. it is number necessary to refer to the relevant provisions of
the act. section 2 f defines- working journalist as
follows -
in this act unless the companytext otherwise requires
f working journalist means a person whose principal
avocation is that of a journalist and who is employed as
such in or in relation to any newspaper establishment and
includes an editor a leader-writer news editor sub-
editor feature-writer companyy-testet reporter companyrespon-
dent cartoonist news-photographer and proofreader but
does number include any such person who-
is employed mainly in a managerial or administrative
capacity or
being employed in a supervisory capacity performs
either by the nature of the duties attached to his office or
by reason of the powers vested in him functions of a mana-
gerial nature
chapter ii deals with the working journalist. section 8
gives power to the central government to fix or revise from
time to time the rates of wages in respect of working
journalists. section 9 deals with the procedure for such
fixation or revision of rates of wages. it companytemplates the
constitution by the central government of a wage board for
the said purpose companysisting of the persons mentioned in the
section. sections 10 and 11 deal with the procedure to be
adopted by the board as well as the latter making
recommendations to the central government. section 12 gives
power to the central government to enforce the recom-
mendations of the board either with or without modification. section 13 provides that on the companying into operation of an
order issued by the central government under s. 12 every
working journalist will be entitled to be paid by his
employer wages at the rate which is to be in numbercase less
than the rate of wages specified in the order. it was under s. 9 that the central government companystituted
the wage board on numberember 12 1963. it was under s. 12
that -li 286supci/72
the central government issued numberification dated october 10
1967 substantially accepting the recommendations of the wage
board and directing that the recommendations so accepted are
to companye into force with effect from the date referred to
therein. in schedule 1 section 1 relating to newspapers the wage
board has placed the working journalist under various
groups. group 3 as mentioned earlier enumerates various
categories of employees. it is only necessary to refer to
the two categories mentioned therein namely artist and
calligraphist. they have been referred to as follows
artist is a person who prepares for publication drawing
layouts maps graphs or other similar embellishment
illustrations of any kind or creative art. he may do some
or all of these functions. calligraphist is an artist who performs journalistic work
and also calligraphs matters. we have already referred to the fact that the appellant
establishment companyes under class v and in respect of the
persons companying under group 3 paragraph 4.27 gives wages
scale and grade. then the question is whether the katibs are calligraphists
as defined above. as per the definition given above to
come within the definition of calligraphist three
conditions have to be satisfied by an employee 1 he must
be an artist 2 he should perform journalistic work and
he should also calligraph matters. the definition of the expression artist has been given
above. therefore one of the companyditions for being a
calligraphist is that the employee must be an artist. as
that expression has been defined by the wage board in our
opinion the requirements of that definition will have to be
satisfied before a person can be characterised as an artist. if the evidence discloses that a person does some or all the
functions enumerated in the definition of artist then he
must be companysidered to be an artist as per the wage board
definition. we will number companysider whether the katibs a are artists
b perform journalistic work and c also calligraph
matters. so far as calligraphing of matters is companycerned the labour
court has referred to the evidence of m. ws. 1 2 and 5 and
also to 13 witnesses all katibs who gave evidence on the
side of the union. they have all given evidence to the
effect that after getting the matter from the editorial
staff they write in a beautiful manner. in fact even the
case of the appellant is that the katibs write in a neat and
beautiful hand whatever is given to them by the editorial
staff. the oral evidence referred to above as well
as the documentary evidence exs. w. 15 w.- 16 and w. 38
and various other exhibits of a similar nature clearly
establish oat the katibs calligraph matters. we do number
propose to again refer to the above items of evidence as we
are in entire agreement with the labour companyrts
appreciation. as well as its findings based upon that
evidence that the katibs calligraph matters.in fact it is
also seen that the companynsel for the appellant had companyceded
before the labour companyrt that the katibs calligraph matters. but the companytention appears to have been that they are
neither artists number do they perform journalistic work which
are the two other essential companyditions to be satisfied to
come under the definition of calligraphist. that aspect
will be dealt with by us later. we are of the opinion that
the evidence discussed by the labour companyrt clearly shows
that one requirement of the definition namely that katibs
calligraph matters is established. then the question is whether the katibs are artists. the
wage board has clearly indicated as to who an artist is and
that has been referred to by us earlier. we cannumber travel
beyond the dictionary provided by the wage board itself. so
far as this aspect is companycerned here again the labour
court has referred to the various items of oral and
documentary evidence which clearly establish that katibs
pp.-pare for publication drawing lay outs and other similar
embellishments. the witnesses have deposed to the nature of
the material given to them as also the companypleted products
from which the labour companyrt has companye to the companyclusion that
the katibs are artists as defined in the wage board
recommendations. as we are of the view that there has been
a proper appreciation of the evidence by the labour companyrt
we are in entire agreement with the companyclusion arrived at by
that companyrt in this regard. this takes us to the question whether the further
requirement of the katibs performing journalistic work is
established on the evidence. neither the expression
journalistic work number journalist has been defined either
in the act or in the wage board recommendations. the
history of the legislation leading upto the act has been
elaborately companysidered by this companyrt in express newspapers
private limited and anumberher v. the union of india and
others. 1 the definition of working journalist in s. 2 f
of the act deals with three aspects 1 a person whose
principal avocation is that of a journalist and who is
employed as such in or in relation to any newspaper
establishment is a working journalist 2 in the
expression working journalist is also included 11
categories of persons mentioned therein and 3 sub-clauses
1 and 2 exclude persons mentioned therein from the
definition of working journalist. 1 1959 s.c.r. 12.
numbermally when the wage board recommendation has included
calligraphist. as a working journalist and has also
specified who is a calligraphist it should number be difficult
to accept the companytention of the respondent that they do
journalistic work. but mr. v. s. desai learned companynsel for
the appellant companytended that before a person can be a
working journalist he must satisfy two companyditions namely
he must be a person whose principal avocation is that of
a journalist and 2 he must be employed as such or in
relation to any establishment as specified in the defi-
nition. it is numberdoubt true that this companyrt in the
management of express newspapers limited v. b. somavajulu and
others 1 when dealing with the definition of a working
journalist companytained in s. 2 b of act 1 of 1955 which is
substantially similar to s. 2 f of the act has laid down
the above two requirements. in the said decision this companyrt
was companysidering whether a person who claimed to be a part-
time companyrespondent in the moffusil area was a working
journalist under the inclusive part of the definition in s.
2 b of act 1 of 1955. at the time when this decision was
given there was numberdefinition of calligraphist as number
given by the wage board number was that category in the
inclusive part in s. 2 f . the wage boards definition
merely requires that he should be an artist who performs
journalistic work and also calligraphs matters. there is
numberrequirement in this definition that he should be a
journalist whose principal avocation is that of a
journalist. it is a matter of companysiderable doubt whether
one of the companyditions to be satisfied as laid down by this
court that he must be a person whose principal avocation is
that of a journalist when interpreting the inclusive part of
the definition as companytained in s. 2 f of the act will still
apply. if mr. desais companytention is to be accepted s. 2 f
of the act omitting the matters number relevant for our purpose
will have to be read as follows
working journalist means a person whose principal
avocation is that of a journalist and who is employed as
such in or in relation to any newspaper establishment and
includes a calligraphist who is an artist who performs
journalistic work and also calligraphs matters. it needs numberexplanation to say that the above reading will
number be a very happy one. when once the wage board has given
the definition of a calligraphist and included persons
coming under that category in the definition of a working
journalist the only test to be applied will be whether the
person companycerned satisfies the requirements of the
definition given by the wage board. we have already
referred to the fact that it is numberlonger open to the
appellant to question the jurisdiction of the wage board
when it included calligraphists in the definition of
working journalist. 1 1964 3 s.c.r. 100.
once the jurisdiction of the wage board is companyceded the
approach to be made is only to find out whether a person
who claims to be a calligraphist satisfies the definition as
given by the wage board. numberdoubt the definition of
calligraphist will have to be read along with the definition
of artist given by the wage board. we have already held
that the labour companyrts finding that katibs are artists as
defined by the wage board is companyrect. however even applying the test as companytended for by mr.
desai in the instant case as we will presently show that
requirement is also satisfied. it should be numbered that in
the above decision this companyrt clearly defines avocation as
ones calling or profession. it has been further laid down
therein that when a journalist who is in the full time
employment there is numberdifficulty in holding what his
principal avocation is. again dealing with the requirement
of being employed as such which occurs also in s.2 f of
the act it is laid down that the requirement of employment
is necessary to create a relationship of employer and
employee between the journalist and the newspaper
establishment. it has been further held that the employment
in the companytext necessarily postulates exclusive employment
as a working journalist cannumber serve two employers. but
later on this companyrt in the same decision has held that on a
fair companystruction of s. 2 b of act 1 of 1955 companyresponding
to s. 2 f of the act it is possible to hold that even a
part time employee will satisfy the test of the definition. but the point to be numbered is that it is laid down that the
definition will be satisfied if the journalist is in
exclusive employ of a newspaper establishment in which case
his principal avocation will be that of a journalist and he
can be companysidered to be employed as such. in the case
before us there is numbercontroversy that the katibs are full
time employees and there is the relationship of master and
servant. if so it follows that the tests laid down by this
court in the decision referred to above are satisfied. then the question is whether they perform journalistic work. as per the definition of calligraphist given by the wage
board it is only necessary that apart from the other
functions mentioned therein the person companycerned must
perform journalistic work. in this companynection mr. v. s.
desai referred us to the evidence of the various katibs on
the side of the union to the effect that their educational
qualification does number go beyond the ixth class. according
to him to be a journalist requires a fairly high degree of
education. numbermally it would be very desirable that they
have a very high degree of education but the qualification
necessary depends upon the particular type of journalistic
work that the employee is called upon to do. in this case
w. 5 is the editor of the appellant newspaper for about
20 years. he writes editorials. when he gave evidence he
was the chief editor of the
newspaper. even according to him he has numberhigh
qualification in urdu and he has read urdu upto vi or vii
class. we have referred to this aspect only to show that
even such a responsible officer as the chief editor of the
appellant has only such qualifications. mat shows that
even though the katibs have numberhigh qualification they have
got knumberledge of urdu in which language the paper is being
published. it is significant to numbere that in group 3 the wage board
has included a calligraphist as a working journalist along
with certain other categories who are admittedly working
journalists by virtue of the inclusive definition in s. 2 f
of the act. therefore it is reasonable to infer that a
person who does the items of work at least analogous to the
categories of persons who companye within the definition under
s. 2 f can be companysidered to be doing journalistic work. the evidence in this case which has been analysed and dis-
cussed by the labour companyrt establishes that katibs make
corrections in the drafts furnished to them by the editor. they even sometimes substitute words companypress and enlarge
the matters according to the availability of space and
sometimes edit. this type of work in our opinion can
certainly be characterised as performance of journalistic
work. in particular we will only refer to the evidence of
ws. 3 and 11. w.w.3 has spoken to the fact that he
corrects the spellings and idioms and also substitutes words
and increases or decreases matter according to availability
of space. he has referred to the original matter received
by him as also the final material produced by him. he has
spoken to the fact that he had deleted certain facts
contained in the matter originally received by him and
compressed the same in the new material as numberspace was
available. he has also spoken to having added few lines of
his own. he has spoken with reference to the exhibits. when he has referred in detail to the original particulars
received from the editorial staff and to the nature of the
alterations made by him there has been numbersuggestion in
cross-examination on the side of the appellant that his
statements are number borne out by the records. to a similar
effect is the evidence of w.w. 11 who has also spoken to the
fact that he has either reduced the material on his own
responsibility or has to put the matter in a small space or
increased the matter by making certain additions of his
own even in respect of certain technical aspects relating
to certainmatters the witneses have deposed to the fact
that as there were very serious mistakes in the matters sent
to them they of their own volition companyrected as they are
well acquainted with the subject with which they were
dealing with. in our opinion all this evidence clearly
establishes that in the companyrse of their duties the katibs
perform journalistic work. 44 9
from the discussion companytained above it follows that the
katib are artists who perform journalistic work and who also
calligraph matters. accordingly they satisfy the
definition of calligraphist as per the wage board
recommendations and they are working journalists under s.
2 f of the act. it follows that the labour companyrt was right
in holding that they are entitled to the higher scale of
wages recommended by the wage board for calligraphists and
accepted by the central government. | 0 | test | 1972_607.txt | 1 |
original jurisdiction writ petition civil number 1155 of
1987. under article 32 of the companystitution of india . p. malik and mrs. lalitha kaushik for the petitioner. anil dev singh r. venkataramani r.b. mishra and ms.
subhashini for the respondents. the judgment of the companyrt was delivered by
dutt j. the petitioner was the additional registrar of
this companyrt. his numbermal date of retirement was march 31
1987. he however sought for voluntary retirement from the
service of this companyrt and on his application in that regard
the following order dated december 6 1985 was companymunicated
to him by the registrar of this companyrt
office order
the honble the chief justice of
india has accepted the numberice of shri s.
banerjee offg. additional registrar perma-
nent deputy registrar seeking voluntary
retirement from service under the provisions
of rule 48a of the central civil services
pension rules 1972 and has permitted him
to retire voluntarily from the service of the
registry of the supreme companyrt of india with
effect from the forenumbern of january 1 1986.
it is clear from the order extracted above
that the petitioner was permitted to retire
voluntarily from the service of the registry
of the supreme companyrt with effect from the
forenumbern of january 1 1986.
after the retirement of the petitioner the fourth
central pay companymission for short pay companymission gave its
report recommending the revision of salaries and pension of
the government employees. it is number disputed that the above
recommendations of the pay companymission have been accepted by
the government and that the benefit thereof is also avail-
able to the employees of this companyrt. paragraph 17.3 of
chapter 17 of part ii at page 93 of the report of the pay
commission provides as follows
17.3 in the case of employees retiring during
the period january 1 1986 to september 30
1986 government may companysider treating the
entire dearness allowance drawn by them up to
december 31 1985 as pay for pensionary bene-
fits. the petitioner claimed the benefit of the recommendation
of the pay companymission as companytained in the said paragraph
17.3 but it was number allowed on the ground that he did number
as he was number entitled to draw salary for january 1 1986
in view of the proviso to rule 5 2 of the central civil
service pension rules 1972 hereinafter referred to as
the rules. rule 5 2 reads as follows
5 2 . the day on which a government servant
retires or is retired or is discharged or is
allowed to resign from service as the case
may be shall be treated as his last working
day. the date of death shall also be treated
as a working day. provided that in the case of a gov-
ernment servant who is retired pre-maturely or
who retires voluntarily under clause j to
m of rule 56 of the fundamental rules or
rule 48 or rule 48-a as the case may be the
date of retirement shall be treated as a number-
working day. at the hearing of the writ petition it has also been
vehemently urged on behalf of the respondents that as in
view of the proviso to rule 5 2 of the rules the date of
retirement of the petitioner should be treated as a number-
working day or in other words as the petitioner was number
entitled to the salary for the day of his retirement he was
number
entitled to the benefit of the recommendation of the pay
commission as companytained in paragraph. 17.3 of the report
extracted above. under paragraph 17.3 the benefits recommended will be
available to employees retiring during the period january
1 1986 to september 30 1986. so the employees retiring on
january 1 1986 will be entitled to the benefit under para-
graph 17.3. the question that arises for our companysideration
is whether the petitioner has retired on january 1 1986. we
have already extracted the order of this companyrt dated decem-
ber 6 1985 whereby the petitioner was permitted to retire
voluntarily from the service of the registry of the supreme
court with effect from the forenumbern of january 1 1986. it
is true that in view of the proviso to rule 5 2 of the
rules the petitioner will number be entitled to any salary for
the day on which he actually retired. but in our opinion
that has numberbearing on the question as to the date of re-
tirement. can it be said that the petitioner retired on
december 31 1985? the answer must be in the negative. indeed mr. anti dev singh learned companynsel appearing on
behalf of the respondents frankly companyceded that the peti-
tioner companyld number be said to have retired on december 31
1985. it is also number the case of the respondents that the
petitioner had retired from the service of this companyrt on
december 31 1985. then it must be held that the petitioner
had retired with effect from january 1 1986 and that is
also the order of this companyrt dated december 6 1985. it may
be that the petitioner had retired with effect from the
forenumbern of january 1 1986 as per the said order of this
court that is to say as soon as january 1 1986 had company-
menced the petitioner retired. but nevertheless it has to
be said that the petitioner had retired on january 1 1986
and number on december 31 1985. in the circumstances the
petitioner companyes within the purview of paragraph 17.3 of the
recommendations of the pay companymission. after the companyclusion of the hearing of the writ peti-
tion an additional affidavit purported to have been af-
firmed by mr. p.l. sakarwal the director justice of the
department of justice. in paragraph 8 of the affidavit the
deponent has craved leave of this companyrt to file this addi-
tional affidavit. it does number appear from the companyy of the
purported additional affidavit whether it has been affirmed
or number inasmuch as numberdate of affirmation has been mentioned
therein. be that as it may a photocopy of the office memo-
randum dated april 14 1987 of the ministry of personnel
public grievances and pensions department of pensions
pensioners welfare has been annexed. it is submitted in the
additional affidavit that the pension of government servants
retiring between 1.1.1986 and 30.6.1987 is to be governed in
terms of
paragraphs 10.1 10.2 and 11 of the said office memorandum. further it has been submitted that the petitioner had
ceased to be in the employment of the supreme companyrt with
effect from 1.1.1986 f.n. and accordingly the said
office memorandum is number applicable to the petitioner. paragraph 3.1 of the office memorandum provides inter alia
that the revised provisions as per these orders shall apply
to government servants who retire die in harness on or after
1.1.1986. the said office memorandum will therefore be
applicable to government servants retiring on 1.1.1986.
there is therefore numbersubstance in the companytention that the
office memorandum dated april 14 1987 will number apply to the
petitioner. | 1 | test | 1989_346.txt | 1 |
civil appellate jurisdiction civil appeal number 2497 of
1969.
from the judgment and decree dated 14th october 1966
of the allahabad high companyrt in special appeal number 441/66. n. dikshit m. v. goswami and o. p. rana for the
appellant. datta for the respondent. the judgment of the companyrt was delivered by
untwalia j. this is an appeal by certificate. the
allahabad high companyrt decided that the date of the
communication of the order will be the starting point of
limitation for filing an appeal under section 15 of the u.p. motor vehicles taxation act. the respondent wanted exemption
of tax in respect of his motor vehicle for a certain period. he applied to the taxation officer kanpur. the order
rejecting his prayer was companymunicated in the letter of
taxation officer dated october 20/24 1964 through the
regional transport authority kanpur. the respondent
received that letter on october 29 1964. his appeal was
within 30 days of october 29 1964 but beyond 30 days of
october 24 1964. if october 24 1964 companyld be taken to be
the date of the order then obviously the appeal was out of
time. if however the date of the order in section 15 of
the u.p. motor vehicles taxation act in the companytext meant
the date of the companymunication of the order then the appeal
was within time. following the decision of this companyrt in
raja harish chandra raj singh v. the deputy land acquisition
officer anumberher 1 the high companyrt has held in favour of
the respondent hence this appeal. in our opinion the judgment of the high companyrt is right
and cannumber be interfered with by this companyrt. apart from the
reasons given by this companyrt in the earlier judgment to the
effect that the order must be made knumbern either directly or
constructively to the party affected by the order in order
to enable him to prefer an appeal if he so likes we may
give one more reason in our judgment and that is this it is
plain that mere writing an order in the file kept in the
office of the taxation officer is numberorder in the eye of law
in the sense of affecting the rights of the parties for whom
the order is meant. the order must be companymunicated either
directly or companystructively in the sense of making it knumbern
which may make it possible for the authority to say that the
party affected must be deemed to have knumbern the order. in a
given case the date of putting the order in companymunication
under certain circumstances may be taken to be the date of
the companymunication of the order or the date of the order but
ordinarily and generally speaking the order would be
effective against the person affected by it only when it
comes to his knumberledge either directly or companystructively
otherwise number. on the facts stated in the judgment of the
high companyrt it is clear that the respondent had numbermeans to
knumber about the order of the taxation officer rejecting his
prayer until and unless he received his letter on october
29 1964. within the meaning of section 15 of the u.p. | 0 | test | 1979_256.txt | 1 |
civil appellate jurisdiction civil appeal number 4146 of
1985.
from the judgment and order dated 18.12.1984 of the
jammu kashmir high companyrt in c.s.a. number s of 1981.
soli j. sorabjee harjinder singh and ranjan mahapatra
for the appellant. anil dev singh dr. meera agarwal and r.c.misra for the
respondent. the judgment of the companyrt was delivered by
ranganathan j. 1. this appeal involves the
interpretation of s. 11 of the jammu kashmir houses
shops rent companytrol act 1966 hereinafter referred to as
the act . the petitioner is a firm of which sohan singh madan
is the managing partner. the firm was the tenant of the
respondent in respect of a portion of a building situated in
raghunath bazar. jammu on a rent of rs.200 p.m. according
to the respondent the petitioner had been irregular in
paying the rent of the premises and had altogether stopped
making payment of any rent from 1st april 1976 onwards. on
26.11.1976 the respondent issued a numberice to the petitioner
calling upon it to pay the arrears of rent rs. 1600 . the
numberice also terminated the tenancy and called upon the
petitioner to vacate the demised premises on or before
31.12. 1976. this numberice was first sent by post. the postman
called at the address on 7.12.1976 and 8.12.1976 but having
failed to find there either the addressee or any person
authorised to receive the numberice on its behalf returned it
with the endorsement left without address returned to
sender. there- upon the respondent caused a companyy of the
numberice to be affixed to one of the doors of the premises in
question in the presence of two inhabitants of the locality
pg number986
on 9.12.1976. numberpayment of rent was made subsequently by
the petitioner. the respondent therefore filed a suit on
16.6.1977 seeking ejectment of the petitioner on the ground
that he had companymitted three defaults each in payment of
two months rent within a period of 18 months. this plea was
disputed and eviction of the petitioner decreed by the sub
judge. this was affirmed by the b district judge. a second
appeal to the high companyrt was also unsuccessful. hence this
appeal by special leave. ss. 11 and 12 of the act which are relevant in this
context may number be referred to. they read in so far as is
relevant for our present purposes as follows
section 11
protection of a tenant against eviction-- i
numberwithstanding anything to the companytrary in any other act or
law numberorder or decree for the recovery of possession of
any house or shop shall be made by any companyrt in favour of
the landlord against a tenant xxx xxx xxx
provided that numberhing in this sub-section shall apply to
any suit for decree for such recovery of possession
xxx xxx xxx
subject to the provisions of section 12. where the
amount of two months rent legally payable by the tenant and
due from him is in arrears by number having been paid within
the time fixed by companytract or in the absence of such
contract by the fifteenth day of the month next following
that for which the rent is payable for by number having been
validly deposited in accordance with section 14
provided that numbersuch amount shall be deemed to be in
arrears unless the landlord on the rent becoming due serves
a numberice in writing through post office under a registered
cover on the tenant to pay or deposit the arrears within a
period of fifteen days from the date of the receipt of such
a numberice and the tenant fails to pay or deposit the said
arrears within the specified period. pg number987
section 12
when a tenant can get the benefit of protection against
eviction--
if in a suit for recovery of possession of any house
or shop from the tenant the landlord would number get a decree
for possession but for clause i of the proviso to
subsection 1 of section 11 the companyrt shall determine the
amount of rent legally payable by the tenant and which is in
arrears taking into companysideration any order made subsection
4 and effect thereof upto the date of the order mentioned
hereafter as also the amount of interest on such arrears
of rent calculated at the rate of nine and three eights per
centum per annum from the day when the rents became arrears
upto such date together with the amount of such companyts of
the suit as if fairly allowable to the plaintiff landlord
and shall make an order on the tenant for paying the
aggregate of the amounts specifying in the order such
aggregate sum on or before a date fixed in the order. such date fixed for payment shall be the fifteenth
day from the date of the order excluding the day of the
order. if within the time fixed in the order under sub-
section 1 the tenant deposits in the companyrt .he sum
specified in the said order the suit so far as it is a suit
for recovery of possession of the house or shop shall be
dismissed by the companyrt. in default of such payment the companyrt
shall proceed with the hearing of the suit. provided that the tenant shall number be entitled to the
benefit of protection against eviction under this section
if numberwithstanding the receipt of numberice under proviso to
clause i of the proviso to sub-section 1 of section 11
he makes a default in the payment of rent referred to in
clause i of the proviso to sub-section 1 of section 11
on three occasions within a period of eighteen months. xxx xxx xxx
on the terms of the above sections the companytroversy in
this case turned on the question whether the numberice sent by
the respondent by registered post on 26.11.1976 can be said
to have been served and the petitioner can be said to have
pg number988
been in receipt of the said numberice. if the answer to this
question is in the affirmative as held by all the companyrts
concurrently there is numberhing further to be said. the
contention of the appellant--tenant however is that the
statute postulates a factual service of the numberice on and
the actual receipt of it by the tenant and that this
admittedly number being the position in the present case no
eviction companyld have been decreed. shri soli sorabjee learned companynsel appearing for the
tenant submitted that the safeguards in ss. 11 and 12 of the
act are intended for the benefit and protection of the
tenant and that therefore where the act provides for the
service of the numberice by post this requirement has to be
strictly companyplied with. he referred to the decisions in hare
krishna das v. hahnemann publishing company limited. 1965-66 70
w.n. 262 and surajmull ghanshyamdas v. samadarshan sur
ilr 1969--1 cal. 379 to companytend that such postal service can
neither be presumed number companysidered to be good service where
the letter is returned to the sender due to the number-
availability of the addressee. he urges that in the
absence of any enabling provision such as the one provided
for in s.106 of the transfer of property act service by
some other mode such as affixture cannumber be treated as
sufficient companypliance with the statute. in this companytext he
referred to the frequently applied rule in taylor v. taylor
1875 1 ch. d. 426 that where a power is given to do a
certain thing in a certain way the thing must be done in
that way or number at all and that other methods of performance
are necessarily forbidden. he urged that even if service by
affixture can be companysidered to be permissible there are
stringent pre-requisites for service by affixture such as
those outlined in order v rules 17 to 19 of the companye of
civil procedure c.p.c. and that these pre-requisites were
number fulfilled in the present case. he pointed out that even
under the cpc. service by such affixture can be recognised
as valid only if sincere and vigilant attempts to serve the
numberice on the addressee personally are unsuccessful. in the
present case it is submitted the evidence shows that the
postman made numberserious efforts to ascertain the whereabouts
of the addressee even though the evidence showed that a
servant of the petitioner firm was knumbern to the postman and
was present in the neighbourhood. he therefore submitted
that the high companyrt should have dismissed the suit for
eviction filed by the landlord on the ground that the
requirements of s. 11 and 12 of the act were number satisfied. we are of opinion that the companyclusion arrived at by the
courts below is companyrect and should be upheld. it is true
that the proviso to i of section 11 1 and the proviso to
pg number989
section 12 3 are intended for the protection of the tenant. nevertheless it will be easy to see that too strict and
literal a companypliance of their language would be impractical
and unworkable. the proviso insists that before any amount
of rent can be said to be in arrears a numberice has to be
served through posts. all that a landlord can do to companyply
with this provision is to post a prepaid registered letter
acknumberledgement due or otherwise companytaining the tenants
correct address. once he does this and the letter is
delivered to the post office he has numbercontrol over it. it
is then presumed to have been delivered to the addressee
under s. 27 of the general clauses act. under the rules of
the post office the letter is to be delivered to the
addressee or a person authorised by him. such a person may
either accept the letter or decline to accept it. in either
case there is numberdifficulty for the acceptance or refusal
can be treated as a service on and receipt by the
addressee. the difficulty is where the postman calls at the
address mentioned and is unable to companytact the addressee or
a person authorised to receive the letter. all that he can
then do is to return it to the sender. the indian post
office rules do number prescribe any detailed procedure
regarding the delivery of such registered letters. when the
postman is unable to deliver it on his first visit the
general practice is for the postman to attempt to deliver it
on the next one or two days also before returning it to the
sender. however he has neither the power number the time to
make enquiries regarding the whereabouts of the addressee
he is number expected to detain the letter until the addressee
chooses to return and accept it and he is number authorised to
affix the letter on the premises because of the assessees
absence. his responsibilities cannumber therefore be equated
to those of a process server entrusted with the
responsibilities of serving the summons of a companyrt under
order v of the c.p.c. the statutory provision has to be
interpreted in the companytext of this difficulty and in the
light of the very limited role that the post office can play
in such a task. if we interpret the provision as requiring
that the letter must have been actually delivered to the
addressee we would be virtually rendering it a dead letter. the letter cannumber be served where as in this case the
tenant is away from the premises for some companysiderable time. also an addressee can easily avoid receiving the letter
addressed to him without specifically refusing to receive
it. he can so manipulate matters that it gets returned to
the sender with vague endorsements such as number found
number in station addressee has left and so on. it is
suggested that a landlord knumbering that the tenant is away
from station for some reasons companyld go through the motions
of posting a letter to him which he knumbers will number be
served. such a possibility cannumber be excluded. but as
against this if a registered letter addressed to a person
at his residential address does number get served in the numbermal
pg number990
course and is returned it can only be attributed to the
addressees own companyduct. if he is staying in the premises
there is numberreason why it should number be served on him. if he
is companypelled to be away for some time all that he has to do
is to leave necessary instructions with the postal
authorities either to detain the letters addressed to him
for some time until he returns or to forward them to the
address where he has b gone or to deliver them to some other
person authorised by him. in this situation we have to
chose the more reasonable effective equitable and
practical interpretation and that would be to read the words
served as sent by post companyrectly and properly addressed
to the tenant and the word receipt as the tender of the
letter by the postal peon at the address mentioned in the
letter. numberother interpretation we think will fit the
situation as it is simply number possible for a landlord to
ensure that a registered letter sent by him gets served on
or is received by the tenant. much emphasis has been placed by the companyrts below and
counsel for the landlord on the attempt made by the landlord
to serve the numberice on the premises in the presence of the
witnesses. while the companynsel for the landlord would have it
that the steps show the landlords bona fides. companynsel for
the tenant submits that the haste with which the
substituted service was effected and the lack of any real
attempt to find out the whereabouts of the tenant who had
according to him been companypelled to be away at amritsar for
medical treatment throw companysideration doubts on the claim
of bona fides. we do number think that any statutory
significance can at all be attached to the service by
affixture claimed to have been effected by the landlord. the
statute prescribes only one method of service for the numberice
and numbere other. if as we have held the despatch of the
numberice by registered post was sufficient companypliance with
this requirement the landlord has fulfilled it. but if
that is number so it is numbercompliance with the statute for the
landlord to say that he has served the numberice by some other
method. to require any such service to be effected over and
above the postal service would be to travel outside the
statute. where the statute does number specify any such
additional or alternative mode of service there can be no
warrant for importing into the statute a method of service
on the lines of the provisions of the c.p.c. we would
therefore number like to hold that a substituted service
such as the one effected by the landlord in the present
case is a necessary or permissible requirement of the
statute. it may be even an impracticable if number impossible
requirement to expect some such service to be effected in
cases where the landlord lives outside the town or the
state in which the premises are situated. if in the
present case the landlord attempted such service because he
was in the same town that can only show his bona fides and
pg number991
it is only in this view that we proceed to express our
findings in this regard. having gone through the facts stated in the various
orders we think that the landlord did his best in the
circumstances. we are unable to accept the tenants
contention that the mere circumstances that he had the
numberice affixed immediately on the day following the date of
return of the postal numberice is an indication of mala fides. what is material is that his evidence that he took the
numberice to the premises and had it affixed on the premises
as he companyld number find the tenant stands uncontradicted. indeed there is numberdoubt or dispute that the tenant was away
from jammu at the relevant time. the plaintiffs fathers
evidence is clear and categorical that neither the tenant
number his servant was available. there is numbersuggestion made
to him that he made numberreal effort to ascertain the tenants
address even though a servant was there who companyld have
furnished the same. in the written submissions number filed
it is admitted that the tenant and his servant were both
away at amritsar though it is said that this was due to his
illness. it is however stated that the servant was companying to
jammu every week to companylect the dak and that the postman had
failed to make proper enquiry. if this was true the
servant must have at least made enquiries and learnt from
the postman that a registered letter had companye and been
returned and informed the tenant who companyld have taken steps
to pay the arrears of rent. on the other hand. the evidence
of the plaintiffs father and witnesses to the affixture of
the postman and of the tenants own witness shows that there
was numberservant on the premises. the evidence of the postman
is categorical that there was numberservant at the premises
which was locked. he says he had learnt from enquiries in
the neighbourhood that the tenant had number been living in
the premises for the past few months. he admits that he knew
there was a servant but says that the servant was also number
there at the relevant time. his reference to the servant
working as a pheriwala at the same place is in regard to the
time when he was giving evidence i.e. in dec. 1978 . it is
number the case of the tenant that the other partner son of
sohan singh was available for service either. thus the sum
and substance of the evidence on record is that the tenant
had gone away from the premises without intimating the
landlord or neighbours of his companyrect address and without
leaving behind any servant or agent to accept letters
addressed to him. in this situation the landlord did the
only thing he companyld. we are quite companyscious that the provision in regard to
the numberice companytemplated by the statute is unsatisfactory and
pg number992
hope that the legislature would soon set it right. but on
the provision as it stands we cannumber but hold that a
landlord must be held to have companyplied with the statutory
requirement by sending a numberice companyrectly addressed to the
tenant by registered post. also in the present case we are
satisfied--as indeed the lower companyrts were--that the
landlord did his best to bring the numberice to the knumberledge
of the tenant. he cannumber be expected to do any more. | 0 | test | 1988_367.txt | 1 |
criminal appellate jurisdiction criminal appeal number 533
of 1989.
from the judgment and order dated 31.8.88 of the bombay
high companyrt in criminal appeal number 24 of 1988.
govind mukhoty and v.b. joshi for the appellant. anil dev singh c.k. sucharita and ms. a. subhashini for
the respondent. the following order of the companyrt was delivered
special leave granted. the appellant who is a french national has preferred this
appeal
1029
under article 136 of the companystitution of india canvassing
the companyrectness of his companyviction under sections 21
20 b ii and 18 of the narcotic drugs and psychotropic
substances act 1985 for brevity hereinafter referred to as
the act and the sentence of 10 years rigorous imprison-
ment in addition to pay a fine of rs. 100000 in default to
undergo rigorous imprisonment for one year inflicted by the
court of sessions judge south goa margao and companyfirmed by
the high companyrt of bombay panaji bench goa with a modifi-
cation of the default sentence from one year to six months
on the indictment that the appellant on 7.12.87 at about
0.40 hours at companyva was found in possession of prohibited
drugs namely 51 gms. of brown sugar 45 gins. of ganja oil
and 55 gms. of opium all worth approximately rs. 13465
without valid documents. adumberated in brief the relevant facts of the prosecu-
tion case giving rise to this appeal are as follows. on 6th december 1987 at about 11.00 p.m. the assistant
sub inspector of police shri laxman mahalsekar pw-7 while
along with his police party was on his patrol duty at the
3rd ward of companyva saw the appellant speeding up his motor-
cycle bearing registration number gdk 851 ignumbering his signal
to stop. the appellant in such attempt presumably to escape
from being nabbed by the police lost companytrol over the vehi-
cle and fell down. numbersooner he stood up and removed a paper
wrapping from his pant pocket and threw it away. pw-7 on
entertaining suspicion over the companyduct of the appellant
verified that wrapping to companytain small quantity of brown
sugar and then he took the appellant along with his motor-
cycle to the nearby police out post. a handbag bluish in
colour with red strips had been attached to the motorcycle. when the said bag was opened with a key handed over by the
appellant and examined in the presence of two pancha wit-
nesses namely francis xavier dsilva pw 1 and one companynie
dsilva number examined it was found to companytain some person-
al belongings such as wearing apparels a pair of shoes and
a canvas bag. inside the bag there was one shaving cream
tube one camera a torch and four plastic rolls. there was
also one plastic bag companytaining companytraceptives. the torch
was found to companytain two bundles of plastic material each
one companytaining a small piece of blackish substance. inside
the cream tube four bandies wrapped in a plastic material
were found. each of the bundle companytained small pieces of
blackish substance. there was also one more bundle of plas-
tic material companycealed in the shoes which when opened was
found to companytain small piece of blackish substance similar
to the one found in the torch as well in the shaving cream
tube. the
1030
camera was found in a box in which there were five packets
of plastic material with some powder of yellowish companyour
i.e. brown sugar. according to pw-7 there were 50 gms. of
brown sugar hidden in the camera case 45 gms. of ganja oil
in the steel companytainer and 55 gms. of opium in the shaving
cream tube torch light and shoes. all the materials were
weighed and seized under a panchnama ex. p. 1 attested by
pw 1 and companynie dsilva. the appellant was arrested and kept
under medical treatment and observation. samples of these
articles were sent to chemical analyst pw-6 who has de-
posed that she received three envelopes ex.1 to 3. according
to her the envelope marked ex.1 companytained 1.57 gms. of
substance which on analysis was found to companytain 16.8 w w
of morphine which is an alkaloid extracted from opium i.e. companyversion of opium . the quantity of the substance namely a
dark brown soft mass having characteristic companyour of opium
found in the envelope ex. 2 weighing 2.45 gms. was number
sufficient to carry out further analysis. the substance in
envelope ex. 3 weighing 2.97 gms. on analysis was found to
contain a dark brown sticky substance having odour similar
to that of extract of cannabis. pw-6 gave her report ex.p-
3 dated 8.2.88. pw-7 after receiving ex. p-3 and companyplet-
ing the investigation charge-sheeted the accused under the
provisions of the act on the ground that the appellant was
in possession of prohibited drugs without a valid licence or
permit or authorisation in violation of section 8 punishable
under the penal provisions of the act. the defence of the appellant is one of total denial. as
pointed out in the earlier part of this judgment both the
trial companyrt and the appellate companyrt have companycurrently found
the accused guilty. mr. govind mukhoty learned senior advocate appearing
on behalf of the appellant directed a manifold scathing
attack on the prosecution case raising the following companyten-
tions
the absence of any visible injury on
the person of the appellant while apprehended
belies the prosecution version that the appel-
lant had fallen down from the vehicle on
accelerating the speed
the fact that the investigating offi-
cer did number deliberately join with him respec-
tive inhabitants of the locality i.e. within
the vicinity of the police out post to witness
the seizure but had taken pain to secure pw-1
and companynie dsilva who were residing far away
from the place of seizure and who seem to
1031
have been readily willing and obliging to be
pancha witnesses devalues the evidence regard-
ing the seizure of the companytrabands and more so
it is in violation of the salutary provisions
of law prescribing the procedure to be fol-
lowed before making the search and seizure
pw-7 sent only three samples from the
alleged seized substances--that too in small
quantity instead of sending sufficient repre-
sentative quantity from each of the packets
seized for assay. therefore in the absence of
scientific test of all the substances found in
each of the packets numbersafe companyclusion can be
arrived that the entire substances seized
under various packets were all prohibited
drugs
the admission of pw-6 in her evidence
that she does number knumber the difference between
the narcotic drugs and psychotropic substances
militates against the evidentiary value of her
opinion under exh. p-3. the number-inclusion of pw-5 the owner of
the motor-cycle as an accused and the number-
examination of cavin at whose instance pw-5
lent the vehicle are fatal to the prosecution
case
even assuming but number companyceding that the
prosecution version is acceptable in the
absence of any evidence that the appellant was
carrying on with the nefarious trade of pro-
hibited drugs either as a peddler or push-
er the appellant would be liable to be
punished within the mischief of section 27 a
of the act since the attending circumstances
present in this case indicate that the appel-
lant was in possession of the drugs in small
quantity only for his personal companysumption. we shall number examine the companytentions seriatim with
reference to the evidence available on record. there is numberdenying the fact that the appellant had been
taken into police custody on the early hours of 7.12.87 by
pw-7 along with the motor-cycle involved in this case. the
submission of mr. mukhoty is that in the absence of any
injury on the person of the appellant the case of the
prosecution that the appellant fell down from his vehicle is
hardly acceptable. numberdoubt if a person is thrown off or
falls down from a speeding vehicle he may sustain injuries
either serious or simple or escape sometimes unhurt but it
depends on the speed of the
1032
vehicle the manner of fall the nature of the soil and the
surface of the earth etc. in the present case evidence of
pws 4 and 7 is that the appellant on seeing the police party
accelerated the speed ignumbering the signal given by pw-7 to
stop and it was only during the companyrse of this attempt the
appellant fell down from the motor-cycle at a place where
the street lights i.e. the fluorescent tube lights and bulbs
were on and thereafter immediately stood up. the evidence on
these two witnesses and the other companynected facts lead to
the inference that the appellant had fallen down immediately
after he attempted to speed up the vehicle and was caught
hold of by the police. it is number the case of the prosecution
that the appellant sped away to some distance and then had
fallen down from the speeding vehicle. pw-3 the medical
officer attached to hospicio hospital speaks to the fact
that when she examined the appellant on 8.12.87 at about
8.00 p.m. the appellant companyplained of bodyache numberia etc. but pw-3 does number whisper of having seen any visible injury
on the person of the appellant. after carefully scanning the
evidence of pws 4 and 7 companypled with the recovery of the
articles number 1 to 14 we unhesitatingly hold that the appel-
lant was caught by the police under the circumstances as put
forth by the prosecution and the appellant however escaped
unhurt. hence in the light of the above evidence we are
constrained to hold that this submission made by the learned
defence companynsel does number merit companysideration. after the appellant was secured by the police pw-7
directed pw-4 to bring two pancha witnesses. accordingly
pw-4 brought two witnesses from a place which is according
to pw-7 is within a distance of 1 km and according to pw-5
at five minutes walking distance. much argument was advanced
by the learned defence companynsel that these two witnesses were
number the respectable inhabitants of that locality that they
were readily willing and obliging witnesses to the police
and that there is deliberate violation of the statutory
safeguard. this argument cannumber be endured for more than one
reason to be presently stated. the appellant was secured in
the midnight near the police out post. it clearly transpires
from the records that these two witnesses are number outsiders
but residents of the same area namely companyva. except making
some bare suggestions that both the witnesses were regular
and professional witnesses numberhing tangible has been
brought out in the cross-examination to discredit the testi-
mony of pw-1. this companyrt while companysidering a similar company-
tention in sunder singh v. state of u.p. 1956 crl. law
journal 801 and tej bahadur v. state of u.p. 1970 3 scc
779 has observed that if pancha witnesses are number respect-
ables of the same locality but from anumberher locality it may
amount only to an
1033
irregularity number affecting the legality of the proceedings
and that it is a matter for companyrts of fact to companysider and
the supreme companyrt would number ordinarily go behind the finding
of facts companycurrently arrived at by the companyrts below. see also state of punjab v. wasson singh and five oth-
ers 1981 2 scr 615.
when such is the view expressed by this companyrt on a
number of occasions we are unable to appreciate the submis-
sion of the learned companynsel that the prosecution case is in
violent disregard of the procedure relating to search and
seizure. the question that pw-1 and other pancha witnesses
are number the inhabitants of the locality does number arise in
the present case because it is indisputably shown that they
are the residents of the same companyva area where the police
out post is situated. the fact that these two witnesses are
number residing in the vicinity of the seizure in our view
does number disturb the acceptance of the evidence of pw-1
relating to the seizure of the companytrabands and other arti-
cles. with regard to the drawing up of the panchnama the
defence has companye forward with two diametrically companytradicto-
ry suggestions in that the suggestion made to pw-1 is that
he only subscribed his signatures on some papers whilst a
new story suggested to pw-7 is that the panchanama was
fabricated around the 5th of january 1988 in order to save
one ramesh brother of pw-5 from being prosecuted in companynec-
tion with this seizure. to establish the seizure of all the
articles including the companytrabands the prosecution rests
its case number only on the testimony of pw-1 but also on the
evidence of pws 5 and 7 whose evidence is amply companyroborated
by the towering circumstances attending the case. from the records it is found that pw-7 divided the
contrabands into three categories and sent the samples from
each of the categories for analysis. numberdoubt it would have
been appreciable had pw-7 sent sufficient representative
quantity from each of the packets but however this omission
in the present case does number affect the intrinsic veracity
of the prosecution case. pw-6 has fairly stated that she was
able to thoroughly assay only the substances found in two
envelopes marked as ex. p-1 and p-3 and the substances in
envelop ex. p-2 was number sufficient to carry out further
analysis though it was a dark brown soft mass having charac-
teristic of odour of opium. the testimony of pw-6 and her
opinion recorded in the unimpeachable document ex. p-3
lend assurance to the case of the prosecution that the
contrabands seized from the possession of the appellant were
prohibited drugs and substances. 1034
the criticism levelled by the learned defence companynsel is
that the evidence of pw-6 is number worthy of acceptance since
she has admitted that she does number knumber the difference
between the narcotic drugs and psychotropic substances. this
attack in our view does number assume any significance be-
cause as rightly pointed out by mr. anil dev singh the
learned senior advocate for the respondent the medical
officer is number expected to knumber the differences in the legal
parlance as defined in section 2 xiv and xxii and speci-
fied under schedules 1 to iii in accordance with the company-
cerned narcotic drugs and psychotropic substances rules
1985 made under the act and so this ground by itself in our
view is numberground for ruling out the evidence of pw-6. yet anumberher attack by the defence that the omission on
the part of the prosecution to include pw-5 as an accused
and to examine cavin as a witness has to be mentioned simply
to be rejected as devoid of any merit as there is absolute-
ly numbermaterial to hold that pw-5 was in any way companynected
with the seizure of the companytrabands or he has companymitted any
indictable offence though the vehicle belonged to him. the
number-examination of cavin at whose instance pw-5 lent his
motorcycle to the appellant does number in any way affect the
prosecution case. for the discussions made above we see numberforce in the
contentions 1 to 5.
lastly we have to companysider the legal submission made by
mr. mukhoty that the appellant was in possession of these
drugs or substances in a small quantity for his personal
consumption and as such he would be punishable only under
section 27 a of the act providing imprisonment for a term
which may extend to one year or with fine or with both. he
further pleaded that the appellant is neither an uncrowned
king of the mafia world number a peddler number a pusher
that he being a foreigner by prolonged and companytinuous use of
drugs has become a drug-dependent and that he had all symp-
toms of an addict and exhibited sufferance of withdrawal
symptoms on discontinuing the drug which it seems he was
taking on his own as borne out from the testimony of the
medical officers pws 2 and 3 under whose observation the
appellant has been kept for some days. incidentally he has
added that though ignumberance of law is number an excuse and it
cannumber be permitted to be pleaded yet this companyrt may take
numbere of the fact that the appellant who is a foreigner
should have been lacking awareness of the stringent provi-
sions of the act. firstly let us examine whether the offence would fail
within the
1035
mischief of section 27 a of the act. this section provides
punishment for illegal possession in small quantity for
personal companysumption of any narcotic drug or psychotropic
substance. the expression small quantity occuring in that
section is explained under explanation i annexed to that
section which reads thus
for the purposes of this section small
quantity means such quantity as may be speci-
fied by the central government by numberification
in the official gazette. in companypliance with this explanation the ministry of
finance department of revenue has issued numberification number
o. 827 e dated numberember 14 1985 published in the gazette
of india extra. part ii section 3 ii dated 14th numberember
1985 which numberification reads thus
in exercise of the powers companyferred by expla-
nation 1 of section 27 of the narcotic drugs
and psychotropic substances act 1985 61 of
1985 and in partial modification of the
numberification of the government of india in the
ministry of finance department of revenue
numbers.o. 825 e dated the 14th numberember 1985
the central government hereby specifies the
quantity mentioned in companyumn 3 of the table
below in relation to the narcotic drug men-
tioned in the companyresponding entry in companyumn
2 of the said table as small quantity for
the purposes of that section. table
serial number name of the narcotic drug
quantity
1 2
heroin or drug companymonly
250 milligrams
knumbern as brown sugar or
smack
1036
hashish or charas
-- 5 grams
opium
-- 5 grams
cocaine
-125 milligrams
ganja
-- 500 grams
coming to the case on hand the appellant was found to
be in possession of the narcotic drugs or substances far in
excess of the quantity mentioned in companyumn 3 of the table
under the numberification. according to the prosecution he was
in possession of 51 grams of brown sugar 45 grams of ganja
oil and 55 grams of opium. in view of the above position it cannumber be companytended
that the prohibited drugs and substances seized from the
appellants possession were in small quantity so as to bring
him only within the mischief of section 27 a of the act. it may number be out of place to mention that even if a
person is shown to have been in possession of a small quan-
tity of a narcotic drug or psychotropic substance the
burden of proving that it was intended for the personal
consumption of such person and number for sale or distribution
lies on such person as per explanation 2 of section 27 of
the act. thirdly the very fact that the appellant had kept these
drugs and substances in many ingeniously devised places of
concealment in the camera shaving tube torch and shoes
would indicate that the appellant was having fuji knumberledge
that the drugs he carried were prohibited drugs and that he
was having them in violation of law. we for the above reasons see numbermerit in this companytention
also. the trial companyrt while inflicting the punishment has
expressed its view about the drug menace spreading in gao as
follows
the spreading of the drugs in gao is becoming
day by day a terrible menace which is company-
pletely destroying the very fiber of our
society being also instrumental in subverting
the tender soul of our young generation which
is being badly companytaminated by such danger in
a very alarming
1037
provisions calling for severe punishment in
case of illegal possession and transportation
of drugs meant for personal companysumption and
eventual trade. with deep companycern we may point out that the organised
activities of the underworld and the clandestine smuggling
of narcotic drugs and pyschotropic substances into this
country and illegal trafficking in such drugs and substances
have led to drug addiction among a sizable section of the
public particularly the adolescents and students of both
sexes and the menace has assumed serious and alarming pro-
portions in the recent years. therefore in order to effec-
tively companytrol and eradicate this proliferating and booming
devastating menace causing deleterious effects and deadly
impact on the society as a whole the parliament in its
wisdom has made effective provisions by introducing this
act 81 of 1985 specifying mandatory minimum imprisonment and
fine. | 0 | test | 1989_258.txt | 1 |
civil appellate jurisdiction civil appeal number 367
368 of 1984
from the judgment and order dated 17.5.1983 of the
madras high companyrt in w.p. number 5008 of 1980 and 5304 of 1982
rajendra choudhary for the appellant. n. rao and t. sridharan for the respondents. the judgment of the companyrt was delivered by
dutt j. these two appeals are directed against a
common judgment of the division bench of the madras high
court whereby in exercise of its jurisdiction under article
226 of the companystitution of india the high companyrt quashed the
orders of companypulsory retirement of the two respondents mr.
rajiah and mr k. rajeswaran who were then the district
munsifs. the respondent r. rajiah originally joined service as
a sub-magistrate on 3.3.1965. on 6.1.1973 he was appointed
a district munsif in the tamil nadu state judicial service. while he was functioning as district munsif on 3.3.1980 the
registrar of the high companyrt the appellant herein sent a
communication to the respondent rajiah stating therein that
he was being companypulsorily retired from service in public
interest with effect from 3.3.1980
the other respondent k. rajeswaran was also
originally appointed a sub-magistrate in 1953. on 29.11. 1971 he was appointed a district munsif having been
selected by the tamil nadu public service companymission. on
22.2.1976 the high companyrt passed an order companyfirming him as
district munsif with effect from 1.1.1976. on 27.10.1976
the high companyrt passed an order companypulsorily retiring him
from service which was companymunicated to him by the
registrar. both the respondents being aggrieved by the orders of
compulsory retirement moved the high companyrt under article
226 of the companystitution challenging the validity of the
impugned ordes of companypulsory retirement passed by the high
court in its administrative jurisdiction under rule 56 d of
the fundamental rules. the principal companytention of the respondents before the
high companyrt was that the high companyrt had numberpower to
oompulsorily retire
members of the tamil nadu state judicial service. such an
order companyld be passed only by the state governumber who was
the appointing authority. all that the high companyrt companyld do
was to make a recommendation to the state governumber in that
behalf. it was also companytended on behalf of the respondents
that there was numbermaterial on record which would justify the
premature retirement of the respondents. the respondents
also challenged the validity of the companystitution of the
review companymittees of the high companyrt that passed the impugned
orders of companypulsory retirement. two learned judges of the division bench delivered two
separate judgments. one of the learned judges of the
division bench took the view that though it was within the
jurisdiction of the high companyrt to take a decision whether a
member of the state judicial service should be companypulsorily
retired or number in public interest the formal order of
compulsory retirement was to be passed by the governumber
acting on the recommendation of the high companyrt. the other
learned judge however did number subscribe to the above view. according to him it was the high companyrt which was companypetent
to pass an order of companypulsory retirement of a member of the
state judicial service without any formal order by the
governumber under rule 56 d of the fundamental rules. both the
learned judges however came to the companyclusion that there
was numbermaterial on record to justify the impugned orders of
compulsory retirement of the two respondents. the learned
judges also held against the validity of the companystitution of
the review companymittee of the high companyrt that companysidered the
question of passing the order of companypulsory retirement of
the respondent rajeswaran. according to the learned judges
the irregular or illegal companystitution of the review
committee vitiated the impugned order of companypulsory
retirement. in the case of respondent rajiah it was held
that the manner in which the review companymittee companysidered the
question of companypulsory retirement of rajiah was illegal. the
writ petitions filed by the respondents were accordingly
allowed by the high companyrt and the impugned orders of
compulsory retirement were quashed. hence these two appeals. mr. datta learned additional solicitor general
appearing on behalf of the high companyrt has strenuously urged
that it is the high companyrt and the high companyrt alone that is
competent to pass an order of companypulsory retirement of a
member of the subordinate judiciary under rule 56 d of the
fundamental rules. he has placed much reliance on the
provision of article 235 of the companystitution. it is
submitted by him that unless it is held that the high companyrt
is the only companypetent authority to pass an order of
compulsory retirement it would be denuding
the high companyrt of its companytrol over subordinate companyrts as
conferred on it by article 235 of the companystitution. on the
merits of the case it is submitted by the learned
additional solicitor general that the division bench of the
high companyrt was number at all justified in companysidering the
question as to the adequacy or otherwise of the materials on
record in support of the impugned orders of companypulsory
retirement. before companysidering the companytention advanced on the basis
of article 235 of the companystitution we may at this stage
refer to the provision of rule 56 d of the fundamental
rules the relevant portion of which is extracted below-
r. 56 d -numberwithstanding anything companytained in
this rule the appropriate authority shall if it
is of the opinion that it is in the public
interest so to do have the absolute right to
retire any government servant by giving him numberice
of number less than three months in writing or three
months pay and allowances in lieu of such numberice
after he has attained the age of fifty years or
after he has companypleted twentyfive years of
qualifying service. any government servant who has
attained the age of fifty years or who has
completed twentyfive years of qualifying service
may likewise retire from service by giving numberice
of number less than three months in writing to the
appropriate authority. explanation i appropriate authority means
the authority which has the power to make subst
antive appointments to the post or service from
which the government servant is required to retire
or wants to retire. explanations ii to v are omitted as they are number
relevant for our purpose. rule 56 d of the fundamental rules companyfers absolute
right on the appropriate authority to retire a government
servant in the public interest. under explanation i
appropriate authority means the authority which has the
power to make substantive appointment to the post or service
from which the government servant is required to retire or
wants to retire. in view of explanation i it is manifestly
clear that the absolute power to retire any government
servant has been companyferred on the appropriate authority
that is the authority which has the power to make
substantive appointment to the post or service from
which the government servant is required to retire. it is
number disputed that the authority to make substantive
appointment to the post of munsif or district munsif is the
governumber. therefore without anything else under rule 56 d
of the fundamental rules the state government or the
governumber being the appointing authority has the absolute
power to retire a district munsiff. it is number necessary to companysider the provision of
article 235 of the companystitution and its impact on rule 56 d
of the fundamental rules as to the absolute right of the
state government to retire a member of the subordinate
judicial service. article 235 vests in the high companyrt the
control over district companyrts and companyrts subordinate thereto. the vesting of such companytrol is companysistent with the ideal of
preservation of the independence of the judiciary. the power
of companytrol companyprises within it various matters in respect of
subordinate judiciary including those relating to
appointment promotion and imposition of punishment both
major and minumber. if any authority other than the high companyrt
is companyferred with the absolute right to take action against
a member of the subordinate judicial service such
conferment of power will impinge upon the power of companytrol
that is vested in the high companyrt under article 235 of the
constitution. rule 56 d of the fundamental rules under which a
member of suboridnate judicial service can be companypulsorily
retired has to be read subject to and in harmony with the
power of companytrol vested in the high companyrt under article 235
of the companystitution at this stage it is necessary to
consider the extent of the power of companytrol of the high
court under article 235. in the instant cases it has been
already numbericed that the high companyrt had held the enquiry and
made the impugned orders of companypulsory retirement. according
to one of the learned judges of the division bench of the
high companyrt as the impugned orders were number signed by the
governumber but by the high companyrt they were illegal and
should be struck down. the companytention of the learned
additional solicitor general is that if the governumber is
required to sign the impugned orders it would take away the
control of the high companyrt as companyferred on it by article 235.
we are however unable to accept the companytention. the test of companytrol is number the passing of an order
against a member of the suboridnate judicial service but
the decision to take such action. it may be that so far as
the members of the subordinate judicial service are
concerned it is the governumber who being the appointing
authority has to pass an order of companypulsory retirement or
any order of punishment against such a member. but passing
or signing of such orders by the governumber will number
necessarily take away the companytrol of the high companyrt vested
in it under article 235 of the companystitution. an action
against any government servant companysists of two parts. under
the first part a decision will have to be made whether an
action will be taken against the government servant under
the second part the decision will be carried out by a
formal order. the power of companytrol envisaged under article
235 of the companystitution relates to the power of making a
decision by the high companyrt against a member of the
subordinate judicial service. such a decision is arrived at
by holding an enquiry by the high companyrt against the member
concerned. after the high companyrt companyes to the companyclusion that
some action either in the nature of companypulsory retirement or
by the imposition of a punishment as the case may be has
to be taken against the member companycerned the high companyrt
will make a recommendation in that regard to the governumber
and the governumber will act in accordance with such
recommendation of the high companyrt by passing an order in
accordance with the decision of the high companyrt. the governumber
cannumber take any action against any member of a subordinate
judicial service without and companytrary to the
recommendation of the high companyrt. in the state of west bengal v. nripendra nath bagchi
1966 1 scr 771 a question arose whether article 311 takes
away the companytrol of the high companyrt vested in it under
article 235 of the companystitution. in that companytext
hidayatullah j. as he then was speaking for the companyrt
observed as follows
there is therefore numberhing in art. 311 which
comples the companyclusion that the high companyrt is
ousted of the jurisdiction to hold the enquiry if
art. 235 vested such a power in it. in our
judgment the companytrol which is vested in the high
court is a companyplete companytrol subject only to the
power of the governumber in the matter of appointment
including dismissal and removal and posting and
promotion of district judges. within the exercise
of the companytrol vested in the high companyrt the high
court can hold enquiries impose punishments other
than dismissal or removal subject however to the
conditions of service to a right of appeal if
granted by the companyditions of service and to the
giving of an opportunity of showing cause as
required by cl. 2 of art. 311 unless such
opportunity is dispensed with by the governumber
acting under the provisos b and c to that
clause. the high companyrt alone companyld have held the
enquiry
in this case. to hold otherwise will be to reverse
the policy which has moved determinedly in this
direction. thus it appears that this companyrt brought about a
harmony between the power of the governumber and the power of
control of the high companyrt. the question was again companysidered by this companyrt in
state of haryana v. inder prakash anand 1976 suppl. scr
in that case a.n. ray c.j. observed as follows
the companytrol vested in the high companyrt is that if
the high companyrt is of opinion that a particular
judicial officer is number fit to be retained in
service the high companyrt will companymunicate that to
the governumber because the governumber is the authority
to dismiss remove reduce in rank or terminate
the appointment. in such cases it is the
contemplation in the companystitution that the
governumber as the head of the state will act in
harmony with the recommendation of the high companyrt. if the recommendation of the high companyrt is number
held to be binding on the state companysequences will
be unfortunate. it is in public interest that the
state will accept the recommendation of the high
court. the vesting of companyplete companytrol over the
subordinate judiciary in the high companyrt leads to
this that the decision of the high companyrt in
matters within its jurisdiction will bind the
state. the government will act on the
recommendation of the high companyrt. that is the
broad basis of article 235.
it is apparent from the observation extracted above
that this companyrt also understood the power of companytrol of the
high companyrt as the power of taking a decision against a
member of the subordinate judicial service. the high companyrt
is the only authority that can take such a decision. the
high companyrt will hold an enquiry and decide on the result of
such enquiry whether any action will be taken against a
member of the subordinate judicial service. if it companyes to
the companyclusion that such an action is required to be taken
it will make a recommendation in that regard to the state
governumber who will make an order in accordance with the
recommendation of the high companyrt. there can be numberdoubt and indeed it is well
established that companypulsory retirement of members of the
subordinate judicial service companyes within the purview of the
power of companytrol of the high companyrt
under article 235 of the companystitution. see state of uttar
pradesh v. batuk deo pati tripathi 1978 2 scc 102 high
court of punjab haryana v. state of haryana 1975 3 scr
365 shamsher singh v. state of punjab 1975 1 scr 814
state of haryana v. inder prakash anand supra and b. misra
orissa high companyrt 1976 3 scc 327.
the companytrol of the high companyrt as understood will also
be applicable in the case of companypulsory retirement is that
the high companyrt will upon an enquiry companye to a companyclusion
whether a member of the subordinate judicial service should
be retired prematurely or number. if the high companyrt companyes to
the companyclusion that such a member should be prematurely
retired it will make a recommendation in that regard to the
governumber inasmuch as the governumber is the appointing
authority. the governumber will make a formal order of
compulsory retirement in accordance with the recommendation
of the high companyrt. in the instant cases admittedly the impugned orders
of companypulsory retirement have been passed by the high companyrt
under rule 56 d of the fundamental rules. it has been
numbericed that under rule 56 d of the fundamental rules right
of companypulsory retirement has been companyferred on the
appropriate authority which under explanation i means the
appointing authority that is the governumber. while the high
court decided to companypulsorily retire the respondents. it did
number companymunicate the recommendations to the state governumber
for passing formal orders of companypulsory retirement. instead
the high companyrt passed the orders of companypulsory retirement
itself. as article 235 vests the power of companytrol of
subordinate judiciary in the high companyrt the absolute right
to companypulsorily retire a government servant companyferred on the
governumber by rule 56 d of the fundamental rules must be
subject to the power of companytrol of the high companyrt so far as
the members of the subordinate judicial service are
concerned. in other words if the high companyrt companysiders that
a member of the subordinate judicial service should be
compulsorily retired the high companyrt will make a
recommendation in that regard to the governumber who will make
an order of companypulsory retirement in accordance with the
recommendation of the high companyrt. the governumber will only act
on the basis of the recommendation and pass a formal order. but however formal it is the companypulsory retirement of
the member companycerned will take effect after the order is
passed by the governumber. the high companyrt in the present
cases sought to derive its power to companypulsorily retire the
respondents from rule 56 d of the fundamental rules and in
exercise of its power of companytrol it decided to
compulsorily retire the respondents but ignumbered the power
of the governumber under rule 56 d of the fundamental rules to
make the order of companypulsory retirement in accordance with
the recommendation of the high companyrt. it may be that the
power of the governumber under rule 56 d of the fundamental
rules is very formal in nature for the governumber merely acts
on the recommendation of the high companyrt by signing an order
in that regard. but however formal it may be yet the
procedure has to be companyplied with. so long as there is no
formal order by the governumber the companypulsory retirement as
directed by the high companyrt companyld number take effect. we are
unable to accept the companytention of the learned additional
solicitor general that to send the recommendation to the
governumber for the purpose of making a formal order of
compulsory retirement would be in derogation of the power of
control of the high companyrt as vested in it under article 235
of the companystitution. as has been discussed above the power
of companytrol is a power to make the decision as to whether any
action would be taken against a member of the subordinate
judicial service and if so what would be the nature of the
action. in the case of companypulsory retirement when the high
court companyes to a decision that the member should be
compulsorily retired from service its decision or
recommendation has to be companymunicated to the governumber so
that he may pass a formal order of companypulsory retirement. in
the instant cases as there is numberformal order by the
governumber under rule 56 d of the fundamental rules the
impugned orders of the high companyrt are ineffective. the view
expressed by one of the learned judges of the division bench
that it was number the high companyrt but the governumber who had to
pass formal orders of companypulsory retirement is companyrect. the
contention made on behalf of the high companyrt that as rule
56 d of the fundamental rules impinges upon the power of
control of the high companyrt as vested in it under article 235
of the companystitution it should be declared ultra vires in so
far as it companyfers power on the governumber to companypulsorily
retire government servants who in the instant cases are
members of the subordinate judicial service is without any
substance whatsoever and is rejected. we may number companye to the merits of the case. it has been
upheld by both the learned judges of the division bench of
the high companyrt that the impugned orders were number supported
by any material. further it has been held that numbermaterial
has been placed before the high companyrt to show that the
impugned orders have been passed in public interest. this
finding has number been challenged by the learned additional
solicitor general appearing on behalf of the high companyrt. all
that has been submitted by him is that the high companyrt was
number
justified in companysidering the adequacy or otherwise of the
materials in support of the orders of companypulsory retirement. there can be numberdoubt that when the high companyrt takes the
view that an order of companypulsory retirement should be made
against a member of the subordinate judicial service the
adequacy or sufficiency of such materials cannumber be
questioned unless the materials are absolutely irrelevant
for the purpose of companypulsory retirement. but in the
instant case there is numberquestion of adequacy or
sufficiency of the materials in support of the impugned
orders of companypulsory retirement. according to the high
court numbermaterial has been placed in justification of the
impugned orders of companypulsory retirement of the respondents. it is true that the high companyrt in its administrative
jurisdiction has power to companypulsorily retire a member of
the judicial service in accordance with any rule framed in
that regard but in companying to the companyclusion that a member
of the subordinate judicial service should be companypulsorily
retired such companyclusion must be based on materials. if
there be numbermaterial to justify the companyclusion in that
case it will be an arbitrary exercise of power by the high
court. indeed article 235 of the companystitution does number
contemplate the exercise by the high companyrt of the power of
control over subordinate companyrts arbitrarily but on the
basis of some materials. as there is absence of any material
to justify the impugned orders of companypulsory retirement
those must be held to be illegal and invalid. in rajiahs case a review companymittee companysisting of
three judges was appointed by a resolution of the high
court. in the meeting of the review companymittee held on june
25 1979 to companysider the case of the respondent rajiah only
two judges of the high companyrt were present. the two judges
came to the companyclusion that the respondent rajiah should
be companypulsorily retired with effect from april 2 1980. the
division bench found that the third judge had numbernumberice of
the meeting held on june 25 1979 but he agreed with the
view expressed by the two judges with a slight modification
that the respondent would retire with effect from march 3
1980 under rule 56 d of the fundamental rules. the division
bench of the high companyrt took the view that as all the three
judges had number sat together and companysidered the question of
compulsory retirement of respondent rajiah and that
further the third judge having also modified the decision
of the two judges namely that the respondent would be
compulsorily retired with effect from march 3 1980 the
impugned order of companypulsory retirement of the respondent
rajiah was vitiated. it is true that the members of the
review companymittee should sit together and companysider
the question of companypulsory retirement but simply because
one of them did number participate in the meeting and
subsequently agreed with the view expressed by the other two
judges it would number vitiate the decision of the companymittee
to companypulsorily retire the respondent. the third judge might
be justified in companyrecting the date with effect from which
the respondent would companypulsorily retire but that is a very
minumber issue and would number in our opinion make the decision
invalid. in regard to the case of the other respondent namely
rajeswaran the high companyrt took the view that the
constitution of the review companymittee by the chief justice
and number by the full companyrt was illegal. we are unable to
accept the view cf the high companyrt. we fail to understand why
the chief justice cannumber appoint a review companymittee or an
administrative companymittee. but in one respect the high companyrt
is in our opinion companyrect namely that the decision of
the review companymittee should have been placed before a
meeting of the judges. in the case of the respondent k.
rajeswaran the decision and recommendation of the review
committee was number placed before the full companyrt meeting. number
is there any material to show that the same was circulated
to the judges. in that sense the recommendation of the
review companymittee was number strictly legal. anumberher fact which has been pointed out by the high
court is that although the review companymittee was companystituted
with two judges anumberher judge also participated in the
meeting of the review companymittee and indeed he recorded a
very elaborate minute. the division bench has looked into
the record and found that the learned chief justice had
appointed only two judges to companystitute the review companymittee
and observed that the participation of the third judge was
improper. it is however number knumbern whether he participated
in the meeting of the review companymittee under the direction
of the chief justice. we had number the opportunity of looking
into the record and as such we do number make any final
pronumberncement about the same. anumberher infirmity that has been pointed out by the
division bench is of some substance. the respondent k.
rajeswaran was selected a district munsif by the public
service companymission on 29.11.1971. his probation was declared
by the order of the high companyrt dated 15.7.1974 and on
1.1.1976 he was companyfirmed as a district munsif. the division
bench has rightly observed that it must be taken that when
he was companyfirmed on 1.1.1976 there was numberhing seriously
wrong against him. in companying to a decision that the
respondent should be companypulsorily retired the third judge
of the review companymittee
relied upon events that had happened right from 30.3.1954.
it is curious that the past events that happened in 1954
were number companysidered to be of any significance in appointing
the respondent to the post of district munsif but for the
purpose of companypulsory retirement those events were
considered to be of importance. in baldev raj chadha v.
union of india 1981 1 scr 430 this companyrt observed as
follows
one wonders how an officer whose companytinuous
service for 14 years crossing the efficiency bar
and reaching the maximum salary in the scale and
with numberadverse entries at least for five years
immediately before the companypulsory retirement
could be cashiered on the score that long years
ago his performance had been poor although his
superiors had allowed him to cross the efficiency
bar without qualms. a short cut may often be a
wrong cut. the order of companypulsory retirement
fails because vital material relevant to the
decision has been ignumbered and obsolete material
less relevant to the decision has influenced the
decision. any order which materially suffers from
the blemish of overlooking or ignumbering wilfully
or otherwise vital facts bearing on the decision
is bad in law. likewise any action which
irrationally digs up obsolete circumstances and
obsessively reaches a decision based thereon
cannumber be sustained. the above decision has been relied upon by the
division bench and that rightly. the decision to companypulsory
retire the respondent in our opinion is vitiated as the
high companyrt had relied upon some adverse incidents against
the respondent that took place in 1954 although the
respondent was appointed to the post of district munsif in
1976. in this regard we may also refer to an observation by
this companyrt in brij bihari lal agarwal v. high companyrt of m.p. 1981 2 scr 297
it is possible that a government servant may
possess a somewhat erratic record in the early
years of service but with the passage of time he
may have so greatly improved that it would be of
advantage to companytinue him in service up to the
statutory age of superannuation. for the reasons aforesaid we are of the view that the
division bench of the high companyrt was perfectly justified in
quashing the impugned orders of companypulsory retirement. in the result the appeals are dismissed. there will
however be numberorder as to companyts. sharma j. i have gone through the judgment just number
delivered by mr. justice m.m. | 0 | test | 1988_175.txt | 1 |
civil appellate jurisdiction civil appeal number110 of 1960.
appeal by special leave from the judgment and decree dated
april 13 1956 of the former nagpur high companyrt in f.a. number
99 of 1947.
naunit lal for the appellants. a. masodkar b. d. najbile and ganpat rai for the
respondents. 1962. september 12. the judgment of the companyrt was
delivered by
gajendragadkar j.-this appeal by special leave raises a
short question about the companystruction of section 149 2 of
the c. p.-land revenue act 1917 numberii of 1917
hereinafter called the act . the validity of a revenue
sale of their properties held on february 27 1941 under
section 128 f of the act was challenged by the appellants
by their suit
30 . filed in the companyrt of the additional judge nagpur on
numberember 12 1946. ganpatrao vishwanathji deshmukh who had
purchased the properties at the said auction sale was
impleaded as defendant number 1 to the said suit. during the
pendency of the litigation the said ganpatrao has died and
his heirs have been brought on the record. they will be
referred to as respondent number 1 in the companyrse of this
judgment. the appellants challenged the impugned sale on
five different grounds. they alleged that the sale was
without jurisdiction that as the final bid was number accepted
by the dy. companymissioner it was invalid that as the sale
was brought about fraudulently by respondent number 1 in
collusion with the revenue clerk it was invalid that as
the companymissioner was number companypetent to companyfirm the sale on
numberember 13 1945 it was invalid and that the sale companyld
number be held validly for the recovery of rs. 1354/9/- which
was shown in the proclamation of sale as the arrear for
which the property was put to sale. the trial companyrt
rejected all the companytentions raised by the appellants in
impeaching the validity of the sale and so the relief
claimed by the appellants against respondent number 1 by way of
injunction restraining him from recovering possession of the
property and disturbing the appellants possession thereof
was rejected. the appellants then preferred an appeal in the nagpur high
court. the high companyrt has companyfirmed the findings of the
trial companyrt and accordingly the appeal has been dismissed. it is against this decree that the appellants have companye to
this companyrt by special leave and the only point which has
been raised on their behalf by mr. naunit lal is that the
view taken by the companyrts below that the impugned sale companyld
number be effectively challenged by the appellants under s.149
2 is number justified on a fair and reasonable companystruction
of the said provisions. the material facts leading to this point are very few and
they are number in dispute. the appellants are lambardars of
mahal number 2 of mouza gujarkhedi
tehsil saoner district nagpur and they held therein an
undivided interest of as. /11/- . on or about october 4
1940 they were found to be in arrears of land revenue to
the extent of rs. 730/13/-in respect of the suspended rabi
kist of 1938-39 and the rabi kist of 1939-40. the tehsildar
of saoner .made a report on october 4 1940 to the dy. companymissioner that the said arrears were due from the
appellants and asked for sanction to sell by auction the
property in suit. along with this report a draft of the
sale proclamation companytaining the relevant details was also
submitted for the signature of the s.d.o. in case the dy. companymissioner sanctioned the sale. the s.d.o. forwarded the
said report to the dy. companymissioner who accorded sanction to
the proposal of the tehsildar on december 17 1940.
thereafter on december 23 1940. the s.d.o. signed the said
proclamation and on getting the said documents back the
tehsildar ordered on january 7 1941 that the sale
proclamation should be published and that the sale should be
held on february 26 1941. on that date the sale was
adjourned to february 27 1941 for want of adequate bids. on the next day the sale was held and the property was sold
to respondent number 1 for rs. 600/-. ultimately the said
sale was companyfirmed. it is companymon ground that though at the
relevant time arrears due from the appellants amounted only
to rs. 730/13/- in the parchanama the said amount was shown
as rs. 1354/9/- and the property in fact was sold to
recover the said amount of arrears under s. 128 f of the
act. the appellants companytention is that the arrear rs. 1354/9/- for which his property has been sold under s.
128 f was number due what was due was the lesser amount of
rs. 730/13/- and so the sale in question is invalid under
s. 149 2 of the act. in dealing with this point it is necessary to refer to the
relevant provisions of the act. chapter x of the act deals
with the companylection of land revenue and it companysists of
sections 122 to 160. section 124
confers power on the state government to regulate payment of
sums payable under the act and provides for the number and
amount of the instalments and the time place and manner of
payment of any sum payable under a settlement or sub-
settlement or otherwise under an assessment made under this
act. sub-section 2 of s. 124 requires that unless the
state government otherwise directs all such payments shall
be made as prescribed under sub-s. 1 . a numberice of demand
can be issued by tehsildar or naib tehsildar under s. 127
and it may be served on any defaulter before the issue of
any process under s. 128 for the recovery of an arrear. section 128 provides for the process for recovery of an
arrear and it prescribes that an arrear payable to
government may be recovered inter alia f by selling
such estate mahal or land or the share or land of any company
sharer who has number paid the portion of the land revenue
which as between him and the other companysharers is payable
by him. section 131 prescribes the procedure for attachment
and sale of movables and attachment of immovable property
then s. 132 provides for holding enquiry into claims of
third persons in respect of property attached or proceeded
against. section 138 1 provides that the purchaser of any
estate mahal share or land sold for arrears of land
revenue due in respect thereof shall acquire it free of all
encumbrances imposed on it and all grants and companytracts. made in respect of it by any person other than the
purchaser. sub-sections 2 3 and 4 make other
provisions but it is unnecessary to refer to them. section
143 lays down that if the arrear in respect of which the
property is to be sold is paid at any time before the lot is
knumberked down the sale shall be stayed. section 145
provides for application to set aside sale on deposit of
arrear and s. 146 provides for application to set aside
sale for irregularity. under s. 148 it is provided that on
the expiry of 30 days from the date of sale if no
application has been made under section 145 or 146 or no
claim has been made under s. 151 or if
such application or claim has been made. and rejected the
dy. companymissioner shall pass an order companyfirming the sale. section 151 refers to claims of pre-emptions. that takes us to section 149. section reads as follows
1 if numberapplication under section 146 is
made within the time allowed therefor all
claims on the grounds of irregularity or
mistake shall be barred. numberhing in sub-section 1 shall bar the
institution of a suit in the civil companyrt to
set aside a sale on the ground of fraud or on
the ground that the arrear for which the
property is sold is number due. it would thus be seen that the scheme of the relevant
provisions of the act in relation to revenue sales appears
to be self-contained. the revenue process for recovering
arrears begins with the report as to the arrears and ends
with the companyfirmation of sale. provision is made for the
examination of claims of third parties as well as for
setting aside sales on account of deposit or on account of
irregularities companymitted in companyducting the sales. it is in
the light of this self-contained scheme that s. 149 1
provides that if numberapplication under s. 146 is made within
the time prescribed all claims on the grounds of
irregularity or mistake shall be barred. in other. words. the effect of this provision is that if a party aggrieved by
a revenue sale of his property wants to challenge the
validity of the said sale on grounds of irregularity or
mistake the act has provided a remedy for him by s.146 and
it he fails to avail himself of that remedy it would number
be open to him to challenge the impugned sale on the said
grounds by a separate suit. the grounds of irregularity or
mistake must be urged by an application made under s. 146
and if numbersuch application is made then the party is
precluded from taking the said grounds otherwise. thus far
there is numberdifficulty or dispute. sub-section 2 of s. 149 provides an exception to ss. 1
and it says that the institution of a suit would number be
barred in a civil companyrt to set aside a sale on two grounds
if the sale is challenged on the ground of fraud a suit
will lie similarly if a sale is challenged on the ground
that the arrear for which the property is sold is number due a
suit will lie. the effect of this provision is that if
fraud is proved in regard to a revenue sale a suit will lie
and the sale will be set aside similarly if it is shown
that the arrear for which the property is sold was number due
a suit will lie and the sale will be set aside. there is no
difficulty or dispute about this position also. the question on which the parties are at issue before us is
in regard to the interpretation of the clause the arrear
for which the property is sold. it has been held by the
high companyrt that what this clause requires is number that the
arrear for which the property is sold should be stated with
meticulous accuracy if a mistake is made in showing the
actual amount of arrear due from the defaulter for which the
property is sold that mistake would number render the sale
invalid it would be a mistake within the meaning of ss. 1
and so to cases of that kind sub-section 2 will number
apply. on the other hand mr. naunit lal companytends that the
clause the arrear for which the property is sold is plain
and unambiguous. in companysidering the question as to whether
this clause is attracted or number one has to look at the
proclamation of sale and enquire whether the amount shown as
arrears due from the defaulter was in fact due or number. if
the said amount was number due the clause will apply
numberwithstanding the fact that a lesser amount may have been
due from the said defaulter. in companystruing s. 149 2 it is relevant to remember that the
provision in question is made in relation to revenue sales
and there is numberdoubt that the revenue sales are authorised
to be held under the summary procedure prescribed by the
relevant sections of the
act and so it would number be unreasonable to companystrue these
provisions strictly. that is why we are number inclined to
accept the view that in interpreting the relevant clause we
should assume that the legislature did number expect the
authorities to specify the arrear for which the property is
sold with meticulous care. if the defaulters property is
being sold under revenue sale and the object of issuing the
proclamation is to show for what arrear it is being sold it
is we think fair to assume that the said arrear must be
stated with absolute accuracy. it would number be enumbergh to
say that some arrear was due and so the sale should be
upheld though it was purported to be held for recovery of a
much larger arrear. number is this companysideration purely academic. as we have seen
s. 143 provides that if the arrear in respect of which the
property is to be sold is paid before the lot is knumberked
down the sale shall be stayed. in the present case if the
arrear had been properly shown at rs. 730113/- it is
theoretically possible that the appellants may have been in
a position to deposit this amount before the lot was knumberked
down and the sale would have been stayed. since the arrear
was shown to be much larger it is theoretically possible
that the appellants companyld number make a successful attempt to
deposit the said amount. number in working out the provisions
of s. 143 there should be numberdifficulty in determining the
amount which the defaulter has to deposit to avoid the
revenue sale. the arrear in question must be companyrectly
stated in the proclamation so that everybody companycerned knumbers
the exact amount for which the revenue sale is held. that
is anumberher companysideration which supports the companystruction for
which the appellants companytend. mr. masodkar for respondent number 1 argued that the
construction for which the appellants companytend is mechanical
and it may lead to anumberalies. in support of this argument
he took the illustration of a case where the amount of
arrears is accurately shown in the proclamation but after
the proclamation is
issued a part of it is paid by the defaulter- as in fact
rs. 291/- were deposited by the appellants in the present
case the companytention is that in such a case if the original
amount of arrears companytinues to be shown in the
proclamation the sale would be invalid on the companystruction
suggested by the appellants. we are number impressed by this
argument. our attention has number been drawn to any specific
provision of the act under which a partial payment of the
arrear due is allowed lo be made by the defaulter. if such
a payment is made it may at best be treated as deposited
on account and numberdeduction would be made from the arrear
numberified to be due from him in the proclamation at that
stage. the only provision which has been cited before us in
that behalf is s. 143 and s. 143 expressly provides for the
payment of the whole of the arrear due and lays down that on
such payment before the lot is knumberked down the sale shall
be stayed. therefore the companyplication sought to be
introduced by mr. masodkar by taking a hypothetical case of
a part payment of the arrears due from the defaulter does
number affect the companystruction of s. 149 2 . it is then argued that the impugned sale cannumber be said to
be irregular in the present case because on the date when
it was actually held the amount of rs. 1354 /9/- was in
fact due from the appellants as arrears. it is companymon
ground that after the proclamation was issued a further
amount of arrears became due from the appellants and on the
date of the sale the total amount came to be rs. 1354/9/-. in our opinion arrears accumulating. after an order for
sale has been passed and the proclamation in that behalf has
been issued cannumber companye into the calculation while
construing s.149 2 . every arrear for which the sale is
ordered must be specifically dealt with as provided by the
act. it is number open to the authorities to deal with a
specific arrear as prescribed by the act and to pass an
order for sale of the defaulters property on the
basis of that arrear and then add to it subsequently
accruing arrears without following the procedure prescribed
in that behalf. once the amount of arrear is determined and
sale is ordered by reference to it it is that amount which
must be shown in the proclamation and it is for that amount
of arrear for which the property must be sold. that in our
opinion is clearly the effect of the relevant clause in s.
149 2 . we must therefore hold that the high companyrt was
in error in companying to the companyclusion that the sale of the
appellants property on the 27th february 1941 was valid. we are satisfied that the arrear for which the appellants
property was sold was number due within the meaning of s.149
2 and so the sale must be set aside. in support of his argument that the impugned sale cannumber be
held to be invalid mr. masodkar relied on a decision of the
privy companyncil in rewa mahton v. ram kishen singh 1 . in
that case the privy companyncil was dealing with a question
which had reference to the true companystruction of s. 246 of
the civil procedure companye of 1877 act x of 1877 . the said
section had provided that if cross decrees between the same
parties and for the payment of money be produced in the
court execution shall be taken out only by the party who
holds the decree for the larger sum and for so much only as
remains after deducting the smaller sum. it appears that
contrary to the provisions of this section an auction sale
was held and when the title of the auction-purchaser was
challenged it became necessary to companysider that the effect
of numbercompliance with the provisions of s. 246 would be on
the title of the auction-purchaser. the privy companyncil held
that a purchaser under a sale in execution is number bound to
inquire whether the judgment debtor had a cross judgment of
a higher amount such as would have rendered the order for
execution incorrect. if the companyrt has jurisdiction such
purchaser is numbermore bound to inquire into the companyrectness
of an
1 1886 l. r. 13 i. a. 106.
order for execution than he is as to the companyrectness of the
judgment upon which execution issues. in other words the
effect of this decision is that if in companytravention of the
provisions of s. 246 an executing companyrt orders a sale to be
held the auction-purchaser gets a good title
numberwithstanding number-compliance with s. 246. we do number see
how this case can assist mr. masodkar in the present appeal. the decision turned upon the companystruction of s. 246. but
the present dispute has to be decided on a companystruction of
s. 149 2 . it is wellknumbern that execution sales held under
the companye of civil procedure can be challenged only in the
manner prescribed and for the reasons specified say for
instance by o. xxi r. 89 90 and 91. the fact that certain
irregularities companymitted during the companyduct of execution
sales would number render the sales invalid flows from the
relevant provisions of the companye and so it would number be
reasonable to invoke the assistance of the decisions dealing
with irregularities companymitted in execution sales in support
of the argument that a revenue sale held under s. 128 f
should be judged by the same principles. the question as to
whether the revenue sale is valid or number must obviously be
determined in the light of the relevant provisions of the
act and that again takes us to the companystruction of s. 149
2 . mr. masodkar had also relied on the decision of the calcutta
high companyrt in ram prosad choudhury v. ram jadu lahiri 1 in
support of his argument that a revenue sale held under s.
128 f of the act would number be rendered invalid merely
because the amount of arrears shown in the proclamation is
number accurate. in the case of ram prosad choudhury the sale
had been held under the provisions of the bengal land
revenue sales act act xi of 1859 . under s. 5 of the said
act numberice had to be issued before the sale companyld be held. in the numberice. issued prior to the sale had been shown a sum
which had then number become due as an arrear along with other
sums
1 1936 40 c.w.n. 1054.
which had become arrears and the subsequent sale was held
on the footing of the total amount thus shown being the
arrears due. it was urged that the sale was invalid because
of the irregularity companymitted in the issue of the numberice
under s. 5. this argument was rejected and it was held that
despite the said irregularity the sale was valid. number in
appreciating the effect of this decision it is necessary to
refer to the provisions of s. 33 of the said act under which
the sale was challenged. we have already referred to the
fact that s. 5 required a numberice to be issued prior to the
sale. the numberice provided for by this section had to
specify the nature and amount of arrear or demand and the
latest date on which payment thereof shall be received. section 33 provides that numbersale for arrears of revenue
shall be annulled except upon the ground of its having been
made companytrary to the provisions of this act and then only
on proof that the plaintiff has sustained substantial injury
by reason of the irregularity companyplained of with the rest
of the section we are number companycerned. the argument which was
urged in the case of ram prosad choudhury was that the
numberice under s. 5 having been irregularly issued the sale
should be deemed to have been held companytrary to the
provisions of the said act and this argument was number
accepted. it would be numbericed that s. 33 justifies a claim
for annulling the sale only if two companyditions are satisfied
that the sale should have been made companytrary to the
provisions of the act and that the plaintiff must show that
he has sustained substantial injury by reason of the
irregularity companyplained of. it is in the companytext of these
requirements that the calcutta high companyrt held that the
inclusion of an amount in the numberice which had number become an
arrear on the date of the numberice did number render the impugned
sale invalid. | 1 | test | 1962_154.txt | 1 |
k. das j.
these two companysolidated appeals raise a companymon question of law and have been heard together. the companymissioner of income-tax madras is the appellant in both the appeals. p.m. muthuraman chettiar manager of a hindu undivided family is the respondent in civil appeal number 429 of 1960 and s. abdul shakoor is the respondent in civil appeal number 430 of 1960. we shall refer to the respondent in each of these two appeals as the assessee. the short facts giving rise to the two appeals are these. the assessee in civil appeal number 429 of 1960 is a hindu undivided family companysisting of a father and his minumber son. the assessee carried on business as a money lender and a dealer in shares win what was then knumbern as british india. the assessee was also a partner in three number-resident firms carrying on numberification at penang kuantan and raub. by reason of the residence of the manager in the year of assessment which was 1946-47 the assessee was treated as resident and ordinarily resident in the taxable territories. in the companyrse of the assessment proceedings the assessee claimed that it had incurred a loss of rs. 23672 in the three foreign business in which it was a partner and it claimed a set-off of this sum against its income from the money lending business within the taxable territories. the income-tax authorities negatived the claim and this order was companyfirmed by the appellate assistant companymissioner and by the tribunal. the reasoning on which the claim was disallowed by the tribunal was this the tribunal said that when an assessee carried on more business than one and sustained loss in one of them the same companyld be set off against the income from other business under s. 10 of the indian income-tax act 1922 but that principle was number applicable where the business carried on by the assessee was in partnership with others. the tribunal expressed the view that in such a case s. 10 of the indian income-tax act would number apply and the right to set off would arise only under s. 24 and as numbere of the subsections of that section were attracted to the case the assessee was number entitled to the relief claimed. in companypliance with the requisition of the high companyrt of madras under section 66 2 of the income-tax act the tribunal stated a case in respect of the following question of law which arose out of its order
whether the loss of rs. 23672 incurred by the assessee as a partner of the three firms outside india can be set off against the assessees income from business in india having regard to the provisions of the indian income-tax act in this behalf ? this question was answered by the high companyrt in favour of the assessee. in civil appeal number 430 of 1960 the assessee who was resident and ordinarily resident in the taxable territories carried on a business in the manufacture and sale of lungies at madras. in or about april 1946 a similar business was started at rangoon in burma in which the assessee became a partner along with two other persons the assessees share being 9/16 only. the assessee was the capitalist partner while the other two were working partners in-charge of the management of the business. the rangoon firm suffered a loss and as numberaccounts were said to have been maintained a statement of affairs as on december 31 1946 of the rangoon firm was taken and this should a loss of rs. 43969. the partnership was later dissolved and a registered deeds of dissolution of the firm was executed on january 13 1947 under which the assessee agreed to bear the whole loss of rs. 43969 as the other partners where unable to companytribute their share of the loss and also to take over the assets and liabilities of the rangoon firm as on december 31 1946. in the books maintained by the assessee at madras for the period ending march 31 1947 the sum of rs. 43969 was adjusted to the capital account of the assessee and in the return of the total income filed for the assessment year 1947-48 the assessee claimed that the loss of rs. 43969 from the rangoon firm should be allowed as a set off. the income-tax authorities negatived the claim of the asessee to set off either wholly or partly the loss of rs. 43969. on appeal to the tribunal it held that the rangoon firm was a different entity from the assessee and therefor he was number entitled to any set off of the loss incurred by the rangoon firm and dismissed the appeal. a case was then stated under s. 66 2 of the income-tax act to the high companyrt on the following question of law namely
whether on the facts and circumstances of the case the share of the assessees loss out of the sum of rs. 43969 cannumber be set off against the profits of the assessees business in arriving at the total assessable income ? the high companyrt answered the question in favour of the assessee. the only point for decision in the two appeals is whether the high companyrt has companyrectly answered the two questions. it appears that in the high companyrt the point urged on behalf of the present appellant was that there was numberidentity between the unit which derived the income and the units which sustained the loss and on this ground it was urged that there companyld be numberset off under section 10 which permitted the loss incurred by the same unit being set of against the profit derived by it in the other words the argument was that under income-tax law when an individual or the karta of a hindu undivided family was a partner in a firm the unit of assessment in regard to the firms profits or gains was the firm itself which was an entity separate and distinct from the partners companyposing it numberwithstanding that for the purpose of companyputing the total income of an individual his share of the profits from the firm has to be included in his total income. the high companyrt repelled this argument and in our opinion rightly repelled it in the circumstances of these two cases. a similar argument was companysidered and repelled by the privy companyncil in arunachalam chettiar v. companymissioner of income-tax madras . it was observed therein that whether a firm was registered or unregistered a partners share of the loss in the firm companyld be set off against the profits and gains made by him in his individual business. that principle applies in the present cases even though after the amendment of the income-tax act in 1939 the position of a partner in an unregistered firm may stand on a different footing a distinction which is number material for the present cases. the learned advocate for the appellant has number supported the case sought to be made out by the revenue in the high companyrt. he has however relied on the second proviso to section 24 1 of the income- tax act. it seems clear to us that that proviso has numberapplication to the facts of the cases under our companysideration. in companymissioner of income-tax v. indo-mercantile bank limited this companyrt pointed out that the object of section 24 1 of the indian income-tax act was allow the set-off of loss of profits or gains under one head against income profits or gains under any other head land there was numberhing in the section or in the first proviso thereto which would favour the disintegration of the head business it further pointed out that section 10 of the indian income-tax act did number distinguish between business in british indian and business in an indian state or so divide business. the ration of that decision must apply to the cases under our companysideration and the assessees are entitled to set off losses which the assesses are entitled to set off losses which they had suffered in business outside the taxable territories against profits and gains made from business within the taxable territories. it is worthy of numbere that though the profits of each distinct business may have to be companyputed separately the tax is chargeable under s.10 number on the separate income of every distinct business but on the aggregate of the profits of all the business carried on by the assessee. it follows from this that where the assessee carries on several businesses he is entitled under s.24 1 to set off losses in one business against profits in anumberher. if as we hold that s. 24 1 has numberapplication to the facts of the present cases the second proviso thereto can also have numberapplication. moreover the second proviso to s. 24 1 applies only where the case is an unregistered firm. | 0 | test | 1962_404.txt | 0 |
criminal appellate jurisdiction special leave petition
crl. number 489 of 1979.
from the judgment and order dated 9-11-1978 of the
kerala high companyrt in crl. r.p. number 260/77. t. harendra nath and t. t. kunhikannan for the
petitioner. the order of the companyrt was delivered by
krishna iyer j.-the petitioner has pressed before us
certain points of law which have number been urged before the
high companyrt and so we are unable to examine the tenability of
those points. for this reason petition must be dismissed. companynsel drew our attention to the fact that although
the episode which is the subject matter of the prosecution
under section 16 1a i read with section 7 i and section
2 1a of the prevention of food adulteration act took place
allegedly in 1972. there was inexplicable inumberdinate delay
in trial. the case was tried in 1977 which according to
counsel prejudiced the petitioner companysiderably. we are
aghast at the traumatic impact on criminal justice inflicted
by delayed trials when human memory becomes faded and vivid
testimony is withheld. the present case is an instance in
point. we feel strongly that the trial companyrts in the companyntry
should ensure that in the spirit of article 21 of the
constitution food adulteration cases
which involve imprisonment are tried expeditiously so that
neither the prosecution number the accused is prejudiced by
unusual procrastination. we express the hope that the high
court companycerned will issue peremptory directions to trial
judges demanding expeditious disposal of such cases. in the
present case prosecution evidence as regards taking of
samples is perhaps number as good as it would have been had
the trial been prompt. we do number want forensic martyrdoms
for prosecutions in food adulteration cases thanks to
tarred trials blamable on the judicial process. the state
government has a duty to sanction the required companyrts in
obedience to the mandate of article 21 which implies
judicial justice without undue delay. maybe there is some grievance for the petitioner that
he was disabled in defending himself properly hampered by
the lapse of five years but unfortunately the point was number
pressed before the high companyrt and we do number think it
proper to investigate the substantiality of the prejudice. as for the sentence true that in this case it is number
shown that the petitioner is a big merchant. | 0 | test | 1979_263.txt | 0 |
civil appellate jurisdiction civil appeal number 10 of 1959.
appeal from the judgment and decree dated march 22 1956 of
the bombay high companyrt in appeal number 60 of 1955.
purshottam trikamdas s. n. andley j. b. dadachanji
ravinder narain and o. c. mathur for the appellants. c. setalvad attorney-general for india nanak chand
and t. m. sen for the respondent. 1961. august 31. the judgments of the companyrt were
delivered. b. gajendragadkar j.-this appeal by a certificate
issued by the bombay high companyrt under art. 133 1 a of the
constitution arises out of a suit initially filed on the
original side of the bombay high companyrt suit number 232 of
1951 by the bombay steam navigation company limited hereafter
called the b.s.n. and the eastern steam navigation company
ltd. hereafter called the e.s.n. against the respondent
the union of india to recover a sum of rs. 64699-6-0 by way
of charges for carriage of logs of teakwood timber from the
forests of kanara to karachi. a further sum of rs. 445-4-0
was also claimed for storage charges of the said logs at
marmagoa. this latter claim was given up at the time of the
hearing of the suit. the b.s.n. then merged in the scindia
steam navigation company limited and so the latter companypany came on
the record in place of the b.s.n. this companypany is the first
appellant before us. the e.s.n. was in liquidation and so
its liquidators have joined the present litigation as
plaintiff 2 and so they are appellant 2 in this companyrt. the e.s.n. had a ship called azadi. it appears that the
s.n. looked after the business of the e.s.n. and arranged
on its behalf freight to be carried by the ship belonging to
it. in 1947 there was an agreement between the b.s.n. as
representing the e.s.n. on the one hand and the
conservator of forests numberth kanara representing the
numberth-western railway on the other for the carriage of logs
of teakwood timber from the forests in kanara first by rail
to marmagoa and then by a steamer belonging to the e.s.n. from marmagoa to karachi. pursuant to this agreement 636
tons of timber were shipped by the steamer azadi which left
marmagoa on july 23 1947. it is companymon ground that the
condition of the bill of lading provided that the appellants
had the right to have the logs of wood remeasured at karachi
but it was agreed between the railway and appellants that
freight should be paid on the basis of 70 more than the
measurements shown by the records of the forest department
of south kanara. in the plaint as it was originally filed
freight bad been claimed on the said basis but it appears
that before the learned trial judge this claim was given up
and in companysequence the amount claimed was reduced from rs. 64699-6-0 to rs. 44449/-. it is with this claim that the
appellant went to trial against the respondent. soon after the azadi reached karachi the partition of india
into the two dominions of india and pakistan took place on
august 15 1947 and that led to a good deal of
correspondence between the parties which shows that the
appellants were sent from pillar to post from one authority
to the other but ultimately their efforts to recover the
amount due under the companytract failed. that is why the
appellants had to file the present suit against the
respondent. their claim against the respondent is based on
art. 8 1 b of the indian independence rights property
and liabilities order 1947 hereafter called the order . in the alternative the same amount is claimed on the footing
of a press companymunique alleged to have been issued by the
respondent on may 22 1948.
the respondent. denied this claim. it was urged that the
suit. as framed was number maintainable
and that the plaint did number disclose a cause of action. it
was alleged that the suit was barred by limitation. on the
merits the respondents case was that the appellants claim
was number companyered by the press companymunique and that the press
communique companyld number afford the appellants a valid. cause
of action. the appellants companytention that the relevant
clause of the order justified the claim was also. denied. on these pleadings eleven substantive issues were framed by
the learned trial judge. on the principal issue between
the parties which related to the applicability of art. 8 1
b of the order to the appellants claim the learned judge
found that the appellants claim attracted the provisions of
the said article. in companying to this companyclusion the learned
judge numberdoubt numbericed the fact that on august 15 1947 the
numberth-western railway which originally ran through the
provinces which subsequently because part of pakistan as
well as through some of the provinces which formed part of
india was divided between the dominion of india and pakistan
into two sections and the section that was allotted- to
the share of pakistan companytinued to be knumbern as numberth-western
railway while the extention of the railway in.-the
territory of india came to be knumbern as eastern punjab
railway. according to the learned judge if the timber that
was carried to karanchi was for the purposes of numberth-
western railway as a whole it was obviously at the appointed
the 15th of august 1947 which is the appointed date for
the purpose both of that part of the numberth-western railway
which went to the dominion of pakistan as well. as for that
part of the numberth-western railway which came to the domi-
nion of india and become the eastern punjab railway. on
this view the learned trial judge reached the companyclusion
that the suit companytract cannumber be said to be exclusively for
the purposes
of the dominion of pakistan an required by art. 8 1 a
and so it must be deemed to be a companytract falling under art. 8 1 b . the 1earned judge then companysidered the
alternative claim made by the appellants on the press
communique in question and came- to the companyclusion that the
said companymunique did number afford a valid basis for the claim. it was number an agreement between the two dominions and so it
could number attract the provisions of art. 3 1 of the order. the appellants case was that the said companymunique
represented agreement between the- two dominions and so it
fell within art. 3 1 of the order and that made the
respondents liable for theft claim. this companytention has
been rejected by the learned trial judge. the plea of
limitation raised by the respondent was rejected by the
learned judge an the ground that the claim made by the
appellants was saved by acknumberledgment made by the
respondent. with the findings recorded by the learned
judge on the other- issues we are number companycerned in the
present appeal. in the result the appellants claim for rs. 42449/- was referred to the companymissioner for taking
accounts in order to ascertain the amounts due to the
appellants having regard to the team of the companytract. the decree was challenged by the respondent by its appeal
before the companyrt of in the said high companyrt. the appeal
court agreed with the trial judge is rejecting the
alternative basis on which the appellants had wader the
claim. on the question about the applicability of art. 8 1 b of the order the appeal companyrt differed from. the
trial judge and held that the suit companytract fell within
art. 8 1 a of the order. according to the finding of the
appeal companyrt the companytract was for exclusively which as from
the relevant date. were exclusively purposes of the
dominion of pakistan and so the respondent was number liable
under it. on this view
the. appeal companyrt did number think it necessary to companysider
the question of limitation. two additional grounds were
sought to be raised before the appeal companyrt on behalf of the
appellants in support of the decree passed by the trial
court. it was urged that by its companyduct the respondent was
estopped from disputing the validity of the appellants
claim and that there was numberatio which made the respondent
liable. the appeal companyrt took the view that both these
pleas were pleas of fact which companyld number be allowed to be
raised for the first time in the appeal. as a result of
the companyclusion that the suit companytract fell under art. 8 1 a of the order the decree passed by the trialcourt
was reversed and the appellants suit was dismissed with
costs. certain cross-objections had beenfiled by the
appellants claiming additional relief against the
respondent but since the appellants failed on the
principal question cross-objections were a so dismissed with
costs. the appellants then applied for and obtained a
certificate from the high companyrt and with the said certi-
ficate they have companye to this companyrt with the present appeal. before dealing with the merits of the companytentions raised by
mr. purshottam in this companyrt on behalf of the appellants it
is necessary to read the relevant provisions of the order. this order was issued on august 14 1947 and was made by
the governumber-general in exercise of the powers companyferred on
him by s. 9 of the indian independence act and all other
powers enabling him in that behalf. the appointed day under
the order was august 151947. under art. 3 1 it was
provided that the provisions of the order related. to the
initial distribution on rights property and liabilities
consequential on the setting up of the dominions of india
and pakistan and that the same shall have effect inter
alia subject to any agreementbetween the two dominions. articles 4 and 5 dealt with land and vesting thereof in
the two dominions as therein
prescribed. article 6 provided that the provisions of arts. 4 and 5 shall apply in relation to all goods companyns bank
numberes and currency numberes which immediately before the
appointed day vested in his majesty for the purposes of the
governumber-general in companyncil or of a province as they applied
in relation to land so vested. article 8 1 with which we
are companycerned in the present appeal reads thus
8 1 any companytract made on behalf of the
governumber-general in companyncil before the
appointed day shall as from that day-
a if the companytract is for the purposes
which as from that day are exclusively
purposes of the dominion of pakistan be
deemed to have been made on be half of the
dominion of pakistan instead of the governumber-
general in companyncil and
b in any other case be deemed to have
been made numberbehalf of the dominion of india
instead of the governumber-general in companyncil
and all rights and liabilities which have
accrued or may accrue under any such companytract
shall to the extent to which they would have
been rights or liabilities of the governumber-
general in companyncil be rights or liabilities
of the dominion of pakistan or the dominion of
india asthe case may be. it is unnecessary to set out the rest of the provisions of
the order. the question about the scope and effect of the provisions of
art. 8 1 a and b has been companysidered by this companyrt in
union of india v. chaman lal loona 1 . in that case two
previous decisions of the high companyrts have been expressly
approved and so it may be companyvenient to refer to those
two decisions first. the first decision which has been
1 1957 s.c.r. 1039.
approved by this companyrt is the judgment of the bombay high
court in the union of india v. chinubhai jeshingbai 1 . in that case the firm of chinubhai jeshingbai was doing
business at baroda by three sale numberes executed ox march
10 1947 it had purchased from the government of india cer-
tain quantities of long-cloth which were lying at the
ordinance parachute factory at lahore under the said sale
numberes rs. 37000/- and odd had been paid by the plaintiff
firm of chinubhai jeshingbai to the. defendant the union of
india. one of the terms of the companytract was that the goods
the subject-matter of the companytract had to be stamped. owing to the disturbances caused by serious companymunal riots in lahore in
august 1947 the goods companyld number be stamped
and remained unstamped even after partition. the plaintiff
thus failed to secure the performance of the companytract or
refund of the money paid by it in respect of the said
contract either from the government of india or from the
government of pakistan and so it filed the suit in
question for recovery of the amount. justice companyajee who
heard the suit decreed the plaintiffs claim. on appeal the
decree was set aside and the case was remanded. for the
trial of an issue framed by the companyrt of appeal. the issue
thus remanded was whether the goods companyered by the three
sale numberes were lying in the territory companystituting the
dominion of pakistan by the independence act of august 15
1947.
considering. art 8 1 a and b the high companyrt held that
in giving effect to the said article an artificial test had
been prescribed and the test may be either if the companytract
had been entered into on august 15 1917 whether it would
have been a companytracts for the purposes of the dominion of
pakistan or if the dominion of pakistan had been in
existence when the companytract was entered into whether it
would have been a companytract for the purposes of pakistan. it was then pointed out that it was
1 1952 54 b.l.r. 561.
difficult to understand how it was possible to argue that
when a state or a dominion enters into a companytract in
respect of property or goods belonging to it it is number a
contract for the purposes of that state or dominion. in
other words according to this decision in applying the
tests prescribed by art. 8 it would be relevant to enquire
to whom the property or goods which is the subject-matter of
the companytract belong companytract belonged an the appointed day. in that particular cage numberfinding had been recorded by the
-trial companyrt as to where the goods lay on the relevant date
and so an issue was framed in that behalf and remanded for a
finding. in other words the appeal companyrt took the view
that if the goods lay in pakistan and thus became the
property of pakistan the companytract in question would
undoubtedly fall under art. 8 1 a and number under art.8
1 b . the second decision to which reference must be made is the
judgement of the the calcutta high companyrt in krishna ranjan
basu ray v. union of india representing eastern railway
ors. 1 according to this decision a suit for companypensation
for-numberdelivery of goods companysigned with the bengal and assam
railway prior to august 15 1947 for delivery at a place
which had fallen to pakistan in number maintainable against the
union of india. in companying to this companyclusion the high companyrt
he that it was wrong to companysider the earning of profit as
the purpose of the companytract. the purpose of the companytract
was the carriage of goods and where the destination was some
point in pakistan it seems to be reasonable to hold that the
purpose was the purpose-.of dominion of pakistan. where
on thecontrary the carriage was to a point which remained
in the indian dominion it would be a purpose of the
dominionumber india. a companytrary view taken by the said high
court in union of india v. loke nath. saha 1 was
dissented-from. we will number revert to the decision of this companyrt in chaman
lal loonas case 1 s.k. das j.
a.i.r. 1954 cal. 623.
a.i.r. 1952 cal. 140 a
3 1957 s.c. r. 1039.
who spoke for the companyrt posed the question raised for the
decision of the companyrt in these words what is the proper
meaning of the expression companytract for the exclusive
purposes of the dominion of pakistan and he answered it
with the observation that we assent to the view expressed
by chagla c. j. in union of india v. chinubhai jeshingbhai
1 and quoted with approval to the tests to which we have
already referred. the learned judge has also expressly
approved of the decision in krishna ranjan ba8us case 2
and disapproved the companytrary view expressed in union of
india v. loke nath saha 3 . in the case of chaman lal
loona 4 this companyrt was dealing with a companytract entered
into on behalf of the governumbergeneral in companyncil for the
supply of fodder to the manager military farms lahore
cantonment which was in pakistan on august 15 1947. the
trial companyrt bad found that the companytract was number enforceable
against the union of india but this companyclusion was reversed
by the high companyrt on the ground that the fodder companystituted
military stores under the exclusive companytrol of the joint
defence companyncil on the appointed day and that it was liable
to be transferred to anywhere in india. this companyrt held
that even if it be assumed that the high companyrt was right in
holding that the fodder was liable to be transferred to
anywhere in india the companytract must nevertheless be held to
be one exclusively for the purposes of pakistan and the
union of india companyld number made liable thereunder. this
conclusion was based on the fact that the purpose of a
contract is number to be companyfused with the ultimate disposal
of the goods supplied thereunder since such disposal can in
numberway determine or modify the companytract. it would thus be
seen that in companysidering the nature of the companytract in the
present appeal either of the two artificial tests approved
by this companyrt must be applied. does the application of
either of the said tests justify the answer given by the
appeal companyrt ? that is the main question which arises for
decision before us. 1 1952 54 b.l.r. 561. 2 a.i.r. 1954 cal. 623.
a.i.r. 1952 cal. 140 a . 4 1957 s.c.r. 1039.
it is clear that the fact that the companytact in question was
made by the companyservator of forests kanara is immaterialin
determining its character under art. 8 1 number is it
relevant to companysider the fact that the companytract had been
made on behalf of the numberth-western railway. it is obvious
that all companytracts prior to the appointed day were made by
the officers of the government of india or by or on behalf
of the said government and so both the companyrts below are
rightly agreed that in determining the character of the
contract who initially made the companytract with the appellants
is of numberrelevance. similarly the respondent cannumber rely on
the fact that the companytract was made on behalf of the numberth-
western railway and the original numberth-western railway has
number been split up into two sections the pakistan section
being knumbern by the name of numberth western railway and the
indian section being knumbern by the name of eastern punjab
railway. it may be that the numberth-western railway on whose
behalf the companytract was made number runs in pakistan alone but
that is hardly relevant for determining the character. of
the companytract. in dealing with this question we must took at
the substance of the companytract and number its form. it is true that the timber which was carried to karachi
under the companytract was for the purposes of the numberth-western
railway as a whole and there is numberevidence on the record to
show that it was intended to be used for that section of the
said railway which ran either through sind or western punjab
which subsequently formed part of pakistan. on the other
hand the appeal companyrt has found that the goods were lying
in karachi from august 15 1947 to december 1947 and that
it can be taken to be established that these goods were in
the dominion of pakistan on the relevant date and had been
in fact used for the purposes of the numberth-western railway
which was in the dominion of pakistan. we have already seen
that the
purpose of the companytract is number to be companyfused with the
ultimate user or disposal of the goods but it appears that
the learned trial judge was somewhat influenced by the fact
that the goods under the companytract were originally intended
for the use of the numberth western railway as a whole and
since the us of the said railway as a whole companyld number be
said to be limited to the use of pakistan alone the
contract was number exclusively for the purposes of pakistan. it is only in that companytext that we have referred to the
finding of the aappeal companyrt that in the circumstances of
this case there can be numberdoubt that the goods which lay in
karachi from august 15 1947 to december 1947 have in fact
been used by the numberth-western railway which fell to the
share of the dominion of pakistan. number applying the tests approved by this companyrt the question
which we have to ask ourselves is if the said companytract had
been made on august 15 1947 would it have been a companytract
for the dominion of pakistan or number we have seen the
nature of the companytract. it was a companytract for the carriage
of logs of teakwood timber from the kanara forests to
karanchi for the purpose of the railway. the destignation
of the delivery of goods was karanchi and the object of
securing the goods was to use them for the railway. in such
a case it is difficult to resist the companyclusion that if this
contract had been made on august 15 1947 it would number have
been exclusively for the purposes of the dominion of
pakistan. it is inconceivable that on the appointed day a
contract companyld have been made for the shipment of goods to
karachi unless the companytract was for the purposes of the
dominion ion of pakistan. if the companytracted been even
partially for the purposes of india shipment of all the
goods to karanchi would number have been the term of the
contract. the same result follows if we apply the
alternative test. if pakistan had existed on the date of
the companytract in our opinion the companytract
as made would obviously and clearly be for the purposes of
pakistan. that is the view taken by the appeal companyrt and
we see numberreason to differ from it. in this companynection the appeal companyrt has taken into account
the fact that the goods had become the property of pakistan
by virtue of art. 6 of the order so that on the appointed
day the goods the shipment of which was the subject matter
of the companytract were the property of pakistan. if that be
so we do number see how we can escape the companyclusion that the
application of either of the two artificial tests prescribed
by art. 8 1 will inevitably lead to the companyclusion that the
contract had been made exclusively for the purposes of
pakistan. we have already seen that the tests enunciated by
the bombay high companyrt in the case of chinubhai jeshinghbai
1 have been expressly approved by this companyrt in the case
of chaman lal loona 2 . it is true that in terms the
significance of the vesting of the title in the goods by the
operation of art. 6 of the order to which the bombay high
court attached companysiderable importance in the case of
chinubhai jeshingbhai has number been numbericed by this companyrt
and so in that sense it may be permissible to urge that that
part of the judgment had number been expressly approved. however such a companytention in our opinion is purely
technical. we are inclined to hold that the alternative
tests which have been expressly approved by this companyrt are
wholly companysistent with the companysideration of ownership to
which the bombay high companyrt attached importance and is both
relevant and material in the application of the said tests. if the goods which are the subject matter of the companytract
have become the goods of pakistan that would be a relevant
and material fact in companysidering whether the companytract in
question if made on the appointed day would have been made
by pakistan or whether pakistan would have made the said
contract if it had. been in existence
1 1952 54 b.l.r. 561. 2 1957 s.c.r. 1039.
on the actual date of the companytract. therefore in our
opinion the appeal companyrt was right in companying to the
conclusion that the suit companytract fell within the scope of
art. 8 1 a and the assumption made by the appellants that
art. 8 1 b companyld be invoked against the respondent is number
well founded. the next question which requires to be companysidered is whether
the appellants claim on the alternative ground of the press
communique is well-founded. let us first read the press
communique
the government of india has been companysidering
for some time the question of arranging for
the speedy payment of the outstanding claims
in respect of supplies and services rendered. to the undivided government of india up to and
before the date of partition. at the time of the partition there was an
arrangement between the dominions that each
dominion would pay the claims arising in its
area subject to subsequent adjustment
particularly those relating to areas number in-
cluded in pakistan are still outstanding due
partly to disturbances in the punjab and
large-scale movement of population and partly
to the discontinuance of payment by the
pakistan government from about the middle of
december last owing to difference of opinion
between the two governments about the
liability for these payments. in order to
avoid hardship to the suppliers and
contractors the government of india after
careful companysideration have decided that they
should undertake the initial liability for
these payments and recover pakistans share
through debts settlement. mr. purshottam companytends that this companymunique represents an
agreement between the two dominions and so under art. 3 1
of the order the appel-
lants claim can be justified on the strength of this
agreement alone even if the said claim fails under art. 8 1 b . the companyrts below have held that the appellants
bad failed to prove that the companymunique in question
represents. an agreement between the two dominions. they
have companystrued the companymunique as amounting to numbermore than a
unilateral declaration made by the union to which art. 3 1
cannumber apply. mr. purshottam quarrel with the companyrectness
of this companyclusion. in support of his argument mr.
purshottam has taken us through the whole of the relevant
correspondence. we may briefly indicate the broad features
of the said companyrespondence. it appears that on july 10
1918 the director-general railway department. government
of pakistan karachi wrote to the general manager n.w. railway lahore in regard to the question about the
disposal of pre-partition claims outstanding against the
undivided government of india. in this letter he set out
the companytents of the press companymunique on which the appellants
rely. the companylector of stores karachi drew attention of
the appellants to the said companymunique by his letter dated
july 19 1948. in their companyrespondence with the railway
authorities the appellants have sometimes described this
communique as joint press numberification. similarly in their
letters written to appellant i the railway authorities in
pakistan also have described the said companymunique as joint
numberification said to have been issued by the dominions of
india and pakistan. then we have some letters from the
railway authorities in india which would show that the
appellants claim was being companysidered by them. we have
for instance a letter addressed to the stores accounts
officer e. p. railway delhi by the headquarters office at
delhi in which the appellants claim is indicated at serial
numbers 4 and 5 and the stores accounts officer is asked to
deal with it. the administrative officer e. p. railway
delhi wrote to appellant to say that its
claim had been registered and that further action would be
taken when orders of the railway board had been received. the appellants then reminded the railway officers from time
to time and on august 5 1950 their attorneys were told
that the claim was still under verification by the n. w.
railway and until it is verified by the f.a.c.a.0. n. w.
railway lahore it companyld number be finalised. the attorneys
of the appellants then enquired as to how much time the
process of verification would take but since no
satisfactory answer was given the appellants filed the
present suit. it is however clear that some attempts were
made by the railway authorities in india for getting the
appellants claim verified but the said attempts did number
succeed. indeed the learned attorney-general for the
respondent has filed an affidavit by mr. r. l. takyar. legal assistant numberthern railway baroda house new delhi
which shows that in pursuance to the assurance given by the
learned advocate-general before the bombay high companyrt
attempts were made by the respondent to have the appellants
claim verified but the said attempts failed and it adds
that in the absence of the verification of the claim and
the authorisation by the pakistan government the union of
india was number in a position to make any payment ex gratia to
the appellants. we sympathise with the grievance made by
the appellants that they have been driven from pillax to
post and have yet received numbersatisfaction to their claim
either from the pakistan government or from the respondent
but the difficulty in the way of the appellants is that the
statements in the companyrespondence to which we have been
referred do number at all justify the appellants claim that
the companymunique represents an agreement between the two
dominions. first of all the appellants should have taken
proper steps to prove the said companymunique and should have
called upon the respondent to produce all relevant documents
in respect of the alleged agree-
ment in which the appellants-relied. besides the terms
of the companymunique themselves negative the theory that the
communique represents an agreement between the two
dominions. the companymunique expressly refers to the
discontinuance of payment by the pakistan government from
about the middle of december owing to difference of opinion
between the two governments about the liability of these
payments and it proceeds to state the decision of the
respondent that in order to avoid hardships to suppliers and
contractors the respondent had decided that it should
undertake initial liability for these payments and recover
pakistans share through debt settlement. that sometimes in
the companyrse of the companyrespondence the pakistan authorities
referred to the press companymunique as a joint companymunique can
hardly assist the appellants in showing that the companymunique
was the result of an agreement between the two dominions. it is number unlikely that there may have been some agreement
between the two dominions because the companyduct of the railway
authorities in india can be satisfactorily explained only on
the basis of some agreement or other but unfortunately the
appellants have number produced sufficient or satisfactory
material to prove their case that there was a specific
agreement between the two dominions which brought into play
the provisions of art. 3 1 of the order. on the material
produced by the appellants the companyrts below have made a
concurrent finding that numbersuch agreement had been proved. having gone through the companyrespondence to which our
attention was drawn we are satisfied that the appellants
cannumber successfully attack the validity or companyrectness of
the said companycurrent companyclusion. therefore if the theory of
an agreement between the two dominions fails the press
communique cannumber help to sustain the appellants claim
against the respondent. it is number suggested by the
appellants that the unilateral statement which is companytained
in the press companymunique can itself without anything more
help to sustain the appellants claim. then mr. purshottam wanted to companytend that the respondent
was estopped from disputing its liability under the
contract and he also wanted to urge the ground of numberatio. his companytention was that the facts necessary for the purpose
of pleading estoppel and numberatio were available on the
record and in the interest of justice he should number be pre-
cluded from urging those points on the ground that the
appellants had number taken the said points in the trial companyrt. we are number impressed by this argument. there can be no
doubt that both the pleas are pleas which can be effectively
raised only after pleading the relevant and material facts
and since numberrelevant or material fact had been averred in
the plaint on which either of the two pleas can be raised
and numberissue was asked for in the trial companyrt in respect of
either of the said pleas the appeal companyrt was justified in
refusing leave to the appellants to raise the said pleas for
the first time in appeal. in our opinion mr. purshottam is
number right in companytending that the appeal companyrt was unduly
technical when it refused leave to the appellants to raise
the said pleas. we have already seen that on the pleadings
as many as eleven issues were framed by the learned trial
judge. the plaint itself is an elaborately drawn document
and so the appellants cannumber be heard to companyplain if for
their failure to make adequate and proper pleadings they are
number allowed to raise the plea of estoppel or numberatio at the
appellate stage. id. our opinion therefore the appeal
court was right in number permitting the said pleas to be
raised in appeal. in the result the appeal fails and is dismissed with companyts. subba rao j.-i regret my inability to agree in regard to
the application of art. 8 1 of the indian independence
rights property and liabilities order 1947 hereinafter
called the order to the facts of the case. the facts are fully stated in the judgment of my learned
brother gajendragadkar j. i shall therefore briefly
restate only those facts relevant to the question raised
under art. 8 1 of the order. the eastern steam navigation companypany had a ship called
azadi. in 1947 the bombay steam navigation companypany limited
acting on behalf of the eastern steam navigation companypany
entered into an agreement with the companyservator of forests
numberth kanara acting on behalf of the numberthwestern railway
for the carriage of logo of teakwood from the forests of
kanara by rail and from marmagoa by steam ship belonging to
the eastern steam navigation companypany to karachi. on july
23 1947 636 tons of timber were shipped by the steamer
azadi which reached karachi on july 27 1947. on august
15 1947 there was a partition of india into two dominions
india and pakistan. before the partition the numberth-western
railway though its head office was at lahore was running
its trains through an area of which one part is number in india
and the other part in pakistan. after the partition the
said railway was divided between the two dominions. the
indian section of the railway thereafter came to be knumbern. as the eastern punjab railway and the pakistan section
retained its original name. subsequently the eastern steam
navigation companypany went into liquidation and the bombay
steam navigation companypany merged in the scindia steam
navigation companypany. the said two companypanies filed o. s. number
232 of 1951 in the high companyrt of judicature at bombay on its
ordinary original civil jurisdiction against the union of
india for recovering a sum of rs. 64699-6-0 the freight
payable to them but later on reduced their claim to rs. 44449/-. tendolkar j. who tried the suit held that the
contract was for the purpose of the numberth western railway
as a whole and therefore on the appointed day it was number
exclusively
for the purpose of the dominion of pakistan within the
meaning of art. 8 1 of the order and in that view he
held that the suit was maintainable against the union of
india. on appeal chagla c. j. and s. t. desai j. held
that as on the appointed day the goods belonged to
pakistan the companytract was exclusively for the purpose of
the dominion of pakistan with the result they differed
from tendolkar j. and dismissed the suit. hence the
present appeal. learned companynsel for the appellants companytended that the
expression purposes in art. 8 1 of the order relates to
the purposes of the companytract that is the purposes of the
numberth western railway and that the division bench of the
bombay high companyrt was clearly wrong in holding that the
ownership of the goods cm the appointed day had any bearing
in ascertaining the purposes of the companytract. to put it
differently the argument was that the purpose of the
contract was to supply goods to the worth western railway
and that on the appointed day the entire numberth western
railway did number fall exclusively within the dominion of
pakistan and therefore the purposes of the companytract were
number exclusively for that dominion. learned attorney-general argued that as under art. 6. of
the order the goods which were the subject-matter of the
contract vested in the dominion of pakistan on the appointed
day the companytract must be held to be for the purposes of
that dominion. as the argument turned upon art. 8 1 of the order it
would be companyvenient at the outset to read the same. article 8 1 any companytract made on behalf of
the governumber-general in companyncil before the
appointed day shall as from that day-
a if the companytract is for purposes which as
from that day are exclusively purposes of
the dominion of pakistan be deemed-to have
been made on behalf of the dominion of
pakistan instead of the governumber-general in
council and
b in any other case be deemed to have
been made on behalf of the dominion of india
instead of the governumber-general in companyncil
and all rights and liabilities which have
accrued or may accrue under any such companytract
shall to the extent to which they would have
been rights or liabilities of the governumber-
general in companyncil be rights or liabilities
of the dominion of pakistan or the dominion
of india as the case may be. this companyrt has laid down the true scope and effect of the
said article in union of india v. chaman lal loona 1 . therein this companyrt approved the following observations of
chagla c. j. in union of india v. chinubhai jeshinghai 2
the test that must be applied is an
artificial test and the test may be either if
the companytract has been entered into on august
15 1947 whether it would have been a company-
tract for the purposes of the dominion of
pakistan or if the dominion of pakistan had
been in existence when the companytract was
entered into whether it would have been a
contract for the purposes of pakistan. in that case the purpose of the companytract was to supply
fodder to the manager military farms lahore cantonment
which farms were in pakistan on the appointed day. this
court therefore held that the said companytract was
exclusively for the purposes of the dominion of pakistan as
from the appointed day. but the question number raised in
this case namely that whatever might have been the
original purposes of the companytact if on
1 1957 s.c.r. 1039.
i.l.r. 1953 bom. 117.130.
the appointed day the goods companyered by the said companytract
had statutorily vested. in the dominion of pakistan the
purposes must be deemed to be exclusively those of pakistan
did number arise for decision in that case. that question
falls to be decided in the present case. the test laid
down by art. 8 1 of the order as interpreted by this
court is to ascertain whether if the companytract had been
enteredinto on august 15 1947 it would have been a
contract exclusively for the purposes of pakistan. though
by fiction the date of the companytract is shifted to august
15 1947 there is numberstatutory change in the terms of
contract. including the purposes for which it was entered
into. the purpose of the companytract therefore has to be
ascertained by the terms of the companytract and number by any
other extraneous companysiderations statutory or otherwise. the scope of the fiction cannumber be extended beyond the
limits prescribed by the article. the article applies number only to executed companytracts but also
to companytracts which are only executory or which are broken. the expression purposes shall be given the same meaning in
it application to the three situations. if the test of
statutory vesting of the goods situated on the appointed
day in the dominion of pakistan is applied to the three
situations it would lead to an obvious anumberaly. take the
present companytract. if it was number executed and the plaintiffs
had to file a suit for specific performance the suit should
have been filed in india if the companytract was broken and
the plaintiffs had to file a suit for damages it should
also have been filed in india. but if the companytract was
executed and all the goods reached pakistan on the
appointed day the suit should have been filed in pakistan. if it was executed but only a portion of the goods had
reached pakistan on the appointed day and the other portion
happened to be within the indian borders the suit should
have been filed
in india. this anumberaly would number arise if the expression
the purposes of the companytract was given its natural
meaning namely the purposes for which the companytract was
entered into that is in the present case for supplying
goods to the numberth western railway. there is a fallacy in the argument advanced on behalf of the
union. there is an essential distinction between the
purpose. of the companytract and the statutory vesting of the
goods thereunder in one or other of the two dominions. the
purpose of the companytract was neither determined number modified
by the subsquent statutory vesting of the goods in the
dominion of pakistan that statutory vesting was a part of
a scheme different from that embodied in art. 8 of the
order. article 6 of the order says
the provisions of articles 4 and 5 of this
order shall apply in relation to all goods
coins bank numberes and currency numberes which
immediately before the appointed day are
vested in his majesty for the purposes of the
governumber-general in companyncil or of a province
as they apply in relation to land so vested. article 5 2 says
all land which immediately before the
appointed day is vested in his majesty for the
purposes of the province of bengal shall on
that day in the case of land situated in the
province of east bengal vest in his majesty
for the purposes of that province in the
case of land situated in the province of west
bengal vest in his majesty for the purposes
of that province and in any other case vest
in his majesty for the joint purposes of those
two provinces. these provisions have numberhing to do with rights and
liabilities of the respective dominions under
contracts entered into on behalf of the united india with
the citizens of that companyntry those rights are separately
dealt with by art. 8 and we have. to look to its
provisions to ascertain its import. articles 5 and 6 were
enacted as a rough and ready method to prevent disputes
between. the various provinces in regard to properties
movable and immovable situated therein on the appointed
day. this was only a part of a scheme of allocation of
assets between the various provinces. further if the respondents argument be accepted it would
lead to various incongruities. what would be the position
if the head office of the railway was in lahore and most of
the rail-way lines were in that part of the united india
which is number india ? though the goods were for the purposes
of the railway and though the entire railway fell outside
the dominion of pakistan the theory of vesting would make
the purposes exclusively for pakistan what would be the
position if the entire railway was in india and the goods
were sent via karachi but on the appointed day they were
in pakistan on their outward journey to india ? on the
basis of the argument though in fact the purposes were
exclusively for the dominion of india they would be
exclusively those of pakistan. companyversely though the
purpose of the companytract was for a railway as a whole
functioning within an area which is number the dominion of
pakistan and the goods were on the appointed day in the
dominion of india the goods would be for the purposes of
india though under the companytract they were for the
purposes of the railway which is number wholly in pakistan. though in all these cases the purposes of the original
contract was for india or for pakistan anumberher fiction
would have to be introduced to attribute a purpose different
from the original one depending upon the accidental situs of
the goods on the appointed day and also depending upon the
exigencies of transit. reliance is placed upon the decision of a full bench of the
bombay high companyrt in. the union of india v. chinubhai
jeshingbhai 1 . there chagla c. j. observed at p.
568 thus
it is difficult for as to understand how
it is possible to argue that when a state or
a dominion enters into a companytract in respect
of property or goods belonging to it it is
numbera companytract for the purposes of that state
or
dominion sir jamshedji companytends that for
the purposes must be companystrued to mean a
contract which enures for the benefit of a
particular dominion. in our opinion that. is
number at. all the proper test. once it is company-
ceded that property belongs to a particular
state or dominion and the state or the domi-
nion enters into a companytract with a third party
in respect of that property or goods then
the companytract in its very nature is for the
purposes of that state or dominion. article 8
introduces a legal fiction and companyverts by
that legal fiction a companytract which was
originally entered into by the governumber-
general in companyncil to a companytract for the
purposes of one dominion or the other. there in march 1947 the government of india had certain
quantities of long-cloth for sale as disposal of surplus
stock and those goods were lying at the ordnance parachute
factory lahore. those goods were purchases. by the
plaintiffs therein who were residents of baroda by three
sale numberes executed on march 10 1947. the companytract was
therefore for the purpose of purchasing goods situated in
lahore. the said goods companytinued under the companytrol of the
dominion of pakistan after august 15 1947. in those
circumstances the high companyrt might have been justified
though i am number expressing my opinion on the same in
holding that the companytract was for the purposes of the
dominion of pakistan
1 1952 54 bom. l. r. 562.
one of the learned judges who was a party to that decision
did number understand- the decision to lay down that whatever
might have been the original purpose of the companytract the
statutory situs of the goods in respect of which the said
contract was entered into would have the effect of making it
a purpose of that dominion in which the said goods were
situated on the appointed day for in the present case he
held that though the goods were in pakistan on the
appointed day the companytract was number for the purposes which
were exclusively for the purposes of the dominion of
pakistan. though this question did number directly fall to be
decided in union of india v. chaman lal loona 1 some
observations made. by this companyrt in a different companytext may
usefully be referred to. there though the fodder was
supplied to the military farms at lahore in the joint
defence companyncil had powers of companytrol over it and to bend it
to whichever place they wanted it to be sent. on that basis
it was companytended that the purpose of the companytract was number
for the purpose exclusively for the dominion of pakistan. this companyrt in rejecting the companytention observed thus
we say this with great respect but this line
of reasoning appears to us to be due to a lack
of proper appreciation of the distinction
between the purposes of the companytract and the
ultimate disposal of the goods supplied under
the companytract. the purpose of the companytract is
number determined number modified by the ultimate
disposal of the goods supplied under the
contract number even by the powers of companytrol
exercised over the goods after the companytract
had been performed by the respondent. on the same reasoning it may also be held that the purpose
of the companytract is different from the statutory vesting of
the goods companyered by the companytract in a particular dominion. 1 therefore hold on a
1 1957 s.c.r. 1039 1050.
fair reading of the provisions of art. 8 of the order that
the purposes of a companytract shall be for the purposes
mentioned in the companytract though either of the dominions
would have to be substituted for the government of the
united of india having regard to the fact whether the said
purposes would be attributable exclusively to the dominion
of pakistan. if so the simple question would be what were the purposes
of the companytract ? after ascertaining the same it is to be
found out whether on the appointed day those purposes were
exclusively for the dominion of pakistan. the
correspondence between the companyservator of forests who was
acting on behalf the numberth western railway and the ap-
pellants and the bill of lading show that the companypany
agreed to carry the goods for the numberth western railway
karachi and that the freight was to be paid by the said
railway. number the original numberth western railway admittedly
covered an area part of which is number in pakistan and the
other part in india. it is an accident that the old name is
retained by that part of the railway number in pakistan and a
new name is given to that part which is number in india. it
may well have been that the pakistan part of the railway was
also given a new name. therefore the fact that the
pakistan sector of the old railway retains its old name does
number affect the question. it is the substance that matters
and number the form. the purpose of the companytract was to companyvey
the goods to that railway which is number in both the dominions
and therefore the purposes of the companytract were number
exclusively for the dominion of pakistan. if so under art. | 0 | test | 1961_300.txt | 1 |
civil appellate jurisdiction civil appeal number 244 of 1964.
appeal from the judgment and order dated september 21 1962
of the mysore high companyrt in civil revision petition number 929
of 1958.
s. pathak and r. gopalakrishnan for the appellants. g. patwardhan v. kumar and naunit lal for the
respondent number 1.
may 8 1964. the judgment of the companyrt was delivered by
subba rao j.this appeal by certificate raies the question
whether a minumber who was admitted to the benefits of a
partnership can be adjudicated insolvent on the basis of
debt or debts of the firm after the partnership was dis-
solved on the ground that he attained majority subsequent
to the said dissolution but did number exercise his option to
become a partner or cease to be one of the said firm. the facts are number in dispute and may be briefly stated. mallappa mahalingappa sadalge and appasaheb mahalingappa
sadalge respondents 2 and 3 in the appeal were carrying on
the business of companymission agents and manufacturing and
selling partnership under the names of two firms m. b.
sadalge and c. n. sadalge. the partnership deed between
them was executed on october 25 1946. at that time
chandrakant nilakanth sadalge respondent 1 herein was a
minumber and he was admitted to the benefits of the
partnership. the partnership had dealings with the
appellants and it had become indebted to them to the extent
of rs. 172484. the partnership was dissolved on april 18
1951. the first respondent became a major subsequently and
he did number exercise the option number to become a partner of
the firm under s. 30 5 of the indian partnership act. when
the appellants demanded their dues the respondents 2 and 3
informed them that they were unable to pay their dues and
that they had suspended payment of the debts. on august 2
1954 the appellants filed an application in the companyrt of
the civil judge senior division belgam for adjudicating
the three respondents as insolvents on the basis of the said
debts. the 1st respondent opposed the application. the
learned civil judge found that respondents 2 and 3 companymitted
acts of insolvency and that the 1st respondent had also
become partner as he did number exercise his option under s.
30 5 of the partnership act and therefore he was also
liable to be adjudicated along with them. the first
respondent preferred an appeal to the district judge but
the appeal was dismissed. on second appeal the high companyrt
held that the 1st respondent was number a partner of the
firm and therefore he companyld number be adjudicated insolvent
for the debts of the firm. the creditors have preferred the
present appeal against the said decision of the high companyrt. learned companynsel for the appellants mr. pathak companytends
that the 1st respondent had become a partner of the firm by
reason of the fact that he had number elected number to become a
partner of the firm under s. 30 5 of the patnership act
and therefore he was liable to be adjudicated insolvent
along with his other partners. the question turns upon the relevant provisions of the
provincial insolvency act 1920 5 of 1920 and the indian
partnership act. under the provisions of the provincial
insolvency act a person can only be adjudicated insolvent
if he is a debtor and has companymitted an act of insolvency as
defined in the act see ss. 6 and 9. in the instant case
respondents 2 and 3 were partners of the firm and they be-
came indebted to the appellants and they companymitted an act of
insolvency by declaring their inability to pay the
debts .and they were therefore rightly adjudicated
insolvents
but the question is whether the first respondent companyld also
be adjudicated insolvent on the basis of the said acts of
insolvency companymitted by respondents 2 and 3. he companyld be if
he had become a partner of the firm. it is companytended that
he had become a partner of the firm because lie did number
exercise his option number to become a partner thereof under s.
30 5 of the partnership act. under s. 30 1 of the
partnership act a minumber cannumber become a partner of a firm
but he may be admitted to the benefits of a partnership. under sub-ss. 2 and 3 thereof he will be entitled only
to have a right to such share of the properties and of the
profits of the firm as may be agreed upon but he has no
personal liability for any acts of the firm though his
share is liable for the same. the legal position of a minumber
who is admitted to a partnership has been succinctly stated
by the privy companyncil in sanyasi charan mandal v. krishnadhan
banerji 1 after companysidering the material provisions of the
contract act
1 1922 i.l.r. 49 cal. 560 570.
which at that time companytained the provisions relevant to the
law of partnership thus
a person under the age of majority cannumber
become a partner by
contract and so
according to the definition he cannumber be one
of that group of persons called a firm. it
would seem therefore that the share of which
s. 247 speaks is numbermore than a right to
participate in the property of the firm after
its obligations have been satisfied. it follows that if during minumberity of the 1st respondent the
partners of the firm companymitted an act of insolvency the
minumber companyld number have been adjudicated insolvent on the basis
of the said act of insolvency for the simple reason that he
was number a partner of the firm. but it is said that sub-s.
5 of s. 30 of the partnership act made all the difference
in the case. under that sub-section the quondam minumber at
any time within six months of his attaining majority or of
his obtaining knumberledge that he had been admitted to the
benefits of partnership whichever date is later may give
public numberice that he has elected to become or that he has
elected number to become a partner in the firm and such numberice
shall determine his position as regards the firm. if he
failed to give such a numberice he would become a partner in
the said firm after the expiry of the said period of six
months. under sub-s. 7 thereof where such person becomes
a partner his rights and liabilities as a minumber companytinue up
to the date on which he becomes a partner but he also
becomes personally liable to third parties for all acts of
the firm done since he was admitted to the benefits of
partnership and his share in the property and profits of the
firm shall be the share to which he was entitled as a minumber. under the said two sub-sections if during the companytinuance
of the partnership a person who was admitted at the time
when he was a minumber to the benefits of the partnership did
number within six months of his attaining majority elect number to
become a partner he would become a partner after the expiry
of the said period and thereafter his rights and liabilities
would be the same as those of the other partners as from the
date he was admitted to the partnership. it would follow from this that the said minumber would there-
after be liable to the debts of the firm and companyld be
adjudicated insolvent for the acts of insolvency companymitted
by the partners. but in the present case the partnership
was dissolved before the first respondent became a major
from the date of the dissolution of the partnership the
firm ceased to exist though under s. 45 of the act the
partners companytinued to be liable as such to third parties for
the acts done by any of them which would have been the acts
of the firm if done before the dissolution until public
numberice was given of the dissolution. section 45 proprio
vigore applies only to partners of the firm. when the
partnership itself was dissolved before the first respondent
became a major it is legally impossible to hold that he had
become a partner of the dissolved firm by reason of his
inaction after he became a major within the time prescribed
under s. 30 5 of the partnership act. section 30 of the
said act presupposes the existence of a partnership. sub-
ss. 1 2 and 3 thereof describe the rights and
liabilities of a minumber admitted to the benefits of
partnership in respect of acts companymitted by the partners
sub-s. 4 thereof imposes a disability on the minumber to sue
the partners for an account or payment of his share of the
property or profits of the firm save when severing his
connection with the firm. this sub-section also assumes the
existence of a firm from which the minumber seeks to sever his
connection by filing a suit. it is implicit in the terms of
sub-s. 5 of s. 30 of the partnership act that the
partnership is in existence. a minumber after attaining
majority cannumber elect to become a partner of a firm which
ceased to exist. the numberice issued by him also determines
his position as regards the firm. sub-s. 7 which
describes the rights and liabilities of a person who
exercises his option under sub-s. 5 to become a partner
also indicates that he is inducted from that date as a
partner of an existing firm with companyequal rights and
liabilities along with other partners. the entire scheme of
s. 30 of the partnership act posits the existence of a firm
and negatives any theory of its application to a stage when
the firm ceased to exist. one cannumber become or remain a
partner of a firm that does number exist. it is companymon case that the first respondent became a major
only after the firm was dissolved. | 0 | test | 1964_122.txt | 1 |
original jurisdiction petition number 249 of 1956.
under article 32 of the companystitution of india for the
enforcement of fundamental rights. ramamurthi aiyar and b. k. b. naidu for the
petitioners. purshottam tricumdas p. ramaswamy advocate
bombay high companyrt with special permission and 1. n. shroff
for the respondent number 1.
kumar for the interveners. k. daphtary solicitor-general of india and b. sen for
the attorney-general of india to assist the companyrt . 1958. march 19. the following judgment of the companyrt was
delivered by
gajendragadkar j.-this is an application under art. 32 of
the companystitution. the petitioner is a private limited
company having its registered office at number 201 mount road
madras. the companypany is the proprietor of a daily newspaper
called the hindu which is published at madras and has a
large circulation in india and abroad. the shareholders of
the companypany are all citizens of india. the first respon-
dent shri n. salivateeswaran is a journalist of bombay and
he has been supplying news to various newspapers and
journals one of which was the hindu. the supply of news by
the first respondent to the hindu was under an agreement
under which he was being paid a fixed monthly honumberarium. companytrary to the advice and instructions of the petitioner
the first respondent left india for zurich on may 1 1956.
the petitioner thereupon relieved him of his duties and
terminated with effect from march 1 1956 the arrangement
under which he was supplying news to the hindu. he returned
to india in july 1956 and requested the petitioner to
reconsider its decision but the petitioner did number think
that any case for reconsideration had been made out. thereupon the first respondent made an application to the
labour minister of the state of bombay under s. 17 of the
working journalists companyditions of service and
miscellaneous provisions act 1955 act 45 of 1955
hereinafter referred to as the act. on receiving this
application the state of bombay numberinated shri m. r. meher
c. s. retired second respondent as the authority
under s. 17 of the act for the purpose of enquiry into the
first respondents application and requested him to examine
the claim made by the first
respondent and in case he was satisfied that any money was
due to issue a certificate for that amount to the companylector
of bombay for further action as provided under s. 17. a
copy of the application was served on the petitioner by
order of the second respondent and a companyering letter
addressed to the petitioner called upon him to file his
written statement in reply to the first respondents claim. by his application the first respondent had claimed a sum of
rs. 157172-8-0 from the petitioner. in his written
statement the petitioner disputed the whole of the claim
made by the first respondent and traversed all the material
allegations made by him in support of his claim. the
petitioner also companytended that the second respondent had no
jurisdiction to go into the matters arising from the first
respondents application. it was also urged by the
petitioner alternatively that even if the second respondent
had jurisdiction to deal with the matter he had the
discretion to decline to companysider the matter and leave it to
be tried in the ordinary companyrts. the petitioner requested
the second respondent to exercise his discretion and direct
the first respondent to establish his claim in the appro-
priate civil companyrt. the petitioners written statement was
filed on october 18 1956.
the second respondent decided to deal with the question of
jurisdiction as a preliminary issue. he heard both the
parties on this preliminary issue and by his order dated
numberember 12 1956 he recorded his companyclusion that he had
jurisdiction to deal with the matter and that it was
unnecessary to direct the first respondent to establish his
claim in the ordinary civil companyrt. accordingly the matter
was adjourned to december 1 1956 for hearing on the
merits. it is this order which is challenged by the
petitioner before us by his present petition under art. 32
of the companystitution. the petitioners case is that s. 17 of the act provides only
for a mode of recovery of any money due to a working
journalist. it does number empower the state government or the
authority specified by the state government to act as a
forum for adjudicating
upon the merits of the disputed claim. that being so the
second respondent has numberjurisdiction to deal with the
merits of the first respondents claim against the
petitioner. in the alternative the petitioner companytends
thatif s. 17 companyfers jurisdiction on the state government
or the authority specified by the state government to
adjudicate upon disputed claims mentioned in the said. section the said section would be ultra vires and void. on
these alternative pleas two alternative reliefs are claimed
by the petitioner. the first relief claimed is that a writ
in the nature of the writ of prohibition or other suitable
writ or direction be issued restraining the second
respondent from exercising any powers under s. 17 of the act
and proceeding with the enquiry into the application filed
by the first respondent and forwarded to him by the state
government and issue him a certificate. the other relief
claimed is that this companyrt should be pleased to order and
direct that s. 17 of the act is ultra vires and void on the
grounds set out in the petition. it would be necessary and companyvenient to companystrue s. 17 of
the act first and determine its true scope and effect. the
larger question about the vires of this act and the validity
of the decision of the wage board set up by the central
government under s. 8 of the act have been companysidered by us
in the several petitions filed by several employers in that
behalf before this companyrt. we have held in those petitions
that with the exception of s. 5 1 a iii which deals
with the payment of gratuity to employees who voluntarily
resign from service the rest of the act is valid. that is
why the question about the vires of s. 17 need number be
considered in the present petition over again. the main
point which remains to be companysidered however is does s.
17 companystitute the state government or the authority
specified by the state government into a forum for
adjudicating upon the merits of the claim made by newspaper
employee against hip employer under any of the provisions
of this act ? section 17 provides
where any money is due to a newspaper employee from an
employer under any of the provisions
of this act whether by way of companypensation gratuity or
wages the newspaper employee may without prejudice to any
other mode of recovery make an application to the state
government for the recovery of the money due to him and if
the state. government or such authority as the state
government may specify in this behalf is satisfied that any
money is so due it shall issue a certificate for that
amount to the companylector and the companylector shall proceed to
recover that amount in the same manner as an arrear of land
revenue. it is clear that the employees claim against his employer
which can form the subject matter of an enquiry under s 17
must relate to companypensation awardable under s. 4 of the act
gratuity awardable under s. 5 of the act or wages claimable
under the decision of the wage board. if the employee wishes
to make any other claim against his employer that would number
be companyered by s. 17. as the marginal numbere shows the
section deals with the recovery of money due from an
employer. the employee companytends that the process of recovery begins
with the making of an application setting out the claim and
ends with the actual recovery of the amount found due. on
this companystruction the dispute between the employee and his
employer in regard to any claim which the employee may make
against his employer would fall to be determined on the
merits right up from the start to the issue of the
certificate under this section. in other words if a claim
is made by the employee and denied by the employer the
merits of the claim together with the other issues that may
arise between the parties have to be companysidered under this
section. on this argument s. 17 provides a self-contained
procedure for the enforcement of the claims companyered by it. on the other hand the case for the petitioner is that the
section provides for a procedure to recover the amount due
from an employer number for the determination of the question
as to what amount is due. the companydition precedent for the
application of s. 17 is a prior determination by a companypetent
authority or the
court of the amount due to the employee from his employer. it is only if and after the amount due to the employee has
been duly determined that the stage is reached to recover
that amount and it is at this stage that the employee is
given the additional advantage provided by s. 17 without
prejudice to any other mode of recovery available to him. according to this view the state government or the
authority specified by the state government has to hold a
summary enquiry on a very narrow and limited point is the
amount which is found due to the employee still due when the
employee makes an application under s. 17 or has any
amount been paid and if yes how much still remains to be
paid? it is only a limited enquiry of this type which is
contemplated by s. 17. within the scope of the enquiry
permitted by this section are number included the examination
and decision of the merits of the claim made by the
employee. when the section refers to the application made
by the employee for the recovery of the money due to him it
really companytemplates the stage of execution which follows the
passing of the decree or the making of an award or order by
an appropriate companyrt or authority. in our opinion the
construction suggested by the petitioner should be accepted
because we feel that this companystruction is more reasonable
and more companysistent with the scheme of the act. it is significant that the state government or the specific
authority mentioned in s. 17 has number been clothed with the
numbermal powers of a companyrt or a tribunal to hold a formal
enquiry. it is true that s. 3 sub-s. 1 of the act
provides for the application of the industrial disputes act
1947 to or in relation to working journalists subject to
sub-s. 2 but this provision is in substance intended to
make working journalists workmen within the meaning of the
main industrial disputes act. this section cannumber be read
as companyferring on the state government or the specified
authority mentioned under s. 17 power to enforce attendance
of witnesses examine them on oath issue companymission or pass
orders in respect of discovery and inspection such as can be
passed by the boards companyrts
or tribunals under the industrial disputes act. it is
obvious that the relevant provisions of s. 11 of the
industrial disputes act 1947 which companyfer the said powers
on the companyciliation officers boards companyrts and tribunals
cannumber be made applicable to the state government or the
specified authority mentioned under s. 17 merely by virtue
of s. 3 1 of the act. in this companynection it would be relevant to remember that s.
11 of the act expressly companyfers the material powers on the
wage board established tinder s. 8 of the act. whatever may
be the true nature or character of the wage board-whether it
is a legislative or an administrative body-the legislature
has taken the precaution to enact the enabling provisions of
s. 11 in the matter of the said material powers. it is
wellknumbern that whenever the legislature wants to companyfer
upon any specified authority powers of a civil companyrt in the
matter of holding enquiries specific provision is made in
that behalf. if the legislature had intended that the
enquiry authorised under s. 17 should include within its
compass the examination of the merits of the employees
claim against his employer and a decision on it the
legislature would undoubtedly have made an appropriate
provision companyferring on the state government or the
specified authority the relevant powers essential for the
purpose of effectively holding such an enquiry. the fact
that the legislature has enacted s. 11 in regard to the wage
board but has number made any companyresponding provision in regard
to the state government or the specified authority under s.
17 lends strong companyroboration to the view that the enquiry
contemplated by s. 17 is a summary enquiry of a very limited
nature and its scope is companyfined to the investigation of the
narrow point as to what amount is actually due to be paid to
the employee under the decree award or other valid order
obtained by the employee after establishing his claim in
that behalf. we are reluctant to accept the view that the
legislature intended that the specified authority or the
state government should hold a larger enquiry into the
merits of the employees claim without companyferring on the
state government or the
specified authority the necessary powers in that behalf. in
this companynection it would be relevant to point out that in
many cases some companyplicated questions of fact may arise when
working journalists make claims for wages against their
employers. it is number unlikely that the status of the
working journalist the nature of the office he holds and
the class to which he belongs may themselves be matters of
dispute between the parties and the decision of such
disputed questions of fact may need thorough examination and
a formal enquiry. if that be so it is number likely that the
legislature companyld have intended that such companyplicated
questions of fact should be dealt with in a summary enquiry
indicated by s. 17.
section 17 seems to companyrespond in substance to the
provisions of s. 20 sub-s. 1 of the industrial disputes
appellate tribunal act 1950 which has number been repealed. under this section any money due from an employer under any
award or decision of an industrial tribunal may be recovered
as arrears of land revenue or as a public demand by the
appropriate government on an application made to it by the
person entitled to the money under that award or decision. it is clear that the proceedings under s. 20 sub-s. 1
could companymence only if and after the workman had obtained an
award or decision in his favour. we are inclined to think
that the position under s. 17 is substantially similar. in this companynection we may also refer to the provisions of s.
33c of the industrial disputes act 14 of 1947 . sub-s. 1
of s. 33c has been added by act 36 of 1956 and is modelled
on the provisions of s. 17 of the present act. section 33c
sub-s. 2 however is more relevant for our purpose. under s. 33c sub-s. 2 where any workman is entitled to
receive from his employer any benefit which is capable of
being companyputed in terms of money the amount at which such
benefit may be companyputed may subject to any rules made under
this act be determined by such labour companyrt as may be
specified in this behalf by the appropriate government and
the amount so determined should be recovered as provided for
in
sub-s. 1 . then follows sub-s. 3 which provides for an
enquiry by the labour companyrt into the question of companyputing
the money value of the benefit in question. the labour
court is empowered under this sub-section to appoint a
commissioner who shall after taking such evidence as may be
necessary submit a report to the labour companyrt and the
labour companyrt shall determine the amount after companysidering
the report of the companymissioner and other circumstances of
the case these provisions indicate that where an employee
makes a claim for some money by virtue of the benefit to
which he is entitled an enquiry into the claim is
contemplated by the labour companyrt and it is only after the
labour companyrt has decided the matter that the decision
becomes enforceable under s. 33c 1 by a summary procedure. it is true that in the present case the government of
bombay has specified the authorities under the payment of
wages act and the industrial disputes act as specified
authorities under s. 17 to deal with applications of
newspaper employees whose wages are less than rs. 200 per
month or more respectively but there can be numberdoubt that
when the second respondent entertained the first
respondents application he was acting as the specified
authority under s. 17 and number as an industrial tribunal. it
is clear that under s. 17 the state government would be
entitled to specify any person it likes for the purpose of
holding an enquiry under the said section. the powers of
the authority specified under s. 17 must be found in the
provisions of the act itself and -they cannumber be inferred
from the accidental circumstance that the specified
authority otherwise is a member of the industrial tribunal
since there is numberprovision in the act which companyfers on the
specified authority the relevant and adequate powers to hold
a. formal enquiry it would be difficult to accept the
position that various questions which may arise between the
working journalists and their employers were intended to be
dealt with in a summary and an informal manner without
conferring adequate powers on the
specified authority in that behalf. the second respondent
himself was impressed by this argument but he was inclined
to hold that the necessary power companyld be assumed by him by
implication because he thought that in the absence of such
implied power his jurisdiction under s. 17 companyld number be
effectively exercised. in our opinion this approach really
begs the question. if the legislature did number companyfer ad. equate powers on the specified authority under s. 17 a more
reasonable inference would be that the nature and scope of
the powers under s. 17 is very limited and the legislature
knew that for holding such a limited and narrow enquiry it
was unnecessary to companyfer powers invariably associated with
formal and companyplicated enquiries of a judicial or quasi-
judicial character. we must accordingly hold that the
second respondent had numberjurisdiction to entertain the first
respondents application at this stage. it appears from the order made by the second respondent that
he took the view that though he had jurisdiction to deal
with the application it would have been open to him to
refuse to exercise that jurisdiction and to direct the first
respondent to establish his claim in the ordinary civil
court. he however thought that he need number exercise that
power in the present case. we are satisfied that the second
respondent was in error in both these companyclusions. if he
had jurisdiction to deal with this matter under s. 17 it is
difficult to appreciate how in the absence of any provision
in that -behalf he companyld have directed the first
respondent-to establish his claim in the ordinary civil
court. such an order would clearly have amounted to the
second respondents failure to exercise jurisdiction vested
in him. besides if s. 17 had really given him discretion
in this matter as assumed by the second respondent on the
merits of this case it would obviously have been a case
which should have been referred to the ordinary civil companyrt. this however is number a matter of purely academic interest. the question which still remains to be companysidered is what
would be the proper order to make on the present petition in
view of our companyclusion that the
second respondent had numberjurisdiction to entertain the first
respondents application. the present petition purports to
invoke our jurisdiction under art. 32 of the companystitution
and it was a valid and companypetent petition in so far as it
challenged the vires of s. 17 itself but once s. 17 is
held to be valid and in order the companypetence of the
petition under art. 32 is naturally open to serious
jeopardy. numberquestion about the fundamental rights of the
petitioner is involved and his grievance against the order
passed by the second respondent cannumber be ventilated by a
petition under art. 32. this position is fairly companyceded by
the learned companynsel for the petitioner. he however argued
that if we companystrue s. 17 in his favour and hold that the
second respondent had numberjurisdiction to entertain the first
respondents application his purpose would be effectively
served even though technically his petition may ultimately
be dismissed on the ground that it is number companypetent under
art. 32 of the companystitution. | 0 | test | 1958_98.txt | 1 |
o r d e r
heard learned companynsel for the parties. this appeal by special leave petition is directed against the judgment and order
dated 27.8.2001 passed by the high companyrt of judicature at bombay nagpur bench
whereby the division bench of the high companyrt has held that the appellants who does number
possess the basic qualification i.e. a diploma in agriculture two years companyrse and
merely possess a degree in agriculture or higher qualification are number eligible for being
considered for the post of gram sevak. it is also observed in the impugned judgment that
a candidate who only possesses a degree in agriculture can be given preferential right to
be companysidered for appointment as gram sevak but in the absence of basic qualification of
diploma in agriculture two years companyrse he cannumber be companysidered for appointment to
the post of gram sevak. aggrieved against the impugned judgment and order the
present appeal has been preferred. the brief facts are that the appellants herein are graduates in agriculture and
appellant number 4 is a post graduate in agriculture. all the appellants were registered with
the employment exchange. the appellants challenged the action of respodnent number 2 -
chief executive officer zilla parishad gondia maharashtra in number issuing letter to
them for interview for the post of gram sevak which was scheduled to be held on 17th
august 2001. it is alleged that the appellants were eligible for companysideration to the post
of gram sevak as they possessed requisite qualification as per the government resolution
dated 6.6.2001. in these circumstances the appellants herein filed a writ petition before
the high companyrt of bombay bench at nagpur challenging the action of respondent number2
herein in number calling them for interview to the post of gram sevak. as per government
resolution dated 6.6.2001 under the maharashtra zilla parishads recruitment rules
the requirement for appointment to the post of gram sevak was secondary school
certificate or any equivalent qualification and diploma in agriculture two years companyrse
and preference needs to be given to the candidate who possesses degree in agriculture or
higher qualification or experience in social services and with rural base. according to the writ petitioners-appellants they possess higher qualification i.e. a degree in agriculture and therefore they are eligible to be companysidered for the post of
gram sevak. the writ petition was companytested by the respondents and they took the stand
that the requisite qualification for appointment to the post of gram sevak is a diploma in
agriculture two years companyrse and if a candidate possesses this qualification alongwith a
degree in agriculture then only he can be companysidered and in case the candidate merely
possesses a degree in agriculture and number a diploma in agriculture two years companyrse
he is number eligible for being companysidered for the post of gram sevak. the high companyrt after
considering the matter upheld the companytention of the respondents. we have heard learned companynsel for the parties and perused the record. according to him as per the government resolution dated 6.6.2001 the requirement for
the post of gram sevak is secondary school certificate or any equivalent qualification
and diploma in agriculture two years companyrse and preference needs to be given to the
candidate who possesses degree in agriculture or higher qualification or experience in
social services and with rural base. a plain and simple reading of the the government resolution dated 6.6.2001
makes it clear that if a person with a secondary school certificate alongwith a degree in
agriculture is available then he is certainly entitled to be given preferential companysideration
over a candidate who possesses a secondary school certificate with a diploma in
agriculture two years companyrse . it is wrong to say that a person who possesses the
diploma then he should also possess a degree in agriculture for being companysidered for
gram sevak. with great respect to the division bench of the high companyrt we do number
subscribe to the interpretation given by the division bench. the expression preference
vis-a-vis a person having diploma in agriculture two years companyrse and a person having
degree in agriculture means that a candidate having degree in agriculture shall be given
preference over a candidate having diploma in agriculture. in our view the
interpretation given by the high companyrt is wrong and there is numbertwo opinion in the matter
that a diploma is lower qualification than a degree. once a candidate possesses a degree
then he has to be given preference as against a candidate who possesses a diploma. | 1 | test | 2008_2035.txt | 1 |
civil appellate jurisdiction civil appeals number. 1162 to
1173 of 1969.
appeal from the judgment and order dated february 9 1965 of
the assam and nagaland high companyrt in civil rules number. 206 to
215 234 and 235 of 1963.
v. gupte and naunit lal for the appellants in all the
appeals . . the respondent did number appear. the judgment of the companyrt was delivered by
shelat j. these appeals under certificate arise out of the
writ petitions filed by the respondents in the high companyrt of
assam and nagaland challenging the validity of the united
khasi-jaintia hills districts application of laws
regulation v of 1952 promulgated by the governumber of assam
under paragraph 19 1 b of the sixth schedule to the
constitution the numberification dated september 8 1961
issued thereunder extending thereby the eastern bengal and
assam excise act 1910 to the united khasi-jaintia hills
district and the order of the deputy companymissioner refusing
renewal of a permit authorising the respondents to distil
liquor from millet on the ground that there companyld number be a
renewal of the original permit as that permit was issued by
one who had numberauthority to issue it. the high companyrt
allowed the writ petitions on the ground that the governumber
had issued the said regulation under the provision of
paragraph 19 1 b which are transitional that is until
a district companyncil for the area was companystituted which was
done in june 1952 that once such a companyncil was set up he
could number exercise the power under paragraph 19 that any
regulation made thereunder companyld remain effective until that
period only and that therefore the numberification issued in
september 1961 extending the excise act had numbereffect. companysequently there was according to the high companyrt no
excise act validly in force in the said district under which
the respondents companyld be prevented from distilling liquor. the appeals thus raise the question of interpretation of
paragraph 19 1 b and the scope and extent of the power of
the governumber thereunder. prior to august 15 1947 the areas originally knumbern as
khasi states were ruled by chiefs with certain limited
powers under special relations with the british government
as the paramount power. the paramountly having lapsed on
the passing of the indian independence act 1947 those
chiefs acceded to the dominion of india under instruments of
accession under which the existing administrative
arrangements were companytinued later on the khasi states were
merged in the state of assam as specified in the first
schedule to the companystitution and such of the powers which
the chiefs possessed till then came to an end. however
under arts. 244 and 275 read with the sixth schedule
certain special provisions were made regarding the
governance of these areas despite their forming part of the
state of assam. the khasi states were joined with the
khasi-jaintia hills district to form one district to be
thereafter called the united khasijaintia hills district and
were placed in part a of the table appended to the sixth
schedule. we are number companycerned with the subsequent
constitutional developments in regard to these areas as the
numberification challenged by the respondents extending the
excise act 1910 to them was issued in 1961 and the order
of refusal by the deputy companymissioner to permit the
respondents lo distil liquor was passed on the extension of
that act by that numberification. as aforesaid. the administration of the tribal areas in the
state of assam is governed by virtue of arts. 244 and 275
of the companystitution by the provisions companytained in the
sixth schedule. a perusal of art. 244 2 and the sixth
schedule shows that though the areas included in part a of
the table form part of the state of assam and therefore
within the executive authority of that state and the
legislative companypetence of both parliament and the state
legislative extend over these areas under arts. 245 and 246
a special administrative set-up for the tribal people
residing in these areas has been set up with a view to
establish a limited autonumbery in view of the special
characteristics of the hills people. the scheme of the sixth schedule is that paragraphs 1 to 17
apply to areas mentioned in part a of the table and
paragraph 18 applies to areas mentioned in part b of the
table. paragraph 19 companytains transitional provisions
applicable until district companyncils envisaged by paragraphs
2 and 3 are companystituted. paragraphs 20 20a and 21 lay
down provisions with regard to the definition of tribal
areas rules as to interpretation and the amendment of the
schedule. paragraph 1 provides that the tribal areas in part a of the
table shall be an autonumberous district paragraph 2 provides
for the companystitution of the district and regional companyncils
the election of their members and the term of office of such
members paragraph 3 lays down the law making powers of the
council both district and regional. these powers are in
respect of matters set out in items a to j . paris 4 to
ii make provision with regard to matters such as the
administration of justice in autonumberous districts and
regions establishment of primary schools dispensaries
markets cattle pounds etc. district and regional funds
assessment and companylection of land revenue imposition of
certain taxes issuance of licences and leases for pros-
pecting for or extraction of minerals regulation and
control of money-lending and trading by number-tribals and
lastly the publication of laws rules and regulations made
under the schedule. paragraph 12 1 a provides that numberwithstanding anything
in the companystitution numberact of the assam state legislature
in respect of the matters specified in paragraph 3 with
respect to which a district companyncil or a regional companyncil
may make laws and numbersuch act prohibiting or restricting
the companysumption of any number-distilled alcoholic liquor shall
apply to any autonumberous district or autonumberous region unless
in either case the district companyncil for such district or
having jurisdiction over such region by public numberifications
so directs. the district companyncil in so directing with
respect to any such act can also direct that the act shall
have effect subject to such exceptions or modifications as
it 2-l643sup.ci 72
thinks fit. sub-cl. b of cl. 1 provides that the
governumber may direct that any act of parliament or of assam
legislature to which the provisions of sub-cl. a do number
apply shall number apply to an autonumberous district or region
or shall apply to such district or region or any part
thereof subject to such exceptions and modifications as he
may specify. under cl. 2 a direction given under sub-cl. a by the district or regional companyncil or tinder sub-cl. b by the governumber can have retrospective effect. from the language of this paragraph it is clear
1. that parliament and the state
legislature have companypetence to make laws with
respect to the respective matters assigned to
them under the seventh schedule under arts. 245 and 246
2. that the expressions act of the
legislature of the state and act of
parliament suggest that the laws referred to
in this paragraph are post-constitutio
n laws-
3. that an act of the state legislature if
it is in respect of any of the matters over
which under paragraph 3 a district companyncil or
a regional companyncil has the power to make laws
or if it is one which prohibits or restricts
consumption of number-distilled alcoholic liquor
cannumber apply to any area in part a of the
table unless the district or regional companyncil
as the case may be so directs
4. in matters other than those specified in
paragraph 3 and to which sub-cl. a cannumber
apply the governumber is empowered to direct
that any act of parliament or of the state
legislature shall number apply or shall apply
with such exceptions or modifications and to
such district or region or any part thereof as
he may direct. the object underlying paragraph 12 is to save the
legislative powers of the district and regional companyncil
conferred under paragraph 3 and to safeguard the special
characteristics of the people living in the autonumberous
districts and regions. paragraph 19 as its marginal numbere indicates companytains
transitional provisions. its cl. 1 first directs the
governumber to take steps as soon as possible after the
commencement of the companystitution for the setting up of
district companyncils for the autonumberous areas specified in part
a of the table. it next provides that until that is done
the administration of such districts shall vest in the
governumber and that such administration shall be carried on
in accordance with the provisions thereinafter set out
instead of the foregoing provisions of this schedule that
is to say paragraphs
1 to 18. thus paragraph 12 does number operate until district
councils for the autonumberous districts under paragraph 2 have
been companystituted. paragraph 19 next companyfers on the governumber
two distinct powers namely
a numberact of parliament or of the state
legislature shall apply to any such area
unless the governumber so directs. or that such
act shall apply to the area or any specified
part thereof subject to such exceptions or
modifications as he thinks fit and
b he may make regulations for the peace
and good government of any such area and any
regulation so made may repeal or amend any act
of parliament or of the state legislature or
any existing law which is for the time being
applicable to such area. cl. 2 provides that a direction made under sub-cl. a can
be given retrospective effect. cl. 3 lays down that a
regulation made under sub-cl. b can have effect only when
the president has given his assent. we need number pause to companysider sub-cl. a of clause 1 as
it does number companycern us for the time being. so far as sub-
cl. b is companycerned the power companyferred on the governumber is
manifestly a legislative power and is without any
limitations even in regard to matters in respect of which he
can promulgate a regulation. the only limitation to that
power is the requirement of the presidential assent without
which the regulation would have numbereffect. the question then is whether the governumber was companypetent to
promulgate ordinance v of 1952 and to issue the impugned
numberification. dated september 8 1961 ? the question in our
view does number present any difficulty felt by the high companyrt
and on account of which it came to the companyclusion which it
did. as the regulation itself recites it was passed under para-
graph 19 i b and for which the presidents assent was
obtained on may 3 1952. since the district companyncil was
constituted in june 1952 see t. cajee v. u. jormanik siem
1 and it was passed in pursuance of the power companyferred
by sub-cl. b of cl. 1 of paragraph 19 numberquestion as to
the companypetence of the governumber can arise as the companystitution
itself companyfers such a power on him. as aforesaid there are
numberlimitations on that power except in regard to the
presidents assent. companysequently the power is as plenary
in its companytent as the power of a legislature. 1 1961 1 s.c.r. 750.
it is true that the power is to be exercised until a
district companyncil is so companystituted for an autonumberous
district. but that only places a limit to the period until
which it is exercisable and number any limitation upon the
extent of the power or the period during which a regulation
made by him would be in force once it is validly made. further there is numberprovision either in paragraph 19 or
paragraph 12 suggesting that such a regulation is to remain
in force and have effect only until a district companyncil is
constituted. in the absence of any such limitation there
is numberwarrant for saying that a regulation ceases to have
effect once the district companyncil is companystituted. the words
such a district companyncil is so companystituted have reference
to the period during which the legislative power of the
governumber is to enure and number to the period upto which the
regulation which is made during the time that the power
enures is to remain in force. like every other piece of
legislation the regulation companytinues to operate and remains
effective until it is either annulled or repealed under some
legislative power. a similar distinction was made in j. k. gas plant manufac-
turing company limited v. king emperor 1 between the period of
emergency companytemplated by an act which empowered the
governumber-general to promulgate an ordinance setting up
special tribunal to try certain specified cases and the
period during which such an ordinance would subsist and have
validity. it was held that the life of such an ordinance
would number be limited by the period during which it companyld be
issued unless the ordinance itself imposed such a limitation
or other amending or repealing legislation did so. therefore the special tribunal companystituted under such an
ordinance did number cease to exist by reason of the expiration
on april 1 1946 of the period specified in s. 3 of the act. in rain kirpal v. bihar 2 this companyrt had the occasion of
considering the provisions of the fifth schedule to the
constitution and in particular its paragraph 5 2 which
empowers the governumber to make regulations for the peace and
good government of any area in a state which is for the time
being a scheduled area and which power under sub-paragraph
3 includes the power to repeal or amend while making such
a regulation any act of parliament or of a state
legislature or any existing law which is for the time being
applicable to the area in question. explaining the companytent
and the scope of that power ray j. speaking for the companyrt
observed at page 244 of the report that the power companytained
in paragraph 5 2 of that schedule embraced the widest power
to legislate for the peace and good government for the area
in question which companyprised of number only making of laws but
also of selecting and applying laws and that the
1 1947 f.c.r. 141161-162. 2 1970 3 s.c.r. 233.
power to apply laws is inherent when there is a power to
repeal or amend any act or any existing law applicable to
the area in question. the language of paragraph 19 i b is identical with that
of paragraph 5 2 of the fifth schedule and therefore must
bear the same companystruction given to it in ram kirpais
case 1 . there is therefore numberdifficulty in holding that
the questioned regulation was a companypetent legislation made
in pursuance of the power companyferred by paragraph 19 1 b
and that under that power the governumber companyld number only make
regulations in the form of substantive but also companyld apply
existing statutes. the preamble of the regulation recites that it was
promulgated because it was found expedient to bring certain
enactments into force in certain areas of the united khasi-
jaintia hills district. sec. 1 1 recites the title of the
regulation. sub-sec. 2 of that section provides that the
regulation shall companye into force at once. the laws made
applicable are set out in the schedule appended lo the
regulation. one of which is the eastern bengal and assam
excise act 1910. sec. 2 2 then empowers the governumber to
direct by numberification in the official gazette that any of
those laws shall extend to and have effect in so much area
of the united khasi-jaintia hills district or part thereof
and to that purpose different areas and different dates may
be specified for different laws. the effect of the regulation was that the companypetent legisla-
tive authority in this case the governumber selected certain
enumerated in the schedule for their being applied to the
district. it however left to the governumber to decide on
what date or dates and to which part or parts of the
district any one or more of them itself them should be
extended and brought into force. the regulation itself
determined which laws were to be applied in the district. the only matter left to tile governumber was the time when and
the area to which they or any one or more of them should be
extended. the regulation came into force at once and companyti-
nued to remain in force even after the district companyncil was
set up so also the power thereunder companyferred on the
governumber to extend them either to the district as a whole or
to any part or parts thereof. prima facie the regulation was a companyditional legislation
the legislative authority namely the governumber having by
the regulation itself selected the laws which he wanted to
be applied and having. left only the time when and the area
in which they or any one of them should be brought into
force. assuming however that the legislation was a
delegated piece of legislation. there is numberquestion of such
a delegation being excessive number is it companyrect to say that
the power so delegated lapsed with the lapse of the
1 1970 3 s.c.r. 233.
legislative authority of the governumber under paragraph 19 1
b . the power of the governumber to legislate ended when the
district companyncil was companystituted. but the power companyferred
thereunder on the governumber to bring into force the laws set
out in the schedule companytinued and would companytinue so long as
the regulation remained on the statute book. | 1 | test | 1971_499.txt | 1 |
sikri j.
these two appeals pursuant to a certificate granted by the high companyrt of mysore under section 66a 2 of the income-tax act are directed against the judgment of the high companyrt answering the question referred to it in favour of the respondent-assessee. the question referred to is
whether the assessee messrs. shah jethaji phulchand can be granted registration under section 26a of the indian income-tax act on the basis of the deed made on numberember 201950 for the assessment year 1953-54 and or 1954-55 ? the relevant facts are these. the respondent m s. shah jethaji phulchand hereinafter called the assessee is a firm companystituted by a partnership deed dated numberember 20 1950. the assessee sought registration of the firm under section 26a of the indian income-tax act for the assessment years 1953-54 and 1954-55. the deed of partnership was entered into between five years 1 nathmal jethaji 2 phulchand 3 s. babulal minumber son of jethaji 4 sakalchand thikmaji and 5 jethibai. the relevant clauses of the agreement on which the learned companynsel have made companyments are these
whereas the above 5 parties have agreed to do business of companyton and kapas purchases and sales and on companymission basis etc. after deepavali 1950 for the future periods also so long as they can possibly work together. number they agree between the above 5 parties as hereunder
that the above five parties shall establish companyton business and carry on the same at davangere with branches in the surroundings areas under the name and style jethaji phulchand. that the capital of the business shall be rs. 275000 companytributed from the parties of the firm
the 1st party shall companytribute of rs. 156000 one lakh fifty-six thousand . the iind parry shall companytribute rs. 22500 twenty-two thousand five hundred . the iiird party shall companytribute rs. 70000 seventy thousand . the ivth party shall companytribute rs. 22500 twenty-five thousand five hundred . the vth party shall companytribute rs. 10000 ten thousand . 3 that all the business of partnership shall be carried on in the name of the partnership only and that the partners shall be at liberty to carry on companyton business in their individual capacity with different capital without the companysent of other parties. the partners doing business in their individual capacity need number disclose their profits of the individual business to the other partners of this partnership. that this partnership shall have effect from deepavali 1950 as previously agreed and as the same as already been working as such with effect from that date and the same shall be in existence for such periods as the parties desire. the partnership shall be terminated at the will of any of the partners. that the partners shall have a right to borrow any money required for partnership business at prevailing rate of interest. that the profits and loss of the companypany shall be shared by the partners in the following proportions irrespective of the companytribution of the capital. 1st party shall be entitled to rs. 0-3-6
iind party shall be entitled to rs. 0-3-0
iiird party shall entitled to rs. 0-3-3
ivth party shall entitled to rs. 0-3-0
vth party shall be entitled to rs. 0-3-3
half an anna of the profits shall be credited to the charity fund the portion of loss to be companytributed by the 3rd party is to be borne by the fist party and adjusted in the accounts. that 1 nathmal jethaji 2 phulchand nathmal 3 sakalchand thikmaji shall be working partners. they shall have the right of doing business borrowing moneys from banks and other persons drawing cheques on account of the firm is the banks and generally they shall have all the rights companynected with business. the income-tax officer rejected the applications for registration for1953-54 and 1954-55 on the ground that there were numbervalue applications for renewal of registration. apparently the firm had been registered in the earlier assessment years. for the assessment year 1953-54 the appellate assistant companymissioner inter alia held that the partnership deed on which the application was based was defective. he observed the minumber is made a party of the partnership through nathmal jethaji the natural father who is incidentally number the real guardian as discussed already. numberminumber can enter into a companytract for partnership either by himself or through a guardian. for the assessment year 1954-55 he held that although the minumber was number liable for loss but he was described as a partner and was vested with all the rights relating to the companyduct of the business along with the other partners and was thus treated as a full-fledged partners. he held that the companytract of partnership was void in law and therefore the firm companyld number be registered. the appellate tribunal by one order disposed of the two appeals relating to both the assessment years. relying on jakka devayya and sons v. companymissioner of income-tax it held that the minumber companyld be regarded as only having been admitted to the benefits of partnership. the high companyrts on reference as already stated answered the question in favour of the assessee. we have just delivered judgment in companymissioner of income-tax c. shah mohandas sadhuram. in that case we have held that a partnership deed must be companystrued reasonably and that a guardian is entitled to do all things necessary for effectuating the companyferment of the benefits of partnership. the question then arises whether deed makes the minumber a full partner or he has been admitted only to the benefits of partnership. there is numberdoubt that on a true interpretation of sub-clause 9 the minumber is number to bear any losses the losses are to be borne by nathmal jethaji. sun-clause 16 does number make the minumber a working partner. the only persons who were entitled to the working partners are nathmal jethaji phulchand nathmal and sakalchand thikmaji it is in the light of these clauses that the other clauses should be companystrued. mr. karkhanis drew out attention to sub-clause 2 requiring the third party to companytribute rs. 70000. there is numberprovision that the minumber will number be entitled to share in profits unless the capital is companytributed for under sub-clause 9 partners are entitled to share in profits irrespective of the companytribution of capital. at any rate as held in shah mohan dass case a guardian can agree to companytribute capital. sub-clause 3 of clause 4 of the partnership deed which enables the partners to individually carry on the other business can number affect the validity of the deed. mr. karkhanis relies specially on sub-clause 4 which states that the partnership shall be terminated at the will of any partner to terminate the partnership shall be clause usually found in partnership deed and it cannumber be said that this clause enables the minumber partner to terminate the partnership itself and in the companytext it only means as far as the minumber is companycerned that the guardian would be entitled to exercise his right of severance given to him by section 30 of the partnership act. sub-clause 5 which enables partners to borrow money obviously has to be read with sub-clause 16 by which only the three minumber partners have been designed as working partners. it seems to us that the minumber has number been made a full partner but has only been given the benefits of partnership. but the final objection of mr. karkhanis requires serious companysideration. he says that guardian has by clause 3 and sub-clause 4 1 purported to agree to the starting of business and the companystitution of a firm. this according to him he was number entitled to do and clauses 3 and 4 1 are void. the learned companynsel fir the respondent tried to have acted on his own behalf. but we are unable to sustain these clauses on the ground. then the question arises can a guardian agree to the starting of a business and the companystitution of a firm on the companydition that the minumber shall number be a full partner but only entitled to the benefits of partnership ? | 0 | test | 1965_323.txt | 0 |
civil appellate jurisdiction civil appeal number 49 of 1954.
appeal by special leave from the judgment and order dated
the 16th august 1949 of the punjab high companyrt in regular
first appeal number 57 of 1949 arising out of the judgment and
order dated the 30th numberember 1945 of the companyrt of senior
sub-judge gurdaspur in suit number 298 of 1944.
j. umrigar and k. l. mehta for the appellants. s. narula for the respondents. 1957. september 24. the following judgment of the companyrt
was delivered by
kapur j.-this appeal by special leave is brought from the
judgment and decree of the high companyrt of the punjab dated
august 16 1949 reversing the decree of the trial companyrt
which had decreed the plaintiffs suit on a mortgage. the plaintiffs who are the appellants in this appeal claim
to be the legatees under a registered will of their mothers
father lala guranditta mal executed on september 6 1944.
one of the items bequeathed to them was the rights in a
mortgage executed by the defendants in favour of the testa-
tor on october 24 1932 for rs. 6000. on october 25
1944 they brought a suit in the companyrt of the senior subor-
dinate judge gurdaspur for the recovery of rs. 5392-2-0 on
the basis of the mortgage. they alleged that they were the
representatives and heirs of lala guranditta mal under
the will and in their replication they just stated
we are heirs and representatives of lala gurandit-
ta mal mortgagee deceased. inter alia the defendants pleaded that they had numberknumberledge
of the will alleged to have been made by guranditta mal and
they denied that the plaintiffs were heirs and representa-
tives of the mortgagee and therefore had numberlocus standi to
sue. five issues were stated by the learned trial judge out
of which the issue number relevant for the purpose of this
appeal is the first one
have the plaintiffs a locus standi to maintain the
present suit as successors-in-interest of guranditta de-
ceased ? the learned subordinate judge held that the will had the
presumption of its companyrect execution because it was regis-
tered and also that number obtaining the pro. bate of the will
was numberbar to the. plaintiffs obtaining a decree and passed
a preliminary mortgage decree. on the matter being taken in
appeal to the high companyrt the decree of the trial companyrt--was
reversed and the suit of the plaintiffs dismissed but the
parties were left to bear their own companyts. the high companyrt
held
it is thus clear that attestation by two witnesses was
necessary in order to validate the will number before us. as
this requirement of law has number been satisfied the plain-
tiffs had numberlocus standi to maintain the suit. a prayer made for the admission of additional evidence under
0. 41 r. 27 of the civil procedure companye was rejected. the
high companyrt refused leave to appeal under art. 133 but spe-
cial leave was granted on october 21 1952. in the mean-
while the probate of the will of lala guranditta mal was
granted by the district judge of gurdaspur on july 11 1951
in favour of the present appellants and their mother mussam-
mat har devi. the appellants made an application in this
court for the admission of additional evidence and prayed
that the probate be placed on the record as the probate
of the will operated as a judgment in rem . they also
applied to add mussammat har devi as a respondent in the
appeal. an objection to the admission of additional evidence at this
stage is taken by the respondents on the ground that the
probate was obtained without their knumberledge and that the
application was made at a late stage it deprived the re-
spondents of the valuable right which vests in them because
the claim has become statute barred and that there is no
provision in the rules of this companyrt for the admission of
additional evidence. it is clear that the probate was
applied for and obtained after the judgment of the high
court and therefore companyld number have been produced in that
court. the judgment of the probate companyrt must be presumed
to have been obtained in accordance with the procedure
prescribed by law and it is a judgment in rem. the objec-
tion that the respondents were number parties to it is thus
unsustainable because of the nature of the judgment itself. as to the power of this companyrt there is numberspecific provi-
sion for the admission of additional evidence but r. 5 of 0. 45 of the supreme companyrt rules recognises the inherent power
of the companyrt to make such orders as may be necessary for the
ends of justice or to prevent
an abuse of process of the companyrt. the privy companyncil in
indrajit pratap sahi v. amar singh 1 said
that there is numberrestriction on the powers of the board to
admit such evidence for the number-productior of which at the
initial stage sufficient ground has been made out. the powers of this companyrt in regard to the admission of
additional evidence are in numberway less than that of the
privy companyncil. moreover in deciding the appeal we have to
take the circumstances as they are at the time when the
appeal is being decided and a judgment in rem having been
passed in favour of the appellants it is necessary to take
that additional fact into companysideration. it was so held by
the federal companyrt in lachmeshwar prasad shukul v. keshwar
lal chaudhuri 2 where gwyer c.j. quoted with approval the
following observation of chief justice hughes in patterson
state of alabama 3
we have frequently held that in the exercise of our appel-
late jurisdiction we have power number only to companyrect error in
the judgment under review but to make such disposition of
the case as justice requires. and in determining what
justice does require the companyrt is bound to companysider any
change either in fact or in law which has supervened since
the judgment was entered. varadachari j. was of the opinion that the hearing of an
appeal is under the processual law of this companyntry in the
nature of a rehearing and therefore in moulding the relief
to be granted in appeal an appellate companyrt is entitled to
take into account even facts and events which have companye into
existence since the decree appealed from was passed. he
referred to many indian cases and to the practice of the
judicial companymittee of the privy companyncil and to some english
cases. in our opinion the fact of the grant of the probate which
has supervened since the decision under appeal was given and
which has been placed before this companyrt must be taken into
consideration in deciding the appeal. in that event the
infirmity in the appellants
lr. 1923 50 i.a. 183 19r. 2 1940 f.c.r 84
3 1934 294 u.s. 600 607
case due to the want of proper attestation of the will inder
s. 63 1 c of the indian succession act would be removed. because of the view we have taken the other objection raised
by the respondents becomes wholly inefficacious. the find-
ing of the high companyrt on this point is therefore reversed. we therefore allow this appeal set aside the judgment and
decree of the punjab high companyrt and remit the case to the
high companyrt for decision of the other issues which had number
been decided. as the appellants did number obtain the probate till after the
appeal was filed in this companyrt and made the application for
the admission of additional evidence at such a late stage
they will pay rs. | 1 | test | 1957_24.txt | 1 |
civil appellate orlginal jurisdiction civil appeal 471 of
1962.
appeal from the judgment and decree dated 9th may 1962 of
the rajasthan high companyrt in d. b. civil misc. write number 214
of 1962.
with
writ petition number 66 of 1962.
petition under art. 32 of the companystitution of india for the
enforcement of fundamental rights. c. setalvad attorney-general for india k. garg d. p.
singh s. c. agarwala and m. k. r.mamurthi for the
appellants and the petitioner. k. daphtary solicitor-general for india s. k. kapoor
k. jain and p. d. menumber for the respondents in the
appeal and the petition . 1962. september 17. the judgement of the companyrt was
delivered by
shah j.-questions relating to the validity of a scheme
approved by the state of rajasthan under s.68d of the motor
vehicles act 1939 4 of 1939 and its effect are raised by
the appeal and the writ petition. in- the appeal the
validity of the scheme is challenged on the plea that the
appellants were denied reasonable opportunity of being heard
in support of their objections before the scheme was
approved. in the writ petition it is submitted that the
fundamental right of the petitioner to carry on business of
a motor transport operator is infringed by the state of
rajasthan plying its buses along the route companyered by the
scheme without obtaining permits under s.42 1 of the motor
vehicles act. a scheme for operating a motor transport service on the
jaipur-tonk-deoli-kotah route was published on september
10 1960 in the rajasthan government gazette by the
rajasthan state roadways which is a state transport
undertaking within the meaning of s. 68a b of the motor
vehicles act 1939. sixty-one persons including certain
holders of stage carriage permits authorising them to ply
stage carriages on the route lodged objections to the
scheme with the secretary. government of rajasthan
transport department jaipur within the period prescribed. the objections were heard by the legal remembrancer of the
state and were rejected by order dated february 2 1961.
the scheme was then approved by the state government and was
published under s 68d of the motor vehicles act and r.8 off
the rajasthan state road transport service development
rules 1960. some holders of stage carriage permits applied
under arts.226 and 227 of the companystitution to the high
court of rajasthan for the
issue of writs cancelling the scheme. the high companyrt by
order dated may 3 1961 allowed the petition and set aside
the scheme. the operative part of the order insofar as it
is material was as follows
the approval of scheme b jaipur-kotah by
the legal remembrancer is quashed and lie is
directed to decide the objections of the
permit holders of jaipur-chaksu-niwai-
banasthali tonk-deoli route in accordance with
the observations made above. the numberification
of the state government publishing the scheme
is also set aside. thereafter the legal remembrancer sent individual numberices
by registered. post pre-paid and addressed to all the sixty-
one objectors fixing june 26 1961 for hearing objections
and also published in the state government gazette a
general numberice to that effect. out of sixty-one numberices
despatched thirteen were duly received by the addressees
and thirty-nine were returned unserved about the remaining
nine numberices numberintimation was received from the postal
department till. june 19 1961. the legal remembrancer
commenced hearing the objections. the proceeding lasted
from june 1961 to march 1962. there were fifteen hearings
at which evidence was recorded and oral arguments were
heard. the legal remembrancer by his order dated march 23
1962 approved the scheme subject to certain modifications. the scheme as approved was then published on april 2 1962
in the government gazette. on may 314 1962 the secretary
regional transport authority jaipur issued an order
declaring that the state road transport service shall
commence to operate from may 15 1962 on the route specified
in the scheme as mentioned in rule 2 and directed that
fifty-five permits described in the order do stand
cancelled. pursuant to the scheme the state transport
undertaking companymenced operating its vehicles upon the route
without obtaining permits under s. 42 1 o
the motor vehicles act. subsequently applications were
submitted to the regional transport authority for permits
and the same were granted to the state transport undertaking
on july 28 1962.
in the mean time sixteen persons-who will be hereinafter
referred to companylectively as appellants claiming that they
had number received numberice of the proceedings before the legal
remembrancer after the scheme was quashed by the high companyrt
of rajasthan and the proceedings were remanded applied to
the high companyrt under arts. 226 and 227 of the companystitution
for writs of certiorari quashing the order of the legal
remembrancer dated march 23 1962 and all proceedings after
may 31 1961 regarding the scheme of nationalisation of
road transport service on the route in question and the
scheme published in the rajasthan government gazette on
april 2 1962 and writs of prohibition restraining the
state of rajasthan the regional transport authority the
legal remembrancer and the rajasthan state transport
undertaking from implementing the scheme and further
restraining the transport authorities from cancelling their
permits for plying vehicles on the route and restraining the
regional transport authority from granting permits to the
rajasthan state transport undertaking in pursuance of the
impugned scheme. the appellants also claimed a declaration
that cl. 4 of r. 7 of the rajasthan state transport
development rules 1960 and the public numberice dated may
30 1961 published in the rajasthan government gazette
dated may 31 1961 were illegal null and void and ultra
vires and a declaration that the proceeding before the
legal remembrancer was taken without affording any real
opportunity to the appellants to produce their evidence and
without hearing their objections in accordance with law. it was urged by the appellants inter alia that as only
thirteen objectors were served and the remaining
forty-eight were number served with numberice of hearing the
proceeding companymenced before the legal remembrancer relying
upon the presumption of due service under cl. 4 of r. 7
was illegal. the high companyrt without issuing rule upon the
state and the transport authorities dismissed the petition
holding that r. 7 4 was number ultra vires the motor vehicles
act and that it was difficult on the material placed
before the companyrt to hold that the legal remembrancer had number
in fact determined the question of regularity of service of
numberice upon the objectors before he companymenced hearing the
objections. against the order dismissing the petition appeal number 471 of
1962 has been filed by the appellants in this companyrt. a
petition has also been filed by one of the appellants in
this companyrt under art. 32 of the companystitution for a writ of
mandamus restraining the state of rajasthan the rajasthan
state transport undertaking and the regional transport
authority jaipur region from companymencing their transport
service and from interfering with the right of the
petitioner in the exercise of his right to ply stage
carriages on that route under a permit issued by the
regional transport authority and which was as originally
granted valid up to numberember 30 1963. the petitioner also
prayed for a writ or direction quashing tie resolution
passed by the regional transport authority on may 3/4
1962 purporting to cancel his permits without issuing valid
permits to the state transport undertaking. the principal
ground in support of the petition was that the state of
rajasthan and the state transport undertaking companyld number
commence to ply their vehicles on the route without
obtaining valid permits under s. 68f and s. 42 1 of the
motor vehicles act. by s. 68c of the motor vehicles act 1939 4 of 1939 a
state transport undertaking if it be of the opinion as to
certain matters specified in the section is authorised to
prepare a scheme giving particulars
105.
of the nature of the service and the area or route to be
covered thereby and to publish it in the government gazette
and in such manner as the state government may direct. per-
sons affected by the scheme may lodge objections to the
scheme within the period prescribed. the objections are
thereafter heard by the state government after giving oppor-
tunity to the objectors to support them. the state
government may thereafter approve or modify the scheme
and the scheme so approved or modified when published in the
official gazette becomes final. section 68f 1 requires
the regional transport authority numberwithstanding anything
to the companytrary companytained in ch. iv to issue permits to
the state transport undertaking for plying vehicles when
that undertaking applies for permits in pursuance of an
approved scheme. sub-section 2 of s. 68d provides that
for the purpose of giving effect to the approved scheme in
respect of a numberified area or numberified route the regional
transport authority may by order refuse to entertain any
application for renewal of any other permit cancel or
modify an existing permit. section 681 companyfers power upon
the state government to make rules for the purpose of
carrying into effect the provisions of chapter iva and in
particular for certain specific matters set out therein. the government of rajasthan framed under s. 68 i rules
called the rajasthan state transport service development
rules 1960. rule 3 prescribed the authority which was to
prepare the scheme on behalf of the state transport
undertaking and the matters in respect of which provisions
were to be made in the scheme. rule 4 prescribed the method
of publication and r. 5 the manner of filing objections. it
was provided by cl. 4 of r. 5 that the memorandum of
objection shall companytain amongst other the following
information
full name and address of the objector on
which the service of numberice or order under
these rules maybe made
rule 7 dealt with the procedure for companysideration and
disposal of objections. by cl. 1 it was provided that the
objections shall be companysidered by an officer authorised to
do so by the governumber. the officer so authorised had by cl. 2 to fix the date time and place for hearing objections
and to issue numberice thereof to the objectors and the general
manager of the state transport undertaking asking them to
appear before him. clause 3 prescribed the method of
service of numberice that the numberice under sub-rule 2 shall
be sent by registered post and shall be posted at least
fourteen days before the date fixed for hearing. clause
4 provided that numberwithstanding anything in sub-r. 3 a
general numberice may also be given regarding the date time
and place of hearing of objections by publication thereof in
the official gazette and where numberice has been issued in
this manner it shall be presumed that all the parties
concerned have been duly intimated. rule 8 prescribed the
from in which the approved scheme shall be published and
rule 9 provided for the companysequences of publication of the
scheme. the appellants companytend that they did number receive the
individual numberices sent to them by registered post and that
they did number at all companye to knumber about the hearing or the
decision of the aforesaid objections by the legal
remembrancer till the approved scheme relating to jaipur-
tonk-deoli-kota route was published in the rajasthan
government gazette dated april 2 1962. opportunity to be
afforded to the objector under s. 68d 1 must of companyrse be a
reasonable opportunity he must have advance numberice of the
date time and place and designation of the authority who
will hear the objections. the authority hearing the ob-
jections must therefore give numberice of the date time and
place for hearing the objections. such numberice must afford
reasonable opportunity to the objector to appear before the
authority and substantiate his objections. on behalf of the
appellants it was submitted
that the numberice sent by registered post which was number served
because it was never tendered to the addressees followed by
publication of the numberice in the government gazette did number
amount to affording reasonable oportunity to the objectors
to substantiate their objections to the scheme. it was
contended that cl. 4 of r. 7 which raises a presumption of
service on publication of numberice in the government gazette
is invalid because the state government is number entitled to
deprive the objectors of a reasonable opportunity of being
heard by prescribing a presumption of service of numberice of
hearing merely from publication of the numberice in the
government gazette. but in companysidering this case it is
unnecessary to embark upon the larger question which was
canvassed at the bar whether numberice given in the manner
prescribed by cl. 3 r. 7 i.e. an individual numberice sent by
the registered post followed by a general numberice published
in the government gazette must because of the presumption
contained in cl. 4 of r. 7 always be companysidered as
affording reasonable opportunity to the objectors. as
already observed sixty-one objectors had filed objections
before the legal remembrancer in the first instance. they
appeared before the legal remembrancer and objected to the
scheme. the scheme was approved by the legal remembrancer
but the order of the legal remembrancer approving the scheme
was set aside by the high companyrt in certain petitions filed
before it. it is admitted by the appellants that they knew
about the proceeding companymenced in the high companyrt challenging
the validity of the scheme and the order passed by the high
court remanding it to the legal remembrancer for hearing the
objections. the appellants however companytend that
thereafter they did number receive any numberice of the hearing
pursuant to the order of remand and they did number companye to
knumber of the proceeding before the legal remembrancer till
the scheme was published by the government of rajasthan. but the legal remembrancer was primarily the authority to be
satisfied whether the
objectors had adequate numberice. there is numberhing to show
that he even relied upon the presumption of service arising
from the publication of the numberice under r. 7 4 . the
legal remembrancer was appraised of the fact that individual
numberice was received only by thirteen individual objectors by
registered post and he had manifestly to companysider whether
the proceeding for hearing the objections companyld be started. the legal remembrancer had when he companymenced hearing the
following matters before him that all the objectors were
aware of the proceeding before the high companyrt and the order
passed therein that he had directed individual numberices
under r. 7 cl. 3 and the same were duly despatched that a
general numberice was also published in the government gazette
that the scheme was an integrated scheme in respect of a
route on which stage carriages were being plied by the
objectors and the objectors were vitally interested in
plying and companytinuing to ply their buses and the publication
of the scheme companystituted a serious threat to their busi-
ness. it is also manifest that he had to deal with
operators of motor vehicles-a class of persons-who in order
to carry on efficiently their business have companystantly to
acquaint themselves with the state government gazette in
which the rules framed under the act the schemes numberices
and the directions which the government issue for acquiring
control over road transport are published as required by the
motor vehicles act. there is numberreference in the order
sheet dated june 19 1961 to the presumption which arises
under r. 7 4 . it appears that the legal remembrancer was
of the opinion that those who had number been personally served
with individual numberices sent by registered post had still
numberice that the proceeding was to companymence on june 26 1961.
the inference raised by the legal remembrancer cannumber be
said to be based on numberevidence. the high companyrt has also
held that the legal remembrancer was satisfied about service
of the numberice on the objectors in accordance with law and
that in proceeding to hear the objections
the legal remembrancer acted according to law. the finding
of the high companyrt that the objectors were duly served with
the numberice was one of fact and according to the settled
practice of this companyrt numberinterference with i the
conclusion of the high companyrt would be called for. if the
objectors were duly served and they failed to appear to
press their objections before the legal remembrancer they
cannumber seek to challenge the scheme after it is duly
published and which by the statute is declared final. that brings us to the question whether any fundamental right
of the petitioner in the writ petition .to carry on
business was infringed by the state transport undertaking
plying its vehicles without obtaining permits under s. 42
1 . the scheme was by order dated march 23 1962 of the
legal remembrancer who was invested with authority to hear
objections thereto duly approved. the scheme so approved
by the legal remembrancer was published in the government
gazette and thereby it was directed that permits of 55
operators amongst whom is the petitioner on the route in
question shall be cancelled and the regional transport
authority in exercise of the powers companyferred under s. 68f
2 and in pursuance of the scheme ordered that those
permits be cancelled. sub-section 1 and 2 of s. 68f deal with different
matters exercise of the powers under cl. 2 is number
dependent upon the grant of any permits to the state
transport undertaking. by sub-s. 1 a statutory duty is
imposed upon the regional transport authority to grant
permits to the state transport undertaking if application
is made in that behalf pursuant to an approved scheme. to
such an application the provisions companytained in ch. iv such
as ss. 47 48 57 and allied sections will number apply. it
was observed by this companyrt in abdul gajoor v. state of
mysore 1 in-order that the approved scheme may be imple-
mented the state transport undertaking which is to run and
operate the transport service under the
1 1962 1 s.c.r. 909.
scheme must have a permit from the regional transport
authority. section 68-f 1 provides that the state
transport undertaking will have to apply for a permit i in
pursuance of the approved scheme and ii in the manner
specified in chapter iv. once that is done the sub-section
proceeds to say a regional transport authority shall issue
such permit to the state transport undertaking and this
numberwithstanding anything to the companytrary companytained in
chapter iv. it appears clear to us that the provisions of
s. 57 3 have numberhing to do with these matters dealt with
by s. 68-f 1 . x x x x under s. 68-f 1 as already
mentioned the regional transport authority has numberoption to
refuse the grant of the permit provided it has been made in
pursuance of the approved scheme and in the manner mentioned
in chap. iv. the duty of the regional transport authority
on receipt of the application from the state transport
undertaking for a permit is therefore to examine the
application for itself to see whether it is in pursuance of
an approved scheme and secondly whether it has been made in
the manner laid down in chapter iv. this is a duty which
the regional transport authority has to perform for itself
and there is numberquestion of its asking for assistance from
the public or existing permit holders for transport services
on the route. neither the public in general number the permit
holders has any part to play in this matter. sub-section 2 authorises the regional transport authority
to take action or to make orders to effectuate the scheme
and to implement its directions. in the samarth transport
co. p limited v. the regional transport authority nagpur
1 dealing with the companyditions under which the power under
s.68-f 2 a may be exercised it was observed that this
power does number depend upon the presentation of an
application by the state transport undertaking for a pen-
nit. this power is exercisable when it is brought to the
numberice of the authority that there is an
1 1961 1 s.c.r. 631.
approved scheme and to give effect to it application for
renewal cannumber be entertained. in kalyan singh v. state of uttar pradesh it was held that
an order passed by the regional transport authority under
s.68-f 2 pursuant to a direction under a scheme duly
approved and published is purely companysequential upon the
scheme and is number open to challenge. in companysidering the
effect of cl. 2 of s.68f it was observed in that case that
the regional transport authority was by the terms of the
scheme left numberdiscretion in the matter. it was .by the
scheme that the right of the appellant was restricted and if
the scheme became final and binding the regional transport
authority had numberauthority to permit the appellant to ply
his vehicles. it was further observed that if the right
of the appellant to ply his buses is lawfully extinguished
he is number entitled to maintain an appeal challenging the
right of the state transport undertaking to ply their buses
with or without permits. number is any fundamental right of
the appellant infringed by the state transport undertaking
plying its buses without permits and a petition under art. 32 of the companystitution cannumber be maintained unless a
fundamental right of the applicant is infringed. it was
therefore held in that case that if a valid scheme companytains
a direction for cancellation of outstanding permits and the
permits are in fact cancelled by order of the regional
transport authority it is number open to the operator whose
permits are cancelled to claim that the state authority
which companymenced to operate its vehicles without obtaining
permits under s.42 of the motor vehicles act infringes the
right of the operator to carry on his business. the right
of the operator having been lawfully extinguished .pro
tanto by the scheme and the companysequential order under
s.68f 2 he is number entitled to have resort to this companyrt
under art. 32 of the companystitution for protection of his
alleged right. the scheme was duly published and the permits issued in
favour of fifty-five operators whose names
1 1962 supp. 2 s.c.r. 76.
are set out in the order dated may 3/4 1962 were
lawfully cancelled. | 0 | test | 1962_305.txt | 1 |
criminal appellate jurisdiction cr. appeal number 252 of
1969.
appeal by special leave from the judgment and order dated
8th may 1969 of the allahabad high companyrt in criminal appeal
number 199 of 1969.
p. rana for the appellant. vimal dave for respondents number. 1 3.
b. agarwala for respondent number 4.
the judgment of the companyrt was delivered by
vaidialingam j.-this appeal by special leave by the state
of u.p. is directed against the judgment and order dated
8-5-1969 in criminal appeal number 199 of 1969 referred number 21
of 1969 allowing the appeal of the four accused
respondents herein and setting aside the companyviction
recorded against them by the learned civil and sessions
judge hardoi under sections 302 and 302 read with 34
p.c. the four respondents herein were tried by the civil and
sessions judge for the offence of companymitting the murder of
sikander khan on october 16 1967. after the filing of
this appeal the second respondent ishitiaq khan is
reported to have been murdered and hence the appeal as
against him has become infructuous. in this appeal by the state we are at present companycerned
only with iftikhar khan son of mohammad hasan anwar khan
son of mohammad hussan khan and syeed khan son of refiq
hussain khan who are respondents one three and four respec-
tively. the prosecution case was as follows
all the respondents and the deceased sikander khan are
residents of village garni chand. iftikhar khan and anwar
khan respondents one and three herein are real brothers
and the other two respondents are their associates. about
two years or so prior to the murder of sikander khan aqil
khan a brother
respondents of one and three was murdered. in companynection
with the said murder the deceased sikander khan ilyas
khan and two or three others were tried. however they were
acquitted about ten months prior to this incident. on
october 16 1967 the day on which sikander khan was
murdered. a case of attempted murder of ilyas khan was
pending against respondents one and two herein. both of
them had been released on bail about. a month prior to
october 16 1967. respondents one and three strongly
suspected that sikander khan was responsible for the murder
of their brother aqil khan though there has been an
acquittal by the companyrt in his favour. on october 16 1967
at about 8.30 p.m. sikander khan was sitting on a company in
front of his shop and was reading jang nama. his
brothers p.ws one and two along with one laddan khan were
also sitting near sikander khan listening to the reading of
the epic. respondents one and two armed with companyntry made
pistols and respondents three and four armed with lathis
came in a body to the place where sikander khan was seated. the first and the second respondents fired shots in quick
succession at sikander khan. the shots struck sikander khan
in his chest and neck and he fell down dead. on hearing the
alarm of p.ws one and two the neighbours came and saw all
the accused running away. sikander khan on receiving the
gun-shots died on the spot. the first information report
was given by p.w. 1 at about 11.35 p.m. and it was recorded
by the head companystable p.w. 7. the investigation was taken
up by p.w. 8. the respondents surrendered in companyrt on
numberember 4 1967. the doctor who performed the postmortem
on the body of sikander khan had given the opinion that the
gun-shot injuries on the chest and the neck were
individually sufficient to cause death in the ordinary
course-of nature. respondents one and two were tried for the offence of company-
mitting the murder of sikander khan under section 302. the
other two respondents were tried under section 302 read with
section 34. the respondents three and four pleaded that
they had been implicated in the case due to enemity. the
first respondent apart from adopting the said plea further
set up an alibi according to him he was an in-patient in
the district hospital bareilly from 14-10-1967 to 31-10-
1967 and that he was operated upon for hydrocele at the said
hospital on 18-10-1967. in view of the fact that he was in
the hospital on 16-10-1967 the evidence given implicating
him in the murder is false. the prosecution mainly relied
on the evidence of p.ws 1 and 2 the. brothers of the
deceased to prove its case against the accused. the first
respondent also examined the doctor of the bareilly hospital
and two nurses working there in support of his plea of
alibi. the companyrt examined a student nurse working in the
same hospital
-l796sup .c.i./73
as c.w. 1. numberwithstanding the fact that p.ws 1 and 2 were
brothers of the deceased and as such can be described as
partisan witnesses the learned sessions judge accepted
their evidence-as true. regarding the plea of alibi set up
by the first respondent the learned sessions judge after
consideration of the evidence of p.ws 1 to 3 as also the
evidence of c.w. 1 held that the said plea cannumber be
accepted. the companyrt further held that though the first
respondent was operated upon for hydrocele on october 18
1967 the evidence of the doctor and the nurses of the
bareilly hospital establish that it was possible for the
first respondent to move about and it was further possible
for him to be absent from the hospital on october 16 1967.
in fact the view of the learned sessions judge is that the
murder of sikander khan had been planned and the first
respondent in order to create the evidence of alibi got
himself admitted in the district hospital at bareilly on the
14th and that he successfully manumberuvred to have the
operation originally fixed for october 16 1967 postponed. by so manumberuvring the first respondent was able to be in-
the village on october 16 1967 and after companymitting the
murder he went back to the hospital. in this view the
respondents one and two were companyvicted under section 302 and
sentenced to death. the respondents three and four were
also found guilty of murder under section 302 read with
section 34 on the finding that they had associated
themselves with the other two accused with the companymon
intention of companymitting the murder of sikander khan. however they were sentenced to undergo imprisonment for
life. all the four respondents appealed to the high companyrt
challenging their companyviction and sentence. there was also
the reference for companyfirmation of the sentence of death of
respondents one and two. the main findings of the high
court were as follows
it is number necessary to give details of enmity that existed
between the deceased and the accused. murders appear to be
quite companymon in the area where the parties live and they
resort to such crimes. the two eye witnesses p.ws 1 and 2
being the brothers of the deceased are partisan witnesses. these two witnesses have number given proper answers when
cross-examined on the point whether the first respondent was
in the village from 14th october 1967. though there can be
some argument whether the first respondent was or was number
actually in the hospital from the afternumbern of october 16
1967 till the morning of the next day yet the evidence
shows that he was admitted in the bareilly hospital on the
14th october and was there on the next day also. he was
operated on october 18 1967. in view of these facts he
could number be in the village on the 14th and 15th october
1967. hence the evidence of p.w. 2 to the companytrary is
false. as p.w. 2 has made a false statement with regard to
the presence of the first respondent
in the village on 14th and 15th october 1967 his brother
w. 1 should also be put in the same category as it is
number proper to believe one brother and disbelieve the other. if the two partisan eye witnesses p.ws 1 and 2 had made a
satisfactory statement the plea of alibi set up by the
first respondent has to be viewed with companysiderable doubt
and respondents two and four may number be entitled to the
benefit of the said doubt. as only two shots had been
fired it was possible for the assailants to escape quickly
and the theory of the witnesses making a mistake cannumber be
excluded. it cannumber be stated that respondents three and
four had the companymon intention to companymit the murder as
villagers in good faith pass on the road in the mid-night
carrying lathis. both respondents two and three may have
had lathis and is also likely that they may have accompanied
the other two respondents but they may have done so without
any knumberledge that fire-arms were being carried to companymit
the murder of sikander khan. if the incident has taken
place at night making it clear that all persons must have
been acting together it may be held that companymon intention
of all was to companymit the murder. though it may be that the
party of the accused was responsible for the murder the
evidence of the partisan witnesses is number satisfactory and
as such all the accused are entitled to the benefit of
doubt. on behalf of the appellant state mr. o. p. rana learned
counsel attacked the judgment of the high companyrt on the
ground that before reversing the companyviction and sentence
passed on the respondents and acquitting them the learned
judges have number adverted to the main evidence relied on by
the prosecution and without recording any finding have
accepted the plea of alibi set up by the first respondent. the order of acquittal has been passed i the high companyrt
according to the learned companynsel on mere companyjectures and
without any reference to the materials on record. quite
naturally he pressed before us the various items of
evidence relied on by the learned sessions judge for
convicting the respondents and which have number been taken
into account by the high companyrt. mr. d. mookerjee learned companynsel for the respondents one
and three pointed out what according to him were serious
discrepancies in the evidence adduced by the. prosecution. the companynsel urged that though the judgment of the high companyrt
has number elaborately companysidered and dealt with all those
matters nevertheless they must have been in the minds of
the learned judges of the high companyrt when they gave the
benefit of doubt to the accused and acquitted them. it was
further stressed that the state has number made out a case for
this companyrt in exercise of its powers under article 136. to
interfere with the decision of the high companyrt acquitting the
accused. mr. b. r. aggarwala learned companynsel appearing for the 4th
respondent adopted most of the general arguments that have
been advanced by mr. mookerjee. he particularly stressed
that the companyviction of the 4th respondent-for an offence
under section 302 ipc with the aid of section 34 is number
justified as there is numberhing in the evidence to show that
even if the shooting by respondents 1 and 2 is accepted the
said criminal act was done by the said accused in
furtherance of the companymon intention of all the four accused. according to him there is numberevidence to establish that the
criminal act was done in companycert or pursuant to a
prearranged plan. the companynsel drew our attention to the
evidence of p.ws 1 and 2 which at the most according to
him only establishes that all the accused came together and
that they left the place at the same time after the shooting
was done by respondents 1 and 2. those witnesses do number
speak of any overt act done by respondent 4. he further
pointed out that in the first information report given by
w. 1 there is numberreference to the 4th respondent being
armed with a lathi. both p.ws 1 and 2 have improved upon
this version-in the f.i.r. before the companyrt they have
stated that respondents 3 and 4 came armed with lathis. but
even then he pointed out those witnesses did number speak of
any further part played by respondent 4 except that he was
in the companypany of the other accused. the companynsel drew our
attention to the decision of the judicial companymittee in
mahbub shah v. king emperor 1 as well as the decision of
this companyrt in pandurang tukia and bhillia v. the state of
hyderabad 2 wherein the ingredients necessary for the
application of section 34 of the indian penal companye have been
laid down. in view of the total lack of evidence to
establish that the act was done in furtherance of the companymon
intention of all the companynsel urged that the order of ac-
quittal passed by the high companyrt in favour of the 4th
respondent does number require interference. we may at this stage mention that the evidence- regarding
the participation of respondents 3 and 4 who are both
stated to have companye with lathis is the same. therefore we
will have due regard to the companytentions of mr. aggarwala
even when the case of the 3rd respondent is being dealt
with by us. we will later refer to the various aspects that were pressed
before us by the learned companynsel for the accused. it must be stated that in view of the approach made by the
high companyrt by number companysidering the various items of evidence
and recording suitable findings both the learned companynsel
found companysiderable difficulty in supporting the judgment of-
the- high companyrt
1 1945 l.r. 72 i.a. 148. 2 1955 s.c.r. 1083.
though it must be stated in fairness to them that they tried
their very best to do so. we have earlier broadly indicated the views expressed by the
high companyrt. it must be remembered that the high companyrt was
dealing apart from an appeal by the companyvicted accused also
with a reference made by the learned sessions judge under
section 374 criminal procedure companye for companyfirmation of
the sentence of death passed on respondents one and two for
an offence of murder. as pointed out by this companyrt in
masalti v. state of u.p. 1 under such circumstances there
was a duty on the high companyrt to independently companysider the
matter carefully and to examine all relevant and material
circumstances. a perusal of the judgment of the high companyrt
gives the unfortunate impression that this principle has number
been borne in mind. before we refer to the evidence on record as well as the
contentions of mr. mookerjee it is desirable to clear the
ground regarding the powers of this companyrt. under article 136
to interfere with the orders of acquittal passed by the
high companyrt. it has been strenuously pressed before us by
mr. mookerjee that unless the companyclusion reached by the high
court is such that numbertribunal ill companye to- this companyrt
will number interfere with the order of acquittal. while
exercising power under article 136. it is true that this
court will interfere in the circumstances mentioned by mr.
mookerjee. but that is number the only circumstance under
which interference will be warranted. there are several
other circumstances under which interference may and has
been made by this companyrt. we will refer to some of those
circumstances presently. it is number well established that in appeals against acquittal
by special leave under article 136 this companyrt has numberdoubt
powers to interfere with findings of fact numberdistinction
being made between judgments of acquittal and companyviction. it has also been held that this companyrt will number ordinarily
interfere with the appreciation of evidence or on findings
of fact unless the high companyrt has acted perversely or
otherwise improperly or there has been a grave miscarriage
of justice. it has been further held that where this companyrt
found that grave injustice has been done by the high companyrt
on grounds which are plainly untenable and the view taken by
the high companyrt is clearly unreasonable on the evidence on
record. a case for interference is made out. the recent
decisions of this companyrt on this aspect laying down the
above principles are to be found in himachal pradesh
administration v. om prakash 2 and state of uttar pradesh
samman dass. 3
1 1964 8 s.c.r. 133. 2 a.t.r. 1972 s.c. 975.
criminal appeal number 17 of 1971 decided on 11-1-1972.
bearing in mind the above principles we will number refer to
the material evidence on record. the evidence of p.w. 1
brother of the deceased is to the following effect -
he first narrated the reasons for the enmity between the
accused and sikander khan. at about 8.30 p.m. on october
16 1967 his brother the deceased sikander khan was
sitting opposite to his shop and reading jang nama. p.w. 1 and his brother p.w. 2 were also with the deceased
listening to the reading of the epic. suddenly the four
accused came together to the place where sikander khan was
sitting. the respondents one and two. who were armed with
pistols fired a shot each at sikander khan. the shots hit
sikander khan in the chest and in the neck and he fell down
dead. on his raising an alarm his neighbours laddan khan
babban khan munnan khan and ibne hasan and others came
there and found sikander khan dead. when respondents three
and four came with the other accused they had lathis with
them. after the shooting all the accused ran away. he
gave the first information report at about 11.35 p.m. which
was recorded by p.w. 7. the evidence of p.w. 2 is also
substantially to the same effect. surprisingly p.ws 1 and
2 have number been cross-examined when they spoke of enmity
between sikander khan and the accused. in the first information report after referring to the
murder of aqil khan and other matters p.w. 1 has
substantially stated about the occurrence as mentioned by
him in the witness box. he referred to the presence of his
brother p.w. 2 as also the villagers referred to in his
evidence as having companye to the scene immediately after the
shots were fired. it is numberdoubt true that both p.ws 1 and 2 are the brothers
of the deceased. this aspect has been taken into account by
the learned sessions judge and he has companysidered their
evidence to be truthful. but when we companye to the high
court there is neither an analysis number proper companysideration
of the evidence of these two eye witnesses. the learned
judges of the high companyrt stated that they are partisan
witnesses. true it is that they are partisan witnesses
being the brothers of the deceased. the reason given by the
high companyrt for rejecting the evidence of those witnesses is
that p.w 2 has made a false statement with regard to the
presence or absence of iftikhar khan in the village on the
14th and 15th october 1967. it is the further view of the
high companyrt that when the evidence of p.w. 2 is number being
accepted the evidence of p.w. 1 also cannumber be accepted as
both brothers must be placed in the same category. this
line of reasoning in our opinion is erroneous. the plea of alibi set up by the first respondent will be
considered by us later. but it is necessary to refer to the
answers given in the cross-examination of p.ws 1 and 2 to
consider whether the approach made by the high companyrt for
rejecting their evidence is justified. we find that the
cross-examination of these two witnesses is very scanty. the only suggestion made to p.w. 1 was whether iftikhar khan
had been admitted to some hospital at bareilly on the day of
occurrence namely october 16 1967. his answer was that
the suggestion is number companyrect. there is numberfurther question
put to this witness regarding the respondent one having been
admitted in the hospital the duration of his stay in the
hospital or his discharge from the hospital. p.w. 2 in
cross-examination has stated that he had seen iftikhar khan
all along in the village on the day of occurrence and for
three or four days before the occurrence this must be the
answer obviously to a question whether the witness had seen
iftikhar khan in the village on the day of the occurrence
and also during the three or four days before october 16
1967. numberfurther questions have been put to this witness. it is on the basis of the answer given by p.w. 2 that the
high companyrt. has rejected number only his evidence but also the
evidence of p.w. 1. in our opinion the approach made by the
high companyrt is erroneous especially when we do number find any
positive finding by the companyrt that the first respondent was
in the hospital on october 16 1967. the high companyrts
rejection of their evidence has been substantially on the
ground that they being the brothers of the deceased were
partisan witnesses and therefore their evidence is
unworthy of credence. here again the learned judges have
committed an error. it is numberdoubt true that when the companyrt
has to appreciate the evidence given by witnesses who are
partisan or interested it has to be very careful in
weighing their evidence. some of the points to be taken
into account will be whether or number there are discrepancies
in the evidence whether or number the evidence strikes the
court as genuine whether or number the story disclosed by the
evidence is true. in our opinion it is unreasonable to
reject the evidence given by the witnesses merely on the
ground that they are partisan or interested witnesses. judicial approach has to be very cautious in dealing with
such evidence. the high companyrt has number given due companysidera-
tion to these aspects also when rejecting the evidence of
ws 1 and 2. this also answers the companytentions of mr.
mookerjee that the evidence of p.ws 1 and 2. who are
partisan witnesses has been rightly rejected by the high
court. mr. mookerjee next pointed out that the number-examination by
the prosecution of the persons mentioned in the first
information report and who according to the prosecution
have seen the occur-
rence must have weighed with the high companyrt in rejecting
the interested testimony of p.ws 1 and 2. he further
stressed that there was a duty on the part of the
prosecution to have examined those persons who have
witnessed the occurrence irrespective of the nature of the
evidence that they may give before the companyrt. on the other
hand he pointed out that those persons who can be called
independent witnesses have been kept back and only the
brothers of the deceased have been examined and the
prosecution must bear the companysequences of such evidence number
having been .accepted by the companyrt. the companynsel further urged that the number-examination of those
persons mentioned in the first information report who have
seen the occurrence has prejudiced the accused and
therefore their companyviction by the trial companyrt based
merely on the testimony of p.ws 1 and 2 who are numbere else
than the brothers of the deceased cannumber be companysidered to
have been arrived at after a fair trial. it is numberdoubt true that as pointed out by this companyrt in
habeeb mohammad v. the state of hyderabad 1 it is the duty
of the prosecution to examine all material witnesses
essential to the unfolding of the narrative on which the
prosecution is based whether in the result the effect of
that testimony is for or against the case of the
prosecution. in the said decision the observations made to
the same effect by the judicial companymittee in stephen
seneviratne v. the king 2 have been quoted with approval. to a similar effect is also the recent decision in sahaj ram
others v. the state of u.p. 3 . after giving due companysideration to the above companytentions of
mr. mookerjee we are of the opinion that in the particular
circumstances of this case there was justification for the
number-examination of laddan khan babban khan ibne hasan and
munnan khan. from the evidence of the investigating
officer p.w. 8 it is seen that the statements were
recorded by the police from the above persons on the morning
of october 17. 1967. p.w. 1 in his chief examination had
stated that laddan khan babban khan and ibne hasan had seen
the murder of his brother sikander khan. it is his further
evidence that though they had seen the murder yet due to
fear of the accused persons they had filed a false affidavit
on april 16 1968 before the companymitting magistrate that
they had seen numberhing. so far as we companyld see there-is no
cross-examination of p.w. 1 on this point. when these three
persons had filed affidavits before the companymitting
magistrate that they had seen numberhing it serves numberpurpose
to insist on the prose-
1 1954 s.c.r. 475. 2 a.i.r. 1936 p.c. 289.
criminal appeal number 131 of 1969 decided on 17-11-1972.
cution examining them as witnesses. so far as munnan khan
is companycerned he is the uncle of p.ws 1 and 2 and the
deceased and the evidence of p.ws 1 and 2 is that he came
running to the scene when an alarm was raised. his
evidence would number have carried the matters further because
he had companye only after the actual shooting had taken place. his evidence is number essential to the unfolding of the
prosecution case and as much he was number a material witness. therefore this criticism regarding the number-examination of
the said four persons has to be rejected. the main plea of the first respondent-was that on the date
of the occurrence he was in the bareilly hospital and
therefore the evidence of the prosecution witnesses
regarding his participation in the murder is false. all the
four accused surrendered before the magistrate on numberember
4 1967. on the said date the first respondent filed a
statement before the magistrate to the effect that on the
date when the murder is alleged to have taken place
namely october 16 1967 he was already in the district
hospital bareilly from october 14 1967 to october 31
1967 and that he was also operated upon for hydrocele in
the meanwhile. according to him be was in the hospital
during the entire period from october 14 1967 to october
31 1967. if this is established. there can be numberdoubt
that his acquittal by the high companyrt will be justified. again if he was in the hospital on october 16. 1967 the
evidence given by the witnesses regarding the participation
in the crime of number only the first respondent but also of
the other respondents. will have to be viewed with greater
care and caution i.e. whether their evidence can be
considered to be true even regarding the participation of
respondents two to four. but the question is whether on the
evidence it can be held that the first respondent was in the
hospital on october 16 1967.
in support of his plea of alibi the first respondent had
examined the medical officer d.w. 1 and two nurses d. ws
2 and 3 working in the said hospital. as the name of
anumberher person was also mentioned by d.ws 2 and 3 as having
been working in the hospital in the particular ward on the
relevant date the learned sessions judge has examined the
said person as c.w. i. d.w. 1 numberdoubt refers to the first
respondent having been admitted as an indoor patient in the
district hospital bareilly on october 141967. but he
ha stated that the operation of the said accusedfor
hydrocele. which had been fixed originally on october 16. 1967. did number take place and that he was actually operated
onoctober 18 1967. but the point to be numbered from the
evidenceof this witness is that he cannumber say on oath that
on
october 16 1967 the first respondent was present in the
hospital all along. he has also stated that on october 16
1967 the first respondent might have been in a fit position
to move about and that there is numbersignature of the said
accused in the records of the hospital on october 16 1967.
w. 2 claims to be the sister-in-charge. of the hospital on
october 16 1967. she has stated that she was on duty from
7.00 a.m. to 12.00 a.m. and again from 4.00 p.m. to 8.00
m. on october 16 1967. it is her further evidence that
she can say from memory that on october 16 1967 the first
respondent iftikhar khan whom she is able to recognise by
sight was in the hospital. in view of this statement
quite naturally she was very severely cross-examined by the
prosecution. she had admitted in cross-examination that
there is number record to say that she was on duty in the
hospital on october 16 1967 and that there is also no
record to show that she companynted the patients and satisfied
herself that the first respondent was in the hospital. even
in cross-examination she has stated that she companynted the
number of patients at 4.00 p.m. on october 16 1967 in the
presence of cw 1. but she is prepared to admit that the
operation which was scheduled to take place on october 16
1967 was postponed because the operation fee was number paid
by the first respondent. she has wound up her evidence by
stating that all the answers given by her on december
18 .1968 regarding the presence of the first respondent in
the hospital on october 16 1967 were from her memory. to
a specific question by the companyrt this witness has further
stated that it is only on the basis of memory that she was
saying that she took charge of the patients on october 16
1967 at 4.00 p.m. along with the student nurse sharma cw
she has admitted that in the day and night register
which appears to have been produced before the companyrt it has
number been numbered that cw 1 came on duty at 4.00 p.m. on
october 16 1967. dw 3 anumberher staff nurse working in the
hospital has stated that she may have been on duty on
october 16 1967 from 7.00 a.m. to 4.00 p.m. but on. seeing
the first respondent in the dock she has stated that she is
number sure if the same person was admitted for operation of
hydrocele in the hospital. in fact. in an answer to a
question out by the companyrt she has admitted that she cannumber
say if the first respondent was in her ward at any time
even between 7.00 a.m. and 4.00 p.m. on october 16 1967.
coming to cw 1 she has categorically denied that she was
ever out in-charge of the ward on october 16. 1967. and she
has also denied having made any companynting of patients and
that at 4.00 p.m. and in the companypany of dw 2. she has also
stated that she cannumber say if the first respondent was an
indoor patient
in the hospital on october 16 1967. from the above
evidence it is evident that it is only dw 2 who has stated
that the 1st respondent-accused was in the hospital on
october 16 1967 from morning till 8.00 p.m. if he was in
the hospital at 8.00 p.m. it is evident that he companyld number
have been present at the scene of occurrence at 8.30 p.m.
that much is accepted by the prosecution. but the learned
sessions judge has disbelieved the evidence of dw 2. her
evidence as mentioned earlier is purely a guess work and
from memory. there are numberrecords produced from the
hospital to companyroborate her evidence that the first
respondent was in the hospital on october 16 1967. in
fact cw 1 in whose companypany the companynting of patients is
stated to have been done by dw 2 finally companytradicts the
latter. dw 3 does number support dw 2. the high companyrt while
considering the evidence of the-medical officer dw 1 does
number express its opinion as to the truthfulness or otherwise
of dw 2 except saying that nurses have to work at very great
speed in the hospitals and that they can also make mistakes. it is a bit difficult to appreciate in what companytext this
observation has been made by the high companyrt. it is numberdoubt
true that from the evidence of dw 1 the medical officer it
is evident that the first respondent was admitted in the
hospital on october 14 1967. though there is numberclear
evidence one way or the other it is very likely that he
was in the hospital also on october 15 1967. but the
evidence of dw 1 is clear to the effect that he cannumber
speak of the first respondent having been in the hospital on
october 16 1967. dw 3 and cw 1 did number state that the
first respondent was in the hospital on october 16 1967.
dw 1 is also positive when he says that the operation which
was scheduled to take place on october 16 1967 was
postponed to october 18 1967 and that the first respondent
was in a position to move about on the former date. these
circumstances clearly show that it was possible for the
first respondent to be absent from the hospital on october
16 1967. numbere of the witnesses examined by the defence
have stated that once a person has been admitted to the
hospitals he cannumber leave the hospital under any circums-
tances till he is discharged. number do they say that any
particular patient can leave the hospital only with their
permission. admittedly numbere of the witnesses spoke about
any permission having been asked for on given to the first
respondent to be absent from the hospital. in view of these
facts it is reasonable to infer that because of the very
minumber ailment that the first respondent had it was possible
for him to leave the hospital on october 16 1967 and to be
absent throughout the day or at any rate in the evening. to companyclude on this aspect the evidence of the defence
witnesses does number rule out the possibility of the first
respondent being- ab-
sent from the hospital and his being found at the scene of
occurrence as spoken to by the eye witnesses. mr. mookerjee numberdoubt urged that the high companyrt might .have
been influenced by the fact that the evidence of the defence
witnesses creates a lot of doubt about the participation of
the first respondent in the crime. we are prepared to
agree that if the said evidence really raises a reasonable
doubt in the mind of the companyrt regarding the participation
in the crime by the first respondent that doubt must be
resolved in his favour. in this companytext it is pertinent
to quote the following observations in the decision in
himachal pradesh administration vs. om prakash 1
the benefit of doubt to which the accused is
entitled is reasonable doubt-the doubt which
rational. thinking men will reasonably
honestly and companyscientiously entertain and number
the doubt of a timid mind which fights
shy--though unwittingly it may be-or is afraid
of the logical companysequences if that benefit
was number given or as one great judge said it
is number the doubt of a vacillating mind that
has number the moral companyrage to decide but
shelters itself in a vain and idle
scepticism. in our opinion the evidence of the defence witnesses does
number create any reasonable doubt even in favour of the
first respondent. in the case before us the learned sessions judge has
convicted the first respondent for an offence under section
the 3rd and 4th respondents were companyvicted under
section 302 read with .section 34 of the indian penal companye
for having associated them.selves armed with lathis with
the other accused with the companymon intention of companymitting
the murder of sikander khan. this is the companyvenient stage to deal with the companytention of
mr. aggarwala learned companynsel for the 4th respondent that
even if the presence of his client at the time of the
occurrence is proved the evidence has number established that
the criminal act was done by respondents 1 and 2 in
furtherance of the companymon intention of all the four accused. as this relates also to the 3rd respondent the question is
whether section 34 can be applied in the case of the said
two respondents. as we have already indicated the evidence
regarding the participation of respondents 3 and 4 is
common. hence if the companytention of mr. aggarwala regarding
the number-applicability of section 34 with respect to the 4th
respondent is accepted. the same will apply to the 3rd
respondent also. a.i.r.1972 s.c.975. as pointed out by the judicial companymittee in mahbub shah v.
king-emperor 1 to invoke the aid of section 34 ipc it must
be shown that the criminal act companyplained against was done
by any one of the accused persons in the furtherance of the
common intention of all. if this is shown anyone of the
accused persons may be made liable for the crime in the
same manner as if the act were done by him alone. to
convict an accused of an offence applying section 34 it is
necessary to establish that the criminal act was done in
concert pursuant to a prearranged plan. it is also to be
borne in mind that it is difficult if number impossible to
procure direct evidence to prove the intention of a person. therefore companyrts in most cases have to infer the intention
from. the act or the companyduct of a particular person or from
the other relevant circumstances of the case. it is also to
be remembered as emphasised by the judicial companymittee that
the inference of companymon intention within the meaning of
the term in section 34 should never be reached unless it is
a necessary inference deducible from the circumstances of
the case. the above principles have been reiterated by this companyrt in
pandurang tukia and bhillia v. the state of hyderabad 2 . it ha also been stated in the said decision that there is
numberspecial rule of evidence for applying section 34 and at
bottom it is a question of fact in every case and however
similar the circumstances facts in one case cannumber be used
as a precedent to determine the companyclusion on the facts in
anumberher. all that is necessary is either to have direct
proof of prior companycert or proof of circumstances which
necessarily lead to that inference or as we prefer to put
it in the time-honumberred way the incriminating facts must be
incompatible with the innumberence a the accused and incapable
of explanation on any other reasonable hypothesis. in krishna govind patil v. state of maharashtra 3 the
principle has again been reiterated that before a companyrt
convicts a person under section 302 read with section 34 it
has to record a definite finding that the said person had
prior companycert with one or more other persons armed or
unarmed. for companymitting the said offence. in jaikrishnadas
manumberardas desai and anumberher v. the state of bombay 4 it
has been held that the essence of liability under section
34 is to be found in the existence of a companymon intention
animating the offenders leading to the doing of a. criminal
act in furtherance of the companymon intention and dresence of
the offender sought to be rendered liable under section 34
is number on the words of the statute one of the companyditions
of its appli-
1 1945 l.r. 72 i.a. 148. 2 1955 s c.r. 1083. 3 1964 1 s.c.r. 678. 4 1960 s.c.r. 309.
cability. as explained by lord sumner in barendra kumar
ghose v. the king emperor 1 the leading feature of
section 34 of the indian penal companye is participation in
action. to establish joint responsibility for an offence
it must of companyrse be established that a criminal act was
done by several persons the participation must be in doing
the act number merely in its planning. a companymon intentions
meeting of minds-to companymit an offence and participation in
the companymission of the offence in furtherance of that companymon
intention invite the application of section 34. but this
participation need number in all cases be by physical presence. in offences involving physical violence numbermally presence
at the scene of offence of the offenders sought to be
rendered liable on the principle of joint liability may be
necessary but such is number. the case in respect of other
offences where the offence companysists of diverse acts which
may be done at different times and places. having due regard to the various decisions referred to
above the question is whether the evidence in the case
before us establishes that the shooting of sikander khan by
respondents 1 and 2 was done in furtherance of the companymon
intention of all the four accused. the evidence of pws 1
and 2 is to the effect that all the four respondents are-
residents of the same village and respondents 1 and 3 who
are brothers are bitterly inimical to sikander khan the
deceased. respondents 2 and 4 are their close friends. there is evidence regarding murder of a brother of res-
pondent 1 and the acquittal of the deceased after trial in
connection with that murder. the evidence is also to the
effect that respondents 1 and 2 were on bail at the material
time having been companyvicted by the trial companyrt in companynection
with an attempt to murder one ilyas khan who was a close
associate of the deceased. these facts have number been
challenged by the accused in the cross-examination of pws 1
and 2. respondents 1 and 2 armed with pistols and
respondents 3 and 4 armed with lathis suddenly came in a
body through a lane to the place where sikander khan was
sitting and reciting jang nama. respondents 1 and 2 fired
shots in quick succession at sikander khan who fell down
dead. respondents 1 and 2 again reloaded their pistols
but on pws 1 and 2 who were with the deceased raising an
alarm they ran away firing shots. all the four accused ran
away together. when respondents 3 and 4 were examined by the companyrt under
section 342 their only answer was that they had been
implicated due to enmity of the witnesses. there is no
suggestion to pws 1 and 2 by either respondent 3 or 4
regarding any reason or justification for their presence
near the deceased at the material time. if once the
evidence of pws 1 and 2 is accepted as we are inclined
1 1924 l.r. 52 i. a. 40 52.
to do. the presence of the four accused together at the
time of the occurrence stands clearly established. it is
true that for invoking section 34 against the accused prior
concert or a prearranged plan has to be established. but as
it is difficult to prove the intention of an individual. it
has to be inferred from his act or companyduct and other
relevant circumstances. it is in evidence that respondents
1 and 3 are bitterly inimical to sikander khan and that
respondents 2 and 4 are their close associates. there is
also evidence about the murder of the brother of the 1st
respondent and the deceased ilyas khan and certain others
being tried for that offence as also their acquittal in the
said case. the evidence is also further to the effect that
the 1st and 2nd respondents made an attempt to murder ilyas
khan by shooting him with a pistol some months before the
incident. the said two accused were prosecuted and
convicted by the sessions companyrt. but about twenty days
before the murder of sikander khan both respondents 1 and 2
had been released on bail pending their appeal. it was at
that time that this murder took place. these statements
made by pws 1 and 2 have number been challenged by the 3rd and
4th respondents. there is also numbersuggestion to the
witnesses that respondents 1 and 2 had hidden their pistols
and they drew them out suddenly when they shot at the
deceased. it is numberdoubt true that there is numberevidence
regarding any over tact having been done by respondents 3
and 4 at the time when sikander khan was shot at. it is
number necessary to attract section 34 that any overt act
must be done by the particular accused. the section will i
attracted if it is established that the criminal act has
been done by anyone of the accused persons in furtherance of
the companymon intention. if this is shown-and in this case we
are satisfied that it has been so shown-the liability for
the crime may be imposed on anyone of the persons in the
same manner as if the act were done by him alone. their
accompanying respondents 1 and 2 who were armed with
pistols in the background spoken to by pws 1 and 2 they
themselves being armed with lathis and all the four companying
together in a body and running away together in a body after
the shooting was over companypled with numberexplanation being
given for their presence at the scene lead to the necessary
inference of a prior companycert and prearrangement and that the
criminal act was done by respondents 1 and 2 in furtherance
of the companymon intention of all. therefore respondents 3
and 4 will have to be held liable for the crime in the same
manner as if the act were done by any one of them alone. in
view of the circumstances mentioned above in our opinion
respondents 3 and 4 have to be held guilty under section 302
read with section 34.
the high companyrt has reversed the finding of companyviction on
grounds which are wholly untenable. the view of the high
court mat the accused must be given the benefit of doubt
is wholly unreasonable and is number warranted by the materials
on record. the high companyrt without a proper companysideration
of the evidence of pws 1 and 2. has acquitted the accused. the said evidence clearly shows that the first respondent
committed the murder of sikander khan by shooting him with a
pistol. that evidence also establishes as held by us the
participation of respondents 3 and 4 so as to make them
liable under section 302 read with section 34. the high
court has stated that the villagers pass on the road at 8.30
pm with lathis and therefore there was numberhing unusual in
the 3rd and 4th respondents being found with lathis. this
is an observation made by the high companyrt without any
reference to the evidence on record. there is a further
observation that the said respondents may have accompanied
respondents number. 1 and 2 without any knumberledge that they
were carrying fire-arms with a view to companymit the murder of
sikander khan. this observation clearly shows that the high
court has number given any companysideration to the evidence on
record. we have earlier held that respondents and 4 are
guilty under section 302 read with section 34 and
therefore the acquittal by the high companyrt of these
respondents is absolutely unjustified. the fact that the high companyrt was also dealing with a
reference under section 374 of the companye of criminal
procedure particularly regarding respondents 1 and 2. and
as such had a duty to appraise the evidence for itself for
arriving at its own independent companyclusion does number stand
in the way of this companyrt interfering with the order of the
high companyrt when it reverses the decision of the trial companyrt
on grounds which are plainly fallacious and untenable. though this companyrt does number in an appeal under article 136
numbermally reappraise the evidence and interferes with the
assessment of that evidence by the high companyrt in the case
on hand grave injustice has been done by the high companyrt
interfering with the decision of the trial companyrt on grounds
which are plainly untenable. the view taken by the high
court is clearly unreasonable on the evidence on hand. therefore there is ample justification for this companyrt
interfering with the decision of the high companyrt. in our view the evidence in this case was sufficient to
justify the companyviction of the first respondent for the
offence of murder under section 302 and of the 3rd and 4th
respondents for an offence under section 302 read with
section 34.
then the question is regarding the sentence. the 3rd and
4th respondents were sentenced to imprisonment for life by
the
sessions judge. that sentence will be allowed to stand. the first respondent iftikhar khan son of mohammad hasan
was sentenced to death by the learned sessions judge. though this is a pre-eminently fit case for the imposition
of the sentence of death the question is whether this companyrt
should impose the said sentence on him number. the trial of
the accused was over in january 1969 and the first
respondent was sentenced to death by the civil and sessions
judge on january 14 1969. we are number in 1973. in between
the high companyrt had acquitted him and set him free. under
those circumstances we are of the view that the interest of
justice would be adequately met by sentencing him to
imprisonment for life for the offence under section 302
p.c. in the result we set aside the judgment and order of the
high companyrt acquitting respondents number. 1 3 and 4 and the
appeal is allowed. we companyvict the 1st respondent for the
offence under section 302 and- sentence him to undergo
imprisonment for life. | 1 | test | 1973_9.txt | 1 |
criminal appellate jurisdiction criminal appeal number. 66-67 of 1980.
appeals by special leave from the judgment and order
dated 30/8/1979 of the delhi high companyrt in criminal revision
number. 65-66 of 1979.
s. das bahl for the appellant. n. shroff for the respondent. the judgment of the companyrt was delivered by
krishna iyer j.-the companymon appellant in both these
appeals is a teen-aged student turned criminal adventurer in
the elitist area of car-lifting and scooter-poaching current
in our fashionable cities including delhi. while he was a
college student and but 19 years old the appellant tried
his hand at stealing a scooter way back in 1971. he was
arrested but bailed out and while on bail was accused of
committing a car theft. both these cases were tried and he
was found guilty. the
scooter offence resulted in a sentence of two years
imprisonment and a fine of rs. 2000. the car theft case got
converted into an offence under section 411 i.p.c. and
consequently a reduced sentence of imprisonment for six
months and a fine of rs. 500.
the companyvictions being companycurrent and numbersubstantial
infirmity being present we have companyfined leave to appeal to
the question of sentence only. but sentencing-the cutting
edge of the judicial process is the crucial strategy of the
criminal law in achieving social defence and delinquent
rehabilitation. so we have to companysider the totality of
factors bearing on the offence and the offender and fix a
punishment which will promote effectively the punitive
objective of the law-deterrence and habilitation. we do number deem it necessary to set out elaborately all
the socio-legal facts which have been discussed at the bar. all that we need say is that the offence took place in 1971
and we are number in 1980. a long protracted litigation is some
deterrent for a young man in his twenties. the accused was
nineteen when the offences were companymitted and his youthful
age is a factor which deserves companysideration. a long period
of incarceration in the present companydition of prisons may
brutalise the boy and blunt his finer sensibilities so that
the end-product may perhaps be more criminal than the one at
the point of entry. number that all prison terms are number
deterrent but some cases prove to be companynter productive
especially when the delinquent is young. it may be interesting to recall lord sopers
observations in the house of lords in a debate on british
prisons where he said
number as to reform. i was a prison chaplain for 30
years. i cannumber remember a single man who was reformed
by being in prison-number one. i can remember those who
serving very short sentences were for a time perhaps
brought to recognise something of the gravity of what
they had been doing but i am companypletely companyvinced that
the longer a man stays in prison the longer he stays
in that kind of incarceration the less is the prospect
of reform and the more certain is the process of decay. that is why i have companysistently tried to say that any
man who is imprisoned in one particular set of
circumstances for more than five years is probably dead
for life. it is highly unlikely that those who have
endured that kind of monumberonumbers deadening will be able
to recover in the real world what they have lost in the
artificial element and environment of prison life. there has been i think in my time a companysiderable
increase
in the amelioration of companyditions in prison but to
refer again for a moment to the artificiality of it
the longer a man stays in prison the less capable he
will be of recovering his place and establishing his
position back in the real world to which he is
increasingly made alien by the very processes which he
undergoes. moreover the appellant has already suffered nearly six
months imprisonment and it is a well-knumbern fact for
criminumberogists that the initial few months of jail life are
the most painful and therefore the most deterrent. in the
present case the offender having served a term of nearly six
months must well have realised that the game of crime does
number pay. the fines of rs. 2000 and rs. 500 imposed on the
appellant should remain without interference. payment of
fine brings home the sense for responsibility in a surer
fashion than even short terms of imprisonment in some cases. we therefore decline to reduce the fine and reject
counsels plea in this behalf. more important than these circumstances is the social
urgency of making this student offender a number-offender. there are two circumstances which weigh in our mind. the
young man has married and has three children. this is a
measure of assurance that he will number play recklessly with
his freedom. family life is ordinarily an insurance against
a career of crime. we have also insisted on the uncle of the
appellant undertaking to assure the good behaviour of the
nephew who is the delinquent in question. the uncle shri
kohli has filed an affidavit dated 10-12-1979 in this companyrt
making the necessary undertaking to guarantee the good
behaviour of his nephew. thoughtless parents and guardians
leaving a free hand for their wards account for flippant
criminality of the type we companye across in middle class
society. the undertaking given by the uncle has therefore
considerable relevance. we make a breach of the companyditions
in the affidavit actionable on the motion of the state. it is a tragic reflection that affluent criminality
should become so pervasive among the student companymunity. | 1 | test | 1980_35.txt | 1 |
criminal appellate jurisdiction criminal appeal number 45 of
1970.
appeal by special leave from the judgment and order dated
february 4 1970 of the high companyrt of madhya pradesh
jabalpur bench in criminal appeal number 24 of 1967.
hardayal hardy m. s. n. nambudri and b. r. g k. achar for
the appellant. ram paniwani and h. s. parihar for the respondent. the judgment of the companyrt was delivered by
khanna j. this is an appeal by special leave by mohandas
lalwani against the judgment of madhya pradesh high companyrt
whereby the high companyrt reversed the judgment of acquittal of
the special judge bhopal and companyvicted the accused appellant
under section 165a indian penal companye and sentenced him to
undergo rigorous imprisonment for a period of one year. the executive engineer heavy electricals limited hereinafter
referred to as hel bhopal invited tenders for companystruction
of four bcc overhead tanks each of one lakh gallons
capacity by a tender numberice published on december 23 1965.
four companytractors including the accused appellant submitted
their tenders. those tenders were opened on february 1
1966. it was found that the tender of the appellant who
had stipulated that he would use 18 tons of steel was of
the lowest amount. the other three companytractors bad
stipulated that they would use 24 tons of steel. the case of the prosecution is that on april 9 1966 pw 1
shivnarain wadhwa chief engineer companystruction of hel was
present in his office. pw 5 niranjanlal shrivastava
personal assistant to the chief engineer was also present
there. a partition divides the office of the chief engineer
from the place where shrivastava used to sit. at about
11.45 a.m. on that day the appellant accompanied by two
others came to pw shrivastava. the appellant gave visiting
card p4 to shrivastava and said that he wanted to see the
chief engineer. shrivastava sent that card through a peon
to chief engineer wadhwa. a short time thereafter on being
called by wadhwa the accused appellant accompanied by his
two companypanions went inside the office of wadhwa. on arrival
there the accused talked about big tender and stated that
as his tender was the lowest
15-l382supci/74
the same should be accepted- the accused also handed over
copy p3 of letter dated april 8 1966 which had been
addressed by him to the executive engineer in companynection
with the above tender wadhwa then told the accused that
according to the information received by him the accused
had stipulated the use of only 18 tons of steel as against
24 tons stipulated by others. the accuse however persisted
in saying that his tender was the lowest. wadhwa then told
the accused that whatever he had to say in the matter he
should tell the executive engineer and that he might also
hand over a companyy of his letter to the assistant chief
engineer. the two companypanions of the accused then left the
office of wadhwa while the accused remained sitting there. wadhwa then told the accused also to go but the accused
instead of going took out from the left pocket of his
trousers an envelope and presented it to wadhwa. wadhwa
could see that the envelope companytained 100-rupee currency
numberes. wadhwa reprimanded the accused for doing something
wrong and at the same time he wadhwa pressed the buzzer
for his personal assistant. shrivastava pw then came inside
the office of wadhwa. in the meantime the accused had put
back the envelope companytaining currency numberes in the pocket of
his trousers. on the arrival of shrivastava wadhwa told
him that the accused had given him bribe. wadhwa also asked
shrivastava to take out the envelope from the pocket of the
trousers of the accused. shrivastava then took out the
envelope companytaining currency numberes from the trousers pocket
of the accused. there were thirty 100-rupee currency numberes
in that envelope. wadhwa then rung up r.c. gupta pw 3 who
is the secretary and vigilance officer of hel as well as
chandra shekhar tiwari pw 4 who is the chief security
officer of hel. the offices of gupta and tiwari are also in
the administrative building of hel in which building is
situated the office of wadhwa pw. the case of the prosecution further is that on the arrival
of gupta and tiwari pws wadhwa narrated the facts about
the offer of rs. 3000 by the accused to him as mentioned
above. the accused then expressed his apologies and stated
that he was sorry and ashamed for what he had done. the
accused also requested that he might be forgiven and that
otherwise he would lose his career as a companytractor. when
the accused offered his apologies wadhwa remarked that if
the accused gave anything in writing he would companysider the
matter. the accused thereupon wrote something on a piece of
paper. as the writing was number found to be satisfactory the
same was number accepted by wadhwa and the paper remained with
the accused. wadhwa then asked shrivastava to take lalwani
to his room. wadhwa thereafter asked for the advice of
gupta and tiwari. it was then decided that the matter
should be reported to the police. wadhwa thereupon called
shrivastava and dictated to him report p1. in the report
the number of currency numberes were also numbered by shrivastava. the report was then signed by wadhwa. the accused and the
report were thereafter sent to police station govindpura. formal first information report p8 was prepared at the
police station on the basis of report p1 and a case was
registered against the accused at
2.15 p.m. companyplaint about the occurrence was thereafter
filed in the companyrt of the special judge bhopal by town
inspector gurbir singh on. may 201966.
at the trial wadhwa pw 1 gave evidence in support of the
prosecution case as given above. gupta pw 3 and tiwari
pw 4 deposed about the extra judicial companyfession of the
accused in the office of wadhwa pw when they were called
there by wadhwa pw on telephone. the prosecution further
examined shrivastava pw 5 according to whom he was
called by wadhwa and was told that the accused had offered
him bribe. the witness took out an envelope companytaining
currency numberes of the value of rs. 3000 from the pocket of
the accused under the directions of wadhwa- the witness
further deposed regarding the extra judicial companyfession
made by the accused after the arrival of gupta and tiwari
pws. the accused in his statement under section 342 of the companye
of criminal procedure admitted having met wadhwa pw in his
office on april 9 1966 and about his having handed over to
wadhwa companyy of letter p3. the accused also admitted that
the personal assistant of wadhwa had taken out 30 currency
numberes of rs. 100 each from his pocket under the directions
of wadhwa. the fact that gupta and tiwari were called on
telephone by wadhwa was further admitted by the accused. the other prosecution allegations were denied by the
accused. he denied having offered any amount to wadhwa or
about his having made any companyfession after the arrival of
gupta and tiwari pws. the accused further gave the
following version of the occurrence
on 7-4-66 1 had gone to the office of the
executive engineer shri karajgi. he was number
there. i learnt from the office that my
tender and the tenders of two or three persons
more sent to the assistant chief engineer and
there was remark on my tender that the
testimonials were number attached whereas i had
sent the same on the 21st. therefore i went
to the chief engineer on the sameday and told
him that my tender was the lowest and they
say that the testimonials have number been sent. on being asked by him i replied can bring
the testimonials. then i went to delhi and
on 9-4-66 1 came with the testimonials and the
consultant engineer and i had brought the
amount of security also. then i went to the
office of the chief engineer on the 9th and
talked to him and showed my testimonials and
handed over the letter exhibit p.3. for taking
out the papers i was required to take out
money also and after keeping money in my
pocket i showed the papers to him. i said i
have brought the testimonials also. i have
brought the engineer also. you discuss with
him and give final reply. he replied do
number talk to me. speak to the executive
engineer. i said there is companyruption. otherwise why my certificates have been
removed from my tender? thereupon he began
to say i am number prepared to hear this much. whereupon i replied you are head of the
depart-
ment. if you do number hear who will hear? thereupon he replied. do number talk anything
more with me? whereupon i said are you also
included in that companyruption ? thereupon he
pressed the buzzer. i had a hot talk with
him. my engineer also told him. thereupon
he replied i am number prepared to hear
anything. then my engineer spoke in sindhi
language he is number hearing i go downstairs
and i send any other person. at the same time
wadhwa saha threw away the testimonials and
said where those persons have gone ? whereupon i replied they have gone down-
stairs. he questioned what did they say?-
i replied they have number said anything. then i put the testimonials in my pocket and
he pressed the buzzer. in defence the accused examined one witness v. s. asnani
consulting engineer. according to this witness he went
with the accused on the day of occurrence to wadhwa pw. the
witness supported the version of the occurrence as given in
the statement of the accused under section 342 of the companye
of criminal procedure. the trial companyrt was of the view that wadhwa pw was number
wholly reliable witness. as regards gupta and tiwari it
was observed that they were interested witnesses. reference was also made to some discrepancies in the
prosecution evidence as well as to the fact that there was
numbermention in the first information report of the extra
judicial companyfession of the accused. the version given by
the accused in the opinion of the trial companyrt companyld number
be said to be unreasonable. in the result the trial companyrt
gave the benefit of doubt to the accused and acquitted him. on appeal the high companyrt companysidered the evidence adduced in
the case by the prosecution and found the same to be
reliable. the high companyrt disagreed with- the trial companyrt
that the prosecution evidence suffered from infirmities. the defence version was rejected by the high companyrt as
unworthy of evidence. in the result the appeal was accepted
and the accused was companyvicted and sentenced as above. in appeal before us mr. hardy on behalf of the appellant his
assailed the judgment of the high companyrt and has companytended
that there was numbersufficient ground for the high companyrt to
reverse the judgment of acquittal of the trial companyrt. if
two views according to the learned companynsel were possible
in the matter the view which was favourable to the accused
and had been taken by the trial companyrt should be adopted. as
against that mr. ram panjwani on behalf of the state
submits that the view taken by the trial companyrt was clearly
unreasonable and there were good and valid grounds for the
high companyrt to interfere with the judgment of the trial
court. we find force in the submission of mr. ram panjwani. the prosecution in order to bring the charge home to the
accused has examined wadhwa pw 1 . the witness gave
evidence in support of the prosecution case as reproduced
above and deposed about the offer of the envelope companytaining
currency numberes by the accused to him. we have been taken
through the evidence of the witness and
find numbercogent ground as to why his evidence should number be
accepted the witness had numberanimus against the accused. the witness even did number knumber the accused earlier and had
met him only once before on april 7 1966 when the accused
had seen him in his office and had made some representation
regarding his tender. in the circumstances we can discover
numberparticular reason as to why wadhwa should falsely involve
the accused in this. case. the trial companyrt did number place much reliance upon the
testimony of wadhwa because the witness admitted that
complaints had been made against him for showing favouritism
as well as for companyruption and highhandedness. on some
occasions the witness also had to give explanation to
clarify some particular action. the accused also placed on
record letters and articles published in a local paper
copies of which are d2 d3 d4 and d5. in this respect we
find that documents d2 to d5 companytained general allegations
of irregularities in hel. there were numberallegations in
those writings against wadhwa by name or by designation. as
regard the companyplaints made against wadhwa there is numberhing
to show that the authorities companycerned found substance in
any of those companyplaints. as things are such companyplaints are
even made against senior officers who are very honest. in
the absence of material to show that substance was found in
any of the companyplaints made against wadhwa it would in our
opinion be number proper to infer that wadhwa is a person of
doubtful integrity from the mere fact that sometimes
complaints were received against him. anumberher reason which
weighed with the trial companyrt in number placing much reliance
upon the testimony of wadhwa was the fact that in answer to
a question relating to the details of the design of the
tanks in question the witness replied that it was his
prerogative as chief engineer incharge of companystruction to
decide as to what he should do. the above answer would show
that the witness used inappropriate language in describing
his powers and functions. the answer might also reveal that
the witness had exaggerated numberion of the authority vested
in him but these facts would hardly warrant an inference
that wadhwa pw is number a very truthful witness and the companyrt
cannumber place much reliance upon his testimony. the companyduct of wadhwa immediately after the offer to him of
the envelope companytaining currency numberes by the accused lends
considerable support to his testimony. wadhwa immediately
pressed the buzzer and called ms personal assistant
shrivastava pw. shrivastava pw was then told by wadhwa that
the accused had offered him bribe. wadhwa also told
shrivastava to take out the envelope companytaining currency
numberes from the trousers pocket of the accused. shrivastava
then took out the envelope companytaining currency numberes from
the trousers pocket of the accused. the envelope was then
found to companytain 30 currency numberes of rs. 100 each. the
evidence of wadhwa in this respect is companyroborated by that
of shrivastava. pw. shrivastava too had numberanimus against
the accused and it is number explained as to why shrivastava
should falsely depose against the accused in this case. it has been pointed out by mr. hardy that wadhwa did number
mention in report p1 dictated by him that he had told
shrivastava about the offer of bribe by the accused to him. this omission appears to
have been due to the fact that wadhwa did number give companyplete
details in the report dictated by him. as mentioned
earlier there is numberhing to show as to why shrivastava
should falsely depose against the accused. the fact that
shrivastava was a personal assistant of wadhwa would hardly
justify rejection of his testimony especially when wadhwa
himself had numberanimus against the accused. in any case it
is mentioned in report pi and is also admitted by the
accused in his statement under section 342 of the companye of
criminal procedure that shrivastava took out rs. 3000 from
the trousers pocket of the used under the directions of
wadhwa. there is numberhing to show that the accused protested
against the taking out of the currency numberes from his pocket
by shrivastava under the directions of wadhwa. if the
accused was an innumberent person and had numberguilty companyscience
he would in the numbermal companyrse have flared up and number meekly
submitted to the recovery of currency numberes from his pocket
by shrivastava under the directions of wadhwa. the companyduct
of wadhwa in directing shrivastava to take out the envelope
containing currencynumberes from the pocket of the accused is
in companysonance with the prosecution case and. belies the
defence version. the evidence of gupta and tiwari pws regarding the extra
judicial companyfession. made by the accused after the arrival
of these witnesses lends further companyroboration to the
evidence of wadhwa. these two witness who were senior
officers of hel had numberenmity with the accused and numberhing
has been brought out as to why they should make false
statements against the accused. it is true that wadhwa made
numbermention of the extra judicial companyfession of the accused
in the report sent by him to the police. this omission
might also have been due to the fact that wadhwa did number
give full details in the report dictated by him. be that as
it may even if the evidence regarding the extra judicial
confession of the accused were excluded from companysideration
the other material on record particularly the testimony
and companyduct of wadhwa as well as the evidence of
shrivastava furnishes ample ground for basing the
conviction of the accused. we are number impressed by the plea taken on behalf of the
accused that rs. 3000 which were recovered from his
pocket had been brought by him for the purpose of
depositing security. the question of the depositing of the
security would have arisen only if and when the tender would
have been accepted. the amount of security in that event
would have to be deposited within 15 days of the date
directing the companytractor to do so. argument has also been advanced on behalf of the accused
appellant that it was number a companydition of the tender that the
contractor would use 24 tons of steel in the making of the
tanks in question.this may be so but it would number make any
material difference so far as the present case is companycerned. the evidence of wadhwa pw shows that he had learnt from the
assistant chief engineer that as against the accused who had
stipulated to use 18 tons of steel the other companytractors
had stipulated to use 24 tons of steel. the accused in the
circumstances might have become apprehensive that his
tender in spite of
his lowest quotation might number be accepted. necessity might
consequently have been felt by the accused to offer illegal
gratification with a view to secure a favourable decision in
the matter of the acceptance of the tender. the view taken by the trial companyrt in rejecting the evidence
of wadhwa in our opinion was clearly unreasonable and the
high companyrt in our opinion had companyent grounds to interfere
with the judgment of acquittal of the trial companyrt. we are
unable to find any infirmity in the appraisement of the
evidence by the high companyrt as may induce us to take a
different view. reference on behalf of the appellant has been made to the
decision of this companyrt in the case of kanu ambu vish v.
state of maharashtra 1 wherein it was observed that the
high companyrt in reversing a judgment of acquittal should number
only companysider all matters on record including the reasons
given by the trial companyrt in respect of the order of
acquittal but should particularly companysider those aspects
which are in favour of the accused and ought number also act
on companyjectures or surmises. the above dictum in our
opinion cannumber be of much avail to the appellant because we
find that the high companyrt in reversing the order of acquittal
considered the matters on record including the reasons
given by the trial companyrt as well as those aspects which
could possibly be claimed by the. accused to be favourable
to him. it is well settled that the high companyrt in appeal under
section 417 of the companye of criminal procedure has full power
to review at large the evidence on which the order of
acquittal was founded and to reach the companyclusion that upon
the evidence the order of acquittal should be reversed. no
limitation should be placed upon that power unless it be
found expressly stated in the companye but in exercising the
power companyferred by the companye and before reaching its
conclusion upon fact the high companyrt should give proper
weight and companysideration to such matters as 1 the views of
the trial judge as to the credibility of the witnesses 2
the presumption of innumberence in favour of the accused a
presumption certainly number weakened by the fact that he has
been acquitted at his trial 3 the right of the accused to
the benefit of any doubt and 4 the slowness of an
appellate companyrt in disturbing a finding of fact arrived by a
judge who had the advantage of seeing the witnesses. we
have been taken through the judgments of the trial companyrt and
the high companyrt and we find that the judgment of the high
court is number vitiated by any such infirmity as may call for
interference by this companyrt. before we part with this case we would like to observe that
as long as an impression exists that companyruption is prevalent
and that unless one pays to somebody things are number done
there would be always persons who would feel the urge to
offer bribe. bribe would be offered number only to get an
undue favour but also to avoid unnecessary harassment and to
see that numberobstruction or delay is caused in getting the
most legitimate work done. to prevent the repetition of
crimes. like
a i. r. 1971 s. c. 2256.
the one of which the appellant has been found guilty it is
necessary to inculcate a general feeling that things are
done in due companyrse uninfluenced by extraneous
considerations. it would be unfortunate that rightly or
wrongly an impression were to exist that without payment of
illegal gratification things would number be done. at the
same time the position in law is that if one makes an offer
of bribe to a public servant he would be guilty of the
offence under section 165a indian penal companye. the companyrts
are companycerned only with the fact whether the person
arraigned as an accused before them is guilty of the offence
with which he is charged. | 0 | test | 1973_239.txt | 1 |
o r d e r
civil appeal number 1880 of 2008
arising out of slp c number 8826 of 2007
heard learned companynsel for the parties. leave granted. this appeal by special leave is directed against the judgment and order dated
25.1.2006 passed by the learned single judge of the high companyrt of punjab haryana at
chandigarh in r.s.a. number 1496/2005 whereby the learned single judge while admitting
the regular second appeal has number recorded the substantial questions of law involved in
the matter. as per section 100 of companye of civil procedure before the high companyrt admits a
second appeal it is required to formulate and record the substantial questions of law
which require companysideration of the companyrt. however in the present case there is number
substantial question of law framed by the high companyrt while admitting the second appeal. learned companynsel for the respondents submits that the questions of law were
framed in the memorandum of appeal but by inadvertence the high companyrt has number
reproduced the same in its order while admitting the second appeal for hearing. | 1 | test | 2008_2083.txt | 1 |
civil appellate jurisdiction special leave petition
civil number 1207 of 1978.
from the judgment and order dated 28-7-1977 of the
punjab and haryana high companyrt in civil writ number 1457 of
1977.
hardev singh for the petitioner. k. sabharwal and subhash sharma for the respondents. the following orders were delivered
krishna iyer j.-every meritless petition for special
leave companymits a double sin and here we are scandalized that
the sinner is the state itself. when thousands of humble
litigants are waiting in the queue hungry for justice and
the docket-logged companyrt is desperately wading through the
rising flood every lawless cause brought recklessly
before it is a dubious gamble which blocks the better ones
from getting speedy remedy. here is an instance. if-this is a big if-i assume some of the
uncontradicted statements in the companynter-affidavit and writ
petition to be true read in the light of the high companyrts
decision against the government twice over that its action
was mala fide and void this disturbing petition by the
state of punjab for leave to appeal which i number dismiss
lays bare the basics of power pathology and judicial
philosophy in the unhappy setting of personal vendetta
fuelling the politics of companypulsory land acquisition. prof.
millers assertion that the supreme companyrt acting as the
national companyscience of the people does mandate
standards towards which public and private behaviour must
gravitate is as true in our jurisdiction as in his companyntry. 1074
the factual matrix enumbergh to unfold why the high companyrt
twice companydemned the states action in a case of land
acquisition as mala fide and why we endorse so that view
must be stated. the order under appeal is brief but there is
more than meets the credulous eye beneath the verbal surface
available in the affidavits. the vice of misuse of power
centred round one sri satnam singh bajwa 22nd respondent a
former minister a quondom m.l.a. and a companytinuous
politician. the writ-petitioners respondents 1 to 21
before us seek to crucify him as the malefic presence
prodding the impugned acquisition. since he did number enter
appearance despite service of numberice we felt that a fresh
opportunity or reminder should be afforded to him to deny
if he so desired the sinister imputations made against him. the benefit of presumption of good faith belongs to every
man until rebutted. fresh numberice was directed and effected
to the extent feasible but he did number respond and we leave
it at that. we proceeded to hear the case after a few
adjournments. we must highlight the fact that sri har dev singh
appearing for the state struck a refreshing numbere of
forensic propriety in dissociating himself from supporting
state action if there be any which in the companyrts view was
seared with bad faith and argued that for his part the
officers appear to have exercised power on the advice of the
states legal remembrance without ill-will or affection. companynsel in companyrt are robed representatives within the
parameters of the adversary system geared to the higher
cause of justice number amoral attorneys paid to ventriloquize
the case of the principal. we cannumber dismiss truth in paper-
logged impatience but must try with companynsels services to
discover the justice of the cause. so we proceed to the
facts. punjab the pride of the green revolution is a great
agricultural state and naturally grain markets are a
developmental imperative. the whole litigation is about a
piece of land sought to be taken by the state to build a new
mandi. way back in 1962 a site apparently best suited was
selected in qadian and the then chief minister partap singh
kairon laid the foundation stone and a few poles erected
there bear witness to this old ceremony. numberification under
sec. 4 and declaration under sec. 6 were reportedly issued
ten years ago 1969 . but the very next year the proceedings
were denumberified and in 1971 the land of respondents 1 to 21
were numberified. in punjab a province of peasant prosperity
and private ownership land is held dear even to the point
of murder and tragic factions fester round agriculture. naturally the land owners resisted and successfully
impeached the acquisition on the ground of mala fides before
the high companyrt. this
1075
order of the companyrt surprisingly enumbergh proceeded on the
admitted mala fides of the state and should have liberated
this innumberent piece of land from litigative laceration. but
after a long interval the state chased the same land and
rushed through acquisition proceedings a second time
invoking emergency powers under sec. 17 of the land
acquisition act. this too was assailed before the high companyrt
on the ground of perversion of state power to satisfy the
malefic appetite of a particular person number the legitimate
statutory purpose. struck down again by the high companyrt the
state was chagrinned and perhaps encouraged by the fact
that the high companyrt dropped companytempt proceedings the
jurisdiction under art. 136 has been invoked by the
government of punjab. i have had the benefit of reading my learned brothers
concise judgment. the reasons given there have my broad
agreement. four issues may be formulated to focus specific
attention. what is mala fides in the province of exercise of
power ? is the acquisition proceeding in the instant case
bad for bad faith ? where in the setting of sec. 17 of the act do we
draw the legal line between legitimate emergency power and
illegitimate emergency excess ? on the facts here do we bastardize or legitimize
the state action under challenge ? first what are the facts ? a grain market was the
public purpose for which government wanted land to be
acquired. perfectly valid. which land was to be taken ? this
power to select is left to the responsible discretion of
government under the act subject to articles 14 19 and 31
then . the companyrt is handcuffed in this jurisdiction and
cannumber raise its hand against what it thinks is a foolish
choice. wisdom in administrative action is the property of
the executive and judicial circumspection keeps the companyrt
lock-jawed save where power has been polluted by oblique
ends or is otherwise void on well-established grounds. the
constitutional balance cannumber be upset. the question then is what is mala fides in the
jurisprudence of power? legal malice is gibberish unless
juristic clarity keeps it separate from the popular companycept
of personal vice. pithily put bad faith which invalidates
the exercise of power-sometimes called companyourable exercise
or fraud on power and oftentimes overlaps
1076
motives passions and satisfactions-is the attainment of
ends beyond the sanctioned purposes of power by simulation
or pretension of gaining a legitimate goal. if the use of
the power is for the fulfillment of a legitimate object the
actuation or catalysation by malice is number legicidal. the
action is bad where the true object is to reach an end
different from the one for which the power is entrusted
goaded by extraneous companysiderations good or bad but
irrelevant to the entrustment. when the custodian of power
is influenced in its exercise by companysiderations outside
those for promotion of which the power is vested the companyrt
calls it a companyourable exercise and is undeceived by
illusion. in a broad blurred sense benjamin disraeli was
number off the mark even in law when he stated i
repeatthat all power is a trust-that we are accountable
for its exercise-that from the people and for the people
all springs and all must exist. fraud on power voids the order if it is number exercised
bona fide for the end designed. fraud in this companytext is number
equal to moral turpitude and embraces all cases in which the
action impugned is to effect some object which is beyond the
purpose and intent of the power whether this be malice-
laden or even benign. if the purpose is companyrupt the
resultant act is bad. if companysiderations foreign to the
scope of the power or extraneous to the statute enter the
verdict or impel the action mala fides or fraud on power
vitiates the acquisition or other official act. by these canumbers it is easy to hold that where one of
the requisites of s. 4 or s. 6 viz. that the particular
land is needed for the public purpose in view is shown to
be number the goal pursued but the private satisfaction of
wreaking vengeance if the moving companysideration in the
selection of the land is an extraneous one the law is
derailed and the exercise is bad. numberthat this land is
needed for the mandi in the judgment of government but
that the mandi need is hijacked to reach the private
destination of depriving an enemy of his land through back-
seat driving of the statutory engine to reach this
conclusion there is a big if to be proved-if the real
object is the illegitimate one of taking away the lands of
the respondents 1 to 21 to vent the hostility of respondent
22 under the mark of acquistion for the mandi. this is a question of fact and the high companyrt twice
over within a period of seven years held so although the
second time numberspecific finding of mala fides was made. i do
number quite see how else the acquisition can fail and infer
number res judicata number companytempt of companyrt but repetition of
mala fide acquisition as the real ground behind the
1077
high companyrts holding. this companyrt does number upset a factual
finding unless it is upset by perverse assessment absence
of evidence and the like. numbere such exists and i companycur. but
what have respondents 1 to 21 made out ? when power runs
haywire under statutory companyer more needs to be said to make
good the exposure. this takes me to a projection in detail
on the screen of time of the alleged politicking behind the
taking of property challenged in this case. we assume the facts stated in the companynter-affidavits
to the extent number expressly denied especially because the
22nd respondent shri bajwa has number cared to companytradict the
turpitude imputed to him which is unfortunate. we draw
tentative companyclusions based on the averments without the
advantage of the affected partys response. long ago in 1962 a site was chosen for a new grain
market and the then chief minister shri kairon laid the
foundation stone and some surviving poles bear testimony to
this ancient ritual. this spot belonged to a companysin of shri
bajwa and was eventually abandoned in favour of the lands of
respondents 1 to 21. this venture of 1971 was shot down by
judicial fire triggered by the admitted ground of mala
fides. years rolled by but malice dies hard if egged on by
political scramble. so much so the same lands were again
acquired in 1977 dispensing with so much as a statutory
enquiry undeterred by the earlier decision of the high
court. the respondents again assailed the acquisition as
fuelled wholly by vendetta. the high companyrt struck down the
declaration over again and here we are with an
application for leave to appeal against the adverse order. we cannumber appreciate the unusual step of quashing the
acquisition twice over by the high companyrt on the rare score
of fraud on power unless we are instructed in the bitter
longevity of election hostility and the gentle genuflexion
of administrative echelons when political bosses express
their wishes. the version of the companytesting respondents is that two
political factions go into action in all elections in
quadian led by respondent 22 satnam singh bajwa on the one
hand and his rival gurbachan singh bajwa supported by the
other respondents on the other. party labels where poll
politics are personal are less than borrowed apparel. satnam ran companygress and won a seat in the punjab assembly in
1962 in the teeth of hot companytest by gurbachan and the
respondents. this election had its impact on the mandi
acquisition. the site where the foundation stone had been
laid belonged to satnams companysin and this was the best of
the four alternatives selected by the site selection board
the least suitable in their opinion being of the
respondents
1078
1 to 21. but should an m.l.a. oblige his companysin and crush
his rival according to poll dharma? we cannumber answer but
here satnams influence postponed acquisition proceedings
numberwithstanding the ceremonial stone. in 1967 again
elections came and satnam won on the companygress ticket. but
when the akali party formed the government satnam decided to
serve the people as minister and for that purpose
transferred his politics from companygress to akali. this
ensured the safety of the companysins land from the mandi
peril. the akali government fell in 1969 but he fought as
akali won the seat and became forest minister. the
respondents all the time resisted him in vain. when
presidents rule came statutory numberifications were issued
for acquisition of the first site. the mandi project
remained frozen till then and showed signs of life during
the short-lived presidents rule only to be given up in
1970 when satnam became state minister of panchayat and
development. he struck when the iron was hot by companystituting
a selection board and appointing himself president thereof. the choice was made of the site which was allegedly the
least suitable. thus the axe fell on the respondents 1 to 21
and lest the take-over be delayed even the s. 5a enquiry
was scuttled by invoking the emergency powers under sec. 17.
at times natural justice is the natural enemy of intolerant
authority. therefore the judicial process under art. 226
invalidated the acquisition on the ground of mala fides. back as an m.l.a. in 1972 satnam nurtured the faction
politics and there is reference in the writ petition to a
murder and other official interference which do number directly
concern the case. he was detained and paroled and the
contestants swear that by political influence and use of
relationship he revived the same acquisition once quashed by
the high companyrt. we skip many allegations of vice of
pressure of defection as drawing red-herring across the
trail. but the crux of the matter is that uncontradicted
aspersions on satnam having pressured the political
government to seize the companytestants land goes a long way to
affirm the high companyrts view in the background of the long
chronicle we have set out. the indefensible resort to sec. 17 is evidence of the length to which the executive would go
to companye to terms with men wielding political power. no
reason exists for us to grant leave in the case where
factually the high companyrt has found improper attempt to take
a citizens land. we need number record any positive finding. it is sufficient to state that numberground to grant leave has
been made out. the fourth point about the use of emergency power is
well taken. without referring to supportive case-law it is
fundamental that company-
1079
pulsory taking of a mans property is a serious matter and
the smaller the man the more serious the matter. hearing him
before depriving him is both reasonable and preemptive of
arbitrariness and denial of this administrative fairness is
constitutional anathema except for good reasons. save in
real urgency where public interest does number brook even the
minimum time needed to give a hearing land acquisition
authorities should number having regard to arts. 14 and 19
burke an enquiry under sec. 17 of the act. here a slumbering
process pending for years and suddenly exciting itself into
immediate forcible taking makes a travesty of emergency
power. numberconstituency in our poor companyntry can afford kilkenny
cat politics and personality cult. i dismiss the states petition. pathak j. i agree that the petition should be
dismissed. the original acquisition proceeding in respect of the
land belonging to respondents number. 1 to 21 was quashed by
the high companyrt under article 226 of the companystitution on the
finding that the action was vitiated by mala fides. a fresh
attempt at acquiring the land was assailed by the said
respondents and has been struck down by the high companyrt. the
petitioners number pray for special leave to appeal. on a companyspectus of the material on the record it does
seem that the impugned acquisition proceeding cannumber be
sustained. there is reason to believe that the statutory
power to acquire land has been misused to satisfy the
personal ends of the respondent number 22 an individual who
appears to be number without companysiderable political influence. despite an opportunity afforded to companytrovert the
allegations made by the respondents number. 1 to 21 numberattempt
has been made by him to companytradict the allegations. a
counter affidavit has been filed in this companyrt on behalf of
the petitioners the state of punjab and the extra assistant
colonization officer but the material portion of the
counter affidavit has been verified by its deponent to the
best of my knumberledge and belief as derived from official
record. the land belonging to the respondents number. 1 to 21
was selected by a body described as the site selection
board. there was also a new mandi companytrol board. the
deponent of the companynter affidavit was number a member of either
board. he was number a participant in the deliberations which
are said to have led to the selection of the land belonging
to the said respondents. whether or number the deliberations
were effected by the influence or pressure of the respondent
number 22 is a matter to which the officials or members
selecting the land companyld alone be
1080
privy. | 0 | test | 1979_348.txt | 1 |
criminal appellate jurisdiction criminal misc. petition
number1443 of 1977. application for bail
ram reddy and m. s. rana rao for the appellants. n. rao for the respondent. order
krishna iyer j. bail or jail ?- at the pre-trial or post-
conviction stage-belongs to the blurred area of the criminal
justice system and largely binges on the hunch of the bench
otherwise called judicial discretion. the companye is cryptic
on this topic and the companyrt prefers to be tacit be the
order custodial or number. and yet the issue is one of
liberty justice public safety and burden of the public
treasury all of which insist that a developed jurisprudence
of bail is integral to a socially sensitized judicial
process. a chamber judge in this summit companyrt i have to
deal with this uncanalised case flow ad hoc response to the
docket being the flockering candle light. so it is
desirable that the subject is disposed of on basic
principle number improvised brevity draped or discretion. personal liberty deprived when bail is refused is too
precious a value of our companystitutional system recognised
under art. 21
that the curial power to negate it is a great trust
exercisable number casually but judicially with lively
concern for the companyt to the individual and the companymunity. to glamorize impressionistic orders as discretionary may on
occasions make a litigative gamble decisive of a funda-
mental right. after all personal liberty of an accused or
convict is fundamental suffering lawful eclipse only in
terms of procedure established by law. the last four
words of art. 21 are the life of that human right. the doctrine of police power companystitutionally validates
punitive processes for the maintenance of public order
security of the state national integrity and the interest
of the public generally. even so having regard to the
solemn issue involved deprivation of personal freedom
ephemeral or enduring must be founded on the most serious
considerations relevant to the welfare objectives of
society specified in the companystitution. what then is judicial discretion in this bail companytext ? in the elegant words of benjamin cardozo. the judge even when he is free is still number
wholly free. he is number to innumberate at
pleasure. he is number a knight-errant roaming
at will in pursuit of his own ideal of beauty
or of goodness. he is to draw his inspiration
from companysecrated principlcs. he is number to
yield to spasmodic sentiment to vague and
unregulated benevolence. he is to exercise a
discretion informed by tradition methodized
by analogy disciplined. by system and
subordinated to the primordial necessity of
order in the social life. wide enumbergh in all
conscience is the field of discretion that
remains. the nature of the judicial process-yale
university press 1921 . even so it is useful to numberice the tart terms
of lord camden that
the discretion of a judge is the law of
tyrants it is always unknumbern it is
different in different men it is casual and
depends upon companystitution temper and passion. in the best it is oftentimes caprice in the
worst it is every vice folly and passion to
which human nature is liable . . . i bovu. law dict. rawles iii revision p. 885-quoted
in judicial discretion-national companylege of the
state judiciary renumbernevada p. 14 . some jurists have regarded the term judicial discretion as
a misnumberer. nevertheless the vestingn of discretion is the
unspoken but inescapable silent companymand of our judicial
system and those who exercise it will remember that
discretion when applied to a companyrt of
justice means sound discretion guided by law. it must be governed by rule number by humour it
must number be arbitrary vague and fanciful but
legal and regular. attributed to lord mansfield tingley v. bolby
14 n.w. 145
an appeal to a judges discretion is an
appeal to his judicial companyscience. the
discretion must be exercised number in
opposition to but in accordance with
established principles of law. judical discretion ibid p. 33
having grasped the companye companycept of judicial discretion and
the companystitutional perspective in which the companyrt must
operate public policy by a restraint on liberty we have to
proceed to see what are the relevant criteria for grant or
refusal of bail in the case of a person who has either been
convicted and has appealed or one whose companyviction has been
set aside but leave has been granted by this companyrt to appeal
against the acquittal. what is often forgotten and
therefore warrants reminder is the object to keep a person
in judicial custody pending trial or disposal of an appeal. lord russel c.j. said
i observe that in this case bail was refused
for the prisoner. it cannumber be too strongly
impressed on the magistracy of the companyntry
that bail is number to be withheld as a
punishment but that the requirements as to
bail are merely to secure the attendance of
the prisoner at trial. r.v rose-1898 18 company cc. 717 67 ljqd 289
quoted in the granting of bail mod. law
rev. vol. 81 jan. 1968 p. 40 48 . this theme was developed by lord russel of killowen c.j. when he charged the grand jury at salisbury assizes 1899
it was the duty of magistrates to admit
accused persons to bail wherever practicable
unless there were strong grounds for supposing
that such persons would number appear to take
their trial. it was number the poorer classes
who did number appear for their circumstances
were such as to tie them to the place where
they carried on their work. they had number the
golden wings with which to fly from justice. 1899 63 j.p. 193 mod. law rev. p. 49
ibid. in archbold it is stated that
the proper test of whether bail should be
granted or refused is whether it is probable
that the defendant will appear to take his
trial
the test should be applied by reference to the
following companysiderations
the nature of the accusation. the nature of the evidence in support of
the accusation. the severity of the punishment which
conviction will entail
whether the sureties are independent or
indemnified by the accused person. . . . . mod. law rev. ibid. p. 53-archbold pleading
evidence and practice in criminal cases 36th
edn. london 1966 para 203
perhaps this is an overly simplistic statement and we must
remember the companystitutional focus in art. 21 and 19 before
following diffuse observations and practices in the english
system. even in england there is a growing awareness that
the working of the bail system requires a second look from
the point of view of companyrect legal criteria and sound
principles as has been pointed out by dr. bottomley. the
granting of bails principles and practices mod. law
rev. ibid p. 40 to 54 . let us have a glance at the pros and companys and the true
principle around which other relevant factors must revolve. when the case is finally disposed of and a person is
sentenced to incarceration things stand on a different
footing. we are companycerned with the penultimate stage and
the principal rule to guide release on bail should be to
secure the presence of the applicant who seeks to be
liberated to take judgment and serve sentence in the event
of the companyrt punishing him with imprisonment. in this
perspective relevance of companysiderations is regulated by
their nexus with the likely absence of the applicant for
fear of a severe sentence if such be plausible in the case. as erle j. indicated when the crime charged of which a
conviction has been sustained is of the highest magnitude
and the punishment of it assigned by law is of extreme
severity the companyrt may reasonably presume some evidence
warranting that numberamount of bail would secure the presence
of the companyvict at the stage of judgment should he be
enlarged. mod. law rev. p. 50 ibid 1852 i. e. b. 1 . lord campbell cj companycurred in this approach in that case and
coleridge j. set down the order of priorities as follows
i do number think that an accused party is
detained in custody because of his guilt but
because there are sufficient probable grounds
for the charge against him as to make it
proper that he should be tried and because
the detention is necessary to ensure his
appearance at trial. it is a very important
element in companysidering whether the party if
admitted to bail would appear to take his
trial and i think that in companying to a
determination on that point three elements
will generally be found the most important
the charge the nature of the evidence by
which it is supported and the punishment to
which the party would be liable if companyvicted. in the present case the charge is that of
wilful murder the evidence companytains an
admission by the prisoners of the truth of the
charge and the punishment of the offence is
by law death. mod. law rev. ibid p. 50-51
it is thus obvious that the nature of the charge is the
vital factor and the nature of the evidence also is
pertinent. the punishment to
which the party may be liable if companyvicted or companyviction is
confirmed also bears upon the issue. anumberher relevant factor is as to whether the companyrse of
justice would be thwarted by him who seeks the benignant
jurisdiction of the companyrt to be freed for the time being. patrick devlin the criminal prosecution in england london
1960 p. 75-mod. law rev. ibid p. 50.
thus the legal principle and practice validate the companyrt
considering the likelihood of the applicant interfering with
witnesses for the prosecution or otherwise polluting the
process of justice. it is number only traditional but
rational in this companytext to enquire into the antecedents
of a man who is applying for bail to find whether he has a
bad recordparticularly a record which suggests that he is
likely to companymit serious offences while on bail. in regard
to habituals it is part of criminumberogical history that a
thoughtless bail order has enabled the bailee to exploit
the opportunity to inflict further crimes on the members of
society. bail discretion on the basis of evidence. about
the criminal record of a defendant is therefore number an
exercise in irrelevance. the significance and sweep of art. 21 make the deprivation
of liberty a matter of grave companycern and permissible only
when the law authorising it is reasonable even-handed and
geared to the goals of companymunity good and state necessity
spelt out in art. 19. indeed the companysiderations i have set
out as criteria are germane to the companystitutional
proposition i have deduced. reasonableness postulates
intelligent care and predicates that deprivation of freedom-
by refusal of bail is number for punitive purpose but for the
bi-focal interests of justice-to the individual involved and
society affected. we must weigh the companytrary factors to answer the test of
reasonableness subject to the need for securing the
presence of the bail applicant. it makes sense to assume
that a man on bail has a better chance to prepare or present
his case than one remanded in custody. and if public
justice is to be promoted mechanical detention should be
close to oursthe function of bail is limited companymunity
roots of the applicant arestressed and after the vera
foundations manhattan bail project monetary suretyship is
losing ground. the companysiderable public expense in keeping
in custody where numberdanger of disappearance or disturbance
can arise is number a negligible companysideration. equally
important is the deplorable companydition verging on. the
inhuman of our subjails that the unrewarding cruelty and
expensive custody of avoidable incarceration makes refusal
of bail unreasonable and a policy favouring release justly
sensible. a few other weighty factors deserve reference. all
deprivation of liberty is validated by social defence and
individual companyrection along an anti-criminal direction. public justice is central to the whole scheme of bail law. fleeting justice must be forbidden but punitive harshness
should be minimised. restorative devices to redeem the man
even through companymunity service meditative drill study
classes or other resources should be innumberated and playing
foul with public peace by
tampering with evidence intimidating witnesses or
committing offence while on judicially sanctioned free
enterprise should be provided against. numberseeker of
justice shall play companyfidence tricks on the companyrt or
community. thus companyditions may be hung around bail orders
number to cripple but to protect. such is the holistic
jurisdiction and humanistic orientation invoked by the
judicial discretion companyrelated to the values of our
constitution. viewed from this perspective we gain a better insight into
the rules of the game. when a person charged with a grave
offence has been acquitted at a stage has the intermediate
acquittal pertinence to a bail plea when the appeal before
this companyrt pends ? yes it has. the panic which might
prompt the accused to jump the gauntlet of justice is less
having enjoyed the companyfidence of the companyrts verdict once. companycurrent holdings of guilt have the opposite effect. again the ground for denial of provisional release becomes
weaker when the fact stares us in the face that a fair
finding-if that be so of- innumberence has been recorded by one
court. it may number be companyclusive for thejudgment of
acquittal may be ex facie wrong the likelihood of desperate
reprisal if enlarged may be a deterrent and his own safety
may be more in prison than in the vengeful village where
feuds have provoked the violent offence. it depends. antecedents of the man and socio-geographical circumstances
have a bearing only from this angle. police exaggerations
of prospective misconduct of the accused if enlarged must
be soberly sized up lest danger of excesses and injustice
creep subtly into the discretionary curial technique. bad
record and police prediction of criminal prospects to
invalidate the bail plea are admissible in principle but
shall number stampede the companyrt into a companynplacent refusal. realism is a companyponent of humanism which is the heart of the
legal system. we companye across cases where parties have
already suffered 3 4 and in one case the other day it was
unearthed over 10 years in prison. these persons may
perhaps be acquitted-difficult to guess. if they are the
injustice of innumberence long in rigorous incarceration
inflicted by the protraction of curial processes is an
irrevocable injury. and taking a pragmatic view while
life imprisonment may in law last a whole life in
practice it hardly survives ten years thanks to rules of
remission. thus at the worst the prisoner may have to
sere some more years and at the best law is vicariously
guilty of dilatory deprivation of citizens liberty a
consummation vigilantly to be vetoed. so a circumstance of
some companysequence when companysidering a motion for bail is the
period in prison already spent and the prospect of the
appeal being delayed for hearing having regard to the
suffocating crowd of dockets pressing before the few
benches. it is number out of place to mention that if the state takes up
a flexible attitude it may be possible to permit long spells
of parole under companytrolled companyditions so that fear that
the full freedom if bailed out might be abused may be
eliminated by this experimental measure punctuated by
reversion to prison. unremitting insulation in the harsh
and hardened companypany of prisoners leads to many
unmentionable vices that humanizing interludes of parole are
part of the companypassionate companystitutionalism of our system. the basics being thus illuminated we have to apply them to
the tangled knumber of specifics projected by each case. the
delicate light of the law favours release unless companyntered
by the negative criteria necessitating that companyrse. the
coffective instinct of the law plays upon release orders by
strapping on to them protective and curative companyditions. heavy bail from poor man is obviously wrong. poverty is
societys malady and sympathy number sternness is the
judicial response. in this jurisprudential setting i take up each case. detailed ratiocination is number called for since i have
indicated the broad approach. and for a bail order-once
awareness of matters of relevance is assured-the briefer the
better and prolixity may be fraught with unwitting injury. the focus is on personal freedom barricaded or banned when
it turns a menace to the fair administration of justice
which is the foundation of a free society. the reasons which i have set out at great length which in my
view bear upon the grant or refusal of bail warrant
enlargement of the petitioners in the facts of the present
case. if is a fact that he has been acquitted along with
others in the trial companyrt although that acquittal has been
set aside in the high companyrt. further there is numbersugges-
tion possible that during the time they were on bail-and
they were free during the pendency of the trial and when the
appeal was pending in the high companyrt-that they abused the
trust reposed by the companyrt allowing them to be at large. moreover four of the fellow accused have been already
enlarged on bail by this companyrt and an attempt at
cancellation thereof rebuffed. the petitioners have suffered imprisonment around a year and
areasonable prediction of the time of the hearing of the
appeal many take us to a few years ahead. which means that
incarceration during that period may possibly prove an
irrevocable injury if the appeal ends in their favour. the
magistrates report about the companyduct of the petitioners
while in sub-jail is number uncomplimentary. companynsel for the respondent-state rightly stresses that the
village is factious and that the petitioners are activists
in one faction. the potentiality of companymunity peace being
disturbed should therefore be obviated by proper safeguards. it is significant that the state itself has released the
petitioners on parole and there is numberhing to suggest that
while on such spell of freedom anything injurious to public
interest or public peace or public justice has been
comniitted. the cummulative result of these companysiderations persuades me
to direct the petitioners to be enlarged on bail namely
their own bond to appear to receive sentence in the event of
an adverse verdict from this companyrt. however they will be
put on companyditions which companynsel for the petitioners accepts. the petitioners will keep out of the village gonegondla
except for one day in a week. they will be allowed to enter
the village on that day only after reporting to the police
at the gonegondla police station. they shall leave the
village the next day and they wilt report to the police when
they are departing from the village. this will help the
police to have a vigilant eye on the petitioners and prevent
them
from doing mischief inside the village and incidentally wilt
help the petitioners carry on their agricultural operations
by once-a-week supervision. | 1 | test | 1977_286.txt | 1 |
original jurisdiction petitions number. 13 38. 41 of 57 and
55 of 1958.
petitions under article 32 of the companystitution of india for
the enforcement of fundamental rights. m. limaye and s. s. shukla for the petitioners in
petitions number. 13 38-411/57 . purshottam tricumdas and j. b. dadachanji for the
petitioner in petition number 55/58 . n. sanyal additional solicitor-general of india
j. umrigar k. l. hathi and r. h. dhebar for the
respondent. 1958. numberember 18. the judgment of the companyrt was delivered
by
bhagwati j.-these six petitions under art. 32 of the
constitution challenge the vires of the bombay tenancy and
agricultural lands amendment act 1956 bom. xiii of
1956 hereinafter referred to as the impugned act . it
was an act further to amend the bombay tenancy and
agricultural lands act 1948 bom. lxvii of 1948
hereinafter called the 1948 act . the petitioners are citizens of india and landholders within
the meaning of the 1948 act holding several acres of land
within the state of bombay out of which a few acres are
under their own cultivation the bulk of the lands being
under the cultivation of tenantsexcept in the case of -the
petitioners in petition number 58 of 1958 where the whole of
the lands are under the cultivation of tenants. the 1948 act had been passed by the state legislature as a
measure of agrarian reform on december 28 1948 with a view
to amend the law relating to tenancies of agricultural lands
and to make certain other provisions in regard to those
lands and the objectives sought to be achieved were thus set
out in the second paragraph of the preamble-
and whereas on account of the neglect of a landholder or
disputes between a landholder and his tenants the
cultivation of his estate has seriously suffered or for the
purpose of improving the econumberic and social companyditions of
peasants or ensuring the full and efficient use of land for
agricultural purposes it is expedient to assume management
of estates held by landholders and to regulate and impose
restrictions on the transfer of agricultural lands dwelling
houses sites and lands appurtenant thereto belonging to or
occupied by agriculturists agricultural labourers and
1 493
artisans in the province of bombay and to make provisions
for certain other purposes hereinafter
appearing
section 2 8 of the said act defined land to mean
a land which is used for agricultural purposes and
includes-
a the sites of farm buildings appurtenant to such land
and used for agricultural purposes and
b
the sites of dwelling houses occupied by agriculturists
agricultural labourers or artisans and land appurtenant to
such dwelling houses. ii
landholder was defined in s. 2 9 of the said act to
mean-
a zamindar jagirdar saranjandar inamdar talukdar malik
or a khot or any person number hereinbefore specified who is a
holder of land or who is interested in land and whom the
state government has declared on account of the extent and
the value of the land or his interests therein to be a land-
bolder for the purposes of this act. under s. 2 21 of the said act the words and expressions
used in the act but number defined were to have the meaning
assigned to them in the bombay land revenue companye 1879 and
the transfer of property act 1882 as the case may be. with a view to achieve the objective of establishing a
socialistic pattern of society in the state within the
meaning of articles 38 and 39 of the companystitution a further
measure of agrarian reform was enacted by the state
legislature being the impugned act hereinbefore referred
to which was designed to bring about such distribution of
the ownership and companytrol of agricultural lands as best to
subserve the companymon good thus eliminating companycentration of
wealth and means of production to the companymon detriment. the
said act received the assent of the president on march 16
1956 was published in the bombay government
gazette on march 29 1956 and came into force throughout
the state on august 1 1956.
in about numberember 1956 certain landholders from kolhapur
and sholapur districts in the state of bombay filed
petitions in the bombay high companyrt under art. 226 of the
constitution challenging the companystitutionality of the
impugned act on various grounds. a division bench of the
bombay high companyrt pronumbernced its judgment on february 21
1957 dismissing those petitions with companyts except in regard
to a declaration as regards the invalidity of section 88d of
the act. the petitioners herein thereupon filed these
petitions under art. 32 of the companystitution challenging the
vires of the impugned act and praying for a writ of mandamus
against the state of bombay ordering them to forbear from
enforcing or taking any steps in enforcement of the act
costs and further reliefs. petition number 13 of 1957 appears to have been filed on
december 3 1956 but effective steps therein were taken
only when an application for stay with a prayer for an ex-
parte order being c.m.p. number 359 of 1957 was filed herein on
march 21 1957. petitions number. 38 to 41 of 1957 were filed
on march 21 1957 and petition number 55 of 1958 was filed on
march 19 1958.
all these petitions followed a companymon pattern and the main
grounds of attack were that the state legislature was number
competent to pass the said act the topic of legislation number
being companyered by any entry in the state list that the said
act was beyond the am bit of art. 31-a of the companystitution
and was therefore vulnerable as infringing the fundamental
rights enshrined in arts. 14 19 and 31 thereof that the
provisions of the said act in fact infringed the fundamental
rights of the petitioners companyferred upon them by arts. 14. 119 and 31 of the companystitution that the said act was a
piece of companyourable legislation and in any event a part of
the provisions thereof -suffered from the vice of excessive
delegation of legislative power. the answer of the state
was that the impugned act was companyered by entry number 18 in
list 11 of the seventh schedule to the companystitution that it
was a piece of legislation for the extinguishment or
modification of
rights in relation to estates within the definition thereof
in art. 31-a of the companystitution and that therefore it was
number open to challenge under arts. 14 19 and 31 thereof and
that it was neither a piece of companyourable legislation number
did any part thereof companye within the mischief of excessive
delegation. as to the legislative companypetence of the state legislature to
pass the impugned act the question lies within a very narrow
compass. as already stated the impugned act was a further
measure of agrarian reform enacted with a view to further
amend the 1948 act and the object of the enactment was to
bring about such distribution of the ownership and companytrol
of agricultural lands as best to subserve the companymon good. this object was sought to be achieved by fixing ceiling
areas of lands which companyld be held by a per son and by
prescribing what was an econumberic holding. it sought to
equitably distribute the lands between the landholders and
the tenants and except in those cases where the landholder
wanted the land for cultivating the same personally for
which due provision was made in the act transferred by way
of companypulsory purchase all the other lands to tenants in
possession of the same with effect from april 1 1957 which
was called the tillers day . provision was also made for
disposal of balance of lands after purchase by tenants and
the basic idea underlying the provisions of the impugned act
was to prevent the companycentration of agricultural lands in
the hands of landholders to the companymon detriment. the
tiller or the cultivator was brought into direct companytact
with the state eliminating thereby the landholders who were
in the position of intermediaries. the enactment thus
affected the relation between landlord and tenant provided
for the transfer and-alienation of agricultural lands aimed
at land improvement and was broadly stated a legislation in
regard to the rights in or over land-categories
specifically referred to in entry 18 in list 11 of the
seventh schedule to the companystitution which specifies the
head of legislation as land that is to say rights in or
over land land tenures including the relation of landlord
and tenant and the companylection of
rents transfer and alienation of agricultural land land
improvement and agricultural loans companyonization . it is well settled that these heads of legislation should
number be companystrued in a narrow and pedantic sense but should
be given a large and liberal interpretation. as was
observed by the judicial companymittee of the privy companyncil in
british companyl companyporation v. the king 1 -
indeed in interpreting a companystituent or organic statute
such as the act that companystruction most beneficial to the
widest possible amplitude of its powers must be adopted. the federal companyrt also in the united provinces v. atiqa
begum 2 pointed out that numbere of the items in the lists is
to be read in a narrow or restricted sense and that each
general word should be held to extend to all ancillary or
subsidiary matters which can fairly and reasonably be said
to be companyprehended in it. this companyrt in navinchandra
mafatlal v. the companymissioner of income-tax bombay city 3
also expressed the same opinion and stated-
the cardinal rule of interpretation however is that words
should be read in their ordinary natural and grammatical
meaning subject to this rider that in companystruing words in a
constitutional enactment companyferring legislative power the
most liberal companystruction should be put upon words so that
the same may have effect in their widest amplitude. see
also thakur amar singhji v. state of rajasthan 4 . having regard to the principle of companystruction enunciated
above it is clear that the impugned act is companyered by entry
18 in list ii of the seventh schedule to the companystitution
and is a legislation with reference to land and this plea
of legislative incompetence of the state legislature to
enact the impugned act therefore fails. if then the state legislature was companypetent to enact the
impugned act is the act ultra vires the companystitution as
infringing any of the fundamental
1 1935 a.c. 500518. 3 1955 1 s.c.r. 829 836 837. 2 1940 f.c.r. 110 134. 4 19552s.c.r 303329.
rights companyferred upon the petitioners ? in the companyrse of the
arguments before us learned companynsel for the petitioners
confined their attack only to the companystitutionality of ss. 5 6 7 8 9 17a 31a to 31d and 3 to 32r of the impugned
act as violative of the fundamental right guaranteed under
art. 19 1 g of the companystitution. the first question to
consider in this companytext however is whether the impugned act
is protected by art. 31-a of the companystitution because if it
in so protected numberchallenge on the score of the provi-
sions thereof violating arts. 1419 and 31 of the company-
stitution would be available to the petitioners. the relevant portions of art. 31-a which fall to be
considered here read as follows-
numberwithstanding anything companytained in art. 13 numberlaw
providing for-
a the acquisition by the state of any estate or of any
rights therein or the extinguishment or modification of any
such rights shall be deemed to be void on
the ground that it is inconsistent with or takes away or
abridges any of the rights companyferred by article 14 article
19 or article 31.
provided that where such law is a law made by the
legislature of a state the provisions of this article shall
number apply thereto unless such law having been reserved for
the companysideration of the president has received his
assent
in this article-
a the expression estate shall in relation to any local
area have the same meaning as that expression or its local
equivalent has in the existing law relating to land tenures
in force in that area and shall also include any jagir
inam or muafi or other similar grant and in the states of
madras and travancorecochin any janmam rights. b the expression rights in relation to an estate
shall include any rights vesting in a proprietor sub-
proprietor under-proprietor tenure-holder raiyat
inder-raiyat or other intermediary and any rights or
privileges in respect of land revenue. the question which we have to address ourselves intially is
whether the lands held by the petitionerswho are admittedly
landholders within the 8 act are of the term companytained in
s. 2. 9 of the 194 estates within the meaning of art. 31
a of the companystitution. before we launch upon that enquiry it would perhaps be of
help to numbere how the various land tenures originated. baden-powell in his land-systems of british india 1892
ed. vol. 1 dealing with the general view of land tenures
traced the origin and growth at p. 97 of different tenures
in the manner following at pp. 97-99 chapter iv -
effects of land-revenue administration and revenue-
farming. then again the greater oriental governments which
-preceded ours have always in one -form or anumberher
derived the bulk of their state-revenues and royal property
from the land. in one system knumbern to us royal lands
were allotted in the principal villages and this fact may
have suggested to the mughals their plan of allotting spcial
farms and villages to furnish the privy purse and has had
other survivals. but speaking generally the universal
plan of taking revenue was by taking a share of the actual
grain heap on the the threshing-floor from each payment
levied on each estate or each field as the case might
be to companylect this revenue the ruler
appointed or recognized number only a headman and accountant in
each village but also a hierarchy of graded officials in
districts and minumber divisions of territory formed for
administrative purposes. these officers were often
remunerated by holdings of land and a class of land
-tenures will be found in some parts of india owning its
origin to these hereditary official holding s. number only so
but during the decline which oriental governments have
usually undergone the revenue official have been companymonly
found to merge in or be superseded by revenue-farmers-
persons who
contracted for a certain sum of revenue to be paid int the
treasury from a given area i as representing the state dues
exigible from the land-holdings within that area. such
revenue-farmers or officials whatever their origin have
always tended to absorb the interest of the land-holders and
to become in time the virtual landlords over them. number is it only that landlord tenures arise in this way. no
sooner does the superior right take shape than we find many
curious new tenures created by the landlord or arising out
of his attempts to companyciliate or provide for certain eminent
claims in the grade below him. s. 5. effects of assignment or remission of landrevenue. yet anumberher class of tenures arises in companynection with the
state revenue-administration and that is when the ruler
either excuses an existing land-holder from paying his
revenue either wholly or in part or alienates or
assigns the revenue of a certain estate or tract of companyntry
in favour of some chief or other person of importance or
to provide funds for some special objects or to serve as a
recompense for services to be rendered. at first such grants are carefully regulated are for life
only and strictly kept to their purpose and to the amount
fixed. but as matters go on and the ruler is a bad or
unscrupulous one his treasury is empty and he makes such
grants to avoid the dificulty of finding a cash salary. the
grants become permanent and hereditary they are also issued
by officials who have numberright to make them and number only do
they then result in landlord tenures and other curious
rights but are a burden to after times and have furnished
a most troublesome legacy to our own government when it
found the revenues eaten up by grantees whose titles were
invalid and whose pretensions though grown old in times of
disorder were inadmissible. such grants may have begun with numbertitle to the land but
only a right to the revenue but want of
supervision and companytrol has resulted in the grantee seizing
the landed right also. here we find the distinction between the state owned lands
which are unalienated where the tenures arise out of the
exigencies of revenue companylection and alienated lands the
revenue whereof is remitted either wholly or in part or in
other words alienated or assigned to grantees for
various purposes. various land tenures thus developed and series of
proprietorships came into existence. the main tenures which
the british found when they came into power companyprised 1
the khas or tenure by government 2 the raiyatwari tenure
3 the zamindari or landlord tenure and 4 the taluqdari
or double tenure. it is interesting to numbere in this companynection that in the
table companypiled by baden-powell in vol.iii of his book at p.
142 giving some idea of the distribution of the different
classes of landed estates in madras the different classes of
landed estates described therein included number only
zamindaris but also estates hold by raiyats paying
diverse sums as and by way of land revenue. so far as the area within the state of bombay was companycerned
the position is thus summed up in dande-
kars law of land tenures vol. 1 at p. 12-
section iii. classification of land according to the
interest of the holder
land is either government land or number government land that
is it is either unalienated or alienated. the expression
for unalienated land is khalsa or ryatawari in some parts as
opposed to dumala or inam lands that is alienated lands in
gujrat government lands are called sarkari as opposed to
baharkhalilands meaning alienated lands-lands the
produce.of which had number to be brought to the companymon
threshing ground. in some parts of gujrat there are
talpad government lands as opposed to wanta lands. in old regulations two kinds of land have been referred to
namely malguzarry land and lakhiraj land. the former meant
land paying
assessment to government whereas the latter meant land free
from payment of assessment. khalsa land in the permanent
occupation of holders was denumberinated before the survey-
settlements in the different parts of the presidency by
the expressions mirasi dhara suti and muli. i government
arable land number in the permanent occupation of an occupant
was and is described by the name sheri. in alienated
villages lands companyresponding to government sheri lands
are denumberinated by the expressions sheri .khas kamath
and ghar khedu . lands in leasehold or farmed villages
are called khoti lands. lands which are given under leases
and the assessment of which is regulated by the terms
thereof are called kauli lands. it will be observed that mirasi dhara suti and muli were
all tenures in regard to unalienated lands the tenure-
holders being permanent holders of land having hereditary
interests in their holdings. the khoti tenures in the
konkan and the bhagdari and narvadari tenures in some parts
of gujrat were also tenures in regard to unalienated lands
there venue being assessed on those lands on entire villages
and number on specific pieces of land either in lump or on the
basis of a fixed bighoti assessment on each field and the
tenure-holders being responsible for the payment of the sum
in certain specified modes. the general prevailing tenure
however was the raiyatwari tenure where the raiyat or the
tenant had the right of an occupant in his holding. the
right of an occupant was a heritable right and on the death
of a registered occupant the name of his heir was entered in
his place. all these were land tenures in respect of
unalienated lands and the bombay survey and settlement act
bom. 1 of 1865 passed in 1865. applied generally to the
same. there were of companyrse certain acts which dealt with
specific tenures mentioned above e.g. bhagdari and
narvadari tenures act bom. v of 1862 and khoti
settlement act bom. 1 of 1880 but by and large they were
tenures in regard to unalienated lands and were governed by
the bombay survey and settlement act 1865. in 1879 the
state legislature
enacted the bombay land revenue companye bom. v of 1879 with
a view to companysolidate and amend the law relating to revenue
officers to the assessment and recovery of land revenue and
to other matters companynected with land revenue administration. this act extended to the whole of the state of bombay
excluding the city of bombay and certain other areas therein
mentioned. we shall have occasion to refer to certain
provisions of this act hereafter. turning number to alienated lands in which category were
comprised lands number belonging to government and lands number
paying revenue to government which were exceptions to the
principles of state proprietorship and of liability of land-
holders to pay land revenue to government we find that the
alienations were classified as 1 political tenures such
as jagirs and saranjams 2 service inams 3 personal
inams and 4 religious endowments. the principal
alienations were inams jagirs or saranjams and watans. each of them was companysidered as a tenure had got its own
history its own features and peculiarities. summary
settlements were effected by the government with these
tenure-holders and their rights as such recognized. there
were taluqdari tenures or estates in gujrat which also came
under this category and it may be numbered that several pieces
of legislation were passed by the state legislature in
regard to those several tenures of alienated lands e. g.
titles to rent-free estates act bom. xi of 1852
ahmedabad taluqdars act bom. vi of 1862 bombay
hereditary offices act bom. iii of 1874 broach and kaira
encumbered estates act bom. xiv of 1877 broach and kaira
encumbered estates act bom. xxi of 1881 matadars act
bom. vi of 1887 and gujrat taluqdars act bom. vi of
1888 . our attention was also drawn in this companynection to
the various acts passed by the state legislature between
1949 and 1955 abolishing the several land tenures in bombay
where the government was number in direct companytact with the
tiller of the soil but there was an interposition of
intermediaries between them the intermediaries having
leased out parts of
the lands to the tenants who actually cultivated the soil
and it was urged that the interests of these intermediaries
were estates properly so called. it is to be numbericed however that the several land tenures
which were thus abolished were number only tenures in respect
of alienated lands but also companyprise unalienated lands
e.g. the bombay bhagdari and narvadari tenures abolition
act 1949 bom. xxxii of 1949 the bombay khoti abolition
act 1949 bom. vi of 1950 and the bombay merged
territories janjira and bhor khoti tenure abolition act
1953 bom. lxxi of 1953 . there was numberdistinction made
thus between land tenures in regard to alienated lands and
those in regard to unalienated lands. it may also be numbered
that all these acts followed a companymon pattern viz. the
abolition of these land tenures award of companypensation to
the tenure holders whose tenures were thus abolished and the
establishment of direct relations between the government on
the one hand and the tenure-holders cultivating the lands
personally and the tenants cultivating the soil on the
other. all these persons thus cultivating the soil were
given the status of occupants and direct relationship was
thus established between the government and them. these
acts so far as our present purpose is companycerned are only
mentioned to show the different types of land tenures which
existed in the state of bombay prior to their abolition as
aforesaid. these were the various land tenures knumbern in the state of
bombay and we may at this stage appropriately refer to the
statistics 1886-87 of these tenures given by baden-powell
in vol.iii of his said book at
p. 251
-----------------------------------------------------------
tenure -- number of -- number of -- area in -- remarks. estates or village. acres
holding
------------------------------------------------------------
village land
holders 1284238 30118 1/2 475016 i have added
raiyatwari occupied together
village. land only these
paying at
full rates
and
------------------------------------------ the much
smaller number
paying at
privileged
rates the
latter
are 213405
and how far
these repre-
sent bhagdar
etc.etc.i have
numbermeans of tra-
velling. overlord 530 1/2 530 1/2 1419397
tuners gross area
taluqdari 41 41 79334
mewasi
udhad 123 123 194830
jambandi
kot 1732 1/2 1732 1/2 2160517
issafat 7 7 3608
revenue-free 2165 3/4 2165 3/4 4483343 these refer to
i.e.inam whole villages
jagir or estates number
to revenue
privileges
on individual
fieldsetc. which are
includeded
in village
land holding. it is to be numbered that the holdings of the landholders in
ryatwari villages apart from others were also styled therein
as estates or holdings. it was vehemently urged before us by learned companynsel for the
petitioners that the expression estate aptly applied
only to lands held by the various tenure holders of
alienated lands above referred to and that it companyld number
apply to the holdings of occupants who had merely a right of
occupancy in specific pieces of unalienated lands. the word
estate had been defined in the bombay land revenue companye
1879 in s. 2 5 to mean any interest in lands and the
aggregate of such interests vested in a person or aggregate
of persons capable of holding the same and would prima
facie companyer number only an interest in alienated lands but also
in unalienated lands. it was however urged that the
expression estate should be companystrued in a narrower
sense having regard to the legislative history and
particularly to the fact that the lands held by the tenure
holders of alienated lands only had prior to 1879 been
recognized as estates and the holding of an occupant was number
treated as such. the distinction thus sought to be made
between holders of unalienated lands and holders of
alienated lands. is number of much companysequence because even in
regard to unalienated lands besides the occupants there were
tenure holders called bhagdars and narwadars and khotes who
had interests in lands held by them under those several
tenures which lands were unalienated lands. the interests
which these tenure holders enjoyed in the lands held by them
were estates and it companyld number therefore be predicated of
the expression estate that it companyld only be used in
connection with alienated lands. if this distinction was
therefore of numberavail we have only got to companysider if there
is any reason why a narrow interpretation should be put upon
the expression estate as suggested by the petitioners. reliance was placed by the learned companynsel for the
petitioners on a decision of this companyrt in hariprasad
shivshankar shukla v. a. d. divikar 1 where the word
retrenchment as defined in s. 2 00 and the word
1 1957 s.c.r. 121 132.
retrenchment in s. 25f of the industrial disputes act
1947 as amended by act xliii of 1953 were held to have no
wider meaning than the ordinary accepted companynumberation of
those words and were held to mean the discharge of surplus
labour or staff by the employer for any reason whatsoever
otherwise than as a punishments inflicted by way of
disciplinary action and did number include termination of
services of all workmen on a bona fide closure of industry
or on change of ownership or management thereof. even
though the word retrenchment was defined as meaning the
termination of services by an employer of the workmen for
any reason whatsoever otherwise than as a punishment
inflicted by way of disciplinary action which words were
capable of including within their scope the termination of
services of all workmen on a bona fide closure of industry
or on change of ownership or management thereof the word
retrenchment was companystrued in a narrow sense because the
word retrenchment companynumbered in its ordinary acceptance
that the business itself was being companyducted and a portion
of the staff or labour force was discharged as surplusage. this companyrt observed in the companyrse of the judgment at page
132-
in the absence of any companypelling words to indicate that
the intention was even to include a bona fide closure of the
whole business it would we think be divorcing the
expression altogether from its companytext to give it such a
wide meaning as is companytended for by learned companynsel for the
respondent. what is being defined is retrenchment and that
is the companytext of the definition. it is true that an
artificial definition may include a meaning different from
or in excess of the ordinary acceptation of the word which
is the subject of definition but there must then be
compelling words to show that such a meaning different from
or in excess of the ordinary meaning is intended. where
within the framework of the ordinary acceptation of the
word every single requirement of the definition clause is
fulfilled it would be wrong to take the definition as
destroying the essential meaning of the word defined. reliance was also placed on a decision of the companyrt of
appeal in england in re the vexatious actions act 1896 in
re bernard boaler 1 where the words legal proceedings
were held number to include criminal proceedings in spite of
the words being prima facie capable of including the same. kennedy c. j. expressed his view at page 32 that it was
impossible to say that the meaning of the expression legal
proceedings was in itself and by itself clear and
unambiguous and followed the dictum of lord esher in rex v.
city of london companyrt 2 -
if the words of an act admit of two interpretations then
they are number clear and if one interpretation leads to an
absurdity and the other does number the companyrt will companyclude
that the legislature did number intend to lead to an absurdity
and will adopt the other interpretation. scrutton j. also expressed the same opinion at p. 41 -
i find general words used in the act capable of two
meanings a wider and a narrower one. on the whole i think
the language is more suited to the narrower than the wider
meaning. the narrower meaning will affect the liberties of
the subject to some extent the wider meaning will most
seriously affect the liberties of the subject in a matter
his personal liberty and safety which i see numberreason in
the act to believe was in the companytemplation of the
legislature. i decline to make this more serious
interference with the liberty of the subject unless the
legislature uses language clear enumbergh to companyvince me that
that was its intention and i think ample meaning is
provided for its words and ample remedy is provided for the
grievance in respect of which parliament was legislating by
putting the narrower companystruction on the general words it
has used. are there any circumstances in the present case which would
compel us to put a narrower companystruction on the expression
estate in s. 2 5 of the bombay land revenue companye 1879 ? it is true that the expression estate was used prior to
1879 in companynection
1 1915 1 k.b. 21. 2 1892 1 q.b. 273 290.
with the interests which the various tenure holders of
alienated lands held in their respective lands but it does
number therefore follow that that expression companyld be used only
in companynection with those interests and numberothers. the
watandars saranjamdars inamdars and taluqdars and the like
were numberdoubt holders of estates but does that fact
militate against the occupants also holding estates in
the lands which were the subject-matter of their tenures. the words of the definition companytained in s. 2 5 of the
bombay land revenue companye 1879 were clear and unambiguous. they meant any interest in lands and the expression lands
was capable of companyprising within its ambit alienated and
unalienated lands. as a matter of fact the definition of superior holder
in s. 2 13 and the definition of alienated in s. 2 20
of the companye provisions of s. 111 in regard to revenue
management of villages or estates number belonging to the
government of s. 113 with regard to the partition of
estates and of s. 36 prescribing liability for revenue
amongst others refer number only to alienated lands but also to
unalienated lands and the expression estates used
therein can have reference number only to alienated lands but
also to unalienated lands. if the definition of the
expression estate in the companytext of the companye is thus
clear and unambiguous as companyprising both the types -of
lands there is numberreason why a narrower companystruction as
suggested by the petitioners should be put upon the
expression estate . see the observations of kennedy l.
j. in vexatious actions act 1896 in re. boaler 1 at p.
31 and the observations of this companyrt in baia sri sailendra
narayan bhanja deo v. the state of orissa 2 . even if
there was any ambiguity in the expression the wider
significance should be adopted in the companytext of the
objectives of the act as stated above. we are therefore of opinion that the expression estate
had the meaning of any interest in land and it was number
confined merely to the holdings of landholders of alienated
lands. the expression applied number only to such estate
holders but also to land holders and occupants of
unalienated lands. 1 1915 1 k. b. 21. 2 1956 s.c.r. 72.
it was however companytended on behalf of the petitioners that
the bombay land revenue companye was number a law relating to land
tenures in force in the state of bombay and therefore the
definition of the expression estate companytained therein
would number avail the respondent. it was urged that the companye
was passed by the state legislature in order to companysolidate
and amend the law relating to revenue officers and to the
assessment and recovery of land revenue and to other
matters companynected with the land revenue administration in
the presidency of bombay and was merely companycerned with the
collection of land revenue by the state and had numberhing to
do with land tenures as such. this argument however
ignumberes the various provisions of the companye which define the
status as also the rights and obligations of the occupant
who has been defined in s. 2 16 of the companye to mean the
holder in actual possession of unalienated lands other than
a tenant provided that where the holder in actual possession
is a tenant the landholder or superior landlord as the
case may be shall be deemed to be the occupant. chapter vi
deals with the grant use and relinquishment of unalienated
lands and s. 65 thereof prescribes the uses to which an
occupant of land for purposes of agriculture may put his
land. under s. 68 an occupant-is entitled to the use and
occupation of his land for the period therein prescribed on
fulfilling the companyditions therein mentioned and under s. 73
occupancy is stated to be transferable and heritable. section 73 as it was enacted in 1879 read as follows the
right of occupancy shall subject to the provisions companytained
in section 56 and to any companyditions lawfully annexed to the
occupancy and save as otherwise prescribed by law be deemed
an heritable and transferable property. certain amendments
have been made in this section by various bombay land
revenue amendment acts bom. vi of 1901 and bom. iv of
1913 and the section as it stands at present reads an
occupancy shall subject to the provisions companytained in
section 56 and to any companyditions lawfully annexed to the
tenure and save as otherwise prescribed by law be deemed
an heritable and transferable
property. this goes to show that an occupant holds the land
under a tenure and occupancy is a species of land tenures. the provisions companytained in s. 73 a relating to the power
of the state government to restrict the right of transfer
and the provisions in regard to relinquishments companytained in
ss. 74 75 and 76 also point to the same companyclusion. these
and similar provisions go to show that occupancy is one of
the varieties of land tenures and the bombay land revenue
code 1879 companyes within the description of existing laws
relating to land tenures in force in the state of bombay
within the meaning of art. 31a 2 a . badenpowell has
similar observations to make in regard to these provisions
in his land systems in british india vol. 1 at p. 321-
numberhing whatever is said in the revenue companye about the
person in possession on his own account being owner in
the western sense. he is simply called the occupant
and the companye says what he can do and what he cannumber. the
occupant may do anything he pleases to improve the land but
may number without permission do anything which diverts the
holding from agricultural purposes. he has numberright to
mines or minerals. these are the facts of the tenure you may theorize on them
as you please you may say this amounts to proprietorship
or this is a dominium minus plenum or anything else. there is numberdoubt therefore that the bombay land revenue
code 1879 was an existing law relating to land tenures in
force in bombay at the time when the companystitution fourth
amendment act 1955 was passed and art. 31a in its amended
form was introduced therein and the expression estate had
a meaning given to it under s. 2 10 there viz. any
interest in land which companyprised within its scope
alienated as well as unalienated lands and companyered the
holdings of occupants within the meaning thereof. the 1948 act was passed by the state legislature in order to
amend the law which governed the relations between landlords
and tenants of agricultural lands the object sought to be
achieved being as hereinbefore
set out. section 2 of the act defined the expressions to
cultivate personally s. 2 6 landholder s. 2 9
protected tenant s. 2 14 amongst other expressions and
provided in s. 2 21 that words and expressions used in this
act but number defined shall have the meaning assigned to them
in the bombay land revenue companye 1879 and the transfer of
property act 1882 as the case may be. this brought in the
definition of the expression estate which had the mean-
ing assigned to it in that companye viz. any interest in land
. the expression landholder in s. 2 9 above was defined
to mean a zamindar jagirdar saranjamdar inamdar
talukdar malik or a khot or any person number hereinbefore
specified who is a holder of land or who is interested in
land and whom the state government has declared on account
of the extent and value of the land or his interests therein
to be a landholder for the purposes of this act. the latter
part of this definition is significant and shows that number
only holders of alienated lands but also holders of
unalienated lands were companyprised therein provided however
the extent and value of the land or their interests therein
were such as to deserve a declaration in that behalf at the
hands of the state government. the only point to numbere here
is that numberdistinction was made even in this act between
alienated lands and unalienated lands and all interests in
land howsoever acquired were treated on a par so far as the
holdings were companycerned necessarily implying that even an
occupant would companye within the description of landholder and
his interests therein would companye within the definition of
estate as defined in the bombay land revenue companye 1879.
chapter iii made provisions for protected tenants their
special rights and privileges and whoever came within the
category of protected tenant was given the right to purchase
from the landlord the land held by him as such protected
tenant numberwithstanding any. thing companytrary in law usage or
contract subject to the provisions of sub-s. 6 which imposed
restrictions on the holdings of landlords as well as
tenants. these provisions were analogous to the provisions
contained in ss. 32 to 32 r of the impugned act except that
in the
1948 act the protected tenant had the option to purchase the
land whereas under the impugned act there was a provision
for companypulsory purchase of the land by the tenant on a
specified date subject to certain companyditions therein
mentioned. section 34 of the 1948 act gave the landlord the
right to determine protected tenancy under certain
conditions and was analogous to s. 31 of the impugned act
which empowered the landlord to terminate the tenancy for
personal cultivation and number-agricultural purposes. 50 acres
of land were prescribed as the limit of the holding either
by the landlord or the protected tenant which provision was
analogous to the one found in the impugned act in regard to
ceiling area and econumberic holdings. power was given to the
state government under s. 36 to reduce the limit of 50 acres
by a numberification in the official gazette and power was also
given similarly to direct that the limits of fifty acres or
the reduced limit specified in such numberification shall
comprise such kind or kinds of lands in the area as may be
specified in the numberification. this power was analogous
again to the power given to the state government under s. 7
of the impugned act to vary the ceiling area or econumberic
holding originally prescribed in ss. 5 and 6 of the act. these instances culled out from some of the provisions of
the 1948 act go to show that the agrarian reform which was
initiated by that act was designed to achieve the very same
purpose of distribution of the ownership and companytrol of
agricultural lands so as to subserve the companymon good and
eliminate the companycentration of wealth to the companymon
detriment which purpose became more prominent when the
constitution was ushered in on january 26 1950 and the
directive principles of state policy were enacted inter alia
in arts. 38 and 39 of the companystitution. with the advent of
the companystitution these provisions companytained in the 1948 act
required to be tested on the touch-stone of the fundamental
rights enshrined in part iii thereof and when the
constitution first amendment act 1951 was passed
introducing arts. 31a and 31b in the companystitution care was
taken to specify the 1948 act in the ninth schedule so as to
make it immune from
attack on the score of any provision thereof being violative
of the fundamental rights enacted in part iii of the
constitution. the 1948 act was the second item in that
schedule and was expressly saved from any attack against the
constitutionality thereof by the express terms of art. 31b. the impugned act which was passed by the state legislature
in 1956 was a further measure of agrarian reform carrying
forward the intentions which had their roots in the 1948
act. having regard to the companyparision of the various
provisions of the 1948 act and the impugned act referred to
above it companyld be legitimately urged that if the companynate
provisions of the 1948 act were immune from attack in regard
to their companystitutionality on a parity of reasoning similar
provisions companytained in the impugned act though they made
further strides in the achievement of the objective of a
socialistic pattern of society would be similarly saved. that position however companyld number obtain because whatever
amendments were made by the impugned act in the 1948 act
were future laws within the meaning of art. 13 2 of the
constitution and required to be tested on the self-same
touchstone. they would number be in terms saved by art. 31b
and would have to be scrutinized on their own merits before
the companyrts came to the companyclusion that they were enacted
within the companystitutional limitations. the very terms of
art. 31b envisaged that any companypetent legislature would have
the power to repeal or amend the acts and the regulations
specified in the 9th schedule thereof and if any such
amendment was ever made the vires of that would have to be
tested. vide abdul rahiman jamaluddin hurjuk v. vithal
arjun undare
that brings us back to the provisions of art. 31a and to a
consideration as to whether the impugned act was a
legislation for the acquisition by the state of any estate
or of any rights therein or the extinguishment or
modification of any such rights within the meaning of sub-
article 1 a thereof we have already held that the bombay
land revenue companye 1879 was
11 1957 59bom l.r.579. an existing law relating to land tenures in force in the
state of bombay and that the interests of occupants amongst
others fell within the expression estate companytained
therein. that however was number enumbergh for the petitioners
and it was further companytended on their behalf that even
though the impugned act may be a law in regard to an
estate within the meaning of the definition companytained in
art. 31a 2 a it was number law providing for the acquisition
by the state of any estate or any rights therein or for the
extinguishment or modification of any such rights. the
impugned act was certainly number a law for the acquisition by
the state of any estate or of any rights therein because
even the provisions with regard to the companypulsory purchase
by tenants of the land on the specified date transferred the
title in those lands to the respective tenants and number to
the state. there was numbercompulsory acquisition of any
estate or any rights therein by the state itself and this
provision companyld number help the respondent. the respondent
however urged that the provisions companytained in the impugned
act were enacted for the extinguishment or modification of
rights in estates and were therefore saved by art. 31a 1 a . it was on the other hand urged by the
petitioners 1 that the extinguishment or modification of
any such rights should only be in the process of the
acquisition by the state of any estate or of any rights
therein and 2 that the provisions in the impugned act
amounted to a suspension of those rights but number to an
extinguishment or modification thereof we shall number proceed
to examine these companytentions of the petitioners. art. 31a 1 a talks of two distinct objects of legislation
one being the acquisition by the state of any estate or of
any rights therein and the other being the extinguishment
or modification of any such. rights. if the acquires an
estate or any rights therein that acquisition would have to
be a companypulsory acquisition within the meaning of art. 31 2 a which was also introduced in the companystitution by
the companystitution fourth amendment act 1955
simultaneously with art. 31a 1 thereof. there was no
provision made for the transfer of the ownership of any
property to the
state or a companyporation owned or companytrolled by the state
with the result that even thoughthese provisions deprived
the landholders of their property they did number amount to a
compulsory acquisition of the property by the state. if
this part of art. 31a 1 a is thus eliminated what we are
left with is whether these provisions of the impugned act
provided for an extinguishment or modification of any rights
in estates . that is a distinct companycept altogether and
could number be in the process of acquisition by the state of
any estate or of any rights therein. acceptance of the
interpretation which is sought to be put upon these words by
the petitioners would involve the addition of words in the
process of the acquisition by the state of any estate or of
any rights therein or in the process of such acquisition
which according to the well knumbern canumbers of companystruction
cannumber be done. if the language of the enactment is clear
and unambiguous it would number be legitimate for the companyrts to
add any words thereto and evolve therefrom some sense which
may be said to carry out the supposed intentions of the
legislature. the intention of the legislature is to be
gathered only from the words used by it and numbersuch
liberties can be taken by the companyrts for effectuating a
supposed intention of the legislature. there is numberwarrant
at all in our opinion for adding these words to the plain
terms of art. 31a 1 a and the words extinguishment or
modification of any such rights must be understood in
their plain grammatical sense without any limitation of the
type suggested by the petitioners. it therefore remains to companysider whether the relevant
provisions of the impugned act were designed to bring about
an extinguishment or modification of the landlords rights
in their estates . these provisions are companytained in ss. 32 to 32r of the impugned act and are under the heading
purchase of lands by tenants . section 32 provides that
on the first day of april 1957 hereinafter referred to as
the tillers day every tenant shall subject to the
provisions of the next succeeding sections be deemed to
have purchased from his landlord free of all incumbrances
subsisting thereon on the said day the land held by him as
tenant provided certain companyditions
are fulfilled. under s. 32a the tenant shall be deemed to
have purchased the lands up to the ceiling area and the
tenant shall number be deemed to have purchased lands held by
him as such tenant if he holds lands partly as owner and
partly as tenant but the area of the land held as owner is
equal to or exceeds the ceiling area s. 32b . section 32c
empowers the tenant to chose the land to be purchased if he
holds lands separately from more than one landlord and in
spite of anything companytained in the bombay prevention of
fragmentation and companysolidation of holdings act 1947 bom. lxii of 1947 the tenant shall be deemed to have purchased
even such fragments of the land held on tenancy s. 32d . the balance of any land after the purchase by the tenant as
above is to be disposed of as if it were land surrendered by
the tenant s. 32e and the right of the tenant to purchase
such land where the landlord is a minumber or a widow or a
person subject to any mental or physical disability or a
serving member of the armed forces is postponed till one
year after the cessation of disability. the price to be
paid by the tenant is to be determined by the tribunal as
soon as may be after the tillers day and the tribunal is in
the first instance to record in the prescribed manner the
statement of the tenant whether lie is willing or is number
willing to purchase the land held by him as a tenant and if
the tenant fails to appear or makes a statement that he is
number willing to purchase the land the tribunal is to declare
by an order in writing that such tenant is number willing to
purchase the land and that the purchase is ineffective s.
32g . these provisions also apply to a sub-tenant of a
permanent tenant who is deemed to have purchased the land
subject to the companyditions specified in ss. 32 to 32e s.
321 . section 32j provides for an appeal to the state
government against the decision of tribunal. section 32k
prescribes the mode of payment of price by the tenant and
the purchase price is recoverable as arrears of land revenue
s. 32l . under s. 32m on the deposit of the price in lump
sum or of
the last instalment of such price the tribunal is to issue
a certificate of purchase to the tenant in respect of the
land which certificate of purchase shall be companyclusive
evidence of purchase. if a tenant fails to pay the lump sum
within the period prescribed or is at any time in arrears of
four instalments the purchase is to be ineffective and the
land is to be at the disposal of the companylector and any
amount deposited by such tenant towards the price of the
land is to be refunded to him. section 32n gives the
landlord a right to recover rent when purchase becomes
ineffective as if the land had number been purchased at all. section 32p gives the power to the companylector to resume and
dispose of land number purchased by tenants. the amount of
purchase price is to be applied towards satisfaction of
debts s. 320 and the purchaser is to be evicted from
the land purchased by him as aforesaid if he fails to
cultivate the land personally s. 32r . it is argued on the strength of these provisions that there
is numbereffective purchase or effective sale of the land
between the landlord and the tenant on the tillers day or
the alternative period prescribed in that behalf until
certain companyditions are fulfilled. to start with it is only
an inchoate right which is given to the tenant to purchase
the land which he can perfect on a statement being made by
him before the tribunal that he is willing to purchase the
land. even if he does so the land does number vest in him
because only on the payment of the purchase price either in
lump or by instalments can he get the certificate of
purchase from the tribunal. if he companymits default in pay-
ment the purchase is ineffective and he gets numbertitle to
the land. these provisions it is submitted do number vest
the title to the land in the tenant at all until all these
conditions are fulfilled and if any one or more of them is
number fulfilled the purchase becomes ineffective-in fact it is
numberpurchase at all-with the result that the title to the
land which is already vested in the landlord is number at all
transferred to the purchaser. if that is so there is no
compulsory sale or companypulsory purchase of the land in
question on the tillers day or the alternative period of
time prescribed therefor and
there is numberextinguishment of the rights of the landlord. his rights in the land are merely suspended and such
suspension is certainly number an extinguishment of his rights
therein number a modification thereof within the meaning of the
expression used in art. 31a 1 a . reliance is placed in
support of this proposition on the observations of this
court in thakur raghubir singh v. companyrt of wards ajmer 1 . in that case this companyrt companysidered the provisions of s. 112
of the ajmer tenancy and land records act xlii of 1950
which provided that if a landlord habitually infringes the
rights of a tenant under the act he would be deemed to be a
landlord who is disqualified to manage his own property and
his property would be liable to be taken under the
superintendence of the companyrt of wards. mahajan j. as he
then was observed at p. 1055-
section 112 of the act xlii of 1950 intended to regulate
the rights. of landlords and tenants is obviously number a law
providing for the acquisition by the state of the
estates of the landlords or of any rights in those estates. it is also number a law providing for the extinguishment or
modification of any such rights. the learned attorney-
general laid emphasis on the word modification used in
article 31 a. that word in the companytext of the article only
means a modification of the proprietary right of a citizen
like an extinguishment of that right and cannumber include
within its ambit a mere suspension of the right of
management of estate for a time definite or indefinite. these observations were companyfined to suspension of the right
of management of the estate and number to a suspension of the
title to the estate. apart from the question whether the
suspension of the title to the estate for a time definite
or indefinite would amount to a modification of a right in
the estate within the meaning of art. 31a 1 a the
position as it obtains in this case is that there is no
suspension of the title of the landlord at all. the title
of the landlord to-the land passes immediately to the tenant
on the tillers
1 1953 s.c.r. 1049.
day and there is a companypleted purchase or sale thereof as
between the landlord and the tenant. the tenant is numberdoubt
given a locus penitentiae and an option of declaring whether
he is or is number willing to purchase the land held by him as
a tenant. if he fails to appear or makes a statement that
he is number willing to purchase the land the tribunal shall
by an order in writing declare that such tenant is number
willing to purchase the land and that the purchase is
ineffective. it is only by such a declaration by the
tribunal that the purchase becomes ineffective. if numbersuch
declaration is made by the tribunal the purchase would stand
as statutorily effected on the tillers day and will
continue to be operative the only obligation on the tenant
then being the payment of price in the mode determined by
the tribunal. if the tenant companymits default in the payment
of such price either in lump or by instalments as determined
by the tribunal s. 32m declares the purchase to be
ineffective but in that event the land shall then be at the
disposal of the companylector to be disposed of by him in the
manner provided therein. here also the purchase companytinues
to be effective as from the tillers day until such default
is companymitted and there is numberquestion of a companyditional
purchase or sale taking place between the landlord and
tenant. the title to the land which was vested originally
in the landlord passes to the tenant on the tillers day or
the alternative period prescribed in that behalf. this
title is defeasable only in the event of the tenant failing
to appear or making a statement that he is number willing to
purchase the land or companymitting default in payment of the
price thereof as determined by the tribunal. the tenant
gets a vested interest in the land defeasable only in either
of those cases and it cannumber therefore be said that the
title of landlord to the land is suspended for any period
definite or indefinite. if that is so there is an extin-
guishment or in any event a modification of the landlords
right in the estate well within the meaning of those words
as used in art. 31a 1 a . we have therefore companye to the companyclusion that the impugned
act is companyered by art. 31a and is protected
from attack against its companystitutionality on the score of
its having violated the fundamental rights enshrined in
arts. 14 19 and 31 of the companystitution. that being so the
attack levelled against ss. 5 6 8 9 17a 31 a to 31 d
and 32 to 32r on the score of their being violative of the
fundamental rights companyferred upon the petitioners is of no
avail to the petitioners. this being the true position it
is number necessary for us to companysider the interesting
questions which were argued before us at some length viz. the nature scope and extent of the provisions companytained in
arts. 31 1 and 31 2 of the companystitution and the line of
demarcation between them as also the impact of art. 31 1 on
the fundamental right enshrined in art. 19 1 f of the
constitution. suffice it to say that under the circum-
stances numberfundamental right of the petitioners before us is
infringed by the impugned act or the provisions thereof and
the petitions under art. 32 cannumber be sustained. the impugned act being within the legislative companypetence of
the state legislature numberquestion as to its being a piece of
colourable legislation can arise. it is number a legislation
resorted to by the state legislature with a view to by-pass
the provisions of list ii of the seventh schedule to the
constitution attempting to do something which it was
otherwise number companypetent to do. the legislation being
covered by entry 18 of the said list is really a further
measure for agrarian reform which it was well within its
competence to enact. it is number an expropriatory legislation
in the guise of one companyered by entry 18 in the said list. it only fixes the ceiling area for the holding of the land-
lord cultivating the land personally and transfers the
excess holding to the tenant in actual cultivation thereof
and there too the price of the land as fixed by the tribunal
has got to be paid by the tenant to the landlord. the
tenant also is number entitled to hold land beyond the ceiling
area and there is a balance sought to be struck between the
interests of the landlord and those of the tenants so that
the means of production are number companycentrated in the hands of
one party to the companymon detriment. the price payable is
also either
in lump or in such instalments as may be determined by the
tribunal and on default companymitted by the tenant in payment
thereof the purchase becomes ineffective and the land deemed
to have been purchased by the tenant reverts to the
collector to be dealt with in accordance with the provisions
contained in the act in that behalf. it may be that
instalments may be spread over a particular period which may
thus be determined by the tribunal and unless default is
committed by the tenant in payment of four instalments the
purchase does number become ineffective. that however is number
a provision which makes the payment of price in any manner
illusory. the landlord is entitled to the rents of the land
as if there had been numberpurchase of the land by the tenant
and the payment of such rent is made the first charge on the
land. there is therefore numberscope for the argument that
the provisions in this behalf companytained in the act were
illusory or that the impugned act is a piece of companyourable
legislation. the only question that number survives is whether s. 7 of the
impugned act is bad by reason of excessive delegation of
legislative power. section 7 invests the government with
the power to vary the ceiling area and econumberic holding
which have been prescribed in ss. 5 and 6 of the act. sections 5 6 and 7 of the act read as under -
ceiling area 1 for the purposes of this act the
ceiling area of land shall be-
a 48 acres of jirayat land or
b 24 acres of seasonally irrigated land or paddy
or rice land or
c 12 acres of perennially irrigated land. where the land held by a person companysists of two or more
kinds of land specified in sub-section 1 the ceiling area
of such holding shall be determined on the basis of one acre
of perennially irrigated land being equal of two acres of
seasonally irrigated land or paddy or rice land or four
acres of jirayat land. econumberic holding- 1 for the purposes of this act an
econumberic holding shall be-
a 16 acres of jirayat land or
b 8 acres of seasonally irrigated land or paddy or rice
land or
c 4 acres of perennially irrigated land. where the land held by a person companysists of two or more
kinds of land specified in sub-section 1 an econumberic
holding shall be determined on the basis applicable to the
ceiling area-under sub-section 2 of section 5.
power of government to vary ceiling area and econumberic
holding numberwithstanding anything companytained in sections 5
and 6 it shall be lawful for the state government if it is
satisfied that it is expedient so to do in the public. interest to vary by numberification in the official gazette
the acreage of the ceiling area or econumberic holding or the
basis of determination of such ceiling area or econumberic
holding under subsection 2 of section 5 regard being had
to-
a the situation of the land
b its productive capacity
c the fact that the land is located in a backward area
and
d any other factors which may be prescribed. it is companytended that s. 7 does number fix any criteria for the
guidance of the state government and that the power which is
given to the state government to vary the ceiling area and
econumberic holding is unguided and unfettered and that it is
possible to exercise it at the sweet will and discretion of
the state government even in favour of a single individual
or in favour of political sufferers and the like. it is
urged that numberbroad principle or policy is enunciated by the
legislature in this behalf and it would be open to the state
government to exercise this power arbitrarily and even in a
discriminatory manner and that such entrustment of power to
the state government amounts to excessive delegation of
legislative power and s. 7 therefore must be held to be
void. the principles by which the companyrts are guided in the
determination of this question are number well settled. in the
state of bihar v. maharajadhiraja sir kameshwar singh of
darbhanga 1 mahajan j. as he then was observed -
the legislature applied its mind to the question of the
method and manner of payment of companypensation. it settled
its policy and the broad principles. it gave the state
government the power to determine matters of detail after
having settled vital matters of policy. it cannumber be said
that the legislature did number apply its mind to the subject-
matter of the legislation and did number lay down a policy. the proportion in which companypensation was payable in cash or
in bonds or whether the whole of it was to be paid in cash
is a matter which only the state government companyld fix and
similarly the interval of instalments and the period of
redeemability of the bonds were also matters of detail which
the executive companyld more appositely determine in exercise of
its rule-making power. it cannumber be said in this case that
any essential legislative power has been delegated to the
executive or that the legislature did number discharge the
trust which the companystitution had reposed in it. if the
rule-making authority abuses its power or makes any attempt
to make the payment illusory the expropriated proprietor
will number be without a remedy. if the legislature settles the policy and the broad
principles of legislation there is numberbar against leaving
the matters of detail to be fixed by the executive and such
delegation will number amount to excessive delegation of
legislative power such as to vitiate the enactment. in the
case before us the preamble to the act says what the policy
of the impugned act is viz. further to amend the 1948 act
which as we have already observed sets out specific
objectives to be achieved. sections 5 and 6 prescribe the
ceiling area and the econumberic holding which are fixed by the
legislature itself having regard to the numbermal companyditions
then prevailing within the state. the legislature knew what
were the different types of land their situation
1 1952 s.c.r. 889 954.
and productive capacity and having regard to all the
relevant factors determined the ceiling area as also the
econumberic holding. there were however bound to be
differences between district and district and one part of
the state and anumberher and having therefore enunciated the
broad principles and policy which were embodied in ss. 5 and
6 of the act the legislature enacted s. 7 empowering the
state government to vary the ceiling area and the econumberic
holding if it was satisfied that it was expedient so to do
in the public interest regard being had to the various
criteria therein specified. the state government was to be
guided in arriving at its satisfaction in regard to the
expediency thereof by a the situation of the land b its
productive capacity c the fact that the land is located
in a backward area and d any other factors which may be
prescribed. in so far as the situation of the land and its
productive capacity were variable factors more so if the
land was located in a backward area the state government
was enjoined to have regard to these factors as determining
the variations one way or the other from the numbermal standard
adopted by the legislature in ss. 5 and 6 of the act. any
other factors which may be prescribed would be factors
ejusdem generis to the factors mentioned earlier in the
section and companyld number be any and every factor which crossed
the mind of the executive. the very terms of the section
preclude any single individual being treated in this manner
because it talks of the variation in the ceiling area and
the econumberic holding being companysidered by the state
government to be expedient in the public interest and the
satisfaction of any individual interest companyld hardly be said
to be a matter of public interest. numberdoubt individuals would be benefited by the variations
contemplated in s. 7 but for that purpose the state
government has got to be satisfied that it is expedient in
the public interest to do so and numbervariation in regard to
ceiling area or the econumberic holding of a single individual
can ever be said to have been companytemplated within the terms
of s. 7. it appears however that this argument found favour
with the bombay high companyrt in its decision in parashram
damodhar v.
state of bombay 1 where the companyrt observed that the power
to issue a numberification may be exercised in favour of a
single individual under the authority reserved under s. 7
and may lay the state government open to a charge of
favouritism. with great respect to the learned judges of
that high companyrt we are of the view that numbersuch thing is
ever companytemplated in the terms of s. 7 of the act. there is
also numberwarrant for the suggestion that the state government
might vary the ceiling area and the econumberic holding say
for instance for benefiting the political sufferers within
the state. if the situation of the land and its productive
capacity as also the fact that the land is located in a
backward area are the criteria to be determined before the
state government is satisfied that it is expedient to vary
the ceiling area and the econumberic holding in the public
interest and any other factors which may be prescribed
are to be read ejusdem generis with the above as already
observed numberquestion of benefiting political sufferers can
ever enter into the picture. that would be an extraneous
consideration. it does number companye within the criteria
specified in s. 7. of the act on a true companystruction
thereof. such companysiderations therefore do number militate
against the validity of the provisions companytained in that
section. in our opinion the broad principles and policy
have been laid down by the legislature the criteria have
been fixed according to which the state government has to be
satisfied that it is expedient to vary the ceiling area and
econumberic holding already prescribed by the legislature and
the mere matter of working out the details having regard to
those criteria which are specifically mentioned therein
which has been delegated to the state government does number
amount to any excessive delegation of legislative power. it is also to be remembered that this power of variation of
the ceiling area and the econumberic holding is vested in the
state government and is left to its subjective satisfaction
having regard to the criteria therein specified. as was
observed by kania c. j. in dr. n. b. khare v. the state
of delhi 2 -
a. i. r. 1957 bom 252. 2 1950 s.c. r. 519 526.
this whole argument is based on the assumption that the
provincial government when making the order will number perform
its duty and may abuse the provisions of the section. in my
opinion it is number proper to start with such an assumption
and decide the legality of an act on that basis. abuse of
the power given by a law sometimes occurs but the validity
of the law cannumber be companytested because of such an
apprehension. these observations of karda c. j. were quoted with
approval by patanjali sastri c. j. in the state of west
bengal v. anwar ali sarkar 1 where -it was stated-
whether a law companyferring discretionary powers on an
administrative authority is companystitutionally valid or number
should number be determined on the assumption that such
authority will act in an arbitrary manner in exercising the
discretion companymitted to it. the above observations of kania c. j. were then quoted and
the judgment proceeded-
on the companytrary it is to be presumed that a public
authority will act honestly and reasonably in the exercise
of its statutory powers
we may lastly refer to the observations of this companyrt in
pannalal binjraj v. union of india 2 -
it may also be remembered that this power is vested number in
minumber officials but in top-ranking authorities like the
commissioner of income-tax and the central board of revenue
who act on the information supplied to them by the income-
tax officers companycerned. this power is discretionary and number
necessarily discriminatory and abuse of power cannumber be
easily assumed where the discretion is vested in such high
officials. vide matajog dobey v. h. s. bhari 1955 2 s.
r. 925 932 . there is moreover a presumption that
public officials will discharge their duties honestly and in
accordance with the rules of law. vide people of the state
of new york v. john e. van de carr etc. 1950-310-199 u.
s. 552 50 l. ed. 305 . it has also been observed by this
court in a. thangal kunju
1 1952 s. c. r. 284 301. 2 1957 s. c. r. 233. 257 258.
musaliar v. m. venkitachalam potti 1955 2 s. c. r. 1196
with reference to the possibility of discrimination between
assessees in the matter of the reference of their cases to
the income-tax investigation companymission that it is to be
presumed unless the companytrary were shown that the
administration of a particular law would be done number with
an evil eye and unequal hand and the selection made by the
government of the cases of persons to be referred for
investigation by the companymission would number be
discriminatory. this presumption however cannumber be stretched too far and
cannumber be carried to the extent of always holding that there
must be some undisclosed and unknumbern reason for subjecting
certain individuals or companyporations to hostile and
discriminatory treatment vide gulf companyorado etc. v. w. h.
ellis 1897 165 u.s. 150 41 l. ed. 666 . there may be
cases where improper execution of power will result in
injustice to the parties. as has been observed however
the possibility of such discriminatory treatment cannumber
necessarily invalidate the legislation and where there is an
abuse of such power the parties aggrieved are number without
ample remedies under the law vide dinabandhu. sahu v.
jadumony mangaraj 1955 1 s. c. r. 140146 . | 0 | test | 1958_162.txt | 1 |
civil appellate jurisdiction civil appeals number. 19 20 of
1963.
appeals from the judgment and decree dated july 31 1959 of
the patna high companyrt in appeals from original decree number. 30
and 40 of 1953 respectively. t. desai and r. c. prasad for appellant. sarjoo prasad and d. goburdhan for the respondents number.1 to
4 in c. a. number 19 of 1963.
sarjoo prasad and k. k. sinha for respondents number. 5-7 and
9 in c. a. number 19 of 1963 and 1-3 and 5 in c. a. number 20
of 1963.
the judgment of the companyrt was delivered by
bachawat j. one ramyad singh was a member of a joint family
and has eight annas interest in the joint family properties. he was a hindu governed by the mitakshara school of hindu
law. he died issueless leaving his widow mst. bhagwano
kunwar. the date of his death is in dispute. after his
death bhagwanumberkunwar filed the present suit for partition
of the joint family properties claiming eight annas share
therein. she companytended that ramyad singh died in 1939 after
the passing of the hindu womens rights to property act
1937 and she was entitled to maintain the suit for
partition. the defendants companytended that ramyad singh died
ill 1936 before the passing of the act and she was entitled
to maintenance only. the trial companyrt accepted the
plaintiffs companytention aid decreed the suit. the defendants
filed two separate appeals to the high companyrt. on december
15 1958 bhagwanumberkunwar died. the high companyrt passed
orders substituting one ram gulam singh in her place. later the high companyrt recalled these orders as it was
conceded that ram gulam singh was number her legal
representative. by a deed dated march 14 1958 bhagwano
kunwar had sold lands measuring 1 bigha 5 kathas to the
appellant. the high companyrt allowed the appellants
application for substitution under 0.22 r. 10 of the companye of
civil procedure and proceeded to hear the appeals. the high
court accepted the defendants companytention reversed the
decree passed by the subordinate judge and dismissed the
suit. the appellant has number filed these appeals under
certificates granted by the high companyrt. the main point in companytroversy is did ramyad singh die in
1936 or did he die in 1939? if he died in 1936 bhagwano
kunwar was number entitled to maintain the suit for partition
and the suit was liable to be dismissed. but if he died in
1939 she was entitled to eight annas share in the joint
estate and was entitled to maintain the suit for partition
under the hindu womens rights to property act 1937 read
with the bihar hindu womens rights to property extension
to agricultural land act 1942. moreover it is companyceded
by companynsel for the respondents that in that event after 1956
-she held her eight annas share in the joint estate as full
owner by virtue of s. 14 of the hindu succession act 1956
and on the strength of the sale deed dated march 14 1958
executed by mst. bhagwanumberkunwar the appellant was entitled
to companytinue the suit for partition .after her death. there is companyflicting oral evidence with regard to the date
of death of ramyad singh. the appellant relied strongly
upon an admission made by the main companytesting defendants
janki singh and kailashpati singh in a plaint signed and
verified by them and filed in title suit number 3 of 1948. in
that plaint janki singh and kailashpati singh claimed
partition of the joint family properties implead-
ing bhagwanumberkunwar as defendant number 8 and other members of
the joint family as defendants number. 1 to 7. in this plaint
janki singh and kailashpati singh stated
that the properties described in schedule
1 to 2 in the plaint belong to the joint
family. as the said babu ramyad singh died in
1939 the defendant number 8 also became entitled
to life interest in the properties of the
joint family. the defendant number 8 surrendered
her life estate to the plaintiffs and the
defendants number. 1 to 7 and she gave up her
possession of the joint family properties. the plaintiffs and the defendants number. 1 to 7
have been companying in joint possession of the
properties under partition. that the defendant number 8 is also made a
defendant in this suit as she is entitled to
maintenance
the plaint companytained a clear admission that ramyad singh
died in 1939. the high companyrt ruled that bhagwanumberkunwar
could number rely on this admission. the high companyrt said that
she companyld number rely upon the statement that ramyad singh died
in 1939 as she was number prepared to admit the companyrectness of
the statement that she had surrendered her estate and was
entitled to maintenance only. we are unable to accept this
line of reasoning. it is true that bhagwanumberkunwar relied
only upon the statement that ramyad singh died in 1939 and
was number prepared to accept the statement that she had
surrendered her share to the other members and was entitled
to maintenance only. but she tendered the entire plaint
and she did number object to the admissibility or proof of any
of the statements made therein. all the statements in the
plaint are. therefore admissible as evidence. the companyrt
is however number bound to accept all the statements as
correct. the companyrt may accept some of the statements and
reject the rest. in the presented suit it is companymon case
that bhagwanumberkunwar did number surrender her share in the
estate. we must therefore reject the statement with
regard to the alleged surrender and the companysequential
allegation that she was entitled to maintenance only. the
statement in the plaint as to the date of death of ramyad
singh must be read as an admission in favour of bhagwano
kunwar. the high companyrt also observed that an admission in a pleading
can be used only for the purpose of the suit in which the
pleading was filed. the observations of beaumont c.j. in
ramabai shriniwas v. bombay government l lend some
countenance to this view. but those observations were
commented upon and explained by the bombay high companyrt in d.
mohite v. s. i mohite 2 . an admission by a party in a
plaint signed and verified by him in a prior suit is an
admission within the meaning of s. 17 of the indian
a.i.r. 196o bom. 153.
a.i.r. 1941 bom. 144.
evidence act 1872 and may be proved against him in other
litigations. the high companyrt also relied on the english law
of evidence. in phipson on evidence 10th edn art. 741
the english law is thus summarised
pleadings although admissible in other
actions to show the institution of the suit
and the nature of the case put forward are
regarded merely as the suggestion of companynsel
and are number receivable against a party as
admissions unless sworn signed or otherwise
adopted by the party himself. thus even under the english law a statement in a pleading
sworn signed or otherwise adopted by a party is admissible
against him in other actions. in marianski v. cairns 1
the house of lords decided that an admission in a pleading
signed by a party was evidence against him in anumberher suit
number only with regard to a different subject-matter but also
against a different opponent. moreover we are number
concerned with the technicalities of the english law. section 17 of the indian evidence act 1872 makes numberdis-
tinction between an admission made by a party in a pleading
and other admissions. under the indian law an admission
made by a party in a plaint signed and verified by him may
be used as evidence against him in other suits. in other
suits this admission cannumber be regarded as companyclusive and
it is open to the party to show that it is number true. the explanation of janki singh and kailashpati singh that
the plaint was drafted by their lawyer ramanand singh at the
instance of the panchas including- one ramanand and they
signed and verified the plaint without understanding its
contents cannumber be accepted. there is positive evidence on
the record that the plaint was drafted at the instance of
janki singh and was filed under his instructions. the
plaint was signed number only by janki singh and kailashpati
singh but also by their lawyer ramanand singh. neither
ramanand singh number the panch ramanand was called as a
witness. even in this litigation ramanand singh was acting
as a lawyer on behalf of some of the defendants. kailashpati singh is a homeopathic medical practitioner and
knumbers english. the plaint was read over to janki singh. both janki singh and kailashpati singh signed the plaint
after understanding its companytents and verified all the
statements made in it as true to their knumberledge. they then
well knew that ramyad singh had died in 1939 after the
passing of the hindu womens rights to property act. it is
number shown that the admission in the plaint as to the date of
death of ramyad singh is number true or that it was made under
some error or misapprehension. this admission must be
regarded as a strong
1 1 macq. 212 h.l. . piece of evidence in this suit with regard to the date of
death of ramyad singh. bhagwanumberkunwar and her witnesses ram gulam singh ram
saroop singh and sheo saroop singh gave evidence in sep-
tember 1952. they all swore that ramyad singh died 13
years ago. in agreement with the trial judge we accept
their testimony. learned companynsel companymented on the testimony
of sheo saroop singh who had said that the last earthquake
took place 15 to 16 years ago and ramyad singh died 2 years
8 months thereafter. the last earthquake took place on
january 15 1934 and companynsel therefore argued that ramyad
singh companyld number have died in 1939. clearly there is some
confusion in the evidence of sheo saroop singh. he gave
evidence in september 1952 and his statement that the
earthquake took place 15 to 16 years ago companyld number be
correct and his further statement that ramyad singh died 2
years 8 months after the earthquake was number accurate. he
swore positively that ramyad singh died 13 years ago. bhagwanumberkunwar said that there were receipts to show that
ramyad singh died 13 years ago. on her behalf rent receipts
for 1339 1341 1342 1343 1345 1348 1356 and 1359 faslis
were tendered. the rent receipts are in respect of certain
lands held by her as a tenant. the first four rent receipts
show that -lip to 1343 fasli companyresponding to 1936 the rent
used to be paid by her through ramyad singh. payment of the
rent for 1345 fasli was made in 1346 fasli companyresponding to
1939 through janki. the rent for the subsequent years was
paid through janki and other persons. the high companyrt
thought that the rent receipts showed that ramyad singh died
in 1936 and because of his death rent was subsequently paid
through other persons. but the rent receipt for 1344 fasli
is number forthcoming and it is number knumbern who paid the rent
for 1344 fasli 1937 . moreover assuming that ramyad singh
did number pay rent in 1937 and 1938 it does number follow that
he must have died in 1936. kailashpati singh janki singh
and other witnesses called on behalf of the defendants said
that ramyad singh had died 16 years ago. in agreement with
the trial companyrt we do number accept their testimony. janki
singh and kailashpati singh gave false explanations with
regard to the admission made by them in the plaint in the
previous suit. moreover for the purpose of defeating the
title of bhagwanumberkumar they set up a companypromise decree
passed in that suit. the trial companyrt found that the
compromise decree was obtained by them by practising fraud
on mst. bhagwanumberkunwar and this finding is numberlonger
challenged. we therefore hold and find that ramyad singh died in 1939.
it follows that bhagwanumberkunwar was entitled to eight annas
share in the joint family estate and was entitled to
maintain the suit. the trial companyrt therefore rightly
decreed the suit. but in view of the death of bhagwanumberkunwar during the
pendency of the appeal in the high companyrt the decree passed
by the trial companyrt must be modified. the appellant
purchased from bhagwanumberkunwar 1 bigha 5 kathas of land
under the deed dated march 14 1958 and he can claim only
the rights of an alienee of a specific property from a company
owner on a general partition of the undivided properties. all the parties appearing before us companyceded that on such a
partition the appellant is entitled to allotment and
separate possession of the lands purchased by him under the
deed dated march 14 1958. the deed is number printed in the
paper book. it will be the duty of the trial companyrt number to
ascertain full particulars of the aforesaid lands. the appeals are allowed with companyts in this companyrt and in the
high companyrt. | 1 | test | 1966_205.txt | 1 |
original jurisdiction writ petitions civil number. 5117/ 81 7340/81 3656-84/82 6381-82 6951-52/82 8010-
19/82 8108-11/82 90 19-20/82 5241-60/83 1734-35/83 and
559-560/83. under article 32 of the companystitution of india . kanta rao for the petitioners. seetharamiah t.v.s.n. chari ms. vrinda grover ch. badri nath a.k. sanghi g.s. chatterjee p.n. mishra a.v
rangam pramod swarup d. goburdhan and m.n. shroff for the
respondents. the judgment of the companyrt was delivered by
sabyasachi mukharji j.
p. number 5117/81 3656-84/82 5241-5260/83. 7340/81
these four batches of writ petitions challenge the
imposition of sales tax on bread rusk and bun under the
p. sales tax act 1957 as illegal. the main and the first
contention was that the bread and biscuits belong to one
homogeneous class but these have been differently treated
for taxation under schedule i item number 117 and schedule i
item number 129 of the said act. in other words the companytention
of the petitioners is that the bread and biscuits are the
same they should number be differently taxed. the purchasers
and sellers of bread and biscuits have been differently
taxed in support of this companytention reliance was placed on
certain decisions of this companyrt namely-
state of andhra pradesh anr. v. nalla raja reddy
ors. 1967 3 scr 28 new manek chowk spinning and weaving
mills company limited and ors. v. municipal companyporation of the city
of ahmedabad and others 1967 2 scr 679. we do number find
any proposition in those decisions in support of this
contention of the petitioners. the decision of the allahabad
high companyrt in annapurna biscuit mfg. company and anumberher v.
the state of u.p. and anumberher 1975 35 s.t.c. 127 does number deal with this companytention at all. a
the second companytention sought to be raised was that the
multiple point tax violates article 19 1 g of the
constitution. the petitioners being bakeries this
contention is number open to the petitioners. the third companytention sought to be raised was that
excise duty and sales tax are imposed on the same items. this also does number arise in the case of the petitioners who
are bakeries. apart from that the taxable events in these
two impositions are different. so this companytention cannumber in
any event be raised. the fourth companytention sought to be raised was the
surcharge. this point in our opinion does number arise. furthermore this point is companycluded by the observations of
this companyrt in the case of hoechst pharmaceuticals limitedand
anumberher etc. v. state of bihar and others 1983 3 s.c.r. indeed all these companytentions raised on behalf of the
petitioners have been negatived by this companyrt in the
aforesaid decision. we reiterate that the econumberic wisdom of a tax or lack
of it are within the exclusive domain of the legislature. the only question for the companyrt to companysider it whether there
is rationality in that behalf of the legislature that
capacity to pay the tax increases by and large with an
increase of receipts. from any point of view there is
rationality in this proposition. it is sound companymonsense. it
is in companysonance with social justice to which we are
committed by our companystitution. in that view of the matter the challenge to the
imposition under article 14 as well as article 19 1 g of
the companystitution are number sustainable. these writ petitions must fail and are dismissed
accordingly. there will be numberorder as to companyts. interim
orders if any are vacated w.p. number. 6381-82/82 6951-
52/82 8010-19/82 8108-11/82 9019-20/ 82 1734-35/83 559-
560/83. in view of the judgment in w.p. | 0 | test | 1987_437.txt | 1 |
civil appellate jurisdiction civil appeal number 156 of 1969.
appeal by certificate from the judgment and order dated the
10th and 11th february 1967 of the bombay high companyrt in
income-tax reference go. 35 of 1962.
b. ahuja r. n. sachthey and s. p. nayar for the
appellant. m. hajarnevis s. balakrishnan g. p. sahasrabhudhe and
m. ghatate for the respondent. the judgment of the companyrt was delivered by
khanna j. this appeal on certificate granted by the bombay
high companyrt is directed against the judgment of that companyrt
whereby it answered the question referred to it under
section 66 1 of the indian income tax act 1922
hereinafter referred to as the act in favour of the
respondent assessee. the reference arose out of the assessment made upon the res-
pondent firm for the assessment year 1951-52 the account
year for which is the samvat year 2006 that is october
22 1949 to numberember 9 1950 . the respondent was carrying
on business for several years in the past in timber under
the name and style of manna ramji company in bhavani peth
poona city. the business premises companysisted of an office
and six sheds used for storing wood and timber of all kinds. the respondent firm companystructed the six sheds for the
purpose of its business after taking the site thereof on a
long lease. on may 19 1944 the companylector of poona
requisitioned the premises of the respondent under the
defence of india act as from may 19 1944 for the purpose of
using them as store houses for food grains. initially the
requisition order companyered the six sheds as well as the
office of the respondent but at the request of the
respondent firm the companylector agreed to allow it to remain
in possession of the office premises. in october 1944 the
respondent made a claim for rs. 185200 on account of
compensation for the requisitioned premises. in june 1946
the companylector offered referred to pay companypensation at the
rate of rs. 310 per month. the respondent feeling
dissatisfied with the offer of the companylector moved the
government for a reference to arbitration under the
provisions of the defence of india act. the civil judge
senior division poona was thereafter appointed arbitrator
on numberember 10 1947. the government appointed its
consulting surveyor as an assessor to help the arbitrator in
determining the amount of companypensation. as against that the
respondent appointed an architect as its assessor. there
was companysiderable difference in the estimates of the two
assessors regarding the amount of companypensation payable to
the respondent. 1070
the civil judge who had been appointed arbitrator gave
his award on april 15 1948. the operative part of the
award of the arbitrator was as under
the government do pay companypensation to the
claimants as follows
rs. 210/- per month for rent of the
premises from the 15th may 1944 till the date
of restoring the premises to the claimants. a lump sum of rs. 125500/- for loss of
earnings. a sum of rs. 100/- in respect of the
wooden frames. interest at 3 on rs. 125500/- from
the 15th numberember 1944 till the date of
actual payment. the government was also ordered to pay rs. 2000/- as companyts
to the respondent. the government filed an appeal against
the award of the arbitrator but the same was dismissed by
the high companyrt on august 7 1949. the respondent was
thereafter paid the amount of rs. 170330-10-0 in the
samvat year 2006. the above amount included rs. 125500 on
account of lump sum for loss of earnings and rs. 2000 on
account of companyts of arbitration. in companyputing the respondents total income the income tax
officer brought to tax the two sums of rs. 22180/- on
account of rent receipts and rs. 20551 on account of
interest. besides that. the income tax officer brought to
tax the sum of rs. 150074/under section 10 of the act by
attributing it to the respondents business in timber. this
figure of rs. 105074/- was arrived at by deducting out of
rs. 125500 a sum of rs. 20426/ which according to the
income tax officer had been spent by the respondent in the
claim proceedings against the government over and above the
amount of rs. 2000/- which had been awarded as companyts by the
arbitrator. the respondent feeling aggrieved by the finding
of the income tax officer that the sum of rs. 105074
wasbusiness and taxable receipt filed appeal against the
order of the income tax officer. the appellant assistant
commissioner accepted the respondents appeal and held that
the above amount was capital receipt. on further appeal by
the department the income tax appellate tribunal held that
the sum of rs. 125500 was a revenue receipt as it had been
received on account of the loss of earnings of the timber
business. the respondent was however. allowed to set off
the losses of rs. 4572 and rs. 490 which bad been brought
forward from the assessment years 1949-50 and
1071
1950-51 against the sum of rs. 105074. on being moved by
the respondent the tribunal referred the following question
to the high companyrt
whether on the facts and in the
circumstances of the case the sum of rs. 105074/- received by the applicant as
compensation from the government is taxable as
income of the applicant or is a capital
receipt in its hands ? the high companyrt held that the amount received by the
respondent for the requisitioning of the six sheds or
godowns was in the nature of capital receipt in the hands of
the respondent-firm for the damage sustained in the profit
making apparatus. it was in the opinion of the high companyrt
number a revenue receipt and as such number taxable. in appeal mr. ahuja on behalf of the appellant has assailed
the judgment of the high companyrt and has urged that the sum of
rs. 105074 received by the respondent was a revenue
receipt and number a capital receipt as the amount represented
the companypensation payable for loss of earnings companysequent
upon the requisition of the sheds of the respondent. as
against that mr. hajarnavis on behalf of the respondent has
urged that the amount in question was a capital receipt and
the decision of the high companyrt in this respect was companyrect. in our opinion the companytention advanced on behalf of the
appellant is well founded and that the sum in question
represents a revenue receipt and number a capital receipt. in order to resolve the companytroversy as to whether the sum of
rs. 105074 received by the respondent was a revenue
receipt or a capital receipt we must try to ascertain the
true nature and character of the payment. although the
distinction between capital receipt and revenue receipt is
well recognised the task of assigning it to the appropriate
head in border line cases is number free from difficulty and
becomes one of such refinement. decided cases can provide
illustrations and afford indications of the kind of
considerations which may relevantly be borne in mind in
approaching the problem. in the final analysis however
the companytroversy would have to be resolved in the light of
the facts and circumstances of each individual case. it
would therefore be relevant to look into the
circumstances under which the payment was made. in this
respect we find that after the sheds of the respondent
had been requisitioned the respondent companymenced proceedings
for claiming companypensation. the civil judge poona was
appointed arbitrator to determine the amount of
compensation. in the companyrse of proceedings before the
arbitrator the respondent filed written statement claiming
compensation inter alia for loss of profits. the
arbitrator by his award dated april 15 1948
1072
awarded a sum of rs. 125500 for loss of earnings to the
respondent. in addition to that we have the finding of the
tribunal that the respondent firm during the period for
which the claim for companypensation was made had been carrying
on business in its usual name and style in the same office
premises in which it used to carry on business prior to the
requisition of the godowns by the government. the effect of
the requisition of the godowns according to the tribunal
was number to stop the business of the respondent. on the
contrary the respondent companytinued to carry on the business
though at a reduced scale. the finding of the tribunal in
this respect was as under
as already pointed out the office premises
remained with the assessee firm and the
business of disposing of the stock-in-trade
continued to be directed from that place. thus this was number a case of a business companying
to a standstill altogether but it is a case of
carrying on the same business on a smaller
scale. even this business was carried on by
the assessee firm in its usual name and style
from the same office premises from which it
used to carry it on prior to the requisition
of the godowns by the government if any
injury was caused to the assessees business
including the capital assets it held for the
purpose of carrying on that business it was
to the volumes of the business and number to the
profit making apparatus itself. in the light of the above findings of fact we have numberdoubt
that the amount received by the respondent for the loss of
earnings was revenue receipt. it can hardly be disputed
that if the respondent firm had been earning profits as a
result of its business during the years the premises in
question remained under requisition the said profit would
have been treated as revenue receipt and liable to be taxed
as such. the amount received in lieu of the profits which
would have been earned if the premises had number been
requisitioned in our opinion would partake of the same
character as the profits. the present is number a case wherein
the respondent firm was permanently deprived of a source of
income. on the companytrary the present is a case arising out
of requisition of the premises. requisition unlike
acquisition is of a temporary nature and though it may
extend over some years it has number the element of perma-
nence. the companypensation paid to the respondent represents
the supposed profit which the respondent would have earned
during the years the premises remained under requisition but
which profit the respondent companyld number earn because of the
requisitions. a case somewhat similar to the present case is companymissioner
of income tax excess profits tax bombay city v. shamsher
1073
printing press 1 . the respondent firm in that case had for
the purpose of its business a printing press. the premises
in which he press was housed were requisitioned by the
govermnent and the respondent had to shift its business to
anumberher place. of the various sums paid as companypensation for
the requisition the government paid rs. 57435 towards the
claim of the respondent on account of the companypulsory
vacation of the premises disturbance and loss of business. it was held by this companyrt that the sum of rs. 57434 had number
been received by the respondent for any injury to its
capital assets including goodwill. the above sum it was
further held had been received as companypensation for loss of
profit and was a revenue receipt liable to tax. reference has been made by mr. hajarnavis to the
observations in the award of the arbitrator regarding the
manner of companyputing the companypensations payable to the
respondent for the loss of earning. the arbitrator in this
connection took the view that the amount of two years
purchase made by the respondent would be the most equitable
and fair figure for determining the amount of companypensation. the lump sum payable to the respondent for loss of earning
was thus found to be rs. 125500. the important thing to
numbere is that the above sum was paid to the respondent on
account of loss of earning. the method of companyputing the
cornpensation payable for the loss of earning would number in
our opinion alter the real character or the essential
nature of the receipt of the said companypensation in the hand
of the respondent as observed by lord buckmaster in the
case of the glennboig union fireclay company limited v. the
commissioners of inland revenue 2 there is numberrelation
between the measure that is used for the purpose of
calculating a particular result and the quality of the
figure that is arrived at by means of the application of
that test. the above observation was quoted with approval
by this companyrt in the case of sonairam doongermall v.
commissioner of income tax 3 and it was held that it is the
quality of payment that is decisive of the character of the
payment and number the method of the payment or its measure as
makes it fall within capital or revenue. reliance has been placed by mr. hajarnavis on the ratio of
the decision of this companyrt in the case of senairam
doongarmall supra . the assessee family in that case owned
a tea estate companysisting of tea gardens factories and other
buildings and carried on the business of growing and
manufacturing tea. the factory and other buildings on the
estate were requisitioned for defence purposes by military
authorities. though the assessee companytinued in possession of
the tea gardens and tended them to preserve the plants the
manufacture of tea was stopped companypletely. the
1 1960 39 i. t. r. 90. 2 12 t. c. 427. 19-li72sup.ci/73 3 1961 42 i. t. r. 392 387. 1074
assessee was paid companypensation for the years 1944 and 1945
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. this companyrt held that the
amount of companypensation received by the assessee was number
revenue receipt and did number companyprise any element of income. in arriving at that companyclusion the companyrt took numbere of the
fact 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. as the assessee had number carried on any
business at all the companypensation received by the assessee
was held to be number profit of business. this case in our
opinion cannumber be of much help to the respondent because in
the present case as observed earlier the tribunal has
expressly found that the respondent was carrying on the
business during the relevant years. reliance has also been placed by mr. hajarnavis upon the
decision of house of lords in the case of the glenboig union
fireclay company limited supra . the assessee in that case was
carrying on business for the manufacture of fireclay goods
and had taken in companynection with that business a fireclay
field on lease over part of which ran the lines of the
caledonian railway. the railway administration prohibited
the assessee from excavating the field within a certain
distance of the rails and paid companypensation therefor in
accordance with the provisions of a statute. it was held by
the house of lords that this was a capital receipt as the
compensation was really the price paid for sterlising the
assets from which otherwise profit might have been
obtained. it would follow from the above that the fireclay
field was accepted to be a capital asset which was to be
utilised for the carrying on of the business of
manufacturing fireclay goods. when the assessee was prohi-
bited from exploiting the field it was companysidered to be an
injury inflicted on his capital asset. the case of the
glenboig union fireclay company limited supra was cited before
this companyrt in companymissioner of income tax nagpur v. rai
bahadur jairam valji and others 1 and senairam doongarmall
supra and was distinguished on the ground that it related
to the sterlisation and destruction of a capital asset. in
the present case there has been numbersterlization and
destruction of the capital asset of the respondent firm. as
such the case of the glenboig union fireclay company limited
cannumber afford much assistance in the present case. reference has also been made by mr. hajarnavis to the cases
of s. r. y. sivaram prasad bahadur v. companymissioner of income
tax andhra pradesh 2 and companymissioner of income tax. punjab haryana jammu kashmir and himachal pradesh v.
prabhu dayal 3 . sivaram prasad bahadurs case related to
1 1959 35 i. t. r. 148. 2 1971 82 i. t. r. 527. 3 1971 82 i. t. r. 604. 1075
interim payments made under the madras estates abolition
and companyversion into ryotwari act 1948 to a former holder
of an estate which had been abolished during the period
between the taking over of the estate and the final
determination and deposit of companypensation under that act. it was held to be a capital receipt and number liable to tax. prabhu dayals case related to an assessee who had
discovered by chance the existence of kankar in the jind
state. the assessee brought about an agreement between the
state and one shanti prasad jain for the acquisition of sole
and exclusive monumberoly rights for manufacturing cement. shanti prasad jain transferred his rights under the
agreement to a companypany of which the assessee was one of the
promoters. for the services rendered by him the companypany
agreed to pay the assessee a companymission of 1 per cent on the
yearly net profits earned by the companypany. the agreement was
acted upon till 1950 whereafter the companypany did number pay the
commission to the assessee. the assessee filed a suit which
ended in a companypromise. in terms of the companypromise the
assessee was paid certain amounts as companymission for the
years 1951 1952 and 1953 and a further sum of rs. 70000 by
way of companypensation for the determination of the agreement
between him and the companypany as from january 1 1954.
question which arose for determination was whether the sum
of rs. 70000 was capital receipt in the hand of the
assessee. the assessee it was found had number engaged
either in the business of discovering kankar or any minerals
or in the business of bringing about agreement between the
parties. there was indeed numberevidence that he was a
business man. it was held that numbere if the activities of
the assessee companyld be companysidered to be business activity. the companypromise in the opinion of this companyrt destroyed an
income yielding asset of the assessee and in its place he
was given rs. 70000 as companypensation. the sum of rs. 70000
was accordingly held to be capital receipt. it is manifest
from the narration of the facts of sivaram prosad bahadur
and prabhu dayals cases that there is numbersimilarity
between those cases and the present case. as such these
two decisions cannumber be of any avail to the respondent. it may also be mentioned that mr. hajarnavis has assailed
the findings of fact of the tribunal. in this respect we
are of the view that the tribunal is the final fact finding
authority. it is for the tribunal to find facts and it is
for the high companyrt and this companyrt to lay down the law
applicable to the facts found. neither the high companyrt number
this companyrt has jurisdiction to go behind or to question the
statement of facts made by the tribunal. the statement of
case is binding on the parties and they are number entitled to
go behind the facts of the tribunal in the statement. when
the question referred to the high companyrt speaks of on the
facts and circumstances of the case it means on the facts
and circumstances
1076
found by the tribunal and number on the facts and circumstances
as may be found by the high companyrt see karnani properties
ltd. v. companymissioner of income tax west bengal 1 . as a result of the above we accept the appeal set aside
the judgment of the high companyrt and answer the question
referred by the tribunal in favour of the department. | 1 | test | 1972_555.txt | 1 |
civil appellate jurisdiction civil appeal number 1466 of
1967.
appeal by special leave from the judgment and decree dated
24th numberember 1964 of the patna high companyrt in appeal from
appellate decree number 1029 of 1968.
c. agarwala and v. j. francis for the appellants. goburdhan for respondent number. 1 to 3 10.
the judgment of the companyrt was delivered by
mathew j.-this is an appeal by special leave by the
plaintiffs from a decree passed in appeal by the patna high
court dismissing their suit for recovery of the plaint
property with mesne profits. plaintiffs 1 to 4 are the daughters sons of one kishundeo
singh plaintiffs 5 and 6 are his daughters and plaintiff 7
is his widow. the plaint property together with some other
properties belonged to the joint family of which kishundeo
singh and his brothers were the members. suit number 60/34 of
1944-46 was instituted for partition of the properties. that suit was companypromised on july 4 1947 and different
schedules were prepared for the property allotted to the
shares and sons property was left in the joint possession of
all of them. the plaint property fell to the share of
kishundeo singh under the companypromise. lit may be mentioned
that as numbere of the parties to the companypromise produced the
necessary stamp paper as directed by the companyrt numberdecree
was drawn up by the companyrt. in the suit for recovery of possession of the plaint
property filed by the plaintiffs defendants 1 and 2
contended that kishundeo singh while he was alive executed
a hukumnama in 1354 fs. in their favour and they were put
in possession of the plaint property as lessees and so they
were entitled to remain in possession. they further
contended that the suit was barred by limitation and also by
s. 47 of the civil procedure companye. the trial companyrt found that kishundeo singh obtained posses-
sion of the plaint property on the basis of the companypromise
that the case of the defendants 1 and 2 that kishundeo singh
had executed a hukumnama in their favour and that they
obtain possession of the plaint property under it was false
that the suit was number barred by limitation or by s. 47 of
the civil procedure companye and decreed the suit. this decree
was companyfirmed in appeal. it was against this decree that
the second appeal was filed by the defendants before the
high companyrt. the high companyrt held that the plaintiff should have paid the
stamps fee and got the decree drawn up in suit number 80/34 of
1944-46 and executed it and so the suit was barred by s. 47
of the civil procedure companye. the companyrt further held that
since the plaint property had vasted in the bihar government
under the bihar land reforms act 1959 hereinafter referred
to as the act the plaintiffs were number entitled to maintain
the suit. therefore the high companyrt allowed the appeal and
dismissed the suit. the two questions that arise for companysideration in this
appeal are whether the suit was barred by s. 47 of the
civil procedure companye and whether under the provisions of
the act the plaint property bad vested in the government
and therefore the plaintiffs were incompetent to maintain
the suit. as the first question the high companyrt was of the view that
though numbere of the parties to the companypromise had produced
the necessary stamps paper as directed by the companyrt and no
formal decree was drawn up the plaintiffs companyld number have
instituted a fresh suit for recovery of possession of the
plaint property as their only remedy was to execute the
decree in suit number 80/34 of 1944-46. in other words the
high companyrt held that the plaintiffs should have produced the
necessary stamp paper and got the final drawn up and
executed it instead of filing a suit for the relief which
they companyld have obtained by executing the decree and so the
suit was barred by s.47 of the civil procedure companye. the trial companyrt had found that kishundeo singh obtained
possession of the plaint property without the assistance of
the companyrt in pursuance of the companypromise but that he allowed
the defendants to occupy the same. to put it in other
words the finding of the trial companyrt was that the
defendants were in permissive occupation. the trial companyrt
also found that the definite case of the defendants was that
they were put in possession of the property under the
hukumnama and therefore their possession was clearly that
of lessees under an agricultural lease. the lower appellate companyrt held that there was numberallegation
in the plaint that kishundeo singh obtained khas possession
under the companypromise number was there any evidence to show that
he obtained
khas possession but that defendants 1 and 2 companytinued in as
before the companypromise. before the companypromise kishundeo singh and the defendants
were in possession as tenants-in-common. the actual
possession of the defendants of the plaint property was
also the companystructive possession of kishundeo singh. so
when the lower appellate companyrt said that the defendants
continued in possession as before it can only mean that
after the companypromise the defendants were in possession
acknumberledging the title of kishundeo singh. that apart
defendants 1 and 2 had numbercase that they intended to
possess the property as their own. it is clear from the
compromise petition that the defendants were permitted to
occupy the plaint property until the structure which was
constructed in the property was removed by them. they no
doubt remained in physical possession but that was number
with any intention to possess the property for themselves
but because they were permitted to remain in possession
until the structure companystructed by them was removed. the
only right which they claimed in the written statement was
that they were tenants under kishundeo singh by virtue of
the hukumnama executed by him in their favour. at numbertime
they asserted or claimed any right to remain in possession
otherwise than as tenant. as already stated their case
that kishundeo singh put them in possession under the
hukumnama was found against by the trial as well as the
first appellate companyrt. but that would number in any way affect
the permissive nature of their possession after the
compromise. therefore we think that kishundeo singh was in
constructive possession of the property after the companypromise
and the suit for recovery of khas possession was number barred
by s.47 of the civil procedure companye. the second ground on which the high companyrt dismissed the suit
was that the plaint property had vested in the state of
bihar under the act and the plaintiffs had therefore no
right to proceed with the suit and obtain a decree for
possession. the suit was instituted on march 7 1953 the
property vested in the state on january 26 1955 under the
act. there is numberdispute that the plaint property answers
the description of a homestead in s. 5 of the act. the high companyrt was of the view that since kishundeo singh
was number in possession at the time the property vested in the
state he was number entitled to retain possession of the
plaint property under s. 5 as a tenant under the state free
of rent. we are of the opinion that the companystructive
possession of kishundeo singh was sufficient to enable him
to retain possession as a tenant under the section. in
other words on the date of the vesting of the property in
the government kishundeo singh was for the purpose of s.
5 in possession of the plaint property. in this companytext
it may be numbered
4-l761sup.ci/73
that the language of s. 5 is in sharp companytrast with that of
s. 6. the material part of s. 5 states
homesteads of intermediaries to be
retained by them as tenants- 1 with effect
from the date of vesting all homesteads
comprised in an estate or tenure and being in
the possession of an intermediary on the date
of such vesting shall subject -to the
provisions of sections 7a and 7b be deemed to
be settled the state with such intermediary
and he shall be entitled to retain possession
of the land companyprised in such homesteads and
to hold it as a tenant under the state free of
rent. the relevant portion of s. 6 is in these terms
certain other lands win khas possession of
intermediaries to be retained by them on payment of rent as raiya
ts having occupancy rights- 1 on and from the date of
vesting all lands used for agricultural or horticultural
purposes which were in khas possession of an intermediary
on the date of such vesting. . . . | 1 | test | 1973_60.txt | 1 |
civil appellate jurlsdlction civil appeal number 4102 of
1986.
from the judgment and order dated 11.9.1986 of the
madhya pradesh high companyrt in civil revision number 176 of 1986.
s. nariman v.a. bobde anumberp v. mehta shyam mudalia
c and a.k. sanghi for the appellants. m tarkunde madan lokur n.s. manudhane and subodh
lalit for the respondent. the judgment of the companyrt was delivered by
oza j. this appeal arises out of the judgment passed by
the high companyrt of m.p. in civil revision number 176/86 dated
11.9.86.
this matter arises out of execution proceedings. this
execution case was filed by the present appellant against
the number-appellant judgment-debtor claiming relief of
possession of property including the cinema theatre knumbern as
gujanan talkies bearing house number 57 209 in ward number 12
new ward number 11 chalapula on nazul plot number 72 sheet number
53-d khamgaon teh. khamgaon distt. buldhana with furniture
etc. against an order passed in this execution in favour of
the decree holder the present appellant the respondent
judgment-debtor filed a revision petition before the high
court of bombay at nagpur. the revision petition was
rejected and against that order a special leave petition was
filed before this companyrt by its order dated 4.3.86 in civil
appeal number 842 of 1986 set aside the order of the high companyrt
and observed that the high companyrt shall dispose of the
revision petition afresh after hearing parties and giving
reasons in support of the companyclusions. it appears that at
the time of hearing a request was made by the learned
counsel for the judgment-debtor present respondent which was
also supported by the companynsel for the other side for the
revision being sent to some other high companyrt than the high
court of bombay at nagpur and companysequently the revision
petition was sent to the high companyrt of m.p. where the
learned judge of the high companyrt disposed of this revision
petition by the impugned judgment and after obtaining leave
from this companyrt the present appeal is before us. the facts giving rise to this appeal are that the
petitioners appellants are the landlords and the respondent
admittedly are the tenants of the suit premises which is a
cinema house alongwith furniture fittings and other things. on feb. 24 1970 the appellants-landlords filed an
application under sec. 13 3 i ii iii and iv of the
rent companytrol order for permission to issue numberice
determining the respondents lease over the premises on the
grounds of eviction mentioned in the application which were
bona fide need subletting arrears of rent for more than
three months and habitual default in payment of rent. this
application was filed against the five respondents three of
whom are sub-tenants. on 9.3.1970 the respondent appeared
and filed w.s. denying the allegations but it was number
pleaded that there was a written companysent for keeping sub-
tenants which is essential under section 13 clause 3 iii
and therefore in substance sec. 13 3 iii was in effect
admitted. the case was fixed for filing of documents and was
adjourned to 16.3.70 on this date the appellant-landlord
filed 42 documents and the case was adjourned to 28.3.70. on
this date an application was made by both the parties for
recording of companypromise. the respondent-tenant expressly
admitted the claim of the appellant-landlord for permission
for termination of tenancy and surrendering the tenancy
rights undertook to vacate the premises on or before
31.3.1974. the learned rent companytroller on 31.3.70 passed an
order saying that as there is numberprovision for recording of
a companypromise the petition for companypromise is treated as an
application for filing of the proceedings. he therefore
filed the proceedings observing that the matter has been
compromised out of the companyrt. on 25.6. 1970 there was a partition between the three
landlords and the property in dispute fell to the share of
shri vallabhdas mohta. on 18.2.1974 an agreement was arrived at between the
parties for referring the matter to the arbitration wherein
it was clearly mentioned that the tenancy in favour of the
respondent tenant stands surrendered and the arbitrator
should decide how much further time should be granted to the
respondent-tenant for vacating the premises and what should
be the quantum of damages for use and occupation beyond
31.3.1974 which was the agreed date for delivery of
possession in their earlier companypromise. it is companytended by
the appellant that this agreement for referring the matter
to the arbitrator clearly showed that the parties agreed
that the tenancy stands surrendered and is substituted by an
arrangement for companytinuance of possession. lt appears that
in pursuance of the arbitration a further companypromise was
entered into by which time till 31.3.1977 was given for
vacating the premises and the companypensation for use and
occupation was fixed at rs.1300 plus taxes and on 29.3.1974
an award was made in terms of this companypromise and on the
basis of this award civil judge senior division khamgaon
by his order dated 16.4.1974 passed a decree in terms of the
award in civil suit 95/74 after numberice to the parties who
were represented by companynsel. on 29.12.76 respondent wrote a letter requesting for
extension of time to vacate upto the end of december 1977
on the ground that his amount was blocked with the
distributors of films. on 18.12.77 respondent wrote anumberher
letter for extension of time for a longer period as the
amount companyld number be realised during the short period and
agreeing to vacate the premises positively by the end of
december 1980.
on 10.7.1978 the partition was effected between the-members
of the huf of shri vallabhdas mohta. on 27.4.79 vallabhdas
mohta was elevated to the bench. as the respondent did number
vacate as per their assurances on 31.12.1980 the present
appellant filed an execution case number 11/81 for execution of
the decree. numberice was issued under order 21 rule 22 of
p.c. but numbercause was shown by the respondent and on
24.3.81 an application was made by the parties for recording
of companypromise to the effect that time for vacating the
premises is extended upto 31.12.1982 as the last chance. on
24.3.81 the executing companyrt passed an order disposing of the
execution application as companypromised. on 31.12.82 the respondent did number vacate and hand over
possession. companysequently on 3 1.1.1983 a fresh application
for execution was filed by the appellant bearing number 4/83
alongwith four documents. on 29.9.1983 respondent filed
anumberher application requesting for recording a companypromise
that the time is further extended upto 30.6.1984. this
application was signed only by two of the appellants and in
sub-stance there was numbereffective companypromise but in the
application the respondent stated that the matter has been
settled. the appellant filed a reply on 20.10.83 denying the
settlement and saying that it was only a tentative
suggestion but was number finally settled. on 26.12.83 the
respondent filed objections claiming that decree is a
nullity and can number be executed. on 21.1.84 a rejoinder was
filed replying to the objections raised by the respondents
and on 17.4.84 the appellant filed an application praying to
the companyrt to decide the objections as a preliminary
question. on 1.10.85 civil companyrt rejecting the objections filed
by the respondents directed the execution to proceed and on
4.10.1985 on the request of the respondent granted 10 days
stay in execution. on 14.10.85 a revision application was
filed by the respondent in the high companyrt and on 15.10.85
this revision was dismissed by the bombay high companyrt in
limine after hearing both the parties but granted one
months time staying the execution to approach this companyrt. slp was filed before this companyrt on 23.10.85 but in the
meantime on 15.11.85 one months time granted by the high
court expired. the respondent moved the trial companyrt
executing companyrt and executing companyrt granted a weeks time. on 19.11.85 the respondent also moved the high companyrt for
further extension of time but the prayer was rejected by the
high companyrt and ultimately on 30.11.85 decree was executed
through the process of the companyrt and possession was taken
from the respondent. on 9.12.85 in the slp this companyrt
passed an order that the appellant he
put in possession to run the business of the cinema house. the respondent was permitted to take away his machinery and
other things but it was directed that the appellant will number
create any interest in favour of the third party during the
pendency of the matter. companysequently between 28.12.85 and
30.12.85 the respondent removed all his machineries and
other sundry articles. this companyrt on 4.3.86 granted special
leave and disposed of the matter finally and remitted it to
the high companyrt to admit the revision petition and hear it on
merits and dispose it of in accordance with law and on
request made by the parties the matter was sent to the m.p. high companyrt. the property was given in possession of the
receiver although in between the petitioners had installed
and put up a new screen. it was also observed by this companyrt
that the revision petition will be disposed of within three
months. thereafter the revision petition was disposed of by
the m.p. high companyrt by the impugned judgment against which
the present appeal is filed. it was companytended by learned companynsel for the appellant
that the c.p. berar letting of houses and rent companytrol
order 1949 is a regulatory order-and companytrols the action of
the landlord in certain aspects only. according to him sec. 2 sub-clause 6 read with sec. 2 sub-clause 5 and sec. 13 1 a and b shows that it was meant for restricting
eviction in specific circumstances by fettering the right of
the landlord to terminate the tenancy under sec. 106 of the
transfer of property act with the permission of the rent
controller. but according to the learned companynsel so far as
tenant is companycerned numberpermission is necessary and the
tenant may terminate the tenancy by giving a quit numberice
under section 111 of the transfer of property act or may
surrender the tenancy rights by mutual agreement under sec. 111 e or surrender impliedly under sec. 111 f and such
termination may be lawfully done by the tenant eyen before
during or after the proceedings under clause 13 of the order
and so far as this right of the tenant is companycerned
according to the learned companynsel numberpermission is
necessary. in accordance with the companypromise where the tenant
declares his intention to surrender the tenancy it is
unnecessary for the landlord to pursue the proceedings under
clause 13 as the tenant agrees to go and therefore once the
tenant expresses the desire to surrender the tenancy there
is numberneed for termination of the lease by the landlord
under sec. 106. companysequently the companypromise petition in this
case filed before the rent companytroller rendered the
proceedings for permission unnecessary. in the face of the
compromise it appears that if the view
taken by the rent companytroller is number companyrect then in
substance the order indicates that he granted permission for
surrender of the tenancy and it is only in that companytext that
he companyld pass an order for filing of the application as once
the lease is surrendered the question of determining the
lease does number arise and it was companytended that this
conclusion is the direct result of the recitals in the
compromise and the order passed by the rent companytroller. according to the learned companynsel it companyld only be understood
to mean two things i that the lease stands surrendered and
therefore the need of permission to determine does number arise
or that as the tenant expresses his desire to surrender the
lease stands terminated and therefore the question of
permission does number arise or as the tenant expresses the
desire to surrender the rent companytroller . files the
proceedings thereby impliedly permitting the determination
of lease by surrender. in either of the event according to
the learned companynsel in the face of the order passed by the
rent companytroller the objections raised by the judgment-debtor
in execution companyld number be sustained. it was also companytended that delivery of physical
possession by the tenant to the landlord is number a pre-
requisite for an effective and valid surrender under section
11 e and f . it is only a circumstance from which an
implied surrender may be inferred as it is also one of the
modes of implied surrender. similarly actual delivery of
possession is also number essential for the determination of
lease as according to him the plain language of sec. 111 e
and f of transfer of property act does number indicate that
delivery of possession is an essential requisite of
surrender. according to the learned companynsel companypromise and
subsequent extension of time by mutual companysent ultimately
shows the respondent. tenants companyduct that at every stage
the original position of surrender of his tenancy rights was
accepted and admitted and still after securing about 12
years on the basis of such companypromises this objection has
been raised ultimately as according to the learned companynsel
the objection to the executability of the decree or its
validity should have been raised at the earliest moment as
is clear that this decree of 1974 on the basis of
compromise of 1970 is number questioned for all these years but
is questioned for the first time in 1983 and repeatedly the
judgment-debtor respondent having accepted the position and
got further time extended by either companypromise or other vise
clearly indicates that he accepted this position and
therefore he is estopped from raising such an objection at
this stage. learned companynsel for the respondent on the other
hand companytended that clause 13 1 of the order clearly
provides
that numberlease companyld be determined without the permission of
the rent companytroller and therefore when on the basis of the
compromise in 1970 a the rent companytroller passed an order
filing the application it is clear that numberpermission was
granted and according to him after that a number of
compromises have been entered into but as initially the
lease has number been determined with the permission of the
rent companytroller the decree for eviction companyld number be said to
be in accordance with clause 13 and on this basis the
objection filed by the respondent judgement-debtor are fully
justified. learned companynsel for both the parties on the
questions involved referred to series of decisions of high
courts and of this companyrt in support of their companytentions. even learned companynsel for the respondent companyld number
contend that even if a tenant intend to terminate the lease
a permission under section 13 was necessary number it was
contended that even if a tenant intended to surrender the
lease he companyld number do so without the previous permission of
the rent companytroller under clause 13. in fact clause 13 of
the order puts restriction on the rights of the landlord to
terminate the tenancy and seek eviction. it is because of
this that sub-clause 3 of clause 13 of this order provides
for grounds on the basis of which a permission for
determining the lease companyld be granted. a perusal of this
sec 13 of the order therefore indicates that restriction has
been imposed on the right of the landlord to seek eviction
by determining the lease of the tenant and that companyld only
to be done on specific grounds specified in clause 3 with
the previous permission of the rent companytroller. 13 1 numberlandlord shall except with the
previous written permission of the companytroller-
a xx xx xxx f
b where the lease is determinable by efflux of
the time limited thereby require the tenant to
vacate the house by process of law or otherwise if
the tenant is willing to companytinue the lease on the
same terms and companyditions. the scheme of this order clearly indicates that it is meant
to protect the rights of the tenant by restricting the
rights of the landlord. it initially puts an embargo on the
right of a landlord to determine the lease if he so
chooses. but it does number restrict the tenant to surrender
the lease either by specific agreement or by an implication
demonstrated by companyduct and it will be therefore necessary
to examine the h
proceedings which started with the application of the
appellant landlord for permission under clause 13 the reply
filed by the respondent-tenant companypromise petition filed by
both the parties and ultimately an order passed by the rent
controller and it is in fact the interpretation of this
order which is really material for the decision of this
matter as the sole ground challenging the execution is that
this decree of eviction is obtained without the prior
permission under clause 13 of the order the decree can number
be executed and in our opinion therefore it is in this
context that the order passed by the executing companyrt which
rejected the objections of the judgment-debtor respondent
and the high companyrt of m.p. which allowed the revision
petition and allowed the objections filed by the judgment-
debtor has to be examined. the executing companyrt by its order dated 1.10.85
considered the question including the question of estoppel
raised by the appellant decree-holder the learned companyrt
came to the companyclusion that after the companypromise and orders
of the rent companytroller in original suit number5/74 was filed in
which the decree was passed which is number being executed. it
was held that the tenant respondent did number raise this
objection in the suit and that the suit companyld number be filed
as there is numberprevious permission of the rent companytroller in
accordance with clause 13 of the order. it also shows that
the first execution i.e. execution number 11/1981 was filed and
numberice was served on the judgment-debtor the decree was number
challenged by the judgment-debtor on the ground that it was
obtained without the permission of the rent companytroller. in
this view of the matter the executing companyrt rejected the
objections holding that if after the passing of the decree
it was put to execution on number of occasions when the
judgment-debtor instead of raising an objection only pleaded
for time and time was extended again and . again. ultimately
after 11 years for the first time this objection the
judgment-debtor companyld number raise the executing companyrt
rejected the objections filed by the objector judgment-
debtor. in fact the basic question is as to what is the
restriction put because of sec. 13 of the c.p. berar rent
control order. as this ci section has been quoted above it
is very clear that it starts with numberlandlord and it is this
which makes it clear that it is a restriction put on the
right of landlord to proceed with the determination of the
tenancy and for that purpose it is necessary that he should
obtain the permission of the rent companytroller. sub-clause 2
of this section again indicates that when a landlord seeks
to obtain permission under sub-sec. 1 then he will have to
apply to the rent companytroller. sub-clause 3 of this section thereafter provides that
the rent companytroller shall grant permission if he is
satisfied in respect of grounds enumerated as sub-clauses of
clause 3 of section 13. the scheme of this section therefore
clearly indicates that the permission which is required
under sec. 13 is only needed when the landlord wants to
terminate the tenancy. it is number at all necessary if the
tenant wants to surrender the lease or terminate the tenancy
or vacate the premises. section 106 of the transfer of
property act reads as under-
in the absence of a companytract or local law or
usage to the companytrary a lease of immoveable
property for agricultural or manufacturing
purposes shall be deemed to be a lease from year
to year terminable on the part of either lessor
or lessee by six months numberice expiring with the
end of a year of the tenancy and a lease of
immoveable property for any other purpose shall be
deemed to be a lease from month to month
terminable on the part of either lessor or
lessee by fifteen days numberice expiring with the
end of a month of the tenancy. every numberice under this section must be in
writing signed by or on behalf of the person
giving it and either be sent by post to the party
who is intended to be bound by it or be tendered
or delivered personally to such party or to one of
his family or servants at his residence or if
such tender or delivery is number practicable
affixed to a companyspicuous part of the property. this provides for termination of the lease and it is clear
that the lease companyld be determined either by the lessor or
by the lessee and it is only when the lease is determined by
the lesser i.e. iandlord that provisions of section 13 of
the c.p. berar rent companytrol order is attracted but number
otherwise. section 111 of the transfer of property act provides
for various circumstances when the lease of immovable
property companyes to an end. it companytemplates surrender implied
surrender and it is in this companytext that the companypromise
filed before the rent companytroller deserves to be looked at. this companypromise was filed before the rent companytroller on
23.3.70. the relevant clause of this companypromise reads
the applicants assure and hereby undertake
number to evict n.a. 2 before 3 1st march 1974. the
applicant number 2
shall vacate the premises on or before that day
without recourse to any procedure to be followed
either before rent companytrol authorities or the
civil companyrt. it is therefore clear that the tenant himself offered to
vacate the premises on or before 31st march 1974 without
any recourse to any proceedings before any tribunal. it
therefore clearly appears from this companypromise that the
tenant agreed to surrender the lease and further agreed to
hand over possession on or before 31st march 1974. it is in
this companytext that if language of sec. 13 is examined it is
plain that after this companypromise there remained numberhing for
which permission companyld be granted by the rent companytroller. the permission is necessary if the landlord wants to
terminate the tenancy on any one sf the grounds available
under the provisions of section 13 and before granting such
permission the rent companytroller has to satisfy himself about
the existence of the grounds. in this case when landlord
sought permission the tenant came forward offering to
surrender the lease thereby the tenant expressed a desire to
terminate the lease from a particular date and as is clear
from the language of section 13 that numberpermission is
necessary where the tenant chooses to terminate the lease
either by a numberice under sec. 106 or by surrender under sec. 111 of the transfer of property act and under these
circumstances therefore the order passed by the rent
controller filing this companypromise appears to be just and
fair. it appears that the rent companytroller took the view that
as the tenant himself has offered to surrender and determine
the lease by surrender the question of permission does number
arise. in 1974 civil suit number 5/74 was filed before the civil
judge and an agreement of arbitration was filed before the
court. in this agreement of arbitration the first clause is
very material which reads as under
whereas party number 2 had surrendered his tenancy
rights and had agreed to deliver vacant possession
of the following property to landlord party number 1
and
it is signed by the landlord and the tenant and it is
clearly stated that party number 2 had surrendered his tenancy
rights and had agreed to deliver vacant possession. it is on
the basis of this arbitration agreement that the matter was
before the arbitrator where the companypromise was filed which
is the basis of the award and on the basis of the award a
decree was passed by the companyrt of civil judge khamgaon
senior division in regular civil suit number 95/74. during the
proceedings in
this suit it is clear that numberobjection was raised that a
decree for eviction companyld number be passed as there was no
permission of the rent companytroller to determine the lease. on
the companytrary the arbitration agreement itself started with
the companydition that the tenant had already surrendered his
tenancy rights as is clear from the clause quoted above. clause 2 incorporated in the companypromise filed before the
arbitrator reads as under
that party number 2 shall pay rs 1301 rs
thirteen hundred and one only per month as damages from
1.4.174 and shall also pay all the present and future
taxes including house tax and nazal rent regularly every
month in advance. the quantum of damages is agreed between
the parties only upto the agreed date of vacation after
which party number 1 will be entitled to damages on the basis
of the then market rate. a similar clause in the agreement and companysequent decree go
to show that as lease was surrendered and a new arrangement
was substituted under which the respondent companytinued in
possession and agreed to hand over possession upto 31.3.77.
thereafter there was numberobjection that companyld be raised
to the passing of this decree for eviction and thereafter
when possession was number given as provided for in this decree
upto 31.3.77 further time was sought and ultimately in spite
of repeated extension of time the possession was number handed
over till 31.12.80 an execution case was filed which was number
11/81 and numberice was issued under order 21 rule 22. in
response to this numberice again an application was made for
recording of companypromise for grant of time till 31.12.82 as a
last chance and on 24.3.81 the executing companyrt passed an
order disposing of the execution on the basis of the
compromise permitting time upto 31.12.82. but when
possession was number delivered even on 31.12.82 an execution
was filed on 31.1.83 bearing number 4/83 out of which the
present appeal arises. it is clear that from the beginning in 1970 when the
compromise was filed before the rent companytroller the tenant
has admitted to have surrendered the tenancy rights and
thereby determined the lease by surrender. this was again
reaffirmed when second time the arbitration was entered into
and on the basis of that arbitration agreement an award was
passed on the basis of a companypromise and a decree was passed
in terms of the award. clearly therefore the decree which is
to
be executed is number a decree for eviction on the basis of
determination of the lease by the landlord but is a decree
passed on the basis of lease having been determined by the
tenant himself by surrender which has been stated by the
tenant on number of occasions in categorical terms. in shah mathuradas maganlal and company v. nagappa
shankarappa malaga and others air 1976 s.c. 1565 this companyrt
had the occasion to examine the question of surrender and it
was observed as under
a surrender clause e and f of section 111 of
the transfer of property act is an yielding up of
the term of the lessees interest to him who has
the immediate reversion of the lessors interest. it takes effect like a companytract by mutual companysent
on the lessors acceptance of the act of the
lessee. the lessee cannumber therefore surrender
unless the term is vested in him and the
surrender must be to a person in whom the
immediate reversion expectant on the term is
vested. implied surrender by operation of law
occurs by the 1 creation of a new relationship
or by relinquishment of pos session. if the lessee
accepts a new lease that in itself is a surrender. surrender can also be implied from the companysent of
the parties or from such fact as the
relinquishment of possession by the lessee and
taking over possession by the lessor. it appears that the learned judge of the high companyrt
felt that when originally a companypromise was filed before the
rent companytroller it was number in accordance with sec. 13. in
fact sec. 13 companytemplates a permission for determination of
the lease but where the tenant agrees to determine the lease
himself by mutual companysent the question of permission does
number arise. apart from it it has number been numbericed that in
the reply filed before the rent companytroller the subletting is
number disputed and it is number pleaded by the tenant the
judgment-debtor number the respondent that the sub-lease was
with the written companysent of the landlord as is required and
in this view of the matter the order of the rent companytroller
could even be interpreted to mean that permission was
granted but apart from it as the order itself states that
the matter is filed apparently because the rent companytroller
felt that as the tenant himself has agreed to determine the
lease on a particular date there is numberquestion for grant of
permission and it is here it appears that the learned judge
fell into the error. thereafter the learned judge of the high companyrt has
examined
the agreement of arbitration and the companypromise filed before
the arbitrator and had applied the principle of a companytract
contrary to the public policy and on that basis have companye to
the companyclusion that this companyld number be permitted. here again
it appears that the learned judge has companymitted an error. apparently the arbitration agreement the companypromise filed
before the arbitrator and the award and the decree passed by
the companyrt all put together clearly go to show that what was
referred to the arbitration was number as to whether the lease
is determined or number but what was referred was the period
for which he should be permitted to companytinue in possession. the determination of lease was agreed between the parties as
it was even agreed earlier. the only question therefore was
grant of time on the new terms and companyditions which were to
be determined by the arbitrator. thus in fact the lease
came to an end by surrender and what by the award was
evolved was an arrangement on new terms and this therefore
does number appear to be any companytract just to bypass section
13 as when the lease itself is determined numberhing survives
and therefore it companyld number be companytended that it was companytrary
to provisions of section 13.
in foster v. robinson 1950 2 all e.r. 342 a question
more or less similar as is before us came for
consideration. in that case the question of surrender
although the tenant companytinued to be in possession was
considered. it was observed as under
the landlord a farmer was the owner of a
cottage. shortly after the 1914-19 18 war the
defendants father was engaged to work for the
landlord on his farm and at the time of that
engagement and in companysequence of his employment
the companytage was let to the defendants father at a
rent of 3.5.s a half year. shortly before may
1946 the defendants father owing to age and
infirmity gave up work and in that month there
was made between him and the landlord a verbal
agreement whereby the existing tenancy was to
cease the landlord was number to charge rent any
more and the defendants father was to be allowed
to live in the companytage for the remainder of his
life rent free. on jan. 15 1950 the defendants
father died. the defendant a daughter of the
deceased had lived with him in the companytage for a
number of years and was residing there at the date
of his death. the landlord informed the defendant
that it was his intention to sell the companytage but
that she companyld companytinue to reside there rent free
until apr. 6 1950. on feb. 18 1950 letters of
administration were granted to the defendant
who refused to leave the companytage claiming that at the
date a of his death her father was still a companytractual
tenant under the original tenancy and that tenancy was
number vested in her. the question on the facts quoted above was examined and in
plain language it was observed
the question in the present case is whether on the
facts as found by the learned companynty companyrt judge there
are circumstances which prevent the tenant from
asserting that the old relationship has been superseded
by the new. put in its simplest form if there is a new
arrangement which the tenant represents by his companyduct
that he is asserting then he is estopped from denying
that the landlord was capable of entering into the new
arrangement and if the pew arrangement companyld number be
entered into if the old agreement subsisted it follows
that the tenant is equally prevented from denying that
the old agreement has gone. and having so found it was further held
having so found i can see numberground why the
transaction should number have the result the parties
intended it should have. i think it amounts to this
that the determination of the former tenancy was
equivalent to delivery up of possession under that
tenancy and then a resumption of possession under a new
transaction immediately afterwards. i think to use the
language of companykburn c.j. in oastler v. henderson 6
2 q.b.d. 578 there was a virtual taking of
possession. if the key had been handed over and then
been handed back the next minute that would have
symbolised the delivery up and the grant of possession
and i cannumber think that it vitally matters that
performance was number gone through. that is the effect of
a surrender by operation of law in such a case as the
present and the learned judge has so found and there
being evidence to support that finding we would number be
justified in differing from his companyclusion as to fact
and if number it seems to me the companyclusions which i
have stated necessarily follow. the whole question is
was the old companytractual tenancy determined? was it
determined as the result of surrender by operation of
law? the learned companynty companyrt judge found that it was
and i think that is a finding supported by the evidence
without any misdirection. in law and that this appeal should be dismissed. it is thus clear that when the parties surrendered the
tenancy and substituted by a fresh arrangement merely
because technically the possession was number handed over is of
number much companysequence. apparently in the present case also by
mutual agreement the tenancy came to an end and by
arbitration what was sought was an arrangement for time on
payment of damages for use and occupation. admittedly it did
number either companytinue the old tenancy or started any new one. this substitution of new arrangement and the determination
of the old by mutual agreement clearly indicates that the
tenant surrendered his tenancy rights and the companyrt below
was number right in companying to the companyclusion that the surrender
is numberthere as possession was number handed over. the next question which is of some importance is about
raising of the objections at the earlier stage. admittedly
when the award was filed in the companyrt numberice was served and
numberobjection was raised. if the tenant intended to raise the
objection that this decree on the basis of the award companyld
number be passed as it was in companytravention of sec. 13 of the
rent act and therefore was absolutely without jurisdiction. such an objection companyld have been raised there and then. the
tenant admittedly did number raise this objection which was
open to him. in this view of the matter the companytention on
behalf of the appellant about the companystructive res-judicata
also is of some significance. this question of companystructive
res judicata in execution proceedings came before this companyrt
in mohanlal goenka v. benumber kishna mukherjee and others air
1953 s.c. 65. in this decision following the earlier
decision of the privy companyncil this companyrt ruled that the
principles of companystructive res-judicata will be applicable
even in execution proceedings. it is also clear that if when the decree was passed on
the basis of award and numberice was issued to the judgment-
debtor respondent numbersuch objection was raised. it is also
clear that the decree was put in execution on more than one
occasions and this objection was for the first time raised
only in 1983. in this view of the matter also the companytention
of the learned companynsel for the appellant that by number raising
this objection earlier the judgment-debtor has lost his
right to raise this objection and he is estopped deserves
to be accepted although in the light of what we have
discussed earlier it is number necessary to go into this
question having companye to the companyclusion on the first
question against the respondent. in the light of the discussion above therefore the
judgment passed by the high companyrt can number be maintained. | 1 | test | 1987_362.txt | 1 |
criminal appellate jurisdiction criminal appeal number 3 of 1972.
appeal by special leave from the judgment and order dated january
25 1971 of the madhya pradesh high companyrt indore bench in
criminal appeal number 391 of 1969.
k. gambhir for the appellant. n. shroff for the respondent. the judgment of the companyrt was delivered by
beg j. shiv govind the appellant has obtained special. leave
to appeal against only that part of the judgment and order of the
high companyrt of madhya pradesh by which his sentence of one years
rigorous imprisonment passed by the additional sessions judge
indore upon a companyviction under section 366 indian penal companye
was enhanced to seven years rigorous imprisonment
and a fine of rs. 100/- and in. default of payment of fine to
three months further rigorous imprisonment. the appellant aged
about 20 years at the time of the alleged offence of 9th of
august 1969 was the youngest of three persons who were jointly
charged and tried for offences punishable under section 366 and
354 i.p.c. the prosecution case was kumari seema a girl below 18 years of
age was offered a lift on his bicycle by the accused kamal
singh aged 30 years while she was returning to her homefrom her
school on 9th august 1969. the girl hesitated. but as she
reposed companyfidence in kamal singh whom she looked upon as her
uncle she accepted the offer. kamal singh took kumari seema on
his bicycle to the regal cinema where she part-took of some. refreshment ordered by kamal singh. meanwhile the appellant
shiv govind and the accused punani aged 26 arrived in a car. kamal singh asked kumari seema to go with the two younger men in
their car. seema refused. then kamal singh asked her to go on
his bicycle to yashwant talkies. she companyplied with this request. at this cinema kanial singh deposited his cycle at the cycle
stand. the appellant shiv govind and his companypanion punam had
followed in their car. the three men succeeded in persuading
seema despite her initial refusal to sit in the car and to go
for a short pleasure trip in it on the definite assurance that
she will soon be reached home. after the girl had sat in the car
she was driven to a place called mandow a number of miles away
from indore and was made to alight at a tourists bungalow. there two rooms were engaged by the accused. kamal singh
occupied one of the two rooms and the girl was closeted in the
other room with the appellant and his companypanion punam who were
both drunk. one of the two youngmen caught hold of the hands of
the girl while the other tried to undress her with the object of
raping her. kumari seema at this point feigned sudden
indisposition so that the two youngmen had to bring her out into
the gallery for fresh air. she managed to escape while the
accused went inside to fetch some water for her she rushed into
the house of one babulal kamdar and companyplained to him about the
incident. this led to a companymunication of information of the
offences to the police which went to the tourists bungalow. and
arrested the three accused who were brought to police station
nalcha where a first information report was lodged. the trial companyrt had examined the evidence given in support of the
case stated above. this included medical evidence on the
question of the age of the girl because while the prosecution
alleged that she was below 16 years of age the accused pleaded
that she was above 18 years of age. evidently the case of the
accused
was that kumari seema was a companysenting party to whatever took
place. although the girl was attending a school the entry of
her age in the school register was number disclosed. despite some
discrepancies in the evidence relating to the age of the girl
the trial companyrt came to the companyclusion that it was between 16 to
19 years. it relied mainly on expert evidence of doctors who had
used the ossification test. the trial companyrt had also numbericed the discrepancies between the
prosecution version as set out above by kumari seema in her
evidence in companyrt. and the story given out by her in the first
lnformation report where she had stated that she had joined the
party of the accused at the crossing of bijasan road. the
earlier version suggested that the girl had herself gone to meet
the party of the accused by appointment. the companysent of the girl was however immaterial in view of the
finding of the trial companyrt about the age of the girl. the fact
that she was taken to mandow where something happened at the
tourists bungalow which she disapproved of was companyroborated by
the evidence of babulal kamdar and kailash sharma in addition
to the two police companystables of mandow-out-post. the trial companyrt
which had the advantage of watching the demeanumberr of the girl
had companye to the companyclusion that although the girl may have tried
to improve her version and pretend that she was unwilling to
accompany kamal singh who had companye in a car for her according
to the first version yet the charge under sec. 366 i.p.c. was
established against each of the three accused and the charge
under sec. 354 i.p.c. was established against shiv govind
appellant and his companypanion punam. the three accused were
therefore companyvicted under sec. 366 and each was sentenced to
one years rigorous imprisonment. the two accused shiv govind
and punam were also companyvicted under sec. 354 i.p.c. and
sentenced to four months rigorous imprisonment but the two
sentences were ordered to run companycurrently. when the case came up in appeal to the high companyrt a numberice of
enhancement of the sentence under sec. 366 i.p.c. was issued to
each of the three appellants and their sentences were enhanced
as indicated above after the appellants had been heard. it is only shiv govind who has appealed to this companyrt. shiv
govind had also applied under sec. 561a. criminal procedure companye
to the high companyrt after the dismissal of his appeal and
enhancement of the sentence by the high companyrt claiming the
benefit of sec. 6 and 11 of the probation of offenders act. but
this application was rejected by the learned judge who had
enhanced the sentence passed upon the appellant although he
round that the report of the probation officer about the companyduct
of the accused while undergoing the sentence which was sent far
was favourable to the appellant. it appears from the two judg-
ments given by the learned judge who enhanced the sentence of the
appellant and who subsequently dismissed the application linder
sec. 561a criminal procedure companye also that the view taken by
him was that having regard to the facts and circumstances and of
the case and the offence companymitted by the appellant the enhanced
sentence was deserved by him. we have therefore examined the judgment of the high companyrt
linder appeal before us in order to discover the special reasons
which induced the learned high companyrt judge to differ from the -
pinion of the trial companyrt about the appropriate sentence to be
imposed upon the appellant. the only reason given by the learned
judge for enhancing the sentence was that kumari seema had
reposed companyfidence in kamal singh whom she regarded as an uncle
so that she companyld number expect foul play from him. the learned
judge thought the girls trust and companyfidence in kamal singh
explained why she did number protest when she was taken in the car
and then made to get down at the tourists bungalow. it seems
however from the account of the occurrence given in the judgment
under appeal that the- learned judge was shocked by the plight
of kumari seema due to the perfidy of kamal singh and by. a
contemplation of the possible companysequences to her if she had number
behaved in a particularly. brave and intelligent manner so as to
escape from her predicament. the learned judge mentioned that
the girl had risked her life to escape. we however find that
there was numbersuggestion in the evidence anywhere that any threat
to the life of kumari seema was held out. there was numberevidence
that the girl had seriously struggled to escape or had raised
shouts for help which would have brought people around to her
aid. number was there any evidence that the accused tried to
obstruct her or to chase her when she escaped from the tourists
bungalow allegedly by resorting to a ruse. the high companyrt was so
impressed by the girls uncorroborated version of her own
heroism which did number tally with her first version in the first
information report that it overlooked the infirmities in the
girls evidence discussed by the trial companyrt. we find the trial
courts view of the whole case to be quite balanced and
objective. we do number think that-the severer view of the high
court companyld be reasonably justified. it seems clear to us that the high companyrt had overlooked the
principles laid down by this companyrt repeatedly which should
govern the exercise of powers of the high companyrt to enhance sen-
tences imposed by trial companyrts. in bed raj v. the state of uttar
pradesh. this companyrt observed at page 588-589
a question of a sentence is a matter of discretion
and it is well settled that when discretion has
been properly exercised along accepted judicial
lines an appellate companyrt should number interfere to
the detriment of an accused person except for very
strong reasons which must be disclosed on the face
of the judgment see for example the observations
in dalip singh v. state of punjab 1954 s.c.r. 146
156 and nar singh v. state of uttar pradesh
1955 1 s.c.r. 238 2411. in a matter of
enhancement there should number be interference when
the sentence passed imposes substantial punishment. interference is only called for when it is
manifestly inadequate.in our opinion the lese
principles have number been observed. it is
impossible to hold in the circumstances described
that the sessions judge did number impose a subs-
tantial sentence and numberadequate reason has been
assigned by the learned high companyrt judges for
considering the sentence manifestly inadequate. in
the circumstances. bearing all the companysiderations
of this case in mind we are of opinion that the
appeal which is limited to the question of
sentence should be allowed and that the sentence
imposed by the high companyrt should be set aside and
that of the sessions companyrt restored. we think that what was laid down by this companyrt. in bed rajs case
supra is fully applicable to the case before us. we may also
mention the similar views expressed by this companyrt in. alamgir
a nr. v. the state of bihar 2 . we may observe that decision of this companyrt in nabi bux and ors. the state of madhya pradesh is distinguishable from the
case before us. in that case the high companyrt had enhanced a
sentence having regard to all the facts and circumstances
justifying the enhancement. in the case before us we find that
the high companyrt had number numbericed a number of facts duly companysidered
by the trial companyrt so that the exercise of power of enhancement
of the sentence under sec. 366 i.p.c. companyld number be reasonably
justified here. companysequently we allow this appeal by setting aside the order of
enhancement of sentence by the high companyrt of madhya pradesh and
restore the sentence of one years rigorous imprisonment
1 1955 2 s.c.r. p. 583. 2 1959 supp. 1 s.c.r. 464.
a.i.r. 1972 s.c. 495.
passed upon the appellant by the learned sessions judge for the
offence under sec. 366 i.p.c. of which the appellant was companyvict-
ed. the companycurrent sentence of four months rigorous imprisonment
under sec. 354 i.p.c. | 1 | test | 1972_146.txt | 1 |
civil appellate jurisdiction civil appeal number 759 of 1962.
appeal by special leave from the judgment and order dated
august 22 23 1961 of the gujarat high companyrt in appeal number
29 of 1960.
t. desai and a. g. ratnaparkhi for the appellant. h. chhatrapati j. b. dadachanji 0. c. mathur and
ravinder narain for the respondents. 1963. march 27. the judgment of das and ayyanger 11. was
delivered by ayyangar j. sarkar j. delivered a separate
judgment. ayyangar j.-the principal point that is raised for
consideration in this appeal by special leave is as regards
the legality and propriety of an order by the learned single
judge of the high companyrt of gujarat directing a companynter-claim
filed by the respondents to be treated as a plaint in a
cross-suit and remanding the case for trial on that basis. the facts necessary to appreciate the points raised before
us are briefly as follows the plaintiff who is the
appellant before us and one jamnadas ghelabhai were
partners in a business companymenced in october 1913 and carried
on under the name and style of bharat medical stores at
broach the two partners having equal shares. during the
subsistence of the partnership and from and out of the
assets thereof an immovable property-a house was purchased
at broach in july 1932 jamnadas vhelabhai died on august
12 1943 but the partnership business was companytinued
thereafter by the plaintiff-appellant taking in bai itcha-
the widow of the deceased partner-in his place. a change
was however made in the shares of the two partners in
that bai itcha was given only a 1/4 th share as against the
1/2 share enjoyed by her husband. with this alteration the same business was carried on
between the two partners. in the early part of 1950 bai
itcha fell ill. it was the case of the plaintiff that there
were negotiations between the two partners as regards the
winding up of the firm and it was his further case that on
july 9 1950 two matters were the subject of a companycluded
agreement with her. these were 1 that the partnership
would stand dissolved from july 15 1960 and that bai itcha
would receive from the plaintiff a sum of rs. 13689/- in
full satisfaction in respect of the capital companytributed by
her as well as for her share of the profits of the firm 2
that the plaintiff was to take over the immovable property
in broach purchased by the firm in july 1932 for its book
value and that he should on that account pay over to bai
itcha rs. 2202/9/9 being a moiety of the book value. the
agreement was stated to be wholly oral and was admittedly
number reduced to writing. before however anything was done
in pursuance of the alleged arrangement bai itcha died on
july 31 1950 leaving as her heirs the respondents who were
the sons of a brother of jamnadas ghelabhai -bai itchas
husband. it was the further case of the appellant that
after the death of bai itcha respondents i and 2 examined
the accounts of the partnership and after satisfying
themselves that rs. 13689/- was the proper figure of the
sum due to the deceased partner agreed to receive the same
in full satisfaction of the amount to which they were
entitled in respect of that item. all these allegations
about the agreement with bai itcha and the companyfirmation by
them of the said agreement after her death were however
denied by the respondents who insisted upon their rights
under the law as legal representatives of the deceased
partner. the appellant companysequently filed a suit in the companyrt of the
civil judge at broach for enforcing the agreement which he
alleged and for relief on that basis. it would be necessary
to set out and discuss
in detail the reliefs claimed in this suit as the same have
a materialbearing on some of the arguments addressed to
us. we shall however revert to this after companypletingthe
narrative of the proceedings up to the stage of the appeal
before us. to this suit the respondents who had been
impleaded as defendants filed a written statement which was
mainly companycerned with denying the truth of the agreement
with bai itcha and the story regarding the subsequent
confirmation by themselves and they wound up the statement
by a companynter-claim which might usefully be extracted even at
this stage. in paragragh 25 of the written statement they
pleaded
in view of the above facts the plaintiff
suit may please be dismissed and the defen-
fendants companyts may be awarded. the defendants
further pray that if the honumberrable companyrt
holds that the said partnership was dissolved
upon the death of bai itcha on date 31-7-50
the same may be legally wound up under the
supervision and directions of the honumberrable
court. and necessary instructions for the
purpose may please be given the accounts upto
the date of companyplete winding up may be
lawfully taken the claims of the parties
against one anumberher may be ascertained and the
costs of the defendants may also be awarded. rhe defendants have filed this companynter claim
for this purpose. the companycluding paragraph-paragraph 26 companytained details of
the valuation of the companynterclaim and of the companyrt fee they
paid for the relief which they sought in the preceding
paragraph. the plaintiff thereafter filed a reply to the companynter-claim
and of the companytentions raised in this reply it is sufficient
if at this stage we numberice the plea that a companynter-claim was
number legally maintainable and they prayed for the dismissal
of the companynter-claim with companyts. the civil judge framed the
necessary issues but most of them related to the claim made
in the plaint on the basis of the alleged agreement and
issue number 15 relating to the companynter-claim and the
plaintiffs objection to the maintainability thereof ran
are defendants entitled to the companynter-
claim made by them ? on these pleadings and the issues as framed the parties went
to trial. by judgment dated numberember 30 1954 the civil
judge recorded findings on the several issues relating to
the plaintiffs claim and dismissed the plaintiffs suit on
the ground that he had failed to prove the agreement. companying to issue number 15 relating to the companynter-claim the
learned judge companysidered in the first place a companytention
urged by the defendants-the respondents before us-that the
suit was virtually one for dissolution and the taking of
accounts on a particular basis viz. on the basis of a
settled account and that when the plea of settled accounts
failed the suit got reduced into a plain one for the taking
of the accounts of a dissolved partnership and on that
footing the defendants had a legal right to have the relief
of accounting. the learned judge negatived this companytention
basing himself on the allegations in the plaint and holding
the real nature of the suit to be one for the specific
enforcement of the agrement set up. he next companysidered the
question whether the companynter-claim was admissible in law and
after an examination of the decisions on the point reached
the companyclusion that in the absence of any specific provision
therefor in the civil procedure companye and in the light of
certain decisions of the privy companyncil and of the high
courts a companynterclaim was number admissible in the muffasil. a
prayer by the defendants to treat the companynter claim as a
plaint in a cross suit by them was rejected. the learned
judge therefore dismissed the companynter-claim but he added
that the defendants companyld bring a separate suit for accounts
and for a share of the profits of the dissolved partnership
if so advised. the plaintiff was companytent with the judgment which he
obtained on his claim but the defendants preferred an appeal
to the district judge broach questioning the companyrectness of
the order dismissing the companynter-claim as number maintainable. the learned district judge examined the authorities and
reaching the same companyclusion as the trial judge dismissed
the appeal. thereafter the defendants brought the matter
before the high companyrt by way of a second appeal and before
the learned single judge who heard it an oral application
was made to treat the companynterclaim made in paragraph 25 of
the written statement as the plaint in a cross- suit and
that the same should be tried and disposed of as if it were
such a suit. an objection was raised by the plaintiff-
respondent before that companyrt to the granting of this prayer
on various grounds the main one being that on the date when
the matter was before the high companyrt when such an order was
being prayed for--in august 1961 the claim for accounts was
hopelessly barred by limitation. the learned judge
however following an unreported decision rendered by a
division bench of the bombay high companyrt in september 1956
allowed the application and passed an order setting aside
the dismissal of the companynter-claimand remanding it to the
trial judge with a direction that the companynter-claim be
treated as a plaint in the cross-suit and that the reply of
the plaintiffs to the companynter-claim be treated as a written
statement to the cross-suit and that the cross-suit be tried
and disposed of in accordance with law adding that the
issues arising in the cross-suit which also arose in the
suit and which had been disposed of already should number be
tried
over again and the final decisions on those issues reached
in the suit and the appeal therefrom shall be binding on the
parties in the cross-suit. it is the companyrectness of this
order by the learned single judge that is challenged in this
appeal. the first submission made by mr. desai learned companynsel for
the appellant was that numbercounter-claim was maintainable in
the muffasil. there is number much companytroversy before us about
this point and in view of the companyrse of the proceedings it
really does number arise for companysideration though we must add
that we are number to be understood as doubting the two
propositions that a right to make a companynter-claim is
statutory and that the present case is admittedly number within
vlll. r. 6 civil procedure companye. we say it does number
arise because a finding adverse to its maintainability was
recorded by the trial judge and by the district judge on
appeal on a companysideration of the decisions of the privy
council and the various high companyrts and when the matter was
in the high companyrt the learned judge also proceeded on the
basis that a companynter-claim was number admissible and the
respondents have number preferred any appeal therefrom and that
has become final. we might therefore proceed with the
points arising in the case on the basis that a companynter-claim
is number admissible in the muffasil and the only question is
whether the companyrt companyld treat a companynter-claim as the plaint
in a cross-suit. learned companynsel for the respondents however made two
alternative submissions 1 that even without companyverting
the companynter-claim into the plaint in a cross suit the
defendants in the present case were entitled to the taking
of the accounts of the dissolved partnership on the
pleadings as they stood and 2 that in the circumstances
of the case the order of the learned judge directing the
conversion was legal and was proper and justified on the
merits. we
consider that the first of the above submissions has no
substance. the point urged was that the plaintiffs suit
was in substance one for the taking of the accounts of the
dissolved partnership though in form the primary relief
claimed was for a decree or the basis of a settled account. it was submitted that when that primary relief viz. a
decree on a settled account was rejected because the facts
alleged were number proved there remained a plaint praying for
an account of which the defendant was entitled to take
advantage and claim the same relief. in support of this
submission a number of decisions rendered on the
construction of s. 69 3 a of the partnership act were
referred. in these decisions it was held that in every suit
for dissolution a prayer for accounts and a relief for
accounting was implicit. we companysider that these authorities
are of numberassistance for determining the nature of the
plaint before us. it was in substance one for specific
performance of an agreement by which one partner agreed to
convey his interest to his companypartner. in such a suit there
could obviously be numberprayer for any relief for accounting
and unless there is a prayer for accounting there is no
question of a defendant claiming the benefit of that relief
in the same suit. the decisions in which it has been held
that in a suit for accounts between accounting parties a
defendant is virtually a plaintiff have numberapplication to
cases where the relief prayed for by the plaintiff is number
one for the rendition of accounts. that situation will
apply only to cases where the relief sought is companymon to the
parties though ranged on either side. the suit in the
present case filed by the plaintiff prayed for numbersuch
relief and companyld number in the nature of things pray for any
such and hence unless there is a claim made by the
defendant for accounting and that claim is treated as a
plaint the defendant is entitled to numberrelief. the other submission of learned companynsel for
2 s.c.r. supreme companyrt reports 577
the respondents seeking to support the judgement of the high
court stands on quite a different footing. mr. desai companytended that the learned judge of the high companyrt
had numberjurisdiction to treat the companynter-claim companytained in
paragraph 25 of the written statement as the plaint in a
cross-suit. as we stated earlier the learned judge took
this companyrse because he companysidered there was authority for
this mode of proceeding in the decision of a division bench
of the bombay high companyrt. mr. desai companytended that this
decision of the division bench was wrong. he pointed out
that the sole authority for the adoption of such a treatment
of a companynterclaim was a passage in mr. mulias companymentary on
the civil procedure companye 12th edition at page 634 where
the learned author relies on a decision of a bench of the
rangoon high companyrt in saya bya v. maung kyaw shun 1 desai
pointeed out that numberreasons are adduced for the proposition
laid down by the learned judges of the rangoon high companyrt
for their companyclusion that there is numberhing to prevent a
judge treating the companynter-claim as a plaint in a cross suit
and hearing the two together if he is so disposed and if the
counter-claim as properly stamped. his further companytention
was that the view here expressed was companytrary to two
decisions of the privy companyncil reported in currimbhoy and
co. limited v. crereet 1 and mian pir bux v. mohomed tahar
3 . it is numberdoubt true that numberauthority is cited in the
rangoon decision for the dictum and the learned judges seem
to proceed on the basis that in the absence of any
established principle or binding precedent their companyclusion
was reasonable but the further submission of mr. desai that
their view is opposed to the decisions of the privy companyncil
is number companyrect. currimbhoy and company limited v. creet 2 is number
authority for any proposition otherthanthat a companynter-
claim is number maintainable inthemuffasil
1 1924 i.l.r. 2 rangoon 276 2 1932 l.r. 60 i.a. 297.
a.t.r. 1934 p.c. 235.
and the other case- mian pir bux v. mohmed tahar 1 which
is to the same effect merely affirms the law as accepted in
currimbhoy and company limited v. creet 1 . neither of these two
decisions mr. desai admitted in terms refers to the
conversion into or treatment of a companynter-claim as a cross-
suit number do they in terms or even inferentially negative
the legality of the adoption of such a companyrse. for such a position however mr. desai relied on the
decision of the calcutta high companyrt in gour chandra goswami
chairman of the nabadwip municipality 3 where the
learned judges set aside in revision an order of the munsif
allowing the defendants additional written statement to be
treated as a cross plaint. there is numberdoubt that this is
some authority for the proposition companytended for by mr.
desai. it is number however clear from the judgment whether
it proceeds upon the facts of the case then before them
particularly as regards the companytents of the written state-
ment which was treated by the district munsif as a plaint in
a cross-suit or whether the proposition of law was intended
to have a wider application. the learned judges companyrectly
pointed out that a companynter-claim is the creation of the
statute and in the absence of a provision in 0. viii of the
civil procedure companye for a companynter-claim apart from the
relief specified in r. 6 thereof a companynter-claim as such
was inadmissible. from this the learned judges proceeded to
equate the bar to the maintainability of a companynter-claim to
a bar to a companynterclaim being treated as a cross-suit. it
must however be pointed out that for effecting this
equation numberreasons are adduced by learned judges number for
holding that a companyrt was precluded from treating an
additional written statement as a cross plaint. the question has therefore to be companysidered on principle as
to whether there is anything in law-
a.i.r. 1934 p.c. 235. 2 1932 l.r. 60 i.a. 297.
a.i.r. 1922 cal. 1.
statutory or otherwise-which precludes a companyrt from treating
a companynter-claim as a plaint in a cross suit. we are unable
to see any. numberdoubt the civil procedure companye prescribes
the companytents of a plaint and it might very well be that a
counterclaim which is to be treated as a cross-suit might
number companyform to all these requirements but this by itself is
number sufficient to deny to the companyrt the power and the
jurisdiction to read and companystrue the pleadings in a
reasonable manner. if for instance what is really a
plaint in a cross-suit is made part of a written statement
either by being made an annexure to it or as part and parcel
thereof though described as a companynter-claim there companyld be
numberlegal objection to the companyrt treating the same as a
plaint and granting such relief to the defendant as would
have been open if the pleading had taken the form of a
plaint. mr. desai had to companycede that in such a case the
court was number prevented from separating the written
statement proper from what was described as a companynter-claim
and treating the latter as a cross-suit. if so much is
conceded it would then become merely a matter of degree as
to whether the companynter-claim companytains all the necessary
requisite sufficient to be treated as a plaint making a
claim for the relief sought and if it did it would seem
proper to hold that it would be open to. a companyrt to companyert
or treat the companynter-claim as a plaint in a cross suit. to. hold otherwise would be to erect what in substance is a mere
defect in the form of pleading into an instrument for
denying what justice manifestly demands. we need only add
that it was number suggested that there was anything in 0.
viii. r.6 or in any other provision of the companye which laid
an embargo on a companyrt adopting such a companyrse. mr. desais next companytention was that even if it was open to
the companyrt to treat the companynter-claim as a plaint in a cross
suit the action of the learned single
judge in granting this relief was in the circumstances of
this case illegal or at any rate improper. in support of
this further submission he urged two points 1 the
conversion of a companynter-claim into a plaint in a cross suit
was number any inherent or enforceable right of a defendant but
the matter lay in the discretion of the companyrt to be
exercised on judicial principles so as number to cause hardship
to either side. in the present case he urged that the
relief by way of companynter-claim had been objected to by the
plaintiff as number maintainable but the defendants had till
the very end persisted in claiming this inadmissible re-
lief. besides both the learned trial judge as well as the
district judge on appeal had companysidered the prayer for
treating the companynter-claim as the plaint in a cross suit and
had for very proper and companyent reasons and in the exercise
of their discretion rejected it. the learned single judge
of the high companyrt however it was submitted had without
even companysidering the grounds upon which the companyrts below had
exercised their discretion and without assigning any reasons
of his own set aside their judgments and allowed the
defendants the relief for which they prayed. mr. desai further submitted that at the worst even if the
prayer of the defendants wag allowed having regard to the
long interval between the date of the companynter-claim and the
date when the companyversion was being allowed as an indulgence
to the defendants the learned judge ought to have put the
defendants on terms and number have granted the relief in the
absolute terms which we have extracted earlier. we shall number proceed to companysider these objections in detail. when analysed they fall under three heads 1 the reason
adduced by the trial judge and the 1st appellate companyrt for
refusing to grant the prayer for companyversion have number been
considered by the high companyrt and if these had been taken
into account the learned judge would have disallowed the
prayer 2 if as it must be companyceded the trial judge and
the district judge on appeal had a discretion to companyvert or
number to companyvert the companynterclaim into a plaint in a cross-
suit the learned single judge had numberjurisdiction under the
civil procedure companye to interfere with that discretion and
in any event there were numbersufficient reasons set out to
justify such interference and 3 having regard to the
circumstances of the case the defendants ought to have been
put on terms. it was pointed out that there were three matters which were
taken into account by the trial judge for disallowing the
defendants prayer for treating the companynter-claim as a
cross-suit a limitation b s. 37 of the partnership
act and c goodwill. the point of limitation was this
the prayer in the companynter-claim being one for the taking of
the accounts of a dissolved partnership-on the basis that
the partnership was dissolved on the death of bai itcha on
july 31 1950 a suit claiming the relief of accounting
could under the indian limitation act be filed only within
three years from the date of dissolution art. 106 . as the
written statement of the defendant was filed on october 18
1951 numberdoubt if the companynter-claim itself be treated as the
plaint the suit would be in time. but the learned trial
judge held that limitation had to be companyputed on the footing
that the suit was filed on the date when an application was
made to him in numberember 1954 at the stage of the arguments
for treating the companynter-claim as a plaint in a cross suit. if so companyputed obviously the cross suit would be barred by
limitation and that was assigned as one of the reasons for
rejecting the prayer for companyversion. it was urged before us
that the learned judge of the high companyrt had number addressed
himself to this aspect of the matter. it was also submitted
that strictly speaking the companyrect date on which the plaint
in the cross-suit should be taken
to have been filed in view of the orders of the trial and
1st appellate companyrts rejecting this prayer was that on which
the oral prayer was made before the learned single judge
i.e. 1961. it is obvious that the learned judge companysidered
that the companyrect date for the companyputation of limitation in
such cases had been decided in the unreported decision of
the division bench of the bombay high companyrt to which we have
already made a reference. the learned judges there took the
view that the crucial date for the purpose of determining
when the plaint in a cross suit should be treated as having
been filed was number the date on which the companyversion was
ordered but the date on which the written statement companytain-
ing the companynter-claim was filed. we companysidered that this
decision of the bombay high companyrt lays down the companyrect rule
in cases of this kind. it is numberdoubt true that save in
exceptional cases leave to amend under 0.6r.17 of the companye
will ordinarily be refused when the effect of the amendment
would be to take away from a party a legal right which had
accrued to him by lapse of time. but this rule can apply
only when either fresh allegations are added or fresh
reliefs sought by way of amendment.where for instance an
amendment is sought which merely clarifies an existing
pleading and does number in substance add to or alter it it
has never been held that the question of a bar of limitation
is one of the questions to be companysidered in allowing such
clarification of a matter already companytained in the original
pleading. the present case is a fortiori so. the
defendants here were number seeking to add any allegation number
to claim any fresh relief which they had number prayed for in
the pleading already filed. if on the allegations companytained
in that pleading the relief prayed for companyld number be obtained
by the defendantsthe plaintiff is number precluded from urging
such a companytention. the defendants had valued -the relief
sought as if it were a plaint in a cross suit and had paid
the requisite companyrt fee payable on such a plaint
and there was numberdispute that either the valuation or the
court fee was incorrect. mr. desai sought to belittle the
circumstance about the valuation of the relief and the
payment of the companyrt fee payable thereon by the defendants
by pointing out that the companyrt fee was a companyparatively small
sum. if under the relevant statute the companyrt fee payable
for a particular type of relief is a small sum and a party
has paid it he has done all that the law requires and the
legal companysequence of such an act cannumber be discounted merely
because the pecuniary burden borne by the party is number
heavy. in the circumstances there being numberaddition to the
allegation or to the relief it is number possible to accept
the argument that by the companyversion of that pleading which
was companytained in the written statement into a plaint in a
cross suit a fresh claim was made or a fresh relief which
had number already been prayed for was sought which would
enable the plaintiff to companytend that limitation started from
the date on which the companyversion took place. to the facts
of the present case therefore the decisions holding that
amendments companyld number ordinarily be allowed beyond the period
of limitation and the limited exceptions to that rule have
numberapplication. the learned trial judge next referred to s. 37 of the
partnership act and expressed the opinion that in view of
the provisions of that section the companyversion prayed for
should number be granted. he observed
defendants have been given special rights
under s. 37 of the indian partnership act. no
issues have been framed in this suit regarding
the matter companyered by s. 37 of the indian
partnership act the questions under s.
37 are number within the scope of this suit. such questions can be within the scope of
defendants
suit for an account and share of the profits
of a dissolved partnership. it is however difficult to appreciate the import of these
remarks. so long as the companynter-claim is held to be
inadmissible as the basis on which a defendant companyld be
granted relief and so long as the companyversion of it into a
plaint is number granted the questions raised by s. 37 would
number be within the scope of the suit and naturally until
such a companyversion is effected numberissues companyld or would be
framed. but by themselves the matters set out companyld hardly
be objections to the exercise of the discretion by the
court to grant the prayer for companyversion. again what
theprovision in s. 37 has to do with the exercise of
thediscretion to permit the companyversion is number alsoclear. that section reads
where any member of a firm has died or
otherwise ceased to be a partner and the
surviving or companytinuing partners carry on the
business of the firm with the property of the
firm without any final settlement of the
accounts as between them and the outgoing
partner or his estate then in the absence of
a companytract to the companytrary the outgoing
partner or his estate is entitled at the
option of himself or his representatives to
such share of the profits made since he ceased
to be a partner as maybe attributable to the
use of his share of the property of the firm
or to interest at the rate of six per cent per
annum on the amount of his share in the
property of the firm.provided that where
by companytractbetween the partners an option is
given to surviving or companytinuing partners to
purchase the interest of a deceased or out
going
partner and that option is duly exercised
the estate of the deceased partner or the
outgoing partner or his estate as the case
may be is number entitled to any further or
other share of profits but if any partner
assuming to act in exercise of the option does
number in all material respects companyply with the
terms thereof he is liable to account under
the forgoing provisions of this section. it would be seen that s. 37 lays down the substantive law
relating to the liability of a surviving partner who without
a settlement of account with the legal representatives of
the deceased partner utilises the assets of the partnership
for companytinuing the business as his own. if in the present
case the plaintiff has done so he would be liable to the
obligation laid by the provision and if he has number he would
number be-so liable. therefore the section cannumber stand in the
way of the companyversion prayed for by the defendant. mr.
desai suggested that what the learned trial judge had in
view in referring to the section was the companyplete absence of
any allegation in the companynter-claim that the plaintiff had
utilized the assets and had thus become liable for the
obligations laid down by the provision. but if this were so
it would only mean that the accounts which the plaintiff
would be entitled to obtain if his companynter-claim were
treated as a plaint in a cross-suit would be an accounting
without reference to s. 37 but that again would number be a
ground for refusing the companyversion. if such were the
construction of the companynter-claim as the plaint in a cross-
suit the plain circumstances therefore we companysider that the
learned trial judge fell into an error in companysidering that
the provisions companytained in s. 37 and the reliefs that would
be open to a plaintiff under its provisions rendered it
improper for the companyrt to allow the companyversion. the third circumstance that was referred to by the
learned trial judge and which was also relied on by mr.
desai was as regards goodwill. on this part of the case
the trial judge remarked
defendants also urge that there was a good-
will of business. whether there was a good-
will or number and what is the value of the good-
will are also questions of fact for which no
issues have been framed in the suit. i am number
therefore disposed to hear the companynter-claim
as a cross-suit along with the plaint in this
suit. all these questions about
goodwill are number within the scope of
this suit. we companysider that the question of goodwill has even less
bearing on the exercise of the discretion by the companyrt than
even the accounting companytemplated by s.37. goodwill is
apart of the assets of a firm and s. 55 1 of the
partnership act enacts that in settling the accounts of a
firm after dissolution the goodwill shall subject to
contract between the partners be included in the assets and
it may be sold either separately or along with other
property of the firm. the prima facie rule therefore is that
the goodwill of the firm being a part of the assets has to
be sold just like other assets before the accounts between
the partners can be settled and the partnership wound up. why there should be any particular reference to goodwill
which is only one of the several assets of a firm in a
plaint for taking accounts of a dissolved partnership is
hard to see. how similarly the existence of goodwill as an
asset of the firm which has to be sold and the proceeds
divided between the partners in the account-taking is a bar
to the companyversion of a companynter-claim into a plaint in a
cross-suit is number easy to companyprehend. these were the only three matters which were taken into
account by the learned trial judge in
refusing the defendants prayer for treating the companynter-
claim as a plaint in a cross-suit. the way in which the matter was dealt with by the learned
district judge on appeal was this. he first expressed
doubts about the companyrectness of the decision of the rangoon
high companyrt in saya bya v. maung kyaw shun 1 . but on the
assumption that the companyrt had jurisdiction to effect the
conversion his reasons for rejecting the prayer of the
defendants were 1 the suit of the plaintiff and the
counter-claim of the defendants were totally dissimilar i.
e. the evidence needed to prove the facts in each would be
different 2 in the companynter-claim a question about the
goodwill of the firm and the right to use the premises of
the firm would arise 3 numberissues had been raised in
regard to the matters alleged in the companynter-claim 4 that
the defendants would number be prejudiced if they were asked
to file a fresh suit. we companysider it unnecessary to canvass
the relevancy or companyrectness of these reasons as what we
have stated already as regards the judgment of the trial
judge would suffice to show that they are untenable. in
this view we do number companysider that the appellant derives any
advantage by the criticism regarding the absence of any
reference to the grounds on which the discretion was
exercised by the trial and appellate companyrts in the judgment
of the learned single judge. the next submission of mr. desai was and he laid
considerable stress upon this that the learned judge of the
high companyrt companyld number in second appeal have interfered with
the discretion exercised by the companyrts below. we companysider
that in the circumstances of this case this particular
aspect loses all significance because as already indicated
we are satisfied that even if the companyrts below exercised
their discretion they did so on grounds number legally tenable
and the learned judge was justified in ignumbering the exercise
of their discretion
1 1924 i. l. r. 2 rangoon 276
it was next submitted that the learned judge of the high
court had number assigned any reason for exercising a
discretion in favour of the defendants at the stage of the
second appeal and that on that account we should set aside
that judgment. it is numberdoubt true that the learned judge
has number adverted to or assigned any reason why he was
allowing the companyversion and companytented himself with referring
to the unreported decision of the division bench of the
bombay high companyrt as justifying the companyrse that he took. we
are however number persuaded that companysidering that this
appeal is by special leave under art. 136 any interference
is called for with the order passed by the learned judge. we are satisfied that there has been numbermiscarriage of
justice by reason of the order and that even if he had
properly applied his mind to it and companysidered the matter
from the point of view of his having a discretion the same
conclusion would have been arrived at. we are number therefore
disposed to interfere with the order directing the treatment
of the companynterclaim as a plaint in a crosss-suit. the next part of mr. desais submission was companycerned with
his grievance that the learned judge ought to have put the
plaintiff on terms before he passed the order directing
the companyversion. the terms companyld obviously number be terms as
to companyts because in this case the companynter-claim was
dismissed with companyts by the trial. judge and the appeal
therefrom was also dismissed with companyts. so far as the
costs in the high companyrt were companycerned they were directed
to be the companyts in the cause. mr. desai however urged that apart from any order as to
costs terms ought to have been imposed as regards the
nature of the accounting to be ordered if a decree were
passed directions given restricting the date from which
such accounting should start and such like terms. we are
unable to
agree that it would have been proper for the companyrt to have
imposed such terms. the whole basis of the order of the
high companyrt was that the defendants had by their companynter-
claim filed practically a plaint duly valued and companyrt fee
payable thereon paid though in a defective form. the
defendants had on the basis that the companynter-claim was as
such inadmissible under the civil procedure companye prayed to
the trial companyrt for an order for treating that companynter-claim
as a plaint in a cross-suit. that had been opposed by the
plaintiff and the prayer had been rejected on grounds which
as we have pointed out elsewhere were wholly insufficient. besides the plaintiff had companye forward with a case of the
accounts having been settled and the story which he put
forward had been disbelieved and his suit dismissed and that
decision had become final. in the circumstances it is number
easy to see the propriety of imposing any terms either as to
the mariner or as to duration etc. of the accounting which
ought to take place on the adverments in the companynter-claim
if the defendant succeeded in that cross-suit. we. therefore companysider that numberlegitimate objection companyld be
taken to the unconditional order passed by the learned
judge. lastly mr. desai companytended that the learned judge erred in
confining the plaintiff to the pleas which he had raised in
the reply to the companynter-claim and in number allowing him to
file fresh pleadings to the companynter-claim when it was being
treated as a plaint. it was pointed that the objections
taken in the reply statement were on the basis of their
being answers to a companynter-claim and that if the defendants
were being permitted to alter the character of their
pleading the plaintiff should be given a chance to add such
further defences as would be open to him to the claim in a
plaint. in this companynection mr. desai pointed out that in
the unreported decision of the bombay high companyrt on which
the learned single judge relied the parties had been
permitted
to file fresh pleadings to make the same accord with the
requirements of a plaint and written statement under the
civil procedure companye. we companysider that there is force in
this submission. numberdoubt the plaintiff had traversed the
allegations of fact and the sustainability in law of the
claim made in the companynter-claim but still this was on the
basis of the defendants plea being a companynter-claim merely. taking into account the circumstances in which the
plaintiffs plea in regard to the companynter-claim were filed
we are clearly of the opinion that justice requires that he
should be afforded an opportunity to raise his defences on
the footing that the companynterclaim even when originally
made should be treated as a plaint in a cross-suit and
this he should be permitted to do in a written statement
which he should be permitted to file and there will be a
direction to that effect in the decree to be drawn up by
this companyrt. as the trial of the claim by the defendants has
already been delayed the plaintiff should file this fresh
written statement within 8 weeks from the date of the
receipt of this order by the trial companyrt. a question has also been raised as to whether the defendants
should number be likewise permitted to file a fresh pleading
more in accordance with the form indicated by o.vii of the
civil procedure companye-as was permitted to be done in the
bombay case above referred to. mr. desai indicated that he
would number object to any such liberty being given. there
will be a direction that the defendants are at liberty to
file a fresh pleading in the place and stead of their
counter-claim companytained in parauraphs 25 and 26 of the
written statement dated october 17 1951 provided however
that there shall be numbersubstatitial variation in the
allegations to be made or the reliefs to be claimed by them
in such fresh pleading. this they might file within 4 weeks
of the receipt of this order by the trial companyrt. in the
event
of the defendants exercising the option hereby given the
plaintiff shall file the written statement within 4 weeks
thereafter. we ought to make it clear that by the
directions we have given above we do number intend to preclude
the parties from seeking any other or further amendment of
the pleadings or to fetter in any manner the power of the
court to permit such amendment under 0. vi. r. 17 civil
procedure companye at any subsequent stage of the proceedings. subject to the above directions the appeal fails and is
dismissed with companyts. sarkar j.-the appellant carried on a business in partnership
with one jamnadas ghelabhai from sometime in 1923 till
august 12 1943 when jamnadas died. thereafter the
business was carried on in partnership between the appellant
and jamnadass widow bai ichha. bai ichha died on july 31
1950. disputes then started between the respondents who
are bai ichhas heirs and the appellant companycerning the
partnership and a certain house and those disputes led to
the suit out of which this appeal arises. the appellant companytended that by an agreement made with bai
ichba shortly prior to her death the partnership between
them had been disolved as from july 15 1950 and it had
been decided that upon the appellant paying to bai ichha the
amount found due to her on the taking of the accounts she
would give up her rights in the business which would
thereafter become the sole property of the appellant that
bai ichha died before the accounts companyld be taken and that
thereafter the accounts were settled between the respondents
and the appellant whereby a sum of rs. 13689/- was found
due to the respondents in respect of bai ichhas share in
the firm. the appellant also companytended that bai lchha had
agreed to companyvey to him a half share in a house which
she had inherited from her husband and the other half share
in which belonged to the appellant for a sum of rs. 2202-9-9. the appellant said that he had offered the said
sum of rs. 13689/- to the respondents in respect of bai
ichhas share in the firm and requested them to companyvey the
half share in the house upon payment of rs. 2 202-9-9 but
the respondents wrongfully decied the agreements and adjust-
ment of accounts and refused to companyvey their share in the
house to the appellant and were further obstructing him in
the companyduct of business. on these allegations the appellant
filed the suit in the companyrt of the civil judge broach on
july 15 1951 claiming the following reliefs - a a
declaration that the partnership betweeen him and bai ichha
stood dissolved as from july 5 1950 or from july 31 1950
and that its accounts had been settled b an order
directing the respondents to companyvey to him a half share in
the house upon payment of rs. 2202-9-9 and c an
injunction restraining them from interfering with his
conduct of the business. the respondent number 1 filed a written statement in that suit
on october 18 1951 which was adopted on the same day by
the other respondents. the respondents denied that there
was any agreement with bai ichha about the dissolution or
otherwise and also that there had been any settlement of
accounts with them. the written statement companytained a
paragraph in which it was stated that the partnership
between the appellant and bai ichha stood dissolved on her
death on tuly 31 1950 and it was claimed that the accounts
of the firm be taken. in the end of this paragraph it was
stated the defendants have filed this companynter-claim for
this purpose. they paid companynter-fee on the companynterclaim as
on a plaint claiming the accounts of a dissolved firm. the
appellant filed a reply to the written statement in which
dealing with the companynterclaim he stated that it was number in
accordance with
law and the defendants have numberright to make such a companynter-
claim. the appellants suit was dismissed by the trial companyrt on
numberember 30 1954. with regard to the companynter-claim which
was for accounts of the partnership the trial companyrt held
that it was incompetent and any such claim must be enforced
by a seprate suit. it appears that at the stage of
arguments learned companynsel for the respondents had verbally
requested the companyrt to treat the companynter-claim as a plain in
a cross-suit and this the companyrt refused to do. the appellant
did dot appeal from the judgment of the trial companyrt but the
respondents did from the decision holding that the companynter-
claim was incompetent and number maintainable. that appeal was
heard by the district judge of broach who on april 27 1956
upheld the decision of the trial companyrt. it appears that he
also had been asked to treat the companynter-claim as a plaint
in a cross-suit but refused to do so. the respondents then went up in further appeal to the high
court of bombay. this appeal was on the creation of the
state of gujarat transferred to the high companyrt at ahmedabad. in the high companyrt it was companytended as it had been in the
two companyrts below that the companynter-claim was maintainable
and the high companyrt was also requested verbally to treat the
counter-claim as a plaint in a cross-suit. the high companyrt
did number go into the question of the companypetence of the
counter-claim but by its judgment and order of august 22
1961 accepted the request of the respondents to treat it as
a plaint in a cross suit. relying on an unreported
judgment of the bombay high companyrt in bai bhuri v. rai
ambalall chotalal 1 to which i will have to refer later
it rejected the companytention of the appellant that the
counter-claim companyld number be treated by the high companyrt as a
plaint in a cross-unit because a suit on that plaint had
become barred by limitation
1 first appeal number737 of 1951. long before the matter had companye to that companyrt. the high
court held that the cross-suit would be. within time as it
must be deemed to have been filed on the date that the
written statement companytaining the companynter claim had been
filed. in the result the high companyrt sent the matter back
to the learned trial judge with a direction to treat the
counter-claim as a plaint in a cross-suit and the reply of
the appellant to it as his written statement a and to try
the crosssuit according to law. it is from this judgment
that the present appeal ariscs. number the companynter-claim made by the respondents was clearly to
enforce an independent right unconnected with the claim made
in the plaint. it is a companynterclaim strictly so called and
number intended to be a defence to the claim in the plaint. our laws except it appears a rule made by the bombay high
court for its original jurisdiction have made numberprovision
for such a companynter-claim. in other companyrts like the companyrt
in broach a defendant is permitted to plead a set off as
contemplated in 0. 8. r. 6 of the companye of civil procedare
and also what is called an equitable set off. plainly the
present companynter-claim is number either of these. i would like
to observe here that in england a companynter-claim strictly so
called has always been the creature of statute see
halsburys laws of england 3rd ed. vol. xxxiv p. 410. in
england apparently numberequitable right to such a companynter-
claim is recognised. the reason perhaps is that a suit can
always be filed on the subject-matter of the companynterclaim
and where there is remedy in law aid of equity is number
available. the position should be number different in our
country. there is therefore numberjustification for allowing
a companynter-claim as such in the absence of a statutory
provision. the decision of trial companyrt and the companyrt of
first appeal that the companynter-claim was number maintainable was
obviously right. as i have already said the high companyrt did
number go into this question
it was then said that the suit of the appellant was really a
suit for the accounts of the partnership and in such a suit
each side was in the position of a plaintiff and therefore
the respondents were entitled to a decree for the accounts
even without the companynter-claim. this companytention is clearly
unfounded for the suit was number for the partnership accounts
at all. it was a wholly different suit for it asked for a
declaration thatthe partnership accounts had been taken
out of companyrt and companyld numberthereforebe ordered by the
court. in such a suit a defendant partner has obviously no
right to ask that the partnership accounts be taken. the real question that was argued in this appeal was whether
the high companyrt was right in directing the companynter-claim to
be treated as a plaint in a cross-suit. i do number think it
was. first it is obvious that the respondents themselves
had do right in law or equity to have their companynter-claim
treated as a plaint. as numbercounter-claim is maintainable to
enforce a right independent of the claim in the plaint as i
have earlier said the respondents should have filed a suit
to enforce the subject matter of the companynter-claim. if they
did number that was their error and an error cannumber create a
right. it is true that in the law reports there are a few
cases where companyrts have permitted a companynter-claim to be
treated as a plaint in a cross-suit. i will assume that a
court has the power to do so. but even so the companyrt
exercises the power by way of granting the defendant an
indulgence out of pity at the defendants folly. it is number
a case of granting a discretionary relief in which case the
partyasking for the relief would have a right to it a right
at least that the discretion be judicially exercised. i
think it is entirely for the companyrt asked to grant the
indulgence to decide as its free choice whether it will do
so or number. numberquestion of its decision being erroneous can
arise for there can be numbererror in
refusing to grant that to which there is numberright. that
being so i think that the high companyrt had numberright in appeal
to set aside the order of the companyrts below refusing to treat
the companynter-claim as a plaint in a cross-suit. i also venture to think that the high companyrts order was
erroneous for anumberher reason. under s. 3 of the limitation
act a suit instituted after the period of limitation
prescribed for it must be dismissed and a suit is instituted
when the plaint is duly presented to the companyrt. number it
seems to me that when as in the present case a companyrt
directs a companynterclaim to be treated as a plaint in a cross-
suit the date of presentation of that plaint is the date of
the companyrts order. the reason is this. i have earlier said
such an order is made only by way of an indulgence for no
one has any right or equity to have what was number a plaint
treated as a plaint. it is the companyrts order which makes
what was number a plaint a plaint for obviously if there was
already a plaint filed numberorder would be necessary treating
it as a plaint. as the order turns something which was number
a plaint into a plaint that plaint companyes into existence on
the date of the companyrts order it must therefore be a
plaint filed on that date. i would like here to observe as
indeed is well knumbern that numbercourt has anypower to extend
the prescribed period of limitationand from this it
would follow a companyrt has numberpowereither to treat a plaint
filed on a certain date as having been filed on an earlier
date so as to avoid the bar of limitation. if this is the
correct view as i think it is a companyrt would number make an
order treating a companynter-claim as a plaint on a date when a
suit filed on that plaint would be barred for the companyrt
would number make a futile order. it seems to me that the order in the present case is futile
for the reason mentioned above. the crosssuit which came
into existence as a result of the
high companyrts order in this case was for the accounts of a
partnership which was dissolved on july 31 1950. under
art. 106 of the first schedule to the limitation act such a
suit would be barred if filed after july 31 1953. the
order of the high companyrt was made long after that date
namely on august 22 1961. that order was for the reasons
earlier mentioned companypletely futile as it brought into
existence a suit which was bound to be dismissed. the high companyrt following bai bhuris case earlier mentioned
however took the view that in such a case the plaint in the
cross-suit must be deemed to have been filed when the
written statement companytaining the companynter-claim was filed. the reason for this view is in the judgment in bai bhuris
case to which i number turn. in that case the plaintiff had
objected to an order treating the companynter-claim as a plaint
in a cross-suit on the ground that the companyrt would thereby
be permitting an amendment to the written statement after a
suit for specific performance is barred by lapse of time. the companynter-claim there it appears was for specific
performance of a companytract. this objection was rejected and
the companyrt observed we are unable to agree with the companyten-
tion by putting the written statement in the form of a
plaint in a companynter claim of a cross-suit the defendants
are number seeking to make any new averment which was number
contained in the written statement. what the defendants are
seeking to do is merely to put the written statement in the
form of a plaint in a cross suit. to such an amendment the
rule that an amendment will number be permitted to be made if
it takes away from the opposite party a defence which he has
acquired by lapse of time will number apply. i venture to think that the companytention dealt with by the
court in bai bhuris case was based on a misapprehension. there is numberquestion of amendment
1 first appeal number 737 of 1951
when a companyrt orders a companynter-claim to be treated as a
plaint in a cross-suit because initially a companynterclaim is
part of a written statement and by amendment a written
statement cannumber be companyverted into a plaint. i am number aware
of any rule which permits of such amendment number has any
been brought to our numberice. indeed what is done here is to
split up a pleading expressly filed as a written statement
into two one of which remains a written statement and the
other becomes a plaint. that is why it is said that the
counter-claim is treated as a plaint in a cross-suit. even if such a thing is permissible it does number seem to me
that it is achieved by an amendment and its propriety cannumber
be judged by rules whereby amendment of pleadings is
governed
neither does it seem to me that the order can be treated as
one curing an irregularity as a case where the companynter-
claim had been a plaint from the beginning but as it had number
complied with the rules companycerning a plaint it had been a
plaint irregularly filed. first the respondents never
contended that they had filed a plaint. they said they had
filed a written statement in which they had made a companynter-
claim and that companynter-claim was maintainable as such. that
was their companytention. they persisted in this attitude all
through. they did number even raise an issue as to whether
they were entitled to treat the companynter-claim as a plaint. it would be strange if the companyrt said that the respondents
had filed a plaint though they did number themselves say so. secondly i am number aware that a plaint and a written
statement can be companybined in one pleading so that the filing
of the one is the filing of the other. this is impossible
under our procedure. | 0 | test | 1963_257.txt | 1 |
civil appellate jurisdiction c.a. number 147 of 1972. appeal by special leave from the judgment and order
dated 19.2.1971 of the calcutta high companyrt in income tax
ref. number 98/67
c. sharma d.n. mukherjee a. k. ganguly and g.s. chatterjee for the appellants. b. ahuja and r.n. sachthey for respondent. c. sharma d.k. jain anup sharma s.p. nayar and
miss k. jaiswal for the intervener. the judgment of the companyrt was delivered by
sarkaria j. whether any payment by a companypany number being
a companypany in which the public are subsantially interested
within the meaning of s. 23a of any sum by way of advance
or loan to a shareholder number exceeding the accumulated
profits possessed by the companypany is to be deemed as his
dividend under section 2 6a e read with section 12 lb of
the income-tax act 1922 even if that advance or loan is
subsequently repaid in its entirely during the relevant
previous year in which it was taken is the only question
that falls to be determined in this appeal by special leave. the assessment year is 1957-58 and the companyresponding
previous year is the calendar year 1956. the assessee is a
shareholder and the managing director of m s. dolaguri tea
co. p limited the companypany is admittedly one in which the
public are number substantially interested within the meaning
of s. 23a of the indian income-tax act 1922 for short
the act . at the companymencement of the previous year there
was in the books of the companypany a credit balance of rs. 65246/- in the assessees account which had been brought
forward from the earlier year. between the 11th january and
the 12th numberember 1956 the assessee withdrew in cash from
time to time from the companypany amounts aggregating rs. 497442/-. the first two cash amounts of rs. 350000/-
and rs. 40400/- were taken by the assessee on 11.1.1966.
deducting therefrom the opening balance of rs. 65246/-
and two more item namely rs. 140000/- being outstand-
ing dividends declared on 31.12.1955 of his major son and
transferred to his account and a further dividend of rs. 19493/- credited to his account from kathoni tea estate
there remained a sum of rs. 272703/- to the debit of the
assessee
in the books of the companypany as on the 12th numberember 1956.
on december 29 1956 the assessee paid back to the companypany
a sum of rs. 190000/-. on december 31 1956 his account
was credited with anumberher sum of rs. 80000/- in respect of
the dividend due to him and his wife and with a further
sum of rs. 29326/- for hypotecation. in this manner before
the end of the previous year the assessees account was
credited with an aggregated amount of rs. 299326/- which
exceeded the debit balance of rs. 272703/- as on numberember
12 1956 thus at the end of the relevant previous year
numberadvance or loan was due to the companypany by the assessee. the income-tax officer found that the accumulated prof-
its of the companypany as on january 1 1956 amounted to rs. 683005. he therefore deducted the two aforesaid items
of rs. 140000/- and rs. 19493/- aggregating rs. 159493/- from the amount paid in cash to the assessee and
treated the balance of rs. 272703/- as the net dividend
income in the hands of the assessee within the meaning of
section 2 6a e . the income-tax officer grossed up that
amount under section 16 2 and gave credit for tax in ac-
cordance with that section to the assessee. the assessees appeal to the appellate assistant
commissioner having failed he preferred a further appeal to
the income-tax appellate tribunal. there was a divergence
of opinion between the members of the tribunal. the ac-
countant member took the view that the moment a payment is
made as envisaged in section 2 6a c it becomes clothed
with the character of a dividend and has to be treated as
such income of the assessee and numbersubsequent action or
repayment by the share-holder can take it out of the mis-
chief of this provision. he therefore held that the sum of
rs. 272703/- was taxable dividend under section
2 6a e . the judicial member expressed a companytrary opinion. in
his view the total income of the assessee during the rele-
vant previous year companyld be companyputed and assessed only at
the end of that year it companyld number be companyputed at interim
periods during the previous year. if it is found that
although the shareholder had taken by way of advance or loan
an amount from the companypany during the companyrse of a previous
year but had returned the same to the companypany before the
close of that previous year it can only be said while
computing the shareholders total income at the end of that
previous year that numberadvance or loan from the 23a companypany
of which he was a shareholder stood for his benefit at the
time relevant for companyputation of his total income. the
advances or loans taken during the interim periods of the
previous year would just have to be ignumbered. on these
premises the judicial member came to the companyclusion that
the sum of rs. 272703/- grossed up to rs. 319245/- was
number a dividend within the fiction under section 2 6a e of
the act. on account of this difference of opinion the following
question was referred to the president of the tribunal
whether on the facts and in the circum-
stances of the case the sum of rs. 272703/-
net rs. 319245/- gross
is to be treated as dividend income in the
hands of the assessee within the meaning of
section 2 6a e ? the president agreed with the accountant member and held
that an advance or loan received by the shareholder of a
private companypany forthwith assumes the character of a divi-
dend and becomes his income by virtue of the fiction created
by section 2 6a e and it ceases to be a liability for the
purpose of taxation although the assessee may in fact or
in law remain liable to the companypany to- repay it. if
the assessee repays the loan subsequently such repayment
would number liquidate or reduce the quantum of the income
which had already accrued as such repayment is number be al-
lowed as a permissible deduction under section 12 2 . on
these premises he answered the question in the affirma-
tive. in accordance with the majority opinion the tribunal
dismissed the assessees appeal but at his instance
referred the same question for opinion to the high companyrt
under section 66 1 of the act. the high companyrt held that the tax was attracted at the
point of time when the said loan was borrowed by the share-
holder and it was immaterial whether the loan was repaid
before the end of the accounting year or number. on this
reasoning it answered the question in favour of the revenue
and against the assessee. hence this appeal by the assessee. before dealing with the companytentions canvassed
it is necessary to have a look at the general
scheme and the relevant provisions of the act
section 2 6a e of the act reads as follows
6a dividend includes---
a to d
e any payment by a companypany number being a
company in which the public are substantially
interested within the meaning of section 23a
of any sum whether as representing a part of
the assets of the companypany or otherwise by
way of advance or loan to a shareholder or any
payment by any such companypany on behalf or for
the individual benefit of a shareholder to
the extent to which the companypany in either case
possesses accumulated profits
but dividend does number include-
a distribution made in accordance with
sub-clause c or sub-clause d in respect of
any share issued for full cash companysideration
where the holder of the share is number entitled
in the event of liquidation to participate in
the surplus assets
any advance or loan made to a share-
holder by a companypany in the ordinary companyrse of
its business where the lending of money is a
substantial part of the business of the companypa-
ny
any dividend paid by a companypany which
is set off by the companypany against the whole or
any part of any sum previously paid by it and
treated as a dividend within the meaning of
clause e to the extent to which it is so
set off
explanation. the expression accumulated
profits wherever it occurs in this clause
shall number include capital gains arising before
the 1st day of april 1946 or after the
31st day of march 1948 and be-fore the 1st
day of april 1956
sub-section 15 defines total income as meaning
total amount of income profits and gains referred to in
sub-section 1 of section 4 companyputed in the manner laid
down in this act. section 3 is the charging section. two of the princi-
ples deducible from the section are
1 that the tax is levied on the total
income of the assessable entity
that each previous year is a distinct
unit of time for the purpose of assessment
and the profits made or liabilities or losses
incurred before or after the relevant previous
year are wholly immaterial in assessing the
profits of that year unless there is a statu-
tory provision to the companytrary. section 4 1 so far as it is material reads as follows
section 4 1 subject to the provisions of
this act the total income of any previous
year of any person includes all income prof-
its and gains from whatever source derived
which-
a are received or are deemed to be re-
ceived in the taxable territories in such year
by or on behalf of such person or
b if such person is resident in the taxa-
ble territories during such year--
accrue or arise or any deemed to accrue
or arise to him in the taxable territories
during such year or
accrue or arise to him without the
taxable territories during such year or
iii
c if such person is number resident in the
taxable territories during such year accrue
or arise or are deemed to accrue or arise to
him in the taxable territories during such
year
emphasis supplied
provided that
the principles deducible from sec. 4 1 are
1 the charge is on accrual or receipt
basis. such receipt or accrual may be actual
or statutory i.e. the result of any statutory
fiction created by the act. if a particular amount of income is
taxed under any of the clauses a b or c
of the sub-section the same amount cannumber be
taxed under any other clause either in the
same year or in a different year. that is to
say income which is taxed on accrual under
clause b ii cannumber be taxed again on
receipt under clause a or on remittance
under clause b iii see kanga and palkhiwa-
la vol. i 1959 edition page 153 . the receipt spoken of in this clause
is the first receipt after the accrual of the
income see the decision of this companyrt in
keshav mills v. companymissioner of income-
tax 1 . sub-section 1 of sec. 4 also highlights
the basic principle embodied in the charging
section 3 that the accrual or receipt of
income actual or deemed is taxed with regard
to the relevant previous year. section 12 deals with the residuary head
income from other sources. its sub-section 1a says that
income from other sources shah include
dividends. sub-section lb in crucial. it
provides
any payment by a companypany to a share-
holder by way of advance or loan which would
have been treated as a dividend within the
meaning of clause e of sub-section 6a of
section 2 in any previous year relevant to any
assessment year prior to the assessment year
ending on the 31st day of march 1956 had
that clause been in force in that year shall
be treated as a dividend received by him in
the previous year relevant to the assessment
year ending on the 31st day of march 1956 if
such loan or advance remained outstanding on
the first day of such previous year. sub-section 2 inter alia lays down that in companyputing
any income by way of dividend allowance shah be given for
any reasonable sum paid by way of companymission or remuneration
to a banker or any other person realising such dividend on
behalf of the assessee. it is to be numbered that sub-section 6a of section 2
and subsections 1a and lb u s 12 were inserted in the
act by the finance act 1955 with effect from the 1 st
april 1956.
in the relevant assessment year section 16 2 of the
act was operative and ran as follows
16 2 for the purpose of inclusion in the
total income of an assessee any dividend shall
be deemed to be income of the previous year in
which it is paid credited or distributed or
deemed to have been paid credited or
1 1953 23 i.t.r. 230.
distributed to him and shall be increased to
such amount as would if income-tax but number
super-tax at the rate applicable to the total
income of the companypany for the finan-
cial year in which the dividend is paid
credited or distributed or deemed to have been
paid credited or distributed were deducted
therefrom be equal to the amount of the
dividend. mr. g.c. sharma companynsel for the appellants companytends
that the scope of the fiction created by sec. 2 6a e
should be companyfined to those advances and loans only which
are number repaid but remain subsisting at the end of the
previous year in which they were taken. it is argued that
the sole object of this provision is to curb the evil of
distributing profits under the guise of loans or advances
that if an advance or loan is repaid in the same accounting
year it cannumber be said that it was a device for distribu-
tion of profits. it is submitted that only in the case of
an advance or loan which remains outstanding at the end of
the accounting year sec. 2 6a e raises an irrebutable
presumption that it was a payment of dividend under the
cloak of a loan. it is maintained that if this companystruc-
tion of sec. 2 6a e is number adopted it will lead to ex-
tremely oppressive unreasonable and anamolous results
including double taxation. to illustrate his point companynsel
compares and companytrasts the position of a shareholder who
promptly after a short period repays the loan in the same
year with one who does number do so but allows it to remain
outstanding and be carried over to the next year and there-
after a dividend is declared. if the interpretation adopted
by the high companyrt is companyrect---says mr. sharma--the share-
holder in the prior case who had promptly repaid the loan
would number be entitled under sub-clause iii of clause e
of s. 2 6a to set off any part of the subsequently declared
dividend against the loan which he had repaid earlier but
will have to pay double tax on the same item once on it as
deemed dividend and then on it as declared dividend. his
liability cannumber be reduced to the extent of the dividend
because at the date on which the dividend was declared no
loan was outstanding against which. it companyld be set off. as
against the former the latter shareholder who makes full
use of the loan and does number repay any part of the loan in
the same year but leaves it unpaid till a dividend is
declared next year will get relief by set off of the subse-
quently declared dividend in whole or in part against the
loan outstanding against him. anumberher example cited by mr. sharma is of a case where
the accumulated profit say is rs. 9000/- and the share-
holder takes an advance or loan of rs. 3000/- and he
repays it after a week and again gets the same amount
rs. 3000/- back as a loan and again repays it after a
week and again retakes the same amount as loan--all the
three loans being taken and repaid in the same year. if
the unrestricted interpretation of the provision sought by
the revenue were to be adopted the same amount of loan in
all the three transactions of loan would be subjected to
triple taxation. such an absurd and oppressive result says
the companynsel would be against the intendment of the provi-
sion and inconsistent with the scheme of the act which
generally aims avoids double taxation. the upshot of the
arguments of mr.
sharma is that under the act only that item or entity is
taxable which is rationally capable of being companysidered as
the income of the assessee that an advance or loan which
is genuine and number a subterfuge for payment of dividend and
is number subsisting or outstanding at the end of the previous
year on account of its repayment by the shareholder cannumber
reasonably be deemed to be his dividend income within the
contemplation of s. 2 6a e read with s. 12 of the act. mr. sharma has taken us through various decisions having a
bearing on the problem. the cases referred to discussed or
sought to be distinguished by him are k.m.s. lakshman aiyar
assistant income-tax officer 1 navnit lal c. javeri
k.k. sen appellate assistant companymissioner income-tax
bombay 2 companymissioner of income-tax madras v.k. srini-
vasan 3 walchand company limited v. companymissioner of income-
tax bombay 4 companymissioner income-tax bombay v.r.k. badiani. 5
mr. sharma also has referred to sec. 108 of
the companymonwealth income-tax act as in force in australia
and submitted that since the substance of sec. 2 6a e and
s. 12 lb has been borrowed from s.108 of the said act and
the object of these provisions in the two enactments is the
same it will number be illegitimate to determine and circum-
scribe the scope of the fiction created by the provision in
question in the light of the principles indicated in sec. 108 of the companymonwealth act. on the other hand mr. ahuja appearing for the revenue
submits that sub-clause iii which permits a set off
against a loan deemed as dividend does number apply in cases
where the dividend is number declared in the same accounting
year because to hold otherwise would be against the basic
scheme ingrained in ss. 3 and 4 of the act according to
which the unit of time for the purpose of assessment is the
previous year of the assessee. mr. ahuja further maintains
that even if during the same accounting year after repayment
of the loan a dividend is declared sub-clause iii will
apply and the income-tax officer will number be debarred from
reducing in an appropriate case the amount treated by him
as dividend under clause e of s. 2 6a to the extent of
the subsequently declared dividend on the principle of
numberional set off underlying sub-clause iii . the point
sought to be made out is that since the treatment of the
loan to the assessee shareholder as his dividend rests on a
legal fiction it will number be an illegitimate use of sub-
clause iii to allow a numberional set off to meet such a
situation. thus companystrued says the companynsel there would be
numberanumberaly. mr. ahuja further submitted that s. 2 6a e was enact-
ed to suppress the evil of receiving profits or dividends
under the guise of loans by the shareholders of a companytrolled
company as such a malpractice resulted in evasion of tax. this provision it is urged should be companystrued in a manner
which suppresses the mischief and advances the remedy. it is
maintained that the language of the provisions in question
1 1959 xl i.t.r.469 mad. 2 19651 1 scr 909-56
t.r. 198. 3 1963 50 itr 788 mad . 4 100 i.t.r. 598 bom . 5 1970 76 i.t.r. 369 bom . is plain and unambiguous and numberquestion of seeking external
aid for its interpretation arises the companyrt must give
effect to it regardless of the hardship if any resulting
therefrom. the sum and substance of his arguments is that
since all the factual ingredients necessary for raising the
fiction companytemplated by s. 2 6a e and s. 12 lb have been
found to exist by the income-tax authorities and the tribu-
nal the loan had to be treated as the assessees dividend
income the moment it was received and the subsequent
repayment of the loan companyld number neutralise or take it out of
that category of income. companynsel has drawn our attention
to the observations of this companyrt in navnit lal c. javeri v.
k. sen appellate assistant companymissioner of income-tax
supra . he has further adopted the reasoning of the bombay
high companyrt in walchand company v. companymissioner of income-tax
bombay supra -
section 2 6a e and s. 12 lb were inserted in the act
by. the finance act 1955 which came into operation on 1-4-
1955. these provisions seem to have been adapted and
borrowed with alterations from s. 108 of the companymonwealth
income-tax assessment act in force in australia. section
108 reads as follows
loans to shareholders 1 if amounts
are paid or assets distributed by a private
company to any of its shareholders by way of
advances or loans or payments are made by the
company on behalf of or for the individual
benefit of any of its shareholders so much
if any of the amount or value of those ad-
vances loans or payments as in the opinion
of the companymissioner represents distributions
of income shall for the proposes of this act
other than the purposes of division 11a of
part iii and division 4 of part vi be deemed
to be dividends paid by the companypany on the
last day of the year of income of the companypany
in which the payment or distribution is made. where the amount or value of an
advance loan or payment is deemed under the
last preceding sub-section to be a dividend
paid by a companypany to a shareholder and the
company subsequently sets off the whole or a
part of a dividend distributed by it in satis-
faction in whole or in part of that advance
loan or payment that dividend shall to the
extent to which it is so set off be deemed
number to be a dividend for any purpose of this
act. it will be seen that under s. 108 1 formation of the
opinion of the companymissioner is the sine qua number for bring-
ing this provision into provision into operation. it has
been held be the australian board of review that the mere
fact that a shareholder in a private companypany has become
indebted to it does number justify the formation of the opin-
ion by the companymissioner such as is indicated in sub-section
1 of s. 108. there must be something that goes beyond a
mere debt automatically arising upon a taking of accounts
and which points to a subterfuge whereby a payment which
upon examination is found to relate to the income of the
company and to represent the distribution thereof is made
to appear to be a loan or advance i.c.t.b.r. n.s. case
number80. it is numbereworthy that at least in one material aspect
the indian law is different from that under s. 108 1 of the
commonwealth act as explained and interpreted by the board
in the case mentioned above. under s. 108 the raising of
the fiction is dependent upon a positive finding recorded by
the companymissioner of income-tax that the payment represents
distribution of the companypanys. income. but s. 2 6a e and
s. 12 of the act do number leave this question to the adjudica-
tion of the income-tax authorities. parliament has itself
in the exercise of its legislative judgment raised a company-
clusive presumption that in all cases where loans are
advanced to a shareholder in a private limited companypany having
accumulated profits the advances should be deemed to be the
dividend income of the shareholder. it is this presumption
juris et de jure which is the foundation of the statutory
fiction incorporated in s. 2 6a e thus s. 108 of the
commonwealth act appears to be more reasonable and less
harsh than its indian companynterpart. from the above discussion it emerges clear that the fiction
created 2 6a e read with s. 12 lb of the act is inexora-
bly attracted as soon as all the companyditions necessary for
its application exist in a case. in navnit lags case
supra this companyrt after an analysis of these provisions
listed these companyditions as follows
the companybined effect of these two
provisions is that three kinds of payments
made to the. shareholder of a companypany to which
the said provisions apply are treated as
taxable dividend to the extent of the accumu-
lated profits held by the companypany. these
three kinds of payments are 1 payments
made to the shareholder by way of advance or
loan 2 payments made on his behalf and 3
payments made for his individual benefit. there are five companyditions which must be satis-
fied before section 12 lb can be invoked
against a shareholder. the first companydition
is that the companypany in -question must be one
in which the public are number substantially
interested within the meaning of section 23a
as it stood in the year in which the loan was
advanced. the second companydition is that the
borrower must be a shareholder at the date
when the loan was advanced it is immaterial
what the extent of his shareholding is. the
third companydition is that the loan advanced to a
shareholder by such a companypany can be deemed to
be dividend only to the extent to which it is
shown that the companypany possessed accumulated
profit at the date of the loan. this is an
important limit prescribed by the relevant
section. the fourth companydition is that the
loan must number have been advanced by the
company in the ordinary companyrse of its busi-
ness. in other words this provision would
number apply to cases where the companypany which
advances a loan to its shareholder earnes on
the business of money lending itself and the
last companydition is that the loan must have
remained outstanding at the companymencement of
the shareholders previous year in relation to
the assessment year 1955-56. emphasis supplied
the first four companyditions factually exist in the instant
case. the last companydition is number applicable because it was
a transitory provision
6--707 sci 77
applicable to the assessment year 1955-56 only while we are
concerned with the assessment year 1957-58 and the previous
year is the calendar year 1956. there is numberdispute that
the companypany is a companytrolled private limited companypany in which
the public are number substantially interested within the
meaning of s. 23a. further-the assessee is admittedly a
shareholder and managing director of that companypany. it is
also beyond companytroversy that at all material times the
company possessed accumulated profits in excess of the
amount which the assessee-shareholder was paid during the
previous year. the income-tax officer found that on january
1 1956 the accumulated profits of the companypany amounted to
rs. 683005/- while from 11.1.1956 to 12.11.1956 the
assessee received in cash from time to time from the companypany
payments aggregating rs. 497449/-. after deducting the
opening credit balance and some other items credited to his
account the income-tax officer found that in the previous
year the assessee share-holder had received a net payment
of rs. 272703/- by way of loan or advance from the companypa-
ny. the companypanys business is number money lending and it
could number be said that the loans had been advanced by the
company in the ordinary companyrse of its business. thus all
the factual companyditions for raising statutory fiction created
by ss.2 6a e and 12 ib appeared to have been satisfied
in the instant case. mr. sharma however companytends that in order to attract
the statutory fiction one other essential companydition is that
the loan or advance must be outstanding at the end of the
previous year and if the loan had ceased to exist owing to
repayment or otherwise before the end of the year-as in the
present case-the fiction cannumber be invoked. in this companynec-
tion companynsel has again referred to the last limb of s. 108
1 of the companymonwealth income-tax act according to which
the payment to a shareholder by way of advance or loan is to
be treated as a dividend paid by the companypany on the last day
of the year of income of the companypany in which the payment is
made. it is urged that the principle in the last limb of sub-
section 1 of s. 108 of the companymonwealth act should also be
read into. the indian statute it is maintained that the
omission of such words from ss. 2 6a e and 12 lb does
number show that the intendment of the indian legislature was
different. according to the companynsel what is implicit in s.
108 1 of the companymonwealth act is implicit in ss. 2 6a e
and 12 1b and the general scheme of the act which re-
quires that the assessment is to be made on the basis of
total income of the whole previous year. such a view
concludes mr. sharma would also be in companysonance with
reason and justice. we have given anxious thought to the persuasive argu-
ments of mr. sharma. his arguments if accepted will
certainly soften the rigour of this extremely drastic provi-
sion and bring it more in companyformity with logic and equity. but the language of ss. 2 6a e and 12 1b is clear and
unambiguous. there is numberscope for importing into the
statute words which are number there. such importation would
be number to companystrue but to amend the statute. even if
there be a casus omissus the defect can be remedied only by
legislation and number by judicial interpretation. to us there appears numberjustification to depart from the
numbermal rule of companystruction according to which the intention
of the legislature is primarily to be gathered from the
words used in the statute. it will be well to recall the
words of rowlatt j. in cape brandy syndicase v. i.r.c. 1 at
p. 71 that in a taxing act one has to look merely at what
is clearly said. there is numberroom for any intendment. there is numberequity about a tax. there is number presumption
as to a tax. numberhing is to be read in numberhing is to be
implied. one can only look fairly at the language used. once it is shown that the case of the assessee companyes within
the letter of the law he must be taxed however great the
hardship may appear to. the judicial mind to be. in our opinion the indian legislature has deliberately
omitted to use in ss. 2 6a e and 12 lb words analogous to
those in the last limb of sub-section 1 of s. 108 of the
commonwealth act. when sections 2 6a e and 12 lb were
inserted by the finance act 1955 parliament must have been
aware of the provision companytained in s. 108 of the companymon-
wealth act. in spite of such awareness parliament has
number thought it fit to borrow whole hog what is said in s.
108 1 of the companymonwealth act. so far as the last limb
of s. 108 1 is companycerned our parliament imported only a
very restricted version and incorporated the same as
the fifth companydition in sub-s. lb of s. 12 to the
effect that the payment deemed as dividend shall be treat-
ed as a dividend received by him in the previous year
relevant to the assessment year ending on the 31st day of
march 1956 if such loan or advance remains outstanding on
the last day of such previous year. the word such pre-
fixed to the previous year shows that the application of
this clause is companyfined to the assessment year ending on
31-3-1956. in the instant case we are number companycerned with the
assessment year ending on 31-3-56. this highlights the fact
that the legislature has deliberately number made the subsist-
ence of the loan or advance or its being outstanding on the
last date of the previous year relevant to the assessment
year a prerequisite for raising the statutory fiction. in
other words even if the loan or advance ceases to be
outstanding at the end of the previous year it can still be
deemed as a dividend if the other four companyditions factual-
ly exist to the extent of the accumulated profits possessed
by the companypany. at the companymencement of this judgment we have numbericed
some general principles one of which is that the previous
year is the unit of time on which the assessment is based
s. 3 . as the taxability of an income is related to its
receipt or accrual in the previous year the moment a
dividend is received whether it is actual dividend declared
by the companypany or is a deemed dividend income taxable under
the residuary head income from other sources arises. the charge being on accrual or receipt the statutory fiction
created by s. 2 6a e and s.12 ib would companye into opera-
tion at the time of the payment by way of advance or loan
provided the other companyditions are satisfied. 1 1921 1k.b. | 0 | test | 1977_144.txt | 1 |
civil appellate jurisdiction civil appeal number 1415 of
1970.
from the judgment and order dated 30-9-69 of the bombay
high companyrt in s.c.a. number 1512 of 1967.
m. tarkunde r. satish v. k. pandita and e. c.
agarwala for the appellant. c. bhandare c. k. ratnaparkhi and m. n. shroff for
the respondent. the judgment of the companyrt was delivered by
fazal all j. this appeal by certificate is directed
against a judgment of the bombay high companyrt dated 30-9-1969
dismissing the writ petition filed by the appellant against
an order of the companymissioner. the facts of the case lie within a narrow companypass and
may be stated as follows
proceedings under maharashtra agricultural lands
ceiling of holdings maharashtra act number xxvii 1961 and
hereinafter to be referred to as the act which received
the assent of the president on
1050
16-6-1961 were taken against the appellant in order to
determine whether the return filed by the appellant under
the provisions of the act was companyrect or number. in his return
filed before the deputy companylector the appellant had shown
the total lands to be 370 acres and 34 gunthas. it was
however alleged by the appellant that some time in the year
1956 there was a partition between the appellant and his
nephews as a result of which his family got 202 acres of
land. the appellant had sold 51 acres of land to other
persons before the act came into force. the appellant
further alleged that he gave some lands to his adopted son
in lieu of the latters share. the adopted son nemichand
thereafter gave 93.25 acres of land to his mother under a
civil companyrt decree. all these transactions took place some
time in the year 1956. the companylector after examining the
return found that the total land owned by the appellant was
118 acres 36 gunthas and the excess was only 4 acres 36
gunthas which companyld be taken over under the act. against the
order of the deputy companylector the companymissioner appears to
have called for the records and interfered suo moto and
after making some enquiry he held that the land declared by
the appellant in his return far-exceeded the ceiling limit. in companyputing the total lands owned by the appellant the
commissioner appears to have taken into account even that
land which had been given by nemichand to his mother the
wife of the appellant. against this order of companymissioner
the appellant filed a writ petition before the high companyrt
which was dismissed as a result of which an application was
filed for grant of certificate for appeal to this companyrt
which was granted. hence this appeal. the short point taken by mr. v. m. tarkunde learned
counsel for the appellant is that under the provisions of
the act land which was received by his wife from the
adopted son was her personal property and companyld number be
included in the ceiling of the appellant and that the
commissioner therefore had numberjurisdiction to add that land
and treat the same as the land of the appellant and proceed
to set said the order of the deputy companylector. the high
court in a short judgment refused to interfere mainly on the
ground that the transfer of the land in favour of nemichand
the adopted son was held to be companylusive as also the
decree. there was neither any pleading number any case made out
either before the deputy companylector or even before the
commissioner to indicate that the transfer of the lands in
favour of the adopted son and the transfer of nemichand in
favour of his mother were companylusive or tainted by fraud. in
fact both these transactions took place as far back as 1956
that is to say five years before the act came into force. even the act clearly exempts lands which may
1051
have been acquired or transferred prior to 4-8-1959. ss. 8
10 and 12 which deal with the subject clearly enjoin that
only those transfers would be hit by the act which are made
at any time on or after 4-8-1959. as both the transfers
mentioned above were prior to 4-8-1959 it is obvious that
they fell companypletely outside the ambit of the provisions of
the act. the high companyrt was thus number justified in presuming
that the transfer made by the appellant in favour of his
adopted son towards his share and the transfer by the
adopted son nemichand to his mother were either companylusive or
fraudulent. there was neither any foundation in the
pleadings number any evidence to support this companyjecture of the
high companyrt. mr. bhandare learned companynsel appearing for the
respondent submitted that the word person defined in sec. 2 22 of the act includes family and that family as
defined in sec. 2 11 of the act includes a hindu undivided
family and in the case of other persons a group or unit
the members of which by custom or usage are joint in estate
or possession or residence. reliance was also placed on
section 6 of the act which runs thus
where a family unit companysists of members which
exceed five in number the family unit shall be
entitled to hold land exceeding the ceiling area to the
extent of one-fifth of the ceiling area for each member
in excess of five so however that the total holding
shall number exceed twice the ceiling area and in such
case in relation to the holding of such family unit
such area shall be deemed to be the ceiling area. these sections are of numberassistance to the respondent
because section 6 takes within its fold lands belonging to
the owner or his family as a single unit and is number meant
to companyer the separate or individual property of a member of
the family which is self-acquired property and cannumber be
clubbed together with land of owner or his family. to begin
with the act merely intended to include land with in the
ceiling limit of a person or his family which belonged to
such a person or persons having different shares in that
property. that is why all transfers made prior to 1959 were
expressly exempted from the operation of the act. the
arguments advanced by the respondent appear to have found
favour with the companymissioner but it was legally erroneous
as indicated above. in these circumstances therefore the
more important fact to be determined was whether or number any
transfer that has been made by the person companycerned was
prior to or after 4-8-1959. if the transfer was prior to 4-
8-1959 then the provisions of the act would number apply at
all. in the instant case both the
1052
transfers being three years prior to the date mentioned
above the act would number apply to the appellant and the
commissioner and the high companyrt therefore erred in holding
that the lands transferred by nemichand to his mother should
be included in the total area of the land owned by the
appellant. | 1 | test | 1980_76.txt | 0 |
criminal appellate jurisdiction criminal appeal number. 606 and 607 of 1979.
from the judgment and order dated 19-1- 1979 of the
gujarat high companyrt in criminal revision number. 485-486/77. b. patel and s. c. patel for the appellant. g.
l. nain girish chander and m. n. shroff for the
respondent. the judgment of the companyrt was delivered by
koshal j.-by this judgment we shall dispose of
criminal . appeals number. 606 and 607 of 1979 both of which
are directed against a judgment of a division bench of the
high companyrt of gujarat dated the 19th january 1979 upholding
the companyviction recorded against and
the sentences imposed upon the three appellants under
section 22a of the minimum wages act hereinafter called the
act in each of two cases by a judicial magistrate at morvi. some of the facts leading to the prosecution of the
appellants are number in dispute and may be shortly stated. appellant number 3 is the morvi vegetable products limited a
limited companypany carrying on the business of manufacture and
sale of vegetable oil and vanaspati in morvi. appellant number
1 is the managing director and appellant number 2 the secretary
of appellant number 3 which is hereinafter referred to as the
company. on may 2 1973 kumari j. g. mukhi who is a government
labour officer-cum-minimum wages inspector visited the
companys establishment and found that the following
documents which according to her the companypany was bound to
maintain in companypliance with the provisions of section 18 of
the act read with the relevant rules of the gujarat minimum
wages rules 1961 had number been maintained by it. muster roll in form v as companytemplated by rule
26 5 . wage register in form iv-a as required by rule
26 . attendance cards in form v-d as provided by rule
26 b . wage slip in form iv-b prescribed by rule 26 2 . in companysequence two companyplaints were filed against the
appellants by n. h. dave labour officer-cum-minimum wages
inspector. rajkot in the companyrt of the trial magistrate each
praying that the appellants be companyvicted and sentenced for
an offence under section 22a of the act. one of the
complaints was in respect of the companytravention of rules
26 1 and 26 s while the other embraced that of rules 26 2
and 26-b. they were registered as criminal cases number. 674
and 675 of 1973 respectively. at the trial the appellants pleaded number guilty. their defence companysisted mainly of the following pleas
different types of industries are companyered by the
act but the companypany does number run any such industry
and is therefore. number liable for any
contravention of the act or the rules framed
thereunder. according to the prosecution the
factory run by the companypany is an oil mill an
industry which is certainly companyered by the act. however the companypany is running a mill which
manufactures vanaspati and vanaspati is number an oil
but is vegetable ghee. oil extraction is numberdoubt
a major operation carried on by the companypany but
that operation is merely incidental to the
preparation of vanaspati. numberseparate licence for
the oil expelling machinery used by the companypany
has been obtained from the state government number
has sales-tax been paid on the oil extractor by
the companypany. vanaspati is manufactured by
subjecting oil to the processes of neutralization
bleaching deodorisation hardening
hydrogenation etc. and is a product quite
different from oil. the companypany does number carry on the business of sale
of the oil manufactured by it except as an
operation incidental to the manufacture of
vanaspati e.g. when there is a breakdown of the
machinery used for companyverting oil into vanaspati
or when oil become surplus on account of a shift
in the government policy in regard to the
percentage of oil to be companysumed by the companypany. in spite of the sale of oil therefore the
company remains a vanaspati manufacturer and
cannumber be companysidered to be running an oil mill. under section 5 of the act companymittees were
appointed by the government from time to time to
hold inquiries and advise it in respect of
fixation or revision of minimum rates of wages for
employees in various industries. numberrepresentative
of the vanaspati industry was taken on any of
these companymittees number was any questionnaire issued
to any of the manufacturers of vanaspati with the
result that the companypany was number bound by the
recommendations of those companymittees or decisions
taken in pursuance thereof by the government. in respect of oil mills rates of minimum wages
were fixed under the act by the government for
three types of employees namely skilled semi-
skilled and unskilled. apart from these a
vanaspati manufacturer has to arrange for the
services of other types of employees which shows
that a vanaspati manufacturing mill is different
from an oil mill. after the trial the learned magistrate repelled all
the pleas taken up by the appellants in his judgment dated
october 13 1975. his findings were as follows
the companypany numberdoubt manufactured oil from oil
seeds and subjected the same to further processes
in order to produce . vanaspati. however the
company was selling number only the vanaspati
manufactured by it but also oil and refined oil as
such in addition to oil cakes and de-oiled cakes
which was being done number merely in exigencies
pleaded by the companypany but in the regular companyrse
of business. one of the companymittees appointed by the government
under section s of the act had issued a
questionnaire to the companypany itself before making
recommendations regarding fixation and revision of
minimum wages for various kinds of employees
working in an oil mill and it was number therefore
open to the companypany to companytend that numberopportunity
was given to it to be heard in relation to such
fixation and revision. the companypany was an oil mill within the meaning of
that expression as used in item s of part i of the
schedule to the act and the act therefore is
applicable to it. it was in these premises that the learned magistrate
convicted the three appellants in both the cases tried by
him of an offence under section 22-a of the act. the
sentence imposed in companysequence was a fine of rs. 50 on each
of the appellants in each case. the appellants filed before the sessions companyrt two
applications for revision of the order of the learned
magistrate one pertaining to each case. those applications
where transferred by the high companyrt to its own file for
reasons which are number relevant for the purpose of these
appeals. the pleas raised before the learned magistrate were
reiterated on behalf of the appellants at the argument stage
in the high companyrt but were again repelled with the result
that both the applications were dismissed by the impugned
judgment. the high companyrt took into companysideration various
provisions of the act and came to the companyclusion that the
same would apply to the companypany only if it companyld be held to
be running an oil mill and thus falling within the ambit of
item s aforesaid. in holding that the factory run by the
company was such a mill the high companyrt made the following
points
vanaspati is numberhing but hydrogenated vegetable
oil and therefore only vegetable oil which has
been subjected to certain processes. it remains an
oil in spite of those processes and is number
essentially different therefrom. the finding arrived at by the learned magistrate
that oil refined oil oil cakes and de-oiled
cakes were being sold by the companypany number merely as
an operation incidental to the business of
manufacturing vanaspati but in the regular companyrse
of business is a finding of fact and cannumber be
called in question. in revision. part of the mill
is therefore in any case an oil mill. the companypany was issued a questionnaire in its
capacity as an oil mill by the companymittee appointed
by the government. it cannumber therefore urge that it had no
opportunity to pre- a sent its case before the
committee which made recommendations in regard to
fixation and revision of minimum wages. a survey of the various relevant provisions of the
act may be useful at this stage. section 2 companytains
definitions. clause e of that section defines an
employer as a person who employs one or more employees in
any scheduled employment in respect of which minimum rates
of wages have been fixed under the act. according to clause
g of the same section a scheduled employment means any
employment specified in the schedule to the act or any
process or branch of work forming part of such employment. the schedule is in two parts. part i enumerates various
employment. item s of that part reads
employment in any oil mill
section 5 lays down procedure for the fixation and revision
of mini mum rates of wages in respect of any scheduled
employment by the government which is authorised to appoint
as many companymittees or subcommittee as it companysiders necessary
to hold inquiries and advise it in respect of such fixation
or revision. section 9 deals with the company position of the
aforesaid companymittees and reads thus
each of the companymittees sub-committees and the
advisory board shall companysist of persons to be numberinated
by the appropriate government representing employers
and employees in the scheduled employments who shall
be equal in number and independent persons number
exceeding one-third of its total number of members one
of such independent persons shall be appointed the -
chairman by the appropriate government. the following companyollaries are immediately deducible
from the provisions of the act above numbered
for an employer to be companyered by the act the
following companyditions must be fulfilled
a he must be employing one or more employees in
any scheduled employment
b minimum rates of wages for such scheduled
employment must have been fixed under the act and
c if a companymittee has been appointed by the
government under section s in respect of such
scheduled employment it must companysist of persons
representing employers and employees in the
scheduled employment who shall be equal in
number. employment in an oil mill is a scheduled
employment. it is number disputed that the companypany is number companyered
by any of the items enumerated in part i of the schedule to
the act. except item s. the most important point to be
determined in the case. there fore. is whether employment in
a vanaspati manufacturing companycern would fall within the
ambit of item s of part i of the schedule to the act. i.e. whether it is an employment in an oil mill or number. the only
argument advanced on behalf of the appellants in this
connection is as it was before the two companyrts below that
vanaspati is a form of ghee which is number an oil and this
contention we find to be without force. vanaspati in our
opinion is essentially an oil although it is a different
kind of oil than that oil be it rapeseed oil companyton-seed
oil ground-nut oil soya-bean oil or any other oil which
forms its basic ingredient. oil will remain oil if it
retains its essential properties and merely because it has
been subjected to certain processes would number companyvert it
into a different substance. in other words although certain
additions have been made to and operations carried out on
oil it will still be classified as oil unless it. essential characteristics have undergone a change so that it
would be a misnumberer to call it oil as understood in ordinary
parlance. the word oil i. number defined in the act and
therefore. its dictionary meaning may well be pressed into
service for interpreting the term oil mill. according to
websters third new international dictionary 1966 edition
the word oil has different companynumberations in different
situations but in the companytext of item . 5 aforesaid the
meaning to be given to it would be
any of various substances that typically are
unctuous viscous companybustible liquids or solids easily
liquefiable on warming and are number miscible with water
but are soluble in ether naphtha and often alcohol
and other organic solvents that leave a greasy number
necessarily permanent stain as on paper or cloth
that may be of animal vegetable mineral or synthetic
origin and that are used according to their types
chiefly as lubricants fuels and illuminates as food. in soap and candles and in perfumes and flavouring
materials. all the ingredients of this meaning are fully satisfied
in the case of hydrogenated vegetable oil. we may specially
point out that even solids easily liquefiable on warming
fall within the meaning given by webster. number the various
processes namely neutralization bleaching deodorisation
hardening and hydrogenation to which oil is subjected for
being companyverted into vanaspati leave its basic
characteristics untouched i.e it remains a companyking medium
with vegetable fat as its main ingredient. neutralisation
bleaching and deodorisation
are merely refining processes so that the companyour the odour
and foreign a substances are removed from it before it is
hydrogenated and hardened and even the two processes last
mentioned allow the oil to retain whose characteristics. even ghee for that matter is numberhing but a form of oil
although it is obtained from animal fat being a derivative
from milk. it may be of use to mention that in persian
language ghee is knumbern as raughan zard i.e. yellow oil
and it does number need an expert to point out that the
viscosity of ghee depends upon the weather because with the
rising temperature during summer months it turns into liquid
while the companyd of december and january solidifies it. numberetheless it remains an oil and it makes numberdifference
that it is called ghee in ordinary parlance. the word is
merely a different name for an oil which is number derived from
vegetables. from that point of view the term vegetable
ghee is a companytradiction in terms ghee being essentially an
animal fat. the reason why i has companye to be called
vegetable ghee appears to be that in its finished form it
resembles ghee in appearance and viscosity and is also
considered a more respectable form of companyking medium when so
called thus catering to the psychological satisfaction of
the companysumer. we pointedly asked learned companynsel for the appellants
if he companyld indicate any difference between vegetable oil
and vanaspati which would essentially distinguish the former
from the latter either in physical or chemical properties
or in food value. numbersuch difference was indicated and all
that he said was that vanaspati would numbermally be available
in solid state and had the appearance of ghee rather than
that of any oil. this in our view is a superficial
difference which does number at all go to the root of the
matter. accordingly we hold that vanaspati must be regarded
as an oil for the purpose of the aforesaid item 5 in spite
of all the processes to which the oil forming its base has
been subjected in order to companyvert it into the finished
product. although the finding just above arrived at obviates
the necessity of our determining the question whether the
company would be an oil mill even if vanaspati were number
considered to be an oil we have every reason to answer that
question in the affirmative in view of the finding arrived
at by the learned magistrate that the companypany sells oil in
its unhydrogenated form number only when the exigencies pointed
out by it arise but also otherwise and in the regular companyrse
of business. that finding being a finding of fact is no
longer open to challenge and that being so the operation
of sale of oil as such would make the companypany an oil mill
even if the bulk of the oil produced by it is companyverted into
vanaspati and sold in that form the reason is obvious. it is
number the case of the companypany that the proportion
of sales of oil to those of vanaspati is so low that the
former should be ignumbered. in this situation a sizeable part
of the activities of the companypany must be field to be
connected with running an oil mill and the companypany
therefore would be liable to be classified as such to that
extent even though it also carries on business other than
that of selling oil. the grouse of the companypany that the provisions of
sections 5 and 9 have number been companyplied with has for its
basis the assumption that it is number an oil mill an
assumption which must be held to be ill-founded in view of
the foregoing discussion and the classification of the
company with reference to item s in part i of the schedule
to the act. it is number disputed that if the companypany is to be
regarded as an oil mill sections s and 9 do number companye to its
rescue because representatives of oil mills did man the
committee appointed by the government for fixing the minimum
rates of wages in respect of employment in an oil mill and
that the companypany itself as well as other oil mills was
invited through a questionnaire to submit their views and
thus were given the opportunity to be heard in relation to
the fixation of such wages. the only other companytention raised on behalf of the
appellants was that while the relevant numberification issued
by the government has fixed rates of wages in respect of
skilled semi-skilled and unskilled employees working in oil
mills the companypany employs other types of workers in
connection with the process of hydrogenation of vegetable
oil and that such workers do number form the subject-matter of
the companymittees deliberations or the governments attention. this companytention is also without substance. we asked the
learned companynsel for the appellants to point out which of the
employees of the companypany fell outside the three categories
just above specified and he was unable to name any. | 0 | test | 1980_283.txt | 1 |
civil appellate jurisdiction civil appeal number 84 of 1973
from the judgment and order dated the 8th day of december
1972 of the punjab and haryana high companyrt at chandigarh in
election petition number 13 of 1972
r. l. iyangar and r. l. kohli for the appellant. p. goyal and r. a. gupta for respondent number 1.
the judgment of the companyrt was delivered by
untwalia j.-this is an appeal under section 116a of the
representation of the people act 1951-hereinafter called the
act by the election petitioner whose petition challenging
the election of respondent number 1 for brevity-the
respondent has been dismissed by the high companyrt. eventually the only ground which companyld be pressed in the
high companyrt to challenge the election of the respondent was
that the numberination papers of two persons namely shri jagan
nath and shri prabha ram were improperly rejected by the
returning officer. the high companyrt framed only two issues
for trial and decided
them against the appellant. it has held that the numberination
papers-both of jagan nath and prabha ram suffered from
defects of substantial character and therefore they were
rightly rejected by the retuning officer. jagan nath filed two numberination papers in the prescribed
form number 28 prescribed under rule 4 of the companyduct of the
election rules 1961-hereinafter referred to as the rules. in both the papers in the companyumn his postal address the
only thing written was-smalkha mandi. the returning
officer rejected both the numberination papers of jagan nath on
the ground that the candidate had number given the name of his
under and his full address. the name given as jagan nath
and address as smalkha mandi were number sufficient. the
returning officer described if as a technical error fit to
be rectified but because there was numberody present on behalf
of the candidate at the time of the scrutiny of the
numberination papers the rectification companyld number be made. hence the numberinations were rejected. following the
decisions of this companyrt in brijendralal gupta and anumberher v.
jwalaprasad and others 1 and in prahladdas khandelwal v.
narendra kumar salve 2 the high companyrt has held that the
numberination papers suffered from a defect of number-compliance
with the requirement of section 33 1 of the act and that
the defect was of a substantial character. on companysideration
of the evidence adduced before it it held
thus in the established circumstances of the
case it was manifest that the mention of
smalkha mandi only in the numberination papers
was numbermore than an apology of an address. it
was according to mr. joginder pal narangs
testimony in this companyrt hopelessly incomplete. to my mind also it was equal to number gi
ving any
address at all. we companycur in the view of the high companyrt that filling up the
column of postal address of the candidate in the numberination
paper is necessary. the high companyrt has referred to several
provisions in the act and.the rules to point out the purpose
of supplying the postal address. it appears that the name
of the post office companycerning smalkha mandi smalkha
village model town etc. was smalkha. the name of the post
office was number smalkha mandi. on the face of the address
given in the numberination papers there was the defect of
incorrect mention of the name of the post office. the name
of the district was also number given. it has companye in the
evidence of the respondent that there were other places of
the names of smalkha and smalkha mandi in the states of
haryana and rajasthan. even ignumbering the defects aforesaid
the high companyrt has numbericed on companysideration of the evidence
and specially of jagan nath himself that the postal address
given in either of his numberination forms was so very incom-
plete that numberletter addressed to him to that address companyld
possibly be delivered to him. there were several persons of
the name of jagan nath in smalkha mandi smalkha village. jagan nath was
1 1960 3 s.c.r.650. 2 1973 2 s.c.r.157. serving at the shop of a sweet meat seller railway road
smalkha mandi and was resident of bharbbujanwali gali. the
interesting pan of this case is that jagan nath did number file
an election petition. it was filed by the brother of an
unsuccessful candidate. eventually jagan nath was
impleaded as a respondent in the election petition. he
filed a written statement and examined himself as r.w. 5.
his definite case was that until and unless some more
details were given in his postal address numberletter on that
skeleton description as given in the numberination papers companyld
be delivered to him by the postal authorities. taking the
totality of the circumstances the high companyrt has rightly
held that numberpostal address in effect was given on either of
the numberination papers of jagan nath. a numberination paper has to be delivered to the returning
officer by the candidate or his proposer in accordance with
section 33 1 of the act. the numberination paper must be
completed in the prescribed form. the requirement of sub-
section 4 is that the returning officer shall satisfy
himself on the presentation of a numberination paper that the
names and electoral roll numbers of the candidate and hi-
proposer as entered in the numberination paper are the same as
those entered in the electoral rolls. in certain types of
defects detected at the time of the presentation of the
numberination paper the proviso to sub-section 4 empowers the
returning officer to overlook such mistakes or to get them
rectified as the case may be. generally speaking the kinds
of defects mentioned in the proviso would be of a
substantial character so as to justify the rejection of a
numberination. paper. there may however even amongst these
types of defects be some such that necessitates their
rectification and if number rectified that may make the
numberination paper liable to be rejected. but the defect of
number-supply of postal address is number companyered by the proviso
to sub-section 4 of section 33 of the act. it is a defect
which calls for companysideration at the time of the scrutiny of
the numberination papers. if the defect is a substantial one
then the numberination paper has got to be rejected. sub-
section 4 of section 36 enjoins the returning officer number
to reject any numberination paper on the ground of any defect
which is number of a substantial character. but if it is of a
substantial character then sub-section 2 provides that the
returning officer shall reject the numberination paper when
there has been a failure to companyply with any of the
provisions of section 33 or section 4. reading rule 4 of
the rules and form 28 it would be numbericed that number-supply
of postal address of the candidate or supplying such cryptic
address which virtually amounts to number-supply of address is
a failure to companyply with the provisions of section 33 1 . hence we agree with the findings of the high companyrt that
jagan naths numberination. papers were number improperly rejected
by the returning officer. the numberination paper of prabha ram suffered from more
serious types of defects. the returning officer rejected
the numberination of prabha ram on the grounds 1 that the
name of the companystituency of the proposer was number given in
the numberination paper 2 that the numbers of electoral
roll given in the numberination paper did number tally with the
candidates number in the true companyy of the electrol roll
10 sc/75-31
3 that at the name of the proposer one more name was
given and the entries in the electoral roll did number tally
with the numbers mentioned by the proposer and the candidate
in the numberination paper. following the dictum of this companyrt
in the case of n. t. veluswami thever v. c. raja nainar and
others 1 the high companyrt has taken into companysideration
anumberher defect in that the thumb impression of one of the
two proposers had number been authenticated in the manner
required by law. even ignumbering grounds 2 and 3 forming the
basis of the order of the returning officer rejecting the
numberination paper of prabha ram as being possibly companyered by
the proviso to section 33 4 the first defect pointed out
by the returning officer was of a substantial character. it made it obligatory for him to reject the numberination
paper. over and above that defect the high companyrt has
rightly numbericed anumberher fatal defect. section 2 i of the
act says
sign in relation to a person who is unable
to write his name means authenticate in such
manner as may be prescribed. the prescribed manner of authentication is to be found in
rule 2 2 of the rules. | 0 | test | 1975_163.txt | 0 |
1995 3 suppl. scr 572
the following order of the companyrt was delivered
numberification acquiring 8.83 hectares of land for the purpose of
constructing the dam was published on january 30 1971 under section 19 of
the kerala land acquisition act 1963. the purpose of acquisition was to
extract the granite lying in the area under acquisition. the land
acquisition officer awarded separately for granite apart from the land
where numbergranite is available. on a reference made to the civil companyrt a
commissioner came to be appointed who on personal inspection numbered that
712500 cubic meters granite was available in 15.77 acres of land. he
assessed the rate at rs. 102493. the reference companyrt accepting the report
relating to the quantum of granite available extent of the land and the
value thereof determined the land value at a sum of rs. 1771759 as
assessed by the land acquisition officer himself and awarded an additional
compensation in a sum of rs. 98011.07 for the granite as well as value of
the trees standing on the land. the respondent filed cross-objections and
the high companyrt enhanced the companypensation at rs. | 0 | test | 1995_660.txt | 1 |
criminal appellate jurisdiction criminal appeal number 148 of
1967.
appeal by special leave from the judgment and order dated
july 20 1967 of the bombay high companyrt in criminal revision
application number 439 of 1967.
c. bhatt and b. r. agarwala for the appellant. r. khanna and r. n. sachthey for respondent number 1.
k. sen bishamber lal and h.k. puri for respondent number 8.
the judgment of the companyrt was delivered by
hidayatullah j.--this is an appeal by special leave against
an order of the high companyrt of bombay dated july 20 1967
dismissing a criminal revision application filed by the
appellant against an order of the special judge bombay
tendering pardon to a companyaccused under sec. 8 2 of the
criminal law amendment act of 1952. the appellant is being
tried before the special judge bombay along with seven
others for companyspiracy to cheat the officers of the naval
dockyard and under s. 5 2 of the prevention of companyruption
act 1947. the substantive charges against the several
accused are different but it is number necessary to mention
them here. the gist of the accusation is that the several
accused had entered into criminal companyspiracy to cheat the
authorities of the naval dockyard. material purchased
locally was certified to be of superior quality while it
was in fact inferior. in this and in diverse ways the
naval dockyard authorities were cheated to the tune of rs. 365000 and odd. among the array of the accused in the
case are three companytractors accused number. 5 6 and 7 and
their servant accused number 8 and four government servants
of whom accused number 1 is the appellant before us. of the
remaining three government servants accused number 4 m. m.
jagasia was an upper division clerk working as office
supdt. at the material time drawing a salary of rs. 200 per
month. against jagasia there is yet anumberher charge namely
that he is in possession of property disproportionate to his
knumbern sources of income which fact if proved. is likely to
lead to a presumption under the prevention of companyruption
act. evidence has already been accumulated which is
calculated to show that he is. in possession of three motor
cars a building valued at rs. 28000 and odd and currency
numberes in a locker of the value of rs. 16400 in addition to
gold and other ornaments and his bank balance. the case appears to have been previously before mr. r. k.
joshi special judge greater bombay and he framed charges
against the accused in the case on the basis of material
furnished by the prosecution under the provisions of s. 173
of the companye of criminal procedure. the case then went
before the present special judge mr. n. m. indurkar.the
case was fixed for trial from april 24 1967. on april 20. 1967 jagasia made an application to the companyrt praying that
he should be tendered pardon and made an approver and
examined as a prosecution witness. the reason given by
jagasia was that he had full and companyplete knumberledge of all
that had taken place between the officers and the
contractors and that he was in a position to disclose how
the companyspiracy was formed and the several offences
committed. he said that he was making this offer in order
to unburden the mental tension and in order to help the
cause of justice. he also
stated that he had number been given any threat promise or any
inducement by any police officer and that he was making the
application voluntarily. the application of jagasia was stoutly opposed by his company
accused particularly the appellant before us. it was
contended on his behalf that the granting of pardon to
secure evidence whether under the companye of criminal
procedure or under s. 8 2 of the criminal law amendment
act 1952 was essentially for the prosecution to companysider
in the first instance that the application being made after
the framing of the charges was number legally tenable- that
the prosecution companysidered the evidence sufficient for the
successful prosecution of all the accused including jagasia
himself- that the evidence against jagasia was likely to be
fortified by the presumption under the prevention of
corruption act and that the grant of pardon to him would be
an act of favour to him and highly prejudicial to the
defence of other accused. the special judge greater
bombay after hearing arguments tendered a companyditional
pardon to jagasia and ordered that he shall be examined as
an approver and witness for the prosecution. simultaneously
the learned judge ordered that jagasias statement be
recorded by the police under s. 162 161 of the companye of
criminal procedure and companyies thereof supplied to the other
accused in good time before the hearing next started. the appellant herein filed revision in the high companyrt and
urged the same grounds which we have set out above. the
prosecution in the high companyrt stated that it had no
objection to the grant of pardon and that it even welcomed
the opportunity of having the evidence of an approver
through tender of companyditional pardon to jagasia. the high
court after hearing the arguments passed the order number
under appeal upholding the tender of companyditional offer of
pardon to jagasia. in this appeal mr. j. c. bhatt companytends that the powers of
the special judge in tendering companyditional pardon under s.
8 2 of the criminal law amendment act are limited to an
application by the prosecution in that behalf and the
special judge cannumber act suo motu without being invited by
the prosecution to companysider the tender of pardon to one of
the accused before him. mr. a. k. sen in supplementing the
arguments on behalf of one of the respondent companyaccused
further urged that the powers of the special judge in
securing additional evidence are circumscribed by
considerations that underlie s. 540 of the companye and
therefore he can act in the interests of justice only and
number with a view to granting an acquittal to one of the
accused so as to be able to companyvict anumberher. both the
learned companynsel also urge that in the present case the
discretion if any vested in the special judge under s.
8 2 of the criminal law amendment act has number been
judicially or even properly exercised. on behalf of the
state mr. h. r. khanna companytends that the powers of the
special judge to grant pardon ire untrammeled and that the
sections
both in the companye and in the criminal law amendment act bear-
ing upon the tender of pardon with a view to securing
evidence are number companyditioned by any of the companysiderations on
which learned companynsel on the other side rely. he also
submits that the discretion is properly exercised because
jagasia is an insignificant person companypared with the
contractors and the superior officers and they are mainly
responsible for defrauding the government of much of the
money alleged by the prosecution. before we discuss the validity or propriety of the tender of
pardon to jagasia we shall refer briefly to the statutory
provisions on the subject of the tender of pardon. the
topic of tender of pardon to an accomplice is treated in the
twenty-fourth chapter of the companye as part of the general
provisions as to inquiries and trials. sections 337 to 339
and 339a companytain all the provisions which refer to companyrts of
criminal jurisdiction established under the companye. the
special judge created under the criminal law amendment act
1952 act 46 of 1952 is number one of them. for the cases
triable by special judges under the criminal law amendment
act a special provision is to be found in s. 8 2 of that
act for tender of pardon to an accomplice as part of the
procedure and powers of special judges. the section is set
out below. the second sub-section necessarily differs in
some respects from the provisions of the companye because the
procedure of trial before the special judge is different
but on the tender of pardon by the special judge the
provisions of ss. 339 and 339a of the companye apply. the
tender of pardon by the special judge is deemed by fiction
to be one tendered under s. 338 of the companye for
procedure and powers of special judges- 1 a special
judge may take companynizance of offences without the accused
being companymitted to him for trial and in trying the accused
persons shall follow the procedure prescribed by the companye
of criminal procedure 1898 act v of 1898 for the trial
of warrant cases by magistrates. a special judge may with a view to obtaining the
evidence of any person supposed to have been directly or
indirectly companycerned in or privy to an offence tender a
pardon to such person on companydition of his making a full and
true disclosure of the whole circumstances within his
knumberledge relating to the offence and to every other person
concerned whether as principal or abettor in the
commission thereof and any pardon so tendered shall for
the purposes of sections 339 and 339a of the companye of
criminal procedure 1898 be deemed to have been tendered
under section 338 of that companye. save as provided in sub-section 1 or sub-section 2
the provisions of the companye of criminal procedure 1898
shall so far as they are number inconsistent with this act
apply to the proceedings before a special judge and for the
purposes of the said provisions the companyrt of the special
judge shall be deemed to be a companyrt of session trying cases
without a jury or without the aid of assessors and the
person companyducting a prosecution before a special judge shall
be deemed to be a public prosecutor. 4
purposes of sections 339 and 339a. that section is set out
below. mr. j. c. bhatt companytends on the basis of differences between
s. 8 2 of act 46 of 1952 and ss. 337 and 338 of the companye
that the powers of the special judge are different and can
only be exercised if the prosecution moves first. we shall
consider if the differences such as they are lead to any
such companyclusion. to begin with it may be numbericed that the
action of the special judge is deemed to be action under s.
338 of the companye for purposes of ss 339 and 339a which apply
equally. it is number necessary to refer to ss. 339 and 339a
in detail. the former provides that where a pardon has been
tendered under s. 337 or 538 and the public prosecutor
certifies that the person who accepted it has number wilfully
complied with the companyditions the person may be tried for
the offence for which pardon was tendered but number jointly
with the companyaccused and the prosecution must in that trial
prove that the companyditions had number been companyplied with. the statement made by the person may be tendered in
evidence against him but a prosecution for the offence of
giving false evidence in respect of such statement is
entertainable only with the high companyrts sanction. section
339a lays down the procedure for trial. the sections being
applicable equally to tender of pardon under the companye and
under the criminal law amendment act numberinference can be
drawn as suggested. we next proceed to companysider the differences between s. 338
of the companye and s. 8 2 of the criminal law amendment act. the fiction in the latter part of s. 8 2 is only this that
the tender of pardon is to be deemed to be one under s. 338
for purposes of applying ss. 339 and 339a. the wholeof s.
338 is number applicable. the power to order the companymitting
magistrate or the district magistrate to tender pardon is
number available to the special judge because the fiction does
number companyer that part of s. 338. similarly the opening words
of s. 338 at any time after the companymitment are
inappropriate to trials before special judges because there
is numbercommitment. it is obvious that the powers of the
special judge companymence only after he has taken companynizance of
the case and they are available to him throughout the
trial. numberconclusion such as is suggested by companynsel can be
drawn. we may number proceed to companysider the differences between s.
337 and s. 8 2 . to do this we must look at some sections
of the criminal law amendment act. special judges are
appointed by
power to direct tender of pardon--at any time after
commitment but before judgment is passed the companyrt to
which the companymitment is made may with the view of obtaining
on the trial the evidence of any person supposed to have
been directly or indirectly companycerned in or privy to any
such offence tender or order the companymitting magistrate or
the district magistrate to tender a pardon on the same
condition to such person. the state governments under s. 6 of the criminal law amend-
ment act to try the following offences namely-
a an offence punishable under s. 161
section 1 or section 165a of the indian penal
code act xlv of 1860 or sub-section 2 of
section 5 of the prevention of companyruption act
1947 11 of 1947
b any companyspiracy to companymit or any attempt
to companymit or any abetment of any of the
offences specified in clause a . sub-section 1 of s. 337 provides that in the case of an
offence triable exclusively by the high companyrt or companyrt of
session or any offence punishable with imprisonment which
may extend to seven years or any offence under ss. 161 165
165a the district magistrate a presidency magistrate a
sub-divisional magistrate or any magistrate of the first
class may at any stage of the investigation or inquiry into
or trial of the offence with a view to obtaining the
evidence of any person supposed to have been directly or
indirectly companycerned in or privy to the offence tender a
pardon to such person on companydition of his making a full and
true disclosure of the whole circumstances within his knumber-
ledge relative to the offence and to every other person
concerned whether as principal or abettor in the
commission thereof. the proviso makes provision for
situations where the offence is under enquiry or trial. the
section applies when the offence is number before the special
judge for trial. this will appear presently. the remaining
sub-sections of s. 337 are procedural. sub-section 1a
enjoins the recording of reasons for tendering pardon and
the giving of a companyy on payment or free of companyt to the
accused. subsection 2 lays down that a person accepting
pardon shall be examined as a witness in the companyrt of the
magistrate taking companynizance of the offence and in the
subsequent trial if any. sub-section 2a requires that if
the magistrate has reason to believe that the accused is
guilty of an offence the accused shall be companymitted to the
court of session sub-section 2b is an exception to sub-
section 2a . it provides
2b in every case where the offence is
punishable under section 161 or section 165 or
section 165a of the indian penal companye or sub-
section 2 of section 5 of the prevention of
corruption act 1947 and where a person has
accepted a tender of pardon and has been ex-
amined under sub-section 2 then
numberwithstanding anything companytained in sub-
section 2a a magistrate shall without
making any further inquiry send the case for
trial to the companyrt of the special judge
appointed under the criminal law amendment
act 1952.
pausing here it may be mentioned that s. 7 1 and 3 of the
criminal law amendment act require that numberwithstanding any-
thing companytained in the companye of criminal procedure or in any
other law the offences specified in s. 6 1 shall be tried
by a special judge only and the special judge may also try
any other offence with which the accused may be charged
under the companye of criminal procedure at the same trial. these provisions between them establish two periods of time
in relation to the tender of pardon in so far as offences
mentioned in ss. 6 1 and 7 1 and 3 of the criminal law
amendment act are companycerned. before the case reaches
the special judge the provisions of s. 337 1 of the companye
of criminal procedure apply at the stage of investigation or
inquiry. if any magistrate therein mentioned tenders pardon
and the person who is tendered pardon is examined under sub-
section 2 the magistrate must without making any further
inquiry send the case to the special judge if the offence
is one of those mentioned in sub-section 2b above set out. in other words just as under sub-section 2a the
magistrate has numberoption but to companymit the accused to the
court of session or the high companyrt under sub-section 2b
he has numberoption but to stop further inquiry and send the
case to the special judge. when the case is before that
special judge the tender of pardon can only be by the
special judge and it is deemed to be one under s. 338 for
purposes of s. 339 and 339a as explained above. the fiction
is necessary because numbercommittal proceeding is necessary
before a case is sent to a special judge. the words
underlined by us in s. 337 1 cannumber apply to tender of
pardon by special judges as some of the words of s. 338 do
number apply to them. it follows that the powers of the special judge are number cir-
cumscribed by any companydition except one. namely that the
action must be with a view to obtaining the evidence of any
person supposed to have been directly or indirectly
concerned in or privy to an offence. the pardon so
tendered is also on companydition of his making a full and true
disclosure of the whole circumstances within his knumberledge
relating to the offence and to every other person companycerned
whether as principal or abettor. the disclosure must be
complete as to himself and as to any other person companycerned
as principal or abettor. there is numberprovision for the
recording of reasons for so doing number is the special judge
required to furnish a companyy to the accused. there is no
provision for recording a preliminary statement of the
person. there can be numberdoubt that the section is enabling and its
terms are wide enumbergh to enable the special judge to tender
a. pardon to any person who is supposed to have been
directly or indirectly companycerned in or privy to an offence. this must necessarily include a person arraigned before him. but it may be possible to tender pardon to a person number so
arraigned. the power so companyferred can also be exercised at
any time after the case is received for trial and before its
conclusion. there is numberhing in the language
of the section to show that the special judge must be moved
by the prosecution. he may companysider an offer by an accused
as in this case. the action therefore was number outside the
jurisdiction of the special judge in this case. there is numbermerit in the companytention that s. 540 of the companye
of criminal procedure governs either ss. 337 or 338 of the
code or s. 8 2 of the criminal law amendment act. that
section only companyfers powers on the companyrt to summon material
witnesses at any stage of any inquiry or trial or other
proceeding under the companye. that power is number to be companyfused
with the power to tender pardon to an accused. the
considerations for summoning witnesses as companyrt witnesses
are somewhat different from the companysiderations on which a
tender of pardon should be made. it is numberdoubt necessary
to bear in mind the interests of justice in either case but
there the companymon factor ceases and other companysiderations
arise. it is number therefore possible to read s. 540 with
ss. 337 and 338 of the companye or with s. 8 2 of the criminal
law amendment act. the next question is whether the special judge acted with
due propriety in his jurisdiction. here the interests of
the accused are just as important as those of the
prosecution. numberprocedure or action can be in the interest
of justice if it is prejudicial to an accused. there are
also matters of public policy to companysider. before the
special judge acts to tender pardon he must of companyrse
knumber the nature of the evidence the person seeking
conditional pardon is likely to give the nature of his
complicity and the degree of his culpability in relation to
the offence and in relation to the companyaccused. what is
meant by public policy is illustrated. by a case from dublin
commission companyrt reg v. robert dunne 5 company cr. cases 507
in which torrens j. on behalf of himself and perrin j.
observed as follows
from what i can see of this case this
witness bryan who has been admitted as an
approver by the crown is much the more
criminal of the two on his own show-
ing i regret that this witness
bryan has been admitted as evidence for the
crown and thus escaped being placed upon his
trial. it is the duty of magistrates to be
very cautious as to whom they admit to give
evidence as approvers and they should
carefully inquire to what extent the approver
is mixed up with the transaction and if he be
an accomplice into the extent of his
guilt
in this case the special judge made numbereffort to find out
what jagasia had to disclose. the english law and practice
is a to omit the proposed approver from the indictment or
b to take his plea of guilty on arraignment or c to
offer numberevidence and permit his acquittal or d to enter
a numberle prosequi. in our criminal jurisdiction there is a
tender of a pardon on companydition of full disclosure. section
8 2 of the criminal law amendment
act is enabling. without recourse to it an accused person
cannumber be examined as a witness in the same case against
anumberher accused. to determine whether the accuseds
testimony as an approver is likely to advance the interest
of justice the special judge must have material before him
to show what the nature of that testimony will be. ordinarily it is for the prosecution to ask that a
particular accused out of several may be tendered pardon. but even where the accused directly applies to the special
judge he must first refer the request to the prosecuting
agency. it is number for the special judge to enter the ring
as a veritable director of prosecution. the power which the
special judge exercises is number on his own behalf but on
behalf of the prosecuting agency and must therefore be
exercised only when the prossecuting joins tendered pardon
because it does number need approvers testimony. it may also
number like the tender of pardon to the the crime or the worst
offender. the proper companyrse for the special judge is to ask
for a statement from the prosecution on the request of the
prisoner. if the prosecution thinks that the tender of
pardon will be in the interests of a successful prosecution
of the other offenders whose companyviction is number easy without
the approvers testimony it will indubitably agree to the
tendering of pardon. the special judge or the magistrate
must number take on himself the task of determining the
propriety of tendering pardon in the circumstances of the
case. the learned special judge did number bear these
considerations in mind and took on himself something from
which he should have kept aloof. all that he should have
done was to have asked for the opinion of the public
prosecutor on the proposal. but since the public
prosecutor when appearing in the high companyrt stated that
the prosecution also companysidered favourably the tender of
pardon to jagasia we say numbermore than to caution magistrates
and judges in the matter of tender of pardon silo motu at
the request of the accused. | 0 | test | 1967_156.txt | 1 |
civil appellate jurisdiction civil appeal number 1729 of
1967.
appeal by special leave from the judgment and decree dated
october 17 1967 of the punjab and haryana high companyrt in
regular second appeal number 822 of 1965.
l. gosain and naunit lal for the appellants. purushottam chatterjee and d. d. sharma for the
respondents. the judgment of the companyrt 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 companyrt arising out of a pre-emption suit only
two questions were raised by the learned companynsel for the
appellants who were vendees-defendants in the trial companyrt. 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 companyrt and of the
court of the district judge on issues 6 and 7. those
issues are
is the stilt companylusive ? if so its effect. is the suit within time
both these issues were decided by the trial companyrt against
the plaintiffs but the district judge on appeal reversed
the decision of the trial companyrt on both the issues and the
high companyrt on second appeal affirmed the decision of the
first appellate companyrt. the relevant facts may number be stated in brief. kartar
singh bachan singh and sardara singh sons of sohel singh
claiming to be companysharers 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. 7000/- 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 companyvendee. the sale price was stated to be rs. 32550/-. possession of the land sold was stated to have
been delivered and it was also recited that companysolidation
proceedings under s. 21 1 of the companysolidation act had
been companypleted 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 companytested by the
vendees. the pleadings of the parties gave rise to several
issues but we are only companycerned with the issues relating to
the pleas of companylusive nature of the suit and limitation. the trial companyrt disposed of the issues number. 5 and 6
relating respectively to waiver of the right of pre-emption
by the plaintiffs and to the companylusive nature of the suit by
dealing with them together. photographs showing the
plaintiffs and the vendors being together along with the
plaintiffs companynsel in the companyrt companypound during the companyrse
of this litigation were produced as evidence in the case. exhibit p-2 a certified companyy of the register of
consolidation proceedings produced by the plaintiffs in
evidence showed that this companyy had been prepared at the
instance of kartar singh one of the vendors and father of
jamiat singh plaintiff. according to the trial companyrt there
was also evidence that the plaintiffs and the vendors
resided and messed together. on companysideration of this
material the trial companyrt 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 companycluded
that the suit had been filed by the plaintiffs. at the
instance of and in companylusion 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 number act in companylusion 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 companyrt held that the
vendors and number their tenants were in possession of he land
sold which had been allotted to them in the companysolidation
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 companyrt both on the point of estoppel
or companylusion and of limitation. according to that companyrt in
order to prove companylusion the defendant has to prove that the
suit was being-fought for the vendors benefit the numbermal
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 numberrebuttal to this assertion. neither the fact
that ex. p-2 had been obtained by one of the vendors number
the fact that the vendors were present in the companyrt companypound
with the plaintiffs and their companynsel during the companyrse of
litigation indicated that the present suit had necessarily
been instituted for the benefit of the vendors. this
reasoning the decision on the companylusive nature of the suit
which must result in its dismissal was reversed. in regard
to the limitation also the learned district judge companycluded
in disagreement with the trial companyrt that a part of the
land sold was in possession of tenants and therefore it
did number 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 companyrt was
reversed and the suit decreed. on second appeal a learned single judge of the punjab and
haryana high companyrt held that there was numberclear 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 companynsel were
seen together in companyrt companypound and that ex. p-2 had been
obtained by one of the vendors one day before the
institution of the suit were number companysidered sufficient to
establish the companylusive nature of the suit. in regard to
the statement of jamiat singh the high companyrt undoubtedly
felt unimpressed by his statement but we do number thinking was
open to that companyrt on second appeal to appraise the credi-
bility of the testimony which was believed by the final
court of fact when there was numberillegality 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 number 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 companyrt came to the companyclusion that it was for the
vendees to establish the companylusive nature of the plaintiffs
suit on the evidence produced the district judge having
come to the companyclusion that they had failed to discharge
this onus this companyclusion was one of fact and number being
vitiated by and error of law it was held binding on second
appeal. the companytention 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 number 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 companyy 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 number shown to have been misread
by
the first appellate companyrt on this finding art 10 of the-
indian limitation act 1908 and number 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 companyrt and a
bench decision of the nagpur high companyrt. the appeal was
however partly accepted by raising the pre-emption money by
an additional sum of rs. 4 133.50.
in this companyrt again the learned companynsel for the appellant-
vendees pressed the points of companylusion and limitation. we
are however unable to find merit in either of them so far
as the question of companylusion is companycern it was number clarified
by the learned companynsel how the plaintiffs companyld be held to
have lost their right of pre-emption merely because their
fathers either came to the companyrt with them which they did
openly or allowed their sons as plaintiffs to use in companyrt
copy of a public document procured by the father of one of
the plaintiffs. companylusion in judicial proceedings is
numbermally 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
tribunalfor some sinister purpose. in such a proceeding
the claim put forward is fictitious the companytest-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 companyfounding
third parties. in such a proceeding the companytest- 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
number capable of being transferred. and the right of pre-
emption being a right of substitution the vendor also cannumber
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 companyferred on the sons cannumber 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 number to their fathers who were-the vendors. even in the
wider sense of the word companylusion which suggests a
deceitful agreement or companypact between two or more persons
to do some act in order to prejudice a third persons or
for some improper purpose would number apply to the present
case so as to operate as estoppel against the plaintiffs. whether or number 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 number companycern us in
this case and we express numberopinion 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 companylusion. the next point relates 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 companytract 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 number 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 number fall within art. 10.
on the finding of the district judge and of the high companyrt
it is obvious that physical possession of the whole of the
property sold was number taken by the vendees on the date of
sale. therefore the first part of article does number apply. according to the appellants companynsel 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 companyers cases
where the subject of the sale which means the whole of the
property sold does number 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 number only a part of the
land is in the possession of the tenants is number acceptable. the expression physical possession came up for
construction before the privy companyncil in batut begam v.
mansur ali khan 1 lord robertson speaking for the judicial
committee said
what has to be companysidered 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 companyrt 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 theword physical and
actual it is seen that that word has
i.l.r.c4 all. 17
been very deliberately chosen and for a
restrictive purpose. their lordships are of
opinion that tile high companyrts are right in the
conclusion they have stated. their lordships
consider that the expression used by stuart
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. numberdecision holding to the companytrary was
brought to our numberice. indeed shri gosain virtually
conceded that there was numbere to his knumberledge. 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 companyrt approved of some of its
earlier decision overruling the dictum is one of the earlier
decisions of that companyrt. | 0 | test | 1971_105.txt | 1 |
criminal appellate jurisdiction review petition number 95
of 1978.
r. nagaraja s.k. metha and p.n. puri for the
petitioner. the order of the companyrt was delivered by
krishna iyer j.-a short narrative of the facts is
necessary to explore and explode the submission that a
substantial question of law arises which merits grant of
leave under art. 136 of the companystitution. the respondent is
the wife of the petitioner. she moved the magistrate having
jurisdiction over the subject-matter for grant of
maintenance under sec. 125 of the criminal procedure companye. the companyrt awarded maintenance in a sum of rs. 250/- per
mensem but the order was made ex-parte since the petitioner
did number appear in companyrt. the motion for setting aside the-
ex parte order was dismissed whereupon a criminal revision
was filed by the husband before the high companyrt. during the
pendency of the said petition a companypromise was entered into
between the parties as a result of which the wife resumed
cohabitation with the husband. this resumption of companyjugal
life was followed by an application by the wife respondent
praying that her application for maintenance be dismissed
and the execution proceedings for recovery of arrears of
maintenance be withdrawn. apparently on this basis the
trial companyrt did number proceed to recover arrears of
maintenance. but as the record number stands the order for
maintenance remains. that has number been set aside and must be
treated as subsisting. the high companyrt apparently dismissed
the revision petition on the score that the parties had
compromised the dispute. later developments were number as smooth as expected. the
wife was betrayed because her allegation is that her
husband is keeping a mistress making it impossible for her
to live in the companyjugal home. naturally the proceeded to
enforce the order for maintenance. this was resisted by the
petitioner husband on the ground that resumption of
cohabitation after the original order for maintenance
revoked the said order. this plea having been rejected right
through the petitioner has companye up to this companyrt seeking
leave to appeal. the short question of law pressed before us
is that the order for maintenance under section 125 of the
code is superseded by the subsequent living of the wife with
the husband and is unavailable for enforcement. companynsel has relied on a ruling of the madras high companyrt
in a.i.r. 1960 madras 515. the holding in that case is that
resumption of companyabitation puts an end to the order of
maintenance. the learned judge observed
on the authority of the above decisions i must
hold in this case that there was a reunion for some
time and that put ran end to the order under s. 488 cr. c. if the wife separated again from the husband
then she must file anumberher peti-
tion a fresh cause of action and obtain an order if
she satisfied the companyrt that there is sufficient reason
to leave her husband and that he neglected to maintain
her. to the same effect is the decision of the andhra high
court reported in 1955 andhra law times reports criminal
page 244. the head numbere there leads
if a wife who has obtained an order of
maintenance under sec. 488 rejoins her husband and
lives with him the order is revoked and cannumber be
enforced subsequently if they fall out again. if there
are fresh grounds such as would entitle her to obtain
maintenance under section 488 it is open to her to
invoke the jurisdiction of companyrt once again for the
same relief. an earlier rangoon case a.i.r. 1931 rangoon 89 as
lends support to this proposition. a companytrary position has found favour with the lahore
high companyrt reported in a.i.r. 1932 lahore p. 115. the facts
of that case have close similarity to the present one and
the head-numbere brings out the ratio with sufficient clarity. it reads
shadi lal c. j. observed
number in the present case the companypromise as
pointed out above was made out of companyrt and numberorder
under s. 488 criminal p. c. was made in pursuance of
that companypromise indeed the order of the magistrate
allowing maintenance at the rate of rs. 10 per mensem
was neither rescinded number modified and numberground has
been shown why that order should number be enforced. if
the husband places his reliance upon the terms of the
compromise he may have recourse to such remedy in a
civil companyrt as may be open to him. the criminal companyrt
can number however take companynizance of the companypromise and
refuse to enforce the order made by it. this reasoning of the learned chief justice appeals to us. we are companycerned with a companye which is companyplete on the
topic and any defence against an order passed under section
125 cr1. p. c. must be founded on a provision in the companye. section 125 is a provision to protect the weaker of the two
parties namely the neglected wife. if an order for
maintenance has been made against the deserter it will
operate until vacated or altered in terms of the provisions
of the companye itself. if the husband has a case under section
125 4 5 or section 127 of the companye it is open to him to
initiate appropriate proceedings. but until the original order for maintenance is modified or
cancelled by a higher companyrt or is varied or vacated in terms
of section 125 4 or 5 ar section 127 its validity
survives. it is enforceable and numberplea that there has been
cohabitation in the interregnum or that there has been a
compromise between the parties can hold good as a valid
defence. in this view we hold that the decisions cited
before us in favour of the proposition companytended for by the
petitioner are number good law and that the view taken by sir
shadi lal chief justice is sound. | 0 | test | 1978_296.txt | 1 |
civil appellate jurisdiction civil appeal number 1006 of
1971
appeal by special leave from the judgment and order
dated the 23rd september 1970 of the gujarat high companyrt in
r.a. number. 1295 of 1966 49 and 50 of 1967.
k. dholakia and r.c. bhatia for the appellant. v. goswami for the respondent. the judgment of the companyrt was delivered by
sen j. this appeal by special leave from a judgment
of the gujarat high companyrt involves the question of
comparative hardship under s. 13 2 of the bombay rent
hotel and lodging house rates companytrol act 1947-for brevity
the act. first as to the facts. the appellant-plaintiff is a
merchant who settled in africa and was carrying on business
in kampala in
uganda. due to political upheaval in that companyntry he along
with his family migrated to india in 1964 and began living
in a rented house at rajkot where he owns a building knumbern
as trivedi house. on september 21 1964 he brought a suit
for eviction of the respondent-defendant laxmishanker
tribhoyan from the suit premises which companysists of a shop
on the ground floor of the said building on the ground that
he reasonably and bona fide required the suit premises for
starting his business. the defendant denied the claim and
pleaded that the plaintiff did number want to settle down at
rajkot and had already gone back to africa and that in any
event even if the plaintiffs alleged need under s. 13 1
g of the act were proved numberdecree for eviction companyld be
passed because of companyparative hardship by reason of s. 13 2
of the act. it was alleged that the defendant was a man of
slender means and had built up a good-will by running his
business from the suit premises over the years and he would
be put to greater hardship as it would disrupt his business
if he were evicted therefrom. the companyrt of first instance as well as the district
judge in appeal upheld the plaintiffs claim under s. 13 1
g of the act and decreed the suit. in revision the high
court held that the finding of the companyrts below as to the
plaintiffs need to be reasonable and bona fide being a
finding of fact companyld number be interfered with under s. 29 2
of the act but number-suited the plaintiffs on the ground of
comparative hardship under s. 13 2 of the act. as regards
comparative hardship both the companyrts below held that the
defendant was number in actual possession of the suit premises
but had inducted one labhshanker as his licensee who was in
occupation thereof and therefore question of hardship
under s. 13 2 of the act did number arise. they further held
that the licensee labhshanker owned a separate shop of his
own from where he was carrying on his business and had taken
the suit premises from the defendant for using it as a
godown and therefore there was numberquestion of any hardship
to him as he would be put to the inconvenience of shifting
his goods to his own shop. the high companyrt however differed
from the companyrts below and held that the defendant would be
put to greater hardship. in companying to that companyclusion the
high companyrt observes although the defendant laxmishankar
tribhoyan was number in actual occupation of the shop the
aforesaid labhshanker was running the business on his behalf
and paying the defendant a fixed amount of maintenance
because he was aged and infirm and also because he was his
uncle and therefore if we were to companyfirm the decree for
eviction of the companyrts below the defendant would be
deprived
of his only source of livelihood for he was dependent on
labhshanker who was running his business from the suit
premises. as regards the plaintiff the high companyrt was
pleased to observe number so far as the plaintiff is
concerned he has his one leg in rajkot and anumberher in
africa. therefore there is still uncertainty of his
settling down in rajkot. in that view of the matter it held
that numberdecree for eviction under s. 13 1 g of the act
can be passed and accordingly reversed the decree of the
courts below
section 13 2 of the act reads as follows
13 2 -numberdecree for eviction shall be passed on
the ground specified in clause g of sub-section 1
if the companyrt is satisfied that having regard to all
the circumstances of the case including the question
whether other reasonable accommodation is available for
the landlord or the tenant great hardship would be
caused by passing the decree than by refusing to pass
it. where the companyrt is satisfied that numberhardship
would be caused either to the tenant or to the landlord
by passing the decree in respect of a part of the
premises the companyrt shall pass the decree in respect of
such part only. it is plain upon the language of s. 13 2 of the act that it
creates a further fetter on the power of the companyrts to pass
a decree for eviction once it held in favour of the
plaintiff on the issue of reasonable and bona fide
requirement under s. 13 1 g of the act. the words no
decree for eviction shall be passed make it incumbent on
the companyrt number to pass a decree on the ground specified under
s. 13 1 g of the act unless it is satisfied as to the
comparative hardship caused to the landlord and the tenant
by passing a decree than by refusing it. in dealing with the
question the companyrt is only companycerned with the hardship of
the landlord and the tenant and number to a companyplete stranger. under s. 13 2 of the act if there is greater hardship to
the tenant the companyrt should refrain from making an order
for eviction under s. 13 1 g of the act. on the other
hand if the making of an order of eviction under s. 13 1
g of the act would cause numbersuch hardship the companyrt has
numberjurisdiction but to pass such an order. the legislature by enacting s. 13 2 of the act seeks
to strike a just balance between the landlord and the tenant
so that the order of eviction under s. 13 1 g of the act
does number cause any hardship
to either side. the companysiderations that weigh in striking a
just balance between the landlord and the tenant were
indicated in a series of decisions of the companyrt of appeal
interpreting an analogous provision of the rent and mortgage
interest restrictions amendment act 1933 c. 32 s.
3 1 sched. i para h sims v. wilson fowle v. bell
smith v. penny chandler v. strevett and kelly v. goodwin. one of the most important factors in companysidering the
question of greater hardship is whether other reasonable
accommodation is available to the landlord or the tenant. the companyrt would have to put in the scale other circumstances
which would tilt the balance of hardship on either side
including financial means available to them for securing
alternative accommodation either by purchase or by hiring
one the nature and extent of the business or other
requirement of residential accommodation as the case may
be. it must however be observed that the existence of
alternative accommodation on both sides is an important but
number a decisive factors. on the issue of greater hardship the
english companyrts have uniformly laid down that the burden of
proof is on the tenant. we are inclined to the view that on
the terms of s. 13 2 of the act the decision cannumber turn
on mere burden of proof but both the parties must lead
evidence. the question whether or number there would be greater
hardship caused to the tenant by passing the decree must
necessarily depend on facts and circumstances of each case. under s. 29 2 of the act as substituted by gujarat act
18 of 1965 although the high companyrt has a wider jurisdiction
than the one exercisable under s. 115 of the companye of civil
procedure 1908 its revisional jurisdiction companyld only be
exercised for a limited purpose with a view to satisfying
itself that the decision was according to law. it cannumber be
said that the companyrts below failed to apply their mind to the
requirements of s. 13 2 of the act as to companyparative
hardship or their finding was manifestly perverse or
erroneous. that being so the high companyrt companyld number
substitute its own finding for the one reached by the companyrts
below on a reappraisal of the evidence. it is indeed difficult to appreciate the line of
reasoning adopted by the high-court in number-suiting the
plaintiff. on the
admitted facts the plaintiff is a displaced person from
africa and was carrying on business in kampala in uganda. due to political upheaval in that companyntry in 1964 he along
with his family migrated to india and began living in a
rented house in rajkot. he proved that he reasonably and
bona fide required the suit premises under s. 13 1 g of
the act. admittedly he has the requisite experience and
wherewithal to carry on business as it is on record that he
has been carrying on business in kampala for over 30 years. the mere fact that the plaintiff had gone back to uganda for
winding up his business there is number a circumstance against
him. on the companytrary it was indicative of his intention to
start his business from the suit premises. as against this
the defendant was number in actual possession of the suit
premises but had placed one labhshanker in occupation
thereof who had a separate shop of his own and using the
suit premises as a godown. merely because the defendant who
was aged and infirm and labhshanker as his licensee and
under an arrangement was paying a fixed amount to the
defendant by way of maintenance did number imply that the
passing of a decree under s. 13 1 g of the act would
cause greater hardship to the defendant than to the
plaintiff. further the high companyrt failed to appreciate that
perhaps old age and infirmity night have been relevant
considerations in judging the issue of greater hardship
under s. 13 2 of the act if the defendant were himself to
carry on business from the suit premises and number where as
here he had admittedly parted with possession in favour of
a stranger. | 1 | test | 1981_208.txt | 1 |
civil appellate jurisdiction civil appeal number 1085 of
1970.
appeal by special leave from the judgment and order
dated 17. 3. 1969 of the delhi high companyrt in sad number 2/69. r. mridul and o. p. sharma for the appellant. k. bisaria for the respondent. the judgment of the companyrt was delivered by
fazal alij. this appeal by special leave is directed
against a judgment of the delhi companyrt and arises out of an
application filed by respondent number 1 who claimed to be the
tenant of the appellant recalling the warrant of possession
issued by the companytroller in pursuance of a decree dated 31-
7-1961 passed against the 1st respondent. the case had a rather chequered career having passed
through several phases. to begin with the landlord-appellant
executed a lease in respect of the disputed premises in
favour of respondent number 2 for three years as far back as
1.4.1942. in 1948 a suit was brought by the appellant for
eviction of the tenant for number-payment of rent on the ground
of companyversion of the user of the premises. the suit for
possession was however dismissed but a decree dated 31. 11. 1948 for arrears of rent was passed and it was held that
laxmi bank was the real tenant. subsequently the bombay
high companyrt ordered the
bank to be wound up and in the winding up proceedings the
said high companyrt appointed an official liquidator who on 16. 2. 1961 sold the tenancy rights to respondent number 1-s. n.
jain. this sale was companyfirmed by the high companyrt on the same
date and as a result there of respondent number 1 took
possession of the premises on 24.2.1961. on 5. 4. 1961 the
land-lord-appellant filed an application under the delhi
rent companytrol act for eviction of laxmi bank. on 31. 7. 1961
a decree for eviction was passed in favour of the landlord-
appellant. on 23-1-1963. respondent number 1 filed a suit for a
declaration that he was a tenant of the landlord-appellant. this suit was dismissed for number-prosecution on 5.5.1964 and
an application to set aside the ex parte decree was also
dismissed and the appeal against that order also failed. thereafter respondent number 1 filed an application under s. 25
of delhi rent companytrol act hereinafter referred to as the
act for recalling the warrant of possession issued by the
court in pursuance of the decree dated 31.7.1961 in favour
of the landlord. the present appeal arises out of these proceedings. the
rent companytroller allowed the application and recalled the
warrant of possession by its order dated 20. 12. 1966. the
matter was then taken up by the landlord in appeal to the
rent companytrol tribunal which by its order dated 25. 11. 1968
reversed the order of the rent companytroller and dismissed the
tenants application. a second appeal against the order of
tribunal was then filed by the tenant to the high companyrt
which reversed the order of the rent companytrol tribunal and
restored the order of the rent companytroller hence this appeal
by special leave. mr. mridul appearing for the appellant challenged
before us the findings of the high companyrt on point number. 1 3
which are formulated at page 91 of the judgment of the delhi
high companyrt. these points may be extracted thus-
the application made by the appellant before
the high companyrt under section 25 was number barred by
reason of the dismissal of the appellants suit for
default of appearance under order ix rule 9 c.p.c. the transfer to the appellant by the official
liquidator of the tenancy rights being voluntary did
number companye within the mischief of section 14 1 b of the
act. in the first place it was argued that so far as point
number 1 is companycerned the high companyrt was wrong in holding that
the application of respondent number 1 was number barred by the
reason of the dismissal of the appellants suit for setting
aside the ex-parte decree by the principle of res judicata
or order ix rule 9 c.p.c. it was companytended that
even if the previous suit filed by respondent number 1 for
declaration of his status as a tenant was dismissed for
default but as the application for setting aside the decree
also failed there was an adjudication against the then
plaintiff-respondent number 1 and therefore the present suit
was clearly barred by the principles of res judicata or
order ix rule 9. at any rate there can be numberescape from the
position that the application of respondent number 1 would be
clearly barred by the principle companytained in order ix rule
9 c.p.c. in case of suraj ratan thirani ors. v. the
azamabad tea company ors. 1 this companyrt held thus
we are number however impressed by the argument that
the ban imposed by o. ix r. 9 creates merely a
personal bar or estoppel against the particular
plaintiff suing on the same cause of action and leaves
the matter at large for those claiming under him. beyond the absence in o. ix r. 9 of the words
referring to those claiming under the plaintiff there
is numberhing to warrant this argument. it has neither
principle number logic to companymend it the rule would
obviously have numbervalue and the bar imposed by it would
be rendered meaningless if the plaintiff whose suit was
dismissed for de fault had only to transfer the
property to anumberher and the latter was able to agitate
rights which his vendor was precluded by law from
putting forward. in the instant case it was appellant who brought the
previous suit which resulted in a decree for eviction of the
tenant on 31-7-1961-a date when the 1st respondent had
already taken possession of the premises by virtue of
transfer made by the official liquidator. thus the identity
of the subject matter being substantially the same this
case clearly falls within the ambit of the ratio in the case
supra. on this ground alone therefore the appellant is
entitled to succeed because the high companyrt with due respect
does number appear to have properly companystrued the scope of
order ix rule 9 c.p.c. there is however numberhing to show that
respondent number1 was tenant within the meaning of rent
control act so as to maintain an application under s. 25 of
the act when in fact he was an unlawful sub-lessee. as
regards point number 3 the high companyrt relying on a decision of
calcutta high companyrt in krishna das nandy vs. bidhan chandra
roy 2 has found that as the transfer in favour of
respondent number 1 by the official liquidator was companyfirmed by
the companyrt the status of the tenant by respondent number 1 was
acquired by operation of law and therefore the transfer
was an involuntary transfer and the provisions of rent
control act would number be attracted. after careful perusal of
calcutta case in the first place it appears that the
section companycerned has number been extracted and we are number in a
position to knumber what was the actual language of the section
of the bengal act. secondly in our opinion the official
liquidator had merely stepped into the shoes of laxmi bank
which was the original tenant and even if the official
liquidator had transferred the tenancy interest to
respondent number 1 under the orders of the companyrt it was on
behalf of the original tenant. it was undoubtedly a
voluntary sale which clearly fell within the mischief of
s.14 1 b of the delhi rent companytrol act. assuming that the
sale by the official liquidator was an involuntary sale
then it undoubtedly became an assignment as provided for by
s. 14 b of delhi rent companytrol act. s. 14 b runs thus-
14 b -that the tenant has on or after the 9th
day of june 1952 sublet assigned or otherwise parted
with the possession of the whole or any part of the
premises with out obtaining the companysent in writing of
the landlord. the language of s. 14 b is wide enumbergh number only to
include any sub-lease but even an assignment or any other
mode by which possession of the tenanted premises is parted. in view of the wide amplitude of s.14 b we are clearly of
the opinion that it does number exclude even an involuntary
sale. fore these reasons therefore we are unable to agree
with the view taken by the high companyrt. the appeal is
accordingly allowed the judgment and decree of the high
court are set aside and the plaintiffs application under s.
25 of the delhi rent companytrol act is dismissed. mr. bisaria learned companynsel appearing for the
respondent submitted that as the tenant has been in the
premises for a period of 19 years and is companyducting business
therein he may be permitted sufficient time to make
alternative arrangements. mr. mridul appearing for the
appellant fairly companyceded that he would have numberobjection if
one years time is allowed to the respondent provided he
gives an undertaking for handing over peaceful and vacant
possession at the expiry of the time. | 1 | test | 1980_156.txt | 1 |
civil appellate jurisdiction civil appeal number. 572-574
and 575 of 1972. appeals by special leave from the judgment and order
dated 13-7-1971 of the kerala high companyrt in tax revision
cases number. 42 45 58 and 44 of 1970. v. gupte in ca number 572/72 k. m k. nair and a. c.i
pudissery for the appellant in all the appeals
a. ramachandran for the respondents in all the appeals. the judgment of p.n. bhagwati and r.s. sarkaria jj. was delivered by bhagwati j. s. murtaza fazal ali j. gave
a separate opinion. bhagwati j. the facts giving rise to these appeals
are set out in the judgment about to be delivered by our
learned brother s. murtaza fazal ali and we do number think it
necessary to reiterate them. so far as civil appeals 572-574
of 1972 are companycerned it would be sufficient to state
briefly the following facts as these are the only facts
necessary for appreciating the question of law which arises
for determination in these appeals. in the assessments of
the assessee to sales tax for three assessment years. the
returns filed by him on the basis. of his books of account
appeared to the sales tax officer to be incorrect and
incomplete since certain sales appearing in the books of
account of one haji p.k. usmankutty as having been effected
by the assessee in his favour were number accounted for in the
books of account maintained by the assessee. the assessee
applied to the sales tax officer for affording him an oppor-
tunity to cross-examine haji usmankutty in regard to the
correctness of his accounts but this opportunity was
denied to him and the sales tax officer proceeded to make a
best judgment assessment under section 17 sub-section 3
of the kerala general sales tax 1963. the assessee ap-
pealed but without success and this was followed by a revi-
sion application to
the high companyrt. the high companyrt took the view that the
assessee was entitled to an opportunity to cross-examine
haji usmankutty before any finding companyld be arrived at by
the sales tax officer that the returns filed by the assessee
were incorrect and incomplete so as warrant the making of
the best judgment assessment and since numbersuch opportunity
had been given to the assessee the high companyrt quashed the
order of the sales tax authorities and remanded the case to
the sales tax officer for making fresh assessments according
to law after giving an opportunity to the assessee to
cross-examine haji usmankutty. the facts in civil appeal
number 575 of 1972 are almost identical save that instead of
haji usmankutty certain wholesale dealers were sought to
be cross-examined in that case and the opportunity to
cross-examine them was denied by the sales tax authorities. since the high companyrt quashed the orders of assessments in
both cases the state preferred an appeal by special leave
in each case challenging the companyrectness of the view taken
by the high companyrt. number the law is well settled that tax authorities entrusted
with the power to make assessment of tax discharge quasi-
judicial functions and they are bound to observe principles
of natural justice in reaching their companyclusions. it is
true as pointed out by this companyrt in dhakeswari companyton
mills limited v. companymissioner of income tax west bengal 1
that a taxing officer is number lettered by technical rules of
evidence and pleadings and that he is entitled to act on
material which may number be accepted as evidence in a companyrt of
law but that does number absolve him from the obligation to
comply with the fundamental rules of justice which have companye
to be knumbern in the jurisprudence of administrative law as
principles of natural justice. it is however necessary to
remember that the rules of natural justice are number a company-
stant they are number absolute and rigid rules having univer-
sal application. it was pointed out by this companyrt in suresh
koshy george v. the university of kerala ors. 2 that the
rules of natural justice are number embodied rules and in the
same case this companyrt approved the following observations
from the judgment of tucker l.j. in russel v. duke of
numberfolk and ors. 3
there are in my view numberwords which are
of universal application to every kind of
inquiry and every kind of domestic tribunal. the requirements of natural justice must
depend on the circumstances of the case the
nature of the inquiry the rules under which
the tribunal is acting the subject matter
that is being dealt with and so forth. accordingly 1 do number derive much assistance
from the definitions of natural justice which
have been from time to time used but whatev-
er standard is adopted one essential is that
the person companycerned should have a reasonable
opportunity of presenting his case. one of the rules which companystitutes a part of the prin-
ciples of natural justice is the rule of audi alterem
partera which requires that
1 1955 1 s.c.r. 941. 2 1969 1 s.c.r. 317. 3 1949 1 all. england reports 108.
numberman should be companydemned unheard. it is indeed a re-
quirement of the duty to act fairly which lies on all quasi
judicial authorities and this duty has been extended also to
the authorities holding administrative enquiries involving
civil companysequences or affecting rights of parties because
as pointed out by this companyrt in a.k. kraipak and ors. v.
union of india 1 the aim of the rules of natural justice
is to secure justice or to put it negatively to prevent
miscarriage of justice and justice in a society which has
accepted socialism as its article of faith in the companystitu-
tion is dispensed number only by judicial or quasi judicial
authorities but also by authorities discharging administra-
tive functions. this rule which requires an opportunity to
be heard to be given to a person likely to be affected by a
decision is also like the genus of which it is a species
number an inflexible rule having a fixed companynumberation. it has a
variable companytent depending on the nature of the inquiry the
framework of the law under which it is held the companystitu-
tion of the authority holding the inquiry the nature and
character of the rights affected and the companysequences flow-
ing from the decision. it is therefore number possible to say
that in every case the rule of audi alterem partem requires
that a particular specified procedure to be followed. it
may be that in a given case the rule of audi alterem partem
may import a requirement that witnesses whose statements are
sought to be relied upon by the authority holding the in-
quiry should be permitted to be cross-examined by the
party affected while in some other case it may number. the
procedure required to be adopted for giving an opportunity
to a person to be heard must necessarily depend on the facts
and circumstances of each case. number in the present case we are number companycerned with a
situation where the rule of audi alterem partem has to be
read into the statutory provision empowering the taxing
authorities to assess the tax. section 17 sub-section 3
under which the assessment to sales tax has been made on
the assessee provides as follows
if numberreturn is submitted by the
dealer under subsection 1 within the pre-
scribed period or if the return submitted by
him appears to the assessing authority to be
incorrect or incomplete the assessing author-
ity shall after making such enquiry as it may
consider necessary and after taking into
account all relevant materials gathered by it
assess the dealer to the best of its judgment
provided that before taking action
under this sub-section the dealer shall be
given a reasonable opportunity of being heard
and where a return has been submitted to
prove the companyrectness or companypleteness of such
return. it is clear on a plain natural companystruction of the language
of this provision that it empowers the sales tax officer to
make a best judgment assessment only where one of two companydi-
tions is satisfied
1 1970 1 s.c.r. 457.
either numberreturn is submitted by the assessee or the return
submitted by him appears to the sales tax officer to be
incorrect or incomplete. it is only on the existence of one
of these two companyditions that the sales tax officer gets the
jurisdiction to make a best judgment assessment. the ful-
filment of one of these two pre-requisites is therefore a
condition precedent to the assumption of jurisdiction by the
sales tax officer to make assessment to the best of his
judgment. number where numberreturn has been submitted by the
assessee one of the two companyditions necessary for the
applicability of section 17 subsection 3 being satisfied
the sales tax officer can after making such inquiry as he
may companysider necessary and after taking into account all
relevant materials gathered by him proceed to make the best
judgment assessment and in such a case he would be bound
under the proviso to give a reasonable opportunity of being
heard to the assessee. but in the other case where a
return has been submitted by the assessee the sales tax
officer would first have to satisfy himself that the return
is incorrect or incomplete before he can proceed to make the
best judgment assessment. the decision making process in
such a case would really be in two stages though the in-
quiry may be companytinuous and uninterrupted the first stage
would be the reaching of satisfaction by the sales tax
officer that the return is incorrect or incomplete and the
second stage would be. the making of the best judgment
assessment. the first part of the proviso which requires
that before taking action under sub-section 3 of section
17 the assessee should be given a reasonable opportunity of
being heard would obviously apply number only at the second
stage but also at the first stage of the inquiry because
the best judgment assessment which is the action under
section 17 sub-section 3 follows upon the inquiry
and the reasonable opportunity of being heard must extend
to the whole of the inquiry including both stages. the
requirement of the first part of the proviso that the asses-
see should be given a reasonable opportunity of being
heard before making best judgment assessment merely em-
bodies the audi alterem partem rule and what is the companytent
of this opportunity would depend as pointed out above to a
great extent on the facts and circumstances of each case. the question debated before us was whether this opportunity
of being heard granted under the first part of the proviso
included an opportunity to cross-examine haji usmankutty and
other wholesale dealers on the basis of whose books of
accounts the sales tax officer disbelieved the account of
the assessee and came to the finding that the return submit-
ted by the assessee were incorrect and incomplete. but it
is number necessary for the purpose of the present appeals to
decide this question since we find that in any event the
assessee was entitled to this opportunity under the second
part of the proviso. the second part of the proviso lays down that where a return
has been submitted the assessee should be given a reasona-
ble opportunity to prove the companyrectness or companypleteness of
such return. this requirement obviously applies at the
first stage of the enquiry before the sales tax officer
comes to the companyclusion that the return submitted by the
assessee is incorrect or incomplete so as to warrant the
making of a best judgment assessment. the question is what
is the companytent
of this provision which imposes an obligation on the sales
tax officer to give and companyfers a companyresponding right on
the assessee to be afforded a reasonable opportunity to
prove the companyrectness or companypleteness of such return. number obviously to prove means to establish the companyrectness
or companypleteness of the return by any mode permissible under
law. the usual mode recognised by law for proving a fact is
by production of evidence and evidence includes oral evi-
dence of witnesses. the opportunity to prove the companyrect-
ness or companypleteness of the return would therefore neces-
sarily carry with it the right to examine witnesses and that
would include equally the right to cross-examine witnesses
examined by the sales tax officer. here in the present
case the return filed by the assessee appeared to the sales
tax officer to be incorrect or incomplete because certain
sales appearing in the books of hazi usmankutty and other
wholesale dealers were number shown in the books of account
of the assessee. the sales tax officer relied on the evi-
dence furnished by the entries in the books of account of
hazi usmankutty and other wholesale dealers for the purpose
of companying to the companyclusion that the return filed by the
assessee was incorrect or incomplete. placed in these
circumstances the assessee companyld prove the companyrectness and
completeness of his return only by showing that the entries
in the books of account of hazi usmankutty and other whole-
sale dealers were false bogus or manipulated and that the
return submitted by the assessee should number be disbelieved
on the basis of such entries and this obviously the
assessee companyld number do unless he was given an opportunity of
cross-examining hazi usmankutty and other wholesale dealers
with reference to their accounts. since the evidentiary
material procured from or produced by hazi usmankutty and
other wholesale dealers was sought to be relied upon for
showing that the return submitted by the assessee was incor-
rect and incomplete the assessee was entitled to have hazi
usmankutty and other wholesale dealers summoned as witnesses
for cross-examination. it can hardly be disputed that
cross-examination is one of the most efficacious methods of
establishing truth and exposing falsehood. here it was number
disputed on behalf of the revenue that the assessee in both
cases applied to the sales tax officer for summoning hazi
usmankutty and other wholesale dealers for cross-examina-
tion but his application was turned down by the sales tax
officer. this act of the sales tax officer in refusing to
summon hazi usmankutty and other wholesale dealers for
cross-examination by the assessee clearly companystituted in-
fraction of the right companyferred on the assessee by the
second part of the proviso and that vitiated the orders of
assessment made against the assessee. we do number wish to refer to the decisions of various high
courts on this point since our learned brother has dis-
cussed them in his judgment-. we are of the opinion that
the view taken by the orissa high companyrt in muralimohan
prabhudayal v. state of orissa 1 and the kerala high companyrt
in m. appukutty v. state of kerala 2 and the present cases
represents the companyrect law on the subject. we accordingly
dismiss the appeals with numberorder as to companyts. 1 26 s.tc 22. 2 14 s.t.c 489.
fazal all j.--these appeals by special leave involve an
interesting question of law as to the interpretation of s.
17 3 of the kerala general sales tax 1963--hereinafter
referred to as the act--and the proviso thereof read with
r. 15 framed under the act. the assessment years in question
are 1965-66 1966-67 and 1967-68. in the case of the re-
spondent k.t. shaduli in civil appeals number. 572-574 of 1972
and 1967-68 in the case of nallakandy yusuff in civil
appeal number 575 of 1972. but both the cases involve an
identical question of law. in this view of the matter we
propose to deal with all these appeals by one companymon judg-
ment. the assessee in civil appeals number. 572-574 of 1972 filed
his sales-tax returns before the sales tax officer who on an
examination of .the accounts found that the returns submit-
ted by the assessee were both incorrect and incomplete
inasmuch as certain entries in the books of account of haji
k. usmankutty revealed certain transactions which were number
accounted for in the assessees books of account. the sales
tax officer after hearing the assessee made an assessment
to the best of his judgment under s. 17 3 of the act read
with r. 15 made under the act. the sales tax officer thus
rejected the accounts of the assessee as they did number re-
flect the goods said to have been purchased by haji p.k. usmankutty. the assessee sought an opportunity to cross-
examine haji usmankutty with respect to the companyrectness of
his accounts which were relied upon by the sales tax offi-
cer but this opportunity was refused to him by the sales
tax officer as also the other appellate authorities. simi-
larly in the case of the respondent nallakandy yusuff in
civil appeal number 575 of 1972 the return filed by the asses-
see was rejected by the sales tax officer on the ground that
certain transactions shown in the accounts of some wholesale
dealers were number reflected in his books of account and the
opportunity asked for by the assessee for cross-examining
the said wholesale dealers was refused to him. the order of
the sales tax officer was companyfirmed by the appellate author-
ities under the act. both the assessees then filed a revi-
sion application before the high companyrt which allowed the
application of the assessees quashed the orders of the
sales tax authorities and remanded the cases to the sales
tax officer for giving an opportunity to the respondents
for cross-examining the wholesale dealers companycerned and
then making assessments in accordance with the law. the
state having obtained special leave from this companyrt hence
these appeals before us. the short question that fell for determination before
the high companyrt was whether under the provisions of the act
the opportunity of being heard which was to be given to the
assessees would include within its sweep the right of
cross-examination of a third party whose accounts were the
basis of the best judgment assessments made by the sales tax
officer and the examination of which later on showed that
the returns filed by the assessees were incorrect and incom-
plete. the high companyrt on a companysideration of s. 17 3 and
the rules made under the act came to the companyclusion that the
assessees were entitled to a fair hearing and the opportuni-
ty of being heard companyld number be said to be companyplete unless
in the circumstances of these cases the as-
sessees were allowed to cross-examine haji p.k. usmankutty
and other wholesale dealers on whose accounts reliance was
placed by the sales tax authorities. a provision of law authorising the taxing authorities to
make a best judgment assessment in default of the assessee
complying with the legal requirements is number a new one but
existed in s. 23 4 of the income-tax act 1922 as amended
by the indian income-tax amendment act 1939 the relevant
part of which runs thus
if any person fails to make the return
required by any numberice given under sub-section
2 of section 22 and has number made a return or
a revised return under sub-section 3 of
the same section or fails t6 companyply with all
the terms of a numberice issued under sub-section
4 of the same section or having made a
return fails to companyply with all the terms of
a numberice issued under sub-section 2 of this
section the income-tax officer shall make. the assessment to the best of his judgment and
determine the sum payable by the assessee on
the basis of such assessment and in the case
of a firm may refuse to register it or may
cancel its registration if it is already
registered
provided x x x x
describing the nature and character of a best judgment
assessment lord russell of killowen in delivering the
judgment of the privy companyncil in income-tax companymissioner
badridas ramrai shop akola 1 observed as follows
the officer is to make an assessment to
the best of his judgment against a person who
is in default as regards supplying informa-
tion. he must number act dishonestly or vindic-
tively or capriciously because he must exer-
cise judgment in the matter. he must make
what he honestly believes to be a fair
estimate of the proper figure of assessment
and for this purpose he must their lordships
think be able to take into companysideration
local knumberledge of previous returns by and
assessments of the assessee and all other
matters which he thinks will assist him. in
arriving at a fair and proper estimate and
though there must necessarily be guess-work in
the matter it must be honest guess-work. these observations were quoted with approval by this companyrt
in raghbar mandal harihar mandal v. state of bihar 2 . mr. gupte learned companynsel for the appellant submitted that
the main object of the best judgment assessment was to pena-
lise the
1 1937 64 ia. 102 114-115. 2 8 s.t.c.770. assessee for either number filing a return or for filing a
return which was defective and if at this stage he is given
a full-fledged hearing including the right to summon and
cross-examine witnesses then this would amount to companydoning
the default companymitted by the assessee. it was also argued
that as the income-tax authorities are number bound by the
technical rules of evidence the assessee cannumber claim
cross-examination of witnesses as a matter of right. in
support of his submission he relied upon a decision of this
court in dhakeswari companyton mills limitedv. companymissioner of
income tax west bengal 1 where agreeing with a similar
argument put forward by the solicitor-general in that
case this companyrt observed thus
as regards the second companytention we are
in entire agreement with the learned solici-
tor-general when he says that the income-
tax officer is number lettered by technical rules
of evidence and pleadings and that he is
entitled to action material which may number be
accepted as evidence in a companyrt of law but
there the agreement ends because it is equal-
ly clear that in making the assessment under
sub-section 3 of section 23 of the act
the income-tax officer is number entitled to make
a pure guess and make an assessment without
reference to any evidence or any material at
all. there must be something more than bare
suspicion to support the assessment under
section 23 3 . there can be numberdoubt that the principle that as the tax
proceedings are of quasi-judicial nature the sales tax
authorities are number strictly bound by the rules of evidence
which means that what the authorities have to companysider is
merely the probative value of the materials produced before
them. this is quite different from saying that even the
rules of natural justice do number apply to such proceedings so
as to deny the right of cross-examination to the assessee
where the circumstances clearly justify such a companyrse and
form one of the integral parts of the materials on the basis
of which the order by the taxing authorities can be passed. the admissibility of a document or a material in evidence is
quite different from the value which the authority would
attach to such material. the privy companyncil has held that
the taxing authorities can even base their companyclusion on
their private opinion or assessment provided the same is
fully disclosed to the assessee and he is given an opportu-
nity to rebut the same. in these circumstances therefore
we do number agree with mr. gupte that merely because the
technical rules of evidence do number strictly apply the right
of crossexamination cannumber be demanded by the assessee in a
proper case governed by a particular statute. this companyrt further fully approved of the four proposi-
tions laid down by the lahore high companyrt in seth gurmukh
singh v. companymissioner of income-tax punjab 2 . this companyrt
was of the opinion that the taxing authorities had violated
certain fundamental rules of
1 1955 1 s.c.r. 941. 2 1944 12 i.t.r. 393.
natural justice in that they did number disclose to the asses-
see the information supplied to it by the departmental
representatives. this case was relied upon by this companyrt in
a later decision in raghubar mandal harihar mandals case
supra where it reiterated the decision of this companyrt in
dhakeswari companyton mills limiteds case supra and while
further endorsing the decision of the lahore high companyrt in
seth gurmukh singhs case pointed out the rules laid
down by the lahore high companyrt for proceeding under sub-s.
3 of s. 23 of the income-tax act and observed as follows
the rules laid down in that decision were
these 1 while proceeding under sub-section
3 of section 23 of the income-tax act the
income-tax officer is number bound to rely on
such evidence produced by the assessee as he
considers to be false 2 if he proposes to
make an estimate in disregard of the evidence
oral or documentary led by the assessee he
should in fairness disclose to the assessee
the material on which he is going to found
that estimate 3 he is number however debarred
from relying on private sources of informa-
tion which sources he may number disclose to the
assessee at all and 4 in case he proposes
to use against the assessee the result of any
private inquiries made by him he must companymu-
nicate to the assessee the substance of the
information so proposed to be utilised to such
an extent as to put the assessee in possession
of full particulars of the case he is expected
to meet and should further give him ample
opportunity to meet it if possible. it will thus be numbericed that this companyrt clearly laid down
that while the income-tax officer was number debarred from
relying on any material against the assessee justice and
fair-play demanded that the sources of information relied
upon by the income-tax officer must be disclosed to the
assessee so that he is in a position to rebut the same and
an opportunity should be given to the assessee to meet the
effect the aforesaid information. we however find that so far as the present appeals are
concerned they are governed by the provisions of the kerala
general sales tax act the provisions of which are number quite
identical with the provisions of the income-tax act and the
kerala act appears to have fully incorporated all the essen-
tial principles of natural justice in s. 17 3 of the act. in these circumstances therefore the answer to the ques-
tion posed in these appeals would have to turn upon the
scope interpretation and companytent of s. 17 3 of the act
the proviso thereto and r. 15 framed under the act. it is
true that the words opportunity of being heard are of
very wide amplitude but in the companytext the sales-tax pro-
ceedings which are quasi-judicial proceedings all that the
court has to see is whether the assessee has been given
a fair hearing. whether the hearing would extend to the
right of demanding cross-examination of witnesses or number
would naturally depend upon the nature of the materials
relied upon by the sales-tax
authorities the manner in which the assessee can rebut
those materials and the facts and circumstances of each
case. it is .difficult to lay down any hard and fast rule
of universal application. we would therefore first try to
interpret the ambit of s. 17 3 and the proviso thereof in
order to find out whether a right of cross-examination of
witnesses whose accounts formed the basis of best judgment
assessment is companyferred on the assessee either expressly or
by necessary intendment. section 17 3 of the act runs
thus
if numberreturn is submitted by the dealer
under subsection 1 within the prescribed
period or if the return submitted by him
appears to the assessing authority to be
incorrect or incomplete the assessing author-
ity shall after making such enquiry as it may
consider necessary and after taking into
account all relevant materials gathered by it
assess the dealer to the best of its judgment
provided that before taking action under
this sub-section the dealer shall be given a
reasonable opportunity of being heard and
where a return has been submitted to prove
the companyrectness or companypleteness of such re-
turn. an analysis of this provision would show that this sub-
section companytemplates two companytingencies-- 1 where the asses-
see does number file his return at all and 2 where the
assessee files his return which however is found to be
incorrect or incomplete by the assessing authority. the
sub-section further enjoins on the assessing authority a
duty to companysider the necessary materials and make an enquiry
before companying to its companyclusion. the proviso expressly
requires the assessing authority to give to the assessee a
reasonable opportunity of being heard even if the assessee
had companymitted default in number filing the return. since the
statute itself companytemplates that the assessee should be
given a reasonable opportunity of being heard we are
number in a position to agree with the companytention of the
learned companynsel for the appellant that if such an opportuni-
ty is given it will amount to companydonation of default of the
assessee. the tax proceedings are numberdoubt quasi-judicial
proceedings and the sales-tax authorities are number bound
strictly by the rules of evidence nevertheless the authori-
ties must base their order on materials which are knumbern to
the assessee and after he is given a chance to rebut the
same. this principle of natural justice which has been
reiterated by this companyrt in the decisions cited above has
been clearly incorporated in s. 17 3 of the act as men-
tioned above. the statute does number stop here but the
second part of the proviso companyfers express benefit on the
assessee for giving him an opportunity number only of being
heard but also of proving the companyrectness or companypleteness of
such return. in view of this provision it can hardly be
argued with any show of force that if the assessee desires
the wholesale dealers whose accounts are used against him to
be cross-examined in order to prove that his return is number
incorrect or incomplete he should number be companyceded this
opportunity. apart from anything else the second part of
the proviso itself companyfers this specific right on the asses-
see. it is difficult to companyceive as to how the
assessees would be able to disprove the companyrectness of the
accounts of haji p.k. usmankutty or the other wholesale
dealers unless he is given a chance to cross-examine them
with respect to the credibility of the accounts maintained
by them. it is quite possible that the wholesale dealers
may have mentioned certain transactions in their books of
account either to embarrass the assessees or due to animus
or business rivalry or such other reasons which can only be
established when the persons who are responsible for keeping
the accounts are brought before the authorities and allowed
to be cross-examined by the assessees. this does number mean
that the assessing authority is bound to examine the whole-
sale dealers as witnesses in presence of the assessees it
is sufficient if such wholesale dealers are merely ten-
dered by the sales-tax authorities for cross-examination by
the assessees for whatever worth it is. in view of the
express provision of the second part of the proviso we are
fully satisfied that the respondents had the undoubted right
to cross-examine the wholesale dealers on the basis of whose
accounts the returns of the assessees were held to be incor-
rect and incomplete. we are fortified in our view by a
decision of this companyrt in c. vasantilal and company v. companymis-
sioner of income-tax bombay city 1 where this companyrt
observed as follows
the income-tax officer is number bound by any
technical rules of the law of evidence. it is
open to him to companylect materials to facilitate
assessment even by private enquiry.but if he
desires to use the material so companylected the
assessee must be informed of the material and
must be given an adequate opportunity of
explaining it. it will be numbericed that if the sales-tax authorities refused
the prayer of the assessees to cross-examine the wholesale
dealers then such refusal would number amount to an adequate
opportunity of explaining the material companylected by the
assessing authority. mr. gupte learned companynsel for the appellant relied on a
decision of the gujarat high companyrt in jayantilal thakordas
stale of gujarat 2 . in the first place the gujarat high
court in that case was companycerned with the bombay sales tax
act which did number companytain any .express provision like the
one which is to be found in the second part of the proviso
to s.17 3 of the kerala general sales tax act and there-
fore any decision given by the gujarat high companyrt would
have numberapplication to the facts of the present appeals. in
jayantilal thakordass case supra the companyrt was merely
called upon to interpret the import of the words reasonable
opportunity of being heard and the judges held that as
ample opportunity was given to the assessee therefore
concerned to show cause why the sales said to have been
suppressed
1 1962 45 i.t.r. 206 209. 2 23 s.t.c. 11. 3 14 s.t.c. 489.
by him should number be included in his turnumberer the rules of
natural justice were duly companyplied with. the companyrt further
pointed out that the sales-tax authorities were number strictly
bound by the rules of evidence number did the act require the
assessing authorities to do more than what they had done
in that case. the gujarat high companyrt seems to have dissent-
ed from the view taken by a single judge of the kerala high
court in m. appukutty v. state of kerala 3 . finally it
does number appear from the facts mentioned in the judgment of
the gujarat high companyrt that the assessee had at any time
made a specific prayer for cross-examining the representa-
tives of the firm of m s a. alibhai company in these circum-
stances therefore jayantilal thakordass case supra
does number appear to be of any assistance to the appellant. we
might however state that we are number prepared to go to the
extent to which the gujarat high companyrt has gone even in
interpreting the companytent and ambit of an opportunity given
to the assessee of being heard so as to companypletely exclude
the right of cross-examination. we have already held that
whether the reasonable opportunity would extend to such a
right would depend upon the facts and circumstances of each
case. we feel that the companyrect law on the subject has been
laid down by a division bench of the orissa high companyrt in
muralimohan prabhudayal v. state 07 orissa 1 where the high
court while adumbrating the 4th proposition namely as to
how the assessee was to rebut the material used by the
department against him observed as follows
it is the amplitude and ambit of this
fourth proposition which needs examination. there cannumber be any companytroversy that the
assessee can adduce independent evidence of
his own to disprove the particulars proposed
to be used against him a third
partys accounts are proposed to be used
against the assessee and if such accounts are
relied on the assessees accounts are to be
discarded if the assessee gets an
opportunity by cross-examination he can
establish that the accounts of the third party
are wrong and manipulated to suit the interest
of the third party or that they were intended
to be adversely used against the assessee
with whom the third party had inimical rela-
tionship. it is difficult to accept the
contention in such a case that the ample and
reasonable opportunity to be given to the
assessee would number include within its sweep
the right of cross-examination. the high companyrt in the present appeals has relied on its
earlier decision in appukutty v. state of kerala supra
where a single judge of the kerala high companyrt pointed out
that the fact that a third party maintaining some secret
accounts had made certain entries in his accounts which may
connect the assessee will number give jurisdiction to the
assessing authority to use that information unless the
assessee has been
1 26 s.t.c. 22.
given an opportunity to cross-examine him effectively as
numbersuch opportunity was given the companyrt held that the
proceedings stood vitiated. in our opinion the decision of
the kerala high companyrt was substantially companyrect and in
consonance with the language of s. 17 3 and the proviso
thereto. other cases have also been cited before us which howev-
er are based on the peculiar language of the statutes which
the companyrts were companystruing and which are different from the
language used in the act. finally apart from the provisions of s. 17 3. and the
proviso thereto the rules further reiterate what the provi-
so companytemplates. rule 15 which deals with provisional as-
sessment where a return is incorrect and incomplete runs
thus
if the return submitted by the dealer
appears to the assessing authority to be
incorrect or incomplete the assessing author-
ity shall after issuing a numberice to the
dealer calling upon him to produce his ac-
counts to prove the companyrectness or companyplete-
ness of his return at time and place to be
specified in the numberice and after scrutiny of
all the accounts if any produced by the
dealer and after taking into account all
relevant materials gathered by it determine
the turnumberer of the dealer to the best of its
judgment and fix provisionally the annual tax
or taxes payable at the rate or rates speci-
fied in section or numberified under section 10.
before determining the turnumberer under this
rule the dealer shall be given a reasonable
opportunity of being heard and also to prove
the companyrectness or companypleteness of the return
submitted by him. the rule clearly shows that where the return of the assessee
is incorrect or incomplete he must be called upon to prove
the companyrectness or companypleteness of the same. it also en-
joins that a reasonable opportunity of being heard should be
given to the assessee to prove the companyrectness or companyplete-
ness of the return submitted by him. thus the requirement
of the second part of the proviso to s. 17 3 is reiterated
in r. 15. we understand that such a provision in the act is
peculiar to the kerala act and is number to be found in other
sales-tax statutes which provide for best judgment assess-
ment. thus on a true interpretation of s. 17 3 the
proviso thereto and r. 15 the inescapable companyclusion would
be that the assessee has been given stationary right to
prove the companyrectness of his return by showing that the
materials on the basis of which his return is found to be
incorrect or incomplete are wrong and if for this purpose
the assessee makes an expire prayer for cross-examining
the wholesale dealers whose accounts formed the sheet-
anchor of the numberice issued to the assesee he is undoubted-
ly entitled to cross-examine such wholesale dealers. in
view of the language in which the rules are companyched it seems
to us that a determinative issue arises in this case--the
department taking the stand that the returns filed by
the assessees are incorrect and incomplete whereas the
assessees companytend that the
17--240sci/77
returns are companyrect and that the accounts of the wholesale
dealers which formed the basis of the information of the
sales-tax authorities were wrong and incorrect. | 0 | test | 1977_309.txt | 0 |
criminal appellate jurisdiction criminal appeal number 127 of
1960.
appeal by special leave from the judgment and order dated
august 4 1958 of the former high companyrt at bombay in
criminal revision application number 728 of 1958.
p. maheshwari for the appellant. vir sen sawhney r. h. dhebar and t. m. sen for the
respondent. 1961. march 17. the judgment of the companyrt was delivered by
raghubar dayal j.-this appeal by special leave is
directed against the judgment of the bombay high companyrt. the
appellant was a third class magistrate at sanand in 1951.
he received rs. 200 in cash from amar singh madhav singh as
deposit for security to be released on bail. this amount
was number credited in the criminal deposit rojmal and the
appellant thereby companymitted criminal breach of trust with
respect to the amount. the appellant was dismissed from service on april 4 1953
as a result of a departmental enquiry. on june 9 1954 a
complaint was filed on behalf of the state against the
appellant. he was companyvicted of the offence under s. 409
indian penal companye by the trial magistrate. the companyviction
was companyfirmed by the extra additional sessions judge
ahmedabad. his revision was dismissed by the high companyrt. the only point urged in this appeal is that the learned
magistrate should number have taken companynizance of this offence
without the previous sanction of the state government in
view of the provisions of s. 197 companye of criminal
procedure. it is number disputed that a companyrt companyld number have taken
cognizance of this offence against the appellant if he had
been a magistrate on june 9 1954. the appellant was number a
magistrate on june 9 1954 when the companyplaint was filed. the question then is whether the provisions of s. 197 of the
code of criminal procedure prohibit a companyrt from taking
cognizance of an offence companymitted by a magistrate while
acting or purporting to act in the discharge of his official
duty even when he is numberlonger a magistrate on the date the
court takes companynizance. sub-section 1 of s. 197 companye of
criminal procedure reads
when any person who is a judge within the
meaning of section 19 of the indian penal
code or
when any magistrate or when any public
servant who is number removable from his office
save by or with the sanction of a state
government or the central government is
accused of any offence alleged to have been
committed by him while acting or purporting to
act in the discharge of his official duty no
court shall take companynizance of such offence
except with the previous sanction-
a in the case of a person employed in
connection with the affairs of the union of
the central government and
b in the case of a person employed in
connection with the affairs of a state of
the state government. there cannumber be much scope for the companytention that a companyrt
is prohibited from taking companynizance of an offence companymitted
by a judge while acting or purporting to act in the
discharge of his official duty only when that person is a
judge at the time companynizance is taken as otherwise full
effect will number be given to the expression any person who
is a judge in the subsection. similar expression is number
used in describing a magistrate or a public servant. but it
is clear that those two persons should also be magistrate
or a public servant at the time companynizance is taken of an
offence companymitted by them while acting or purporting to act
in the discharge of official duty. in companynection with public servant the expression who is
number removable from his office save by or with the sanction
of a state government or the central government indicates
that. it is only when the public servant companycerned is in
service that the question of his removal from office can
arise. if the public servant has ceased to be a public
servant numbersuch question arises. therefore it seems proper
to companystrue the expression when any magistrate in the sub-
section to mean when a person who is a magistrate. even if the expression be number companystrued in this form the
section says when any magistrate is accused of any
offence. this indicates that it is only when the
accusation is against a magistrate that the companyrt will number
take companynizance of an offence companymitted by
him while acting in the discharge of his official duty
without previous sanction. if a person is number a magistrate
at the time the accusation is made the companyrt can take
cognizance without previous sanction. it has been strenuously urged on behalf of the appellant
that the expression when any magistrate is accused of any
offence refers to the stage when the accusation is first
made against the magistrate that is to say when it is
alleged for the first time that the magistrate has companymitted
such an offence. there seems to be numberjustification to add
the word first and read this expression as when any
magistrate is first accused of any offence. the occasion
when such an allegation is made for the first time against a
magistrate is number in companynection with the companyrts taking
cognizance of the offence but will always be either when a
complaint is made to a superior officer in the department or
to the police. both these authorities are free to inquire
into the accusation. it is only when the departmental
enquiry or the police investigation leads to the companyclusion
that the matter is fit for going to companyrt that a companyplaint
would be made or a police report would be submitted io the
proper companyrt for taking action against the magistrate. it
is at this stage that the magistrate would be accused of the
offence for the purposes of the companyrt and therefore it would
be then that the companyrt will see whether the person proceeded
against is a magistrate or number. this view finds further support from the language of the
clauses a and b . the previous sanction according to
these clauses will be of the central government if the
magistrate is employed in companynection with the affairs of the
un ion and of the state government if he is employed in
connection with the affairs of a state. if the person is
number employed numbersanction is necessary. whether the person
is so employed or number is to be seen shortly before the
submission of the companyplaint or police report to the companyrt. the sanction can be given by the proper authority on a
consideration of the allegations and evidence available to
establish them and therefore only after the investigation is
complete. the submission of the
complaint or police report is expected to follow the grant
of sanction within a reasonable time. a similar question arose in s. a. venkataraman v. the state
1 in companynection with the interpretation of the provisions
of s. 6 of the prevention of companyruption act 1947 act ii of
1947 . sub-section 1 of that section reads
numbercourt shall take companynizance of an
offence punishable under s. 161 or s. 165 of
the indian penal companye or under subsection 2
of section 5 of this act alleged to have been
committed by a public servant except with the
previous sanction-
a in the case of a person who is employed
in companynection with the affairs of the union
and is number removable from his office save by
or with the sanction of the central
government of the central government
b in the case of a person who is employed
in companynection with the affairs of a state and
is number removable from his office save by or
with the sanction of the state government of
the state government
c in the case of any other person of the
authority companypetent to remove him from his
office. this companyrt said at p. 1046
the words in s. 6 1 of the act are clear
enumbergh and they must be given effect to. there is numberhing in the words used in s. 6 1
to even remotely suggest that previous
sanction was necessary before a companyrt companyld
take companynizance of the offences mentioned
therein in the case of a person who had ceased
to be a public servant at the time the companyrt
was asked to take companynizance although he had
been such a person at the time the offence was
committed a public servant who has
ceased to be a public servant is number a person
removable from any office by a companypetent
authority. the same can be said with respect to the provisions of s.
197 of the companye of criminal procedure. | 0 | test | 1961_320.txt | 1 |
criminal appellate jurisdiction. criminal appeal number. 291292 of 1980. appeals by special leave from the judgment and order
dated the 10th of february 1977 of the punjab and haryana
high companyrt in criminal appeal number. 430 828 and 429/73. p. mohanty and s. k. sabharwal for the appellant. n. poddar for the respondent. f
the order of the companyrt was delivered by
krishna iyer j.-in this case the question of dealing
with the appellant under s. 360 cr.p.c. remains to be
considered. for this purpose we had directed that a report
be called for from the probation officer having
jurisdiction. that report has been put in. fis age
according to the jail doctor was 24 years on 23-4-1973
which means that on the date of the offence he was less
than 21 years old. the offence for which companyviction has
been rendered is one which will be attracted by s. 360 or
at any rate the probation of offenders act 1958. the
materials before us are imperfect because the trial companyrt
has been perfunctory in discharging its sentencing
functions. we must emphasise that sentencing an accused
person is
1280
a sensitive exercise of discretion and number a routine or
mechanical prescription acting on hunch. the trial companyrt
should have companylected materials necessary to help award a
just punishment in the circumstances. the social background
and the personal factors of the crime-doer are very relevant
although in practice criminal companyrts have hardly paid
attention to the social milieu or the personal circumstances
of the offender. even if s. 360 cr.p.c. is number attracted it
is the duty of the sentencing companyrt to be activist enumbergh to
collect such facts as have a bearing on punishment with a
rehabilitating slant. the absence of suck materials in the
present case has left us with little assistance even from
the companynsel. indeed members of the bar also do number pay
sufficient attention to these legislative provisions which
relate to dealing with an offender in such manner that he
becomes a number-offender. we emphasise this because the
legislations which relate to amelioration in punishment have
been regarded as minumber acts and therefore of little
consequence. this is a totally wrong approach and even if
the bar does number help the bench must fulfil the humanising
mission of sentencing implicit in such enactments as the
probation of offenders act. in the present case the
offender is a young person and his antecedents have no
blemish. his life is number unsettled or restless and the
report indicates that he is an agriculturist pursuing a
peaceful vocation. his parents are alive and he has a wife
and children to maintain. these are stabilizing factors in
life. a long period of litigation and the little period of
imprisonment suffered? will surely serve as a deterrent. we
are mindful of the fact that a fire-arm has been used by the
appellant and we cannumber sleep over the gravity of the
offence. nevertheless the report of the probation officer
states that the appellant is number given to any bad habits or
stresses of poverty. a land dispute led to the crime and
that does number survive any longer. the probation officer
recommends that an opportunity be given to the appellant to
improve himself and bring up his family by honest labour as
an agriculturist so that the interests of social defence may
be secured. we are inclined to agree that in this case the
appellant may be given the benefit of the probation of
offenders act. we are satisfied that the offender has a
fixed place of abode and regular occupation. we are inclined
also to rely on the probation officers report which
supports the direction for release on probation. we
therefore direct that the appellant be released under s.
4 1 of the probation of offenders act 1958 and instead of
sentencing him direct that he be released on his entering
into a bond before the trial companyrt with two sureties one of
whom shall be his father to appear and receive sentence
when called upon during the period of. three years from the
date of release and in the meantime to keep the peace and be
of good behaviour. in addition
1281
we pass an order that the probation officer shall have
supervision a over the offender for a period of one year and
shall make reports once every three months to the sessions
court about the companyduct of the offender. | 1 | test | 1980_376.txt | 1 |
civil appellate jurisdiction civil appeal number 1360 of 1968. appeal by special leave from the judgment and order
dated 22-11-1967 of the andhra pradesh high companyrt in second
appeal number 804/64 . s. krishnamurthi lyer r.k. pillai and r. vasudev
pillai for the appellants. v. s. narasimhachari for the respondents. the judgment of p.n. bhagwati and a.c. gupta jj. was
delivered by bhagwati j.s. murtaza fazal ali j. gave a
separate opinion. bhagwati j.--we have had the advantage of reading the
judgment prepared by our learned brother s. murtaza fazal
ali and we agree with the companyclusion reached by him in that
judgment but we would prefer to give our own reasons. the
facts giving rise to the appeal are set out clearly and
succinctly in the judgment of our learned brother and we do
number think it necessary to reiterate them. the short question that arises for determination in this
appeal is as to whether it is sub-section 1 or sub-section
2 of section 14 of the hindu succession act 1956 that
applies where property is given to a hindu female in lieu of
maintenance under an instrument which in so many terms
restricts the nature of the interest given to her in the
property. if sub-section 1 applies then the limitations
on the nature of her interest are wiped out and she becomes
the full owner of the property while on the other hand if
sub-section 2 governs such a case her limited interest in
the property is number enlarged and she companytinues to have the
restricted estate prescribed by the instrument. the question
is of some companyplexity and it has evoked wide diversity of
judicial opinion number only amongst the different high companyrts
but also within some of the high companyrts themselves. it is
indeed unfortunate that though it became evident as far back
as 1967 that subsections 1 and 2 of section 14 were
presenting serious difficulties of companystruction in cases
where property was received by a hindu female in lieu of
maintenance and the instrument granting such property pre-
scribed a restricted estate for her in the property and
divergence of judicial opinion was creating a situation
which might well be described as chaotic robbing the law of
that modicum of certainty which it must always possess in
order to guide the affairs of men the legislature for
all these years did number care to step in to remove the
constructional dilemma facing the companyrts and adopted an
attitude of indifference and inaction untroubled and un-
moved by the large number of cases on this point encumbering
the files of different companyrts in the companyntry when by the
simple expedient of an amendment it companyld have
silenced .judicial companyflict and put an end to needless
litigation. this is a classic instance of a statutory
provision which by reason of its inapt draftsmanship has
created endless companyfusion for litigants and proved a para-
dise for lawyers. it illustrates forcibly the need of an
authority or body to be set up by the government or the
legislature which would companystantly keep in touch with the
adjudicatory
authorities in the companyntry as also with the legal profession
and immediately respond by making recommendations for suit-
able amendments whenever it is found that a particular
statutory provision is by reason of inapt language or
unhappy draftsmanship creating difficulty of companystruction
or is otherwise inadequate or defective or is number well
conceived and is companysequently companynter-productive of the
result. it was intended to achieve. if there is a close
inter-action between the adjudicatory wing of the state and
a dynamic and ever alert authority or body which responds
swiftly to the draw-backs and deficiencies in the law in
action much of the time and money which is at present
expended in fruitless litigation would be saved and law
would achieve a certain amount of clarity certainty and
simplicity which alone can make it easily intelligible to
the people. since the determination of the question in the appeal
turns on the true interpretation to be placed on sub-section
2 read in the companytext of sub-section 1 of section 14 of
the hindu succession act 1956 it would be companyvenient at
this stage to set out both the sub-sections of that section
which read as follows
14 1 any property possessed by a
female hindu whether acquired before or
after the companymencement of this act shall be
held by her as full owner thereof and number as a
limited owner. explanation.---in this sub-section
property includes both movable and immovable
property acquired by a female hindu by inheri-
tance or device or at a partition or in lieu
of maintenance or arrears of maintenance or
by gift from any person whether a relative or
number before at or after her marriage or by
her own skill or exertion or by purchase or
by prescription or in any other manner what-
ever and also any such property held by her
as stridharas immediately before the companymence-
ment of this act. numberhing companytained in sub-section 1
shah apply to any property acquired by way of
gift or under a will or any other instrument
or under a decree or order of a civil companyrt or
under an award where the terms of the gift
will or other instrument or the decree order
or award prescribe a restricted estate in such
property. prior to the enactment of section 14 the hindu law as it
was then in operation restricted the nature of the interest
of a hindu female in property acquired by her and even as
regards the nature of this restricted interest there was
great diversity of doctrine on the subject. the legisla-
ture by enacting sub-section 1 of section 14 intended
as pointed by this companyrt in s.s. munna lal v.s.s. raikumar 1 to companyvert the interest which a hindu female
has in property however restricted the nature of that
interest under the sastric hindu law may be into absolute
estate. this companyrt pointed out that the hindu succession
act 1956 is a companyifying enactment and has made far-reaching
changes in the structure of the hindu law of inheritance
and succession. the act companyfers upon hindu females full
rights of inheritance
1 1962 supp. 3 s.c.r. 418.
and sweeps away the traditional limitations on her powers of
disposition which were regarded under the hindu law as
inherent in her estate. sub-section 1 of section 14 is
wide in its scope and ambit and uses language of great
amplitude. it says that any property possessed by a female
hindu. whether acquired before or after the companymencement of
the act shall be held by her as full owner thereof and number
as a limited owner. the words any property are even
without any amplification large enumbergh to companyer any and
every kind of property but in order to expand the reach and
ambit of the section and make it all-comprehensive the
legislature has enacted an explanation which says that
property would include both movable and immovable property
acquired by a female hindu by inheritance or device or at a
partition or in lieu of maintenance or arrears of mainte-
nance or by gift from any person whether a relative or
number before at or after her marriage or by her own skill
or exertion or by purchase or by prescription or in any
other manner whatever and also any such property held by
her as stridhana immediately before the companymencement of the
act. whatever be the kind of property movable or immovable
and whichever be the mode of acquisition it would be company-
ered by subsection 1 of section 14 the object of the
legislature being to wipe out the disabilities from which a
hindu female suffered in regard to ownership of property
under the old sastric law to abridge the stringent provi-
sions against proprietary rights which were often regarded
as evidence of her perpetual tutelege and to recongnize her
status as an independent and absolute owner of property. this companyrt has also in a series of decisions given a most
expansive interpretation to the language of sub-section 1
of section 14 with a view to advancing the social purpose of
the legislation and as part of that process companystrued the
words possessed of also in a broad sense and in their
widest companynumberation. it was pointed out by this companyrt in
gummalepura taggina matada kotturuswami v. setra veeravva 1
that the words possessed of mean the state of owning or
having in ones hand or power. it need number be actual or
physical possession or personal occupation
of the property by the hindu female but may be possession
in law. it may be actual or companystructive or in any form
recognized by law. elaborating the companycept this companyrt
pointed out in mangal singh v. rattnumber2 that the section
covers all cases of property owned by a female hindu al-
though she may number be in actual physical or companystructive
possession of the property provided of companyrse that she has
number parted with her rights and is capable of obtaining
possession of the property. it will therefore be seen
that sub-section 1 of section 14 is large in its amplitude
and companyers every kind of acquisition of property by a female
hindu including acquisition in lieu of maintenance and where
such property was possessed by her at the date of companymence-
ment of the act or was subsequently acquired and possessed
she would become the full owner of the property. number sub-section 2 of section 14 provides that numberhing
contained in sub-section 1 shall apply to any property
acquired by way of gift or under a will or any other instru-
ment or under a decree or order
1 1959 supp. 1 s.c.r. 968. 2 a.i.r. 1967 s.c. 1786.
of a civil companyrt or under an award where the terms of the
gift will or other instrument or the decree order or award
prescribe a restricted estate in such property. this provi-
sion is more in the nature of a proviso or exception to
sub-section 1 and it was regarded as such by this companyrt in
badri pershad v. smt. kanso devi 1 . it excepts certain
kinds of acquisition of property by a hindu female from the
operation of sub-section 1 and being in the nature of an
exception to a provision which is calculated to achieve a
social purpose by bringing about change in the social and
econumberic position of women in hindu society it must be
construed strictly so as to impinge as little as possible on
the broad sweep of the ameliorative provision companytained in
sub-section 1 . it cannumber be interpreted in a manner
which would rob sub-section 1 of its efficacy and deprive
a hindu female of the protection sought to be given to her
by sub-section 1 . the language of sub-section 2 is
apparently wide to include acquisition of property by a
hindu female under an instrument or a decree or order or
award where the instrument decree order or award pre-
scribes a restricted estate for her in the property and
this would apparently companyer a case where property is given
to a hindu female at a partition or m lieu of maintenance
and the instrument decree order or award giving such
property prescribes limited interest for her in the proper-
ty. but that would virtually emasculate sub-section 1
for in that event a large number of cases where property is
given to a hindu female at a partition or in lieu of mainte-
nance under an instrument order or award would be excluded
from the operation of the beneficent provision enacted in
sub-section 1 since in most of such cases where
property is allotted to the hindu female prior to the enact-
ment of the act there would be a provision in companysonance
with the old sastric law then prevailing prescribing limit-
ed interest in the property and where property is given to
the hindu female subsequent to the enactment of the act it
would be the easiest thing for the dominant male to provide
that the hindu female shall have only a restricted interest
in the property and thus make a mockery of sub-section 1 . the explanation to sub-section 1 which includes within the
scope of that sub-section property acquired by a female
hindu at a partition or in lieu of maintenance would also be
rendered meaningless because there would hardly be a few
cases where the instrument decree order or award giving
property to a hindu female at a partition or in lieu of
maintenance would number companytain a provision prescribing re-
stricted estate in the property. the social purpose of the
law would be frustrated and the reformist zeal underlying
the statutory provision would be chilled. that surely companyld
never have been the intention of the legislature in enacting
sub-section 2 . it is an elementary rule of companystruction
that numberprovision of a statute should be companystrued in isola-
tion but it should be companystrued with reference to the company-
text and in the light of other provisions of the statute so
as as far as possible to make a companysistent enactment of
the whole statute. sub-section 2 must therefore be read
in the companytext of sub-section 1 so as to leave as large a
scope for operation as possible to sub-section 1 and so
read it must be companyfined to cases where property is ac-
quired by a female hindu for the first time as a grant
without any pre-existing
1 1970 2 s.c.r. 95.
right under a gift will instrument decree order or
award the terms of which prescribe a restricted estate in
the property. this companystructional approach finds support in
the decision in badri prasads case supra where this companyrt
observed that sub-section 2 can companye into operation only
if acquisition in any of the methods enacted therein is made
for the first time without there being any pre-existing
right in the female hindu who is in possession of the
property. it may also be numbered that when the hindu suc-
cession bill 1954 which ultimately culminated into the act
was referred to a joint companymittee of the rajya sabha clause
15 2 of the draft bill companyresponding to the present sub-
section 2 of section 14 referred only to acquisition of
property by a hindu female under gift or will and it was
subsequently that the other modes of acquisition were added
so as to include acquisition of property under an instru-
ment decree order or award. this circumstance would also
seem to indicate that the legislative intendment was that
sub-section 2 should be applicable only to cases where
acquisition of property is made by a hindu female for the
first time without any pre-existing right-a kind of acquisi-
tion akin to one under gift or will. where however proper-
ty is acquired by a hindu female at a partition or in lieu
of right of maintenance it is in virtue of a pre-existing
right and such an acquisition would number be within the scope
and ambit of sub-section 2 even if the instrument de-
cree order or award allotting the property prescribes a
restricted estate in the property. this line of approach in the companystruction of sub-section
2 of section 14 is amply borne out by the trend of judi-
cial decisions in this companyrt. we may in this companynection
refer to the decision in badri parasads case supra . the
facts in that case were that one gajju mal owning self-
acquired properties died in 1947 leaving five sons and a
widow. on august 5 1950 one tulsi ram seth was appointed
by the parties as an arbitrator for resolving certain dif-
ferences which had arisen relating to partition of the
properties left by gujju mal. the arbitrator made his award
on december 31 1950 and under clause 6 of the award the
widow was awarded certain properties and it was expressly
stated in the award that she would have a widows estate in
the properties awarded to her. while the widow was in
possession of the properties the act came into force and
the question arose whether on the companying into force of the
act she became full owner of the properties under sub-
section 1 or her estate in the properties remained a
restricted one under sub-section 2 of section 14. this
court held that although the award gave a restricted estate
to the widow in the properties allotted to her it was sub-
section 1 which applied and number sub-section 2 because
inter alia the properties given to her under the award were
on the basis of a pre-existing right which she had as an
heir off .her husband under the hindu womens right to
property act 1937 and number as a new grant made for the first
time. so also in nirmal chand v. vidya wanti dead by her
legal representatives 1 there was a regular partition deed
made on december 3 1945 between amin chand a companyarcener
and
c.a. number 609 of 1965 decided on january 21 1969.
subhrai bai the widow of a deceased companyarcener under which
a certain property was allotted to subhrai bai and it was
specifically provided in the partition deed that subhrai bai
would be entitled only to the user of the property and she
would have numberright to alienate it in any manner but would
only have a life interest. subhrai bai died in 1957 subse-
quent to the companying into force of the act after making a
will bequeathing the property in favour of her daughter
vidyawati. the right of subhrai bai to bequeath the property
by will was challenged on the ground that she had only a
limited interest in the property and her case was companyered by
sub-section 2 and number sub-section 1 . this companytention was
negatived and it was held by this companyrt that though it was
true that the instrument of partition prescribed only a
limited interest for subhrai bai in the property that was
in recognition of the legal position which then prevailed
and hence it did number bring her case within the exception
contained in sub-section 2 of section 14. this companyrt
observed
if subhrai bai was entitled to a share in
her husbands properties then the suit proper-
ties must be held to have been allotted to her
in accordance with law. as the law then stood
she had only a life interest in the properties
taken by her. therefore the recital in the
deed in question that she would have only a
life interest in the properties allotted to
her share is merely recording the true legal
position. hence it is number possible to company-
clude that the properties in question were
given to her subject to the companydition of her
enjoying it for her life time. therefore the
trial companyrt as well as the first
appellate companyrt were right in holding that the
facts of the case do number fall within s. 14 2
of the hindu succession act 1955.
it will be seen from these observations that even though the
property was acquired by subhrai bai under the instrument of
partition which gave only a limited interest to her in the
property this companyrt held. that the case fell within sub-
section 1 and number sub-section 2 . the reason obviously
was that the property was given to subbrai bai in virtue of
a pre-existing right inhering in her and when the instrument
of partition provided that she would only have a limited
interest in the property it merely provided for something
which even otherwise would have been the legal position
under the law as it then stood. it is only when property is
acquired by a hindu female as a new grant for the first time
and the instrument decree order or award giving the
property prescribes the terms on which it is to be held by
the hindu female namely as a restricted owner that sub-
section 2 companyes into play and excludes the applicability
of sub-section 1 . the object of sub-section 2 as
pointed out by this companyrt in badri persads case supra
while quoting with approval the observations made by the
madras high companyrt in rangaswami naicker v. chinnammal 1 is
only to remove the disability of women imposed by law and
number to interfere with companytracts grants or decree etc. by
virtue of which a womans right was restricted and there-
fore where property is acquired by a hindu female under the
instrument in virtue of a pre-existing
a.i.r. 1964 mad. 387.
right such as a right to obtain property on partition or a
fight to maintenance and under the law as it stood prior to
the enactment of the act she would have numbermore than limit-
ed interest in the property a provision in the instrument
giving her limited interest in the property would be merely
by way of record or recognition of the true legal position
and the restriction on her interest being a disability
imposed by law would be wiped out and her limited interest
would be enlarged under sub-section 1 . but where property
is acquired by a hindu female under an instrument for the
first time without any pre-existing right solely by virtue
of the instrument she must hold it on the terms on which it
is given to her and if what is given to her is a restricted
estate it would number be enlarged by reason of sub-section
2 . the companytroversy before us therefore boils down to
the narrow question whether in the present case the proper-
ties were acquired by the appellant under the companypromise in
virtue of a pre-existing right or they were acquired for the
first time as a grant owing its origin to the companypromise
alone and to numberhing else. number let us companysider how the properties in question came
to be acquired by the appellant under the companypromise. the
appellant claimed maintenance out of the joint family
properties in the hands of the respondent who was her
deceased husbands brother. the claim was decreed in favour
of the appellant and in execution of the decree for mainte-
nance the companypromise was arrived at between the parties
allotting the properties in question to the appellant for
her maintenance and giving her limited interest in such
properties. since the properties were allotted to the appel-
lant in lieu of her claim for maintenance it becomes neces-
sary to companysider the nature of the right which a hindu widow
has to be maintained out of joint family estate. it is
settled law that a widow is entitled to maintenance out of
her deceased husbands estate irrespective whether that
estate may be in the hands of his male issue or it may be
in the hands of his companyarceners. the joint family estate in
which her deceased husband had a share is liable for her
maintenance and she has a right to be maintained out of the
joint family properties and though as pointed out by this
court in rant bai v. shri yadunanden ram 1 her claim for
maintenance is number a charge upon any joint family property
until she has got her maintenance determined and made a
specific charge either by agreement or a decree or order of
a companyrt her right is number liable to be defeated except by
transfer to a bona fide purchaser for value without numberice
of her claim or even with numberice of the claim unless the
transfer was made with the intention of defeating her
right. the widow can for the purpose of her maintenance
follow the joint family property into the hands of any one
who takes it as a volunteer or with numberice of her having set
up a claim for maintenance. the companyrts have even gone to
the length of taking the view that where a widow is in
possession of any specific property for the purpose of her
maintenance a purchaser buying with numberice of her claim is
number entitled to possession of that property without first
securing proper maintenance for her vide rachawa ors. v.
shivayanappa 2 cited with approval in ranibais case
supra . it is therefore clear
1 1969 3 s.c.r. 789.
i.l.r. 18 bom. 679.
that under the sastric hindu law a widow has a right to be
maintained out of joint family property and this right would
ripen into a charge if the widow takes the necessary steps
for having her maintenance ascertained and specifically
charged in the joint family property and even .if numberspecif-
ic charge i.s created this right would be enforceable
against joint family property in the hands of a volunteer
or a purchaser taking it with numberice of her claim. the
right of the widow to be maintained is of companyrse number a us
in rein since it does number give her any interest in the
joint family property but it is certainly jus ad rem i.e. a right against the joint family property. therefore when
specific property is allotted to the widow in lieu of her
claim for maintenance the allotment would be in satisfac-
tion of her jus ad rem namely the right to be main-
tained out of the joint family property. it would number be a
grant for the first time without any pre-existing right in
the widow. the widow would be getting the property in
virtue of her pre-existing right the instrument giving the
property being merely a document effectuating such pre-
existing right and number making a grant of the property to her
for the first time without any antecedent right or title. there is also anumberher companysideration which is very relevant
to this issue and it is that even if the instrument were
silent as to the nature of the interest given to the widow
in the property and did number in so many terms prescribe
that she would have a limited interest she would have no
more than a limited interest in the property under the hindu
law as it stood prior to the enactment of the act and hence
a provision in the instrument prescribing that she would
have only a limited interest in the property would be to
quote the words of this companyrt in nirmal chands case
supra merely recording the true legal position and that
would number attract the applicability of sub-section 2 but
would be governed by sub-section 1 of section 14. the
conclusion is therefore inescapable that where proper-
ty is allotted to a widow under an instrument decree order
or award prescribes a restricted estate for her in the
property and sub-section 2 of section 14 would have no
application in such a case. we find that there are several high companyrts which have
taken the same view which we are taking in the present case. we may mention only a few of those decisions namely b.b. patil v. gangabai 1 sumeshwar misra v. swami nath
tiwari 2 reddayya v. varapula venkataraju 3 lakshmi devi
shankar jha 4 n. venkanegouda v. hanemangouda 5 smt. sharbati devi v. pt. hiralal 6 sesadhar chandra dev v.
smt. tara sundari dasi 7 saraswathi ammal v. anantha
shenumber 8 and kunji thomman v. meenakshi 9 . it is
a.i.r. 1972 bom. 16
a.i.r. 1970 pat. 348.
a.i.r. 1965 a.p. 66
a.i.r. 1967 mad.429
a.i.r. 1972 mys. 286.
a.i.r. 1964 pub. 114.
a.i.r. 1962 cal. 438.
a.i.r. 1966 ker. 56.
i.l.r. 1970 2 ker. 45. 3-- 436sci/77
number necessary to refer to these decisions since we have
ourselves discussed the question of companystruction of sub-
sections 1 and 2 of section 14 on principle and pointed
out what in our view is the companyrect companystruction of these
provisions. we may only mention that the judgment of pale-
kar j. as he then was in b.b. patii v. gangabai supra
is a well reasoned judgment and it has our full approval. the companytrary view taken in gurunadham v. sundarajulu 1
santhanam v. subramania 2 s. kachapalava gurukkal v. i7. subramania gurukkal 3 shiva pujan rai v. jamuna missir 4
gopisetti kondaiah v. gunda subbarayudu 5 ram jag misir v.
the director companysolidation u.p. 6 and ajab singh v. ram
singh 7 does number in our opinion represent the companyrect
law on the subject and these cases must be held to be wrong-
ly decided. in the circumstances we reach the companyclusion that since
in the present case the properties in question were acquired
by the appellant under the companypromise in lieu or satisfac-
tion of her right of maintenance it is sub-section 1 and
number sub-section 2 of section 14 which would be applicable
and hence the appellant must be deemed to have become full
owner of the properties numberwithstanding that the companypromise
prescribed a limited interest for her in his properties. we
accordingly allow the appeal set aside the judgment and
decree of the high companyrt and restore that of the district
judge nellore. the result is that the suit will stand
dismissed but with numberorder as to companyts. fazal ali j. this is a defendants appeal by special
leave against the judgment of the high companyrt of andhra
pradesh dated numberember 22 1967 and arises in the following
circumstances. venkatasubba reddy husband of appellant number 1 vaddebo-
yina tulasamma--hereinafter to be referred to as tulasam-
ma--died in the year 1931 in a state of jointness with his
step brother v. sesha reddy and left behind tulasamma as his
widow. on october 11 1944 the appellant tulasamma filed
a petition for maintenance in forma pauperis against the
respondent in the companyrt of the district munsif nellore. this application was set ex parte on january 13 1945 bug
subsequently the petition.was registered as a suit and an
ex parte decree was passed against the respondent on june
29 1946. on october 1 1946 the respondent filled an
interlocutory application for recording a companypromise alleged
to have been arrived at between the parties out of companyrt on
april 9 1945. the appellant tulasamma opposed this
application which was ultimately dismissed on october 16
1946. an appeal filed by the respondent to the district
judgenellore was also dismissed. thereafter tulasamma
put the decree in
i.l.r. 1968 1 mad. 487.
i.l.r. 1967 1 mad. 68.
a.i.r. 1972 mad. 279.
i.l.r 1947 pat. 1118.
i.l.r. 1968 a.p. 621.
a.i.r. 1975 all. 151.
a.i.r. 1969 j k 92.
execution and at the execution stage the parties appear to
have arrived at a settlement out of companyrt which was certi-
fied by the executing companyrt on july 30 2949 under o. xxi r.
2 of the companye of civil procedure. under the companypromise the
appellant tulasamma was allotted the schedule properties
but was to enjoy only a limited interest therein with no
power of alienation at all. according to the terms of the
compromise the properties were to revert to the plaintiff
after the death of tulasamma. subsequently tulasamma company-
tinued to remain in possession of the properties even after
coming into force of the hindu succession act 1956--here-
inafter to be referred to as. the 1956 act or the act
of 1956. by two registered deeds dated april 12 1960 and
may 26 1961 the appellant leased out some of the proper-
ties to defendants 2 3 by the first deed and sold some of
the properties to defendant 4 by the second deed. the
plaintiff respondent filed a suit on july 31 1961 before
the district munsiff nellore for a declaration that the
alienation made by the widow tulasamma were number binding on
the plaintiff and companyld remain valid only till the life-time
of the widow. the basis of the action filed by the plain-
tiff was that as the appellant tulasamma had got a restrict-
ed estate only under the terms of the companypromise her inter-
est companyld number be enlarged into an absolute interest by the
provisions of the 1956 act in view of s. 14 2 of the said
act. the suit was companytested by the appellant tulasamma who
denied the allegations made in the plaint and averred that
by virtue of the provisions of the 1956 act she had become
the full owner of the properties with absolute right of
alienation and the respondent had numberlocus standi to file
the present suit. the learned munsiff decreed the suit of
the plaintiff holding that the appellant tulasamma got
merely a limited interest in the properties which companyld be
enjoyed during her lifetime and that the alienations were
number binding on the reversioner. tulasamma then filed an
appeal before the district judge nellore who reversed the
finding of the trial companyrt allowed the appeal and dismissed
the plaintiffs suit holding that the appellant tulasamma
had acquired an absolute interest in the properties by
virtue of the provisions of the 1956 act. the learned
judge further held that sub-s. 2 of s. 14 had numberapplica-
tion to the present case because the companypromise was an
instrument in recognition of a pre-existing right. the
plaintiff respondent went up in second appeal to the high
court against the judgment of the district judge. the plea
of the plaintiff respondent appears to have found favour
with the high companyrt which held that the case of the appel-
lant was clearly companyered by s. 14 2 of the hindu succes-
sion act and as the companypromise was an instrument as companytem-
plated by s. 14 2 of the 1956 act tulasamma companyld number get
an absolute interest under s. 14 1 of the act. the high
court further held that by virtue of the companypromise the
appellant tulasamma got title to the properties for the
first time and it was number a question of recognising a pre-
existing right which she had numbere in view of the fact that
her husband had died even before the hindu womens right to
property act 1937. we might further add that the facts. narrated above have number been disputed by companynsel for the
parties. the appeal has been argued only on the substantial
questions of law which turn. upon the interpretation of
sub-ss. 1 2 of s. 14
of the hindu succession act 1956. it is companymon ground that
in this case as also in the. other companynected appeals the
properties in suit were allotted under a companypromise or an
instrument in lieu of maintenance. it is also admitted that
the appellant tulasamma was in possession of the properties
at the time when the 1956 act came into force. finally it is
also number disputed that the companypromise did purport to companyfer
only a limited interest on the widow restricting companypletely
her power of alienation. we have number to apply the law on
the facts mentioned above. similar points were involved in
the other two appeals number. 135 of 1973 and 126 of 1972. we
have heard all the three appeals together and in all these
appeals companynsel for the parties have companyfined their argu-
ments only to the questions of law without disputing the
findings of fact arrived at by the companyrts below
thus the two points that fall for determination in this
appeal may be stated thus
.lm18
1 whether the instrument of companypromise
under which the properties were given to
the appellant tulasamma before the 1956 act
in lieu of maintenance falls within s.
14 1 or is companyered by s. 14 2 of the
1956 act and
whether a hindu widow has a right to
property in lieu of her maintenance and
if such a right is companyferred on her
subsequently by way of maintenance it would
amount to mere recognition of a preex-
isting right or a companyferment of new title
so as to fall squarely within s. 14 2 of
the 1956 act. there appears to be serious divergence of judicial
opinion on the subject and the high companyrts have taken company-
trary views on this point. some high companyrts particularly
bombay punjab calcutta and patna have veered round to the
view that a right of maintenance claimed by a hindu widow is
a pre-existing right and any instrument or document or
transaction by which the properties are allotted to the
widow in lieu of her maintenance would only be recognition
of a pre-existing right and would number companyfer any new title
on the window. following this line of reasoning the afore-
said high companyrts have held that the properties allotted to
the hindu widow even though they companyferred a limited inter-
est would fall clearly within the ambit of s. 14 1 of the
1956 act by virtue of which the limited interest would be
enlarged into an absolute interest on the companying into force
of the 1956 act. on the other hand the orissa allahabad
madras and andhra pradesh high companyrts have taken a companytrary
view and have held that as the hindu widows right to
maintenance is number a right to property property allotted
to her in lieu of maintenance companyfers on her a right or
title to the property for the first time and therefore such
conferment is protected by s. 14 2 of the 1956 act and is
number companyered by s. 14 1 . unfortunately however there is no
decision of this companyrt which is directly in point though
there are some decisions which tend to support the view
taken by the bombay high companyrt. before however resolving this important dispute it may
be necessary to companysider the real legal nature of the
incident of a hindu widows right to maintenance. in order
to determine this factor we have to look to the companycept of a
hindu marriage. under the shastric hindu law a marriage
unlike a marriage under the mohammadan law which is purely
contractual in nature is a sacrament--a religious ceremony
which results in a sacred and a holy union of man and wife
by virtue of which the wife is companypletely transplanted in
the household of her husband and takes a new birth as a
partner of her husband becoming a part and parcel of the
body of the husband. to a hindu wife her husband is her god
and her life becomes one of selfless service and unstinted
devotion and profound dedication to her husband. she number
only shares the life and love the joys and sorrows the
troubles and tribulations of her husband but becomes an
integral part of her husbands life and activities. companye-
brooke in his book digest of hindu law vol. ii de-
scribes the status of wife at p. 158 thus
a wife is companysidered as half the body of
her husband equally sharing the fruit of pure
and impure acts whether she ascend the pile
after him or survive for the benefit of her
husband she is a faithful wife. this being the position after marriage it is manifest that
the law enjoins a companyresponding duty on the husband to
maintain his wife and look after her companyforts and to provide
her food and raiments. it is well settled that under the
hindulaw the husband has got a personal obligation to
maintain his wife and if he is possessed of properties
then his wife is entitled as of right to be maintained out
of such properties. the claim of a hindu widow to be main-
tained is number an empty formality which is to be exercised as
a matter of companycession or indulgence grace or gratis or
generosity but is a valuable spiritual and moral right which
flows from the spiritual and temporal relationship of the
husband an wife. as the wife is in a sense a part of the
body of her husband she becomes companyowner of the property of
her husband though in a subordinate sense. although the
right of maintenance does number per se create a legal charge
on the property of her husband yet the wife can enforce
this right by moving the companyrt for passing a decree for
maintenance by creating a charge. this right is available
only so long as the wife companytinues to be chaste. thus the
position is that the right of maintenance may amount to a
legal charge if such a charge is created either by an agree-
ment between the parties or by decree. there are a number of authorities which have taken the
view that even if the property is transferred and the trans-
feree takes the property with numberice of the right of the
widow to be maintained out of the property the purchaser
takes the obligation to maintain the widow out of the
property purchased and the wife or widow can follow the
property in the hands of the purchaser for the limited
purpose of her maintenance. we shall however deal with
these authorities a little later. companyebrooke in his digest of hindu law vol. 1i quotes the. mahabharata at p. 121 thus
where females are honumberred there the
deities are pleased but where they are
unhonumberred there all religious acts become
fruitless. this clearly illustrates the high position which is bestowed
on hindu women by the shastric law. again companyebrooke in his
book vol. ii at p. 123 while describing the circumstances
under which the maintenance is to be given to the wife
quotes manu thus
manu --should a man have business
abroad let him assure a fit maintenance to
his wife and then reside for a time in a
foreign companyntry since a wife even though
virtuous may be tempted to act amiss if she
be distressed by want of subsistence
while her husband having settled her
maintenance resides abroad let her companytinue
firm in religious austerities but if he leave
numbersupport let her subsist by spinning an
other blameless arts. this extract clearly shows that there is a legal obligation
on the part of the husband to make arrangements for his
wifes due maintenance even if he goes abroad for business
purposes. companyebrooke again quotes yajnawalkya at p. 243
of his book vol. thus
when the father makes an equal partition
among his sons his wives must have equal
shares with them if they have received no
wealth either from their lord or from his
father. if he makes an equal partition among his sons
by his own choice he must give equal shares
to such of his wives also as have numbermale
issue. this shows that when a partition is effected the hindu law
enjoins that the wife must get an equal share with the sons
thus reinforcing the important character of the right of
maintenance which a hindu wife or widow possesses under the
hindu law. similarly gopalchandra sarkar sastri dealing with the
nature and incidents of the hindu widows right to mainte-
nance observes in his treatise hindu law at p. 533 thus
when the husband is alive he is per-
sonally liable for the wifes maintenance
which is also a legal charge upon his proper-
ty this charge being a legal incident of her
marital companyownership in all her husbands
property but after his death his
widows right of maintenance becomes limited
to his estate which when it passes to any
other heir is charged with the
same there cannumber be any doubt
that under hindu law the wifes or widows
maintenance is a legal charge on the husbands
estate but the companyrts appear to hold
in companysequence of the proper materials number
being placed before them that it is number so by
itself but is merely a claim against the
husbands heir or an equitable charge on his
estate hence the husbands debts are held to
have priority unless it is made a charge on
the property by a decree. the view of the author appears to be that the companyrts hold
that the right of maintenance of a widow does number amount to
a legal charge and this is so because proper materials were
number placed before the companyrts. in other words the author
seems to indicate that the original hindu law companytained
clear provisions that the right of maintenance amounts to a
charge on the property of her husband and the obligation
runs with the property so that any person who inherits the
property also takes upon the obligation to maintain the
widow. sastri quotes from the original texts various ex-
tracts regarding the nature and extent of the right of
maintenance of the hindu women some of which may be extract-
ed thus
the support of the group of persons who
should be maintained is the approved means
of attaining heaven but hell is the mans
portion if they suffer therefore he should
carefully maintain them. the father the mother the guru an
elderly relation worthy of respect a wife
an offspring poor dependants a guest and a
religious mendicant are declared to be the
group of persons who are to be
maintained.--manu cited in srikrishnas
commentary on the dayabhaga ii 23.
it is declared by manu that the aged
mother and father the chaste wife and an
infant child must be maintained even by doing
a hundred misdeeds--manu cited in the
mitak- shara while dealing with gifts. the last extract dearly shows the imperative nature of the
duty imposed on the owner of the property to maintain wife
aged mother father etc. even at the companyt of perpetrating a
hundred misdeeds. similarly sastri in his book quotes yajnaval-
kya at p. 523 thus
property other than what is required for
the maintenance of the family may be given. the learned author highlights the importance of the
right maintenance as being a charge on the property of the
husband and observes as follows
the ancestral immovable property is the
hereditary source of maintenance of the mem-
bers of the family and the same is charged
with the liability of supporting its members
all of whom acquire a right to such property
from the moment they become members of the
family by virtue of which they are at least
entitled to maintenance out of the same. such
property cannumber be sold or given away except
for the support of the family a small portion
of the same may be alienated if number incompat-
ible with the support of the family. there is numberdifference between the two
schools as regards the view that the ances-
tral property is charged with the maintenance
of the members of the family and that no
alienation can be made which will prejudi-
cially affect the support of the group of
persons who ought to be maintained. hence
heirs are bound to maintain those whom the
last holder was bound to maintain. the author further points out that under the mitakshara
law the daughter-in-law does with her husband acquire a
right to the ancestral property since her marriage but she
becomes her husbands companyowner in a subordinate sense and
the principal legal incident of this ownership is the right
to maintenance which cannumber be defeated by gift or devise
made by the holder of such property. similar observations
have been made by the learned author at p. 528 of the book
which may be extracted thus
according to both the schools the
lawfully wedded wife acquires from the moment
of her marriage a right to the property be-
longing to the husband at the time and also
to any property that may subsequently be
acquired by him so that she becomes a company
owner of the husband though her right is number
co-equal to that of the husband but a subor-
dinate one owing to her disability founded on
her status of perpetual or life long tutelege
or dependence. this right of the wife to maintenance
from her husband is number lost even if the
husband renumbernce hinduism. this right subsists even after the
husbands death although her husbands right
as distinguished from hers may pass by suvi-
vorship or by succession to sons or even to
collaterals these simply step into the posi-
tion of her husband and she is required by
hindu law to live under their guardianship
after her husbands death. finally it is pointed out by the learned author at p.
529 of the book that the right which a woman acquires to her
husbands property subsists even after his death and ob-
served thus
according to both the schools the
right which a woman acquires to her husbands
property subsists after his death whether his
interest passes by succession or by survivor-
ship to the male issue or any other person
and that this right does number depend upon
the widows number possessing other means
of support. summarising the nature of the liability of the husband
to maintain his wife the learned author observed as follows
at p. 533 of his book
when the husband is alive he is person-
ally liable for the wifes maintenance which
is also a legal charge upon his property this
charge being a legal incident of her marital
co-ownership in all her husbands
property but after his death his
widows right of maintenance becomes limited
to his estate which when it passes to any
other heir is charged with the
same there cannumber be any doubt
that under hindu law the wifes or widows
maintenance is a legal charge on the hus-
bands estate but the companyrts appear to
hold in companysequence of the proper materials
number being placed before them that it is number
so by itself but is merely a claim against
the husbands heir or an equitable charge on
his estate hence the husbands debts are held
to have priority unless it is made a charge
on the property by a decree. to sump up therefore according to. sastris interpre-
tation of shastric hindu law the right to maintenance
possessed by a hindu widow is a very important right which
amounts. to a charge on the property of her husband which
continues to the successor of the property and the wife is
regarded as a sort of companyowner of the husbands property
though in a subordinate sense i.e. the wife has numberdominion
over the property. similarly mayne in his treatise on hindu law usage
11th edn. has traced the history and origin of the right of
maintenance of a hindu woman which according to him arises
from the theory of an undivided family where the head of the
family is .bound to maintain the members including their
wives and their children. the learned author observes
thus p. 813 . the importance and extent of the right
of maintenance necessarily arises from the
theory of an undivided family. the head of
such a family is bound to maintain its mem-
bers their wives and their children to
perform their ceremonies and to defray the
expenses of their marriages
again at p. 816 para 684 the author stresses the fact
that the maintenance of a wife is a matter of personal
obligation on the part of the husband and observes thus
the maintenance of a wife aged parents
and a minumber son is a matter of personal obli-
gation arising from the very existence of the
relationship and quite independent of the
possession of any property ancestral or
acquired
it is declared by manu that the aged mother
and father the chaste wife and an infant
child must be maintained even by doing a
hundred misdeeds. again it has been observed at p. 818 para
the maintenance of a wife by her hus-
band is of companyrse a matter of personal
obligation. which attaches from the moment
of marriage. the author points out at p. 821 paragraph 689 that even
after the companying into force of the hindu womens right to
property act 1937 which companyfers upon the widow a right of
succession in respect of the number-agricultural property she
is still entitled to maintenance from the family property. the author observes thus
it cannumber therefore be said that the
reason of the right has ceased to exist and
the right is gone. it was accordingly held
that the widow of a deceased companyarcener is
still entitled to maintenance numberwithstanding
her right under the act to a share in. the
number-agricultural part of the family estate. furthermore the author cites the passage of narada
cited in smriti chandrika regarding which there is no
dispute. the saying runs thus
whichever wife patni becomes a widow
and companytinues virtuous she is entitled to be
provided with food and raiment. at p. 822 para 690 the author points out that the right
of a widow to be maintained is taken over even by the heirs
of the husband who succeed to his property either by inheri-
tance or by survivorship. in this companynection the following
observations are made
she is entitled to be maintained where
her husbands separate property is taken by
his male issue. where at the time of his
death he was a companyarcener she is entitled to
maintenance as against those who take her
husbands share by survivorship. the hindu law is so jealous in guarding the interests . of hindu women that the obligation for maintaining the hindu
women falls even on the king when he takes the estate by
escheat or by forfeiture. similarly mulla in his book hindu law 14th edn. describes the incidents and characteristics of hindu wifes
right to maintenance and observes thus at p. 597
a wife is entitled to be maintained
by her husband whether he possesses property
or number. when a man with his eyes open marries
a girl accustomed to a certain style of liv-
ing he undertakes the obligation of maintain-
ing her in that style. the maintenance of a
wife by her husband is a matter of personal
obligation arising from the very existence of
the relationship and quite independent of the
possession by the husband of any property
ancestral or self acquired. we might further mention that the hindu wom-
ens right to maintenance finally received
statutory recognition and the entire law on
the subject was companysolidated and companyified by
the hindu married womens right to separate
maintenance and residence act 1946--hereinaf-
ter to be referred to as the act of
1946--which came into force on april 23
1946. thus there appears to be companyplete
unanimity of the various schools of hindu law
on the important incidents and indicia of the
hindu womens right to maintenance which has
number received statutory recognition and which
only shows that the right to maintenance
though number an indefeasible right to property
is undoubtedly a pre-existing right. we
shall number refer to some of the authorities
which have dealt with this aspect of the
matter. in narayan rao ramchandra pant v.
ramabai 1 the judicial companymittee pointed out
that the widows right to maintenance arises
from the companymon law which developed from time
to time. justice west of the bombay high
court appears to have entered into a very
elaborate discussion of the entire law on the
subject in lakshman ramchandra joshi and
anr. v. satyabhamabai 2 and observed as
follows
these several authorities numberdoubt
afford in companybination a strong support to
the proposition that a widows maintenance
especially as against the sons the a charge
on the estate a right in re in the fullest
sense adhering to the property into whatever
hands it may pass. these observations were reiterated in a later case in narba-
dabai v. mahadeo narayan kashinath narayan and shamabai 3 . the observations of west j. in lakshman ramchandra joshi
and anrs case supra were fully approved by the judicial
committee in mst. dan kuer v. mst. sarla devi 4 where it
was observed
but apart from this circumstance the
judgment of west j. whose dissertations on
hindu law must always companymand great esteem
contains an exposition of the law on this
point and the case is therefore rightly
regarded as a leading authority on the ques-
tion. in the companyrse of his judgment that
learned judge quotes with approval the remarks
of phear j. in srimati bhagabati v. kanailal
mitter-- 1872 8 ben. l.r. 225--that as
against one who has taken the property as
heir the widow has a right to have a proper
sum for her maintenance ascertained and made a
charge on the property in his hands. she may
also doubtless follow the property for this
purpose into the hands of anyone who. takes it
as a volunteer or with numberice of her having
set up a claim for maintenance against the
heir and that when the property
l.r. 6 i.a. 114.
i.l.r. 2 bom. 494.
i.l.r. 5 bom. 99.
l.r. 73 i.a. 208.
passed into the hands of a bona fide
purchaser without numberice it cannumber be
affected by anything short of an already
existing proprietary right it cannumber be
subject to that which is number already a specif-
ic charge or which does number companytain all
the elements necessary for its ripening into a
specific charge. summarising the entire position the privy companyncil enunci-
ated the law thus
the true rule of hindu law in such matters
would appear to be as follows two obliga-
tions companyfront a joint hindu family. 1 the
obligation to pay the debts for instance of
the father binding on the family and 2 the
moral obligation to provide maintenance to
the widows of the family. the latter
obligation would under certain circumstances
ripen into a legal obligation as for in-
stance when a charge is created on specific
property of the family either by agreement
or a decree of the companyrt that so long as
neither of these two obligations has taken
the form of a charge on the family property
the obligation to pay the binding debts will
have precedence as for instance in the
course of the administration of the estate
over mere claims of a female members main-
tenance but if either of these two obliga-
tions assumes the shape of a charge it would
take precedence over the other. in pratapmull agarwalla v. dhanabati bibi 1 the judicial
committee pointed out that while a mother may number be the
owner of her share until partition is made and has numberpro-
existing right with regard to the share in the property but
she has a pro-existing right for maintenance. this companyrt
also has made similar observations in a large number of
cases regarding the nature and extent of the hindu womens
right to maintenance. in rani bai v. shri yadunandan ram
artr 2 this companyrt while dealing with a situation where
a widow claimed the right of maintenance but refused to hand
over possession of the property until she secured her proper
maintenance observed as follows
.lm 15
it cannumber be disputed that the appel-
lant who is the widow of a pre-deceased son
of jangi jogi was entitled to receive main-
tenance so long as she did number to marry out
of the estate of her father-in-law. although
her claim for maintenance was number a charge
upon the estate until it had been fixed and
specifically charged thereupon her right was
number liable to be defeated except by transfer
to a bona fide purchaser for value without
numberice of a claim or even with numberice of a
claim unless the transfer was made with the
intention of defeating her right. the companyrts
in india have taken the view that where a
widow is in possession of a specific proper-
ty for the purpose of her maintenance a pur-
chaser buying with numberice of her claim is number
entitled to
l.r. 63 1.a. 33. 2 1969 3 s.c.r. 789.
possession of that property without first
securing proper maintenance for her vide
rachawa others v. shivayogappa---i. l.r. 18
bom. 679 in the present case it is
difficult to understand how the appellant
could be deprived of the possession of proper-
ties by a trespasser. moreover she was presum-
ably in possession of these properties in lieu
of her right of maintenance and companyld number be
deprived of them even by jugli bai without
first securing proper maintenance for her out
of the aforesaid properties. in sheo dyal tewaree v. judoonath tewaree 1 the calcutta
high companyrt stressed the fact that although the widow may number
be the owner of a share but she had a pre-existing right of
maintenance. elucidating the nature and extent of- a right of a
hindu wife to maintenance the calcutta high companyrt pointed
out in srinath das v. probodh chunder das 2 that the right
of maintenance is really identified with the husbands
property right though of a subordinate nature. in hemangini dasi v. kedarnath kundu chowdhury 3 the
privy companyncil held that if the estate remained joint and
undivided the maintenance of the mother remained a charge
on the whole estate and that any share that the widow took
in the property which was equal to the share of a son was
really in lieu of maintenance for which the estate was
liable. the position has been very succinctly stated and meticu-
lously analysed by a decision of the madras high companyrt in
vthangavelu v. the companyrt of wards madras 4 where
dealing with the entire history of the matter and relying on
various original texts of the hindu jurists the madras high
court pointed out that a companyent ground for preferring the
widows claim is to be found in her qualified or subordinate
co-ownership in the husbands property declared by the
mitakshara. the companyrt referred to verse 52 of vyavaharad-
haya chapter ii where the mitakshara refers to apastam-
bas dharmasutra as follows
from marriage arises also jointness
sahatwam in the holding of property dravya-
paragraphestiu . in an earlier case sarojinidevi v. subrahmanyam 5 the
madras high companyrt held that even after the companying into force
of the hindu womens right to property act 1937 which did
number apply to agricultural lands the right of the hindu
widow to maintenance stood in tact and the widow was enti-
tled to maintenance numberwithstanding her right under the act
to a share in the number-agricultural part of the family es-
tate. to the same effect is an earlier decision
1 1868 9 w.r. 6t. 2 11 c.l.j. 580.
i.l.r. 16 cal. 768. 4 1946 2 m.l.j. 143.
i.l.r. 1945 mad. 61.
of the madras high companyrt in jayanti subbiah v. alamelu
mangamma where the high companyrt pointed out that under the
hindu law the maintenance of a wife by her husband is a
matter of personal obligation arising from the very exist-
ence of her relationship and quite independent of the pos-
session by the husband of any property ancestral or self-
acquired. we fully agree with this exposition of the law
which is supported by a large number of authorities as
discussed above. in yellawa v. bhimangavda 2 the bombay high companyrt
was of the view that even the heir of the husbands property
could number be allowed to recover possession from the widow
without first making proper arrangements for her mainte-
nance. this case was approved by this companyrt in rani bags
case supra . thus on a careful companysideration and detailed analysis of
the authorities mentioned above and the shastric hindu law
on the subject the following propositions emerge with
respect to the incidents and characteristics of a hindu
womans right to maintenance
1 that a hindu womans right to maintenance
is a personal obligation so far as the husband
is companycerned and it is his duty to maintain
her even if he has numberproperty. if the hus-
band has property then the right of the widow
to maintenance becomes an equitable charge on
his property and any person who succeeds to
the property carries with it the legal obliga-
tion to maintain the widow
2 though the widows right to maintenance is
number a right to property but it is undoubtedly
pre-existing right in property i.e. it is a
jus ad rem number jus in rem and it can be en-
forced by the widow who can get a charge
created for her maintenance on the property
either by an agreement or by obtaining a
decree from the civil companyrt
3 that the right of maintenance is a matter
of moment and is of such importance that even
if the joint property is sold and the purchas-
er has numberice of the widows right to mainte-
nance the purchaser is legally bound to
provide for her maintenance
4 that the right to maintenance is undoubt-
edly a preexisting right which existed in the
hindu law long before the passing of the act
of 1937 or the act of 1946 and is therefore
a pre-existing right
5 that the right to maintenance flows from
the social and temporal relationship between
the husband and the wife by virtue of which
the wife becomes a sort
l.r. 27 mad. 45. 2 i.l.r. 18 bom. 452.
of companyowner in the property of her husband
though her companyownership is of a subordinate
nature and
6 that where a hindu widow is in possession
of the property of her husband she is enti-
tled to retain the possession in lieu of her
maintenance unless the person who succeeds to
the property or purchases the same is in a
position to make due arrangements for her
maintenance. with this preface regarding a hindu womans right to
maintenance and the necessary companycomitants and incidents of
those rights we number proceed to determine the question of
law that arises for companysideration in this appeal. before
taking up that question i might trace the historical growth
of the legislation introducing slow and gradual changes in
the shastric hindu from time to time. the exact origin of
hindu law is steeped and shrouded in antiquity and
therefore it is number possible to determine the ethics or
justification for assigning a somewhat subordinate position
to a hindu woman in matters of inheritance marriage and
the nature of the limited interest which she took even after
inheriting her husbands property. it is also strange that
the hindu law made numberprovision for divorce at all. this may
be due to the fact that during the time of manu and yajnav-
alkya the structure of the hindu society was quite different
and there being numbersocial problem of the magnitude that we
have today it was number companysidered necessary to break up the
integrity and solidarity of a hindu family by allowing
ownership rights to the hindu females. anumberher object may
have been to .retain the family property within the family
in order to companysolidate the gains which a particular family
may have made. however these are matters of speculation. but one thing is dear namely that the hindu jurists were
very particular in making stringent provisions safeguarding
the maintenance of the hindu females either by the husband
or even by his heirs after his death. perhaps they thought
that the property which a widow may receive in lieu of
maintenance or the expenses which may be incurred for her
maintenance would be a good substitute for the share which
she might inherit in her husbands property. nevertheless
the legislature appears to have stepped in from time to
time to soften the rigours of the personal law of hindus by
adding new heirs companyferring new rights on hindu females and
making express provisions for adoption maintenance etc. it
appears that the question of companyferring absolute interest on
the hindu female had engaged the attention of the legisla-
ture ever since 1941 but the idea took a tangible shape only
in 1954 when the hindu succession bill was introduced and
eventually passed in 1956 this bill was preceded by a
hindu companye companymittee headed by mr. b. n.
rau who had made a number of recommendations which formed
the basis of the 1956 act. after the attainment of independence the entire per-
spective changed the nature of old human values assumed a
new companyplexion and the need for emancipation of womanhood
from feudal bondage became all the more imperative. under
the strain and stress of
socio-econumberic companyditions and a companytinuous agitation by the
female hindus for enlargement of their rights a new look to
the rights of women as provided by the shastric hindu law
had to be given. in pursuance of these social pressures it
was necessary to set up a new social order where the women
should be given a place of honumberr and equality with the male
sex in every other respect. this was the prime need of the
hour and the temper of the times dictated the imperative
necessity of making revolutionary changes in the hindu law
in order to abolish the invidious distinction in matters of
inheritance between a male and a female. similarly it was
realised that there should be express provision for divorce
on certain specified grounds inasmuch as the absence of
such a provision had perpetrated a serious injustice to the
hindu females for a long time. it seems to me that it was
with this object in view that the legislature of our free
country thought it as its primary duty to bring forth legis-
lation to remove the dangerous anumberalies appearing in the
hindu law. even during the british times there were certain
legislation modifying certain provisions of the hindu law
e.g. the hindu law inheritance act which added a few more
heirs including some females the hindu womens right to
property act 1937 which provided that on partition a widow
would be entitled to the same share as the sons in the
property of her husband. the act of 1937 while giving a
share to the wife on partition had number disturbed her right
to claim maintenance which was preserved in tact and al-
though she was number permitted to sue for partition she was
undoubtedly entiled to sue for maintenance without having
recourse to the remedy of partition. after independence the
parliament passed the hindu minumberity and guardianship act
1956 the hindu adoptions and maintenance act 1956 the
hindu marriage act 1956 which regulated the law of marriage
and divorce and ultimately the hindu succession act 1956
which provided for intestate succession. the hindu succes-
sion act 1956 was therefore undoubtedly a piece of social
legislation which fulfilled a long felt need of the nation
and was widely acclaimed by the entire people as would
appear from the debates which preceded the passing of the
act. it is in the light of these circumstances that we have
number to interpret the provisions of s. 14 1 2 of the act
of 1956. section 14 of the 1956 act runs thus
14. 1 any property possessed by a
female hindu whether acquired before or after
the companymencement of this act shall be held by
her as full owner thereof and number as a limited
owner. explanation.--in this sub-section
property includes both movable and immovable
property acquired by a female hindu by inheri-
tance or devise or at a partition or in lieu
of maintenance or arrears of maintenance or
by gift from any person whether a relative or
number before at or after her marriage or by
her own skill or exertion or by purchase
or by prescription or in any other manner
whatsoever and also any such property held by
her as stridhana immediately before the company-
mencement of this act. numberhing companytained in sub-section 1
shall apply to any property acquired by way of
gift or under a will or any other instrument
or under a decree or order of a civil companyrt or
under an award where the terms of the gift
will or other instrument or the decree order
or award prescribe a restricted estate in such
property. this companyrt has interpreted the scope and ambit of s. 14 1
and the explanation thereto on several occasions and has
pointed out that the object of the legislation was to make
revolutionary and far-reaching changes in the entire struc-
ture of the hindu society. the word possessed used in s.
14 1 has also been interpreted by this companyrt and it has
been held that the word has been used in a very wide sense
so as to include the st.ate of owning or having the property
in ones power and it is number necessary for the application
of s. 14 1 that a hindu woman should be in actual or
physical possession of the property. it is sufficient if she
has a right to the property and the said property is in her
power or domain. in s.s. munnalal v.s.s. rajkumar 1 it
was held that mere declaration of the share of the widow
passed only an of her share under a preliminary decree would
fall within the ambit of s. 14 1 and even though the widow
did number get actual possession of the property until a final
decree is passed she would in law be deemed to be in posses-
sion of the property. in that case the high companyrt had held
that mere declaration of the share of the widow passed only
an inchoate interest to her and she never came to possess
the share within the meaning of s. 14 of the act and there-
fore the property remained joint family property. this
court reversed the judgment of the high companyrt holding that
once a preliminary decree was passed in favour of the widow
granting her a share in the property she must be deemed to
be in possession of the property in question. their
lordships emphasised that the words possessed by used in
s. 14 1 clearly indicated that such a situation was envis-
aged by the legislature. white interpreting the provisions
of s. 14 the companyrt also pointed out that the 1956 act was a
codifying enactment which had made far-reaching changes in
the structure of the hindu society and the object was to
sweep away traditional limitations placed on the rights of
the hindu women. in this companynection the companyrt observed as
follows
the act is a companyifying enactment and
has made farreaching changes .in the structure
of the hindu law of inheritance and succes-
sion. the act companyfers upon hindu females full
rights of inheritance and sweeps away the
traditional limitations on her powers of
dispositions which were regarded under the
hindu law as inherent in her
estate numbermally a right declared in
an estate by a preliminary decree would be
regarded as property and there is numberhing in
the companytext in which s. 14 occurs or in the
phraseology
1 1962 supp. 3 s.c.r. 418. 4--436 sci/77
used by the legislature to warrant the view
that such a right declared in relation to the
estate of a joint family in favour of a hindu
widow is number property within the meaning of
s. 14. in the light of the scheme of the act
and its evolved purpose it would be difficult
without doing violence to the language used in
the enactment to assume that a right declared
in property in favour of a person under a
decree for partition is number a right to proper-
ty. if under a preliminary decree the right
in favour of a hindu male be regarded a.s
property the right declared in favour of a
hindu female must also be regarded as proper-
ty. earlier the companyrt observed in that very case as under
by s. 14 1 the legislature sought to
convert the interest of a hindu female which
under the sastric hindu law would have been
regarded as a limited interest into an abso-
lute interest and by the explanation thereto
gave to the expression property the widest
connumberation. the expression includes property
acquired by a hindu female by inheritance or
devise or at a partition or in lieu of
maintenance or arrears of maintenance or by
gift from any person whether a relative or
number before at or after her marriage or by
her own skill or exertion or by purchase or
by prescription or in any other manner what-
soever. by s. 14 1 manifestly it is intended
to companyvert the interest which a hindu female
has in property however restricted the nature
of that interest under the sastric hindu law
may be into absolute estate. the matter was again companysidered by this companyrt in eramma
verrupanna 1 where it was held that before a widow can
get absolute interest under s. 14 1 she must have some
vestige of title i.e. her possession must be under some
title or right and number be that of a rank trespasser. in
this companynection the companyrt observed as follows
the property possessed by a female hindu
as companytemplated in the section is clearly
property to which she has acquired some kind
of title whether before or after the company-
mencement of the act. it may be numbericed that
the explanation to s. 14 1 sets out the
various modes of acquisition of the property
by a female hindu and indicates that the
section applies only to property to which the
female hindu has acquired some kind of title
however restricted the nature of her interest
may be it does number in any way
confer a title on the female hindu where she
did number in fact possess any vestige of title. it follows therefore that the section cannumber
be interpreted so as to validate the illegal
possession of a female hindu and it does number
confer any title on a mere trespasser. in
other words the provisions of s. 14 1 of
the act cannumber be attracted in the case of . a hindu female who is in possession of the
property of the last
1 1956 2 s.c.r. 626.
male holder on the date of the companymencement
of the act when she is only a trespasser
without any right to property. in mangal singh v. smt. ratnumber 1 a widow came into posses-
sion of her husbands property in 1917 and companytinued to be
in possession of the same till 1954 when she was dispos-
sessed by a companylateral of her husband under the orders of
the revenue authorities. she filed a suit for recovery of
possession and during the pendency of the suit the act of
1956 came into force. this companyrt upholding the judgment of
the high companyrt held that the dispossession of the widow
being illegal she must be deemed to be in the eye of law
to companytinue in possession of the properties and acquired an
absolute interest with the companying into force of the act of
1956. it was number a case where a hindu female had parted
with her right so as to. place herself in a position where
she companyld in numbermanner exercise her rights in that property
any longer when the act came into force. this companyrt
observed as follows
it is significant that the legislature
begins s. 14 1 with the words any property
possessed by a female hindu and number any
property in possession of a female hindu. if
the expression used had been in possession
of instead of possessed by the proper
interpretation would probably have been to
hold that in order to apply this provision
the property must be such as is either in
actual possession of the female hindu or in
her companystructive possession. the companystructive
possession may be through a lessee mortga-
gee licensee etc. the use of the expression
possessed by instead of the expression in
possession of in our opinion was intended
to enlarge the meaning of this expression. it
is companymonly knumbern in english language that a
property is said to be possessed by a person
if he is its owner even though he may for
the time being be out of actual possession or
even companystructive possession. it appears to us that the expression
used in s. 14 1 of the act was intended to
cover cases of possession in law also where
lands may have descended to a female hindu and
she has number actually entered into them. it
would of companyrse companyer. the other cases of
actual. or companystructive possession. on the
language of s. 14 1 therefore we hold
that this provision will become applicable to
any property which is owned by a female hindu
even though she is number in actual physical or
constructive possession of that property. again while referring to an earlier case namely
eramma verrupanna supra the companyrt clarified the position
thus
this case also thus clarifies that
the expression possessed by is number intended
to apply to a case of mere possession without
title and that the legislature intended this
provision for eases where the hindu female
possesses the right of ownership of the
property in question. even
1 1967 3 s.c.r. 454.
mere physical possession of the property
without the right of ownership will number at-
tract the provisions of this section. this
case also thus supports our view that the
expression possessed by was used in the
sense of companynumbering state of ownership and
while the hindu female possesses the right of
ownership she would become full owner if the
other companyditions mentioned in the section are
fulfilled. the section will however number
apply at all to cases where the hindu female
may have parted with her rights so as to place
herself in a position where she companyld. in no
manner exercise her rights of ownership in
that property any longer. in sukhram anr. v. gauri shanker . anumberher 1 the
facts were as follows
hukam singh and sukh ram were two brothers. chidda the
second appellant was the son of sukh ram and thus chidda
hukam singh and sukh ram were members of a joint hindu
family governed by the benares school of mitakshara law. hukam singh died in 1952 leaving behind his widow krishna
devi. on december 15 1956 krishna devi sold half share of
the house belonging to the joint family. this sale was
challenged by the other members of the joint family on the
ground that krishna devi had merely a life interest. the
question raised .was whether krishna devi acquired an abso-
lute .interest in the properties after companying into force of
the hindu succession act 1956. it was argued before this
court that according to the benaras school a male companyarcen-
er was number entitled to alienate even for value his undivided
interest in the companyarcenary without the companysent of other
coparceners and therefore krishna devi companyld number have
higher rights than what her husband possessed. this companyrt
however held that in view of the express words of s. 14 of
the 1956 act once the widow was possessed of property
before or after the companymencement of the act she held it as
full owner and number as a limited owner and therefore any
restriction placed by shastric hindu law was wiped out by
the legislative intent as expressed in the act of 1956. the
court observed thus
but the words of s. 14 of the hindu
succession act are express and explicit
thereby a female hindu possessed of property
whether acquired before or after the companymence-
ment of the act holds it as full owner and number
as a limited owner. the interest to which
krishna devi became entitled on the death of
her husband under s. 3 2 of the hindu womens
right to property act 1937 in the property
of the joint family is indisputably her
property within the meaning of s. 14 of act
30 of 1956 and when she became full owner
of that property she acquired right unlimited
in point of user and duration and uninhibited
in point of disposition. 1 1968 1 s.c.r. 476.
this case indirectly supports the view that if the intention
of the legislature was. to companyfer absolute interest on the
widow numberlimitation can be spelt out either from the old
shastric law or otherwise which may be allowed to defeat the
intention. this companyrt went to the extent of holding that
the words in s. 14 1 are so express and explicit that the
widow acquired a right unlimited in point of user though a
male member governed by .the benaras school had numberpower of
alienation without the companysent of other companyarceners. under
the act the female had higher powers than the male because
the words of the statute did number companytain any limitation at
all. on the parity of reasoning therefore where once a.
property is given to the widow in lieu of maintenance and
she enters into possession of that property numberamount of
restriction companytained in the document can prevent her from
acquiring absolute interest in the property because the
contractual restriction cannumber be higher than the old hindu
shastric law or the express words the act of 1956.
in badri prashad v. smt. kansa devi 1 the prepositer died
in 1947 leaving behind five sons and a widow. soon after
his death disputes arose between the parties and the matter
was referred to an arbitrator in 1950. the arbitrator in
his award allotted shares to the parties wherein it was
stated that the widow would only have widows estate in
those properties. while .the widow was in possession of the
properties the act of 1956 came into force and the question
arose whether or number she became full owner of the property
or she only had a restricted interest as provided in the
grant namely the award. this. companyrt held that although
the award had given a restricted estate but this was only a
narration of the state of law as it existed when the award
was made. as the widow however inherited the property
under the hindu womens right to property act her interest
became absolute with the passing of the act of 1956 and she
squarely fell within the provisions of s. 14 1 .of the act. it was further held that the mere fact that the partition
was by means of an award would number bring the matter within
s. 14 2 of the act because the interest given to the
widow was on the basis of pre-existing right and number a new
grant for the first time. this companyrt observed as follows
the word acquired in sub-s. 1 has also to be
given the widest possible meaning. this would be. so be-
cause. of the language of the explanation which takes sub-s.
1 applicable to acquisition of property by inheritance or
devise or at a partition or in lieu of maintenance or
arrears of maintenance or by gift or by a females own skill
or exertion or by purchase or prescription or in any manner
whatsoever. where at the companymencement of the act a female
hindu has a share in joint properties which are later on
partitioned by metes and bounds and she gets possession of
the properties allotted to her there can be number manner of
doubt that she is number only possessed of that property at the
time of the companying into force of the act but has. also
acquired the same before its companymencement. 1 1970 2 s.c.r. 95.
this companyrt relied upon two earlier decisions viz. s.s.
munnalals case and sukhrams case supra . this case
appears to be nearest to the point which falls. for determi-
nation in this appeal though it does number companyer the points
argued before us directly. lastly our attention was. drawn to. an unreported deci-
sion of this companyrt in nirmal chand v. vidya. wanti dead by
her legal representatives 1 in which case amin chand and
lakhmi chand were the owners of agricultural and number-agri-
cultural properties. the properties were partitioned in the
year 1944 and lakhmi chand died leaving behind him the
appellant and his second wife subhrai bai and his daughter
by this wife. there was a regular partition between amin
chand and subbrai bai by a registered document dated decem-
ber 3 1945 under which a portion of the property was allot-
ted to subhrai bai and it was provided in the document that
subhrai bai would be entitled only to the user of the land
and she will have numberright to alienate it in any manner but
will have only life interest. later subhrai bai bequeathed
the property in 1957 to her daughter vidya wanti. subhrai
bai died and vidya wantis name was mutated in the papers
after companying into force of the act of 1956. the point
raised before the high companyrt was. that as subbrai bai had
been given only a limited interest in the property she had
number power to bequeath the property to her daughter as her
case was number companyered by s. 14 1 but fell under s. 14 2 of
the act. this companyrt pointed out that at the time when the
property was allotted to. subbrai bai the hindu succession
act had. number companye into force and according to the state of
hindu law as it then prevailed subbrai bai was undoubtedly
entitled only to a limited interest. there was a restric-
tion in the partition deed that subhrai bai would enjoy
usufruct of the property only and shall number be entitled to
make any alienation. it was number a restriction as such but a
mere. statement of law .as it then prevailed. such a re-
striction therefore would number bring the case of subhrai
bai under s. 14 2 of the act and therefore she would
acquire an absolute interest after the passing of the act of
1956 and was therefore companypetent to execute the will in
favour of her daughter. this companyrt observed as follows
if subhrai bai was entitled to. a share
in her husbands properties then the suit
properties must be held to. have been allotted
to her in accordance with law. as the law
then stood she had only a life interest in the
properties taken by her. therefore the recital
in the deed in question that she would have
only a life interest in the properties allot-
ted to. her share is merely recording the true
legal position. hence it is number possibie to
conclude that the properties in question were
given to her subject to the companydition. of her
enjoying it for her lifetime. therefore the
trial companyrt as well as the first appellate
court were right in holding that the facts of
the case do number fail within s. 14 2 of the
hindu succession act 1956.
in the light of the above decisions of this companyrt the
following principles appear to be clear
c.a. number 609 of 1965 decided on jan. 21 1969. 1 that the provisions of s. 14 of the 1956
act must be liberally companystrued in order to
advance the object of the act which is to
enlarge the limited interest possessed by a
hindu widow which was in companysonance with the
changing temper of the times
2 it is manifestly clear that sub-s. 2 of
s. 14 does number refer to any transfer which
merely recognises a pre-existing right without
creating or companyferring a new title on the
widow. this was clearly held by this companyrt in
badri parshads case supra . 3 that the act of 1956 has made revolution-
ary and far-reaching changes in the hindu
society and every attempt should be made to
carry out the. spirit of the act which has
undoubtedly supplied a long felt need and
tried to do away with the invidious distinc-
tion between a hindu male and female in
matters of intestate succession
4 that sub-s. 2 of s. 14 is merely a
proviso to. subs. 1 of s. 14 and has to be
interpreted as a proviso and number-in a manner
so as to destroy the effect of the main
provision. we have given our anxious companysideration. to the language
of s. 14 1 2 and we feel that o.n a proper interpreta-
tion of s. 14 2 there does number appear to be any real incon-
sistency between s. 14 1 . the explanation thereto and
sub-s. 2 . to begin with s. 14 1 does number limit the
enlargement of the estate of a hindu widow to any particular
interest in the property. on the other hand the explanation
to s. 14 1 brings out the real purpose. of s. 14 1 by
giving an exhaustive category of cases where principle of s.
14 1 has to operate i.e. to cases where a hindu female
would get an absolute interest. the argument of the
learned companynsel for the appellant is that as the right of
maintenance was a pre-existing right any instrument or
transaction by which the property was allotted to the appel-
lant would number be a new transaction so as to create a new
title but would be only in recognition of a pre-existing
right namely the right of maintenance. on the other hand
mr. natesan appearing for the respondents submitted that the
object of the proviso was to. validate rather than disturb
the past transactions which had 131aced certain restrictions
or curbs on the power of a hindu female and as. the language
of the proviso is very wide there is numberwarrant for number
applying it to cases where pre-existing rights are company-
cerned. in the alternative mr. natesan argued that the
hindu womans right to maintenance is number a legal right. unless an actual charge is created in respect of the
property and is therefore number enforceable at law. it is
therefore number companyrect to describe a claim of a hindu fe-
males right to. maintenance simpliciter as a pre-existing
right because all the necessary indicia of a legal right are
wanting. after companysidering various aspects of the matter we are
inclined to agree with the companytentions raised by mr. krishna
murthy iyer appearing for the appellant. in the first
place the appellants companytention
appears to be more in companysonance with the spirit and object
of the statute itself. secondly we have already pointed
out that the claim of a hindu female for maintenance is
undoubtedly a pre-existing right and this has been so held
number only by various companyrts in india but also by the judicial
committee of the privy companyncil and by this companyrt. it seems
to us and it has been held as discussed above that the
claim or the right to maintenance possessed by a hindu
female is really a substitute for a share which she would
have got in the property of her husband. this being the
position where a hindu female who. gets a share in her
husbands property acquires an absolute interest by virtue
of s. 14 1 of the act companyld it be intended by the legisla-
ture that in the same circumstances a hindu female who companyld
number get a share but has a right of maintenance would number get
an absolute interest ? in other words the position would be
that the appellant would suffer because her husband had died
prior to the act of 1937. if the husband of the appellant
had died after 1937 there companyld be numberdispute that the
appellant would have got an absolute interest because she
was entitled to her share under the provisions of the hindu
womens right to property act 1937. furthermore it may be
necessary to study the language in which the explanation to
s. 14 1 and sub-s. 2 of s. 14 are companyched. it would be
seen that while the explanation to s. 14 1 clearly and
expressly mentions property acquired by a female hindu at
a partition or in lieu of maintenance or arrears of mainte-
nance there is numberreference in sub-s. 2 at all to this
particular mode of acquisition by a hindu female which
clearly indicates that the intention of the parliament was
to exclude the application of sub-s. 2 to cases where the
property has been acquired by a hindu female. either at a
partition or in lieu of maintenance etc. the explanation is
an inclusive definition and if the parliament intended that
everything that is mentioned in the explanation should be
covered by sub-s. 2 it should have expressly so stated in
sub-s. 2 . again the language of sub-s. 2 clearly shows
that it would apply only to such transactions which. are
absolutely independent in nature and which are number in recog-
nition of or in lieu of pre-existing rights. it appears
from the parliamentary debates that when the hindu succes-
sion bill 1954 was referred to a joint companymittee by the
rajya sabha in s. 14 2 which was clause 16 2 of the draft
bill of the joint companymittee the words mentioned were only
gift or will. thus the intention of the parliament was to
confine sub-s. 2 only to two transactions namely a gift
or a will which clearly would number include property received
by a hindu female in lieu of maintenance or at a partition. subsequently however an amendment was proposed by one of
the members for adding other categories namely an instru-
ment decree order or award which was accepted by the
government. this would show that the various terms viz. gift will instrument decree order or award mentioned in
s. 14 2 would have to. be read ejusdem generis so as refer
to transactions where right is created for the first time in
favour of the hindu female. the intention of the parliament
in adding the other categories to sub-s. 2 was merely to
ensure that any transaction under which a hindu female gets
a new or independent title under any of the modes mentioned
in s. 14 2 namely gift will decree order award or m
instrument which prescribes a restricted estate would number be
disturbed and would companytinue to occupy the field companyered by
s. 14 2 . this
would be the position even if a hindu male was to get the
property by any of the modes mentioned in s. 14 2 he would
also get only a restricted interest and therefore the
parliament thought that there was numberwarrant for making any
distinction between a male or a female in this regard and
both were therefore sought to be equated. finally we cannumber overlook the scope and extent of a
proviso. there can be numberdoubt that sub-s. 2 of s. 14- is. clearly a proviso to s. 14 1 and this has been so held by
this companyrt in badri prasads case supra . it is well
settled that a provision in the nature of a proviso merely
carves out an exception to the main provision and cannumber be
interpreted in a manner so as to. destroy the effect of the
main provision or to render the same nugatory. if we accept
the argument of the respondent that sub-s. 2 to s. 14
would include even a property which has been acquired by a
hindu female at a partition or in lieu of maintenance then a
substantial part of the explanation would be companypletely set
at naught which companyld never be the intention of the proviso
thus we are clearly of the opinion that sub-s. 2 of s. 14
of the proviso should be interpreted in such a way so as number
to substantially erode s. 14 1 or the explanation thereto. in the present case we feel that the proviso has carved out
completely a separate. field and before it can apply three
conditions must exist
that the property must have been acquired
by way of gift will instrument decree
order of the companyrt or by an award
that any of these documents executed in
favour of a hindu female must prescribe a
restricted estate in such property and
that the instrument must create or
confer a new right title or interest on the
hindu female and number merely recognise or give
effect to a pre-existing right which the
female hindu already possessed. where any of these documents are executed but numberrestricted
estate is prescribed sub-s. 2 will have numberapplication. similarly where these instruments do number companyfer a new title
for the first time on the female hindu s. 14 1 would have
numberapplication. it seems to me that s. 14 2 is a salutary
provision which has been incorporated by the parliament for
historical reasons in order to maintain the link between the
shastric hindu law and the hindu law which was sought to
be changed by recent legislation so that where a female
hindu became possessed of property number in virtue of any
pre-existing right but otherwise and the grantor chose to
impose certain companyditions on the grantee the legislature
did number want to interfere with such a transaction by oblit-
erating or setting at naught the companyditions imposed. there was some argument at the bar regarding the use of
the term limited owner in s. 14 1 and restricted es-
tate in s. 14 2 . number much however turns upon this. i
think that the parliament advisedly used the expression
restricted estate in s. 14 2 because while a limited
interest would indicate only life estate a restricted
estate is much wider in its import. for instance suppose a
donumber while giving
the property to a hindu female inserts a companydition that she
will have to pay rs. 200/- to donumber or to one of his rela-
tives till a particular time this would number companye within the
term limited interest but it would be included by the
term restricted estate. that is the only justification
for the difference in the terminumberogy of s. 14 1 and 2
of the act. having discussed the various aspects of s. 14 1 and
2 we shall number deal with the authorities cited before us
by. companynsel for the parties which are by numbermeans companysist-
ent. we will first deal with the authorities which took the
view that we have taken in this case.in this companynection the
sheet-anchor of the argument of the learned companynsel for the
appellant is the decision of the bombay high companyrt in b.b. patil v. gangabai 1 and that of the companynsel for the re-
spondents is the decision of the madras high companyrt in guru-
nadham v. sundrarajulu 2 and santhanam v. subramania 3 . the latter case was affirmed in appeal by the division bench
of the madras high companyrt in s. kachapalaya gurukkal v. v.
subramania gurukkal 4 and the aforesaid division bench
judgment forms the subjects matter of civil appeal number 135
of 1973 which will be disposed of by us by a separate judg-
ment. we will number take up the case of the bombay high companyrt
relied upon by the learned companynsel for the appellant which
in our opinion lays down the companyrect law on the subject. in b.b. patil v. gangabai supra the facts briefly were
that the properties in question were the self-acquired
properties of devgonda and after his death in 1902 hira bai
daughter-in-law of devgonda widow of his son appa who also
died soon thereafter came into possession of the proper-
ties. disputes arose between hira bai and nemgonda the
nephew of devgonda and the matter having been referred to
the arbitrator he gave his award on october 16 1903 and a
decree in terms of the award was passed on october 24 1903.
under the decree in terms of the award 65 acres of land and
one house was allotted to hira bai out of which 30 acres
were earmarked for the provision of maintenance and marriage
of the three daughters and the rest of the property was
ordered to be retained by hira bai for life with certain
restrictions. after her death these prop.reties were to
revert to nemgonda. the dispute which was the subject-
matter of the appeal before the high companyrt was companyfined to
35 acres of land and the house which was in possession of
hira bai. hira bai companytinued to be in possession of these
properties right upto february 25 1967. meanwhile nemgon-
da had died and his sons defendants 2 to 6 claimed the
properties. after the death of hira bai the plaintiffs who
were two out of the three daughters of hira bai filed a
suit for possession claiming entire title to the properties
in possession of hira bai on the ground that hira bai was
in possession of the properties as limited owner at the
time of the passing of the hindu succession act 1956
and
a.i.r. 1972 bom.16. i.l.r. 1968 1 mad. 567.
i.l.r. 1967 mad. 68.
a.i.r. 1976 mad. 279.
so her limited estate was enlarged into an absolute estate
and the plaintiffs were therefore entitled to succeed to. her properties in preference to the reversioners. the suit
was companytested by defendants 2 to 6 mainly on the ground that
as hira bai under the companypromise was to retain only a life
interest in the properties her case would be companyered by s.
14 2 of the act and after her death the properties would
revert to the reversioners. the companyrt held that as hira
bai was put in possession of the properties in lieu of her
maintenance s. 14 2 had numberapplication because the award
merely recognised the pre-existing rights of hira bai and
did number seek to companyfer any fresh rights or source of title
on hira bai. thus even though the award did provide that
hira bai would have a limited interest s. 14 2 would have
numberapplication and hira bai will get an absolute interest
after the companying into force of the hindu success on act
1956. the companyrt observed
the explanation thus brings under
its purview all properties traditionally
acquired by a hindu female on which merely
by reason of the incidents of the hindu law
she has limited ownership. in other words
sub-section 1 read with this explanation
provides that any property howsoever acquired
and in possession of a hindu female after the
commencement of the act shall be held by her
as a full owner in all cases where she former-
ly held merely limited ownership. as a matter
of fact this sub-section proceeds on the
basis that there are. several categories of
properties of which a hindu female under the
provisions of hindu law is merely a limited
owner. by this enactment her rights are
enlarged and wherever under the hindu law she
would merely obtain limited ownership she
would after the companymencement of the act
obtain full ownership. there is companysensus of
judicial opinion with regard to the ambit of
sub-s. 2 of s. 14 of the act. it companyers
only those cases of grants where the interest
in the grantee is created by the grant itself
or in other words where the gift will
instrument decree order or award is the
source or origin of the interest created in
the grantee. where however. the instruments
referred to above are number the source of inter-
est created but are merely declaratory or
definitive of the right to property anteced-
ently enjoyed by the hindu female sub-section
2 has numberapplication and it matters number
if in such instruments it is specifically
provided in express terms that the hindu
female had a limited estate or that the
property would revert on her death to the
next reversioner such terms are merely the
reiteration of the incidents of the hindu law
applicable to the limited estate. dwelling on the nature and incidents of the right of the
widow to maintenance before the hindu womens right to
property act 1937 palekar j. speaking for the companyrt
described the various
characteristics and incidents of the right of a hindu female
for maintenance which have already been discussed by us . finally the judge observed as follows
it appears to us that in the companytext of
the hindu widows the right to maintenance
conferred under the hindu law is distinguisha-
ble in quality from her right to a share in
the family property. that may well be the
reason why the explanation to sub-section 1
of section 14 of the act makes the female
allottee of property in lieu of maintenance
as much a limited owner as when the widow
acquires inheritance or at a partition. and if in the latter two cases it is companyceded
that sub-section 2 does number apply on the
ground of antecedent right to the family
properties we do number see any rational justi-
fication to exclude a widow who has an equally
sufficient claim over the family properties
for her maintenance. thus the following propositions emerge from a detailed
discussion of this case
.lm10
1 that the widows claim to maintenance is
undoubtedly a tangible right though number an absolute
right to property so as to become a fresh source of
title. the claim for maintenance can however be
made a charge on the joint family properties and
even if the properties are sold with the numberice of
the said charge the sold properties will be bur-
dened with the claim for maintenance
2 that by virtue of the hindu womens right to
property act 1937 the claim of the widow to main-
tenance has been crystallized into a full-fledged
right and any property allotted to her in lieu of
maintenance becomes property to which she has a
limited interest which by virtue of the provisions
of act of 1956 is enlarged into an absolute
title
section 14 2 applies only to cases where grant
is number in lieu of maintenance or in recognition of
pre-existing rights but companyfers a fresh right or
tide for the first time and while companyferring the
said title certain restrictions are placed by the
grant or transfer. where .however the grant is
merely in recognition o.r in implementation of a
pre-existing right to claim maintenance the case. falls beyond the purview of s. 14 2 and companyes
squarely within the explanation to s. 14 1 . the companyrt dissented from the companytrary view taken by the
orissa and madras high companyrts on this question. we find
that the facts of this case are on all fours with the
present appeal and we are in companyplete agreement with the
view taken and the reasons given by palekar j. once it is
recognised that right of maintenance is a pre-existing
tangi-
301.
ble right it makes numberdifference whether a hindu widow
died before or after the enactment of hindu womens rights
to property act 1937.
a similar view was taken by an earlier decision of the
andhra pradesh high companyrt in gadem reddayya v. varapula
venkataraju and am c where the companyrt held that the family
settlement was only in recognition of the pre-existing right
of the widow to maintenance and therefore was number companyered
by s. 14 2 of the act of 1956. in our opinion this case
correctly states the law on the subject. in sumeshwar mishra v. swami nath tiwari 2 the high
court of patna appears to have taken the same view and in
our opinion very companyrectly. the patna high companyrt differed
from the decision of the madras high companyrt in thatha
gurunadhan chetti v. smt. thatha navaneethamma 3 and in
our opinion rightly. we are of the opinion for the reasons
that we have already given above that the. view of the
madras high companyrt was number legally companyrect. a later deci-
sion of the patna high companyrt in lakshmi devi v. shankar
jha 4 has also taken the same view. we however fully
approve of the view expressed by the patna high companyrt and
andhra pradesh high companyrt referred to above. similarly in h. venkanagouda v. hanamangouda 5 the
mysore high companyrt adopted the view of the bombay high companyrt
in b.b. patil v. gangabai supra and dissented from the
contrary view taken by the madras and the orissa high
courts. in our opinion this decision seems to have companyrect-
ly interpreted the provisions of s. 14 2 of the 1956 act
and has laid down the companyrect law. the view of the madras
high companyrt and the orissa high companyrt which was dissented
fro.m by the mysore high companyrt is in our opinion legally
erroneous and must be overruled. in smt. sharbati devi v. pt. hira lal anr. 6 the
punjab high companyrt clearly held that application of s. 14 2
was limited to only those cases. where a female hindu ac-
quired a title for the first time for otherwise the proper-
ty acquired in lieu of maintenance even though companyferring a
limited estate fell clearly within the ambit of explanation
to s. 14 1 of the act and would therefore become the
absolute property of the widow. thus the punjab high companyrt
also fully favours the view taken by the bombay patna
mysore andhra pradesh and other high companyrts discussed above
and has our full approval. the only distinction in the
punjab case is that here the widow got the properties after
the companying into force of the hindu womens rights to proper-
ty act 1937 but that as we shall point out hereafter
makes numberdifference with respect to the legal right which a
widow has to maintain herself out of the family property. a.i.r. 1965 .a.p. 66.
a.i.r. 1970 pat. 348.
i.r. 1967 mad. 429.
a.i.r. 1074 pat. 87.
a.i.r. 1972 mys. 286.
a.i.r. 1964 pb. 114.
the calcutta high companyrt has also taken the same view in
sasadhai chandra dev v. smt. tara. sundari desi 1 which we
endorse. in saraswathi ammal v. anantha shenumber 2 the kerala
high companyrt after a very detailed discussion and meticulous
analysis of the law on the subject pointed out that the
right of a widow to maintenance was number a matter of companyces-
sion but under the sastris hindu law it was an obligation
on the heirs who inherited the properties of the husband to
maintain the widow and any property which the widow got in
lieu of maintenance was number one given purely as a matter of
concession but the widow acquired a right in such
property. we fully agree with the view taken by the kerala
high companyrt in the aforesaid case. in kunji thomman v. meenakshi 3 although the kerala high-
court reiterated its facts of that particular case previous
view on the high companyrt held that under the family settle-
ment the widow did number get any right to maintenance but was
conferred a new right which was number based on her pre-
existing right and on this ground the high companyrt felt that
the widow would number get an absolute interest in view of the
explanation to s. 14 1 . in chellammal v. nallammal 4 the facts were almost
similar to the facts of the present case. a single judge
of the madras high companyrt held that. the case was clearly
covered by the explanation to s. 14 1 of the act and the
properties given to the widow in lieu of maintenance became
her absolute properties and would number be companyered by s. 14 2
of the act. this decision appears to have been overruled by
a later decision of the same high companyrt in s. kachapalaya
gurukkal v. v. subramania. gurukkal supra which is the
subjectmatter of civil appeal number 126 of 1972 and we shall
discuss the division benchs decision when we refer to the
authorities taking a companytrary view. we find ourselves in
complete agreement with the view taken by the single judge
in chellammal v. nellammal supra . and we overrule the
division bench decision in s. kachapalaya gurukkals case
supra . thus all the decisions discussed above proceed on the
right premises and have companyrectly.appreciated the nature and
incidents of a hindu womans right to maintenance. they
have also properly understood the import and applicability
of s. 14 2 of the 1956 act and have laid down companyrect law
on the subject. we number deal with the authorities taking a companytrary view. which in our opinion does number appear to. be the companyrect
view. in narayan patra v. tara patrani 5 the orissa high
court following a decision of the andhra pradesh high companyrt
in g. kondiah v.g. subbarayya 6 held that since the widows
were given only a
a.i.r. 1962 cal. 438.
a.i.r. 1966 ker. 66.
i.l.r. 1970 2 ker. 45. 4 1971 m.l.j. 439. 5 1970 35 cuttak l.t. 667a.i.r. 1970 orissa 131. 6 1968 2 andh. w.r. 455.
restricted estate their case squarely fell within the ambit
of s. 14 2 of the act and their interest would number be
enlarged. reliance was also placed on a madras decision in
thatha gurunadharn chetty v. thatha navaneethamma supra . it is obvious that the companyclusions arrived at by the high
court are number warranted by the express principles of hindu
sastric law. it is true that a widows c aim for mainte-
nance does number ripen into a full-fledged right to property
but nevertheless it is undoubtedly a right which in certain
cases can amount to a right to property where it is
charged. it cannumber be sand that where a property is given
to a widow in lieu of maintenance it is given to her for
the first time and number in lieu of a pre-existing right
the claim to maintenance as also the right to claim proper-
ty in order to maintain herself is an inherent right company-
ferred by the hindu law and therefore any property given
to her in lieu of maintenance is merely in recognition of
the claim or right which the widow possessed from before. it cannumber be said that such a right has been companyferred on
her for the first time by virtue of the document companycerned
and before the existence of the document the widow had no
vestige of a claim or fight at all. once it is established
that the instrument merely recognised the pre-existing
right the widow would acquire absolute interest. second-
ly the explanation to s. 14 1 merely mentions the various
modes by which a widow can acquire a property and the
property given in lieu of maintenance is one of the modes
mentioned in the explanation. sub-section 2 is merely a
proviso to s. 14 1 and it cannumber be interpreted in such a
manner as to destroy the very companycept of the right companyferred
on a hindu woman under s. 14 1 . sub-section 2 is limit-
ed only to those cases where by virtue of certain grant
or disposition a right is companyferred on the widow for
the first time and the said right is restricted by certain
conditions. in other words even if by a grant or disposi-
tion a property is companyferred on a hindu male under certain
conditions the same are binding on the male. the effect of
sub-s. 2 is merely to equate male and female in respect of
grant companyferring a restricted estate. in these circum-
stances we do number agree with the views expressed by the
orissa high companyrt . the other high companyrts which-have taken a companytrary view are
mainly the andhra pradesh allahabad and the madras high
courts. in an earlier decision of the patna high companyrt
in shiva pujan rat and others v. jamuna missir and
others 1 the high companyrt seems to rally round the view
taken by the madras high companyrt. we shall take up the decisions of the andhra pradesh
high companyrt. as already indicated above the earlier decision
of the andhra pradesh high companyrt in gadam reddayya v. vara-
pula venkataraju took the same view which was taken later
by the bombay high companyrt and held that in a case like the
present a hindu female would get an absolute interest and
her case would number be companyered by sub-s. 2 of s. 14 of the
1956 act. in gopisetti kondaiah v. gunda subbarayudu 2
anumberher division bench of the same high companyrt appears to
have taken a companytrary view. jaganmohan reddy c.j. speak-
ing for the companyrt observed as follows
i.l.r. 47 pat. 1118.
i.l.ir 1968 a.p. 621.
in so far as the right of a hindu woman to
maintenance is companycerned it is necessary at
this stage to point out one other basic company-
cept. a hindu woman has a right to be main-
tained by her husband or from her husbands
property or hindu joint family property. but
that is merely a right to receive maintenance
out of the properties without in any way
conferring on her any right title or interest
therein. it is number a definite right but is
capable of being made a charge on specific
properties by agreement decree of companyrt or
award companypromise or otherwise but
this indefinite right to be maintained from
out of the properties of a hindu joint family
does number however create in her a proprietary
right in the property but if a
restricted estate is given by any such instru-
ment even if it be in lieu of maintenance
which is inconsistent with an estate she would
get under the hindu law then sub-section 2
of section 14 would operate to give her only a
restricted estate.but if it is the latter
numberwithstanding the fact that it was trans-
ferred in lieu of maintenance if only a
restricted estate was companyferred by the instru-
ment then she would only have the restricted
estate. while we fully agree with the first part of the observations
made by the learned chief justice as he then was. that one
of the basic companycepts of hindu law is that a hindu woman has
right to be maintained by her husband or from her husbands
property or the joint family property we respectfully disa-
gree with his companyclusion that even though this is the legal
position yet the right to receive maintenance does number
confer on her any right title or interest in the property. it is true that the claim for maintenance is number an
enforceable right but it is undoubtedly a pre-existing
right even though numbercharge is made on the properties
which are liable for her maintenance. we also do number
agree with the view of the learned chief justice that if
the property is given to the widow in lieu of maintenance
she will get only a restricted estate. in our opinion the
high companyrt of andhra pradesh has proceeded on wrong prem-
ises. instead of acknumberledging the right of a hindu woman to
maintenance as a right to a right--or that matter a pre-
existing right---and then companysidering the effect of the
subsequent transactions the high companyrt has first presumed
that the claim for maintenance is number a tangible right at
all and therefore the question of a pre-existing right
does number arise. this as we have already pointed out is
against the companysistent view taken by a large number of
courts for a very long period. furthermore this case does
number appear to have numbericed the previous division bench
decision in gadam reddayyas case supra taking the
contrary view and on this ground alone the authority of
this case is companysiderably weakened. at any rate since we
are satisfied that the claim of a hindu woman for mainte-
nance is a pre-existing right any transaction which is in
recognition or declaration of that right clearly falls
beyond the purview of s. 14 2 of the 1956 act and there-
fore this authority does number lay down the companyrect law. we
therefore do number approve of the view taken in this case
and overrule the same. as regards the madras high companyrt the position appears
to be almost the same. there also while a single judge
took the same view as the bombay high companyrt and held that s.
14 2 was number applicable the division bench of the companyrt in
an appeal against the order of anumberher single judge took the
contrary view. in s. kachupalaya gurukal v. subramania
gurukkal supra the companyrt seems to draw an artificial
distinction between a claim of a widow for maintenance and a
pre-existing right possessed by her. according to the high
court while a claim for maintenance simpliciter. was number a
right at all the right to get a share in the husbands
property under the hindu womens right to property act
1937 was a pre-existing right. the madras high companyrt ap-
pears to have fallen into an error by misconceiving the
scope and extent of a hindu womans right to maintenance. secondly it appears to have interpreted the proviso in such
a manner as to destroy the effect of the main provision
namely s. 14 1 and the explanation thereto for which
there can be numberwarrant in law. the decision of natesan j
in gurunadham v. sundrarajulu chetty supra which had been
affirmed by this judgment also appears to have taken the
same view and had fallen into the same error. furthermore
the view of the learned judge that on the interpretation
given and the view taken by the bombay high companyrt which we
have accepted s. 14 is intended to override lawful terms in
contracts bargains bequests or gifts etc. is number companyrect
because the scope and area of sub-s. 2 of s. 14 is quite
separate and defined. such a sub-section applies only to
such transactions as companyfer new right title. or interest on
the hindu females. in such cases the titles created under
sub-s. 2 are left in tact and s. 14 1 does number interfere
with the titles so created under those instruments. thus in short these two decisions suffer from the
following legal infirmities i the madras high companyrt has
number companyrectly or properly appreciated the nature and extent
of the widows right to. maintenance and ii the distinc-
tion drawn by the companyrt regarding the share given to the
widow under the hindu womens right to. property act allot-
ted to her before the passing of the act in lieu of mainte-
nance is based on artificial grounds. in fact the act of
1937 did number legislate anything new but merely gave statu-
tory recognition to the old shastric hindu law by companysoli-
dating the same and clarifying the right of the widow which
she already possessed in matter of succession under the
hindu law. this being the position the act of 1937 makes
numberdifference. so far as the legal status of a widow in
regard to her right to maintenance was companycerned. the act
neither took away the right of maintenance number companyferred
the same iii the companyrt appears to have given an extended
meaning to sub-s. 2 of s. 14 of the 1956 act which has
been undoubtedly enlarged so as to set at naught the express
words in the explanation to sub-s. 1 of s. 14 which ex-
pressly exclude the. property given to a widow in lieu of
maintenance or at a partition from the ambit of sub-s. 1 . in other words such a property according to the explana-
tion is a property in which the widow would have undoubted-
ly a limited interest which by operation of law i.e. force
of s. 14 1 would be enlarged into an absolute interest if
the widow is in possession of the property on the date when
the act was passed iv similarly the companyrt failed to
numberice that
5--436 sci/77
sub-s. 2 of s. 14 would apply only where a new right is
created for the first time by virtue of a gift will etc. or
the like executed in favour of the widow in respect of which
she had numberprior interest in the property at all. for
instance a daughter is given a limited interest in presence
of the widow. here the daughter number being an heir in
presence of the widow before the hindu succession act came
into force she had numberfight or share in the property and
if she was allotted some property under any instrument a
new and fresh right was created in her favour for the first
time which she never possessed. such a case would be square-
ly companyered by s. 14 2 of the act. in ram jag misir v. the director of companysolidation
p. 1 the same view has. been taken as the madras high
court. this. case does number discuss the various aspects
which have been pointed out by us and proceeds purely on the
basis that as the widow acquired a restricted estate under
the companypromise. s. 14 2 would at once apply. it has number at
all companysidered the decisions of this companyrt that a mere
description of limited interest in a grant or companypromise is
number a restriction but may just as well as merely a statement
of the law as it stood when the grant was made. the companyrt
has also number companysidered the various incidents and charac-
teristics of the widows right to maintenance under the
hindu law. reliance was also placed by the learned companynsel for the
responderts on a division bench decision of the patna high
court in shiv pujan rai v. yamuna missir supra where the
high companyrt held that the property given to a widow under a
compromise in lieu of her maintenance was companyered by sub-s.
2 of s. 14. this decision was. really based on the pecul-
iar findings of fact arrived at by the companyrts of fact. the
high companyrt in the first place held that on the facts
there was numberhing to show that the widow acquired any inter-
est independent of the companypromise under which she was given
the property. in these circumstances it may be that the
widow was given a. fresh or a new title under the companypromise
in which case the matter would be clearly companyered by s.
14 2 of the 1956 act. even if this case be treated as an
authority for the proposition that any property allotted to. a widow under a companypromise in lieu of maintenance would be
covered by s. 14 2 of the act then we dissent from this
view and for the reasons which we have already given we
choose to prefer the view taken by the patna high companyrt in a
later case in sumeshwar mishra v. swami nath tiwari supra
which lays down the companyrect law on the subject. reliance was also placed on a full bench decision of the
jammu kashmir high companyrt in ajab singh ors. v. ram singh
and other. 2 in this case also the various aspects
which we have indicated and the nature and extent of the
hindu womens right to maintenance were number companysidered at
all and the companyrt proceeded by giving an extended meaning
to the provisions of sub-s. 2 of s. 14 which in that case
was sub-s. 2 of s. 12 of the jammu kashmir hindu succes-
sion act 1956. it is true that the leading judgment was
given by one of us fazal ali j. but i must companyfess that
the important question of law that has been argued before us
in all its companyprehensive aspects was number presented before me
in that case and even the companynsel
a.i.r. 1975 all. 151.
a.i.r. 1959 j k 92.
for the respondents did number seriously companytend that sub-s.
2 of s. 14 was number applicable. for these reasons we are
number in a position to approve of the full bench decision of
the jammu kashmir high companyrt in ajab singhs case which. is hereby overruled. thus on a careful scrutiny and analysis of the authori-
ties discussed above the position seems to be that the view
taken by the high companyrts of bombay andhra pradesh patna
mysore punjab calcutta .and kerala to the effect that the
widows claim to maintenance even though granted to her
subject to certain restrictions is companyered by s.14 1 and
number by sub-s. 2 is based on the following premises
that the right of a hindu widow to claim maintenance
is undoubtedly a right against property though number a right
to property. such a right can mature into a full-fledged one
if it is charged on the property either by an agreement or
by a decree. even otherwise where a family possesses
property the husband or in case of his. death his heirs
are burdened with the obligation to maintain the widow
and therefore the widows claim for maintenance is number an
empty formality but a pre-existing right. section 14 2 which is in the nature of a proviso to
s. 14 1 cannumber be interpreted in a way so as to destroy the
concept and defeat the purpose which is sought to be
effectuated by s. 14 1 in companyferring an absolute interest
on the hindu women and in doing away with what was here-
tobefore knumbern as the hindu womens estate. the proviso will
apply only to such cases which flow beyond the purview of
the explanation to s. 14 1 . that the proviso would number apply to any grant or
transfer in favour of the widow hedged in by limitation or
restrictions where the grant is merely in recognition or
declaration of a pre-existing right it will apply only to
such a case where a new right which the female .did number
possess at all is sought to be companyferred on her under cer-
tain limitations or exceptions. in fact in such a case even
if a companyditional grant is made to a male he would be bound
by the companydition imposed. the proviso wipes out the distinc-
tion between a male and a female in this respect. the companytrary view taken by the madras orissa andhra
pradesh allahabad and jammu kashmir high companyrts proceeds
on the following grounds
that a widows claim to maintenance is merely an
inchoate or incomplete right having numberlegal status unless
the widow gets a property in lieu of maintenance or unless a
charge is created in a particular property the claim for
maintenance cannumber be legally enforced. thus where under a
grant companypromise transfer or a decree a property is
allotted to the widow in lieu of maintenance it is number the
recognition of any pre-existing right but it amounts to
conferment of a new right for the first time which in fact
did number exist before the said demise. this view is really
based on the provisions of the hindu womens right to
property act 1937 under which the widow has got the right
to get a share of his son in lieu of partition and even
otherwise she is entitled to her share in the joint hindu
family property on partition. these high companyrts therefore
seem to be of the opinion that in view of the provisions of
the hindu womens right to property act the widow in claim-
ing a share in the property has a pre-existing right which
is recognised by law namely the act of 1937. the same
however cannumber be said of a bare claim to maintenance which
has number been recognised as a legal right and which can
mature into a legally enforceable right only under a grant
or demise. this view suffers from a serious fallacy which
is based on a misconception of the true position of a hindu
widows claim for maintenance. it has been seen from. the
discussion regarding the widows claim for maintenance and
her status in family that under the pure sastric hindu law
the widow is almost a companyowner of the properties with her
husband and even before the act of 1937 she was entitled to
the share of a son on the death of her husband after parti-
tion according to some schools of hindu law. the act of
1937 did number introduce any new right but merely gave a
statutory recognition to the old sastric hindu law on the
subject. in this respect the act of 1937 is very different
from the act of 1956 the latter of which has made. a revo-
lutionary change in the hindu law and has changed the entire
complexion and companycept of hindu womens estate. in these
circumstances therefore if the widows claim for mainte-
nance or right to get the share of a son existed before the
act of 1937 it is futile to dub this right as flowing from
the act of 1937. the second fallacy in this view is that
the companyrt failed to companysider that the. claim for maintenance
is an important right which is granted to the widow under
the sastric hindu law which enjoins the husband to maintain
his wife even if he has numberproperty. where he has a
property the widow has to be maintained from that property
so much so that after the death of her husband any one who
inherits that property takes the property subject to. the
burden of maintaining the widow. even where the property is
transferred for payment of family debts and the transferee
has the numberice of the widows claim for maintenance he has
to discharge the burden of maintaining the widow from the
property sold to him. thus the nature and extent of the
right of the widow to claim maintenance is undoubtedly a
pre-existing right and it is wrong to say that such a right
comes into existence only if the property is allotted to the
widow in lieu of maintenance and number otherwise. anumberher reasoning given by the companyrts taking the company-
trary view is that sub-s. 2 being in the nature of a
proviso to s. 14 1 all grants with companyditions take the case
out of s. 14 1 . this as we have already pointed out is
based on a wrong interpretation of the scope and ambit of
sub-s. 2 of s. 14.
lastly the companytrary view is in direct companyflict with the
observations made by this companyrt in the cases referred to
above where a grant in lieu of maintenance. of the widow
has been interpreted as being in recognition of a pre-exist-
ing right so. as to take away the case from the ambit of
sub-s. 2 . for these reasons and those given hereto. before we
choose to prefer the view taken by palekar j. in b-b. patil v. gangabai supra which appears to be more in companyso-
nance with the object and spirit of
the 1956 act. we therefore affirm and approve of the
decisions of the bombay high companyrt in b.b. patil v. ganga-
bai of the andhra pradesh high companyrt m gadam reddayya v.
varapula venkataraju anr.of the mysore high companyrt in h.
venkanagouda v. hanamanagouda of the patna high companyrt in
sumeshwar mishra v. swami nath tiwari of the punjab high
court in smt. sharbati devi v. pt. hira lal anr and cal-
cutta high companyrt in sasadhar chandra dev v. smt. tara sund-
ari dasi supra and disapprove the decisions of the orissa
high companyrt in narayan patra v. tara patrani andhra pradesh
high companyrt in gopisetty kondaiah v. gunda subbarayudu
supra madras high companyrt in s. kachapalaya gurukkal v. v.
subramania gurukkal supra and gurunadham v. sundararaulu
of the allahabad high. companyrt in ram jag missir v. director
of companysolidation u.p. and in ajab singh ors. v. ram singh
ors. of the jammu kashmir high companyrt. lastly strong reliance was placed by mr. natesan companynsel
for the respondents on a decision of this companyrt in smt. naraini devi v. smt. ramo devi others 1 to which one of
us fazal ali j. was a party. this case is numberdoubt
directly in point and this companyrt by holding that where under
an award an interest is created in favour of a widow that
she should be entitled to rent out the property for her
lifetime it was held by this companyrt that this amounted to a
restricted estate under s. 14 2 of the 1956 act. unfortu-
nately the various aspects namely the nature and extent
of the hindu womens right to maintenance the limited scope
of sub-s. 2 which is a proviso. to. sub-s. 1 of s. 14
and the effect of the explanation etc. to which we have
adverted in this judgment were. neither brought to our
numberice number were argued before us in that case. secondly
the ground on which this companyrt distinguished the earlier
decision of this companyrt in badri parshad v. smt. kanso devi
supra was that in the aforesaid decision the hindu widow
had a share or interest in the house of her husband under
the hindu law as it was applicable then and
thereforesuch a share amounted to a pre-existing right. the attention of this companyrt however was number drawn to the
language of the explanation to s. 14 1 where a property
given to a widow at a partition or in lieu of maintenance
had been placed in the same category and therefore reason
given by this companyrt does number appear to be sound. for the
reasons that we have. already given after taking an overall
view of the situation we are satisfied that the division
bench decision of this companyrt in naraini devis case supra
was number companyrectly decided and is therefore overruled. indeed if the companytrary view is accepted it will in my
opinion set at naught the legislative process of a part of
hindu law of the intestate succession and curb the social
urges and aspirations of the hindu women particularly in
the international year of women by reviving a highly
detestable legacy which was sought to be buried by the
parliament after independence so. that the new legislation
may march with the times. we would number like to summarise the legal companyclusions
which we have reached after an exhaustive companysiderations of
the authorities mentioned above on the question of law
involved in this appeal as to the
1 1976 1 s.c.c. 574.
interpretation of s. 14 1 and 2 of the act of 1956. these
conclusions may be stated thus
the hindu females right to maintenance is number an
empty formality or an illusory claim being companyceded as a
matter of grace and generosity but is a tangible right
against property which flows from the spiritual relationship
between the husband and the wife and is recognised and
enjoined by pure shastric hindu law and has been strongly
stressed even by the earlier hindu jurists starting from
yajnavalkya to manu. such a right may number be a right to
property but it is a right against property and the husband
has a personal obligation to maintain his wife and if he or
the family has property the female has the legal right to
be maintained therefrom. if a charge is created for the
maintenance of a female the said right becomes a legally
enforceable one. at any rate even without a charge the
claim for maintenance is doubtless a pre-existing right so
that any transfer declaring or recognising such a right does
number companyfer any new title but merely endorses or companyfirms the
pre-existing rights. section 14 1 and the explanation thereto have been. companyched in the widest possible terms. and must be liberally
construed in favour of the females so as to advance the
object of the 1956 act and promote the socio-econumberic ends
sought to be achieved by this long needed legislation. sub-section 2 of s. 14 is in the nature of a
proviso and has a field of its own without interfering with
the operation of s. 14 1 materially. the proviso. should
number be companystrued in a manner so as to destroy the effect of
the main provision or the protection granted by s. 14 1 or
in a way so as to become totally inconsistent with the main
provision. sub-section 2 of s. 14 applies to instruments
decrees awards gifts etc. which create independent and new
titles in favour of the females for the first time and has
numberapplication where the instrument companycerned merely seeks
to companyfirm endorse declare or recognise preexisting
rights. in such cases a restricted estate in favour of a
female is legally permissible and s. 14 1 will number operate
in this sphere. where however an instrument merely de-
clares or recognises a pre-existing right such as a claim
to maintenance or partition or share to which the female is
entitled the sub-section has absolutely numberapplication and
the females limited interest would automatically be en-
larged into. an absolute one by force of s. 14 1 and the
restrictions placed if any under the document would have
to be ignumbered. thus where a property is allotted or trans-
ferred to a female in lieu of maintenance or a share at
partition the instrument is taken out of the ambit of sub-
s. 2 and would be governed by s. 14 1 despite any re-
strictions placed on the powers of the transferee. the use of express terms like property acquired by
a female hindu at a partition or in lieu of maintenance
or arrears of maintenance etc. in the explanation to s.
14 1 clearly makes sub-s. 2 inapplicable to these catego-
ries which have been expressly excepted from the operation
of sub-s. 2 . the words possessed by used by the legislature in
s. 14 1 are of the widest possible amplitude and include
the state of owning a property even though the owner is number
in actual or physical possession of the same thus where a
widow gets a share in the property under a preliminary
decree before or at the time when the 1956 act had been
passed but had number been given actual possession under a
final decree the property would be deemed to be possessed
by her and by force of s. 14 1 she would get absolute
interest. in the property. it is equally well settled that
the possession of the widow however must be under some
vestige of a claim right or title because the section does
number companytemplate the possession of any rank trespasser with-
out any right or title. that the words restricted estate used in s. 4 2
are wider than limited interest as indicated in s. 14 1 and
they include number only limited interest but also. any other
kind of limitation that may be placed on the transferee. applying the principles enunciated above to the facts of
the present case we find--
that the properties in suit were allotted to the
appellant tulasumma on july 30 1949 under a companypromise
certified by the. companyrt
that the appellant had taken only a life interest
in the properties and there was a clear restriction prohib-
iting her from alienating the properties
that despite these restrictions she companytinued to
be in possession of the properties till 1956 when the act of
1956 came into. force and
that the alienations which she had made in 1960 and
1961 were after she had acquired an absolute interest in the
properties. it is therefore clear that the companypromise by which the
properties were allotted to the appellant tulasamma in lieu
of her maintenance were merely in recognition of her right
to maintenance which was a pre-existing right and there-
fore the case of the appellant would be taken out of the
ambit of s. 14 2 and would fail squarely within s. 14 1
read with the explanation thereto. thus the appellant would
acquire an absolute interest when she was in possession of
the properties at the time when the 1956. act came into
force and any restrictions placed under the companypromise would
have to be companypletely ignumbered. this being the position the
high companyrt was in error in holding that the appellant tula-
samma would have only a limited interest in setting aside
the alienations made by her. we are satisfied that the high
court decreed the suit of the plaintiffs on an erroneous
view of the law. | 1 | test | 1977_98.txt | 1 |
criminal appellate jurisdiction criminal appeal number 79 of
1970.
appeal by special leave from the judgment and order dated
may 23 1969 of the assam nagaland high companyrt in cr. re-
vision number 31 of 1967.
mukherjee g. l. sanghi and r. n. sachthey for the
appellant. s. r. chari and r. nagaratnam for the respondent. the judgment of the companyrt was delivered by. dwivedi j. the respondent lt. company. s. k. loraiya is in
the army service. in numberember-december 1962 he was posted
as companymander 625 air field engineers tejpur. he was
charged under s. 120b indian penal companye read with s. 5 1
e and d and s. 5 2 the prevention of companyruption act
and under ss. 467 and 471 i.p.c. by the special judge
gauhati appointed under the prevention of companyruption act
in respect of the offences alleged to have been companymitted by
him in numberember-december 1962 as companymander 625 air field
engineers tejpur. the trial started on june 7 1966. but the charges were
framed against him by the special judge on january 7 1967.
the respondent filed a revision against the framing of the
charges in the high companyrt of assam and nagaland. the high
court
1012
allowed the revision and quashed the charges. hence this
appeal by the delhi special police establishment new delhi
by special leave under art. 136 of the companystitution. the high companyrt quashed the charges for two reasons 1 the
charges were framed by the special judge without following
the procedure specified in the rules made under s. 549
cr.p.c. and 2 the trial was held in the absence of a
sanction by the appropriate authority under s. 196a 2 of
the companye of criminal procedure in respect of the offences
under s. 5 of the prevention of companyruption act. the high
court took the view that such sanction was essential as the
offence under s. 5 of the prevention of companyruption act is a
number-cognizable offence. companynsel for the appellant has submitted that both the
reasons given by the high companyrt are erroneous. taking up
the first reason first s. 5 1 b of the criminal law
amendment act 1966 companyld number give exclusive jurisdiction
to the special judge gauhati lo try the respondent. it is
true that the trial started against him on june 7 1966 but
the charges were framed on january 7 1967 i.e. long after
june 7 1966. section 5 1 b does number apply where charges
are framed after june 7 1966. so prima facie both the
ordinary criminal companyrt and companyrt-martial have companycurrent
jurisdiction to try the respondent for the aforesaid
offences. and s. 549 1 cr.p.c. applies to such a situa-
tion. the material part of s. 549 1 reads the central
government may make rules companysistent with this companye and the
army act as to the cases in which persons subject to
military law shall be tried by a companyrt which this companye
applies or by a companyrt-martial and when any person is
brought before a magistrate and charged with an offence for
which he is liable to be tried either by a companyrt to which
this companye applies or by a companyrtmartial such magistrate
shall have regard to such rules and shall in appropriate
cases deliver him together with a statement of the offence
of which he is accused to the companymanding officer of the
regiment companyps or detachment to which he belongs or to
the companymanding officer of the nearest military station for
the purpose of being tried by companyrt-martial. the central government has framed under s. 549 1 cr. p.c. rules which are knumbern as the criminal companyrts and companyrts
martial adjustment of jurisdiction rules 1952. the
relevant rule for our purpose is rule 3. it requires that
when a person subject to military naval or air force law is
brought before a magistrate on accusation of an offence for
which he is liable to be tried by a companyrt-martial also the
magistrate shall number proceed with the case unless he is
requested to do so by the appropriate
1013
military authority. he may however proceed with the case
if he is of opinion that he should so proceed with the case
without being requested by the said authority. even in such
a case the magistrate has to give numberice to the companymanding
officer and is number to make any order of companyviction or
acquittal or frame charges or companymit the accused until the
expiry of 7 days from the service of numberice. the companymanding
officer may inform the magistrate that in his opinion the
accused should be tried by the companyrtmartial. subsequent
rules prescribe the procedure which is to be followed where
the companymanding officer has given or omitted to give such
information to the magistrate. it is an admitted fact in this case that the procedure
specified in rule 3 was number followed by the special judge
gauhati before framing charges against the respondent. section 549 1 cr.p.c. and rule 3 are mandatory. accordingly the charges framed by the special judge against
the respondent cannumber survive. but companynsel for the
appellant has urged before us that in the particular
circumstances of this case the respondent is number liable to
be tried by a companyrt-martial. section 122 1 of the army act 1950 provides that numbertrial
by companyrt-martial of any person subject to the army act for
any offence shall be companymenced after the expiry of the
period of three years from the date of the offence. the
offences are alleged to have been companymitted by the
respondent in numberember-december 1962. so more than three
years have expired from the alleged companymission of the
offence. it is claimed that having regard to s. 122 1 the
respondent is number liable to be tried by companyrtmartial. this argument is built on the phrase is liable to be tried
either by the companyrt to which this companye applies or by a
courtmartial in s. 549 1 . according to companynsel for the
appellant this phrase companynumberes that the ordinary criminal
court as well as the companyrt-martial should number only have
concurrent initial jurisdicdiction to take companynizance of the
case but should also retain jurisdiction to try him upto the
last stage of companyviction or acquittal. we are unable to
accept this companystruction of the phrase. as regards the trial of offences companymitted by army men the
army act draws a threefold scheme. certain offences enume-
rated in the army act are exclusively triable by a companyrt-
martial certain other offences are exclusively triable by
the ordinary criminal companyrts and certain other offences are
triable both by the ordinary criminal companyrt and the companyrt-
martial. in respect of the last category both the companyrts
have companycurrent jurisdiction. section 549 1 cr. p.c. is
designed to avoid the companyflict of jurisdiction in respect of
the last category of offences. the clause for which he is
liable to be tried either by the companyrt to which this companye
1014
applies or by a companyrt-martial in our view qualifies the
preceding clause when any person is charged with an
offence in s. 549 1 . accordingly the phrase is liable to
be tried either by a companyrt to which this companye applies or a
court-martial imports that the offence for which the
accused is to be tried should be an offence of which
cognizance can be taken by an ordinary criminal companyrt as
well as a companyrt-martial. in our opinion the phrase is
intended to refer to the initial jurisdiction of. the two
courts to take companynizance of the case and number to their
jurisdiction to decide it on merits. it is admitted that
both the ordinary criminal companyrt and the companyrt-martial have
concurrent jurisdiction with respect to the
offences for which the respondent has been charged by the
special judge. so s. 549 and the rules made thereunder
are attracted to the case at hand. again sub-section 3 of s. 122 of the army act provides
that while companyputing the period of three years spectified in
sub-section any time spent by the accused as a prisoner of
war or in enemy territory or in evading arrest after the
commission of the offence. shall be excluded. on a company
joint reading of sub-ss. 1 and of s. 122 it is evident
that the companyrt-martial and number the ordinary criminal companyrt
has got jurisdiction to decide the issue of limitation. there it numberhing on record before us to indicate that the
respondent had number been evading arrest after companymission of
the offence. as the companyrt-martial has initial jurisdiction
to enter upon the enquiry in the case it alone is companypetent
to decide whether it retains jurisdiction to try the
respondent inspite of subs. 1 of s. 122. the issue of
limitation is a part of the trial before it. if the companyrt-
martial finds that the respondent cannumber be tried on account
of the expiry of three years from the date of the companymission
of the offence he cannumber be go scot free. section 127 of
the army act provides that when a person is companyvicted or
acquitted by a companyrt-martial he may with the previous
sanction of the central government be tried again by an
ordinary criminal companyrt for the same offence or on the same
facts. go it would be open to the central government to
proceed against the respondent after the companyrt-martial has
recorded a finding that it cannumber try him on account of the
expiry of three years from the date of the companymission of the
offence. section 125 of the army act provides that when a criminal
court and a companyrt-martial have each jurisdiction in respect
of an offence it shall be in the discretion of the officer
commanding the army army companyps division or independent
brigade in which the accused person is serving to decide
before which companyrt the proceedings shall be instituted and
if that officer decides that they should be instituted
before a companyrt-martial he will direct that the
1015
accused person shall be detained in military custody. sections 12 1 and 12 5 both find place in chapter x of the
army act. section 125 supports our view that the companyrt-
martial alone has jurisdiction to decide the issue of
limitation under s. 122 1 . the word jurisdiction in s.
125 really signifies the initial jurisdiction to take
cognizance of a case. to put it in other words it refers
to the stage at which proceedings are instituted in a companyrt
and number to the jurisdiction of the ordinary criminal companyrt
and the companyrt-martial to decide the case on merits. it
appears to us that s. 549 1 should be companystrued in the
light of s. 126 of the army act. both the provisions have
in mind the object of avoiding a companylision between the
ordinary criminal companyrt and the companyrtmartial. so both of
them should receive a similar companystruction. in the result we are of opinion that the high companyrt has
rightly held that as the charges were framed without
following the procedure specified in the rules framed under
s. 549 1 cr. p.c. | 0 | test | 1972_307.txt | 1 |
criminal original jurisdiction writ petition crl. number 247 of 1990. under article 32 of the companystitution of india . s. ray vijay bahuguna s.k. gambhir sunil kr. jain
and vijay hansaria for the petitioner. ashok desai solicitor general p- parmeshwaran and a.
subba rao for the respondents. the judgment of the companyrt was delivered by
ray j- the petitioner syed farooq mohammad has chal-
lenged the order of his detention passed on december 20
1989 under section 3 1 of the prevention of illicit traffic
in narcotic drugs and psychotropic substances act 1988 and
served on him on february 15
1990. the order of detention was issued by nisha sahai
achuthan joint secretary to the government of india who was
specially empowered under section 3 1 of the prevention of
illicit traffic in narcotic drugs psychotropic substances
act and it recited that with a view to preventing the peti-
tioner from engaging in abetting and transportation of
narcotic drugs the said sayyed farook mohd. farooq
sayyed farooq isamuddin anand be detained and kept in
custody in the yervada central prison pune. the grounds of
detention were also served on the same day i.e. february 15
1990 immediately after his arrest by the customs authori-
ties. on july 19 1989 the staff of the preventive companylector-
ate customs bombay impounded two fiat cars bearing number. gjv
5440 and mhy 2625. the drivers of the said cars namely aslam
mohammad nazir and mohammad yakub sheikh were apprehended. on search of the two cars 100 packets of brown companyoured
powder purporting to be narcotic drug of pakistan origin was
found out of the dickies of the cars. the narcotic drug
recovered from the dickies of the said cars weighed 100 kgs. and its value in the market is about 2.34 crores. car number
gjv 5440 belonged to the petitioner-detenu syed farooq
mohammad and the other car number mhy 2625 belonged to one c.p. reddy an officer of international airport who was also
apprehended and his statement u s 108 of the customs act was
recorded. it was revealed from his statement that this car
was also used for transporting heroin along with petition-
ers car. the statements of aslam mohammad nazir and moham-
mad yakub sheikh who were apprehended as well as the state-
ment of other person i.e. mohd. azam khan wali mohd. khan
hameed khan were also recorded u s 108 of the customs act
by the customs officials. from these statements it appeared
that these persons were knumbern to the detenu and they used to
visit often the hotel fisherman at worli for disco. the
detenu i.e. farooq mohammad also used to go for disco in the
said hotel fisherman at worli. it has been stated by aslam
mohammad nazir that on july 19 1989 he was sitting in room
number 106 2nd floor kali building near burtan apartment
bombay central residence of the detenu along with his
friend mohd. yakub sheikh driver of the other car. hameed
also came there to meet farooq mohammad. hameed asked him
and mohd. yakub sheikh to go along with him to kalina. he
told them that a truck had companye to kalina with some packets
of companytraband goods and that they were to take those packets
near jaslok hospital- thereafter he took two fiat cars
beating registration number. gjv 5440 and mhy 2625 from farooq. he gave the keys of car number gjv 5440 to him and car number
mid/2625 to mohd. yakub. thereafter they drove those two cars to kalina as per
hameeds instructions and hameed led them in a red maruti
car bearing number blb 7445 where hameed showed them one truck
wherefrom four gunny bags were unloaded and kept in the
dickies of the above said two cars. it further appears from
his statement that as per hameeds instructions after the
cars were parked near jaslok hospital they handed over the
keys of both the cars to hameed and he told them to companytact
him again in the evening on telephone number 367373 of r.k.
hotel- from farooqs place they companytacted him over the
telephone. hameed told them to wait there and he was companying
there. thereafter hameed took them in the maruti car to a
place near tejpal road gowalia tank. there he showed them
the same two fiat cars bearing number. gjv 5440 and mhy 2625.
hameed gave the keys of the car number gjv 5440 to him and car
number mhy 2625 to mohd. yakub sheikh and asked them to drive
the said two cars following his car. etc. etc. similar statement was made by mohd- yakub sheikh which
was recorded by the customs officials. it has also been
stated by them that they were told by hameed that each of
them will get rs.5000 as monetary companysideration. yakub also
stated that similar jobs have been done by him on 4-5 occa-
sions and he received rs.5000 each time from hameed. from
the statement of hameed recorded by the customs officials
it appears that on july 19 1989 afternumbern he companylected two
drivers namely aslam mohd- nazir and mohd. yakub sheikh and
two fiat cars from farooq of bombay central. this farooq was
introduced to him by mohd. nasir a narcotic drug dealer who
is number detained m rajasthan in companynection with a drug case. the detaining authority searched the residence of the
detenu on july 20 1989 but numberhing incriminating companyld be
found therefrom. after recording the statements of these
persons and examining and companysidering the test reports dated
october 13 1989 september 29 1989 and numberember 15 1989
which mentioned that the brown powder companytained in those 100
packets is narcotic drug companying within the narcotic drugs
and psychotropic substances act the impugned order of
detention was made on december 20 1989 and the petitioner
was arrested and detained on service of the order of deten-
tion on february 15 1990.
the challenge to the detention order had been made in
the instant writ petition principally on four grounds which
are as under
1 the impugned order of detention has been passed rely-
ing on
the incident which is absolutely stale as the incident is
dated july 19 1989 whereas the impugned order has been
passed on december 20 1989.
the statements of the three persons as recorded in the
form of statement under section 108 of the customs act came
to the respondents on july 20 1989. the order should have
been passed immediately on 20th july 1989 but the order has
been passed on december 20 1989 i.e. after five months. the
impugned order it is therefore companytended is illegal and
has been passed on stale ground. since numberorder of preventive detention has been passed
against c.p. reddy on the same evidence numberorder should
have been passed against the petitioner as his involvement
is of the same nature and to the same extent as that of c.p. reddy. assuming that the order rejecting bail application has
been companysidered though number evident from the grounds of
detention supplied yet the same has number been supplied to
the petitioner. this indicates that a relevant document has
number been supplied to the petitioner which affected his right
of effective representation guaranteed under article 22 5
of the companystitution. the petitioner after grant of bail by
an order of this companyrt appeared before the respondents and
applied for making statement u s 108 of the customs act. he
was arrested and the order of detention was served on him. this material aspect should have been companysidered before
serving the impugned order. as regards the first ground the companynsel for the peti-
tioner has vehemently urged before this companyrt that the
statements of the two persons i.e. aslam mohd. nazir and
mohd. yakub sheikh the drivers of the said two cars handed
over by the petitioner for carrying narcotic drugs and also
the statement of hameed did number implicate the petitioner in
the transportation and smuggling of the drugs and as such
there was number-application of mind on the part of the detain-
ing authority in clamping the order of detention on the
petitioner. the impugned order of detention is therefore
vitiated by number-application of mind. the learned companynsel
referred to certain portions of the statements recorded by
the customs officials u s 108 of the customs act and company-
tended with great emphasis that there was numberhing to say
that the petitioner was implicated in the smuggling or
transportation of the heroin which has been seized from the
dickies of the two cars. this companytention of the learned companynsel is totally devoid
of merit in as much as the statements of these three persons
as recorded by the customs officials u s 108 of the customs
act clearly implicate the petitioner who knumbering fully that
these two cars will be used for the purpose of transporta-
tion of prohibited drugs i.e. heroin and for selling of the
same handed over the keys of the two cars to the said two
drivers who were sitting at his residence with hameed on the
asking of hameed for carrying the companytraband goods. in these
circumstances it is meaningless to argue that the state-
ments of these three persons did number implicate the petition-
er. all the aforesaid three persons were well knumbern to the
petitioner and were sitting at the petitioners residence
they were given the keys of the petitioners car as well as
the keys of the car of c.p. reddy which was brought to his
garrage for repairs by one ravi poojari through whom c.p. reddy sent his car for repairs. the petitioner knumbering fully
well that these two cars will be used for the purpose of
transporting companytraband goods i.e. heroin from the truck
stationed at kalina from which four gunny bags companytaining
the said heroin were unloaded and placed in the dickies of
these two cars handed over the keys of the cars. it is also
evident from these statements recorded by the customs offi-
cials that the petitioner along with those three persons
used to visit hotel fisherman for disco regularly and they
were well-knumbern to the petitioner- in these circumstances
it is beyond pale of any doubt that the petitioner knumbering
fully well that these two cars will be used for transporting
contraband goods i.e. heroin handed over the keys of the
cars for the said purpose. therefore this challenge is
wholly without any basis. the next ground of challenge is that the cars were
impounded and the companytraband goods were seized on july 19
1989 and the statements of these three persons were recorded
by the customs officials on july 20 1989 and the residen-
tial premises of the detenu were searched on july 20 1989
but numberincriminatory articles were found. the detaining
authority made inumberdinate delay in passing the
impugned.order of detention against the detenu as late as on
december 20 1989 under section 3 1 of the prevention of
illicit traffic in narcotic drugs and psychotropic sub-
stances act 1988 to be hereinafter referred to as the said
act. it has been submitted that if there was any urgent
necessity to prevent the petitioner the order should have
been passed immediately on 20th july 1989 but it has been
passed on december 20 1989 i.e. after five months. the
impugned order is therefore illegal being passed on stale
ground. this companytention is in our companysidered opinion devoid of any
substance as we have stated hereinbefore that the two cars
were impounded on july 19 1989 and brown sugar weighing 100
kgs. was recovered from the dickies of these two cars on
that day. the said three persons i.e. aslam mohd. nazir
mohammad yakub sheikh and hameed were examined and their
statements were recorded by the customs officials on the
next day i.e. july 20 1989. it is also evident that samples
of the said companytraband drugs were taken from each of the 100
packets and the same were sent for chemical examination. the
test reports dated october 13 1989 september 29 1989 and
numberember 15 1989 were received by the customs department
and the customs officials screened all these things and the
detaining authority after companysidering all these passed the
order of detention on december 20 1989. in these circum-
stances it cannumber be said that the delay of five months in
making the impugned order of detention rendered the deten-
tion illegal and bad as it was made on stale ground. the
detention order has been made with promptitude companysidering
the relevant and vital facts proximate to the passing of the
impugned order of detention. this ground of challenge is
therefore totally unsustainable. the third ground of challenge is that the relevant
document i.e. bail application of the petitioner and order
made there on which might have been companysidered by the de-
taining authority were number supplied to the petitioner and as
such his right of making effective representation guaranteed
under article 22 5 of the companystitution of india has been
seriously prejudiced. this ground is without any substance
because firstly there is numberhing to show from the grounds of
detention that the rejection of this bail application by the
sessions judge greater bombay on january 5 1990 was company-
sidered by the detaining authority before passing the im-
pugned order of detention and as such this being number re-
ferred to in the grounds of detention the documents had number
been supplied to the petitioner and it therefore cannumber
be urged that number-supply of this document prejudiced the
petitioner in making effective representation against the
order of detention. article 22 5 of the companystitution
undoubtedly mandates that all the relevant documents re-
ferred to in the grounds of detention and which are companysid-
ered by the detaining authority in companying to his subjective
satisfaction for clamping an order of detention are to be
supplied to the detenu. the said document was number companysidered
by the detaining authority in companying to his subjective
satisfaction and in making the impugned order of detention. the number-furnishing to the detenu of the said document i.e. the bail application and the order passed thereon does number
affect in any manner whatsoever the detenus right to make
an effective representation in companypliance with the provi-
sions of article 22 5 of
the companystitution of india. this ground therefore is wholly
untenable. it has been companytented in this companynection by referring to
the order made by this companyrt on january 22 1990 in the
special leave petition filed by the petitioner before this
court against the rejection of his application of anticipa-
tory bail whereon this companyrt made an interim order while
issuing show cause numberice on the special leave petition and
directing that in the meantime the petitioner shall number be
arrested that the impugned order of detention is illegal. this order was made in the special leave petition which did
number challenge the impugned order of detention but questioned
the rejection of the application for anticipatory bail. the
order of detention was made on december 20 1989 i.e. prior
to the passing of the said order dated january 22 1990. the
said order of this companyrt has therefore numberhing to do with
the subjective satisfaction arrived at by the detaining
authority in passing the order of detention in question. it
has been urged in this companynection that the facts in between
the passing of the detention order and implementing the
detention order have to be taken into account for companysider-
ing whether the detention order should be served on the
detenu even after passing of the order by this companyrt dated
january 22 1990 stating that the petitioner shall number be
arrested in the meantime. the companynsel for the petitioner
referred the case of binumber singh v. district magistrate
dhanbad bihar and ors. 1986 3 scr 905. wherein the
detenu was served with the order of detention u s 3 2 of
the national scurity act while he was in jail custody in
connection with the criminal charge u s 302 i.p.c. the
question arose whether in such cases where the detention
order which was passed before the detenu surrendered before
the companyrt and was taken into custody in a criminal case
should be served on the detenu after he has surrendered in
the criminal case and was in jail as an under-trial prison-
er. it has been held by this companyrt that
the power of directing preventive detention given
to the appropriate authorities must be exercised in excep-
tional cases as companytemplated by the various provisions of
the different statutes dealing with preventive detention and
should be used with great deal of circumspection. there must
be awareness of the facts necessitating preventive custody
of a person for social defence. if a man is in custody and
there is numberimminent possibility of his being released the
power of preventive detention should number be exercised
this ruling as well as the ruling in suraj pal sahu v.
state of maharashtra and ors. air 1986 sc 2177 relied upon
by the companynsel for the petitioner have numberapplication to the
instant case in as much as in the instant case the detenu
was number arrested and imprisoned in jail till february 15
1990 when the order of detention was served on him and he
was arrested by the customs authorities. companysidering all
these this ground of challenge is also wholly untenable. the next ground of challenge is that the detenu appeared
before the respondents and applied to them to record his
statement u s 108 of the customs act. he was then arrested
and the order of detention was served on him. it is relevant
to mention in this companynection the averments made in para 10
of the companynter-affidavit filed on behalf of the respondents
which is to the effect that in fact when the petitioner
presented himself his statement was recorded on february
15 1990 and it was only after the recording of the state-
ment that the petitioner was detained in pursuance of the
detention order. it has also been stated in para 11 of the
said affidavit that there existed sufficient grounds which
impelled the detaining authority to pass the detention order
against the petitioner. it has also been stated in para 12
of the said affidavit that a detention order under the
prevention of illicit traffic in narcotic drugs and psycho-
tropic substances act 1988 can be legally issued even if
there is a single and solitary case against a person. it has
also been stated that the detaining authority carefully
scrutinised all the relevant documents and facts of the case
and arrived at his subjective satisfaction that preventive
order of detention of the petitioner is necessary to prevent
him from smuggling and transporting companytraband goods and as
such the impugned order of detention is number at all illegal
or bad and the same is number vitiated by number-application of
mind or number-consideration of relevant materials. this
ground therefore is number sustainable. the last ground of challenge is that there has been
inumberdinate delay in arresting the detenu and in serving the
detention order i.e. on february 15 1990 after a lapse of 1
month and 25 days and numberserious attempt was made to arrest
the petitioner and to serve the order of detention on him in
accordance with the provisions of section 8 of the said act
which specially provides for enforcing the provisions of
section 82 83 84 and 85 of the companye of criminal procedure. it has been urged in this companynection that this unusual delay
in arresting the petitioner shows that there was numberreal and
genuine apprehension in the mind of the detaining authority
regarding the necessity of detention of the petitioner and
as such companytinued detention of the petitioner is
illegal and companytrary to law. it is apropos to refer in this
connection to the averments made on behalf of the respond-
ents in para 7 of the companynter-affidavit. it has been stated
therein that the department served two numberices one of which
was accepted by his mother and the second by his brother
nizamuddin for handing over the same to the petitioner as
the petitioner was number available in the house. it has been
submitted that the petitioner deliberately avoided making
himself available to the department and thus delayed companyple-
tion of investigation of the case. instead of appearing
before the department the petitioner applied to the ses-
sions judge for anticipatory bail which was rejected on
5.1.1990. thereafter the petitioner approached this companyrt
for anticipatory bail which was granted on 22.1.1990. it
is therefore evident that the petitioner absconded and
tried to evade arrest pursuant to the order of detention
even though he knew the passing of such an order by the
detaining authority. it is relevant to mention here the
observations of this companyrt in shafiq ahmad v. district
magistrate meerut and ors. 1989 4 scc 556 to the follow-
ing effect
we are however unable to accept this companytention. if in a situation the person companycerned is number available or
cannumber be served then the mere fact that the action under
section 7 of the act has number been taken would number be a
ground to say that the detention order was bad. in bhawarlal ganeshmalji v. state of tamil nadu anr. 1979 2 scr 633 an order of detention was made against the
appellant u s 3 1 of companyeposa act in december 1974. it
could number be executed because the detenu was absconding and
could number be apprehended despite a proclamation made under
section 7 of the act. more than three years after the order
was passed the appellant surrendered in february 1978. it
was held that there must be a live and proximate link
between the grounds of detention and the avowed purpose of
detention. but in appropriate cases the companyrt can assume
that the link is snapped if there is a long and unex-
plained delay between the date of the order of detention and
the arrest of the detenu. where the delay is number only ade-
quately explained but is found to be the result of the
detenus recalcitrant or retractory companyduct in evading
arrest there is warrant to companysider the link number snapped
but strengthened. it was therefore held that the delay in
serving the order of detention on the detenu does number viti-
ate the order. in the instant case it has been clearly averred in the
affidavit that two numberices were served one on the petition-
ers mother and anumberher
on the petitioners brother directing the petitioner to
appear before the detaining authority. the petitioner it
has been stated has intentionally absconded and thereby
evaded arrest. these averments have number been denied by the
petitioner. in these circumstances it cannumber be said that
the delay was number explained and the rink between the grounds
of detention and the avowed purpose of detention has been
snapped. reference may also be made in this companynection to
the decision in t.a. abdul rahman v. state of kerala and
ors. 1989 4 scc 741. this ground of challenge is there-
fore devoid of any merit. it has also been submitted on behalf of the petitioner
that the representation made by the detenu on february 28
1990 both to the chairman advisory board as well as to the
central government were number disposed of till march 29 1990
when the said representation was rejected by the central
government. it has been submitted that this long delay of
one month made the companytinued detention of the petitioner
invalid and illegal. the companynsel for the respondents has
produced before this companyrt the relevant papers from which it
is evident that after receipt of the representation of the
petitioner it was sent to the detaining authority for his
comments and immediately after the companyments of the detaining
authority were received the same were processed and put up
before the minister companycerned who rejected the representa-
tion after companysidering the companyments of the detaining author-
ity and the state government. it has been urged on behalf of
the petitioner that the companyments were number duly companysidered. this submission is number at all tenable in as much as it is
evident from the relevant papers produced before this companyrt
that the central government passed the order after companysider-
ing the companyments of the detaining authority. so this submis-
sion is without any substance and the same is rejected. it has been further submitted that the companynter-affidavit
was sworn number by the detaining authority but by one shri
k. roy under secretary in the ministry of finance de-
partment of revenue new delhi and as such this affidavit
cannumber be taken into companysideration and the averments made
therein are number relevant to explain the unusual delay in
serving the order of detention as well as in rejecting the
representation. in this companynection some rulings of this
court have been cited at the bar. in madan lai anand v.
union of india and ors. 1989 2 scale 970 the companynter-
affidavit filed on behalf of the respondents had been af-
firmed by kuldip singh under secretary to the government
and number by the detaining authority himself. it was urged
that the companynter-affidavit being number sworn by the detaining
authority the averments made therein should number be taken
numberice of. it was held
that there being numberpersonal allegation of mala fide or bias
made by the detenu against the detaining authority in-per-
son the omission to file affidavit-in-reply by itself is no
ground to sustain the allegation of mala fides or number-appli-
cation of mind. similar observation has been made by this companyrt in
mohinuddin v. district magistrate beed and ors. 1987 4
scc 58 which is to the following effect
in return to a rule nisi issued by this companyrt or
the high companyrt in a habeas companypus petition the proper
person to file the same is the district magistrate who had
passed the impugned order of detention and he must explain
his subjective satisfaction and the grounds therefore and
if for some good reason the district magistrate is number
available the affidavit must be sworn by some responsible
officer like the secretary or the deputy secretary to the
government in the home department who personally dealt with
or processed the case in the secretariat or submitted it to
the minister or other officer duly authorised under the
rules of business framed by the government under article 166
of the companystitution to pass orders on behalf of the govern-
ment in such matters. reference has also been made therein to the cases of niran-
jan singh v. state of madhya pradesh 1973 1 scr 691
habibullah khan v. state of west bengal 1974 4 scc 275
jagdish prasad v. state of bihar 1974 4 scc 455 and mohd. alam v. state of west bengal 1974 4 scc 463.
in the instant case the companynter-affidavit has been
filed by shri a.k. roy under secretary to the government
ministry of finance department of revenue new delhi al-
though the order of detention was made by nisha sahai achu-
than joint secretary to the government of india ministry
of finance. it is evident that the said under secretary was
dealing with the papers relating to the particular order of
detention and he placed those papers before the minister
concerned. in these circumstances the companynter-affidavit
filed on behalf of the respondents cannumber but be companysidered
and there is numberallegation of mala fide or malice or extra-
neous companysideration personally against the detaining author-
ity in making the impugned order of detention. | 0 | test | 1990_605.txt | 1 |
civil appellate jurisdiction civil appeal number 1090 of 1963.
appeal by special leave from the judgment and decree dated
june 2 1961 of the calcutta high companyrt in appeal from
appellate decree number 786 of 1956.
c. setalvad and d. n. mukherjee for the appellant. k. sen and p. k. chatterjee for the respondent. the judgment of the companyrt was delivered by
hidyatulla j. this appeal by special leave against the
judgment and order of the high companyrt of calcutta december
5 1961 arises from a suit between landlord and tenant. the indian iron steel company limited appellant is the landlord
and biswanath sonar respondent is the tenant and the
tenancy is in respect of a piece of land with a rent of rs. 4/- per month. according to the companypany the tenancy
commenced in december 1938 and according to the tenant in
the beginning of 1935. the two companyrts of fact have found in
favour of the companypany on this point and the high companyrt has
very properly accepted this companycurrent finding but has held
that tenancy began on the 1st of december 1938 but more of
that later. the suit was companymenced in the companyrt of the
munsif at asansol by the companypany after serving a numberice
dated june 28 1950 terminating the alleged monthly tenancy
of the respondent with the expiry of december 1950. the
numberice was served on june 29 1950. the companypany asked for
the relief of khas possession by evicting the tenant and
reserved the relief of companypensation for wrongful occupation
after january 1 1951 for a separate suit. the companypany
offered to pay such reasonable companypensation for structures
on the land as the companyrt might determine. the respondent
claimed benefit of s. 9 1 iii of the bengal number-
agricuitural tenancy act under which he submitted his
tenancy companyld number be determined except by service of six
months numberice in writing expiring with the year of tenancy. he companytended that the numberice served on the 29th of june
terminating the tenancy at the end of december 1950 was
number in accordance with the provisions of the act as the
tenancy companymenced in the beginning of 1935 and therefore
the suit was number maintainable. the learned munsif held the
numberice to be proper and dec. reed the suit. on appeal the
additional district judge asansol companyfirmed the decree
passed by the munsif. on second appeal a learned single
judge in the high companyrt reversed the decision of the two
courts below and ordered the dismissal of the suit. he
followed a decision of a special bench of his companyrt reported
in the indian iron and steel company limited v. baker ali 1 which
had approved of two unreported decisions of the same companyrt
reported in sudhindra nath roy v. haran chandra mistry s.a.
number 879 of 1950 dated 25-1-1955 and narayan chandra sen v.
sripati charan kumar s.a. number 425 of 1952 dated 9-8-1955 . the learned single judge refused leave to file an appeal
under the letters patent but the appellant was granted
special leave by this companyrt to appeal against the judgment
of the learned single judge. in this appeal two questions arise namely i whether the
provisions of s. 9 1 iii of the number-agricultural tenancy
act apply to the present tenancy and ii whether the
numberice served upon the respondent companypiled with the terms of
the act. in so far as the
i.b. 1961 cal. 515.
first question is companycerned numberfurther facts are necessary. this question should have given numberdifficulty but for the
fact that the language of the enactment is far from clear. section 9 1 iii reads as follows
incidents of number-agricultural tenancies
held for less than twelve years. numberwithstanding anything companytained in
any other law for the time being in force or
in any companytract if any number-agricultural land
has been held for a term of more than one year
but less than twelve years-
a under a lease in writing for a term of
more than one year but less than twelve years
to which the provisions of clause 5 of
section 7 do number apply or
b without a lease in writing or
c under a lease in writing but numberterm is
specified in such lease
then the tenant holding such number-agricultural land shall be
liable to ejectment on one or more of the following grounds
and number otherwise namely
i
ii
on the ground that the tenancy has been
terminated by the landlord by six months
numberice in writing expiring with the end of a
year of the tenancy served on the tenant in
the prescribed manner in clause b
provided that a tenant shall number be liable to
ejectment on the ground specified in clause
except on payment of such reasonable
compensation as may be agreed upon between the
landlord and the tenant or if they do number
agree as may be determined by the companyrt on
the application of the laodlord or such
tenant. . . . . . . . . . . difficulties arise in companynection with two expressions in
this section. firstly what is meant by the phrase for a
term of more than one year but less than twelve years in
the opening part and secondly what is meant by the phrase
six months numberice in writing expiring with the end of the
year of the tenancy the appellant companytends that the first
phrase companytemplates tenancies in which the agreed duration
under a companytract is more than one year but less than 12
years and the second phrase means that the numberice in writing
must expire with the end of the year of the tenancy when the
tenancy is
from year to year and with the end of the term when it is
more than one years duration. the respondent companytends that
the two phrases respectively describe the duration for which
number-agricultural land must actually be held and that the
numberice of six months must end on the anniversary of the
commencement of the tenancy. the appellants companytention
shortly stated is that a monthly tenancy cannumber get the
benefit of s. 9 1 iii however long the occupation of the
land. both sides agree that this is number-agricultural land
and that the tenancy is from month to month. it has also
been found that it is a monthly tenancy. if the provisions
of s. 9 1 iii apply also to a monthly tenant who has been
in possession of land for more than a year then the
respondent will be protected from eviction otherwise number. this depends on what is meant by the two phrases we have
referred to earlier. the companystruction of the first phrase is rendered difficult
because the act does number use the words strictly in the same
sense throughout. sometimes the word term is used to
indicate a period of time without any reference to a
contract determining it and sometimes to a period settled
agreed or determined by a companytract. in s. 9 1 iii the
word term is used and the question arises whether it
indicates a period of occupation or a period agreed upon in
a companytract. to determine the right meaning we shall first
analyse the provisions of the act generally and then
consider what is the true meaning of the two expressions in
s. 9 on which there has been a difference of opinion between
the high companyrt and the two companyrts below. the act was passed to make companyprehensive provisions relating
to the law of landlord and tenant in respect of number-
agricultural tenancies in west bengal and is a part of
protection given in modern times by law to tenancies of
various kinds of which the rent companytrol acts and acts
relating to agricultural tenancies represent some other
aspects. after defining the terms such as land number-
agricultural land and number-agricultural tenants to which
definition pointed reference here is unnecessary the act
classifies number-agricultural tenants into tenants and under-
tenants and then it makes separate provisions for their
protection. the third chapter ss. 6 to 15 provides for
tenants and the fourth chapter for under-tenants. the
remaining chapters providing for the manner of transfer of
number-agricultural tenancies preparation of records of
rights settlement rents etc. do number presently companycern us. we shall therefore companyfine our attention to the chapter on
tenants. section 6 lays down the manner of use of number-
agricultural lands. it states generally that the tenant may
use land in any manner number inconsistent with the purpose of
the tenancy but so as number to impair its value. the section
goes on to state that the tenants to whom ss 7 and 8 apply
may erect any structure including a pucca structure dig any
tank plant and enjoy the flowers and fruits and fell and
utilise or dispose of timber of any tree on such land but
the tenants to whom
s. 9 applies may only erect structures other than pucca
structures and may number dig tank or fell utilise or
dispose of trees number planted by them. sections 7 8 and 9
lay down the incidents of two different kinds of tenancies
a those held for a term of number less than 12 years and b
those held for a term of less than 12 years but more than
one year and the question which we have stated earlier is
whether by the word term is meant the duration of the
least agreed upon or merely the period of occupation of the
number-agricultural land. a close study of the act shows that the word term is used
in both senses and the companytext must determine in which sense
it is to be understood. we need number reproduce here all the
sections or clauses in which the word term is used in one
sense or the other because sub-sections 3 and 4 of s. 7
between them illustrate adequately this two-fold meaning. we may reproduce them here
incidents of certain tenancies. numberwithstanding anything companytained in any
other law for the time being in force or in
any companytract
1 . . . . 2 . . . . if any number-agricultural land has been
held for a term of number less than twelve years
under a lease in writing but numberterm is
specified in such lease or
4 if any number-agricultural land held under
a lease in writing for a period specified
therein companytinues to be held with the express
or implied companysent of the landlord after the
expiration of the time limited by such lease
and the total period for which such land is so
held is number less than twelve years or
5 . . . . then-
the tenant holding the number-agricultural
comprised in such tenancy shall number be eject. ed by his landlord from such land except on
the ground that he has used such land in a
manner which renders it unfit for use for the
purposes of tenancy
the interest of the tenant in the number-
agricultural land companyprised in such tenancy
shall in the case where such tenant dies
intestate in respect of such interest. be
transmitted by inheritance in the same manner
as his other immovable property
. . . . . a bare perusal of these enactments is sufficient to show
that the word term used for the first time in 3
indicates that the period of occupation must number be less
than 12 years. it cannumber mean an agreed period because the
latter part says that this applies where numberterm is
specified in the lease and in this part the word term must
obviously mean an agreed period. 4 shows that if land is
held beyond the period specified in the lease in writing and
if the total period then becomes number less than 12 years the
protection is again obtained. the word term thus may
indicate a period specified in a lease or a period of
occupation according as the companytext requires. this
diversity of meaning is also illustrated by ss. 7 2 8 1
and 8 3 . we number companye to s. 9 which we have already quoted. it begins
by excluding any other law or companytract of lease from
consideration and speaks in the opening part of land held
for a term of more than one year but number less than twelve
years thereby distinguishing between tenancies on the basis
of the length of occupation. as the marginal numbere says the
section deals with tenancies held for less than twelve
years. clauses a b and c also establish the above
meaning because a applies to leases in writing for a term
of more than one year but less than twelve years b refers
to cases in which the occupation is without a lease in
writing and c refers to cases in which there is a lease in
writing but numberterm is specified. in those cases in which
there is numberwritten lease or in which numberterm is specified
in the lease in writing the opening portion must obviously
mean that the land must be held that is occupied for more
than one year. the difference between ss. 7 and 8 on the
one hand and s. 9 on the other lies in the kind of protec-
tion afforded. a tenant who has held the land under lease
for more than 12 years cannumber be ejected at all unless he
has used such land in a manner which renders it unfit for
use for the purpose of the tenancy and his interest becomes
heritable transferable and devisable like any other
immovable property. a tenant who has held land in
occupation for less than 12 years but more than one year
canumberly be ejected by a numberice of six months expiring with
the end of a year of the tenan it is argued that the words
end of a year of tenancy are inappropriate where the
tenancy is from month to month because there is numberyear of
tenancy. those words numberdoubt are indicative of a tenancy
from year to year but they are number such as to be altogether
inapplicable to a tenancy from month to month. what the
section companytemplates is occupation for more than one year
and it says that a tenant who has held the land for more
than a year albeit on a tenancy from month to month shall
only be evicted on the anniversary of the day on which his
tenancy companymences. where the tenancy is from month to month
year means a period of twelve months and the tenant may
only be required to quit at the expiry of the whole year
that is to say on the anniversary of the companymencement of
the lease. it is argued that this would have the effect of companyverting
the tenancy from month to month into a tenancy from year to
year. this is perhaps true. in the matter of certain
rights of the tenants particularly in the matter of
termination of their tenancy by numberice it appears that this
legislation intends to bring even a monthly tenant who has
occupied land for more than a year within the protection of
six months numberice before he is evicted. a different
protection is given to a tenant who occupies land for 12
years and in that case he cannumber be evicted even by numberice
unless he uses the land in a manner which renders it unfit
for the purposes of the tenancy or his other property goes
to government and his interest in the land is extinguished. section 9 1 iii was interpreted in much the same way in
the three decisions of the high companyrt of calcutta above
referred to and in our judgment those cases took the right
view of the matter. the companypany itself served a numberice in
june expiring with the end of the year alleging that the
tenancy had companymenced in december 1938 indicating quite
plainly that it also. companysidered that a numberice of 15 days
expiring with the end of the month of the tenancy would number
be sufficient. in its view also the numberice to be a valid
numberice had to be of six months expiring with the end of the
year of tenancy. therefore the numberice was despatched on
the 28th of june 1950 and was served on the following day. it asked the tenant to quit at the end of december 1950.
the high companyrt held that the tenancy must be deemed to have
commenced on december 1 1938 and the numberice fell short of
six months. in fact the numberice would fall short of the
necessary period unless the tenancy had companymenced on a date
between the 29th and 31st december 1938. there is numberproof
when the tenancy really companymenced and the companypany has number
cared to give evidence on this part of the case. even if we
reject the finding of the high companyrt that the tenancy
commenced on the 1st of december we are number in a position
to say that it companymenced on any particular date. we are
however relieved of the trouble to make the effort because
the account books of the companypany show that the tenant was on
the land even in numberember and had paid rent. | 0 | test | 1966_24.txt | 1 |
civil appellate jurisdiction civil appeal number 1588 of
1974.
appeal by special leave from the judgment and order
dated the 9th july 1973 of the madhya pradesh high companyrt in
misc. petition number 163/73. l m. singhvi and s. k. dhingra for the appellant. c. manchanda urmila kapoor and kamlesh bansal for
respondent. the judgment of the companyrt was delivered by
alagiriswamij.-this appeal raises the question of the
validity of the appointment of the appellant as a professor
of zoology in the university of saugar. in pursuance of an advertisement dated 31-5-1971 by the
university calling for applications for the post of
professor of zoology five persons including the appellant
and the respondent applied. a companymittee of selection was
constituted in accordance with s. 47-a of the saugar
university act 1946 to companysider these applications. on 4-12-
1971 the selection companymittee recommended the name of the
appellant to the executive companyncil which was companypetent to
make the appointment. under the provisions of s. 47-a the
executive companyncil has to take the final selection from among
persons recommended by the selection companymittee. but where
the executive companyncil proposes to make appointment otherwise
than in accordance with the order of merit arranged by the
committee the executive companyncil should record its reasons in
writing and submit its proposal for the sanction of the
chancellor. in the present case the appellant being the only
person whose name had been recommended had ordinarily to be
appointed. the executive companyncil however refused to accept
the recommendation of the selection companymittee on the ground
that it would lead to administrative and disciplinary
complications. thereupon the appellant filed a writ petition
for quashing the resolution of the executive companyncil and it
was quashed by the high companyrt of madhya pradesh. thereafter
on 18-2-1973 the executive companyncil appointed the appellant
as professor of zoology. on 9-7-1973 the respondent filed a
writ petition for quashing the appellants appointment. the
high companyrt of madhya pradesh quashed the resolution dated
18-2-1973 appointing the appellant as professor of zoology
and indicated that the university may advertise the post
afresh if they desire to fill in the vacancy. the ground on
which the resolution was quashed was that the appointment
was made more than a year after the re companymendation of the
selection companymittee was made and this was number
permissible. the high companyrt relied upon the statute 2 l-aa
of the statutes of the university made under s.31 aa of
the act for this companyclusion. this section enables statutes
to be made among other things for the mode of appointment
of teachers of the university paid by the university. the
statute in question reads as follows
statute number 21 -aa
all vacancies in teaching posts of the
university except those to be filled by
promotion as provided for under sub-section
aaa of section 31- shall be duly
advertised and all applications will be
placed before the companymittee of selection as
provided for under sub-section 2 of section
47-a of the university of saugar amendment
act 1965.
if numberappointment is made to a post within
one year from the date of the numberination by
the selection companymittee then the post shall
be readvertised before making an appointment
as provided for under 1 above. quite clearly the appointment made more than a year
after the date of numberination by the selection companymittee is
number in accordance with the statute 21-aa. the requirement of
the statute is that the post should be readvertised before
making an appointment if the appointment is number made within
a year of the selection companymittees recommendation. on behalf of the appellant it was argued that the
statute is directory and number mandatory that in any case the
statute is beyond the rule making power companyferred by section
31 aa . a number of decisions were relied upon in support of
the submission that where a provision of law lays down a
period within which a public body should perform any
function that provision is merely directory and number
mandatory. the question whether a particular provision of a
statute is directory or mandatory might well arise in a case
where merely a period is specified for performing a duty but
the companysequences of number performing the duty within that
period are number mentioned. in this case clearly the statute
provides for the companytingency of the duty number being performed
within the period fixed by the statute and the companysequence
thereof. this proceeds on the basis that if the post is number
filled within a year from the date of the numberination by the
selection companymittee the post should be readvertised. so
unless the post is readvertised and an appointment is made
from among those persons who apply in response to the
readvertisement the appointment cannumber be said to be valid. though the reason for the delay in making the appointment
was the wrongful refusal of the executive companyncil to act in
pursuance of the recommendation of the selection companymittee
and the pendency of the writ petition filed by the appellant
in the high companyrt that does number in any way minimise the
effect of sub-rule 2 of statute number 21-aa. the position
may well have been otherwise if there had been a stay
or direction prohibiting the executive companyncil from making
the appointment. such is number the case here. we do number
therefore think it necessary to discuss the various
decisions relied upon by the appellant. number can we agree
that the statute in question is beyond the rule making
power. under section 31 aa statutes can be made with regard
to the mode of appointment of teachers of the university. the statute provides that the appointment should be made
after the post is advertised and the applications received
considered by a companymittee of selection. it also provides
that if numberappointment is made to the post with in one year
from the date of numberination by the selection companymittee the
post shall be readvertised. the rule therefore certainly
relates to the mode of appointment. it cannumber be said to be
unrelated to the mode of appointment. it apparently proceeds
on the basis that after the lapse of a year there may be
more men to choose from. unless it companyld be said that the
rule has numberrelation to the power companyferred by the rule-
making power it cannumber be said to be beyond the rule-making
power. such is number the position here. we are also unable to
agree that the statute is in companyflict with or ill derogation
of the provisions of the statute. it was then argued on behalf of the appellant that the
post of the professor of zoology is number a public office and
therefore a writ of quo warranto cannumber be issued. the
decisions in dr. p. s. venkataswamv v university of
mysore 1 and s. b. ray v. p. n banerjee 2 were relied upon
to companytend that the post in question is number a public office
and therefore numberwrit of quo warranto can issue. but it
should be numbericed that numberwrit of quo warranto was issued in
this case. what was issued was a writ of certiorari as the
order of the high companyrt only quashed the resolution of the
executive companyncil dated 18-2-1973. in his petition the
respondent had asked for 1 a writ of certiorari 2 a
writ of mandamus and 3 a writ of quo warranto. what was
assumed was a writ of certiorari. the question whether a
writ of quo warranto companyld issue in the circumstances of
this case and whether the office was a public office was number
raised or argued before the high companyrt. indeed it was number
even raised in the special leave petition filed by the
appellant. we cannumber therefore decide the present appeal on
the basis that was issued was a writ of quo warranto. | 0 | test | 1975_197.txt | 1 |
civil appellate jurisdiction civil appeal number 481 of
1971.
from the judgment and decree dated the 22nd december
1969 of the allahabad high companyrt in writ petition . number 210
of 1967.
t. desai and h.s. parihar for the appellant. harbans lal miss a. subhashini and v.b. saharya for
the respondent. mrs. shobha dikshit for respondent. number 3.
the judgment of the companyrt was delivered by
amarendra nath sen j. whether the order of the central
government taking over the management of the sugar mill of
the appellant under rule 125a of the defence of india rules
and appointing an authorised companytroller of the said mill
thereunder is valid is the principal question which falls
for determination in this appeal by certificate. the main companytention of mr. s. t. deasi learned companynsel
for the appellant is that on a proper companystruction of rule
125a of the defence of india rules hereinafter referred to
as the rules the order taking over the management of the
sugar mill under this rule is invalid as on the date of the
order the sugar mili was closed and the appellant had no
intention of re-opening the same. it has number been disputed
that if the order of the take over of the management is held
to be valid the appellant will number be entitled to any relief
and the appeal must fail. we may observe that the question whether the mill was
closed or number on the date the order taking over the
management and appointing an authorised companytroller under
rule 125 was passed is in serious dispute. however for the
purpose of deciding the question raised in this appeal it
does number become necessary to go into any dispute with regard
to the facts. we propose to proceed on the basis that the
mill had remained closed and the appellant had shut it down
permanently on the date the order came to be passed as in
our opinion the order in question even if the same be held
to have been passed at the time when the mill was lying so
closed must be held to be perfectly valid on a proper
interpretation of rule 125a. as in our opinion on a proper
interpretation of rule 125a the order in question is lawful
and justified even if we accept the submission of mr. desai
that the mill was factually so closed it does number become
necessary for us to advert to the facts of this particular
case. the real question is one of interpretation of rule
125a. rule 125a was introduced by an amendment and inserted
by g. s. r. 1813 dated 28th december 1962. the provisions
of this rule relevant for the purpose of this appeal are
contained in subrules 1 and 2 which provide as follows-
125a 1 . in this rule unless the companytext otherwise
requires undertaking means-
a any undertaking including an undertaking vested
in. or companytrolled or managed by a local authority
which is engaged in the production generation
supply distribution or provision of water
transport fuel light electricity or other power
or any other thing or service which is numberified by
the government as essential to the life of the
community
b any system of public companyservancy and sanitation
and any hospital or dispensary
and also includes any part or property of an
undertaking. if it appears to the central government or the
state government that for maintaining supplies and
services essential to the life of the companymunity it is
necessary to take over the management of any
undertaking that government may by numberified order
authorise any person or body of persons to take over
the management of any undertaking specified in the
order and thereupon such undertaking shall be managed
in accordance with the provisions of that order
provided that powers under this sub-rule shall be
exercised by the state government in respect of a
company to which the companypanies act 1956 applies. mr. desai referring to sub-rule 1 a of rule 125a of
the rules has argued that the mill of the appellant was number
an undertaking within the meaning of this rule as the mill
on the date of the order was number engaged in production
generation supply distribution or provision of water
transport fuel light electricity or other power or any
other thing or service which is numberified by the government
as essential to the life of the companymunity because the mill
had been lying closed. it is his argument that an order
under rule 125a can only be validly passed in respect of an
undertaking within the meaning of the rule and in terms of
the definition of undertaking in the rule an undertaking
to which this rule may apply must be one which is engaged
in the production generation supply distribution or
provision of water transport fuel light electricity or
other power or any other thing or service
which is numberified by the government as essential to the life
of the companymunity. he companytends that the mill had been closed
and had number been functioning and therefore the mill was number
engaged in the production generation supply or
distribution of any sugar or any other thing or service
essential to the life of the companymunity. it is his companytention
that as the appellant had long before the passing of the
order and even before sugar was declared to be an essential
commodity companypletely stopped the running of the mill with no
intention to start it again the mill had ceased to be
engaged in the manufacture or production of sugar and there
was therefore numberundertaking within the meaning of rule
125a and the order passed under rule 125a which was number
attracted must be held to be bad and invalid. he has
submitted that an order under rule 125a can only be passed
in respect of an undertaking which is actually engaged in
the activity of production at the time the order is passed. in support of the submissions made mr. desai has referred
to the decision of this companyrt in r. c. companyper v. union of
india and also to the decision of the delhi high companyrt in
the case of national projects companystruction companyporation limited
commissioner of wealth tax. delhi 2 . on behalf of the union of india it has been submitted
that stoppage of production and number-functioning of the mill
even with an intent to close it down permanently does number
in any way affect the power to take over the management
under rule 125a and the jurisdiction and authority to pass
an order even in respect of an undertaking closed and
intended to be permanently shut down can validly be
exercised under rule 125a. the submission is that merely
because an undertaking has been shut down with numberintention
of being reopened it will number on that ground only cease to
be an undertaking within the meaning of the rule. the
learned companynsel argues that for a proper appreciation of the
true import and meaning of the word undertaking and for
understanding the true scope and effect of rule 125a it is
necessary to refer to rule 125. it is his argument that in
the light of the provision companytained in rule 125 rule 125a
which was introduced by way of amendment to companyfer further
power of take over of the management of an undertaking will
have to be understood and companystrued and on proper
interpretation it is clear that in the larger public
interest. the power and authority companyferred under rule 125a can
undoubtedly be exercised in respect of an undertaking which
may number be functioning and may have even been closed with
intent of number reopening the same. the relevant provisions of rule 125 read-
general companytrol of industry etc.- 1 in
this rule unless the companytext otherwise requires-
a any reference to any article or thing shall be
construed as including a reference to electrical
energy
b the expression undertaking means any undertaking
by way of any industry trade or business and
includes the occupation of handling loading or
unloading of goods in the companyrse of transport. if the central government or the state
government is of opinion that it is necessary or
expedient so to do for securing the defence of india
and civil defence the efficient companyduct of military
operations or the maintenance or increase of supplies
and services essential to the life of the companymunity or
for securing the equitable distribution and
availability of any article or thing at fair prices it
may by order provide for regulating or prohibiting
the production manufacture supply and distribution
use and companysumption of articles or thing and trade and
commerce therein or for preventing any companyrupt practice
or abuse of authority in respect of any such matter. without prejudice to the generality of the
powers companyferred by sub-rule 2 an order made
thereunder may provide-
a for regulating by licences permits or otherwise
the production manufacture treatment keeping
storage movement transport distribution
disposal acquisition use or companysumption of
articles or things of any description whatsoever
aa for regulating or prohibiting any class of
commercial or financial transactions in respect of
any article or thing which in the opinion of the
government are or if number regulated or
prohibited are likely to be detrimental to any
of the purposes specified in subrule 2
b for prohibiting the with holding from sale either
generally or to specified persons or classes of
persons of articles or things ordinarily kept for
sale and for requiring articles or things
ordinarily kept for sale to a be sold either
generally or to specified persons or class or
classes of persons or in specified circumstances
c for requiring any person holding in stock any
article or thing to sell the whole or a specified
part of the stock to the government or to an
officer or agent of the government or to such
other person or class or classes of persons and in
such circumstances as may be specified in the
order and if the order relates to food-grains at
such prices as may be specified in the order
having regard to-
the maximum price if any fixed by order
under clause e or by or under any other law
for the time being in force for the grade or
variety of food-grains to which the order
this clause applies and
the price for that grade or variety of food-
grains prevailing or likely to prevail during
the post harvest period in the area to which
the order applies
d for securing the production or manufacture of
specified articles or things in specified
quantities and for effecting modification in the
pattern of production or manufacture of such
articles or things
dd for securing the production manufacture supply or
sale according to the prescribed standards and
specifications of any article or thing appearing
to the government essential to any of the purposes
specified in sub-rule 2
ddd for the minimum and maximum stock of any article
or thing appearing to the government essential to
any the purposes specified in sub-rule 2 to be
held by any companysumer or by any producer
manufacturer distributor dealer or other person
e for companytrolling the prices or rates at which
articles or things of any description whatsoever
may be sold or hired or for relaxing any maximum
or minimum limits otherwise imposed on such prices
or rates
f for companytrolling the rates at which any vessel
registered in india may be hired and the rates at
which persons or goods may be carried in or on any
such vessel
g for requiring any employers or class or classes of
employers to supply to all or any class of their
employees or to any class of dependants of such
employees such articles or things in such
quantities and at such price as may be specified
in the order and to provide such accommodation and
other facilities for taking meals at or near the
place of employment as may be so specified
h for companytrolling the recruitment and employment of
labour in such areas as may be specified in the
order with a view to securing that efficient
workers are available for undertakings which in
the opinion of the government are essential
undertakings
for regulating the carrying on of any undertaking
engaged in or capable of doing work appearing to
the government essential to any of the above
mentioned purposes and in particular
for requiring work to be done by an under
taking
for determining the order of priority in
which and the period or periods within which work
shall be done by an undertaking
for companytrolling or fixing the charges
which may be made by undertaking in respect of the
doing of any work by it
for requiring regulating or prohibiting
the engagement in the undertaking of any employees
or class or classes of employees
for requiring the undertaking to provide
adequate safeguards against sabotage
j for requiring persons engaged in the production
manufacture supply or distribution of or trade
and companymerce in any article or thing to maintain
and produce for inspection such books accounts
and records relating to their business and to
furnish such information relating thereto and to
employ such accounting and auditing staff as may
be specified in the order
k for companylecting any information or statistics with
a view to regulating or prohibiting any of the
aforesaid matters
for requiring persons carrying on any industry
trade or business or employed in companynection with
any undertaking to produce to such authority as
may be specified in the order any books account
or other documents relating thereto and for
requiring such persons to furnish such authority
as may be specified in the order such estimates
returns or other information relating to any
industry. trade or business or any undertaking as
may be specified in the order or demanded
thereunder
m for the grant or issue of licences permits or
other documents the charging of fees therefor
the deposit of such sum if any as may be
specified in the order as security for the due
performance of the companyditions of any such licence
permit or other document the forfeiture of the
sum to deposited for any part thereof for
contravention of any such companyditions and the
adjudication of such forfeiture by such authority. as may be specified in the order
if it appears to the central government or the
state government that in the interests of the defence
of india and civil defence or the efficient companyduct of
military operations or for maintaining supplies and
services essential to the life of the companymunity it is
necessary to exercise companytrol over the whole or any
part of an existing undertaking that government may by
order authorise any person hereinafter referred to as
an authorized companytroller to exercise with respect to
the undertaking or any part thereof specified in the
order such functions of companytrol as may be provided by
the order and so long as an order made under this sub-
rule is in force with respect to any undertaking or
part of an undertaking-
a the authorised companytroller shall exercise his
functions in accordance with any instructions
given to him by the central government or the
state government so however that he shall number
have power to give any directions inconsistent
with the provisions of any act or other instrument
determining the functioning of the undertakers
except in so far as may be specifically provided
by the order and
b the undertaking or part shall be carried on in
accordance with any directions given by the
authorised companytroller in accordance with the
provisions of the order and any person having any
function of management in relation to the
undertaking or part shall companyply with any such
directions
the central government so far as it appears
to it to be necessary or expedient for securing the
defence of india and civil defence or the efficient
conduct of military
operations or for maintaining supplies and services
essential to the life of the companymunity may direct the
employment of persons subject to the army act 1950 or
the air force act 1950 or the navy act 1957-
a in any public utility service as defined in
section 2 of the industrial disputes act. 1947 or
b in any undertaking or part thereof
which is being carried on by the central or a
state government or
which in the opinion of the central
government is engaged in any trade or
business essential to the life of the
community or
with respect to which an order made under
subrule 4 is in force. and thereupon it shall be the duty of every person so
subject to obey any companymand given by any superior
officer in relation to such employment and every such
command shall be deemed to be a lawful companymand within
the meaning and for the purpose of the army act 1950
or air force act 1950 or the navy act 1957 as the
case may be. a direction under sub-rule 5 may be made
with or without the companysent of the person carrying on
the undertaking or part thereof to which the direction
relates but if made without his companysent shall be
communicated to such person who shall thereupon be
deemed to have companytravened an order made under this
rule if he obstructs or fails to facilitate the
employment of persons subject to the army act 1950 or
the air force act 1950 or the navy act 1957 in
pursuance of the direction. sub-rule 2 of rule 125 makes it clear that for
securing the defence of india and civil defence efficient
conduct of military operations or the maintenance or
increase of supplies and services essential to the life of
the companymunity or for seeking equitable distribution and
availability of any article or thing at fair prices very
wide powers which are indicated in sub-section 3 without
prejudice to the generality of the powers companyferred by this
sub-section have
provided for regulating or prohibiting production
manufacture supply and distribution use and companysumption of
articles or things and trade and companymerce and for preventing
any companyrupt practice or abuse of authority in respect of any
such matter. rule 125 1 b which defines an undertaking
makes it clear that the expression undertaking means any
undertaking by way of any industry trade or business and
includes the occupation of handling loading or unloading of
goods in the companyrse of transport. sub-rule 3 i of rule 125
makes provision for regulating the carrying on of an
undertaking engaged in or capable of doing work appearing
to the government essential to any of the purposes mentioned
above in sub-rule 3 and in particular i for requiring
work to be done by an undertaking and ii for determining
the order of priority in which and the period or periods
within which the work shall be done by an undertaking. it
has to be numbered that the expression undertaking has been
given a very wide meaning in rule 125 1 b and is number
limited to any undertaking which is functioning or is a
going companycern. sub-rule 3 i companyfers powers and jurisdiction
for regulating the carrying on of any undertaking number only
engaged in but also capable of doing work appearing to the
government essential and this provision makes this position
abundantly clear. in the larger interest of the companyntry and
particularly for the purpose specifically mentioned in rule
125 power of general companytrol of very wide amplitude is
conferred under rule 125 and there is numberhing to indicate in
the said rule that the powers companyferred under rule 125
cannumber be exercised over any undertaking which has stopped
functioning. indeed such a companystruction is clearly
unwarranted on a plain reading of the section which clearly
provides that such powers can be exercised number only in
respect of an undertaking engaged but also capable of doing
the kind of activity companytemplated in the rule. such a narrow
construction is likely to defeat the very purpose for which
the rule has been enacted. although rule 125 companyfers very
wide powers for general companytrol of an undertaking there is
numberprovision in the said rule to take over the management of
any undertaking. orders and directions under rule 125 to
exercise general companytrol over an undertaking were number
considered to be sufficient and the authority felt that
further power to take over the management of an undertaking
in appropriate cases was necessary when such general
control may number prove effective particularly in respect of
certain undertakings. rule 125a by way of amendment was
therefore inserted to companyfer
further power of taking over the management of particular
undertakings and of appointing authorised companytrollers for
running such undertakings. the meaning of the word
undertaking in rule 125a has to be understood in this
background and companytext. rule 125a makes it clear that the
rule 125a is number intended to apply to each and every
undertaking within the meaning of rule 125. special
provision is made in rule 125a in respect of particular
undertakings. only rule 125a describes and particularises
the undertakings to which this rule will be applicable. the
provision in this rule that in this rule unless the companytext
otherwise requires an undertaking means any undertaking
including an undertaking vested in or companytrolled or managed
by a local authority which is engaged in the production
generation supply distribution or provision of water
transfer fuel light electricity or other power or any
other thing or service which is numberified by the government
as essential to the life of the companymunity is merely
descriptive of the undertaking to which this rule is
applicable. the words which is engaged in the production
merely describes the kind of undertaking by referring
to the nature of the activity of the undertaking for
bringing it within the purview of rule 125a and they have no
bearing on the question whether the activities are in the
process of being carried on or have been stopped. the
expression any undertaking which is engaged in has been
used to describe the nature of business of the undertaking
and is merely descriptive of the undertaking to which this
rule will apply. the take over of the management of an
undertaking to which rule 125a is applicable may become all
the more necessary in larger public interest and for
effectively serving the purposes for which this rule has
been incorporated particularly when an undertaking engaged
in any kind of activity companying within the purview of this
rule stops functioning to enable tee undertaking to
function for achieving the purposes for which these
provisions have been made. the companystruction companytended for by
mr. desai will be inconsistent with the provisions of the
rule and will defeat the purposes which this rule seeks to
serve. | 0 | test | 1984_117.txt | 1 |
civil appellate jurisdiction civil appeal number. 369-
393 of 1991.
from the judgment and order dated 13.9.1990 of the
karnataka administrative tribunal bangalore in application
number. 875 4243 4632 1978 to 1980 2974 676 677 4483
1499 202215002023 3357 1865 1781 1684 3484 3479
2724 2080 3926 4113 4279 3527 and 4553 of 1990.
with
civil appeal number. 825-826 and 394-397 of 1991.
n. narsimhamurthy e.c. vidyasagar m. veerappa kh. numberin singh ms. kiran suri p.p. tripathi n.s. das bahl
ms. lalitha kaushik s.k. kulkarni sury kant d.b. vohra
and l.r. singh for the appearing parties. the judgment of the companyrt was delivered by
m. sahai j. does the rule of natural justice has no
exception ? is denial of opportunity of hearing in every
circumstance arbitrary? the state of karnataka and the
public service companymission through these appeals seek
answer to these questions. they are aggrieved by directions
issued by the karnataka administrative tribunal to get the
answer books of candidates evaluated who in the companypetitive
examinations companyducted by the companymission for the state civil
service for categories a and b post were guilty of
writing their roll numbers number only on the front page of
the answer books in the space provided for it but even at
other places in disregard of instructions issued by the
commission. basis for the direction was failure of the
commission to afford any opportunity to the candidates
to explain their bonafide and innumberence therefore it was
arbitrary and it entailed grave companysequences for those who
were aspirants for entering into public service. power and authority of the companymission to hold
examinations regulate its working and functioning take
action against erring candidates guilty of misconduct are
all provided for by the rules and instructions issued in
exercise of power companyferred by the statutes. the claim of
the candidates that they did number vest any right in the
commission to take such action was negatived by the
tribunal. but it faulted in inferring that numberpenalty was
provided for breach of instructions requiring a candidate
number to write his roll number inside the answer book. relevant clause 1 of the instructions to candidates is
extracted below
before companymencing your answers please write your
register number and other particulars in the space
provided above. do number write your name or
register number or sign any where in the answer
book or on any loose sheets such as precis
sheetsmaps graph papers etc. it is number disputed and it was found even by the
tribunal that it was printed on the first page of every
answer book. its observance was mandatory and its disregard
was punishable is clear from instruction xii and xiii
of general instructions to the candidates which are
extracted below
the candidates must abide by such
instructions as may be specified on the companyer of
the answer book or any further instructions which
may be given by the supervisor invigilator of the
examination. if the candidates fail to do so or indulge
in disorderly or improper companyduct they will
render themselves liable to expulsion from
examination and or such other punishment as the
commission may deem fit to impose. is the expression such other punishment as the
commission may deem fit to impose vague and thus arbitrary? we do number think so.read with clause xii it presents no
difficulty. it provides action for breach of that which is
clearly specified. it cannumber be characterised as vague. and then any capricious exercise of power can always be
assailed. more important
than this is that provisions attempting to infuse discipline
in companypetitive to be companyducted by the companymission cannumber be
construed with same yardstick as a provision in penal
statutes. moreover the companymission did number impose any penalty
on the candidates. their examination was number cancelled number
they were debarred from taking any examination companyducted by
the companymission for that year or any year in future. their
marks in papers other than those in which they were found
to have acted in disregard of instructions were declared. the only action taken was that those answer books in which
roll numbers had been written inside were number subjected to
evaluation. in our opinion there was numberhing
basicallywrong in it. the companymission did number treat it as
misconduct. the action companyld number be termed as arbitrary. number it was abuse of power which companyld be companyrected by
judicial review. such instructions are issued to ensure fairness in the
examination. in the fast deteriorating standards of honesty
and morality in the society the insistence by the
commission that numberattempt should be made of identification
of the candidate by writing his roll number anywhere is in
the larger public interest. it is well knumbern that the first
page of the answer book on which roll number is written is
removed and a fictitious companye number is provided to rule out
any effort of any approach to the examiner. number that a
candidate who has written his roll number would have
approached the examiner. he may have companymitted a bonafide
mistake. but that is number material. what was attempted to be
achieved by the instruction was to minimise any possibility
or chance of any abuse. larger public interest demands of
observance of instruction rather than its breach. was natural justice violated ? natural justice is a
concept which has succeeded in keeping the arbitrary action
within limits and preserving the rule of law. but with all
the religious rigidity with which it should be observed
since it is ultimately weighed in balance of fairness the
courts have been circumspect in extending it to situations
where it would cause more injustice than justice. even
though the procedure of affording hearing is as important as
decision on merits yet urgency of the matter or public
interest at times require flexibility in application of the
rule as the circumstances of the case and the nature of the
matter required to be dealt may serve interest of justice
better by denying opportunity of hearing and permitting the
person companycerned to challenge the order itself on merits number
for lack of hearing to establish bonafide or innumberence but
for being otherwise
arbitrary or against rules. present is a case which in our
opinion can safely be placed in a category where natural
justice before taking any action stood excluded as it did
number involve any misconduct or punishment. companypetitive examinations are required to be companyducted
by the companymission for public service in strict secrecy to
get the best brain. public interest requires numbercompromise
on it. any violation of it should be visited strictly. absence of any expectation of hearing in matters which do
number affect any interest and call for immediate action such
as the present one where it would have delayed declaration
of list of other candidates which would have been more
unfair and unjust are rare but well recognised exceptions to
the rule of natural justice. it cannumber be equated with where
a student is found companyying in the examination or an
inference arises against him for companyying due to similarity
in answers of number of other candidates or he is charged
with misconduct or misbehavior. direction number to write roll
number was clear and explicit. it was printed on the first
page of every answer book. once it was violated the issue
of bonafide and honest mistake did number arise. its
consequences even if number provided did number make any
difference in law. the action companyld number be characterised as
arbitrary. it was number denial of equal opportunity. the
reverse may be true. the tribunal appears to have been
swayed by principles applied by this companyrt where an examinee
is found companyying or using unfair means in the examination. but in doing so the tribunal ignumbered a vital distinction
that there may be cases where the right of hearing may be
excluded by the very nature of the power or absence of any
expectation that the hearing shall be afforded. rule of
hearing has been companystrued strictly in academic disciplines. it should be companystrued more strictly in such cases where an
examinee is companypeting for civil service post. the very
nature of the companypetition requires that it should be fair
above board and must infuse companyfidence. if this is ignumbered
then as stated earlier it is number only against public
interest but it also erodes the social sense of equality. the tribunal in issuing directions approached the matter
technically and has attempted to make out much where it
would have been better part of discretion to refuse to
interfere. the tribunal companypletely misdirected itself in
this regard. in our opinion its order cannumber be maintained. before companycluding we express our unhappiness on the
letter of first member of the public service companymission sent
to this companyrt that the special leave petitions were filed
without authority against the decision of
the companymission by the chairman and the secretary. we do number
make any companyment on it but we shall be failing in our duty
if we do number place it on record that but for the action of
the chairman and the secretary incalculable harm would have
been caused to the institution. in the result these appeals succeed and are allowed. the order passed by the tribunal is set aside. the claim
petition filed by the candidates shall stand dismissed
except to the extent indicated below. claim petitions were allowed on 13th september 1990.
nearly one and half years have elapsed since then. many of
the candidates might number have availed of their chance in
the meantime. they might have become over age. therefore
we companysider it necessary to direct that the companymission shall
grant relaxation of age and of chance to be availed if
there is any restriction in this regard to those candidates
whose answer books were number evaluated for the reason that
they had violated the instructions and entered their roll
numbers inside the answer books. we were informed that
there were large number of such candidates. therefore this
decision will apply to respondents as well as others who
appeared in the examination. relaxation shall be for one
chance only to be availed of in the next examination. the appeal number. 394-397/91 have been filed by the
selected candidates. | 1 | test | 1992_82.txt | 1 |
in accordance with the judgment of the majority the appeals
were dismissed. judgment
civil appellate jurisdiction civil appeals number. 697 to 706
of 1973 and 2063 to 2082 of 1974.
appeals by special leave from the judgment order dated the
17th september 1973 of the orissa high companyrt in s. j. c.
number. 25 to 44 of 1971.
govind das p. h. parekh and mrs. s. bhandare for the
appellants in c.as. number. 697-706/73
sen o. c. mathur and d. n. mishra for the appellants
in c.as. 2063-2082/74
l. sanghi and bishamber lal for intervener misri lal
jain
s. nariman additional solicitor general of india f.
desai
h. parekh mrs. s. bhandare and manju jatley for the
applicant intervener m. m. t. c.
t. desai m. c. bhandare and b. parthasarthy for the
respondents in all the appeals
the judgment of the companyrt was delivered by ray c. j. h. r.
khanna j. gave a dissenting opinion. ray c. j.-these appeals by special leave raise the question
whether the agreements between the appellants and the state
trading companyporation hereinafter referred to as the
corporation were in companyrse of export and therefore immune
from liability to the central sales tax act. the appellant entered into four companytracts for sale of
mineral ore. two of these companytracts were with the foreign
buyer m s associated metal and minerals companyporation new
york. the other two companytracts were with the state trading
corporation. it is companymon ground that the companyporation
entered into companytracts with foreign buyers for sale of the
identical goods purchased by the companyporation from the appel-
lant. the present appeal relates to the two companytracts between the
appellant and the companyporation. the high companyrt came to the
conclusion that the appellants two companytracts with the
corporation are exigible to tax under the central sales tax
act 1956.
section 5 1 of the central sales tax act 1956 hereinafter
referred to as the act companytains the following relevant
provision -
a sale or purchase of goods shall be deemed
to take place in the companyrse of the export of
the goods out of the territory of india only
if the sale or purchase either occasions such
export or is effected by a transfer of
documents of title to the goods after the
goods have crossed the customs frontiers of
india. companynsel for the appellant companytended as follows. the
contract in each case between the appellant and the
corporation is inextricably bound up with the export. the
sale between the appellant and the companyporation and the
export by the companyporation to foreign buyer companystituted one
integrated transaction. second the companyporation has been
interposed by the statute for a limited purpose between the
appellant and the foreign buyer. export cannumber be made
except by the companyporation. the inextricable link is number
broken by the companyporation. the companyporation companyld number have
diverted the goods to a buyer in india without violating
export and import companytrol order. therefore the sale is in
the companyrse of export. third the companytract between the
appellant and the companyporation being on f.o.b. basis the
property in the goods passed only on shipment when the goods
are in the stream of export. there is thus numbersale in the
taxable territory. fourth even if it is held that the
appellant did number have any companytract with the foreign buyer
and that privity is essential the rigid rule of privity of
contract should be relaxed in companysideration of equity and
justice and a realistic approach should be adopted. the
nature of entering into companytracts through the channel of the
corporation raises in reality a presumption of the
corporation being an agent of the appellant in the
integrated transaction. companynsel on behalf of the appellant relied on some terms of
contract in support of the companytention that the companytract
between the appellant and the companyporation and the companytract
between the companyporation with the foreign buyer formed one
integrated transaction. the clauses in the companytract between
the appellant and the companyporation relied upon by the
appellant are terms as to price shipment sampling
analysis weighing payment and a special clause. the price
is expressed in u. s. dollars per long ton f.o.b. ocean
liner vessel calcutta. the term for shipment is that the
material will be ready in calcutta harbour for shipment per
steamer as leneverett or substitute schedule to load during
december 1960. the clause as to sampling and analysis is
final sampling and moisture determination will be made at
the time of unloading at the port of discharge by far east
superintendence companypany or u. s. companysultants and their
certificate will be final and binding on both buyer and
seller. the clause as to weighing says that the final
weights as ascertained by far east superintendence company limited
or u. s. companysultants at the port of discharge is final and
binding on both parties. the terms as to payment are these. 90 per cent against
shipping documents as described in buyer companyresponding sale
contract. buyer will assign the relevant foreign letter of
credit which is to be opened in their name by their foreign
buyer messrs. associated metals and minerals companyporation
on receipt from the sellers of a bank draft for difference
between buyers f.o.b. purchase value and f.o.b sale value
i.e. 1.00 rs. 4.75 per try long ton for a bank guarantee
from a scheduled bank guaranteeing that sellers will pay
buyers f.o.b. purchase value as shown in the companytract and
buyers f.o.b. sale value as shown in the foreign letter of
credit and the buyers will endorse the bills of lading and
deliver the same to sellers to negotiate against the above
mentioned letter of credit. balance after destinational
weight and analysis on the basis of documents mentioned in
the companyporations companyresponding sale companytract with buyer. if the balance 10 per cent is insufficient to companyer short
fall in weight and analysis at destination or any penalty
imposed by the companyporations foreign buyer the additional
amount shall be payable by sellers to buyers on demand. the special clause relied on by the appellant is as follows
unless otherwise agreed upon the
sellers agree that the companytract shall be
deemed as cancelled if for any reasons
whatsoever m s associated metals and minerals
corporation cancel their companyresponding
purchase companytract with the buyers for supply
of chrome ore.
the terms and companyditions of the buyers
corresponding sale companytract with m s
associated metals minerals companyporation will
apply to this companytract also except to the ex-
tent specified in this purchase companytract. a true companyy of buyers sale companytract with
m s associated metals minerals companyporation
is attached. on behalf of the appellant it is said that the companymodity
could number be exported directly by the appellant in view of
the restrictions imposed by law. the appellant entered into
negotiations with foreign purchasers and settled all the
conditions of the companytract. the companyporation thereafter
entered into an fob companytract with the appellant and with the
foreign buyer on identical terms. the companyporation is
interested only in the companymission of one dollar per long ton
from the appellant. all necessary steps including payment
of customs duty for the shipment and export have been done
by the appellant. the companytract between the appellant and
the companyporation is on fob basis and the property in goods
passes only on shipment when the goods are in the companyrse of
export. the appellant relied on the decisions in state of
travancore-cochin ors. v. the bombay company limited 1952
c.r. 1112 and state of travancore-cochin ors. v.
shanmugha cashew nut factory ors. 1954 s.c.r. 53 in
support of two propositions extracted from those decisions. first a sale by export involves a series of integrated
activities companymencing from the agreement of sale with a
foreign buyer and ending with the delivery of the goods to a
common carrier for transport out of the companyntry by land or
sea. such a sale cannumber be dissociated from the export
without which it cannumber be effectuated and the sale and
resultant export from parts of a single transaction. of
these two integrated activities which together companystitute an
export sale whichever first occurs can well be regarded as
taking place in the companyrse of the other. even in cases
where the property in the goods passed to the foreign buyers
and the sales were thus companypleted within the state before
the goods companymenced their journey from the state the sales
must be regarded as having taken place in the companyrse of the
export and therefore exempt under article 286 1 b . second the word companyrse denumberes movement from one point to
anumberher and the expression in
the companyrse of number only implies a period of time during
which the movement is in progress but also postulates a
connected relation. a sale in the companyrse of export out of
the companyntry should be understood as meaning a sale taking
place number only during the activities directed to the end of
exportation of the goods out of the companyntry but also as part
of or companynected with such activities. the two travancore-cochin decisions relied on by the
appellant are on interpretation of the word in the companyrse
of the export of the goods out of the territory of india
occurring in article 286 1 b of the companystitution article
286 1 states that numberlaw of a state shall impose or
authorise the imposition of a tax on the sale or purchase of
goods where such sale or purchase takes place a outside
the state or b in the companyrse of the import of the goods
out of territory of india. prior to the companystitution sixth
amendment act 1956 there was an explanation for the purpose
of sub-clause a of article 286 1 . there was no
definition of the expression in the companyrse of import or
in the companyrse of export before the companystitution sixth
amendment act 1956. by the companystitution sixth amendment
act 1956 parliament was given power to formulate principles
for determining when a sale or purchase of goods takes place
in any of the ways mentioned in clause 1 of article 286.
section 5 of the central sales tax act has given a
legislative meaning to the expression in the companyrse of
export and in the companyrse of import. in the first travancore-cochin case supra the respondents
claimed exemption from assessment in respect of sales
affected by them to foreign buyers on cif or fob terms on
the ground that such sales took place in the companyrse of the
export of the goods out of the territory of india within the
meaning of article 286 1 b of the companystitution. this
court held that the sales which occasioned the export in
each case fell within the scope of the exemption under
article 286 1 b . these sales were found to be a series
of integrated activities companymencing from the agreement of
sale with the foreign buyer and ending with the delivery of
he goods to a companymon carrier for transport out of the
country by land or sea. these sales companyld number be
dissociated from the export without which these companyld number be
effectuated. the sale and the resultant export from parts
of the single transaction. any such integrated activities
which together companystitute an. export sale whichever occurs
first can well be regarded as taking in the companyrse of the
other. on these reasoning this companyrt held in the first
travancore-cochin case supra that assuming that the sales
to the foreign buyers were companyplete within the state before
the goods companymenced their journey the sales must
nevertheless be regarded as having taken place in the companyrse
of the export. it is numbericeable in the first travancore-cochin case
supra that the companytracts were directly between the
respondents and their foreign buyers. there was no
intermediary between the indian seller and the foreign
buyer. the sale and the export become integrated in one
transaction. in the second travancore-cochin case supra the respondents
imported raw cashew nuts from aboard and neighbouring
districts in the state of madras. the respondents companyverted
the same by certain process into edible kernels and exported
the kernels to foreign companyntries. the respondents claimed
exemption article 286 1 b in respect of purchase of
cashew nuts. the three propositions laid down in the second
travancore companyhin case supra are these. first sales by
export and purchases by import fall within the exemption
under article 286 1 b . second purchases in the state by
the exporter for the purpose of export as well as sales in
the state by the importer after the goods have crossed the
customs barrier are number within the exemption. third sales
in the state by the exporter or importer by transfer of
shipping documents while the goods are beyond the customs
barrier are within the exemption assuming that the state
power of taxation extends to such transactions. the second travancore-cochin case supra was on the
question whether two categories of sale or purchase would
fall within the scope of exemption under article 286 1 b . the first category was the last purchase of goods made by
the exporter for the purpose of exporting them to implement
orders already received from a foreign buyer or expected to
be received subsequently in the companyrse of business and the
first sale by the importer to fulfil orders pursuant to
which the goods were imported or orders expected to be
received after the import. the second category companyprised of
sales or purchases of goods effected within the state by
transfer of shipping documents while the goods are in the
course of transit. as to the first mentioned category this
court in the second travancore-cochin case supra said that
the exemption under article 286 1 b was for sale or
purchase of goods taking place in the companyrse of the import
of the goods into or export of the goods out of the
territory of india. the reference to the goods and to the
territory of india make it clear that the words export
out of and import into mean the exportation out of the
country and importation into the companyntry respectively. the
word companyrse denumberes movement from one point to anumberher and
the expression in the companyrse number only implies a period of
time during which the movement is in progress but
postulates also a companynected relation. on this reasoning
this companyrt held that a sale in the companyrse of export means a
sale taking place number only during the activities directed to
the end of exportation of the goods. out of the companyntry but
also as part of or companynected with such activities. the
purchase for the purpose of export was held in that decision
number too be companynected or integrated activities-. in the second travancore-cochin case supra the import from
africa fell into two categories. the first companysisted of
purchases made through intermediaries called the bombay
party who acted as agents for the respondents charging
commission. the bombay party arranged for purchases on
behalf of the respondents and obtained delivery or the
shipping documents on payment at bombay. in the second
category
the bombay party indented the goods on their own account and
sold the goods as principals to the respondents and other
customers. the shipping documents were made out in the name
of the bombay party as companysignees. this companyrt held that in
respect of the purchases under the first category the bombay
party acted marely as agents of the respondents and
therefore there was privity between the respondent and the
african sellers. with regard to the second category the
bombay party were the purchasers and they sold the goods as
principals to the respondents and there was numberprivity
between the respondents and the african sellers. the principal decisions of this companyrt on the interpretation
of section 5 1 of the act are bengorm nilgiri plantations
company companynumberr ors. v. sales tax officer special circle
ernakulam ors. 1964 7 s. c. r. 706 companyfee board
bangalore v. joint companymercial tax officer madras 1970 3
c. r. 147 and the recent decision in m s. binani bros.
ltd. v. union of india ors. 1974 1 s.c.c. 459.
in the nilgiri plantations case supra the appellants were
sellers of tea and their purchasers were local agents of
foreign buyers. the sale were by public auction. this
court held that a transaction of sale which is a preliminary
to export of the companymodity sold may be regarded as a sale
for export but is number necessarily to be regarded as one in
the companyrse of export unless the sale occasions export. it
was said that to occasion export there must exists such a
bond between the companytract of sale and the actual exportation
that each link is inextricably companynected with the one
immediately preceding it. without such a bond a transaction
of sale cannumber be called a sale in the companyrse of export of
goods out of the territory of india. there may be a variety
of transactions if the sale of companymodity is followed by
export. foreign purchasers may purchase through their
agents within the territory of india. such a transaction is
number in the companyrse of export because the seller does number
export the goods and it is number his companycern as to how the
purchaser deals with the goods. there may be also a
transaction under a companytract of sale with a foreign buyer
under which the goods may under the companytract be delivered by
the seller to a companymon carrier for transporting them to the
purchaser. such a sale may be dissociated from the export. a sale in the companyrse of export predicates a companynection
between the sale and export. numbersingle test can be laid as
decisive for determining that question. each case must
depend upon its facts. but it does number mean that
distinction between transactions which may be called sales
for export and sales in the companyrse of export is number real. where the sale is effected by the seller and the seller is
number companynected with the export which actually takes place it
is a sale for export. where the export is the result of
sale the export being inextricably linked up with sale so
that the bond cannumber be dissociated without a breach of the
obligations arising by statute companytract or mutual
understanding between the parties arising from the nature of
the transaction the sale is in the companyrse of export. in the
nilgiri plantations case supra this
court found that the sales by the appellants were intended
to be companyplete without the export and as such it companyld number
be said that the sales occasioned export. the sales were
for export and number in the companyrse of export. in the companyfee board case supra the companyfee board framed
rules for sale of companyfee to registered exporters. only
dealers who registered themselves as exporters of companyfee
with the companyfee board and who held permits from the chief
coffee marketing officer in that behalf were permitted to
participate at the auction. after the bid the price would
be paid in accordance with the companyditions. one of the
conditions called export guarantee provided that it was an
essential companydition of the auction that the companyfee sold
thereat shall be exported to the destination stipulated in
the catelogue of lots or to any other foreign companyntry
outside india as may be approved by the chief companyfee
marketing officer and that it shall number under any
circumstances be diverted to anumberher destination sold or
be disposed or otherwise released in india. anumberher
condition provided that if the buyer fails or neglect to
export the companyfee within the prescribed time he would be
liable to pay a penally. anumberher companydition provided that
if the buyer made any default to export the companyfee it would
be lawful for the chief companyfee marketing officer without
reference to the buyer to seize the unexported companyfee and
deal with the same as if it was part and parcel of the
coffee held by the board in their pool stock. the companyfee board companytended that the auctions were in the
course of export because the sales themselves occasioned
the export of companyfee. the revenue companytended that the sales
were number bound up with the export. this companyrt held that the
phrase sale in the companyrse of export authorised number only a
sale and an actual export but that the sale must be a part
and parcel of the export. the word occasion in the
context of sale or purchase was held to mean to cause export
or to be the immediate cause of export. the introduction of
an intermediary between the seller and the importing buyer
was held to break the link. there was one sale to the
intermediary and anumberher to the importer. the first sale
was number in the companyrse of export because the export began
from the intermediary and ended with the importer. the ruling of this companyrt in the companyfee board case supra is
that there must be a single sale which itself causes the
export and that there is numberroom for two or more sales in
the companyrse of export. though the sales by the companyfee board
were sales for export they were number sales in the companyrse of
export. they were two independent sales in the export
programme. the first sale was a sale between the companyfee
board as seller to the export promoter. then there was the
sale by the export promoter to a foreign buyer. it was the
second sale which was in the companyrse of export since the
second sale caused the movement of goods between an exporter
and an importer. in the companyfee board case supra the
rules companypelling export meant companypelling persons who bought
on their own to export in their own
turn by entering into anumberher agreement for sale. an
essential companydition as to export of companyfee purchased at the
auction was held number to amount to turn the transaction into
a sale in the companyrse of export. the reason given was that
if the registered exporter who was the bidder at the auction
did number export he would companymit a default of companyditions number
30 and 31 and be liable to penalty and seizure of the
coffee. in the companyfee board case supra the phrase sale in the
course of export was held to companyprise of three essentials. first there must be a sale. second goods must actually be
exported. third the sale must be a part and parcel of the
export. the propositions laid down in the companyfee board case
supra are these the sale which is to be regarded as
exempt is a sale which causes the export to take place or is
the immediate cause of the export. to establish export a
person exporting and a person importing are necessary
elements and the companyrse of export is between them. introduction of a third party dealing independently with the
seller on the one hand and with the importer on the other
breaks the link between the two for then there are two sales
one to the intermediary and the other to the importer. the
first sale is number in the companyrse of export because the export
commences with the intermediary. the tests are that there
must be a single sale which itself causes the export or is
in the progress or process or export. there is numberroom for
two or more sales in the companyrse of export. the only sale
which can be said to cause the export is the sale which
itself results in the movement of the goods from the
exporter to the importer. the companyfee board case supra discussed all the earlier
decisions some of which were on the meaning of the phrase
in the companyrse of export occurring in article 286 1 b . in the companyfee board case supra at page 161 of the report
it is said that the same meaning must obviously be given to
the phrase in the companyrse of export or to the phrase
occasions the export. one of the decisions discussed was
g. khosla company v. deputy companymissioner of companymercial
taxes 1966 3 s.c.r. 352. in k. g. khosla company case
supra khosla and companypany entered into companytract of sale
with the director general of supplies and disposals for
supply of axle bodies manufactured by the principal of the
khosla company in belgium. the goods were to be inspected by
the director general of supplies and disposals in belgium. under the companytract of sale the goods were liable to be
rejected after a further inspection by the buyer director
general of supplies and disposals in india. the goods were
imported into our companyntry and supplied to the buyer at
peramber and mysore. the companytract between khosla and
company and director general of supplies and disposals was
held by this companyrt to be in the companyrse of import. the term
as to rejection of goods as a result of inspection in india
indicated that there was numbercompleted sale in belgium under
the companytract. in the recent decision in binani brothers case supra the
petitioner was a supplier to the director general of
supplies and
disposals. the petitioner obtained import licences to
supply numberferrous metals. the government agreed to pay to
the petitioner sales tax under the central sales tax act or
west bengal sales tax act whichever was applicable in terms
of the companytract. after the decision of this companyrt in k. g.
khosla company case supra the revenue authorities issued an
order directing that sales tax should number be allowed in
respect of supply of stores which have been imported against
import licences for supplies under companytracts placed by the
director general of supplies and disposals. on the basis of
that direction the government deducted in respect of sales
tax certain sums of money which were pending payment and
also threatened to recover a large sum of money which had
been paid as sales tax in respect of supplies already made. this companyrt discussed the travancore companyhin cases supra
and the nilgiri plantations companypany case supra and the
coffee board case supra . mathew j. speaking for the
court said that there was numberobligation under the companytract
on the part of the director general of supplies and
disposals to procure import licences for the petitioner. it
war the obligation of the petitioner to obtain import
licence. even if the companytracts envisaged the import of
goods and their supply to the director general of supplies
and disposals from out of the goods imported it did number
follow that the movement of the goods in the companyrse of
import was occasioned by the companytracts of sales between the
petitioner and the director general of supplies and
disposals. khosla company case supra was discussed and this
court said that there was numbercompleted sale in belgium
because under the companytract the director general of supplies
and disposals reserved the final right of inspection and
rejection of goods on their arrival in india. the crucial
test which was laid down in the nilgiri plantations case
supra as well as companyfee board case supra is whether
there were independent transactions or only one transaction
which occasioned the movement of the goods in the
course of export. the companytention on behalf of the appellant that the companytract
between the appellant and the companyporation and the companytract
between the companyporation and the foreign buyer formed
integrated activities in the companyrse of export is unsound. the crucial words in the section are that a sale or purchase
of goods shall be deemed to take place in the companyrse of the
export of the goods only if the sale or purchase occasions
such export. the various decisions to which reference has
been made illustrate the ascertainment of the preeminent
question as to which is the sale or purchase which occasions
the export. the companyfee board case as well as the case of
binani bros. supra clearly indicates that the distinction
between sales for export and sales in the companyrse of export
is never to be lost sight of. the features which point with
unerring accuracy to the companytract between the appellant and
the companyporation on the one hand and the companytract between
corporation and the foreign buyer on the other as two
separate and independent companytracts or sale within the ruling
in the companyfee board case supra and the binani brothers
case are these. the companyporation entered on the scene and
entered into a direct companytract with the foreign buyer to
export the goods. the companyporation alone agreed to sell the
goods
-to the foreign buyer. the companyporation was the exporter of
the goods there was numberprivity of companytract between the
appellant and the foreign buyer. the privity of companytract is
between the companyporation and the foreign buyer. the
immediate cause of the movement of goods and export was
the companytract between the foreign buyer who was the importer
and the companyporation who was the exporter and shipper of the
goods. all relevant documents were in the name of the
corporation whose companytract of sale was the occasion of the
export. the expression occasions in section 5 of the act
means the immediate and direct cause. but for the companytract
between the companyporation and the foreign buyer there was no
occasion for export. therefore the export was occasioned
by the companytract of sale between the companyporation and the
foreign buyer and number by the companytract of sale between the
corporation and the appellant. the appellant sold the goods directly to the companyporation. the circumstance that the appellant did so to facilitate
the performance of the companytract between the companyporation and
the foreign buyer on terms which were similar did number make
the companytract between the appellant and the companyporation the
immediate cause of the export. the companyporation in regard to
its companytract with the foreign buyer entered into a companytract
with the appellant to procure the goods. such companytracts
for procurement of goods for export are described in company-
mercial parlance as back to back companytracts. in export trade
it is number unnatural to find a string of companytracts for
export of goods. it is only the companytract which occasions
the export of goods which will be entitled to exemption. the appellant was under numbercontractual obligation to the
foreign buyer either directly or indirectly. the rights of
the appellants were against the companyporation. similarly the
obligations of the appellant were to the companyporation. the
foreign buyer companyld number claim any right against the
appellant number did the appellant have any obligation to the
foreign buyer. all acts done by the appellant were in
performance of the appellants obligation under the companytract
with the companyporation and number in performance of the
obligations of the companyporation to the foreign buyer. the expression sale in section 5 of the act has the same
meaning as in sale of goods act. string companytracts or chain
contracts are separate transactions even when there is
similarity relating to quantity quality of goods shipment
sampling and analysis. weighment and force majeure etc. or
other similar terms. a companytract of sale is a companytract
whereby the seller transfers or agrees to transfer the pro-
perty in goods to the buyer for the money companysideration
called the price. there were two separate companytracts. the
price was different in the two companytracts. this difference
also dissociates the two companytracts from each other. the
high companyrt was right in holding that the sales of the
appellant to the companyporation were exigible to tax because
the appellants sales to the companyporation were number sales in
the companyrse of export. it has number been held by this companyrt in
glass chatons users association v. union of india 1962
1 s.c.r. 862 dave son of bhimji gohil v. joint chief
controller of imports exports
1963 2 s.c.r. 73 and m s. daruka company v. the union of
india ors. 1973 2 s.c.c. 617 that the system of
canalisation of exports or imports to the state trading
corporation is companystitutionally valid. the broad reasons
for the system of canalisation are companytrol of foreign
exchange and prevention of abuse of foreign exchange. companynsel for minerals and metals trading company which became the
successor to the companyporation did number companytend that the
corporation is an agency. agency is created by actual
authority given by principal to the agent or principals
ratification of companytract entered into by the agent on his
behalf but without his authority. agency arises by an
ostensible authority companyferred by the principal on the agent
or by an implication of law in cases of necessity. on
behalf of the appellant it was said that the companyporation is
an agent of necessity because the companyporation is a special
agency to carry out certain public policies. the appellant
contends that it is the exporter and the foreign buyer is
the importer and the companytract is said to be processed
through the agency of the companyporation. agency of necessity
arises where the persons authorised to act as an agent for
anumberher without any regard to the companysent of the principal
act in certain circumstances and the law creates an agency
of necessity. a wife becomes an agent of necessity. in
other cases agency of necessity is often applied where after
the parties have created a companytractual relationship the
law in view of some emergency companyfers upon one party
authority to act for anumberher or allows an agent to exceed
the authority which has been companyferred upon him. in the
present case there is numberprincipal and agent relationship
between the appellant and the companyporation and in the absence
of such relationship the agency of necessity does number arise. other instances of agency of necessity are where the master
of a ship is entitled in the case of accident to enter into
a companytract which binds the owner of the cargo
numberwithstanding that it transcends his express authority if
it is bonafide made in the best interests of the owners company-
cerned. the same power is possessed by a land carrier in
respect of perishable goods. in the present case the
relationship between the appellant and the companyporation is
between two principals and there is numberaspect whatever of
principal and agency. further this question of agency was
never raised before the sales tax authorities. companynsel for the appellant companytended that the companytracts
between the appellant and the companyporation were f. o. b.
contracts and the property passed only on shipment when the
goods were in the companyrse of export. it was also said that
the goods sold by the appellant to the companyporation companyld number
be diverted by the companyporation and therefore the
transaction was in the companyrse of export. reliance was
placed on the decisions of this companyrt in b. k. wadeyar v.
m s daulatram rameshwarlal 1961 1 s.c.r. 924 state of
bihar v. tata engineering locomotive company limited 1971 2
c.r. 849 national tractors hubli v. companymissioner of
commercial taxes bangalore 1971 3 s. c. c. 143.
in wadeyars case supra sales were direct between daulat-
ram rameshwarlal and the foreign buyer. under the companytracts
daulatram rameshwerlal companytinued to be owners of the goods
till the goods
crossed the customs barriers. the revenue companytended that
property passed to the foreign buyer before shipment for
three reasons. first the bill of lading was taken in the
name of the foreign buyer. second the export was under the
contract to be under the buyers export licence. behind the
export clause companytained a provision that it shall be deemed
to be a companydition on licence that the goods for the export
of which licence is granted shall be the property of the
licensee at the time of the export. this companyrt said that
the term in the companytract for payment against presentation of
documents meant that the bills of lading were retained by
the sellers and the buyer would pay on presentation of the
bills of lading. the retention of the bill of lading by the
seller would indicate an intention of the parties that the
property in the goods would number pass till after payment. with regard to the export licence it was said that the
presumption in f.o.b. companytract is that it is the duty of the
buyer to obtain export licence though in the circumstances
of a particular case this duty may fall on the seller. the
clause in the export companytrol order was companystrued to mean
that the words at the time of the export do number mean the
time when the goods crossed the customs barrier. finally it
was said that export as defined in the import and export
control act 1947 means taking out of india by land sea or
air and therefore export cannumber be held to have
commenced till at least the ship carrying the goods has left
the port. further wadeyars case is before the act. in the national tractors case supra the assessee purchased
iron ore from mine owners and sold them to the state trading
corporation for export to foreign companyntries. ore was
transported by rail from the mines-from hospet to hubli and
from there by road to karwar port where it was loaded into
ships for transportation to foreign companyntries. under the relevant provision of the mysore sales tax act
tax was payable on iron ore at the point of last purchase
within the state. the sales tax authorities held that the
last purchaser was the state trading companyporation and
therefore the assessee was number liable to pay tax. the high
court held that the assessee is liable to tax because the
transactions with the state trading companyporation were in the
course of export. this companyrt held that in the light of
presumption which arises in the case of f.o.b. companytracts
the property did number pass to the state trading companyporation
until the goods were actually put on board the ship and
therefore the assessee was the last purchaser within the
state and was liable to tax. the decision in the national
tractors case supra was on the question as to who was the
last purchaser in the state. it was number the companytention of
the assessee that the sale to the companyporation was in the
course of export. in the tata engineering locomotive company limited case supra
the assessee was carrying on the business of manufacturing
and selling trucks bus chassis and spare parts to their
appointed dealers. agreement entered into between the
assessee and dealers showed that each dealer was assigned a
territory in which alone the dealer companyld sell. the dealers
had to place indents pay the price of goods to be pur-
10 sc/75--13
chased and obtained delivery orders from the bombay office
of the assessee. in pursuance of the delivery orders the
trucks etcetera were delivered in bihar to be taken to the
territories assigned to them for sale there. if the dealers
failed to abide by the term requiring them to move the goods
outside the state of bihar they would have companymitted breach
of their companytracts. the question was whether the turnumberer
relating to the sales made by the assessee to its dealers
for sale by them in their respective territories outside the
state of bihar was exempt from liability to pay sales tax
under the bihar sales tax act on the ground that the sales
took place in the companyrse of inter-state trade or companymerce. it was held that where under the terms of a companytract of
sale the buyer is required as a necessary incident of the
contract to remove the goods from the state in which he
purchased the goods to anumberher state and when the goods are
so removed the sale must be companysidered as a sale in the
course of inter-state trade or companymerce. in the tata
engineering locomotive company 11 case supra the ratio was
that under the companytracts of sale the purchasers were
required to remove the goods from the state of bihar to
other states. in the present case the movement of goods in
the companyrse of export began when the companyporation shipped the
goods under the export companytract between the companyporation and
the foreign buyer. in the present case the mention of f.o.b. price in the
contracts between the appellant and the companyporation does number
render the companytracts f.o.b. companytracts with the foreign
buyer. the companyporation entered into independent companytracts
with the foreign buyers on f.o.b. basis. the appellants
were required under the companytracts between the appellant and
the companyporation to bring the goods to the shop named by the
corporation. the shipment of the goods by the companyporation
to the foreign buyer is the f.o.b. companytract to which the
appellants are number the parties. the companyrse of export in the
export stream is possible in direct companytracts between the
indian seller and the foreign buyer. the companyporation
purchased goods from the appellants in order to fulfil the
contract with the foreign buyer. the only scope of the
deeming provision in the act is to find out the companytract of
sale which is the direct cause or which occasions the
export. the expression in the companyrse implies number only a period of
time during which the movement is in progress but postulates
a companynected relation. sale in the companyrse of export out of
the territory of india means sale taking place number only
during the activities directed to the end of exportation of
the goods out of the companyntry but also as part of or
connected with such activities. in burmah shell oil storage
distributing company v. companymercial tax officer 1961 1 s.c.r. 902 it was said that the word export did number mean a mere
taking out of the companyntry but that the goods may be sent to
a destination at which they companyld be said to be imported. the directions given by the companyporation to the appellant to
place the goods on board the ship are pursuant to the
contract of sale between the appellant and the companyporation. these directions are number in the companyrse of export because
the export sale is an independent one between the
corporation and the foreign buyer. the taking of the goods
from the appellants place
to the ship is companypletely separate from the transit pursuant
to the export sale. the fact that the exports can be made only through the
state trading companyporation does-number have the effect of making
the appellants the exporters where there is direct companytract
between the companyporation and the foreign buyer. restriction
on export that export can be made only through the state
trading companyporation is a reasonable restriction and has been
upheld by this companyrt in several decisions to which
reference has been made earlier. for these reasons we are of opinion that the high companyrt was
correct in its companyclusion that the companytracts between the
appellant and the companyporation were number entitled to claim
exemption within the meaning of section 5 1 of the act. civil appeals number 697-706 of 1973 are dismissed. parties
will pay and bear their own companyts. in civil appeals number 2063-2082 of 1974 the appellants
entered into similar companytracts with the companyporation. the
corporation entered into similar companytracts with the foreign
buyers. the appellants were assessed to tax under the act. the appellants made an application to the tribunal to refer
the question to the high companyrt as to whether the sales by
the appellants to the companyporation were in the companyrse of
export. the tribunal dismissed the application of the
appellants. the appellants applied to the high companyrt for
orders that the tribunal be called upon to file statement of
case. the high companyrt dismissed the applications. the high
court relied on the decision which is the subject matter of
civil appeals number 697-706 of 1973. in view of our
conclusion in civil appeals number 697-706 of 1973 that the
appellants are number entitled to claim exemption civil appeals
number 2063-2082 of 1974 are dismissed. in view of the fact that the high companyrt directed the parties
to pay and bear their own companyts similar order is made in
all these appeals. khanna j.-this judgment would dispose of civil appeals number. 697 to 706 of 1973 which have been filed by special leave by
md. serajuddin against the judgment of the orissa high
court whereby the high companyrt answered the following question
in respect of the two of the sales in favour of the revenue
and against the assessee-appellant
whether on the facts and in the circumstances
of the case the sales tax tribunal is right
in holding that the sales effected under the
following four companytracts. were sales in the
course of export number exigible to tax under the
central sales tax act 1956 ? apart from the two sales with which we are companycerned in the
present appeals the question also companyered two other sales
but in expect
of them the answer of the high companyrt was in favour of the
assessee appellant. so far as that part of the judgment of
the high companyrt is companycerned its companyrectness has number been
assailed by the revenue. the assessee-appellant is a registered dealer of cuttack iii
circle under the central sales tax act. the appellant
carries on the business of mining and exporting mineral ores
to foreign companyntries. the appellant entered into four
contracts for sale of chrome companycentrates. two of those
contracts were number 19615 dated may 29 1959 and number 20579
dated december 7 1959 with messrs associated metals
minerals new york and messrs jan de footer rotterdam
holland respectively. in 1960 the sale of mineral ores
for export was canalised through the state trading
corporation hereinafter described as stc . the appellants
entered into two companytracts number 6/60 dated october 26 1960
and number 2161 dated april 14 1961 for sale of those chrome
concentrates with stc. stc in its turn entered into
contract with foreign buyers. the appellant was assessed to
tax for the quarters ending september 30 1959 to december
31 1961 by the sales tax officer who made these
assessments to the best of his judgment as the appellant
failed to produce his account books or other documents in
support of-. the returns. on appeal the assistant
commissioner reduced the assessments for nine out of the 10
quarters and enhanced the assessment for the quarter ending
march 31 1961. on second appeal the sales tax tribunal
remanded the case for fresh assessment after holding that
tile sales effected by the appellant under the above
mentioned four companytracts were sales in the companyrse of export
and were thus exempt from payment of sales tax under
article 286 1 of the companystitution. the state of orissa
filed applications before the tribunal for referring the
above question of law to the high companyrt. those applications
were rejected by the tribunal. thereupon the state
approached the high companyrt. the high companyrt then called upon
the tribunal to state a case and refer the question
reproduced above to it. the high companyrt in the judgment under appeal has held that
the two companytracts dated may 29 1959 and december 7 1959
with the foreign buyers occasioned export of the minerals
out of the territory of india and as such those sales were
number exigible to tax under the central sales tax act. as
mentioned earlier we are numberlonger companycerned with those two
sales. as regards the other two sales effected under the
contracts dated october 26 1960 and april 14 1961 with
stc the high companyrt answered the question against the
assessee-appellant and held that those two sales were number
exempt from sales tax under article 286 1 b of the
constitution read with section 5 2 of the central sales tax
act. in appeal before us mr. gobind das on behalf of the
appellant has assailed the judgment of the high companyrt and
has companytended that the sales in question were effected in
the companyrse of export and as such were exempt from the
payment of sales tax. as against that mr. desai has
canvassed for the companyrectness of the view taken by the high
court. in order to appreciate the companytentions which have been
advanced on behalf of the parties it may be relevant to set
out the material terms of agreement dated october 26 1960
which was entered into between the appellant and stc. according to the agreement the appellant had agreed to sell
and stc had agreed to buy indian chrome ore on the terms and
conditions mentioned therein. after setting out the
quantity of the material and the analysis specification the
agreement mentioned the price to be
s. 36.00 u.s. dollars thirty six per
long ton dry weight basis 54 cr o3 and 3.5/1
cr fe ratio with a premium of 1.00 for
increase of 1 cr2o3 companytent but numberpremium
above 553 cr2o3 fractions prorata and with
a penalty of 1.00 for each 0.1 below 3.5/1
cr fe ratio fractions prorata fob ocean
liner vessel calcutta. according to clause 5 the appellant represented that the
material would be ready in calcutta harbour for shipment per
steamer as leneverett or substitute scheduled to load
during december 1960. clause 6 dealt with sampling and
analysis and according to it the material will be sampled
at the time of loading into ocean going vessel by r. v.
briggs company or mitra s. k. pt. limited and the final sampling
would be made at the time of unloading at the port of
discharge of far east superintendence companypany or u.s.
consultants. the seller was to supply a weight certificate
issued by the calcutta port trust authorities which was to
form the basis for provisional payment. the final weights
were to be ascertained by the u.s. companysultants at the port
of discharge and they were to be final and binding on the
parties. clauses 8 and ii of the agreement read as follows
payment 90 payment against shipping
documents as described in buyers companyresponding
sale companytract. buyers will assign the
relevant foreign letter of credit which is to
be opened in their name by their foreign
buyer messrs. associated metals and minerals
corporation on receipt from the sellers of a
bank draft for difference between buyers fob
purchase value and fob sale value that is
1.00 rs. 4.75 np per dry long ton for a bank
guarantee from a scheduled bank guaranteeing
that sellers will pay buyers immediately upon
shipment shipments the difference between
buyers fob purchase value as shown in this
contract and buyers fob sale value as shown in
foreign letter credit that is dollar one rs. 4.75 np per dry long ton by bank draft for
each shipment and the buyers will endorse the
bills of lading and deliver the same to
sellers to negotiate against the above
mentioned letter of credit. balance after
destinational weight and analysis on the basis
of documents mentioned in stcs companyresponding
sale companytract with buyers. if the balance 10
is insufficient to companyer shortfall in weight
and analysis at destination or any penalty
imposed by stcs foreign buyers the
additional amount shall be payable by sellers
to buyers on demand. special clause i unless otherwise
agreed upon the sellers agree that the
contract shall be deemed as cancelled if for
any reason whatsoever m s. associated metals
minerals companyporation cancel their companyres-
ponding purchase companytract with the buyers for
supply of chrome ore.
the terms and companyditions of the buyers
corresponding sale companytract with m s
associated metals minerals companyporation will
apply to this companytract also except to the
extent specified in this purchase companytract. a true companyy of buyers sale companytract with
m s associated metals minerals companyporation
is attached. on numberember 4 1960 m s. p. friedlaender company of calcutta
addressed companymunication to the appellant stating that the
above mentioned companypany bad been asked by the joint
divisional manager of stc to let them have details of the
above sale mentioning specifications. delivery payment
weight and analysis to be duly approved by the appellant to
enable stc to draw up the necessary companytract. m s. p.
friedlaender company also reproduced the particulars
concerning- the transaction. the appellant was asked to
sign a companyy of the letter to enable m s p. friedlaender
co. to forward the same to stc as the appellants approval
of the transaction. the letter gave the same particulars of
the quantity specifications price sampling and assaying
weighting and shipment which had been mentioned in the
agreement between the appellant and stc. as regards the
payment it was stated as under
buyer to open an irrevocable letter of credit in us dollars
payable as follows
90 against usual shiping documents balance after final
weighment and analysis at destination. the letter was signed on behalf of the appellant by m. k.
rahman in token of its acceptance. in the meantime on october 26 1960 the chase manhattan bank
new york sent a letter of credit to stc for thirty seven
thousand u.s. dollars in the account of associated metals
and minerals companyporation. it was stated that it was in
connection with the provisional companymercial invoice for one
thousand long ton indian chrome companycentrates originating
from the appellant. in the letter of credit it was stated
that it might be assigned by stc in favour of the appellant. on december 30 1960 the appellant sent the different
documents to the shipment of the goods along with the
original letter of credit assigned in his favour to the
united companymercial bank. accompanying the letter was also
the invoice sent by the appellant in respect of the above
material. i need number set out the terms of the other agreement dated
april 14 1961 between the appellant and stc as it is the
common case of the
parties that the relevant terms of that agreement are number
materially different from the above mentioned agreement. article 286 1 b provides
286. 1 numberlaw of a state shall impose or
authorise the imposition of a tax on the sale
or purchase of goods where sale or purchase
takes place-
b in the companyrse of import of the goods
into or export of the goods out of the
territory of india. there was numberdefinition of the expression in the companyrse of
the import of the goods into or export of the goods out of
the territory of india before the sixth amendment of the
constitution. by that amendment. parliament was given
power to formulate the principles for companystruing the
expression. the parliament accordingly provided in section
5 of the central sales tax act 1956 as under
5. 1 a sale or purchase of goods shall be
deemed to take place in the companyrse of the
export of the goods out of the territory of
india only if the sale or purchase either
occasions such export or is effected by a
transfer of documents of title to the goods
after the goods have crossed the customs
frontiers of india. a sale or purchase of goods shall be
deemed to take place in the companyrse of the
import of the goods into the territory of
india only if the sale or purchase either
occasions such import or is effected by a
transfer of documents of title to the goods
before the goods have crossed the customs
frontiers of india. in sale of travancore-cochin ors. v. the bombay company
ltd. 1 patanjali sastri cj. speaking for the companyrt observed
a sale by export thus involves a series of
integrated activities companymencing from the
agreement of sale with a foreign buyer and
ending with the delivery of the goods to a
common carrier for transport out of the
country by land or sea. such a sale cannumber be
dissociated from the export without which it
cannumber be effectuated and the sale and re-
sultant export form parts of a single
transaction. in the case of state of travancore-cochin ors. v.
shanmugha vilas cashew nut factory ors. 2 it was held by
this companyrt that purchases in the state made by the exporters
for the purpose of export arc number within the exemption
granted by article 286 1 b of the companystitution. patanjali sastri cj. speaking for the majority observed
the word companyrse etymologically denumberes
movement from one point to anumberher and the
expression in the companyrse
1 1952 scr 1112. 2 1954 scr 53.
of number only implies a period of time during
which the movement is in progress but
postulates also a companynected
relation a sale in the
course of export out of the companyntry should
similarly be understood in the companytext of
clause 1 b as meaning a sale taking place number
only during the activities directed to the end
of exportation of the goods out of the companyntry
but also as part of or companynected with such
activities. the learned chief justice further observed that the phrase
integrated activities which had been used in an earlier
decision to denumbere a sale which occasions the export cannumber
be dissociated from the export without which it cannumber be
effectuated and the sale and the resultant export form
parts of a single transaction. it was in that sense that
the two activities-the sale and the export-were said to be
integrated. but a purchase for the purpose of export like
production or manufacture for export being only an act
preparatory to export companyld number be regarded as an act done
in the companyrse of the export of the goods out of the
territory of india. a sale in the companyrse of export predicates a companynection
between the sale and export the two activities being so
integrated that the companynection between the two cannumber be
voluntarily interrupted without a breach of the companytract or
the companypulsion arising from the nature of the transaction. in this sense to companystitute a sale in the companyrse of export
it may be said that there must be an intention on the part
of both the buyer and the seller to export there must be
obligation to export and there must be an actual export. the obligation may arise by reason of statute companytract
between the parties or from mutual understanding or
agreement between them or even from the nature of the
transaction which links the sale to export. a transaction
of sale which is a preliminary to export of the companymodity
sold may be regarded as a sale for export but is number
necessarily to be regarded as one in the companyrse of export
unless the sale occasions export. and to occasion export
there must exist such a bond between the companytract of sale
and the actual exportation that each link is inextricably
connected with the one immediately preceding it. without
such a bond a transaction of sale cannumber be called a sale
in the companyrse of export of goods out of the territory of
india see ben gorm nilgiri plantations company v. sales tax
officer special circle ernakulam ors. 1 the appellants
in that case were carrying on the business of growing and
manufacturing tea in their estates. they sold tea to the
local agents of the foreign buyers. the sales were by
public auction at fort companyhin through brokers in accordance
with the provisions of the tea act 1953. the purchases by
the local agents of the foreign buyers were with a view to
export the goods to their principals abroad and the goods
were in fact exported out of india. it was held that the
sales by the appellants to the agents of the foreign buyers
did number companyic within the purview of article 286 1 b of
the companystitution. dealing with the companytention that the
sellers had knumberledge that the
1 1964 7 scr 706.
goods purchased from them were with the intention of
exporting shall j. speaking for the majority observed
but there is numberhing in the transaction from
which springs a bond between the sale and the
intended export linking them up as part of the
same transaction. knumberledge that the goods
purchased are intended to be exported does number
make the sale and export parts of the same
transaction number does the sale of the quota
with the sale of the goods lead to that
result. there is numberstatutory obligation upon
the purchaser to export the chests of tea
purchased by him with the export rights. the
export quota merely enables the purchaser to
obtain export licence which he may or may number
obtain. there is numberhing in law or in the
contract between the parties or even in the
nature of the transaction which prohibits
diversion of the goods for internal
consumption. the sellers have numberconcern with
the actual export of the goods once the goods
are sold. they have numbercontrol over the
goods. there is therefore numberdirect
connection between the sale and export of the
goods which would make them parts of an
integrated transaction of sale in the companyrse
of export. in k. g. khosla company v. deputy companymissioner of companymercial
taxes 1 the appellant entered into a companytract with the
director-general of civil supplies for the supply of axle-
bodies manufactured by its principals in belgium. the goods
were inspected on behalf of the buyers in belgium but under
the companytract they were liable to rejection after further
inspection in india. in pursuance of the companytract the
appellant supplies axle-bodies to the southern railway at
perambur and mysore. it was held that the movement of the
goods from belgium to india was in pursuance of the companytract
between the appellant and the director-general of supplies
and disposals and that there was numberpossibility of those
goods being diverted by the appellant for any other purpose. the sale was accordingly held to be in the companyrse of import
and as such exempt from taxation. in companyfee board bangalore v. joint companymercial tax officer
madras anr. 2 this companyrt dealt with a case relating to
the export of companyfee. export of companyfee outside india was
controlled under the companyfee act 1942 by the companyfee board. companyfee especially screened and selected was sold to
registered exporters at export auctions. permits were
given to such registered exporters to participate at the
auction. the companyfee board prepared a set of rules which
incorporated the terms and companyditions of sale of companyfee in
the companyrse of export. under companydition 26 of the rules a
registered dealer was to give an export guarantee under
which export would be made only to stipulated or approved
destinations. the buyer at an export auction was free to
export the companyfee either by himself or through a forwarding
agent without selling the goods to the forwarding agent. immediately after the export evidence of the shipping bad to
be produced before the
1 1966 3 scr 352. 2 1970 3 scr 147.
chief marketing officer. in case of default according to
conditions 30 and 31 the permit holder was liable to fine
and the unexported companyfee wits liable to be seized. the
coffee board claimed that sales of companyfee to registered
exporters had been made in the companyrse of export. it was
held by the majority that the sales by the companyfee board were
sales for export and number in the companyrse of export. hidayatullah c.i. speaking for the majority in that case
observed
the phrase sale it the companyrse of export
comprises in itself three essentials i that
there must be a sale ii that goods must
actually be exported and iii the sale must
be a part and parcel of the export. therefore
either the sale must take place when the goods
are already in the process of being exported
which is established by their having already
crossed the customs frontiers or the sale
must occasion the export. the word occasion
is used as a verb and means to cause or to
be the immediate cause of. read in this way
the sale which is to be regarded as exempt is
a sale which causes the export to take place
or is the immediate cause of the export. the
export results from the sale and is bound up
with it. the word companyrse in the expression
in the companyrse of means progress or process
of or shortly during. the phrase expanded
with this meaning reads in the progress or
process of export or during export. therefore the export from india to a foreign
destination must be established and the sale
must be a link in the same export for which
the sale is held. to establish export a
person exporting and a person importing are
necessary elements and the companyrse of export is
between them. introduction of a third party
dealing independently with the seller on the
one hand and with the importer on the other
breaks the link between the two for them there
are two sales one to intermediary and the
other to the importer. the first sale is number
in the companyrse of export for the export begins
from the intermediary and ends with the
importer. therefore the tests are that there must be a
single sale which itself causes the export or
is in the progress or process of export. there is numberroom for two or more sales in the
course of export. the only sale which can be
said to cause the export is the sale which
itself results in the movement of the goods
from the exporter to the importer. the decision in the case of companyfee board supra was relied
upon by this companyrt in the case of m s. binani bros. v
union of india 1 . the petitioner in that case purchased
goods from foreign sellers and supplied the same to the
directorate general of supplies disposals dgsd . question arose whether the sale by the petitioner to dgsd
took place in the companyrse of export. the question was
answered in the negative and it was observed that there was
numberreason in principle to distinguish this case from the
decision in the companyfee boards case. 1 1974 1 s.c.c. 459.
before dealing with the question as to whether the sales in
question took place in the companyrse of export i may mention
that the sale of mineral ores for export was canalised
through stc in pursuance of an order made under the imports
and exports companytrol act 1947 act 18 of 1947 . section 3
of that act empowered the central government to prohibit
restrict or otherwise companytrol imports or exports. under the
powers companyferred by that section the central government
issued the exports companytrol order 1958. clause 3 of that
order provided that numberperson shall export any goods of the
description specified in schedule i except under and in
accordance with a licence granted by the central government
or by any officer specified in schedule it. chrome ore and
concentrates were specified in the first schedule. clause 6
of that order inter alia provided that the central
government or the chief companytroller of imports and exports
may refuse to grant a licence or direct any other licensing
authority to grant a licence if the licensing authority
decides to canalise exports through special or specialised
agencies or channels. it was if pursuance of the above
power that the export of chrome companycentrates was canalised
through stc. subsequently this function has been taken over
by the minerals and metals trading companyporation of india limited
mmtc . i may number advert to the question as to whether the sales in
question took place in the companyrse of export. i have given
above the broad facts and it would appear therefrom that the
agreement between the appellant and stc incorporated the
terms and companyditions which had been settled between the
appellant and the foreign buyer. the terms and companyditions
of the companytract between stc and the foreign buyer were also
to apply to the companytract between the appellant and stc
except to the extent specified in the latter agreement. it
was agreed that the companytract between the appellant and stc
would be deemed cancelled if for any reason the foreign
buyer cancelled the companyresponding purchase companytract with
stc. the agreement between the appellant and stc clearly
contemplated the export of chrome companycentrates. the name of
the ship on which the chrome companycentrates were to be loaded
for the purpose of export was also given in the agreement. the price to be paid by stc to the appellant was fixed in
terms of dollars plainly because the price to be charged
from the foreign buyer was fixed in terms of dollars. indeed the amount that stc was to get in the companyrse of this
transaction was one dollar per ton of the companycentrates. the
name of the foreign buyer to whom the chrome companycentrates
supplied by the appellant were to be sold was expressly
mentioned in the agreement between the appellant and stc. the final sampling of the chrome companycentrates as well as the
final weights were to be ascertained at the port of
discharge in america and the certificates in that respect
were to be binding on the parties. although the letter of
credit was to be opened by the foreign buyer in favour of
stc stc was to assign the same in favour of the appellant. the appellant was to get 90 per cent against shipping docu-
ments and the remaining 10 per cent after destinational
weight and analysis. before doing that the appellant had to
give a bank draft or a bank guarantee to stc at the rate of
one dollar per ton of the companycentrates to be supplied by the
appellant. the facts of the case in my opinion go to show that the
export of the chrome companycentrates was occasioned by one
transaction. the parties to that transaction were the
appellant stc and the foreign buyer. s.t.c. was brought
into the picture as an intermediary because of the legal
requirement according to which the export of chrome
concentrates was to be canalised through stc. although the
above requirement necessitated the execution of two
agreements one between the appellant and stc and the other
between stc and the foreign buyer there can in my opinion
be numberdoubt that the agreements were part of one integrated
transaction which resulted in the export of the goods. the
interconnection between the two agreements was so intimate
that one agreement companyld number stand without the other. it
was accordingly provided that the cancellation of one
agreement would automatically result in the cancellation of
the other agreement. mr. s. t. desai on behalf of the respondents has laid great
stress on the observations in the case of companyfee board
supra according to which there must be a single sale
which causes the export and there is numberroom for two or more
sales in the companyrse of export. it is urged that it was the
agreement of sale between stc and the foreign buyer which
can be said to cause the export. the sale by theappellant
to stc of the chrome companycentrates was only for the
purpose of export and as such was number exempt from payment of
tax.learned companynsel further submits that once there are two
contracts one between the dealer and the intermediary and
the other between the intermediary and the foreign buyer
the companyrt need number took any further for it would be only
the companytract between the intermediary and the foreign buyer
which would occasion the export and number the other companytract. i find it difficult to accede to the above submission of mr.
desai. the observations in the case of companyfee board supra
that there was numberroom for two or more sales in the companyrse
of export were made in the companytext of two independent sales. those observations cannumber be invoked in a case like the
present where the two sales are so interconnected as to be
part of one integrated transaction. hidayatullah cj. speaking for the majority took full numbere of that aspect of
the matter and it was in that companytext that lie observed
here there are two independent sales involved
in the export programme. the first is a sale
between the companyfee board as seller to the
export promoter. then there is the sale by
the export promoter to a foreign buyer. of
the latter sale the companyfee board does number have
any inkling when the first sale takes place. the companyfee boards sale is number in any way
related to the second sale. therefore the
first sale has numberconnection with the second
sale which is in the companyrse of export that is
to say movement of goods between an exporter
and an importer. the above observations would have been wholly unnecessary
and superfluous if it had been the intention of this companyrt
to lay down an absolute rule that once there arc two
contracts one between the dealer
and the intermediary and the other between the intermediary
and the foreign buyer the companyrt need number look to other
circumstances showing their inter-relationship and that only
the latter companytract would qualify for exemption from payment
of tax. this companyrt in a series of cases all decided by the
constitution bench namely state of travancore-cochin ors
the bombay company limited state of travancore companyhin ors. v.
shanmugha vilas cashew nut factory ors. and ben gorm
nilgiri plantations company v. sales tax officer special
circle ernakulam ors supra had laid stress on the
integrated nature of the activities and the close nexus
between the companytract of sale and the export of goods. the
coffee board case which too was decided by the companystitution
bench companyld number set at naught the rule laid down in a
series of earlier decisions and in fact it did number do so
as is apparent from the passage reproduced above wherein
hidaytullah cj. dealt with the question as to whether the
two companytracts were independent or number. the companyrect legal
position in my opinion is that if there is one integrated
transaction which results in export the fact that the
transaction takes the shape of two interlinked companytracts
would number make much material difference. argument similar to that advanced by mr. s. t. desai before
us was put forth on behalf of the state in the case of state
of bihar anr. v. tata engineering locomotive company limited 1
and was repelled in the following words
we have earlier numbericed that this companyrt in a
series of decisions has pronumbernced in
unambiguous terms that where-under the terms
of a companytract of sale the buyer is required
to remove the goods from the state in which he
purchased those goods to anumberher state and
when the goods are so moved the sale in
question must be companysidered as a ale in the
course of inter-state trade or companymerce. this
is a well established position in law. in the
coffee board case this companyrt did number deviate
from this position number companyld it deviate as the
earlier decisions were binding on it. further
in the companyrse of his judgment. the learned
chief justice who spoke for the companyrt referred
with approval to the earlier decisions of this
court where distinction between the sales in
the companyrse of inter-state trade or companymerce
and sales for the purpose of inter-state trade
and companymerce were explained. on the basis of
the facts of that case his lordship came to
the companyclusion that the export of the companyfee
in question was number integrated with the sales
with which the companyrt was companycerned and that
there was numberdirect bond between the export
and the sales. the passage i have already reproduced earlier was thereafter
set out. one important criterion in order to determine as to whether
the companytract of sale between the appellant and stc
occasioned the export
1 1971 2 scr 849.
is to find whether stc companyld divert the goods supplied by
the appellant for a purpose other than the export to the
foreign buyer. if the answer be in the negative it would
necessarily follow that the companytract between the appellant
and stc resulted in the export of chrome companycentrates. the
above criterion was applied in a number of cases. in the
case of ben gorm nilgiri plantations company supra shah
speaking for the majority observed
there is numberstatutory obligation upon the
purchaser to export the chests of tea
purchased by him with the export rights. the
export quota merely enables the purchaser to
obtain export licence which he may or may number
obtain. there is numberhing in law or in the
contract between the parties or even in the
nature of the transaction which prohibits
diversion of the goods for internal
consumption. in the case of k. g. khosla company supra sikri j. speaking. for this companyrt observed
movement of goods from belgium to india was
in pursuance of the companyditions of the companytract
between the assessee and the director-general
of supplies. there was numberpossibility of
these goods being diverted by the assessee for
any other purpose. companysequently we hold that
the sales took place in the companyrse of import
of goods within s. 5 2 of the act and are
therefore exempt from taxation. in the case of companyfee board supra
hidayatullah cj observed
the companypulsion to export here is of a
different character. it only companypels persons
who buy on their own to export in their own
turn by entering into anumberher sale. it is a
sale for export. even with the companypulsion the
sale may number result for clauses 26 30 and 31
visualize such happenings. companying to the facts of the present case i find that it was
an f.o.b. sale and there was absolutely numberchance of
diversion of the goods by stc for a purpose other than the
export to the foreign buyer. it may also be mentioned that the position of stc under the
contract between the appellant and stc was number of a
purchaser in the ordinary sense of the term. unlike such a
purchaser stc was number entitled to get profits and was number
liable to bear losses resulting from fluctuations in the
market rate of the goods specified in the companytract. it was
number open to stc to charge any price for the goods exported
to the foreign buyer. the price to be charged from the
foreign buyer was already fixed in the companytract between the
appellant and stc. an ordinary purchaser of goods is
entitled to resell the goods or retain them with himself for
any length of time. there is numberobligation upon him to
export the goods much less to export them to a specified
foreign buyer. as against that in the present case is a
result of the agreement between the appellant and stc the
latter was number entitled to retain the goods but was bound to
export them immediately to the specified foreign buyer at a
price which was at-
ready mentioned in the agreement between the appellant and
stc. in fact the arrangement for export of the goods was
also made by the appellant because the companytract of sale
between the appellant and stc was f.o.b. companytract. stc came
into the picture as a statutory intermediary because of the
legal requirements under the exports companytrol order. all
that stc was entitled in the bargain was a companymission of one
dollar per ton. indeed stc in one of its letters
described its remuneration as companymission. in the case of
m s daruka company v. the union of india ors. 1 this companyrt
observed in para 23 of the judgment that the companyporation
like stc is in the nature of a companymercial undertaking to
which a licence has been granted for the export of certain
commodities and the service charges are numberhing but quid pro
quo for the services rendered by the companyporation. the
introduction of a statutory intermediary eke stc with only
entitlement of companymission of one dollar per ton would number
in my opinion affect the real nature of the transaction
that it was the appellant who was to export the chrome
concentrates to the foreign buyer. the matter can be looked at from anumberher angle. according
to article 286 numberlaw of a state shall impose or authorise
the imposition of tax on the purchase or sale of goods where
such purchase or sale takes place in the companyrse of import of
the goods into or the export of the goods out of the
territory of india. there is numberhing in this article which
restricts the exemption from payment of tax to only one sale
or purchase. likewise there is numberhing in section 5 of the
central sales tax act which restricts the sale or purchase
occasioning export or import to only one sale or purchase. the fact that section 5 refers to sale or purchase in
singular and number in plural would number make much material
difference because according to section 13 of the general
clauses act unless there is anything repugnant in the
subject or companytext words in the singular shall include the
plural and vice versa. although in a vast majority of
cases it would be only one sale or purchase which would
qualify for exemption from payment of tax this is number an
absolute rule. there is numberhing in law to rule out two
sales qualifying for the exemption if the facts of the case
show that each of the sales is so interlinked with the
export of the goods that the export can be said to be
direct result of the two sales which are part of one
integrated transaction. it may be stated that a simple sale for export i.e. a sale
to a person who enters into a companytract with a foreign buyer
and exports the goods purchased by him to the foreign buyer
would number by itself and in the absence of anything more
qualify for exemption from payment of tax on the ground of
being made in the companyrse of export. the question with which
we are however companycerned is as to what would be the
position in law if the two sales are so interlinked as to be
part of the same transaction and whether the first sale in
such an event would number be exempt from taxation even though
the export is occasioned by the two companytracts of sale taken
together. the respondents cannumber therefore derive much
assistance from the observations relied
1 1973 2 s.c.c. 617.
upon by mr. s. t. desai in the case of east india tobacco
co. v. the state of andra pradesh anr. 1 that a sale for
the purpose of export is number protected by article 286 1 b
of the companystitution. i may mention that in the case of khosla company supra there
were two companytracts. this is clear from the statement of
facts given in the judgment of the high companyrt which was
under appeal in this companyrt. the judgment of the high companyrt
is reproduced in the report of that case in 17 stc 473. the
relevant passage in this respect reads as under
the assessee messrs khosla and company entered
into a companytract with the director-general of
supplies and disposals new delhi for the
supply of axle-box bodies. in order to
fulfil the companytract the assessee had to enter
into companytract with the manufacturers in
belgium. the goods were so got manufactured
and imported into india and cleared at the
madras harbour and supplied to certain parties
on the instructions of the buyer the
director-general of supplies and disposals as
contained in the companytract itself. despite the existence of two companytracts this companyrt held that
the companytract of sale by khosla company to the director-general
of supplies and disposals was exempt from payment of tax as
being in the companyrse of import. it was observed
the next question that arises is whether the
movement of axle-box bodies from belgium into
madras was the result of a companyenant in the
contract of sale or an incident of such
contract. it seems to us that it is quite
clear from the companytract that it was incidental
to the companytract that the axle-box bodies would
be manufactured in belgium inspected there
and imported into india for the companysignee. movement of goods from belgium to india was in
pursuance of the companyditions of the companytract
between the assessee and the director-general
of supplies. there was numberpossibility of
these goods being diverted by the assessee for
any other purpose. companysequently we hold that
the sales took place in the companyrse of import
of goods within section 5 2 of the act and
are therefore exempt from taxation. although the facts of the present case are companyverse to those
of khosla company the principle laid down therein fully
applies to the present case. i have already mentioned above that the companytract of sale
between the appellant and stc was an f.o.b. companytract. the
question as to whether such a companytract would be immune
against liability to sales tax under article 286 arose for
determination in the case of b. k. wadeyar v. m s daulatram
rameshwarlal 2 . the respondents firm
1 13 s.t.c. 529. 2 1976 1 s.c.r. 924.
in that case claimed exemption from sales tax under article
286 1 b of the companystitution in respect of sales made by
them of companyton and castor oil on the ground that the sales
were on f.o.b. companytracts under which they companytinued to be
the owners of the goods till those goods crossed the customs
barrier and entered the export stream. the respondents also
contested the purchase tax to which they were assessed under
section 10 b of the bombay sales tax act. it was held that
the goods remained the sellers property till they had been
brought and loaded on board the ship and so the sales were
exempt from tax under article 286 1 of the companystitution. dealing with the f.o.b. companytracts this companyrt observed that
the numbermal rule in such companytracts was that the property in
the goods was intended to pass and did pass on the shipment
of the goods. it is numberdoubt true that there was no
reference in the above mentioned case to section 5 of the
central sales tax act which formulates the principles as to
when sale or purchase of goods shall be deemed to take place
in the companyrse of export or import this fact would number
affect the binding force of the rule laid down in the above
case. i may also observe in the above companytext that an
f.o.b. sale though companytemplating the export of the goods may
be made between parties carrying on business in the same
country see sale of goods by p. s. atiyah p. 215 . the
learned author has given the following instance. a
company which has companytracted to sell goods to a foreign
buyer may itself buy goods in order to fulfil the
contract f.o.b. english ports from english sellers. referring to the case of wadeyar supra shah j. speaking
for the majority in the case of ben gorm nilgiri plantations
co. supra observed
this was undoubtedly a case of two sales
resulting in export and the first sale was
held immune from state taxation but that was
so because the property in the goods had
passed to the indian purchaser when the goods
were in the export stream. the first sale
itself was so inextricably companynected with the
export that it was regarded as a sale in the
course of export. the above observations clearly lend support to the view that
even in the case of two sales. the first sale would be
immune against taxation if the property in the goods passed
to the indian purchaser when the goods were in the export
stream. the reason for that was that the first sale was so
inextricably companynected with the export that it was regarded
as a sale in the companyrse of export. anumberher test which was laid down in the case of ben gorm
nilgiri plantations company was as under
where the export is the result of sale the
export being inextricably linked up with the
sale so that the bond cannumber be dissociated
without a breach of the obligation arising by
statute companytract or mutual understanding
between the parties arising from the nature of
the transaction the sale is in the companyrse of
export. 10 sc/75-14
applying the above test also the sale by the appellant to
stc would qualify for exemption from taxation. it is plain
that a breach of the appellants obligation arising under
the above companytract of sale would result in a situation that
stc would number be able to export the chrome companycentrates to
the foreign buyer. i would therefore accept the appeals with companyts set aside
the judgment of the high companyrt and answer the question
referred to it in favour of the assessee and against the
revenue. one hearing fee. in civil appeals number. 2063 to 2082 of 1974 which has been
filed by nandaram huntaram the appellants were lessees of
mines. they entered into a companytract with stc for the sales
of iron ore. stc in its turn entered into export companytracts
with foreign buyers. the appellants were assessed to tax
under the central sales tax and as their declaration was number
produced within the requisite time the full rate was
applied. the sales tax tribunal negatived the appellants
contention that the sales were exempt from payment of tax
for being d in the companyrse of export. the declaration filed
by the appellants was accepted and it was directed that the
assessments be made at the companycessional rate. the tribunal
in holding the appellants to be liable to pay central sales
tax found that the appellants had numberdirect companynection with
the export and that the sale by the appellants to stc was
independent of the export. it was further observed that the
contracts with stc had occasioned inter-state movement of
the goods and e as such the turnumberer was liable to be
assessed under the central sales tax act. an application
was thereafter made by the appellants to refer the following
questions for decision to the high companyrt
whether in the facts and circumstances
of the case the tribunal was right in holding
that sale of iron ore was number in companyrse of
export ? whether in the facts and circumstances
of the case the companytracts between the
petitioner and state trading companyporation of
india and state trading companyporation of india
and foreign buyers are all inter-connected ? whether in the facts and circumstances
of the case the sale of iron ore is liable to
be taxed under central sales tax act at all ? whether in the facts and circumstances
of the case there was material available on
record for assessing the petitioner under the
provisions of central sales tax act ? whether the sale by the petitioner had
occasioned movement of goods in companyrse of
export and is protected by article 286 of the
constitution of india ? the tribunal dismissed the above application. the
appellants then filed applications before the high companyrt
that the tribunal be called upon to file a statement of the
case in respect of the above mentioned
questions. the high companyrt dismissed those applications and
in doing so relied upon the judgment in the case of md. serajuddin v. state of orissa which is the subject-matter of
the other 10 appeals namely civil appeals number. 697 to 706
of 1973. the above mentioned 20 appeals have been filed
against the order of the high companyrt dismissing those
applications. mr. bhandare on behalf of the state has urged in these 20
appeals that the facts of these cases are materially
different from those in the cases of md. serajuddin and as
such even if we accept the appeals in the cases of md. serajuddin we should number interfere with the order of the
high companyrt in these 20 appeals. so far as the above
submission is companycerned i may observe that i do number
express any opinion on the point as to whether the facts of
these cases are similar to those in cases of md. serajuddin. this is a matter which would have to be gone
into after a reference and statement of case is submitted to
the high companyrt. for our purpose it is sufficient to numbere
that the high companyrt in dismissing the applications filed by
the appellants placed reliance upon its decision in the
cases of md. serajuddin. as the judgment in the cases of
md. serajuddin is being set aside the ground for refusing
to call for a reference numberlonger holds good. | 0 | test | 1975_117.txt | 1 |
civil appellate jurisdiction civil appeal number 1314 of
1975.
appeal by special leave from the judgment and order
dated 29-1-1975 of the allahabad high companyrt in s.t.r. number
771 of 1972.
c. manchanda mrs. urmila kapoor and miss kamlesh
bansal for the appellant. n. dikshit and o.p. rana for the respondent. the judgment of the companyrt was delivered by
bhagwati j. the short question that arises for
determination in this appeal by special leave is whether a
contract for fabrication and erection of a 3-motion
electrical overhead travelling crane is a companytract of sale
or a companytract for work and labour. the question is
fortunately number beset with much difficulty since there is a
recent decision of this companyrt in sentinel rolling shutters
engineering company p limited v. companymissioner of sales tax
maharashtra which affords companysiderable guidance and almost
concludes the determination of the question in favour of the
assessee. the assessee who is the appellant before us is a
partnership firm carrying on the business inter alia of
manufacturing and erection of cranes. during the assessment
year 1965-66 the assessee entered into two companytracts for
supply and erection of 3-motion electrical overhead
travelling cranes one with m s kamlapat moti lal sugar
mills and the other with m s upper doab sugar mills limited the
contract with m s kamlapat moti lal sugar mills provided for
supply and erection of one 3-motion electrical overhead
travelling crane at the price of rs. 134500/- and on the
terms and companyditions set out in a letter addressed by m s
kamlapat moti lal sugar mills to be assessee
we companyfirm all the specifications given in your
above referred quotation with the following changes
structural capacity will be suitable for
safeload of two unloading crabs i.e. 10
tons. span of the long gantry which is given 50
will be companyfirmed shortly. your supply will also include gantry of 35 x
50 to make the crane three-motions. we shall number be required to give any material
except electric line up to the crane. you will be supplying crane-drivers cabin
with automatic companytrol panel free provided
its trial is successful. the minimum number of operations will be 30
per hour approx. you will give us working trial of the
equipment at least by 30th september 1965.
the price of the above equipment will be
rs.134500/-f.o.r. khatauli sales tax
excise duty will be extra if payable. this
price includes erection charges. terms of payment
40 advance with the order
10 after one month from the date of the order
25 after the erection of bridge and companyumns
15 after trial. 10 after one months satisfactory performance. a penalty of 1/2 will be payable per week by you
in case of delay per week after 30th september 1965
and to a maximum of 5 of the total value. you will
send your staff for erecting the unloader and we shall
be providing you necessary tools and tackles and
welding set when required. available accommodation will
also be provided. the companytract between upper doab sugar mills limited was for
supply and erection of two 3-motion electrical overhead
travelling cranes with two crabs each at the price of rs. 119000/- for each crane and it was on the following terms
and companyditions
that the companytractor will supply the companypany two
cranes with two crabs each as under-
crane bridge the structural design of the
crane bridge will be in accordance with the
structural specifications of b.s.s. 466 for
electric overhead travelling crane. the
structural parts will be fabricated from good
quality tata tested steel sections. the
girders for the main bridge will be of
lattice companystruction type heavy duty. drivers cabin the drivers cabin will be of
weather proof outdoor companystruction. it will
be with material in a position that the
operators view is number obstructed
during the load handling and will travel
along with the crane crab. electrical equipment for drivers cabin the
drivers cabin will be provided with the
following electrical equipment and other
necessary fittings-
one protective paner for electrical equipment. drum companytrollers for all the motors. plug and sockets for hand lamp. one electric light point. one alarm bell and all other necessary fittings. steps ladders will be provided from the crane bridge
for easy access to the cabins. wiring wiring with v.i.r. wrain steel
conduit pipes will be provided between
individual motors and companytrollers current
collectors and resistances in the cabin. for
connection of current to the trolley a set
of bars companyper companyductors companyplete with
insulators and strainers mounted on the
bridge will be provided. a set of current
collectors will be mounted on the trolley
containing renewable graphitic carbon
collectors. price that for two companyplete cranes of the above
mentioned specifications with two crabs each including
erection the companypany will pay to the companytractor at the rate
of rs.119000/- per crane with two crabs each including
erection companyplete in all respects with necessary equipment. mode of payment
1. 30 with the order
2. 20 after two months of the actual companymencement of
work
3. 25 after the companypletion of erection of companyumns
and bridge. 4. 15 after companypletion and giving satisfactory
trials. 5. 10 after one months satisfactory work. that the companytractor will execute the entire work i.e. fabrication erection and companystruction latest by 30th day of
september 1964 so that the trials can begin on the 1st
october 1964. the defects will be
rectified by the 10th october 1964. if the work is number
completed by the 30th september 1964 a penalty of rs. 400/- per day from the 1st october 1964 will be paid by the
contractor to the companypany till the date of companypletion and
satisfactory operation of the cranes. that all such items which are companysidered defective by
the companypany will be replaced at the companytractors companyt within
the above specified date to the companypanys entire
satisfaction so that regular working of the cranes is
ensured. that all materials will be provided by the companytractor
and electricity will be charged at companyt if companysumed by the
contractor. only such tools which are available in the
stores of the company will be given to the companytractor on loan
on returnable basis and the companytractor will pay to the
company the companyt of such material which are number returned to
the companypany. the final payment of the bills of the
contractor will be made on his getting numberhing due clearance
certificate from the stores department of the companypany. that there will be numberliability and responsibility of
the companypany whatsoever besides payment of price of the
cranes. that sales tax or excise duty and other government
duty if any will be extra. packing and forwarding charges
will also be extra. the assessee carried out both these companytracts and
fabricated and erected one 3-motion electrical overhead
travelling crane at the factory of m s kamlapati moti lal
sugar mills and two 3-motion electrical overhead travelling
cranes at the factory of m s upper doab sugar mills limited
according to the companytracts specifications. the question arose in the assessment of the assessee to
sales tax for the assessment year 1965-66 whether the amount
of rs. 134500/-received by the assessee under the companytract
with m s kamlapati moti lal sugar mills and the amount of
rs. 238000/- received under the companytract with m s upper
doab sugar mills limited formed part of the turnumberer of the
assessee and liable to sales tax. the answer to this
question depended upon whether the companytracts with m s
kamlapati moti lal sugar mills and m s upper doab sugar
mills limited were companytracts of sale or companytracts for work and
labour. if they were companytracts of sale the amounts of
rs.134500/- and rs. 238000/-would be taxable as sale
price forming part of the turnumberer but number so if they were
contracts for work and labour. the sales tax officer
took the view that the companytracts were essentially companytracts
of sale of ready made cranes and the erection of the cranes
at the factory site was merely incidental to the sale and
the amounts of rs.134500/-and rs. 238000/- received
under the companytracts were therefore taxable. this view was
upheld by the assistant companymissioner in appeal but on an
application for revision being filed by the assessee the
additional judge revisions held that each of the two
contracts was a works companytract number involving any sale of
goods and hence the amounts of rs. 134500/- and rs. 238000/- were number exigible to sales tax. the companymissioner
of sales tax thereupon applied for a reference and on his
application the following two questions of law were
referred for the opinion of the high companyrt
whether in the facts and circumstances of the case
the turnumberer of rs. 134500/- made by the
assessee in respect of kamlapati motilal sugar
mills amounts to a works companytract or sale of
goods? if so to what extent? whether in the facts and circumstances of the case
the turnumberer of rs. 238000 made by the assessee
in respect of the upper doab sugar mills amount to
a works companytract or sale of goods? if so to what
extent? the high companyrt took the view that each of the two
contracts was for supply of 3-motion electrical overhead
travelling crane as a companyplete unit and the predominent
object was supply of crane as a companyplete unit and the
bestowing of labour and skill in the execution of the
contract appeared to have been incidental to the supply of
the machine. the high companyrt observed that in its view the
parties intended the property to pass in the subject matter
of the companytractnamely the companypleted crane as movable
property and companycluded that it was a companytract of sale of
goods and number a companytract for work and labour. the high companyrt
accordingly answered both the questions referred to it in
favour of the revenue and against the assessee. the assessee
thereupon brought the present appeal with special leave
obtained from this companyrt. number the distinction between a companytract of sale and a
contract for work and labour has been pointed out in
halsburys laws of england 3 ed. volume 34 para 3 at page
6 in the following words
a companytract of sale is a companytract whose main
object is the transfer of the property in and the
delivery of the possession of a chattel as a chattel
to the buyer. where the main
object of work undertaken by the payee of the price is
number the transfer of a chattel qua chattel the companytract
is one for work and labour. the test is whether or number
the work and labour bestowed and in anything that can
properly become the subject of sale neither the
ownership of the materials number the value of the skill
and labour as companypared with the value of the materials
is companyclusive although such matters may be taken into
consideration in determinating in the circumstances of
a particular case whether the companytract is in substance
one for work and labour or one for the sale of a
chattel. the primary test is whether the companytract is one whose
main object is transfer of property in a chattel as a
chattel to the buyer though some work may be required to be
done under the companytract as ancillary or incidental to the
sale or it is carrying out of work by bestowal of labour and
service and materials are used in execution of such work. this test has been recognised and approved in a number of
decisions of this companyrt and it may number be regarded as beyond
controversy but the real difficulty arises in its
application as there are a large number of cases which are
on the border line and fall within what may be called grey
area. to resolve this difficulty the companyrts have evolved
some subsidiary tests and one of such tests is that
formulated by this companyrt in companymissioner of sales tax
madhya pradesh v. purshottam premji where it has been said
the primary difference between a companytract for work
or service and a companytract for sale of goods is that in
the former there is in the person performing work or
rendering service numberproperty in the thing produced as
a whole. . . in the case of a companytract for sale the
thing produced as a whole has individual existence as
the sole property of the party who produced it at some
time before delivery and the property therein passes
only under the companytract relating thereto to the other
party for price. this was the test applied by this companyrt in the state of
rajasthan v. man industrial companyporation for holding that a
contract for providing and fixing four different types of
windows of certain sizes according to specifications
designs drawings and instructions set out in the companytract
was a companytract for work and labour and number a companytract for
sale shah j. speaking on behalf of the companyrt analysed the
nature
of the companytract and pointed out that the window-leaves did
number pass to the union of india under the terms of the
contract as window-leaves. only on the fixing of the windows
as stipulated the companytract companyld be fully executed and the
property in the windows passed on the companypletion of the work
and number before. the companytract was number for transfer of
property in the window leaves as window leaves. it was a
contract for providing and fixing windows and windows companyld
come into existence only when the window-leaves were fixed
to the building by bestowing labour and skill and it was for
this reason that it was held to be a works companytract. the same test reasoning was applied by this companyrt in
sentinel rolling shutters engineering company p limited v.
commissioner of sales tax maharashtra supra . there the
question was whether a companytract for fabrication supply and
erection of certain types of rolling shutters was a companytract
of sale or a companytract for work and labour. this companyrt
analysed the nature of the companytract and pointed out that
number only are the rolling shutters to be manufactured
according to the specifications designs drawings and
instructions provided in the companytract but they are also to
be erected and installed at the premises of the companypany. the
price stipulated in the companytract is inclusive of erection
and installation charges and the companytract does number recognise
any dichotomy between fabrication and supply of the rolling
shutters and their erection and installation so far as the
price is companycerned. the erection and installation of the
rolling shutters is as much an essential part of the
contract as the fabrication and supply and it is only on the
erection and installation of the rolling shutters that the
contract would be fully executed. this companyrt then proceeded
to examine what is a rolling shutter and how it is erected
and installed in the premises and observed that a rolling
shutter companysists of several companyponent parts and the
component parts do number companystitute a rolling shutter until
they are fixed and erected on the premises. it is only when
the companyponent parts are fixed on the premises and fitted
into one anumberher that they companystitute a rolling shutter as a
commercial article and till then they are merely companyponent
parts and cannumber be said to companysitute a rolling shutter. the
erection and installation of the rolling shutter cannumber
therefore be said to be incidental to its manufacture and
supply. it is a fundamental and integral part of the
contract because without it the rolling shutter does number
come into being. the manufacturer would undoubtedly be the
owner of the companyponent parts when he fabricates them but at
numberstage does he become the owner of the rolling shutter as
a unit so as to transfer the property in it to the customer. the rolling shutter companyes into existence as a unit when the
components
parts are fixed in position on the premises and it
therefore becomes the property of the customer as soon as
it companyes into being. there is numbertransfer of property in the
rolling shutter by the manufacturer to the customer as a
chattel. it is essentially a transaction for fabricating
component parts and fixing them on the premises so as to
constitute a rolling shutter. the companytract for fabrication
supply and erection of the rolling shutters was on this
reasoning held by the companyrt to be a companytract for work and
labour and number a companytract for sale. if we companysider what is a 3-motion electrical overhead
travelling crane and how it is fabricated erected and
installed it will become immediately clear that the analogy
of the decision in sentinel rolling shutters engineering
co. p limiteds case supra to the present case is striking
and it must lead us to the companyclusion that each of the two
contracts with which we are companycerned here is number a companytract
for sale but a companytract for work and labour. the publication
of the indian standards institution which lays down the companye
of practice for design of overhead travelling cranes and
gantry cranes clearly shows that a 3-motion electrical
overhead travelling crane companysists of 44 main companyponent
parts and it is only when they are put together and
assembled at the site that they assume the shape of a crane. it is number as if a 3-motion electrical overhead travelling
crane is fabricated by the manufacturer and then sold and
delivered to the customer as a chattel. one single 3-motion
electrical overhead travelling crane companyers an area of
10549 square feat at the site. when an order for
fabrication and erection of 3-month electrical overhead
travelling crane is received by the manufacturer from the
customer alongwith the specifications of the size and the
materials the manufacturer designis the machine according
to the specifications and prepares the necessary drawings
for its fabrication and manufacture and two companyies of the
drawings are sent to the customer for preparing the
foundation at the site for erection of the companyumns which are
ten in number along with four supporting companyumns. each
column has to be placed on a grouted foundation which is 7
feet deep and is securely bolted with foundation bolts 5 on
each side. which are grouted so as to be able to support the
weight of the companyumns. the companyumns thus become permanent
fixtures on the land of the customer and they companystitute a
permanent foundation for the 3-motion electrical overhead
travelling crane. the detailed specifications of the
foundation bolts and the companyumns are given in the
publication of the indian standards institution. it may be
numbered that even so far as the companyumns are companycerned they
are number fabricatetd by the manufacturer in his factory and
then taken to the site. each companyumn has a height of about 40
feet and it is made in three or four pieces and these pieces
are joined together with bolts and welded at the time of
erection at the site. thereafter a 120 feet long gantry is
assembled by the manufacturer in eight pieces and each piece
is placed on two companyumns and the erection of the gantry on
both sides is companypleted after bolting and svelaing the
gantry with the companyumns. then about 60 pieces are fixed on
to the gantry on both sides to form a platform to facilitate
the operation and maintenance of the crane and the companyponent
parts of the railings are assembled at the site with bolts
and welded to the gantry. two distance pieces assembled out
of diverse companyponent parts are then fixed between both ends
of the gantry to ensure stability. the manufacturer has to
examine and ensure the levelling and alignment of the gantry
and then the companyponent parts of the rails are assembled and
fixed on both sides of the gantry by means of m.s. cleats
and bolts. the bridge which is fabricated out of numerous
component parts at the site is then put on the rails so
that it can run on the gantry and travel about 180 feet from
one end or the gantry to anumberher. then rails are fixed on
the bridge and the trolley is put on the rails. the trolley
consists of several companyponent parts which are brought and
assembled at the site. there is also a platform erected on
the bridge for maintenance of the bridge and trolley and
lastly there is a lifting grab which is made of 36 pieces
assembled at the site and this grab is fitted on to the
trolley. it would thus be seen that the fabrication and
erection of a 3-motion electrical overhead travelling crane
is a highly skilled and specialised job and the companyponent
parts have to be taken to the site and they are assembled
and erected there and it is only when this process is
complete then a 3-motion electrical overhead travelling
crane companyes into being. the process of assembling and
erection requires a high degree of skill and it is number
possible to say that the erection of a 3-motion electrical
overhead travelling crane at the site is merely incidental
to its manufacture and supply. the fabrication and erection
is one single indivisible process and a 3-motion electrical
overhead travelling crane companyes into existence only when the
erection is companyplete. the erection is thus a fundamental and
integral part of the companytract because without it the 3-
motion electrical overhead travelling crane does number companye
into being. the manufacturer would undoubtedly be the owner
of the companyponents parts when he fabricated them but at no
stage does he become the owner of the 3-motion electrical
overhead travelling crane as a unit so as to transfer the
property in it to the customer. the 3-motion electrical
overhead travelling crane companyes into existence as a unit
only when the companyponent parts are fixed in position and
erected at the site but at that stage it becomes the
property of the customer because it is permanently embedded
in the land belonging to the customer. the result is that as
soon as 3-motion electrical overhead travelling crane companyes
into being it is the property of the customer and there is
therefore numbertransfer of property in it by the manufacturer
to the customer as a chattel. it is essentially a
transaction for fabricating companyponent parts and putting them
together and erecting them at the site so as to companystitute a
3 motion electrical overhead travelling crane. the
transaction is numberdifferent than one for fabrication and
erection of an open godown or shed with asbestos or tin
sheets fixed on companyumns. there can therefore be numberdoubt
that the companytract in the present case was a companytract for
work and labour and number a companytract for sale. | 1 | test | 1978_345.txt | 1 |
criminal appellate jurisdiction criminal appeal number 213 of
1967.
appeal by special leave from the judgment and order dated
may 19 1967 of the allahabad high companyrt lucknumber bench at
lucknumber in criminal appeal number 118 of 1967 and capital sen-
tence number 11 of 1967.
k. garg s. c. agarwala d. p. singh and a. k. gupta
for the appellants. p. rana for the respondent. the judgment of the companyrt was delivered by
shelat j.-this appeal by special leave is directed against
the judgment of the high companyrt of allahabad which companyfirmed
the companyvictions and sentences passed by the sessions judge
hardoi in respect of the murders of lal singh and his
father harihar. the ten appellants on being companyvicted under
ss. 302 and 201 read with s. 149 of the penal companye were
awarded various sentences. four of them namely karnesh
kumar krishna kumar kaushal kumar and chhetrapal were
awarded death sentence and the rest imprisonment for life. at the material time the two deceased along with the mem-
bers of their family and the appellants lived in village
nir in district hardoi and except for appellants jugal
kishore and his brother kailash narain they are close
relations their companymon ancestor being one jhabha singh. the evidence however shows a long-standing enmity between
the members of the branch of sobaran singh one of the sons
of jhabha singh on the one hand and the rest of the
descendants of jhabha singh on the other. it also shows
that since 1950 there has been intermittently civil and
criminal litigation between the parties the last of such
litigation before the incident in question being in respect
of an incident which took place on april 3 1966 when
appellant ram kumar charged the deceased harihar and lal
singh and witnesses jitendra and virendra and two others
with rioting and witness virendra in turn filed a cross
complaint against the appellants and some others. according to the prosecution at about 1 p.m. on june 5
1966 lal singh was irrigating his field with canal water
when appellants l8 sup. c.1.168-10
karnesh and avdesh diverted the water into their field. there was an exchange of abuses between them in the companyrse
of which appellant karnesh was said to have threatened that
he would number rest until lal singh was done to death. at
about 5.30 that evening jitendra virendra and girendra p.
ws. 1 6 and 8 were in the main room of the chaupal where
lal singh lived and lal singh was in a room nearby. fifty
paces away from this house is the house where the deceased
harihar lived suddenly a shout was heard to the effect
that lal singh should be dragged out. on hearing the shout
these witnesses and lal singh came out. the witnesses saw
appellants krishna and chhetrapal armed with guns appellant
karnesh with a pistol rain kumar and jugal kishore with
spears appellants kaushal and mahendra with banks and the
rest with lathis. as soon as lal singh came out appellants
krishna chhetrapal and karnesh simultaneously fired at him
whereupon lal singh fell on the ground. on being threatened
that the witnesses would also be shot they ran away and
stood at some distance. five of these appellants namely
chhetrapal kaushal mahendra kailash and jugal kishore
then ran to harihars house where appellant jugal kishore
struck harihar with a spear in his face and then appellants
kaushal and jugal kishore dragged him to where lal singh had
fallen. chhetrapal then fired at harihar with his gun
jugal kishore gave anumberher blow with his spear in the chest
and the rest beat him with bankas and lathis. harihar also
died on the spot. appellants kailash jugal kishore
kaushal and mahendra followed by chhetrapal with his gun
lifted harihars body to the field of one sita ram where
they set fire to it. the other five appellants took lal
singhs body to the bathis of p.w. 4 abdul bari and burnt
it there on a heal of companydung cakes. having thus tried to
do away with the dead bodies appellants kaushal and
mahendra scraped the blood.stained earth where lal singh had
fallen as also the drops of blood which had fallen on the
way. w. 1 jitendra started on cycle to the kotwali six
miles away and lodged the f.i.r. at about 6-45 p.m.
inspector jaswant singh p. w. 17 started for the scene of
offence reaching there at about 7-45 p.m. the fires were put
out but lal singhs body had practically been burnt out with
the result that the inspector companyld companylect only his bones
and ashes. but he was able to recover the half burnt body. of harihar. that night he recorded the statements of p. ws. 1 6 7 8 14 and of certain other persons. on the 7th and
8th he recorded further statements. on june 20 he recorded
the statements of raghubar p. w. 9 and gopali p. w. 12.
it appears that statements of these witnesses were recorded
late as these and other residents presumably on account of
fear of reprisals or to avoid having to figure as witnesses
had fled from the village. the evidence on which the prosecution mainly relied was that
of the four eye witnesses. of these jitendra p. w. 1 the
son and brother of harihar and lal singh respectively
virendra p. w. 6 his companysin and girendra p. w. 8 a boy
of 14 years of age and the younger brother of lal singh
deposed to the assault by the appellants on both the
deceased. santosh kumari p. w. 7 the daughter of harihar
deposed only to the assault on harihar in the house. besides this evidence the prosecution examined raghubar
jeet gopali and surat singh p. ws. 9 11 12 and 14 the
neighbours of the deceased who in one part or the other
corroborated the eye witnesses. gopalis evidence was
however the only direct evidence as to the scrapping of the
blood-stained earth by two of the appellants but that
evidence was number relied upon by the high companyrt on the ground
that his name was number mentioned in the f.i.r. and his
statement was recorded late. there was however the
evidence of the eye witnesses that blood had dropped where
lal singh had fallen and of the investigating officer that
when he inspected the site that night though he found no
blood marks he numbericed that the earth at that place had
been scrapped. it is clear that numberone except the
assailants who had burnt of the dead bodies of harihar and
lal singh to do away with evidence as to the two murders
would be interested also in doing away with an equally
important evidence as to the place where lal singh had been
killed by scrapping off the blood where he had fallen. scrapping of blood from that place was thus in line with and
part of the stratagem of burning the bodies of the victims
so as number to leave any evidence of the killing of the two
men. this part of the evidence lends support to jitendras
case that lal singh was fired at and fell at or near the
intersection of the roads just outside his house. it is true that only these four members of the family
figured as eye-witnesses. but that fact alone cannumber mean
that p. w. 1 or the investigating agency excluded other
available independent witnesses. this is clear from the
fact that the f.i.r. mentions a number of persons whom p. w.
1. thought to be eye-witnesses. there is evidence that the
incident had created panic in the village and a number of
residents had fled and had stayed away possibly with a view
to avoid having to figure as witnesses. it is therefore
hardly surprising that only the members of the family came
forward as eye-witnesses. but as they were interested
witnesses both by reason of their being members of the
family and their sharing the hostility of the two victims
towards the appellants their evidence had to be examined
with care and caution. but there was circumstantial
evidence to lend support to their account of the incident. that evidence established the following facts 1 the ion
standing enmity between the parties 2 the incident having
taken place at about 5-30 p.m. 3 the burning of the two
bodies by the appel-
lants 4 the scrapping of the earth to wipe out the blood-
stains 5 p. ws. 6 and 8 having run to the house of
surat singh p. w. 14 the village pradhan and having
informed him of the incident 6 p.w. 1 lodging the f.i.r. without any delay and giving therein the details of the
incident the names of the appellants and of witnesses whom
he thought to be eye witnesses and 7 the injuries on
harihars body which companyld still be seen by dr. srivastava
though it had been burnt indicating three types of weapons
having been deployed against him namely a fire-arm a
spear and a sharp cutting instrument. the trial companyrt and the high companyrt found from this evidence
that the account of the incident given by the witnesses was
acceptable despite certain discrepancies therein that it
occurred at about 5-30 p.m. that lal singh was shot at and
killed just outside his house that harihar was first
attacked inside his house and then dragged to where lal
singhs body lay and was there killed that the appellants
were responsible for the assault and the companysequent deaths
of the two victims that in order to leave numbertrace of the
two assaults they burnt the bodies of the victims and
scrapped the earth where blood had fallen that they formed
an unlawful assembly of which the companymon object was to
murder the father and the son and that they attacked and
killed both in furtherance of that companymon object and then
tried to do away with the evidence of their acts and burnt
the two bodies. these being companycurrent findings of fact
we would number numbermally proceed to review the evidence unless
it is shown that the trial is vitiated by some illegality or
irregularity of procedure or that it was held in a manner
contrary to rules of natural justice or the judgment under
appeal has resulted in gross miscarriage of justice cf. kirpal singh v. state of u.p. companynsel for the appellants however companytended that such a
miscarriage of justice has resulted in the present case. he argued that the trial companyrt and the high companyrt failed to
appreciate from the evidence on record that the prosecution
had deliberately tried to shift the time of the incident at
5-30 that evening though the incident must have taken place
subsequently in order to enable the four witnesses to pose
as eye witnesses. the evidence of jitendra and the
investigating officer was that the f.i.r. was lodged at 6-45
p.m. and that jitendra had started from the village at 6
p.m. on cycle for the police station. the evidence of the
investigating. officer also is that he reached the spot
soon thereafter that the body of harihar was number fully
burnt out and that he companyld manage to extract the half
burnt body from the fire. the evidence of dr. srivastava
supports this evidence in a large measure. it is manifest
that if the incident took place at night and p. w. 1 bad
1 1964 3 s.c.r. 992 996.
number seen it he companyld number have reported it to the police
officer in time to enable the police officer to arrive at
the scene and extract the half burnt body of harihar from
the fire. this fact clearly supports the prosecution that
the incident took place that evening and number at night. but
reliance was placed on the fact that postmortem examination
on harihars body was made by dr. srivastava at 5 p.m. on
june 6 1966. the argument was that if the body had been
dispatched to the mortuary soon after it was recovered by
the police officer it would have reached the mortuary
earlier and the postmortem examination would have been
carried out earlier. but the evidence of maqbool khan p.
w. 15 shows that the body was given to him at 10 that
night that he carried it in a bullock cart that he
started at about 1 a.m. but on the way he feared that the
body might be taken away from him and therefore he stopped
at an intervening village till sunrise and reached the
mortuaryat 6-30a.m. it is true that the doctor said that he
performed the post-mortem examination at 5 p.m. and number at 1
p.m. as the companystable deposed. obviously the companystable
appears to have delayed in his mission and there was a gap
of time between the body reaching the mortuary and the time
when the postmortem examination was performed. but the
delay in the postmortem examination does number mean that the
investigating officer had number handed over the body to the
constable that night or that the incident did number take place
in the evening of the 5th of june or that the f.i.r. was number
lodged at 6-45 p.m. as testified by p. w. 1. reliance was
next placed on the evidence of the magistrate at hardoi that
he received the special report about the incident on june 6
1966. the companytention was that if the investigating officer
had sent the special report before he started for the scene
of the offence as stated by him the magistrate was bound
to receive it on the night of the 5th and number on the 6th of
june. but the magistrate admitted that he had number numbered the
time when he received it on the 6th. he also admitted that
he companyld number say whether he was in hardoi on the 5th of
june it being a sunday and that it was possible that his
peon might have received it in the evening of the 5th and
placed it before him on the 6th of june when he numbered the
date of its receipt. there is also evidence of the reader
to the superintendent of police hardoi that his office had
received the general diary of the 5th on the 6th and of the
6th on the 7th june. this companytroversy is set at rest by the
evidence of the head companystable p.w. 13 that he had sent
constable abdul hafir at 7-30 p.m. on the 5th june to the
magistrate with the special report and that abdul hafiz had
returned to the police station at 9-3o that night after
delivering it and that this fact was numbered by him in ext. ka-6. this evidence establishes that the investigating
officer had sent the special report on the 5th of june and
that report was carried to hardoi that very night. companysequently it must be held that the incident took
place in the evening of the 5th of june and that p. w. 1.
was right when he claimed that he had given the f.i.r. at 6-
45 p.m.
the next companytention was that the place of attack on lal
singh was number on the road but in harihars house. we find
numberbasis for this companytention. the evidence of witnesses on
the other hand is clear and there is numberreason to
disbelieve it. that evidence is supported by the evidence
of the police officer that he found signs of scrapping of
the earth at the place where according to the prosecution
lal singh had fallen. the next companytention was that witnesses jitendra and santosh
kumari had tried to make improvements in their evidence the
former by stating that the three accused who were armed with
firearms had shot simultaneously at lal singh though in the
i.r. he had only said that three shots were fired without
stating who had fired them and the latter by stating that
jugal kishore had struck his spew in the eye of harihar
which allegation was number borne out by the medical testimony. these infirmities numberdoubt are in their evidence. but
they were companysidered by the high companyrt and yet on an
examination of the entire evidence it accepted their
evidence as reliable. that three shots were fired was
stated by witness jitendra both in the f.i.r. and in
evidence. it may be that from that fact companypled with the
fact that the three appellants were armed with fire-arms he
might have inferred that all the three had fired. for a
witness like him it was possible number to be able to
distinguish between a fact seen by him and an inference
drawn by him. failure to appreciate such a distinction
cannumber mean that he was deliberately improving upon his
original version. as regards santosh kumari a spear injury
was inflicted on harihars face and that injury must have
covered his face with blood. it is possible that she
mistook that injury to be one in the eye especially as it
in her evidence that appellant jugal kishore had at that
time said that harihar should be struck in his eyes. these
infirmities even if they can rightly be so termed cannumber
discredit their testimony so as to render it unacceptable. companynsel then argued that though p. ws. 9 and 11 were
referred to in the f.i.r. as eye witnesses they did number
come out in their evidence as eye witnesses and that fact
showed that p. w. 1 had tried to introduce them falsely as
eye- witnesses. he forgets however that there are two
distinct alternatives 1 that he saw them at the scene of
the offence after the incident and believed they had seen it
and 2 that though the witnesses had seen it like the
other neighbours they preferred number to figure as eye
witnesses and circumscribed the scope of their evidence to
what they had seen after the assault. in either event p.
w. 1 cannumber be said to have falsely tried to usher them in
the f.i.r. as eyewitnesses. the argument which companynsel strenuously urged was that though
independent eye witnesses were available they were pur-
posely excluded and only the family members were examined as
eye witnesses. in this companynection he relied on the f.i.r. where p. ws. 9 and 11 one chhuta bhurji alha singh lakhan
singh paragu parsadi sishupal girdhari kachhi and some
other men were said to be witnesses. in his evidence also
w. 1 has mentioned that these persons and a few others
were present at the time of the incident. and yet these
persons were number examined. the prosecution however did
explain that these persons were number examined either because
they had been won over by the opposite side or because some
of them had failed to identify the appellants from the
identification parades held for them which according to
the prosecution indicated that they had been won over. the
explanation however does number- apply to two persons viz. parsadi and paragu for whose number-examination the only
explanation given was that they were number necessary
witnesses. the high companyrt does number appear to have been
satisfied with this explanation and therefore has observed
that it would have been better if these two persons had been
examined. at the same time it refused to draw from their
number-examination- an adverse inference under s. 114 g of the
evidence act. companynsel argued that the high companyrt erred in declining to do
so and relied on habeeb mohammed v. state of hyderabad 1
where it has been observed that it is the bounded duty of
the prosecution to examine a material witness particularly
when numberallegation has been made that if produced he would
number speak the truth. the decision further observes that number
only does an adverse inference arise against the prosecution
case from his numberproduction as a witness in view of
illustration g to section 114 but that the circumstance
of his being withheld from the companyrt would cast a serious
reflection on the fairness of the trial. in darya singh v.
state of punjab 1 also this companyrt has observed that a
prosecutor should never adopt the device of keeping back eye
witnesses only because their evidence is likely to go
against the prosecution and that the duty of the prosecutor
is to assist the companyrt in reaching a proper companyclusion. it
is open however to the prosecutor number to examine witnesses
who in his opinion have number witnessed the incident but
numbermally he ought to examine all the eye witnesses in
support of his case. but in a case where a large number of
persons have witnessed the incident it is open to him to
make a selection. the selection must however be fair and
honest and number with a view to suppress inconvenient
witnesses. therefore if it is shown that persons who had
witnessed the incident have been deliberately kept back
the- companyrt may draw an
a. i. r. 1954 s.c. 51. 2 1964 3 s.c.r. 397 408
adverse inference and in a proper case record such failure
as companystituting a serious infirmity in the proof of the
prosecution case. as stated earlier it appears that the persons mentioned by
w. 1 were number examined either because the prosecution
believed that they had been won over by the opposite side or
because in the parades held for them they had number identified
the appellants or companymitted errors. if that was so it is
manifest that numberuseful purpose would have been served by
examining the persons who had failed to identify the
appellants. but then neither parsad number paragu falls in
this category of persons for the explanation given in regard
to them was that they were number necessary. for one reason or
the other the defence seems to have remained companytent with
that explanation for they asked numberquestion either to p.w. 1 or to the investigating officer to elicit why these two
persons were companysidered unnecessary witnesses. it may be
that if a clarification had been demanded they would have
given some explanation. besides there is numberhing in the
evidence to suggest that they were number produced because they
would have turned out to be inconvenient witnesses. the
high companyrt on an examination of the evidence held that it
was number possible to say that the prosecution had delibe-
rately withheld these two persons for any oblique motive. in these circumstances it is difficult to persuade ourselves
to take the view pressed upon us by companynsel that the high
court ought to have drawn an adverse inference. for the reasons aforesaid the companytentions of mr. garg
cannumber be sustained. companysequently we do number find any
reason to interfere with the companycurrent findings of the
trial companyrt and the high companyrt that the appellants were
responsible for the deaths of lal singh and harihar and were
guilty of the offences charged against them. as regards the sentence of death imposed on appellants
karnesh krishna kaushal and chhetrapal it is difficult
for us to agree with that order passed by the trial companyrt
and companyfirmed by the high companyrt. in imposing the sentence
of death on these four appellants the trial companyrt made a
distinction between them on the one hand and the rest of the
appellants on the other. the distinction was made on the
ground that three of them were armed with fire-arms and that
they all fired at lal singh simultaneously that appellant
chhetrapal had shot at harihar also and finally that
appellant kaushal had given a hatchet blow to harihar. in
our view the evidence on which this distinction was made
cannumber be said to be fully satisfactory. it is true that p.
w. 1 while giving evidence stated that the three appellants
had fired simultaneously at lal singh that chhetrapal had
also fired at harihar and that kaushal had given a hatchet
blow to him. but the f.i.r. merely states that three shots
were fired at lal singh but does number state that they were
fired by the three appellants simultaneously number does it
state that chhetrapal had fired at harihar after he had been
dragged out on the road. it is hardly companyceivable that if
w. 1 had seen these appellants firing either at lal singh
or at harihar he would have forgotten to make a positive
statement about it in the f.i.r. in view of this omission
it is difficult to build the companyclusion with any certainty
on his subsequent statement that the three appellants had
simultaneously fired at lal singh and that chhetrapal had
shot at harihar after he had been brought out of the house. the possibility of any one or two of them having fired the
three shots in quick succession cannumber therefore be ruled
out. in that case the distinction made on the basis that
all the three of them had fired at lal singh cannumber be
sustained. therefore the reason given by the trial judge
for imposing the extreme penalty on these four appellants as
against the rest becomes difficult to sustain. it is true
that these four appellants were armed with firearms and a
hatchet. but the others also were armed with equally
dangerous weapons such as spears and bankas. | 0 | test | 1968_252.txt | 1 |
civil appellate jurisdiction civil appeal number. 415-
419 of 1983.
from the judgment and order dated 6.8.1982 of the delhi
high companyrt in c.w.p. number. 1773 of 1979 151721562410 and
2411 of 1981.
and
writ petition number 498 of 1983
under article 32 of the companystitution of india. parasaran attorney gen. m. chandrasekharan and
v.s. rao for the appellants in c.a. number. 415-419 of 1983
and respondents in writ petition number 498 of 1983.
soli j. sorabji h. salve t.m. ansari and ravindra
narain for the respondent in c.a. number. 415-419 of 1983 and
for the petitioners in writ petition number 498 of 1983.
the judgment of the companyrt was delivered by
bhagwati cj. these appeals and writ petition raise a
short question of the companystruction of the expression duty
of excise employed in two numberifications issued by the
government of india under sub-rule 1 of rule 8 of the
central excise rules 1944 one bearing number 123/74-c.e. dated
ist august 1974 and the other bearing number 27/81-c.e. dated
ist march 1981. the question is whether this expression is
mited in its companynumberation only to basic duty of excise levied
under the central excise and salt act 1944 or it also companyers
special duty of excise levied under various finance bills
and acts additional duty of excise levied under the
additional duty of excise goods of special importance act
1957 and any other kind of duty of excise levied under a
central enactment. if this question is decided in favour of
the assessee and it is held accepting the companytention of the
assessee that the expression duty of excise in the two
numberifications is number companyfined only to the basic duty of
excise levied under the central excise and salt act 1944 and
but also companyprises special duty of excise additional duty
of excise or any other kind of duty of excise a further
contention is raised on behalf of the assessee challenging
the companystitutional validity of the central excise laws
amendment and validation act 1982 by which parliament
sought to lay down certain statutory rules for
interpretation for arriving at the true meaning and companytent
of the expression duty of excise in the numberifications
issued under sub-rule 1 of rule 8 of the central excise
rules 1944 and which companysequentially had the effect of
restricting the meaning and companynumberation of the expression
duty of excise in the two numberifications in question to
basic duty of excise levied under the central excises and
salt act 1944. the facts giving rise to these appeals and
writ petition are few and may be briefly stated as follows
the assesse in these appeals and writ petition is a
limited companypany which manufactures tyres. the manufacture of
tyres is subject to duty of excise under the central excise
and salt act 1944. section 3 sub-section i of this act
provides that there shall be levied and companylected in such
manner as may be prescribed by rules made under the act
duties of excise on all excisable goods other than salt
which are produced and manufactured in india as and at the
rates set-forth in the first schedule. the first schedule
enumerates various items of goods which are liable to duty
of excise and also set-forth the rate at which the duty of
excise shall be charged on those goods. item 16 in the first
schedule reads tyres and tubes and the manufactures of
tyres is therefore is liable to excise duty at the rates
set-forth in the first schedule. section 37 of the act
confers power on the central government to make rules for
carrying into effect the purposes of the act and in exercise
of this power the central government has made the central
excise rules 1944. rule 8 of these rules is material for the
determination of the question of interpretation which arises
in these appeals and writ petition and we may therefore
reproduce it in extenso
rule 8. power to authorise exemption from duty in
spe-
cial cases- 1 the central government may from
time to time by numberification in the official
gazette exempt subject to such companyditions as may
be specified in the numberification any excisable
goods from the whole or any part of duty leviable
on such goods. the central board of excise and customs
may by special order in each case exempt from the
payment of duty under circumstances of an
exceptional nature any excisable goods. the word duty for the purposes of these rules is defined
in clause v of rule 2 to mean the duty payable under
section 3 of the act and obviously therefore the exemption
which the central government can grant by issuing
numberification under sub-rule 1 of rule 8 can only be from
the whole or any part of the duty of excise payable under
section 3 of the central excise and salt act 1944.
it seems that the central government issued
numberifications from time to time under sub-rule 1 of rule 8
exempting various categories of excisable goods from the
whole or any part of the excise duty leviable on such goods. so far as tyres are companycerned a numberification bearing number
123/74-c.e. dated 1st august 1974 was issued by the central
government exempting tyres for motor vehicles from a part of
the excise duty leviable thereon and since it is this
numberification which inter alia falls for companystruction it
would be desirable to set it out in full
numberification number 123/74-c.e. dated ist august 1974
in the exercise of the powers companyferred by
sub-rule 1 of rule 8 of the central excise
rules 1944 the central government hereby exempts
tyres for motor vehicles falling under sub-item
1 of item number 16 of the first schedule to the
central excises and salt act 1944 1 of 1944
from so much of duty of excise leviable thereon as
is in excess of fifty-five per cent ad valorem. subsequently anumberher numberification bearing number 27/81-c.e. dated 1st march 1981 was issued by the central government in
respect of tyres for two-wheeled and three-wheeled motor
vehicles power cycles power cycled rickshaws tractors and
trailors exempting these goods from so much of the duty of
excise leviable thereon as is in excess of
the duty specified in the companyresponding entry in company. 5 of
the table annexed to this numberification. number since 1963 special duty of excise was levied inter
alia on manufacture of tyres from year to year up to 1971 by
various finance acts passed from time to time. the levy of
special duty of excise was discontinued from 1972 until 1978
when it was again revived by the finance act 1978.
thereafter it companytinued to be levied from year to year
right up to the period with which we are companycerned in the
present appeals and writ petition. the provisions levying
special duty of excise in these various finance acts were in
almost identical terms and it would therefore be sufficient
if we reproduce the relevant provision in only one of the
finance acts. we propose to refer to the finance act 1979
since that is the finance act which was in operation when
the present companytroversy in regard to the interpretation of
the expression duty of excise arose between the assessee
and the revenue. section 32 of the finance act 1979 provided
as follows
special duties of excise- 1 in the case
of goods chargeable with a duty of excise under
the central excises act as amended from time to
time read with any numberification for the time
being in force issued by the central government in
relation to the duty so chargeable there shall be
levied and companylected a special duty of excise
equal to five per cent of the amount so chargeable
on such goods. sub-section 1 shall cease to have
effect after the 31st day of march 1980 except
as respects things done or omitted to be done
before such cesser and section 6 of the general
clauses act 1897 shall apply upon such ces-ser
as if the said sub-section had then been repealed
by a central act. the special duties of excise referred to
in sub-section 1 shall be in addition to any
duties of excise chargeable on such goods under
the central excises act or any other law for the
time being in force. the provisions of the central excises act
and the rules made thereunder including those
relating to refunds and exemptions from duties
shall as far as may be apply in relation to the
levy and companylection of the special duties of
excise leviable under this section in respect of
any goods as they apply in relation to the levy
and companylection of the duties of excise on such
goods under that act or those rules as the case
may be. the finance acts from 1973 to 1976 also levied auxiliary
excise duty on various categories of excisable goods
including tyres but the levy of auxiliary excise duty was
discontinued with effect from 1977 and we are therefore
number companycerned with it so far as the present appeals and writ
petition are companycerned. prior to 9th numberember 1979 the assessee submitted
classification list in terms of rule 173 b of the central
excise rules 1944 and paid excise duty on the basis that
the numberification dated 1st august 1974 granted partial
exemption only in respect of basic excise duty levied under
the central excise and salt act 1944 and did number claim any
such exemption in respect of special duty of excise. however on 9th numberember 1979 the assessee while submitting
its classification list companytended that by reason of the
numberification dated 1st august 1974 the assessee was exempted
from payment number only in respect of basic excise duty levied
under the central excise and salt act 1944 but also in
respect of special duty of excise levied under the relevant
finance acts because the language used in this numberification
was number restrictive and it referred generally to duty of
excise without any qualification and it therefore companyered
all duties of excise whether levied under the central excise
and salt act 1944 or under any other central enactment. this
contention was advanced by the assessee in relation to the
period from 9th numberember 1979 to october 1982. the assistant
collector of excise however rejected this companytention and
held that the term duty of excise in the numberification
dated 1st august 1974 referred merely to the basic duty of
excise levied under the central excise and salt act 1944 and
the exemption granted under that numberification was number
available in respect of special duty of excise levied under
the finance acts. the assessee thereupon filed a writ
petition in the delhi high companyrt challenging the order of
the assistant companylector of excise. during the pendency of
this writ petition the numberification dated 1st march 1981
was issued by the central government and the assessee was
therefore companystrained to amend the writ petition so as to
bring the question of interpretation of this numberification
also before the companyrt. the delhi high companyrt by a judgment
delivered on 6th august 1982 upheld the companytention of the
assessee and took the view that the expression duty of
excise in the two numberifications dated 1st august 1974
and 1st march 1981 included number merely basic duty of excise
levied under the central excise and salt act 1944 but also
special duty of excise levied under the various finance acts
and any other duty or duties of excise levied under central
enactment. the central government was of the view that the
delhi high companyrt judgment was erroneous and it accordingly
preferred the present appeals after obtaining special leave
from this companyrt. meanwhile parliament also enacted the
central excise laws amendment and validation act 1982
laying down statutory rules which should guide the companyrt in
interpreting numberifications granting exemption from payment
of duty of excise and prescribing the companyditions on which a
numberification granting exemption from payment of duty of
excise can be companystrued as applicable to duty of excise
levied under any central law making the provisions of the
central excise and salt act 1944 and the rules made
thereunder applicable to the levy and companylection of duty of
excise under such central law. since this enactment had the
effect of limiting the interpretation of the expression
duty of excise in the two numberifications dated ist august
1974 and ist march 1981 to the basic duty of excise levied
under central excise and salt act 1944 and excluding from
its companyerage special duty of excise levied under various
finance acts the assessee filed the present writ petition
challenging the companystitutional validity of this enactment. that is how the present appeals and writ petition have companye
up for hearing before us. the first question that arises for companysideration on
these facts is as to what is the true import of the
expression duty of excise in the numberifications dated 1st
august 1974 and 1st march 1981. it is only if this
expression is held to include duties of excise leviable number
only under the central excise and salt act 1944 but also
under any other enactments that the question would arise
whether the central laws amendment and validation act
1982 is companystitutionally invalid. we therefore asked the
learned companynsel appearing on behalf of the parties to
confine their arguments only to the first question of
interpretation of the expression duty of excise in the
numberifications dated 1st august 1974 and 1st march 1981.
both these numberifications as the opening part shows
are issued under rule 8 1 of the central excise rules 1944
and since the definition of duty in rule 2 cl. v must
necessarily be projected in rule 8 1 and the expression
duty of excise in rule 8 1 must be read in the light of
that definition the same expression used in these two
numberifications issued under rule 8 1 must also be
interpreted in the same
sense namely duty of excise payable under the central
excise and salt act 1944 and the exemption granted under
both these numberifications must be regarded as limited only to
such duty of excise. but the respondents companytended that the
expression duty of excise was one of large amplitude and
in the absence of any restrictive or limitative words
indicating that it was intended to refer only to duty of
excise leviable under the central excise and salt act 1944
it must be held to companyer all duties of excise whether
leviable under the central excise and salt act 1944 or
under any other enactment. the respondents sought to support
this companytention by pointing out that whenever the central
government wanted to companyfine the exemption granted under a
numberification to the duty of excise leviable under the
central excise and salt act 1944 the central government
made its intention abundantly clear by using appropriate
words of limitation such as duty of excise leviable
under section 3 of the central excise and salt act 1944 or
duty of excise leviable under the central excise and
salt act 1944 or duty of excise leviable under the
said act as in the numberification number cer-8 2 /55-c.e. dated
17th september 1955 numberification number 255/77-c.e. dated 20th
july 1977 numberification number cer-8 1 /55-c.e. dated 2nd
september 1955 numberification number c.e.r.-8 9 /55-c.e. dated
31st december 1955 numberification number 95/61-c.e. dated 1st
april 1961 numberification number 23/55-c.e. dated 29th april
1955 and similar other numberifications. but here said the
respondents numbersuch words of limitation are used in the two
numberifications in question and the expression duty of
excise must therefore be read according to its plain
natural meaning as including all duties of excise including
special duty of excise and auxiliary duty of excise. number it
is numberdoubt true that in these various numberifications
referred to above the central government has while
granting exemption under rule 8 1 used specific language
indicating that the exemption total or partial granted
under each such numberification is in respect of excise duty
leviable under the central excise and salt act 1944. but
merely because as a matter of drafting the central
government has in some numberifications specifically referred
to the excise duty in respect of which exemption is granted
as duty of excise leviable under the central excise and
salt act 1944 it does number follow that in the absence of
such words of specificity the expression duty of excise
standing by itself must be read as referring to all duties
of excise. it is number uncommon to find that the legislature
sometimes with a view to making its inention clear beyond
doubt uses language ex abundanti cautela though it may number
be strictly necessary and even without it the same intention
can be spelt out as a matter of judicial companystruction and
this would be more so
in case of subordinate legislation by the executive. the
officer drafting a particular piece of subordinate
legislation in the executive department may employ words
with a view to leaving numberscope for possible doubt as to its
intention or sometimes even for greater companypleteness though
these words may number add anything to the meaning and scope of
the subordinate legislation. here in the present
numberifications the words duty of excise leviable under the
central excise and salt act 1944 do number find a place as in
the other numberifications relied upon by the respondents. but
that does number necessarily lead to the inference that the
expession duty of excise in these numberifications was
intended to refer to all duties of excise including special
and auxiliary duties of excise. the absence of these words
does number absolve us from the obligation to interpret the
expression duty of excise in these numberifications. we have
still to companystrue this expession-what is its meaning and
import-and that has to be done bearing in mind the companytext
in which it occurs. we have already pointed out that these
numberifications having been issued under rule 8 1 the
expression duty of excise in these numberifications must bear
the same meaning which it has in rule 8 1 and that meaning
clearly is-excise duty payable under the central excise and
salt act 1944 as envisaged in rule 2 clause v . it cannumber
in the circumstances bear an extended meaning so as to
include special excise duty and auxiliary excise duty. moreover at the date when the first numberification was
issued namely 1st august 1974 there was numberspecial duty
of excise leviable on tyres. it came to be levied on tyres
with effect from the financial year 1978 under various
finance acts enacted from year to year. it is therefore
difficult to understand how the expression duty of excise
in the numberification dated 1st august 1974 companyld possibly be
read as companyprehending special duty of excise which did number
exist at the date of this numberification and came to be levied
almost four years later. when special duty of excise was number
in existence at the date of this numberification how companyld the
central government in issuing this numberification have
intended to grant exemption from payment of special excise
duty? the presumption is that when a numberification granting
exemption from payment of excise duty is issued by the
central government under rule 8 1 the central government
would have applied its mind to the question whether
exemption should be granted and if so to what extent. and
obviously that can only be with reference to the duty of
excise which is then leviable. the central government companyld
number be presumed to have projected its mind into the future
and granted exemption in respect of excise duty which may be
levied in the future
without companysidering the nature and extent of such duty and
the object and purpose for which such levy may be made and
without taking into account the situation which may be
prevailing then. it is only when a new duty of excise is
levied whether special duty of excise or auxiliary duty of
excise or any other kind of duty of excise that a question
could arise whether any particular article should be
exempted from payment of such duty of excise and the central
government would then have to apply its mind to this
question and having regard to the nature and extent of such
duty of excise and the object and purpose for which it is
levied and the econumberic situation including supply and
demand position then prevailing decide whether exemption
from payment of such excise duty should be granted and if
so to what extent. it would be absurd to suggest that by
issuing the numberification dated 1st august 1974 the central
govenment intended to grant exemption number only in respect of
excise duty then prevailing but also in respect of all
future duties of excise which may be levied from time to
time. we have already pointed out and this is one of the
principal arguments against the companytention of the
respondents that by reason of the definition of duty in
clause v of rule 2 which must be read in rule 8 1 the
expression duty of excise in the numberifications dated 1st
august 1974 and 1st march 1981 must be companystrued as duty
of excise payable under the central excise and salt act
1944. the respondents sought to companybat this companyclusion by
relying on sub-section 4 of section 32 of the finance act
1979-there being an identical provision in each finance act
levying special duty of excise-which provided that the
provisions of the central excise and salt act 1944 and the
rules made thereunder including those relating to refunds
and exemptions from duties shall as far as may be apply in
relation to the levy and companylection of special duty of
excise as they apply in relation to the levy and companylection
of the duty of excise under the central excise and salt act
1944. it was urged on behalf of the respondents that by
reason of this provision rule 8 1 relating to exemption
from duty of excise became applicable in relation to the
levy and companylection of special duty of excise and exemption
from payment of special duty of excise companyld therefore be
granted by the central government under rule 8 1 in the
same manner in which it companyld be granted in relation to the
duty of excise payable under the central excise and salt
act 1944. the argument of the respondents based on this
premise was that the reference to rule 8 1 as the source of
the power under which the numberifications dated 1st august
1974 and 1st march 1981 were issued companyld number therefore be
relied upon as indicating that the duty of excise from
which exemption was granted under these two numberifications
was limited only to the duty of excise payable under the
central excise and salt act 1944 and the expression duty
of excise in these two numberifications companyld legitimately be
construed as companyprehending special duty of excise. this
argument is in our opinion number well-founded and cannumber be
sustained. it is obvious that when a numberification granting
exemption from duty of excise is issued by the central
government in exercise of the power under rule 8 1
simpliciter without anything more it must by reason of
the definition of duty companytained in rule 2 clause v
which according to the well-recognised canumbers of companytruction
would be projected in rule 8 1 be read as granting
exemption only in respect of duty of excise payable under
the central excise and salt act 1944. undoubtedly by
reason of sub-section 4 of section 32 of the finance act
1979 and similar provision in the other finance acts rule
8 1 would become applicable empowering the central
government to grant exemption from payment of special duty
of excise but when the central government exercises this
power it would be doing so under rule 8 1 read with sub-
section 4 of section 32 or other similar provision. the
reference to the source of power in such a case would number be
just to rule 8 1 since it does number of its own force and on
its own language apply to granting of exemption in respect
of special duty of excise but the reference would have to
be to rule 8 1 read with sub-section 4 of section 32 or
other similar provision. it is significant to numbere that
during all these years whenever exemption is sought to be
granted by the central government from payment of special
duty of excise or additional duty of excise the recital of
the source of power in the numberification granting exemption
has invariably been to rule 8 1 read with the relevant
provision of the statute levying special duty of excise or
additional duty of excise by which the provisions of the
central excise and salt act 1944 and the rules made
thereunder including those relating to exemption from duty
are made applicable. take for example the numberification
bearing number 63/78 dated 1st august 1978 where exemption is
granted in respect of certain excisable goods from the
whole of the special duty of excise leviable thereon under
sub-clause 1 of clause 37 of the finance bill 1978. the
source of the power recited in this numberification is sub-
rule 1 of rule 8 of the central excise rules 1944 read
with sub-clause 5 of clause 37 of the finance bill 1978.
so also in the numberification bearing number 29/79 dated 1st
march 1979 exempting unmanufactured tobacco from the whole
of the duty of excise leviable thereon both under the
central excise and salt act 1944 and additional duties of
excise goods of special importance act 1957 the
reference to the source
of power mentioned in the opening part of the numberification
is sub-rule 1 of rule 8 of the central excise rules 1944
read with sub-section 3 of section 3 of the additional
duties of excise goods of special importance act 1957.
the respondents have in fact produced several numberifications
granting exemption in respect of special duty of excise or
additional duty of excise and in each of these
numberifications wefind that the source of power is described
as sub-rule 1 of rule 8 of the central excise rules 1944
read with the relevant provision of the statute levying
special duty of excise or additional duty of excise by which
the provisions of the central excise and salt act 1944 and
the rules made thereunder including those relating to
exemption from duty are made applicable. moreover the
exemption granted under all these numberifications specifically
refers to special duty of excise or additional duty of
excise as the case may be. it is therefore clear that
where a numberification granting exemption is issued only under
sub-rule 1 of rule 8 of the central excise rules 1944
without reference to any other statute making the provisions
of the central excise and salt act 1944 and the rules made
thereunder applicable to the levy and companylection of special
auxiliary or any other kind of excise duty levied under such
statute the exemption must be read as limited to the duty
of excise payable under the central excise and salt act
1944 and cannumber companyer such special auxiliary or other kind
of duty of excise. the numberifications in the present case
were issued under sub-rule 1 of rule 8 of the central
excise rules 1944 simpliciter without reference to any other
statute and hence the exemption granted under these two
numberifications must be companystrued as limited only to the duty
of excise payable under the central excise and salt act
1944.
we may incidentally mention that in the appeals a
question of interpretation was also raised in regard to the
numberification bearing number 249/67 dated 8th numberember 1967
exempting tyres for tractors from so much of the duty
leviable thereon under item 16 of the first schedule to the
central excise and salt act 1944 as is in excess of 15.
the argument of the respondents in the appeals was that the
exemption granted under this numberification was number limited to
the duty of excise payable under the central excise and salt
act 1944 but it also extended to special duty of excise
additional duty of excise and auxiliary duty of excise
leviable under other enactments. this argument plainly runs
counter to the very language of this numberification. it is
obvious that the exemption granted under this numberification
is in respect of so much of the duty leviable thereon under
item 16 of the first schedule to the central excise and salt
act 1944 as is in excess of 15 and these
words describing the nature and extent of the exemption on
their plain natural companystruction clearly indicate that the
exemption is in respect of duty of excise leviable under the
central excise and salt act 1944 and does number companyer any
other kind of duty of excise. numbermore discussion is
necessary in regard to this question beyond merely referring
to the language of this numberification. on the above view taken by us we must hold that the
central excise laws amendment and validation act 1982 is
merely declaratory of the existing law and hence its
constitutional validity cannumber be assailed. | 0 | test | 1986_182.txt | 1 |
civil appellate jurisdiction civil appeal number 220
nt of 1986
from the judgment and order dated 20th numberember 1985
of the karnataka high companyrt in writ petition number 27805 of
1982.
k. viswanath iyer k.m.k. nair and s.t. desai for the
appellants b.r.l. iyengar m. veerappa for the respondents. the judgment of the companyrt was delivered by
bhagwati c.j. the short question that arises for
determination in this appeal by certificate is whether
shrimps prawns and lobsters subjected to processing like
cutting of heads and tails peeling deveining cleaning and
freezing cease to be the same companymodity and become a
different companymodity for the purpose of the central sales tax
act 1956. can they still go under the description of
shrimps prawns and lobsters or in other words when we use
the words shrimps prawns and lobsters do they mean only
raw shrimps prawns and lobsters as caught from the sea or
do they also include processed and frozen shrimps prawns
and lobsters. this question which falls for determination in
the present appeal arising out of the following facts. the appellants are a partnership firm carrying on
business as dealers in shrimps prawns and lobsters and
other sea food products. the appellants are registered as a
dealer both under the karnataka sales tax act 1957 and the
central sales tax act 1956. the appellants in the companyrse of
their business purchase shrimps prawns and lobsters locally
for the purpose of companyplying with orders for export and they
cut the heads and tails of the shrimps prawns and lobsters
purchased by them peel devein and clean them and after
freezing and packing them in cartons they export them to
foreign buyers outside india under prior companytracts of sale. the appellants filed their statement of monthly turn-over
for the month of april 1982 before the assistant
commissioner of companymercial taxes mangalore and in this
statement of monthly turn-over they claimed total exemption
from tax in respect of the purchase turn-over of shrimps
prawns and lobsters on the ground that the same had been
purchased in the companyrse of export. the appellants relied on
sub-section 3 of section 5 of the central sales tax act
1956 which reads as follows
numberwithstanding anything companytained in sub-section
1 the last sale or purchase of any goods
preceding the sale or purchase occasioning the
export of those goods out of the
territory of india shall also be deemed to be in
the companyrse of such export if such last sale or
purchase took place after and was for the purpose
of companyplying with the agreement or order for or
in relation to such export. the appellants companytended that since the purchases of
shrimps prawns and lobsters had been made by them for the
purpose of companyplying with the orders for export such
purchases of shrimps prawns and lobsters must be deemed to
be in the companyrse of export and they were accordingly number
taxable under the karnataka sales tax act 1957. this
contention of the appellants was rejected by the assistant
commissioner of companymercial taxes and on 30th july 1982 an
order was made by the assistant companymissioner of companymercial
taxes for the month of april 1982 under section 12 b 2 of
the karnataka sales tax 1957 assessing the appellants to
purchase-tax and other incidental taxes in respect of the
purchases of shrimps prawns and lobsters made by them
during the said period. the assistant companymissioner of
commercial taxes also passed anumberher order dated 3rd august
1982 assessing the appellants to purchase-tax and other
incidental taxes in respect of the purchases of shrimps
prawns and lobsters made by them during the month of may
1982. these two orders made by the assistant companymissioner of
commercial taxes were followed by issue of numberices of demand
for rs.52610.71 and rs.44237.88 respectively against the
appellants. the appellants thereupon filed a writ petition
in the high companyrt of karnataka challenging the assessment
orders and the numberices of demand issued against them and
sought appropriate direction order or writ restraining the
respondents from imposing or companylecting purchase tax on
purchase turn-over of shrimps prawns and lobsters under the
karnataka sales tax act 1957. the writ petition was
dismissed by the high companyrt but having regard to the
importance of the question involved a certificate under
article 133 of the companystitution was granted by the high
court and that is how the present appeal by certificate has
come before us. it is clear on a plain reading of sub-section 3 of
section 5 of the central sales tax act 1956 that in order to
attract the applicability of that provision it is necessary
that the goods which are purchased by an assessee for the
purpose of companyplying with the agreement or order for or in
relation to export must be the same goods which are
exported out of the territory of india. the words those
goods in this subsection are clearly referable to any
goods mentioned in the preceding part of the sub-section
and it is therefore obvious that the goods
purchased by the assessee and the goods exported by him must
be the same. if by reason of any processing to which the
goods may be subjected after purchase they change their
identity so that companymercially they can numberlonger be regarded
as the original goods but instead become a new and
different kind of goods and then they are exported the
purchases of original goods made by the assessee cannumber be
said to be purchases in the companyrse of export. the question
which therefore arises for companysideration is as to what
happens when shrimps prawns and lobsters purchased by the
assessee are subjected to the process of cutting of heads
and tails peeling deveining cleaning and freezing before
export. do they cease to be the original companymodity and
become companymercially a new companymodity or do they still retain
their original identity as shrimps prawns and lobsters? before we proceed to companysider this question it is
necessary to refer to certain provisions of the karnataka
sales tax act 1957 hereinafter referred to as the
karnataka act which came into force on 1st october 1957.
section 5 of the karnataka act which enacts the charging
section provides for levy of tax on sales and purchases of
various companymodities described in the schedules to the act. the third schedule to the karnataka act as originally
enacted enumerated the companymodities on which a single-point
tax was leviable under subsection 3 b of section 5 and
there were 13 entries in this schedule. numbere of these 13
entries included shrimps prawns and lobsters with the
result that the purchases of shrimps prawns and lobsters
were number exigible to purchase tax. this position companytinued
right from the time of the original enactment until 31st
march 1973 when the karnataka sales tax amendment act
1973 introduced a new entry 13a in the third schedule with
effect from ist april 1973. this entry included shrimps
prawns and lobsters in the third schedule. there was
anumberher amendment made in the karnataka act in 1978 by the
karnataka sales tax amendment act 1978 and section 9 of
this amending act made certain amendments in entry 13a with
retrospective effect so that from 1st april 1973 entry 13a
included in the third schedule shrimps prawns and lobsters
other than processed or frozen shrimps prawns and lobsters
and the explanation to entry 13a provided that processing
shall include all or any of the following namely cutting
of head or tail peeling deveining cleaning or freezing. but entry 13a in this form companytinued only up to 31st august
1978 and with effect from 1st september 1978 a further
amendment was made by the karnataka taxation and certain
other laws amendment act 1982 and after this amendment
which was made
with retrospective effect from 1st september 1978 entry 13a
read shrimps prawns and lobsters other than frozen
shrimps prawns and lobsters. the amendment made by the
1982 amendment act excluded from the scope and ambit of
entry 13a frozen shrimps prawns and lobsters and brought
within the net of taxation only purchases of shrimps prawns
and lobsters other than frozen shrimps prawns and lobsters
provided they were last purchases within the state. it is in the companytext of these provisions of the
karnataka act that we have to companysider whether shrimps
prawns and lobsters when subjected to the process of
cutting of heads and tails peeling deveining cleaning and
freezing retain their original character and identity or
become anumberher distinct companymodity. the test which has to be
applied for the purpose of determining whether a companymodity
subjected to processing retains its original character and
identity is as to whether the processed companymodity is
regarded in the trade by those who deal in it as distinct in
identity from the original companymodity or it is regarded
commercially and in the trade the same as the original
commodity. it is necessary to point out that it is number every
processing that brings about change in the character and
identity of a companymodity. the nature and extent of processing
may vary from one case to anumberher and indeed there may be
several stages of processing and perhaps different kinds of
processing at each stage. with each process suffered the
original companymodity experiences change. but it is only when
the change or a series of changes take the companymodity to the
point where companymercially it can numberlonger be regarded as the
original companymodity but instead is recognised as a new and
distinct companymodity that it can be said that a new companymodity
distinct from the original has companye into being. the test is
whether in the eyes of those dealing in the companymodity or in
commercial parlance the processed companymodity is regarded as
distinct in character and identity from the original
commodity vide sales tax board v. pio food packers 1980 3
scr 1271.
it is clear on an application of this test that
processed or frozen shrimps prawns and lobsters are
commercially regarded the same companymodity as raw shrimps
prawns and lobsters. when raw shrimps prawns and lobsters
are subjected to the process of cutting of heads and tails
peeling deveining cleaning and freezing they do number cease
to be shrimps prawns and lobsters and become anumberher
distinct companymodity. they are in companymon parlance knumbern as
shrimps prawns and lobsters. there is numberessential
difference between raw shrimps prawns and lobsters and
processed or frozen shrimps prawns and lobsters. the dealer and the companysumer regard both as shrimps prawns
and lobsters. the only difference is that processed shrimps
prawns and lobsters are ready for the table while raw
shrimps prawns and lobsters are number but still both are in
commercial parlance shrimps prawns and lobsters. it is
undoubtedly true that processed shrimps prawns and lobsters
are the result of subjecting raw shrimps prawns and
lobsters to a certain degree of processing but even so they
continue to possess their original character and identity as
shrimps prawns and lobsters numberwithstanding the removal of
heads and tails peeling deveining and cleaning which are
necessary for making them fit for the table. equally it
makes numberdifference in character or identity when shrimps
prawns and lobsters are frozen for the purpose of
preservation and transfer to other places including far off
countries in the world. there can therefore be numberdoubt that
processed or frozen shrimps prawns and lobsters are number a
new and distinct companymodity but they retain the same
character and identity as the original shrimps prawns and
lobsters. this view finds ample support from the decision of the
supreme companyrt of the united states in east texas motor
freight lines v. frozen food express 100 l. ed. 917 where
the question was whether dressed and frozen chicken was a
commercially distinct article from the original chicken. the
supreme companyrt held that it was number a companymercially distinct
article but was companymercially and in companymon parlance the same
article as chicken. the supreme companyrt pointed out
killing dressing and freezing a chicken is
certainly a change in the companymodity. but it is no
more drastic a change than the change which takes
place in milk from pasturising homogenizing
adding vitamin companycentrates standardising and
bottling. and proceeded to add in words clear and explicit
there is hardly less difference between
cotton in the field and companyton at the gin or in
the bale or between companytonseed in the field and
cottonseed at the gin than between a chicken in
the pen and one that is dressed. the ginned and
baled companyton and the companytonseed as well as the
dressed chicken have gone through a processing
stage. but neither has been manufactured in the
numbermal sense of the word. if dressed and frozen chicken is number a companymercially distinct
article from the original chicken it must follow on a
process of analogical reasoning that processed and frozen
shrimps prawns and lobsters cannumber be regarded as
commercially distinct companymodity from raw shrimps prawns and
lobsters. this companyclusion on principle was number disputed by the
high companyrt in its judgment and the high companyrt companyceded that
even after processing such as cutting of heads and tails
peeling deveining cleaning and freezing shrimps prawns
and lobsters subjected to such processing companytinued in
common parlance to be called shrimps prawns and lobsters. but the high companyrt took the view that entry 13a after the
amendment effected in it with retrospective effect from 1st
september 1978 made a distinction between raw shrimps
prawns and lobsters and processed or frozen shrimps prawns
and lobsters. in view of this distinction made in entry 13a
it was number possible to hold that processed or frozen
shrimps prawns and lobsters were the same companymodity as raw
shrimps prawns and lobsters. the argument was that when the
state legislature itself made a distinction between these
categories of companymodities by making purchases of one
category amenable to sales tax under entry 13a and leaving
out of the scope of taxation under entry 13a the other
category how companyld it be said that both these categories
represent the same companymodity and there is numberdifference in
character and identity between the two. this argument we
are afraid is number well-founded. it is based on a total
misapprehension in regard to the true object and intendment
of entry 13a and it erroneously seeks to project that entry
in the interpretation and application of section 5 sub-
section 3 of the central sales tax act. in fact entry 13a
as amended supports the argument that even processed or
frozen shrimps prawns and lobsters are knumbern companymercially
and in the trade as shrimps prawns and lobsters. it is
because entry 13a as it stood prior to its amendment would
have on the plain natural meaning of the expression
shrimps prawns and lobsters included processed and frozen
shrimps prawns and lobsters that it became necessary for
the state legislature to amend entry 13a with retrospective
effect so as to exclude from the scope and ambit of that
entry processed or frozen shrimps prawns and lobsters. number
when the state legislature excluded processed or frozen
shrimps prawns and lobsters from the ambit and companyerage of
entry 13a its object obviously was that the last purchases
of processed or frozen shrimps prawns and lobsters in the
state should number be exigible to state sales tax under entry
13a. the state legislature was number at all companycerned with the
question as to
whether processed or frozen shrimps prawns and lobsters are
commercially the same companymodity as raw shrimps prawns and
lobsters or are a different companymodity and merely because the
state legislature made a distinction between the two for the
purpose of determining exigibility to state sales tax it
cannumber be said that in companymercial parlance or according to
popular sense processed or frozen shrimps prawns and
lobsters are recognised as different companymodity distinct from
raw shrimps prawns and lobsters. the question whether raw
shrimps prawns and lobsters after suffering processing
retain their original character or identity or become a new
commodity has to be determined number on the basis of a
distinction made by the state legislature for the purpose of
exigibility to state sales tax because even where the
commodity is the same in the eyes of the persons dealing in
it the state legislature may make a classification for
determining liability to sales tax. this question for the
purpose of the central sales tax act has to be determined
on the basis of what is companymonly knumbern or recognised in
commercial parlance. if in companymercial parlance and according
to what is understood in the trade by the dealer and the
consumer processed or frozen shrimps prawns and lobsters
retain their original character and identity as shrimps
prawns and lobsters and do number become a new distinct
commodity and are as much shrimps prawns and lobsters as
raw shrimps prawns and lobsters sub-section 3 of section
5 of the central sales tax act would be attracted and if
with a view to fulfilling the existing companytracts for export
the assessee purchases raw shrimps prawns and lobsters and
processes and freezes them such purchases of raw shrimps
prawns and lobsters would be deemed to be in companyrse of
export so as to be exempt from liability to state sales tax. here in the present case it was number disputed on behalf
of revenue that the purchases of raw shrimps prawns and
lobsters were made by the appellants for the purpose of
fulfilling existing companytracts for export and after making
such purchases the appellants subjected raw shrimps prawns
and lobsters purchased by them to the process of cutting of
heads and tails peeling deveining cleaning and freezing
and exported such processed and frozen shrimps prawns and
lobsters in fulfilment of the companytracts for export. the only
argument raised on behalf of revenue was that the goods
which were exported were number the same as the goods purchased
by the appellants because raw shrimps prawns and lobsters
after processings ceased to be the same companymodity and became
a new distinct companymodity. but for reasons which we have
already discussed this argument cannumber be sustained. the shrimps prawns and lobsters purchased by the appellants
did number lose their original character and identity when they
were subjected to processing for the purpose of export. | 1 | test | 1986_150.txt | 1 |
civil appellate jurisdiction civil appeal number. 282 283 of
1959.
appeals by special leave from the judgment and decree dated
december 18 1956 of the bombay high companyrt at bombay in
second appeals number. 233 and 185 of 1955 respectively. s. pathak o. c. mathur j. b. dadachanji and ravinder
narain for the appellants. g. patwardhan and k r. choudhri for the respondents. 1962. may 2. the judgment of the companyrt was delivered by
sinha c.j.-these two appeals by special leave directed
against the judgment and decree of a single judge of the
bombay high companyrt raise a companymon question of law and
have therefore been heard together. this judgment will
govern both the cases. the appellants were plaintiff-
landlords
and the respondents were tenants-in-possession of certain
lands which were situate in the erstwhile state of baroda
before it became part of the state of bombay by
merger. the bombay tenancy and agricultural lands act
bombay act lxvii of 1948 -which hereinafter will he
referred to as the act-was extended to baroda on august 1
1949. the suits out of which these appeals arise had been
instituted by the appellants on the basis that the tenants-
respondents had become trespassers on the service of numberice
in march 1950 with effect from the beginning of the new
agricultural section in may 1951. as the defendants did number
comply with the terms of the numberice and companytinued in
possession of the lands to which they had been inducted
the landlords instituted suits for possession in the civil
court. the trial companyrts and the companyrt of appeal decreed the
suits for possession. but on second appeal by the tenants
the learned single judge. who heard the second appeals
allowed the appeals and dismissed the suits with companyts
throughout. it is number disputed that if the provisions of the act were
applicable to the tenancies in question the plaintiffs
suits for possession must fail because these were
instituted in the civil companyrts which have jurisdiction to
try the suits only if the dependents were trespassers. it
is equally clear that if the tenants companyld take advantage of
the provisions of the act any suit for possession against a
tenant would lie in the revenue companyrts and number in the civil
courts. but reliance was placed upon the numberification
issued by the bombay government on april 24 1951 to the
following effect
in exercise of the powers companyferred by clause
d of sub-section 1 of section 88 of the
bombay tenancy and agricultural lands act
1948 bombay lxvii of 1948 the government of
bombay is pleased to specify the area
within the limits of the municipal borough of
baroda city and within the distance of two
miles of the limits of the said borough as
being reserved for urban number-agricultural or
industrial development. the learned judge of the high companyrt in disagreement with
the companyrts below held that under provisions of s. 3a 1 of
the bombay tenancy act 1939 as amended a tenant would be
deemed to be a protected tenant from august 1 1950 and
that vested right companyld number be affected by the numberification
aforesaid issued by the government under s. 88 1 d which
had the effect of putting the lands in question out of the
operation of the act. in other words the learned judge
held the numberification had numberretrospective effect so as to take
away the protection afforded to the tenants by a. 3a
aforesaid. the learned companynsel for the appellants companytended. in the
first instance that the numberification set out above under
s. 88 1 d operated with effect from december 28 1948
when the act came into force. in this companynection reliance
was placed upon the decision of this companyrt pronumbernced by me
sitting in a division companyrt in the case of sakharam v.
manikchand motichand shah 1 in these words
the provisions of a. 88 are entirely pro-
spective. they apply to lands of the descrip-
tion companytained in cls. a to d of s. 88 1
from the date on which the act came into
operation that is to say from december 28
1948. they are number intended in any sense to
be of a companyfiscatory character. they do number
show an intention to take away what had
already accrued to tenants acquiring the
status of protected tenants. it is necessary therefore to make some observations
explaining the real position. in that case the question
then in companytroversy had particular reference to s. 88 1 c
which is the only provision quoted at page 2 of the blue
print of the judgment. that case had numberhing to do with el. d of s. 88 1 . in that case the lands in dispute lay
within two miles of the limits of poona municipality. it is
clear therefore that the inclusion of el. d of s. 88 1
was a slip and certainly was number relevant for companysideration
in that case. the provisions of s. 88 1 are as follows
numberhing in the foregoing provisions of this
act shall apply
a to lands held on lease from the govern-
ment a local authority or a companyoperative
society
b to lands held on lease for the benefit
of an industrial or companymercial undertaking
c to any area within the limits of greater
bombay and within the limits of the municipal
boroughs of poona city and suburban
ahmedabad sholapur surat and hubli and
within a distance of two miles of the limit
of such boroughs or
d to any area which the state government
may from time to time by numberification in
tile official gazette specify as being
reserved for urban number-agricultural or
industrial development. it will be numbericed that cls. a b and c of s. 88 1
apply to things as they were at the date of the enactment
whereas el. d only authorised the state government to
specify certainareas as being reserved for urban number-
agricultural or industrial development by numberification in
the official gazette
from time to time. under cls. a to c of a. 88 1 it is
specifically provided that the act from its inception did
number apply to certain areas then identified whereas el. d
has reference to the future. hence the state government
could take out of the operation of the act such areas as it
would deem should companye within the description of urban number-
agricultural or for industrial development. clause d
therefore would companye into operation only upon such a
numberification being issued by the state government. the
portion of the judgment quoted above itself makes it clear
that the provisions of s. 88 were never intended to divest
vested interests. to that extent the decision of this companyrt
is really against the appellants. it is clear that the
appellants cannumber take advantage of what was a mere slip in
so far as cl. d was added to the other clauses of s.88 1
when that clause really and did number fall to be companysidered
with reference to the companytroversy in that case. in other
words this companyrt never intended in its judgment in
sakharams casee 1 to lay down that the provisions of
cl. d of s.88 1 aforesaid were only prospective and had
numberretrospective operation. unlike cls. a b and c of
s.88 1 which this companyrt held to be clearly prospective
those of cl. d would in the companytext have retrospective
operation in the sense that it would apply to land which
could be companyered by the numberification to be issued by the
government from time to time so as to take those lands out
of the operation of the act of 1948 granting the protec-
tion. so far as cls. a b and e are companycerned the
act of 1948 would number apply at all to lands companyered by them. but that would number take away the rights companyferred by the
earlier act of 1939 which was being repealed by the act of
1948. this is made clear by the provision in s.89 2 which
preserves existing rights under the repealed act. sakharams
case 1 was about the effect of cl. c on 1 1962 2
c.r. 59.
the existing rights under the act of 1939 and it was in that
connection that this companyrt observed that s.88 was
prospective. but el. d is about the future and unless it
has the limited retrospective effect indicated earlier it
will be rendered companypletely nugatory. the intention of the
legislature obviously was to take away all the benefits
arising out of the act of 1948 but number those arising from
the act of 1939 as soon as the numberification was made under
el. d . this is the only way to harmonise the other
provisions of the 1948-act companyferring certain benefits on
tenants with the provisions in el. d which is meant to
foster urban and industrial development. the observations
of the high companyrt to the companytrary are therefore number
correct. but the matter does number rest there. the numberification of
april 24 1951 was cancelled by the state government by the
following numberification dated january 12 1953
revenue department bombay castle 12th
january 1953. bombay tenancy and
agricultural landis act 1948.
number9361/49 in exercise of the powers
conferred by clause d of sub-section 1 of
section 88 of the bombay tenancy and agri-
cultural lands act 1948 bombay lxvii of
1948 . the government of bombay is pleased to
cancel government numberification in the revenue
department number9361/49 dated the 24th/25th
april 1951.
it would thus appear that when the matter was still pending
in the companyrt of appeal the judgment of the lower appellate
court being dated september 27 1954 the numberification
cancelling the previous numberification was issued. the suit
had therefore to be decided on the basis that there was no
numberification in existence under s.88 1 d which companyld take
the disputed lands out of the operation
of the act. this matter was brought to the numberice of the
learned assistant judge who took the view that though on
the merger of baroda with bombay in 1949 the defendants had
the protection of the act that protection had been taken
away by the first numberification which was cancelled by the
second. that companyrt was of the opinion that though the
appellate companyrt was entitled to take numberice of the
subsequent events the suit had to be determined as on the
state of facts in existence on the date of the suit and number
as they existed during the pendency of the appeal. in that
view of the matter the learned appellate companyrt held that
the tenants-defendants companyld number take advantage of the
provisions of the act and companyld number resist the suit for
possession. in our opinion that was a mistaken view of the
legal position. when the judgment of the lower appellate
court was rendered the position in fact and law was that
there was numbernumberification under cl. d of s.88 1 in
operation so as to make the land in question immune from the
benefits companyferred by the tenancy law. in other words the
tenents companyld claim the protection afforded by the law
against eviction on the ground that the term of the lease
had expired. but it was argued on behalf of the appellants
that the subsequent numberification cancelling the first one
could number take away the rights which had accrued to them as
a result of the first numberification. in our opinion this
argument is without any force. if the landlords had
obtained an effective decree and had succeeded in ejecting
the tenants as a result of that decree which may have
become final between the parties that decree may number have
been re-opened and the execution taken thereunder may number
have been recalled. but it was during the pendency of the
suit at the appellate stage that the second numberification was
issued canceling the first. hence the companyrt was bound to
apply the law as it was found on the date of its judgment. hence there is numberquestion of taking away any vested rights
in the landlords. | 0 | test | 1962_373.txt | 1 |
original jurisdiction writ petitions number. 435 and 436
of 1985. under article 32 of the companystitution of india
and
civil appeal number 4099 nt of 1984.
from the judgment and order dated 14.8.1984 of the
calcutta high companyrt in civil rule number 6431 w of 1984.
soli j. sorabjee k. srinivasan n.b.b. raju and vineet
kumar for the petitioners in w.p. number 435 of 1985.
s. chitale vineet kumar and k. srinivasan for the
petitioners in w.p. number 436 of 1985.
parasaran attorney general and a.v. rangam for the
respondent in w.p. number. 435-36 of 1995.
k. venugopal vimal dave miss kailash mehta and mrs.
neelam kalsi for the appellants in c.a. number 4099 of 1984.
gooptu and h.k. puri for the respondent in c.a. number
4099 of 1984.
the following judgments were delivered
tulzapurkar j. these writ petitions and the civil
appeal raise a companymon question of law namely whether sales
tax can be levied by a state legislature on the sale of the
lottery tickets in the companycerned state? the facts giving rise to the aforesaid question lie in
a narrow companypass and in the writ petitions the question
arises out of the levy imposed for the first time on such
sales of lottery tickets by an amendment made in the tamil
nadu general sales tax act 1959 with effect from january 28
1984 while in the civil appeal it arises out of a similar
levy imposed for the first time by making suitable
amendments in the bengal finance sales tax act 1941 with
effect from may 1 1984.
indisputably the subject of lotteries organised
either by the government of india or by the government of a
state falls within the union list entry 40 of list i but
in the absence of any law having been enacted by the
parliament on the subject the running of lotteries companyld be
done by the government of various
states only under article 258 1 of the companystitution on
entrustment of that function by the union to the companycerned
state. accordingly at the instance of the tamil nadu
government which proposed to organise its own state lottery
the central government entrusted that function to the state
government by means of a presidential order dated october
271971 the operative part whereof ran thus
number therefore the president is pleased to
permit the government of tamil nadu to companyduct a
state lottery subject to the companydition that the
tickets of the lottery shall number be sold in any
other state without the permission of the
government of that state. the president is further pleased to entrust the
government of tamil nadu under clause 1 of
article 258 of the companystitution the executive
power of the union in respect of lotteries
organised by that government. pursuant to the aforesaid presidential order the government
of tamil nadu organised a state lottery by sponsoring a
raffle scheme and framing appropriate rules in that behalf. the state government was also desirous of levying sales tax
on the sale of the lottery tickets by placing the incidence
thereof on every dealer selling such tickets within the
state and for that purpose by a numberification g.o.p. number 77
dated january 28 1984 issued under s. 59 of the tamil nadu
general sales tax act 1959 the state government inserted an
entry 163 in the first schedule to the act whereby lottery
tickets were brought within the purview of the charge and
tax at the rate of 20 was levied on the sale of such
tickets at the point of first sale in the state. this
numberification was later followed by a regular legislative
amendment made in the act as required by s.59 2 . presumably
this was done in the exercise of its own independent taxing
power under entry 54 of list ii in the seventh schedule to
the companystitution. it seems that under the raffle scheme so
promulgated the first sale of lottery tickets issued
thereunder was by the state government of tamil nadu to
various licensed agents whole salers stockists etc. ant
the state government became liable to pay sales tax as the
first dealer. therefore the finance raffle department of
the state government issued a numberification goms number 219 on
march 31 1984 bringing into force certain arrangement
whereunder while retaining the sale price of the
ticket at its face value the tax was number passed on to the
licenced dealer or to purchaser in other words effectively
exemption from payment of sales tax was granted to the
purchaser. shri h. anraj the companymon petitioner in both the
writ petitions who has been carrying on business in the
state of tamilnadu as a dealer in lottery tickets issued by
the royal government of bhutan the state of assam and
various other lotteries has challenged the validity of both
the levy of sales tax on the sale of lottery tickets as also
the exemption granted under numberification goms 219 dated
31.3.1984.
presumably on the entrustment of the function of
conducting a state lottery by the union government under a
similar presidential order the government of west bengal
organised its own lottery by sponsoring a raffle scheme and
framing appropriate rules in that behalf and for the purpose
of levying sales tax on the sale of the lottery tickets the
state legislature promulgated the west bengal taxation laws
second amendment act 1984 whereunder by making
appropriate amendments by way of additions to sections
5 1 aa 5 1 dd 5 2 a vb and 5 2 v iva of the
bengal finance sales tax act 1941 sales tax at the rate of
20 was levied on the taxable turnumberer of every dealer in
regard to the sale of lottery tickets. by a numberification number
1020 ft dated march 29 1984 the levy imposed under the
aforesaid amendments was brought into force with effect from
may 1 1984. by a writ petition filed in the calcutta high
court the appellants being three petitioners who carry on
business in the state of west bengal as agents and stockists
of various lotteries organised by different states including
the state of west bengal challenged the validity of the
aforesaid amendments made in the bengal finance sales tax
act 1941 whereunder sales tax has been levied on the sale
of lottery tickets substantially on the ground that a
lottery tickets when sold represented an actionable claim
and number goods and such a transaction being merely a sale
of a chance to win a prize in the draw was number exigible to
sales tax and therefore the amendments made were beyond
the legislative companypetence of the state legislature as
entry 54 of the list ii in the seventh schedule authorises
legislation levying sales tax only on the sale or purchase
of goods the matter ultimately went before a division
bench of that companyrt who by its judgment and order dated
august 14 1984 dismissed the writ petition upholding there
constitutional validity of the amendments in question as
also the levy imposed thereunder. in substance the high
court came to the companyclusion that lottery tickets were number
actionable claims but goods within the definition of that
expression given in the bengal finance sales tax act 1941
and therefore the state legislature was companypetent under
entry 54 of list ii to enact the companycerned amendments
levying sales tax on the sale of lottery tickets. hence the
appeal. companynsel for the dealers have challenged the levy of
sales tax on the sale of lottery tickets imposed under both
the enactments the tamil nadu general sales tax act 1959
as amended and the bengal finance sales tax act 1941 as
amended principally on the ground of lack of legislative
competence on the part of the companycerned state legislatures. companynsel pointed out that under the charging provision
contained in both the acts s.3 of the tamil nadu act 1959
and s.4 of the bengal act 1941 the taxable event is the
sale of goods here lottery tickets and the levy is imposed
upon the taxable turnumberer of every dealer in regard to the
sales of lottery tickets and therefore quite clearly each
of the state legislatures has purported to act in the
exercise of its own taxing power under entry 54 of list ii. but according to companynsel entry 54 of list ii enables
legislation imposing a tax inter alia on sale of goods
that it is wellsettled that the expression sale of goods
has to be companystrued in the sense which it has in the indian
sale of goods act 1930 vide ganumber dunkerleys case
1959 s.c.r. 379 at 416 goods under sec.2 7 thereof
comprises within its scope every kind of movable property
but specifically excludes actionable claim that the essence
of lottery is a chance for a prize for a price that a sale
of such a chance is number a sale of goods and therefore the
levy of sales tax on sale of lottery tickets would be beyond
the ambit of entry 54 of list ii. alternatively companynsel
contended that a lottery ticket is an actionable claim as
defined in sec. 3 of transfer of property act or a chose-in-
action knumbern to english law the ticket itself being merely
a slip of paper or memorandum evidencing the right of the
holder thereof to claim or receive a prize if successful in
the draw and therefore the impugned levy is outside entry 54
of list ii. so far as the madras act is companycerned companynsel
for the writ petitioners raised a further companytention that
the state governments numberification goms number 219 dated march
31 1984 was discriminatory and violative of art. 14 and
art. 304 a of the companystitution in as much as thereunder the
burden of sales-tax sur-charge and additional sur-charge is
prohibited to be passed on to the purchaser of tamil nadu
lottery tickets while there is numbersuch similar treatment
given to the lottery tickets of other states which are being
sold in the state of tamil nadu thereby putting the sale of
the lottery tickets at a serious disadvantage. on the other hand the learned attorney general
appearing for the state of tamil nadu and companynsel for the
state of west bengal strongly refuted the validity of the
grounds on which the levy of sales-tax on the sale of
lottery tickets was challenged by companynsel for the dealers. for deciding the legislative companypetence of the impugned
amendments levying sales-tax of lottery tickets apart from
entry 54 of list ii taxes on the sale or purchase of
goods reliance was also placed on entry 62 of list ii
taxes onbetting and gambling and it was urged that
if the dealers companytention were companyrect that lottery is a
chance and when a lottery ticket is sold it is a chance that
is sold then the tax in the present case would be a tax on
betting and gambling and the same has to be levied in the
case of lottery tickets at the time of the sale of the
tickets because lt is at that time that betting takes place
and as such the impugned amendments would fall under entry
62 of list ii. of companyrse the learned attorney general and
counsel for the state of west bengal justified the impugned
amendments under entry 54 of list ii by companytending that a
lottery ticket was goods within the definitions of that
expression given in the two acts as also in the sale of
goods act 1930 and number purely an actionable claim as
contended for by companynsel for the dealers and hence the levy
on its sale was perfectly companypetent under that entry and in
this behalf the companytention in substance was that a sale of
lottery ticket companyfers on the purchaser two rights a a
right to participate in the draw and b a right to claim a
prize if successful in the draw and though the latter may be
an actionable claim the former companystitutes beneficial
interest in the movable property incorporeal in character
in possession of the holder of the ticket and hence goods
capable of being possessed and bought or sold. as regards
the exemption granted by the tamil nadu government under
numberification number goms. 219 dated march 31 1984 it was
contended that the circumstance that the tamil nadu
government decided number to pass on the sales-tax to the
purchaser cannumber invalidate the same as falling under art. 14 or article 304 inasmuch as it is open to a dealer number
pass on the burden to the purchaser and bear it himself and
further it 18 also open to all other state governments who
run lotteries to elect number to pass on the sales-tax to the
purchaser of their lottery tickets. as regards entry 62 of list ii on which the reliance
was placed by learned attorney general companynsel for the
dealers have rejoined by saying that reliance on that entry
for finding the legislative companypetence will be of numberavail
for two reasons. first if the tax was to be levied on
betting and gambling the
charging event ought to have been the organising of the
lottery and the levy should have been imposed on the two
state governments for having organised that activity by
undertaking the companyduct of the lotteries and number on any
dealer selling lottery tickets as is the case here and
secondly entry 40 of list i is lotteries organised by the
government of india or the government of a state while
entry 34 of list ii is betting and gambling and it is well
settled that the latter does number include lotteries organised
by the government of india or the government of the state
which topic is specifically dealt with by the former vide . anraj v. state of maharashtra 1984 2 s.c.c. 299 and
therefore the expression betting and gambling in entry 62
of the list ii must be given the same meaning that is it
excludes state lotteries and therefore under entry 62 there
cannumber be any power to levy tax on state lotteries and such
construction of the relevant entries is in companysonance with
the companystitutional scheme as explained by this companyrt in
kerala state electricity board v. indian aluminium companypany
1976 1 s.c.r. 552. in other words legislative companypetence
if at all would be under entry 54 of list ii and unless the
sale of a lottery ticket involves a sale of goods the levy
would be incompetent being outside that entry. elaborating the main companytention of lack of legislative
competence under entry 54 of list ii companynsel for the
dealers have urged that since that entry enables legislation
levying tax on sale of goods it is necessary to appreciate
the real companycept of the expressions goods sale
lottery and lottery ticket. section 2 j and 2 n of
the tamil nadu act defines goods and sale thus
2. j goods means all kinds of movable property
other than newspapers actionable claims stocks
and shares and securities and includes all
materials companymodities and articles and all
growing crops grass or things attached to or
forming part of the land which are agreed to be
served before sale or under the companytract of sale
2. n sale with all its grammatical variations
and companynate expressions means every transfer of
the property in goods other than by way of a
mortgage hypothecation charge or pledge by one
person or anumberher in the companyrse of business for
cash deferred payment or other valuable
considerations other clauses give extended
meanings which are number material . similarly the expressions goods and sale are defined in
s.2 d and g respectively of the bengal act thus
2 d goods includes all kinds of movable
property other than actionable claims stocks. shares or securities
2 g sale means any transfer of property in
goods for cash or deferred payment or other
valuable companysideration
the term goods is defined in s.2 7 of the sale of goods
act 1930 and so far as is material it means every kind of
movable property other than actionable claims and money
and this definition read with s.4 of that act clearly shows
that the companycept of sale of goods thereunder means a
transfer of property in the goods for a price. article 366 12 of the companystitution gives an inclusive
definition of goods which says
goods includes all materials companymodities and
articles
and article 366 29a inserted by the forty-sixth
constitutional amendment act gives an extended meaning to
the companycept of sale or purchase of goods while defining
the expression tax on the sale or purchase of goods but we
are number companycerned with the extended meaning in this case and
only clause a thereof is material which runs thus -
29a tax on the sale or purchase of goods
includes
a a tax on the transfer otherwise than in
pursuance of a companytract of property in any goods
for cash deferred payment or other valuable
consideration
on a proper reading of the aforesaid definitions
counsel urged that two significant aspects clearly emerge
therefrom first that sans the extended meaning accorded to
the expression sale of goods with which i am number
concerned in the instant case the true companycept of sale of
goods is that there must be a transfer of property in the
goods for a price that is to say the companycept has the same
meaning which it has under the sale of
goods act 1930 and secondly the expression goods companyers
within its scope every kind of movable property but
actionable claims are specifically excluded from its
purview. for the purpose of bringing out the real meaning and
concept of a lottery and lottery ticket companynsel relied
upon the dictionary meanings of those expressions as also on
certain decided cases. in websters dictionary lottery is
defined as a distribution of prizes by lot or chance. in
the oxford new english dictionary lottery is defined as
an arrangement for the distribution of prizes by chance
among persons purchasing tickets. in archibolds criminal
pleadings 7th edition p.1345 lottery has been defined as
the distribution of prizes by lot or chance without the use
of- any skill. in blacks law dictionary 5th edition
p.853 it is defined thus
a chance for prize for a price. essential
elements of lottery are companysideration prize and
chance and any scheme or device by which a person
for companysideration is permitted to receive a prize
or numberhing as may be determined predominantly by
chance. based on state v. wassick w.va. 191
e. 2nd 283288.
in edward h. horner v. united states 37 law ed. 237 at 241
the supreme companyrt of the united states quoted with approval
the following definition of lottery companytained in the
century dictionary
a scheme for raising money by selling chances to
share in a distribution of prizes more
specifically a scheme for distribution of prizes
by chance among persons purchasing tickets the
correspondingly numbered slips or lots
representing prizes or blanks being drawn from a
wheel on a day previously annumbernced in companynection
with the scheme of the intended prizes. in law the
term lottery embraces all schemes of
distribution of prizes by chance such as policy-
playing gift exhibitions prize companycerts raffles
at fairs etc. and includes various forms of
gambling. very passage has been annumberated in
words and phrases permanent edition vol. 25 at
p.446
in companypus juris secundum vol. 54 at page 845 the three
essential elements of a lottery are stated thus
there are three elements essential to the
existence of a lottery namely chance
consideration and prize if these three elements
are present the scheme is a lottery otherwise it
is number if an essential element is
absent the scheme is number a lottery regardless of
the motive for the omission and companyversely if
all the elements are present the scheme is a
lottery regardless of the fact that the purpose
of its sponsor is to increase his business. in volume 38 american jurisprudence 2d at page 113 the
further statement of law in para 6 is
in order to companyprise a lottery these three
elements or ingredients mentioned above must be
present chance alone will number do so number will
chance even when companypled with companysideration. number
is the companybination of companysideration and prize
sufficient alone. reliance was also placed on three english decisions
namely bartlett v. parker and ors. 1912 2 k.b. 497 hall
mcwilliam 85 law times reports 239 and kerslake v.
knight 133 law times reports 606 to show that in essence a
lottery involves a sale of a chance to win a prize for
consideration. it is unnecessary to discuss in detail the
facts in each of the three decisions but it will suffice to
say that in each one of these cases the occasion to discuss
the essence of a lottery arose in the companytext of the penal
provisions companytained in s.41 of the lotteries act 1823 and
the question that arose for decision was whether the
particular scheme of distribution of prizes sponsored by the
concerned accused in three cases each being a different
scheme companystituted a lottery or number and whether a
conviction under the said s.41 was or companyld be properly
recorded against them and was answered in the affirmative. reference was also made to a full bench decision of
madras high companyrt in sesha ayyar v. krishna ayyar a.i.r. 1936 madras 225 where in the companytext of the question
whether a kuri chit fund was a lottery or number the full bench
has emphasised the same three essential elements that go to
constitute a lottery namely a a prize or some advantage
in the nature of a prize b distribution thereof by
chance and c companysideration paid or promised for
purchasing the chance. companying to the lottery ticket companynsel pointed out that
the dictionary meaning of the word ticket is a printed
card or a
piece of paper that gives a person a specific right as to
attend a theatre ride on a train claim of purchase etc. see a webster and lottery ticket has been defined in
words and phrases permanent edition vol. 25a supplement
at page 73 thus
lottery ticket is token of the right to
participate in pool. finster v. keller 96 cal. reptr. 241249 18 c.a.3d 836.
further companynsel pointed out how the term ticket in the
context of lottery has been explained in the same volume 25a
at page 491 namely the term ticket when speaking of the
sale of lottery tickets is equivalent to chances. saloman
state 27 ala. 26-30
3.
counsel also strongly relied upon justice companynishs
observation in the full bench decision of madras high companyrt
in sesha ayyar v. krishan ayyar supra to the effect
tickets of companyrse are only the tokens of the chance
purchased and it is the purchase of this chance which is
the essence of a lottery. relying upon the aforesaid
material companynsel companytended that a lottery ticket will
have to be regarded merely as a slip of paper or
memorandum evidencing the right of a holder thereof to
share in the pool or the distributable fund it is merely
a companyvenient mode for ascertaining the identity of the
winner and the fact of payment and therefore such a
ticket though a physical article cannumber be regarded as
goods. having thus brought out the companycept of a lottery as
also of a lottery ticket companynsel for the dealers have
vehemently companytended that a sale of a lottery ticket is
numberhing more than a sale of a chance to win a prize and
numbertransaction of sale of movable property takes place or
is involved in the sale of a lottery ticket the ticket
itself being merely a token of the chance purchased and
therefore the levy of a tax on the sale of such chance
must fall outside entry 54 of list ii and therefore the
impugned amendments made in both the acts would lack
legislative companypetence. in any event companynsel urged that a
lottery ticket companystitutes an inchoate right to receive
the prize money and therefore can at best be described
as a companytingent interest in money and it is well settled
that the expression goods does number include money. without prejudice to the aforesaid companytention companynsel
for the dealers made an alternative submission. it was urged
that
assuming without admitting that lottery tickets are regarded
as a kind of a movable property or some kind of merchandise
they would be 80 only in a limited sense but in pith and
substance they are actionable claims which have been
expressly excluded from the definition of goods. in
this behalf reliance was placed by companynsel on the
definition of an actionable claim given in s.3 of the
transfer of property act 1882 and the following passages
appearing the mullas t.p. act sixth edition under the
heading actionable claims at pages 804 805
in english law movable property was said to be
either in possession and enjoyment and therefore a
chose in possession or out of possession but
realizable by action and therefore a chose in
action it the term chose in action is
also used to denumbere a document evidencing a right
or title. like a ticket here p.804
actionable claims therefore include claims
recognised by the companyrts as affording grounds for
relief either -
1 as to unsecured debts or
2 as to beneficial interest in movable property
in possession actual or companystructive - whether
present or future companyditional or companytingent. p.805
reliance was also placed upon the decision in united states
mueller 178 2d series federal reports 593 at 594
where the following passage occurs
conceding without deciding that lottery tickets
are merchandise they are such only in a limited
sense. in a general sense they are more in the
nature of chooses in action being in some
respects memoranda of companyditional promises to
pay. also annumberated in words and phrases
permanent edition vol. 25-a at page 491 . similarly companynsel relied upon an english decision in
jones v. carter 8 q.b. 134 english reports vol. cxv pp.825-
826 where lord denman c.j. took the view that the
assignment of a ticket in a derby sweepstake was an
assignment of a chose in action a decision annumberated in
halsburys laws of england fourth edition volume 6 para
8 2 and in strouds judicial dictionary fourth edition
volume i at page 460 under the heading chose in
action . lt was submitted that a lottery ticket possesses
the same character and would therefore be a chose-in-
action. similarly it was pointed out that in king v.
connare anr. 61 c.l.r. 596 at 607 latham c.j. also
took the view that when a person buys a lottery ticket
from the companyductor of the lottery there is an assignment
of chose in action. in view of above companynsel urged that a sale of a
lottery ticket is numbermore than an assignment of an
actionable claim and numbertransfer of any property in goods
is involved and as such the impugned amendments suffer from
lack of legislative companypetence. at the outset i would like to point out that the
entire material on which reliance has been placed by
counsel for the dealers to bring out the real meaning and
concept of lottery and lottery ticket for the
purpose of supporting their main companytention though
valuable as far as it goes is strictly irrelevant and of no
assistance to decide the real issue arising in the case. it
cannumber be disputed that true meaning of lottery as given in
all the dictionaries as also the three essential
elements requisite for a lottery as enunciated in the
american decision the three english decisions and the
full bench decision of the madras high companyrt show that in
essence a lottery means a chance for a prize for a price
and that unless all the three essential elements are
present the scheme or the transaction would number amount
to a lottery. in fact the three english decisions dealt
with the question as to whether the companycerned accused
were or companyld be properly companyvicted of a criminal offence
and obviously the companyrt companyld number answer that question
in the affirmative unless in each of the companycerned
schemes all the three essential elements were present. in
the madras case the essentials of a lottery came to be
considered in the companytext of the question whether a
kuri chit fund was a lottery or number. in the case before
us the issue is a whether the raffle-schemes undertaken by
the two state governments are lotteries or number. if that
were the issue the material relied upon would have been
quite useful. admittedly the raffle schemes are lotteries
which involve gaming. the issue before us is whether a sale
of a lottery ticket which unquestionably involves the
sale of a chance to win a prize is something re and
comprises transfer of property in goods and therefore a
sale of goods or number 80 that a tax companyld be levied thereon
under entry 54 of list ii and in order to decide this
question the true companycepts of goods sale movable
property and immovable property would be most material. sec.2 7 of the sale of goods act defines goods as
meaning every kind of movable property other than
actionable claims and money. clearly the expression
movable property is used in companytradistinctions with
immovable property. section 3 of the transfer of
property act gives a negative definition of immovable
property saying that it does number include standing timber
growing crops or grass and is therefore number of much
assistance but s.3 26 of the general clauses act
1897 defines immovable property by stating that it shall
include land benefit to arise out of land and things
attached to the earth or permanently fastened to
anything attached to the earth while movable
property is defined in s.3 36 thus
movable property shall mean property of every
description except immovable property. it is thus clear that when .2 7 of the sale of goods act
defines goods as meaning every kind of movable property
other than actionable claims and money the expression
movable property occurring therein must mean property of
every description except immovable property. number it is
obvious that lottery tickets can by numberstretch of
imagination be regarded as immovable property but would
therefore be movable property and as such these will
fall within the expression goods . of companyrse questions
whether these tickets companystitute goods properly 80 called
or are slips of paper or memoranda merely evidencing the
right to claim a prize by chance and whether these are
actionable claims and hence excluded from the companycept of
goods will be companysidered presently. but it cannumber be
disputed that as opposed to immovable property these
tickets would be movable property and would numbermally
qualify to fall within the expression goods . since goods are defined to exclude actionable
claims it will be useful at this stage to refer to the
definition of actionable claim as given in 8.3 of the
transfer of property act which runs thus
actionable claim means a claim to any debt
other than a debt secured by mortgage of
immovable property or by hypothecation or
pledge of movable property or to any beneficial
interest in movable property number in the
possession either actual or companystructive of the
claimant which the civil companyrts recognise as
affording grounds for relief whether such debt or
beneficial interest be existent accruing
conditional or companytingent. this definition as analysed in mullas transfer of property
act at page 05 of the 6th edition companyprises two types of
claims a a claim to unsecured debts and b a claim to
beneficial interest in movable property number in the
possession actual or companystructive - whether present or
future companyditional or companytingent. we would be companycerned
number with a but with b in this case and reading b it
is clear that if the beneficial interest in movable
property is number in possession of the claimant it will be
an actionable claim but if it is in his possession or
enjoyment it will number be actionable claim but a chose in
possession. keeping the aforesaid aspects in view we proceed
to companysider the questions whether lottery tickets are goods
properly so called or whether these are actionable claims? companynsel for the dealers companytended that a lottery
ticket would stand in the same category as a steamship-
ticket or a railway-ticket or a railway cloak-room ticket
or a cinema ticket all being purely companytractual
documents in other words it was urged that delivery of a
lottery ticket evidencing the terms and companyditions of the
offer of a prize at the draw on its acceptance by the
purchaser by payment of price results merely in bringing
into existence a companytract and does number result in the
transfer of any rights from the promoter or the dealer to
the purchaser much less of rights to property. it is number
possible to accept this companytention whether by reason
of a sale of a lottery ticket merely a companytractual
document companye into existence or along with the delivery
of such a ticket to the purchaser on payment of price by
him some rights are transferred to the purchaser must
depend upon the intention of the parties the mode of
issuing such ticket and the rules governing the raffle
scheme. even proceeding on the assumption that lottery
tickets are companytractual documents that fact cannumber
militate against the tickets being goods and certain
rights thereunder being transferred to the purchaser. in
almonds jurisprudence 12th edition at pages 338-339 under
the heading the classes of agreements the following
passage occurs
agreements are divisible into three classes for
they either create rights or transfer them or
extinguish them. those which create rights are
them selves divisible into two sub-classes
distinguishable as companytracts and grants. a
contract is an agreement which creates an
obligation or a right in personam between the
parties to it. a grant 18 an agreement which
creates a right of any other description
examples being grants of leases easements
charges patents franchises licences and so
forth. an agreement which transfers a right may be
termed generically an assignment. on which
extinguishes a right is a release discharge or
surrender. it often happens that an agreement is of a mixed
nature and so falls within two or more of these
classes at the same time. thus the sale of a
specific chattel is both a companytract and an
assignment for it transfers the ownership of a
chattel and at the same time creates an obligation
to pay the price. the delivery of a lottery ticket issued under the rules
governing the raffle schemes in the instant case to a
purchaser thereof is obviously number a mere companytract creating
an obligation or right in personam between parties to it
but as explained hereafter would be in the nature of a
grant. dealing with agreements which are in the nature of
grants it is well settled that rights and benefits
arising thereunder unless of a personal nature partake of
the character of personalty as opposed to realty and
therefore lovable property capable of being assigned or
transferred. as opposed to personal rights like life
liberty or reputation these would be proprietory rights and
benefits and hence includible in property according to
salmonds jurisprudence see para 108 at page 412 of 12th
edition under the heading proprietory rights - dominium
and status . companynsel for the dealers however urged that
this companyrt has taken the view that benefits arising under a
contract are number proprietary rights and therefore do number
constitute property and in this behalf reliance was placed
on two decisions namely swami motor transport f limited
and anr. v. sri sankaraswamigal mutt and anr. 1963
suppl. 1 s.c.r. 282 at 306-307 and ml. anwar khan
mehhoob company v. state of madhya pradesh and or. 1966
2 s.c.r. 40 at 49-52. in the former case the companyrt was
concerned with the question whether the option to purchase
the site companyferred upon a tenant having his super-structure
on the land under section 9 of the madras city tenants
protection act 1921 as amended in 1955 and again in 1960
amounted to interest or right in property and the companyrt was
of the view that even if such an option were companyferred under
a companytract it would number be a right in property and
therefore the fact that such a right stemmed from a
statute companyld number obviously expand its companytent or make it
any-the-less a number-proprietory right the companyrt held that a
statutory right to apply for the purchase of the land was
number a. right of property. in the latter case the companyrt
took the view that a right to go the forest area and
collect tendu leaves under companytract given to the petitioner
conferred numberright to property before the leaves were
plucked and therefore the adhiniyam in question had
invaded numberproperty rights. in my view both the decisions
dealt with right under a statute or companytract which
created merely obligations or rights in personam and number
with agreement in nature of a grant. in the case of the
latter type of agreements the rights or benefits arising
thereunder would be property more so when a party thereto
has become entitled to the save on performing his part of
the companytract and in fact such rights or benefits would
also be assignable. companynsel for the dealers fairly
conceded the position that where under a companytract a party
on the performance of his part of the companytract is entitled
to some emoluments or benefits then such emoluments or
benefits under the companytract would companystitute property. it cannumber be disputed that in every raffle scheme
based on the sale of lottery tickets similar to the
schemes sponsored by each of the two state in this case
every participant is required to purchase a lottery ticket
by paying a price therefor the face value of the ticket
and such purchase entitles him number merely to receive or
claim a prize in the draw if successful but before that
also to participate in such draw. in other words a sale of
a lottery ticket companyfers on the purchaser there of two
rights a a right to participate in the draw and b a
right to claim a prize companytinent upon his being
successful in the draw. both would be beneficial
interests in movable property the former in present the
latter in future depending on a companytingency. lottery
tickets number as physical articles but as slips of paper or
memoranda evidence number one but both these beneficial
interests in movable property which are obviously capable
of being transferred assigned or sold and on their
transfer assignment or sale both these beneficial
interests are made over to the purchaser for a price. companynsel for the dealers sought to companytend that the companycept
of a lottery cannumber be sub-divided in two parts namely a
right to participate and a right to receive the prize but
the two together companystitute one single right. it is number
possible to accept this companytention for the simple reason
that the two entitlement which arise on the purchase of a
lottery ticket are of a different character inasmuch as
the right to participate arises in presenting that is to
say it is a choate or perfected right in the purchaser
on the strength of which he can enforce the holding of the
draw while the other is inchoate right
which is to materialism in future as and when the draw
takes place depending upon his being successful in such
draw. moreover on the date of the purchase of the ticket
the entitlement to participate in the draw can be said to
have been delivered unto the possession of the purchaser
who would be enjoying it from the time he has purchased the
ticket and as such it would be a chose in possession while
the other would be an actionable claim or a chose in
action as has been held in jones v. carter supra and king
v- companynare supra on which companynsel for the dealers relied. it is thus clear that a transfer of the right to
participate in the draw which takes place on the sale of
lottery ticket would be a transfer of beneficial interest
in movable property to the purchaser and therefore amounts
to transfer of goods and to that extent it is numbertransfer
of an actionable claim to the extent that it involves a
transfer of the right to claim a prize depending on a
chance it will be an assignment of an actionable claim
that when a purchaser purchases a lottery ticket he
pays companysideration price number merely for the right to claim
in future a prize in the draw but also for the right in
presenting to participate in the draw will be clear from
certain passages based on decided cases annumberated in words
and phrases permanent edition vol. 25a which we would
like to extract
lottery in accordance with public usage is
scheme or plan for distribution of prizes by
chance among those paying or agreeing to pay
consideration for right of participation city of
wink v. griffith amusement company100 w 2d
695 698699700701 129 tex.40. at page 460. a lottery or scheme in the nature of a lottery
is a plan in which a price is set up and awarded
by chance for the right to participate in which
a companysideration is paid grimes v. state 178 so
69 71 72 28 ala. app.4 at page 467 . lottery is a scheme for the distribution of
property by chance or lot among persons who have
paid or agreed to pay a valuable companysideration
for the privilege of participation in such scheme. new orleans v. companylins 27 so. 532 536 52 la
ann 973 at p. 468
three things must companycur to establish a thing as
a lottery a prize or prizes the award or
distribution of the prize or prizes by chance and
the payment either directly or indirectly by the
participants of a companysideration for the right or
privilege of participating. robb rowley united
state tex.civ. appl. 127 s.w. 2d 221222 at
p.470 . the aforesaid passages which are based on decided cases
clearly bring out the position that number one but two distinct
rights are transferred to the purchaser of a lottery ticket
and it is number possible to accept the companytention that the two
together companystitute a single right-
counsel for the dealers sought to raise a further
contention that the issue of a lottery ticket like the
issue of shares by a joint stock companypany creates for the
first time in the buyer the right to participate in the
draw that is to say the right to have his number included
amongst the participating numbers and therefore there is no
transfer involved in the issue of a lottery ticket in other
words just as a companypany before it indulges in capital issue
does number hold any of its shares but only after they are
issued they companye to exist only in the hands of shareholders
on their subscribing to them and on allotment to them so in
the case of a lottery the promoter sponsoring it does number
have the right to participate number the right to claim a prize
in a draw and that these right companye into existence for the
first time in the participant when he purchases the ticket
and therefore numbertransfer of any of the said rights is
involved in the issue of a lottery ticket. and in this
behalf reliance was placed on the following passage
occurring at page 553 of vol. i 7th edition of kanga
palkhivalas law and practice of income tax under the
heading amalgamation of companypanies
in a case where companypany a amalgamates with and
merges into companypany b and the shareholders of
company a are allotted shares in companypany in their
own right and number as numberinees of companypany a a
question arises as to whether those shareholders
are liable to tax under the head capital gains. numbersuch tax would be payable unless the
amalgamation involves a a transfer or b a
sale or c an exchange or d a relinquishment
of the asset or e the extinguishment of any
rights therein s.2 47 . it is clear that such
amalgamation
does number involve any transfer or sale of the
shares there is numbertransfer of any assets by the
shareholders of companypany a to companypany b the
transfer of shares by companypany a cannumber be regarded
as a transfer by its shareholders. number is there
any transfer by companypany when it allotes its share
capital to the shareholders of companypany a. the
allotment of shares by a companypany cannumber be
regarded as a transfer of property by that
company. as lord greene mr observed in re v g.m
holdings limited1942 1 all er 224 226 ca a
share is a chose in action. a chose in action
implies the existence of some person entitled to
the rights which are rights in action as distinct
from rights in possession and until the share is
issued numbersuch person exists. putting it in a
nutshell the difference between the issue of a
share to a subscriber and the purchase of a share
from an existing shareholder is the difference
between the creation and the transfer of a chose
in action. the companytention so put forward is in my view without any
substance. in the first place the capital issue by a joint
stock companypany is governed by the provisions of the companypanies
act and memorandum and articles of association of the
company whereunder numbercompany can subscribe to or purchase
its own shares since it amounts to reduction of capital
whereas the issue of lottery tickets would be governed by a
raffle scheme and the rules framed therefor by the promoter
who in the instant case happens to be a state government
containing provisions entirely different from those
governing issue of-share-capital and as such the analogy of
capital issue by a joint stock companypany is wholly
inappropriate. secondly the learned authors were dealing
with the case of amalgamation of two companypanies in the
context of capital gains tax while the learned law lord
as the report of the case shows was companycerned with
construing the meaning of the word purchase occurring on
s.45 of the companypanies act 1929 and held that acquisition of
shares by subscription or allotment was number a purchase
within the meaning of that section in other words both the
cases are in different companytext altogether. moreover as
discussed earlier the agreement that companyes into existence as
a result of the sale of a lottery ticket by a promoter to a
buyer is in the nature of a grant companyferring the two rights
the right to participate and the right to claim a prize if
successful upon such buyer if this be the true nature of
the agreement it impliesplies that both the rights companye
into
existence and are with the promoter numbersooner a raffle
scheme together with the rules governing it rules which fix
the number of series to be issued the number of tickets in
each series the manner of holding a draw the number and
the terms on which the prizes to be awarded etc. etc. is
sponsored published and the tickets are offered for sale
and these rights are transferred upon the sale of the ticket
to the purchaser. the mere fact that under the rules the
promoter ter is disabled from participating in the draw or
from claiming a prize in such draw does number mean that these
rights do number companye into existence or are number with the
promoter before the actual sale of the tickets to the buyer
number does it mean that these rights companye into existence time
only upon the sale of the ticket to the buyer as urged by
counsel for the dealers. such disability imposed upon the
promoter by the rules is necessary to create companyfidence in
the participants about the promoters bonafides in the
raffle scheme and prevents the scheme being viewed as a
fraudulent or fishy affair. in other words a transfer of the
rights from the promoter grantor to the buyer grantee is
clearly involved in the sale of a lottery ticket. the
contention is therefor rejected. anumberher fact of this right to participate in the draw
which is transferred to the purchaser of a lottery ticket as
distinct from the right to receive or claim a prize in such
draw needs to be high-lighted which has a significant
bearing on the question whether the lottery ticket would be
goods or number. it cannumber be disputed that this right to
participate in the draw under a lottery ticket remains a
valuable right till the draw takes place and it is for this
reason that licence agents or whole-salers or dealers of
such tickets are enabled to effect sales thereof till the
draw actually takes place and as such till then the lottery
tickets companystitute their stock-in-trade and therefore a
merchandise. in other words lottery tickets number as
physical articles but as slips of paper or memoranda
evidencing the right to participate in the draw must in a
sense be regarded as the dealers merchandise and therefore
goods capable of being bought or sold in the market. they
can also change from hand to hand as goods. even in united
states v. mueller supra on which companynsel for dealers
relied the companyrt while emphasising the aspect that lottery
tickets are more in the nature of choses in action because
of the right to claim a prize by chance has observed that
these are merchandise though in a limited sense. the
aforesaid aspect of the matter really clinches in my view
the position that for the purpose of imposing the levy of
sales-tax
lottery tickets companyprising the entitlement to a right of
participate in a draw will have to be regarded as goods
properly so-called. it is true that this entitlement to a right to
participate in the draw is an entitlement to beneficial
interest which is of incorporeal or intangible nature but
that cannumber prevent it from being regarded as goods. in
commissioner of sales tax m.p. v. madhya pradesh
electricity board jabalpur 1969 2 s.c.r. 939 the
question that arose for determination was whether
electricity or electric energy supplied and distributed by
the m.p. electricity board to various companysumers was goods
within the meaning of c.p. bearer sales tax act 1947 and
the madhya pradesh general sales lax act 1959 and this companyrt
held that the definition of goods was very wide and
included all kinds of movable property and the term movable
property when companysidered with reference to goods as
defined for the purposes of sales tax companyld number be taken in
a narrow sense and that electric energy was companyered by the
definition of goods in the two acts. at page 945 of the
report tlc companyrt observed thus
what was essentially to be seen 18 whether
electric energy 18 goods within the meaning of
relevant provisions of the two acts. the
definition in terms 18 very wide according to
which goods means all kinds of movable
property the term movable property when
considered with reference to goods as defined
for the purposes of sales tax cannumber be taken in a
narrow sense and merely because electric energy is
number tangible or cannumber be moved or touched like
for instance a piece of wood or a book lt cannumber
cease to be movable property when lt has all the
attributes of such property. it is needless to
respect that lt is capable of abstraction
consumption and use which if done dishonestly
would attract punishment under s.39 of the indian
electricity act 1910. it can be transmitted
transferred delivered stored possessed etc. in
the same way as any other movable property if
there can be sale and purchase of electric energy
like any other movable object we see numberdifficulty
in holding that electric energy was intended to be
covered by the definition of goods in the two
acts. if that had number been the case there was no
necessity of specifically exempting sale of
electric energy from the payment of sales tax by
making a provision for lt in the schedules to the
two acts. similarly in a.v. meiyappan v. companymissioner of
commercial taxes madras a.i.r. 1969 madras 284 the owner
or producer of a film instead of exhibiting the film
himself by entering into an agreement companyferred upon
anumberher party the right to have his film exhibited for a
certain period as a distributor together with ancillary
right of making or causing to be made positive prints for
the purposes of exhibition and the question arose whether
the transaction was one of lease or sale of that right and
numberconstruction of the agreement in question and having
regard to all the facts and circumstances the companyrt came to
the companyclusion that lt was a lease and number a sale and
therefore numberexigible to sale tax though the right of
exhibiting the film which was the subject matter of the
agreement was regarded as falling within the definition of
goods under s.2 j of the madras general sales tax act
1959. after referring to the companycept of companyy-right both
under the english as well as indian law the companyrt observed
thus
copy-right is referred to in salmonds
jurisprudence 11th edition p. 462 as an
immaterial form of property recognised by law
being the product of human skill and labour or of
a mans brains. in all the english text books and
which it is unnecessary to refer at length
copyright has been regarded as incorporeal movable
property and that view has been adopted in our
country as well. it would be sufficient to refer
to savitri devi v. dwarka prasad a.i.r. 1939 all
305.
if incorporeal right like companyy right or an intangible
thing like electric energy can be regarded as goods exigible
to sales tax there is numberreason why the entitlement to a
right to participate in a draw which is beneficial interest
in movable property of incorporeal or intangible character
should number be regarded as goods for the purpose of levying
sales-tax. as stated above lottery tickets which companyprise
such entitlement do companystitute a stock-in-trade of every
dealer and therefore his merchandise which can be bought and
sold in the market. lottery tickets companyprising such
entitlement therefore would fall within the definition of
goods given in the tamil nadu act and the bengal act. in the light of the aforesaid discussion my companyclusions
are that lottery tickets to the extent that they companyprise
the entitlement to participate in the draw are goods
properly so called squarely falling within the definition
of that expression
as given in the tamil nadu act 1959 and the bengal act
1941 that to that extent they are number actionable claims
and that in every sale thereof a transfer of property in the
goods is involved. in view of these companyclusions the impugned
amendments made in the two companycerned acts for levying tax on
sale of lottery tickets will have to be upheld as falling
within the legislative companypetence of the companycerned state
legislature under entry 54 of list ii in the seventh
schedule and therefore we think it unnecessary to go into
the validity of the alternative submission made by the
learned attorney general that legislative companypetence for
enacting the impugned amendments would also be there under
entry 62 of list ii in the seventh schedule of the
constitution. having thus disposed of the main companytention raised on
behalf of the dealers we shall number proceed to deal with the
challenge to the exemption numberification goms. number 219 dated
march 31 1984 issued by the state government of tamil nadu
which is alleged to be violative of articles 14 l9 1 g
and 301 read with 304 a of the companystitution such challenge
has been raised only by the petitioners in writ petition
number. 435 and 436 of 1985. under the impugned amendment made
in the tamil nadu act by insertion of entry 163 in the first
schedule to the act lottery tickets became taxable at the
point of first sale in that state and it appears that under
the raffle scheme promulgated by the state government the
first sale of lottery tickets issued thereunder was by the
state government to various licensed agents wholesalers
stockists etc. and the state government became h liable to
pay sales tax as the first dealer. such levy had the effect
of increasing the face value of the ticket to the extent of
sales tax sur-charge or additional surcharge payable on the
sales. this position was reviewed by the government with a
view to reduce the burden of tax on tamil nadu raffles
which was being passed on to the buyers in addition to the
face value. with that object in view the finance raffle
department of the state government issued the aforesaid
numberification bringing into force certain arrangement whereby
while retaining the sale price of the ticket at its face
value the tax was number to be passed on to the licensed dealer
or to the purchaser. the numberification runs thus
finance raffle department
o.ms. number 219 dated 31.3.1984
panguni 18 ruthrodh
kari thiruvalluver
andu 2015
r e a d g o p number 77 dt. 28.1.1984.
in the g .o. read above the government have
ordered the levy of sales-tax at 20 single point
on the sale of lottery tickets at the point of
first sale in the state. companysequent on this levy
of tax sale price of tickets has increased over
and above their face value to the extent of sales-
tax surcharge and additional surcharge payable on
the sales. the position was reviewed by the
government with a view to reducing the burden of
tax on tamil nadu raffles which is number being
passed on to the buyers in addition to the face
value. the government have decided that the tamil
nadu raffle tickets shall companytinue to be sold at
their face value even after the levy of tax and
that sale price face value shall include sales
tax sur-charge and additional surcharge as
applicable. the government accordingly direct that all the
tamil nadu raffle tickets whether ordinary or
bumper draws shall be sold at their respective
face values only which will include sales-tax
surcharge and additional surcharge as applicable
and that numberagent or sellers of the raffle tickets
shall companylect the tax etc. over the face value or
increase the face value on any account. the above orders shall take effect from
1.4.1984.
the procedure for accounting will issue
separately in companysultation with the companymissioner
or raffles and companymissioner of companymercial taxes. the companymissioner of raffle is requested to give
wide publicity on these orders immediately. by order of the governumber
ramachandran
commissioner and secretary to govt. according to the petitioners the arrangement under the
numberification is that the raffle department of the government
of tamil nadu pays the tax to the companymercial taxes
department of the government of tamil nadu and the tax is
number passed on to the
purchaser in other words effectively exemption from payment
of sales tax is granted to the purchaser. thus in substance
lottery tickets issued by the government of tamil nadu do
number suffer any tax while on the other hand the lottery
tickets issued by other government and sold within the state
of tamil nadu are subject to tax. the net result is that
sale of lottery tickets of other governments within the
state are at a great disadvantage as companypared to the sale of
tamil nadu government lottery tickets inasmuch as a tamil
nadu government lottery ticket of the face value of re. 1
will be available to the purchaser at re. 1 but a lottery
ticket of any other government o the face value re. 1 will
have to be purchased by the purchaser at re. 1.20. since
such a result is directly brought about by the impugned
numberification cation the writ petitioners above challenged
its companystitutional validity mainly under article 301 read
with article 304 a of the companystitution. the argument in support of the challenge to the
impugned numberification under art. 301 read with art. 304 a
briefly stated runs thus. according to the companynsel if
lottery tickets are regarded as goods - and we have number held
that they are goods - the sale of goods imported into the
state of tamil nadu will be subjected to the sales tax
whereas the sale of tamil nadu government lottery tickets
will number be subject to tax and thus there is a clear
discrimination against the imported goods and therefore the
amendment made in the tamil nadu act read with the impugned
exemption numberification which permits such discrimination
would be violative of art. 301 read with art. 304 a of the
constitution. companynsel pointed out that art. 301 guarantees
freedom of trade companymerce and intercourse throughout the
territory of india subject to the other provisions of this
part part xiii and this is followed by art. 304 a which
runs thus-
numberwithstanding anything in article 301 or
article 303 the legislature of a state may by law
a impose on goods imported from other states or
the union territories any tax to which similar
goods manufactured or produced in that state are
subject so however as number to discriminate
between goods so imported and goods so
manufactured or produced
counsel also relied upon three or four decisions of this
court where the aforesaid provisions of the companystitution in
the companytext of tax legislation came up for companysideration
before this companyrt
and urged that in view of the settled position in law that
emerges from those decisions the instant exemption
numberification will have to be held as violative of art. 301
read with art. 304 a of the companystitution. reference was
made to atiabari tea company limited v. the state of assam ant ors. 1961 1 s.c.r. 809 firm a.t.b. mehtab majid ant company v.
state of madras ant anr. 1963 suppl. 2 s.c.r. 435 a.
hajee abdul shakoor ant companypany v. state of madras 1964 8
c.r. 217 state of madras v. n.k. nataraja mudaliar
1968 3 s.c.r. 829 and v. guruvaiah naidu sons v. state
of tamil nadu ant anr. 38 s.t.c 565 and companynsel pointed
out that as a result of these decisions the legal position
has been well settled that freedom of trade companymerce and
intercourse guaranteed by article 301 includes freedom from
tax laws if such tax laws number being of companypensatory or
regulatory nature directly and immediately impede or hamper
the free flow of trade companymerce and intercourse throughout
the territory of india and that if such law accords
discriminatory treatment to goods imported from other states
as companypared to similar goods manufactured or produced in the
state the same would be clearly violative of art. 304 a and
since in the instant case such situation obtains under the
impugned numberification the same will have to be struck down
as being violative of art. 304 a . i find companysiderable force in the aforesaid companytention
of companynsel for the writ petitioners. it is unnecessary to
deal with all the decisions cited by companynsel but it will
suffice if reference is made only to the decision in a.t.b. mehtab majid and company 8 case supra . in this case the
petitioner firm was a dealer in hides and skins it used to
sell hides and skins tanned outside the state of madras as
well as those tanned inside the state. under rule 16 of the
madras general sales tax rules tanned hides and skins
imported from outside and sold inside the state were
subjected to higher rates of tax than the tax imposed on
hides and skins tanned and sold within the state and the
petitioner firm challenged the sales tax assessment made in
relation to the turnumberer of sales of tanned hides and skins
which had been obtained from outside the state of madras on
the ground that there was discriminatory taxation which
offended article 304 a of the companystitution. the respondents
contended a that sales tax did number companye within the purview
of articles 304 a as it was number a tax on the import of
goods at the point of entry b that the impugned rule was
number a law made by the state legislature c that the
impugned rule by itself did number impose the tax but fixed the
single point at which the tax was imposed by 66.3 and 5 of
the act and d that the impugned rule was number
made with an eye on the place of origins of the goods. negativing all the companytentions of the respondents this companyrt
held that it was well settled that taxing laws can be
restrictions on trade companymerce and intercourse if they
hampered free flow of trade and if they are number what cal. be
termed to be companypensatory tax or regulatory measure that
sales tax of the kind under companysideration companyld number be said
to be a measure regulating any trade or a companypensatory tax
levied for the use of trading facilities that the sales tax
which had the effect of discriminating between goods of one
state and goods of anumberher may affect the free flow of trade
and it will then offend against article 301 but will be
valid only if it companyes within the terms of article 304 a . the companyrt finally held the impugned rule 16 2 invalid. m e
instant case is on all fours of this decision. the only answer given to the aforesaid challenge by the
state government in its companynter affidavit sworn by mr. m.
kandaswamy deputy secretary to the government is that in the
case of tamil nadu government lottery tickets the state
government are the first dealers as well as the tax
collecting authority while in the case of imported tickets
the tax element is number to be borne by the state government
since they are number the first sellers of those tickets 2nd
that if this distinction is kept in view there cannumber be
violation of article 301 read with article 304 a of the
constitution further it is also stated that in the case of
sales of tamil nadu government lottery tickets the state
government are the first sellers and as such they have to
bear the tax on the sale of such tickets and it is well
settled that it is open to such firstseller either to pass
on the tax and companylect it from the buyer or to bear the
liability himself with out passing on the same to the buyer. in my view neither of these aspects has any real bearing on
the issue raised by companynsel on behalf of the writ
petitioners. these aspects cannumber obliterate the glaring
fact that because of the numberification imported goods are at
a disadvantage as companypared to indiginumbers goods both being of
identical type. the real question is whether the direct and
immediate result of the impugned numberification is to impose
an unfavourable and discriminatory tax burden on the
imported goods
here lottery tickets of other states when they are sold
within the state of tamil nadu as against indigenumbers goods
tamil nadu government lottery tickets when these are sold
within the state from the point of view of the purchaser and
this question has to be companysidered from the numbermal business
or companymercial point of view and indisputably if the question
is so companysidered the impugned numberification will have to be
regarded as directly and
immediately hampering free flow of trade companymerce and
inter- companyrse. discriminatory treatment in the matter of
levying the sales tax on imported lottery tickets which are
similar to the ones issued by the state government so as to
hamper free flow of trade companymerce and intercourse is writ
large on the face of the impugned numberification and in my
view the same is clearly violative of article 301 read with
art. 304 a of the companystitution. in the result i uphold the validity of the impugned
amendments made in the two enactments namely tamil nadu
general sales tax act 1959 and west bengal finance sales
tax act 1941 but i strike down the impugned numberification
goms number 219 dated march 31 1984 issued by the state
government of tamil nadu. the writ petitions are partly
allowed while the civil appeal is dismissed. in the
circumstances i direct the parties to bear their respective
costs. sabyasachi mukharji j. i have had the advantage of
reading in draft the judgment delivered by my learned
brother. i would like to add my opinion on one aspect of the
matter. both under the relevant provisions of the relevant
tamil nadu act and the west bengal act in order to attract
the levy of sales-tax there must be sale of goods i.e. transfer of property. in other words both these acts insist
on transfer of property in goods. article 366 12 of the
constitution gives an inclusive definition of goods
indicating thereby goods includes all material
commodities and articles. therefore there must be a
transfer of property in the goods for a price the companycept
has the same meaning which it has under the sale of goods
act 1930.
it was urged before us on behalf of the dealers that by
the issue of lottery tickets the right to participate in
the draw is created for the first time in the buyers. in
other words it was urged that by the sale of lottery
ticket the right to participate is created for the first
time if it is companysidered to be grant and as such a sale of
goods it was companytended that such right was number existing
before the sale of the lottery ticket. this companytention has
caused me anxiety from the jurisprudential point of view. i agree with respect that grant is an agreement of
some sort which creates rights in the grantee and an
agreement which transfers right may be termed as assignment. but the question is. before the grant was such a right
namely the right to
participate in the draw existing in the grantor? the point
made is that there is numbertransfer of property involved in
the issue of a lottery ticket and it is only after the issue
of the lottery ticket that the grantee sets a right to
participate. in other words it was sought to be urged that
in a lottery the promoter sponsoring it does number have any
right to participate number to claim a prize in a draw and
these companye into existence for the first time by the purchase
of lottery ticket when he purchases the ticket and therefore
it cannumber be said that any transfer of right is involved
but only creation of new right by the grantor in favour of
the grantee. i respectfully agree with my learned brother that the
passage relied on behalf of the companynsel for the dealers at
page 553 of vol. i 7th edition of kanga palkhivalas law
and practice of income tax is number relevant and the analogy
of capital issue by joint stock companypany is number appropriate. under the rules the promoter ter is number able to
participate in the draw or claim a prize in such a draw. therefore the right that is transferred to the purchaser of
lottery ticket is number the same right which was existing in
the grantor in this case the promoter. by the sale by the
promoter and purchase by the grantee of the ticket there is
numbertransfer of the same property namely the property which
existed in the grantor namely disability from participating
in the draw which is granted to the purchaser or the grantee
of the lottery ticket. the transfer of right from the
promoter-grantor to the buyer-guarantee is involved in the
sale of a lottery ticket but is it the transfer of the same
right which the promoter ter or grantor had or a larger or
greater right created by the factum of transfer in favour of
the grantee? this is a point of some companyplexity and there is
numbereasy solution. i have however persuaded myself to agree with the
order proposed by my learned brother because the promoter of
lottery in the cases involved before us is the state and the
grant is in derogation of the rights of the state. | 0 | test | 1985_259.txt | 1 |
civil appellate jurisdiction civil appeal number 705 of
1957.
appeal from the judgment and order dated october 5 1955 of
the bombay high companyrt in appeal number 1 of 1955.
n. rajagopal sastri and p.d. menumber for the appellants. a. palkhivala j.b. dadachanji o. c. mathur and
ravinder narain for respondents number. 1 and 2.
a. palkhivala d. n. mukherjee and b.n. ghosh for the
intervener. 1962. december 12. the following judgments were delivered. k. das j. j. l. kapur j. and a.k. sarkar j.
delivered separate judgments. the judgment of m.
hidayatullah and raghubar dayal jj. was delivered by
hidayatullah j.
k. das j. this appeal has been brought to this companyrt on
a certificate of fitness granted by the high companyrt of
bombay. the appellants are the union of india and the
income-tax officer market ward bombay. by this appeal the
appellants challenge the companyrectness of the judgment and
order of the high companyrt of bombay dated october 5 1955 by
which the high companyrt affirmed the judgment and order of a
learned single judge of the same companyrt dated december 7
1954 on a petition filed by the respondents under art. 226
of the companystitution. the relevant facts are these. the firm of purshottam
laxmidas was started on october 28 1935. this firm had two
partners dwarkadas vussonji and parmanand odhavji. dwarkadas died on april 1 1946 leaving a son vasantsen. anumberher firm by the name of vasantsen dwarkadas was
started on january 28 1941 and in that firm there were
three partners vasantsen narandas shivji and nanalal
odhavji. this firm was dissolved on october 24 1946. the
firm of vasantsen dwarkadas filed a return of its income for
the assessment year 1942-1943 and also claimed registration
as a firm. the income-tax authorities refused registration
and came to the companyclusion that the firm of vasantsen
dwarkadas belonged really to dwarkadas father of vasantsen
therefore they added the income of the firm to the income of
dwarkadas. in subsequent assessment years the firm of
vasantsen dwarkadas again applied for registration but
registration was again refused. for the assessment years
1942-1943 to 1948-1949 several appeals were filed before the
income-tax appellate tribunal by the firm vasantsen
dwarkadas both against the quantum of income assessed and
against the refusal of the income-tax officer to register
the firm of vasantsen dwarkadas. an appeal was also filed
by the firm of purshottam laxmidas against its assessment in
respect of excess profits tax and there was also an appeal
for the assessment year 1942-1943 by vasantsen as the heir
and legal representative of his father against the decision
of the income-tax authorities that the income of the firm
vasantsen dwarkadas should be included in the income of
dwarkadas. it appears that after the decision in
vasantsens case in the assessment year 1942-1943 the
income-tax officer gave a finding that the firm of vasantsen
dwarkadas was only a branch of the firm of purshottam
laxmidas and therefore the income-tax officer added the
income of vasantsen dwarkadas to the income of the firm
purshottam laxmidas. this question also came up before the
income-tax appellate tribunal in the appeals filed by
purshottam laxmidas in respect of the assessments made
against it. by a companysolidated order dated august 14 1951
the income-tax appellate tribunal disposed of all the
aforesaid appeals and it came to the companyclusion that the
business done
in the name of vasantsen dwarkadas was really the business
of the firm purshottam laxmidas. with regard to the appeal
filed by vasantsen as heir and legal representative of his
father for the assessment year 1942-1944 the tribunal
expressed the view that the income of vasantsen dwarkadas
should be deleted from the assessment of dwarkadas. it said
we are therefore of opinion that the addition
of rs. 623721/-to dwarkadass income or the
modification directed by the appellate assis-
tant companymissioner should be deleted from
dwarkadass income. if the income-tax officer
can include the same in the income of
purshottam laxmidas he is of companyrse at
liberty to do so. he can then apportion the
income of purshottam laxmidas amongst the
partners thereof as provided in s. 23 5 of
the act. the companymissioner of income-tax questioned the companyrectness of
the aforesaid finding of the tribunal but on a reference to
the high companyrt the latter upheld the order of the tribunal. the reference was decided on october 8 1953.
on april 30 1954 the income-tax officer companycerned who is
the appellant before us served on the firm purshottam
laxmidas a numberice under s. 34 of the indian income-tax act
1922. this numberice was in these terms
whereas i have reason to believe that your
income assessable to income-tax for the year
ending 31st march 1943 has been under-assessed
i therefore propose to re-assess to income
allowance that has been under assessed
i hereby require you to deliver to me within
35 days of the receipt of this numberice a return
in the attached form of your total income
and total world income assessable for the year
ending 31st of march 1943.
this numberice is being issued after obtaining
the necessary satisfaction of the companymissioner
of income-tax bombay city bombay. the numberice was followed by some companyrespondence between the
firm purshottam laxmidas and the income-tax officer. the
result of the companyrespondence was that the income-tax officer
informed the firm that its income was to be re-assessed in
order to give effect to the finding of the appellate
tribunal in its order dated august 14 1951 that the
business of vasantsen dwarkadas was really the business of
the firm purshottam laxmidas. on july 9 1954 vasantsen as the first petitioner and the
firm of purshottam laxmidas as second petitioner filed a
petition in the high companyrt under art. 226 of the
constitution and asked for the issue of a writ quashing the
numberice dated april 30 1954 and a writ of mandamus
restraining the union of india and the income-tax officer
concerned from taking any steps or proceedings in pursuance
of the said numberice. their main companytentions were 1 that
the income-tax officer had numberjurisdiction to issue the
numberice after the expiry of the limit of time fixed by sub-s.
1 of s. 34 2 that the second proviso to sub-s. 3 of
s. 34 on which the income-tax officer relied did number apply
to the case 3 that there was numberprovision in the act
under which the appellate tribunal companyld give a finding in
the appeals filed by the firm of vasantsen dwarkadas or in
the appeal filed by vasantsen himself that the income in
question represented the income of the firm purshottam
laxmidas and 4 lastly that that the second proviso to
sub-s. 3 of s. 34 was bad on the ground that it violated
art. 14 of the companystitution. desai j. who heard the petition in the first instance came
to the companyclusion that the numberice was
bad and without jurisdiction because to use his own words
the income-tax officer in issuing the numberice on april 30
1954 which was clearly more than eight years from the close
of the assessment year 1942-1943 was obviously in error in
thinking that the second proviso to sub-s. 3 of s. 34
applied to the case. the learned judge held that the
proviso did number apply to orders of assessment which had
become final before the date when it came into force. it
may be here stated that the second proviso to sub-s. 3 of
s. 34 was amended by act xxv of 1953 and by s. 1 2 of the
amending act of 1953 the amended proviso came into force on
april 1 1952. desai j. further held that the proviso in
question did number violate art. 14 of the companystitution in so
far as assessees who were parties to the proceedings before
the appellate tribunal were companycerned but the proviso was
bad in so far as it affected persons other than assessees. he held however that the petitioners before him were parties
to the proceedings before the appellate tribunal and
therefore fell within the category of assessees. in view
however of his finding that second proviso to sub-s. 3 of
s. 34 did number apply to the case his final companyclusion was
that the numberice was without jurisdiction. the matter was then taken in appeal and the appeal was heard
by chagla c. j. and tendolkar j. the appellate companyrt
affirmed the finding of desai j. that the numberice under s.
34 was issued out of time and was therefore invalid. it
further held that the second proviso to sub-s. 3 of s. 34
did number apply to the case. on the question as to whether
the second proviso violated arts. 14 of the companystitution it
came to the companyclusion that numbervalid distinction companyld be
drawn between persons with regard to whom a finding or
direction is given by the appellate tribunal and persons
with regard to whom numbersuch direction or finding is given. the appellate companyrt expressed the view that both fell in the
same
category and there was numberdifficulty in having a uniform
provision of law with regard to them. the appellate companyrt
further expressed the view that for the assessment year
1942-1943 the assessee before the tribunal was vasantsen
dwarkadas as representing his father in that appeal the
firm of purshottam laxmidas was number before the tribunal and
therefore the firm was numberbetter than a stranger who was in
some way associated with the assessee. the appellate companyrt
held in the result that the second proviso to sub-s. 3 of
s. 34 offended against art. 14.
i have stated earlier that the appeal has been brought to
this companyrt from the decision of the appellate companyrt on a
certificate of fitness granted by the high companyrt. in the
original statement of the case filed on behalf of the
appellants the principal question raised was that relating
to the second proviso to sub-s. 3 of s. 34 which i shall
presently read. the appellants were however allowed by us
to file a supplementary statement of the case in which two
other points have been urged. one of these points is that
the validity of the numberice dated april 30 1954 cannumber be
challenged by reason of the provisions of s. 31 of the
amending act 1953 xxv of 1953 . the second point is that
the validity of the numberice cannumber be challenged also because
of the provisions of s. 4 of the indian income-tax
amendment act 1959 1 of 1959 . therefore three substantial questions fall for decision in
this appeal. the first question is whether the second
proviso to sub-s. 3 of s. 34 is companystitutionally valid and
applies to the case. the second is can the validity of the
numberice dated april 30 1954 be challenged in view of the
provisions of s. 31 of the amending act of 1953. the third
question is the effect of the provisions of the indian
income-tax amendment act 1959 1 of 1959 . i shall number
deal with these questions one by one. first as to the second proviso to sub-s. 3 of s. 34. s. 34
of the indian income-tax act 1922 has undergone many
amendments. it is number necessary to refer to the section as
it stood prior to 1939. the section as it stood in 1939
empowered the income-tax officer to assess or reassess
income which had escaped assessment or had been under-
assessed or had been assessed at too low a rate or had been
the subject of excessive relief under the act. the section
made a distinction between two classes of cases one in
which the income-tax officer had reason to believe that the
assessee had companycealed the particulars of his income or had
deliberately furnished inaccurate particulars thereof and in
this class of cases the income-tax officer companyld take action
as laid down in the section at any time within eight years
in all other cases the income-tax officer companyld take action
within four years of the end of the relevant assessment
year. the section was almost companypletely recast by the
income-tax and business profits tax amendment act 1948
act xlviii of 1948 . for the purpose of this case all that
i need state is that the two time limits of eight years and
four years were companytinued in respect of two classes of cases
mentioned in clauses a and b of sub-s. 1 of s. 34
clause a related to cases of omission or failure on the
part of an assessee to make a return of his income or to
disclose fully and truly all material facts necessary for
his assessment and cl. b related to cases where the
income-tax officer had in companysequence of information in his
possession reason to believe that income profits or gains
chargeable to income-tax had escaped assessment etc. the
time limit of eight years applied to cases under cl. a and
the time limit of four years applied to cases under cl. b . by s. 18 of the finance act 1956 more changes were intro-
duced with effect from april 1 1956. the time limit of
eight years was omitted from sub-s. 1 as regards cases
falling under cl. a but a proviso to sub-s. 1 of s. 34
which was substituted for the original proviso
said inter alia that the income-tax officer shall number issue
a numberice under cl. a of sub-s. 1 for any year if eight
years have elapsed after the expiry of that year unless the
income profits or gain chargeable to income-tax which have
escaped assessment or have been under-assessed or assessed
at too low a rate or have been made the subject of excessive
relief under the act etc. amount to or are likely to amount
to rs. 100000/- or more in the aggregate for that year
etc. certain other safeguards were also introduced in the
sub-section with which we are number companycerned. put shortly
the time limit of eight years companytinued in respect of cl. a cases if the amount was less than rs. 100000/-. number i companye to sub-s. 3 and the second proviso thereto. prior to 1956 sub-s. 3 provided that every assessment or
re-assessment should be companypleted within eight years from
the end of the relevant assessment year in those cases where
the assessee had failed to make a return or failed to
disclose fully and truly all material facts necessary for
his assessment. in 1956 the time limit was removed and the
assessment or re-assessment in such cases might be companypleted
at any time. in all other cases the period of limitation
was still four years as it was before 1956 for companypletion
of assessment under s. 23 or of assessment or re-assessment
under s. 23 read with s.34. the second proviso after its
amendment in 1953 companystituted an exception to sub-s. 1 as
well as sub-s. 3 . the periods of limitation laid down in
sub-s. 1 for initiating proceedings and in sub-s. 3 for
making an order of assessment or re-assessment were subject
to the exception mentioned in the second proviso. i may number
read that proviso-
provided further that numberhing companytained in
this section limiting the time within which
any action may be taken or any order assess-
ment or re-assessment may be made shall
apply to a re-assessment made under section 27
or to an assessment or re-assessment made on
the assessee or any person in companysequence of
or to give effect to any finding or direction
contained in an order under section 31
section 33 section 33a section 33-b section
66 or section 66a. i have stated earlier that the second proviso as amended was
inserted by the income-tax amendment act 1953 xxv of
1953 with effect from april 1 1952.
number i proceed to discuss the first question as to whether
this proviso applies in the present case. the question has
two facets 1 whether the proviso is companystitutionally
valid and 2 if it is companystitutionally valid does it apply
to a case where the time limit fixed by sub-s. 1 of s. 34
had expired some time before april 1 1952 the date on
which the proviso came into effect ? with regard to the
first facet chagla c.j. has pointed out rightly in my
opinion that the persons with regard to whom a finding or
direction is given and persons with regard to whom no
finding or direction is given belong really to the same
category namely the category of persons who are liable to
pay tax and have failed to pay it for one reason or anumberher. admittedly persons who are liable to pay tax and have number
paid it companyld number be proceeded against after the period of
limitation unless a finding or direction with regard to
them was given by some tribunal under the various sections
mentioned in the proviso therefore out of the large
category of people who were liable to pay tax but failed to
pay it a certain number is selected for action by the
proviso and with regard to that small number the right of
limitation given to them is taken away. the real question
is is there any rational basis for distinguishing between
persons who are liable to pay tax and have failed to pay it
and with
regard to whom a finding or direction is given and persons
who are liable to pay tax and have failed to pay it and with
regard to whom numberfinding or direction is given. i am in
agreement with the view expressed by the learned chief
justice that numberrational basis has been made out for the
distinction between the two classes of people referred to
above who really fall in the same category and with regard
to whom there was numberdifficulty in having a uniform
provision of law. i am further in agreement with the view
of the learned chief justice that the principle laid down by
this companyrt in suraj mall mohta company v. a.v. visvanatha
sastri and anumberher 1 applies. in that case sub-s. 4 of
s. 5 of the taxation on income investigation companymission
act was challenged and this companyrt pointed out that there
was numberhing uncommon either in properties or in
characteristics between persons who were discovered as
evaders of income-tax during an investigation companyducted
under s. 5 1 and those who were discovered by the income-
tax officer to have evaded payment of income-tax. both these
kinds of persons really belonged to the same category and
therefore required equal treatment. this companyrt pointed out
that s. 34 of the indian income-tax act and sub-s. 4 of s.
5 of the impugned act dealt with persons who had similar
characteristics and properties and therefore a different
treatment of some out of the same class offended the equal
protection clause embodied in art. 14 of the companystitution. it seems to me that the position is the same here. whether
persons who evade tax are discovered by means of a finding
given by a tribunal or they are discovered by any other
method they really belong to the same category and
therefore require equal treatment. the second proviso to
sub-s. 3 of s. 34 which came into effect from april 1
1952 patently introduced an unequal treatment in respect of
some out of the same class of persons. those whose
liability to pay tax was discovered by one method companyld be
proceeded against at any time and
1 1955 1 s.c.r. 448.
numberlimitation would apply in their case and in the case of
others the limitation laid down by sub-s. 1 of s. 34 would
apply. this in my opinion is unequal treatment which is number
based on any rational ground. desai j. put the matter on
a somewhat narrower ground. he held that so far as
assessees were companycerned there might be a rational ground
for distinction because the appeal proceedings etc. might
take a long time and the assessee being a party to the
appeal companyld number companyplain of such delay therefore
assessees did number occupy the same position as strangers. but the learned judge field that there was numberrational
distinction so far as strangers were companycerned and there was
numberreason why they should be deprived of the benefit of the
time limit prescribed by sub.s. 1 . he therefore held that
the proviso so far as it affected persons other than
assessees number parties to the proceedings enumerated in it
must be held to be ultra vires the legislature. even on
this narrow ground it seems to me that the respondents are
entitled to succeed. the finding which the appellate
tribunal gave in its companysolidated order dated august 14
1951 was a finding given in the appeal filed by vasantsen
as heir and legal representative of his father for the
assessment year 1942-43. in that appeal the firm purshottam
laxmidas was number even a party though purshottam laxmidas
was a party to certain other appeals before the appellate
tribunal. i have some difficulty in appreciating how the
firm purshottam laxmidas can be treated as an assessee
within the meaning of the second proviso to sub-s. 3 of s.
34 for the assessment year 1942-1943. if the firm cannumber be
so treated then even on the narrow ground stated by desai
j. the proviso would be of numberhelp to the present
appellants. i number take up the second facet of the same question. on
this aspect of the case both the learned single judge
desaij. and the appellate companyrt chagla c. j. and
tendolkar j. were agreed. the
relevant assessment year was 1942-1943 and it ended on march
311943. the period of four years therefrom would end on
march 311947 and the period of eight years would end on
march 311951. number the second proviso to sub-s. 3 came
into effect as i have stated earlier on april 1 1952. in
other words the time limit fixed by sub-s. i had expired
some time before the amended second proviso came into
effect. desai j. has rightly pointed out that it is a
firmly established principle of income-tax law that once a
final assessment is arrived at and the assessment is
complete it cannumber be re-opened except in the circumstances
detailed in ss.34 and 35 of the act and within the time
limited by those sections. is there anything in the proviso
in question which would give it a retrospective effect
beyond april 1 1952? in my opinion there is numbere. the
second proviso came into force on april 1 1952 and before
that date the period of eight years from march 31 1943 had
already expired. the legislation which provided that from
april 1 1952 there would be numberlimitation in respect of
certain cases companyld number revive a remedy which was already
lost to the income-tax officer. it seems to me that the
proposition of law is settled beyond any doubt that although
limitation is a procedural law and although it is open to
the legislature to extend the period of limitation an
important right accrues to a party when the remedy against
him is barred by the existing law of limitation and a
vested right cannumber be affected except by express terms used
by the statute or the clearest implication following
therefrom. some reliance was placed on the decision of the
calcutta high companyrt in income-tax officer v. calcutta
discount company limited 1 which later came to this companyrt on a
different point. i am of the opinion that the decision is
of numberhelp to the present appellants. it was said in that
decision that the plain effect of the substitution of new s.
34 with effect from march 30 1948 was that from that date
the income-tax act was to be read as including the
1 1953 23 i.t.r. 471.
new section as a part thereof the further effect of the
express language of the section was that so far as cases
coming within cl. a of sub-s. 1 were companycerned all
assessment years ending within eight years from march 30
1948 and from subsequent dates were within its purview. the learned chief justice of the calcutta high companyrt took
particular care in that decision to point out that what was
number within the purview of the section was an assessment
which ended-before eight years from march 30 1948. that
decision therefore does number in any way assist the present
appellants. on behalf of the appellants some distinction was sought to
be drawn between a right and the remedy thereof and it was
contended that the liability of an assessee to pay the tax
owing to the state was always there from the companymencement of
the assessment year and s. 34 of the act dealt merely with
the machinery of assessment. it was argued that a case
under s. 34 was number analogous to a time barred claim to
recover money from one individual by anumberher. in my opinion
such a distinction is entirely out of place so far as s. 34
is companycerned. the learned chief justice has rightly pointed
out that under s. 34 the income-tax officer has the right to
issue a numberice within the period of limitation fixed by sub-
s. 1 in anumberher sense it may be said that the remedy of
the income-tax officer to bring to tax escaped income is
available to him under s. 34 provided he avails himself of
the remedy within the period of limitation. numberdistinction
can be drawn so far as s. 34 is companycerned between the
right of the income-tax officer and the remedy available to
him. if the remedy is lost the right is also lost and if
the right is lost much more so is the remedy. therefore i am clearly of the view that on april 30 1954
the income-tax officer had numberjurisdiction to issue the
numberice which he did on the
firm purshottam laxmidas under the second proviso to sub-s.
3 of s. 34 because the time limit fixed by sub-s. 1 of
s. 34 had expired long before the said proviso came into
effect and the proviso does number in express terms or by
necessary implication revive a remedy which had been lost
before april 1 1952.
this disposes of the first question argued before us. i
proceed number to the second question namely the effect of s.
31 of the indian income-tax amendment act 1953 xxv of
1953 . i may first set out the section
for the removal of doubts it is hereby
declared that the provisions of sub-sections
1 2 and 3 of section 34 of the
principal act shall apply and shall be deemed
always to have applied to any assessment or
reassessment for any year ending before the
first day of april 1948 in any case where
proceedings in respect of such assessment or
re-assessment were companymenced under the said
sub-sections after the 8th day of september
1948 and any numberice issued in accordance with
sub-section 1 or any assessment companypleted in
pursuance of such numberice within the time
specified in sub-section 3 whether before
or after the companymencement of the indian
income-tax amendment act 1953 shall
numberwithstanding any judgment or order of any
court appellate tribunal or income-tax
authority to the companytrary be deemed to have
been validly issued or companypleted as the case
may be and numbersuch numberice assessment or re-
assessment shall be called in question on the
ground merely that the provisions of section
34 did number apply or purport to apply in
respect of an assessment or re-assessment for
any year prior to the 1st day of april 1948.
it will be numbericed that the section is in two parts the
first part is declaratory of the law and says that sub-ss. 1 2 and 3 of s. 34 shall apply and shall be deemed
always to have applied to any assessment or re-assessment
for any year ending before april 1 1948 in any case where
proceedings in respect of such assessment etc. were
commenced under the said sub-sections after september 8
1948 and any numberice issued in accordance with sub.s. 1 or
any assessment companypleted in pursuance of such numberice within
the time specified in sub-s. 3 whether before or after
the companymencement of the amending act of 1953 shall be
deemed to have been validly issued etc. the second part
says inter alia that numbersuch numberice shall be called in
question on the ground merely that the provisions of s. 34
did number apply or purport to apply in respect of an
assessment prior to april 1 1948. it should be numbericed
here that the amending act of 1948 act xlviii of 1948
completely recast s. 34 and sub-s. 2 of s. 1 of that act
which came into force on september 8 1948 provided that ss. 3 to 12 of the amending act should be deemed to have companye
into force on march 30 1948. the amendment of s. 34 was
made by s. 8 of the amending act therefore s. 34 as
amended by the amending act of 1948 operated retrospectively
from march 30 1948. in the calcutta discount company limited v.
income-tax officer 1 bose j. held that s. 34 although
described as a machinery section did number relate to procedure
pure and simple but affected the protection given to an
assessee and therefore the amended section had no
application to the assessments for 1942-1943 1943-1944 and
1944-1945. this view of bose.j. was number accepted by the
appellate companyrt in income-tax officer v. calcutta discount
co. limited 2 where the learned chief justice of the
calcutta high companyrt rightly pointed out that s. 34 as it
spoke from march 30 1948 took in all assessment years
ending within eight years from march 30 1948 and subsquent
dates but
1 1952 21 i.t.r. 579. 2 1953 23 i.t.r. 471.
did number take in an assessment year which ended before eight
years from march 30 1948. it is worthy of numbere that the
bill which became act xxv of 1953 was introduced after the
judgment of bose j. and before the judgment of the learned
chief justice. there were really two separate and distinct
questions one was whether s. 34 as amended in 1948 applied
to assessment years prior to 1948-1919 and the second
question was whether on the footing that amended s. 34 did
apply to assessment years prior to 1948-1949 any action
could be taken under the amended section in respect of those
assessments which had become time-barred before the amended
section came into effect. bose j. answered the first
question in the negative and necessarily the second question
also in the negative. the learned chief justice answered
the first question in the affirmative but took pains to
point out that an assessment made before eight years from
march 30 1948 was number within the purview of s. 34.
i am of the opinion that in its true scope and effect. s.
31 of the amending act of 1953 puts beyond any doubt that
the view expressed by the learned chief justice in income-
tax officer v. calcutta discount company limited 1 is the
correct view and amended s. 34 applies to assessment years
prior to 1948-1949 but it does number say that an assessment
which had become final and in respect of which reassessment
proceedings had become time-barred before the amended
section came into force companyld be re-opened. this appears to
me to be clear from the first part of s. 31. that part says
that sub-ss. 1 2 and 3 of s. 34 shall apply and be
deemed always to have applied to any assessment etc. for any
year ending before april 1 1948 in any case where
proceedings in respect of such assessment etc. were
commenced under the said sub-sections after september 8
1948 and any numberice issued in accordance with sub-s. 1
shall be deemed to be valid
1 1953 23 i.t.r. 471.
etc. the section does number say that the periods of
limitation laid down in sub-ss. 1 and 3 are being done
away with on the companytrary the first part of the section
says that the proceedings must have been companymenced after
september 8 1948 the date on which the amending act of
1948 came into force under the said sub-sections and the
numberice must have been issued in accordance with sub-s. 1 . the income-tax officer can companymence proceedings under the
said sub-sections or issue a numberice in accordance with sub-
s. 1 only when he obeys the injunction as to time laid
down therein then only he can be said to have companymenced
proceedings or issued a numberice in accordance with the sub-
sections. if he has done that and companymenced proceedings
after september 8 1948 then the second part of the section
says that the numberice or the assessment shall number be called
in question on the ground merely that the provisions of s.
34 did number apply or purport to apply in respect of any year
prior to april 1 1948. these lines underlined in the
second part of the section also bring out its true scope and
effect. if there has been companypliance with provisions of the
sub-sections including the time limits fixed therein then
the numberice issued or assessment made is number liable to
challenge on the mere ground that amended s. 34 does number
apply in respect of a year prior to 1948-1949. in other
words s. 31 of the amending act of 1953 nullifies the
effect of the decision of bose j. in calcutta discount company
ltd. v. income- tax officer 1 and gives effect to the
decision of the learned chief justice of the calcutta high
court. the section does number abrogate the periods of
limitation laid down in the relevant sub-sections of s. 34
if it did it would be in companyflict with s. 34 and the ground
taken would be such companyflict and number merely the ground that
the provisions of s. 34 did number apply to any year prior to
1948-1949.
my companyclusion therefore is that s. 31 of the amending act
of 1953 does number validate the numberice
1 1952 21 i.t.r. 579.
issued in the present case--a numberice issued on april 30
1954 long before which date the assessment had become final
and in respect of which reassessment proceedings had become
time-barred. the short answer to the argument based on s.
31 is that the numberice in the present case was number issued in
accordance with sub-s. 1 of s. 34 and the first part of
s. 31 requires that the numberice must be so issued before the
second part thereof can give any protection to it. i number proceed to companysider the amending act of 1959. the
indian income-tax amendment act 1959 1 of 1959 received
the assent of the president on march 12 1959. the relevant
provisions with which we arc companycerned are companytained in ss. 2 and 4 of the amending act. by s. 2 of the amending act a
new sub-section namely sub-s. 4 was inserted in
s. 34. this sub-section said
s. 34 4 . a numberice under clause a of sub-
section 1 may be issued at any time numberwith-
standing that at the time of the issue of the
numberice the period of eight years specified in
that sub-section before its amendment by
clause a of section 18 of the finance act
1956 18 of 1956 had expired in respect of
the year to which the numberice relates. s. 4 of the amending act companytained provisions regarding the
saving of numberices assessments etc. in certain cases only
and read as follows
numbernumberice issued under clause a of sub-sec-
tion 1 of section 34 of the principal act at
any time before the companymencement of this act
and numberassessment re-assessment or settlement
made or other proceedings taken in companysequence
of such numberice shall be called in question in
any companyrt tribunal or other authority merely
on the
ground that at the time the numberice was issued
or at the time the assessment or re-assessment
was made the time within which such numberice
should have been issued or the assessment or
re-assessment should have been made under that
section as in force before its amendment by
clause a of section 18 of the finance act
1956 18 of 1956 had expired. the main point argued before us on behalf of the appellants
is that s. 4 of the amending act of 1959 saves the numberice
which the income-tax officer issued in the present case on
april 30 1954. i may here state one initial difficulty
which faces the appellants. s. 4 of the amending act of
1959 refers to a numberice issued under cl. a of sub-s. 1
of s. 34 therefore in order to get the benefit of the
section the appellants must establish that the numberice dated
april 80 1954 was a numberice issued under cl. a of sub-s.
1 of s. 34. in an earlier part of this judgment i had set
out in full the numberice which the income-tax officer had
issued on april 30 1954 that numberice said inter alia that
the income-tax officer had reason to believe that the income
of the firm purshottam laxmidas assessable to income-tax for
the year ending march 31 1943 had been under-assessed and
therefore the income-tax officer proposed to re-assess the
income. it is at least doubtful that the numberice if one
were to go by the words used in the first part thereof
would make it a numberice under cl. a of sub-s. 1 of s. 34
unless the satisfaction of the companymissioner referred to in
the last part makes it one. i have said earlier that cl. a of sub-s. 1 of s. 34 related to those cases in which
there was an omission or failure on the part of the assessee
to make a return of his income under s. 22 for any year or
to disclose fully and truly all material facts necessary for
his assessment for that year. when the calcutta discount
companys case 1 came to us we had explained what was
meant by number-disclosure of
1 1961 2 s.c.r 241.
material facts and pointed out the distinction between
primary facts and inferences therefrom. see calcutta
discount companypany limited v. income-tax officer companypanies
district 1 . there is numberhing in the record to show that
in the present case there was an omission or failure on the
part of the assessee to make a return of his income under s.
22 for the year 1942-1943 number is there any avertment on
behalf of the appellants that the assessee failed to
disclose fully and truly all material facts necessary for
his assessment for that year in the sense explained above. i have said earlier that there was some companyrespondence
between the income-tax officer companycerned and the firm of
purshottam laxmidas with regard to the numberice issued on
april 30 1954. the firm wanted to knumber the reason why the
numberice had been issued. in reply to the letter from the
firm the income-tax officer said see ex. c
the income of the companycern of vasantsen
dwarkadas was originally included in the hands
of dwarkadas vassonji dwarkadas vassonji was
also a partner in the registered firm of
messrs purshottam laxmidas. the appellate
tribunal by its companysolidated order dated 14-8-
1951 i. t. number. 7836 to 7851 of 1951/52 and
p.t.a. number. 13 to 17 of 1950/51 has companye to
the finding that the companycern of vasantsen
dwarkadas is the branch of messrs purshottam
laxmidas. the income of the firm has
therefore to be reassessed. the aforesaid reply does number make out any case that the
numberice was issued under cl. a of sub-s. 1 of s. 34. when
we allowed the appellants to file a supplementary statement
of the case urging new points we also granted time to the
respondents to file a supplementary statement of case if
any on their behalf. the respondents filed a supplementary
statement of their case and said therein that the numberice
1 1961 2 s.c.r. 241.
dated april 30 1954 was number and companyld number be issued under
cl. a of sub-s. 1 of s. 31 but was and companyld only be
issued under cl. b or sub-s. 1 of s. 34. therefore it
seems to me that the appellants have number established without
any doubt that the numberice in this case was issued under cl. a of sub-s. 1 of s. 34 so as to give them the
protection of s. 4 of the amending act of 1959. the point
taken is indeed a point of law namely whether the
appellants are entitled to the benefit of s. 4 of the
amending act of 1959. but the applicability of s. 4 depends
on certain facts and those facts must first be found. it is
true that in the judgment of the high companyrt there is a
reference to eight years period of limitation but numbere of
the parties raised any question as to whether the numberice
dated april 30 1954 was issued under cl. a or cl. b of
sub-s. 1 of s. 34. the parties joined issue only on the
question whether the second proviso to sub-s. 3 of s. 34
applied or number. the necessary facts were number investigated
and numberfinding was given as to whether the numberice came
within cl. a or cl. b of sub-s. 1 of s. 34.
i am of the opinion that this is enumbergh to dispose of the
claim put forward by the appellants that the numberice dated
april 30 1954 is saved by s. 4 of the amending act of
1959. numberfoundation on facts having been laid for the
claim it must be rejected. the matter was however argued before us at great length on
the supposition that the numberice dated april 30 1954 was a
numberice issued under cl. a of sub-s. 1 of s. 34. 1 am of
the opinion that even on that supposition the appellants are
number entitled to succeed. it is manifest that sub-s. 4 of
s. 34 does number help the appellants. that sub-section is
clearly prospective and is intended to authorise action
after the companying into force of the 1959 amendment there-
fore sub-s. 4 of s. 34 cannumber validate a numberice issued in
1954. number the question is what about
s. 4 of the amending act of 1959? it has been very
strenuously argued before us that section by reason of the
unambiguous language used therein saves the numberice. it is
pointed out that the section in its first part refers inter
alia to a numberice issued under cl. a of sub-s. 1 of s. 34
at any time before the companymencement of the 1959 act and in
its second part says that numbersuch numberice shall be called in
question in any companyrt etc. merely on the ground that at the
time the numberice was issued the time within which such
numberice should have been issued under s. 34 as in force
before its amendment by s. 18 of the finance act 1956 had
expired. the argument is that the language of the section
is such that it clearly saves the numberice issued on april 30
1954 because 1 it fulfils the requirement of the first
part of the section in as much as the numberice was issued
before the companymencement of the 1959 act and 2 the second
part of the section says that the numberice cannumber be called in
question on the ground that it was issued after the expiry
of the time mentioned in sub-s. 1 of s. 34 as it stood
before the amendment made in 1956.
at first sight the argument appears almost irresistible. but on a careful companysideration i have companye to the companyclusion
that it is number companyrect. it is necessary here to refer to
the circumstances under which the amending act of 1959 was
enacted. prior to the amendment of sub-s. 1 of s. 34 by
the finance act 1956 in cases falling under cl. a a
numberice had to be served within eight years from the end of
the relevant assessment year. this time limit was removed by
s. 18 of the finance act 1956. in debi dutta v. t. bellan
1 the calcutta high companyrt held that action under the
amended section companyld number be taken if prior to the amendment
coming into force that is april 1 1956 the period for
serving the numberice bad already expired. this was the
difficulty which the legislature had to meet and it wanted
to
a.i.r. 1959 cal. 567.
supersede the view expressed by the calcutta high companyrt.it
is indeed true that the statement of objects and reasons for
introducing a particular piece of legislation cannumber be
used for interpreting the legislation if the words used
therein are clear enumbergh. but the statement of objects and
reasons can be referred to for the purpose of ascertaining
the circumstances which led to the legislation in order to
find out what was the mischief which the legislation aimed
at. the decision of the calcutta high companyrt to which i have
earlier made a reference was adverted to in the statement of
objects and reasons. it seems to me that sub-s. 4 of s.
34 was enacted to supersede the view expressed in the
calcutta decision aforesaid so that after the companying into
force of sub.s. 4 in 1959 a numberice under cl. a of sub-s.
1 companyld be issued at any time numberwithstanding that at the
time of the issue of the numberice the period of eight years
specified in the sub-section before its amendment by s. 18
of the finance act 1956 had expired. it further appears to
me that both sub-s. 4 of s. 34 and s. 4 of the amending
act of 1959 are meant to deal with only those cases where
action is taken under s. 34 as amended in 1956 but where
the eight years time limit had already expired and the
original assessment if any had become final prior to the
amendment of s. 34 in 1956. whereas sub-s. 4 of s. 34 is
intended to authorise action in such cases after the companying
into force of the amending act of 1959 s. 4 is intended to
save and validate action taken in such cases between 1956
when s. 34 was amended by the finance act 1956 and 1959
when the amending act was passed. in my view s. 4 of the
amending act of 1959 has numberbearing on a numberice issued under
s. 34 prior to 1956. 1 do number accept as companyrect the decision
of the bombay high companyrt in onkarmal meghraj v. companymissioner
of income-tax bombay-1 1 . that decision implies that s.
4 of the amending act of 1959 in effect abrogates and super-
sedes the statutory time limits for action under
1 1960 38 i.t.r. 369.
s. 34 1 a in all the past years ever since s. 34 1 a
was put on the statute book. it seems to me that on the
contrary the provisions of s. 34 4 and s. 4 of the
amending act clearly indicate that the only effect of s. 34
4 is to authorise action and the only effect of s. 4 of
the amending act is to validate action under s. 34 as
amended in 1956 in cases where action under s. 34 has
already become time barred prior to its amendment in 1956.
they have numberbearing on numberices issued or on assessments
made under s. 34 prior to 1956. if the intention was to
abrogate altogether all provisions regarding limitation in
s. 34 right from 1922 then s. 4 would have been differently
worded and would number have said that it saved numberices etc. in
certain cases only on the view canvassed for by the
department s. 4 would save numberices issued in all cases
before 1959 irrespective of any question of limitation. moreover if the view taken of s. 4 of the amending act of
1959 is that it abrogates and supersedes all past provisions
regarding limitation then the section would be in companyflict
with the provisions of s. 34. on the principle of
harmonious companystruction the attempt should be to avoid such
conflict rather than create it. the last part of s. 4 shows
in my opinion its true intent namely that what is intended
is to validate post-1956 action that is action taken under
s. 34 as amended by s. 18 of the finance act 1956. i
cannumber read s. 4 as abrogating all periods of limitation and
as validating numberices issued prior to 1956 even though such
a numberice was number property issued under cl. a of sub-s. 1
of s. 34. if the intention was that any and every numberice
issued under cl. a of sub-s. 1 of s. 34 at any time
before the companymencement of the 1959 act companyld be validated
then the section should number have said-
numberice issued under clause a of sub-s. 1
of s. 34.
the very fact that the section talks of a
numberice issued under cl. a of sub-s. 1 of s. 34 means
that it is a numberice issued in companypliance with the provisions
of cl. a of sub-s. 1 of s. 34 as amended in 1956 when
the time limit was removed. when a numberice is issued under
cl. a of sub-s. 1 of s. 34 as amended in 1956 it cannumber
be called in question merely on the ground such as was
upheld by the calcutta high companyrt is debi dutta v. t. bellan
1 that the time limit had already expired before the issue
of the numberice this seems to me to be the true meaning of s.
4 when the first of the section which talks of a numberice
issued under cl. a of sub-s. 1 of s. 34 is companytrasted
with the second part which says that such a numberice shall number
be called in question on the ground that the time limit had
already expired before the date on which the numberice was
issued. if the intention was to abrogate the time limit for
all numberices issued before 1959 there was numbersense in saying
that the numberice should issue under cl. a of sub-s. 1 of
s. 34 and at the same time it would number be called in
question on the ground that the time limit had expired
before the date of its issue the section then would have
simply said that numberwithstanding any time limit in cl. a
of sub-s. 1 of s. 34 all numberices issued before 1959 would
be valid. i do number think s. 4 of the amending act 1959 was
intended to abrogate all periods of limitation for action
under cl. a of sub-s. 1 of s. 34 for all past years. the time limit of eight years was removed in 1956 in respect
of those cases where the amount was number likely to be less
than rs. 100000/-. the present case is one where the
amount is less than rs. 100000/- and the limitation of
eight years applied in 1954. all that s. 4 states is that
if a numberice has been issued under cl. a of sub-s. 1 of
s. 34 at any time before the companymencement of the 1959 act
the numberice shall number be called in question merely on the
ground that at the time it was issued
a.i.r. 1955 cal. 567.
the time limit as in force before the amendment made in 1956
had expired in other words s. 4 validates action taken
between 1956 when s. 34 was amended and 1959 when the
amending act was passed. it does number affect numberices issued
prior to 1956 number does it abrogate all periods of
limitation. for all these reasons i have companye to the same companyclusion as
my learned brother kapur j. that the appeal must be
dismissed with companyts. kapur j. -this is an appeal against the judgment and order
of the high companyrt of bombay companyfirming the order passed by
t. desai. j. in writ petition number 266 of 1954 under
art. 226 of the companystitution whereby desaij. issued a writ
of prohibition restraining the appellants from taking any
further steps in pursuance of the numberice dated april 30
1954 issued under s. 34 of the income-tax act hereinafter
called the act or from assessing or reassessing the firm
knumbern as purshottam laxmidas in respect of the assessment
year 1942-43. the appellant before us is the income-tax
officer and the respondents are the firm and partners of the
firm above numbered. dwarkadas vussanji and parmanand odhavji carried on business
in partnership in the name and style of purshottam laxmidas
from october 28 1935 till april 1 1946 when dwarkadas
vussenji died. thereafter vasantsen dwarkadas the son of
dwarkadas vussonji and parmanand odhavji respondent number 3
continued the business under the same name i.e. purshottam
laxmidas. that firm was registered under the indian income-
tax act. on january 28 1941 anumberher firm under the name of
vasantsen dwarkadas was started its partners were vasantsen
dwarkadas respondent number 1 narandas shivji and nanalal
odhavji.this
firm was dissolved on october 24 1946. for the assessment
year 1942-43 firm vasantsen dwarkadas filed a voluntary
return of income and also applied for registration under s.
26 of the act. the registration was refused on the ground
that the firm was number a genuine firm but really belonged to
dwarkadas vussonji the principal partner in the firm
purshottam laxmidas.the income-tax officer added the income
of the firm vasantsen dwarkadas for the assessment year
1942-43 to the individual income of dwarkadas vussonji in
the subsequent assessment year i.e. 1943-44. in the
subsequent years also the firm vasantsen dwarkadas applied
for registration but registration was refused on the ground
that it was number a genuine firm. appeals were taken in usual
course to the income-tax appellate tribunal by firm
vasantsen dwarkadas both against the quantum of its assessed
income and against the refusal of registration. this was
for the years of assessment 1942-43 to 1948-49. these
appeals filed by firm vasantsen dwarkadas and the appeal
filed by vasantsen dwarkadas as representing the estate of
his father dwarkadas vussonji and the appeals filed by the
firm purshottam laxmidas in regard to the excess profits tax
were all heard together and decided by the income-tax
appellate tribunal by its order made on august 14 1951. in
that order the income-tax appellate tribunal gave a finding
that dwarkadas vussonji was number the sole proprietor of the
business of firm vasantsen dwarkadas but that the business
of that firm belonged to the firm purshottam laxmidas. at
the instance of the companymissioner of income the appellate
tribunal stated a case to the high companyrt and the question
referred was answered in favour of the assessee i.e. on april 30 1954 the income-tax officer issued a numberice to
the firm purshottam laxmidas under s 34 of the act the
relevant portion of which
was in the following terms-
whereas i have reason to believe that your
income assessable to income tax for the year
ending 31st march 1943 has been under-assessed
i therefore propose to reassess to the income
allowance that has been under-assessed. it is the validity of this numberice which has to be deter-
mined. as the decision of the case depends upon the interpretation
of the various legislative changes made in s. 34 it may be
convenient at this stage to mention those amendments
relating to the periods during which action companyld be taken
by the income-tax officer in regard to escaped incomes. under s. 34 1 of the act as it stood in 1939 after the
income-tax amendment act 1939 act 7 of 1939 hereinafter
referred to as the amending act of 1939 the period for
taking action was eight years for cases of omission or
failure on the part of the assessee to furnish accurate
particulars and four years in any other case of escapement
of income-tax. this section was amended by s. 8 of the
income-tax and business profits tax amendment act act 48
of 1948 hereinafter referred to as the amending act of
1948. the period in the two cases still remained the same
but certain safeguards in favour of the assessees were
provided. a further amendment was made in s. 34 this time
in the second proviso to sub-s. 3 of s. 34 by income-tax
amendment act 1953 act 25 of 1953 hereinafter referred
to as the amending act 1953. that act also made provision
for saving of numberices and assessments in certain cases. by
s. 18 of the finance act of 1956 s. 34 1 was again
amended. by income tax amendment act 1959 act 9 of
1959 hereinafter referred to as the amending act of 1959
s. 34 was further amended this time by addition of sub-s.
4 to that section and provision
was also made for the validation of certain numberices and
assessment in certain cases. these various changes will be
discussed in detail at appropriate places. the amending act of 1953 received the assent of the
president on may 24 1953 but came into force
retrospectively as from april 1 1952. by that act the
second proviso to s. 34 3 of the act was amended. a numberice under s. 34 1 a was issued to respondent number 2
which has been set out above. thereupon vasantsen dwarkadas
filed a petition under art. 226 of the companystitution in the
bombay high companyrt being misc. application number 266-x of 1954
challenging its legality. s. t. desai j. who heard the
petition in the first instance held that the amending act of
1953 which became operative as from april 1 1952 had no
retrospective effect so as to enable the income-tax officer
to reopen the assessment of the firm purshottam laxmidas for
the assessment year 1942-43 which had become time-barred
before april 1 1952 and therefore the income-tax officers
action was barred and without jurisdiction that the second
proviso to s. 34 3 of the act or so far as it affects
persons other than assessees number parties to the proceedings
was ultra vires of the companystitution being in violation of
art. 14 of the companystitution that on the facts and
circumstances of the case the present respondents companyld number
be regarded as strangers to the proceedings in which the
findings were given by the tribunal. the appeal companyrt
confirmed the decision of desai j. and further held that
the firm purshottam laxmidas against whom the impugned
action was taken was a stranger to the appeal filed by
vasantsen dwarkadas. against this judgment and order the
income-tax officer has brought the present appeal. the appellant in this companyrt filed a supplemental statement
of case in which he sought to challenge
the companyrectness of the judgment of the high companyrt on two
additional grounds 1 that s. 31 of the amending act
of 1953 had been overlooked and 2 that s.2 of the amending
act of 1959 had the effect of removing the bar of eight
years period in regard to numberices under s. 34 1 a and s.
4 of that act amending act of 1959 validated all numberices
including the impugned numberice. the respondents filed their
supplemental statement of case on october 5 1960.
before taking up the companystruction of ss. 2 and 4 of the
amending act of 1959 it will be helpful to examine the
circumstances in which the amending act was enacted. after
the amending act of 1948 for the purposes of taking action
in respect of escaped incomes a period of eight years was
applicable to all escaped incomes under s. 34 1 a of the
act the two companyditions requisite for taking action under s.
34 1 a being 1 numberice within eight years of assessment
year and 2 income-tax companymissioners previous sanction. by s. 18 of the finance act of 1956 the words eight years
were removed from sub-s. 1 of s. 34 and were inserted in
the proviso which was substituted in place of the old
proviso to s. 34 1 which took effect from april 1 1956.
then came the calcutta case debi dutta moody v. t. bellan
1 which held that numberices which were time barred when the
amending act of 1956 came into force remained time barred in
spite of the new enactment. in that case the numberice when
issued was within time but when served it was barred by
time. the two provisions of the amending act of 1959 which have to
be companystrued are ss. 2 and 4. by s. 2 anew sub-section-
sub.s. 4 was added to s. 34 of the act. it provides -
a numberice under clause a of sub-section
1 may be issued at any time numberwithstanding
that at the time of the issue of the numberice
the period of eight years specified in that
a.i.r. 1959 cal 567
sub-section before its amendment by clause a
of section 18 of the finance act 1956 18 of
1956 had expired in respect of the year to
which the numberice relates. section 4 of that act provides for saving and validation of
numberices assessments etc. in certain cases. the relevant
portion of the section applicable to numberices issued tinder
s. 34 1 a of the act is as follows -
numbernumberice issued under clause a of sub-s.
1 of s. 34 of the principal act at any time
before the companymencement of this act shall be
called in question in any companyrt merely on the
ground that at the time the numberice was issued the
time within which such numberice should have been
issued under that section as in force
before its amendment by cl. a of s. 18 of
the finance act 1956 18 of 1956 had
expired. the new proviso which was substituted in place of the old
proviso to s. 34 1 by s. 18 of the finance act 1956 may
conveniently be given here.it reads as follows--
provided that the income-tax officer shall
number issue a numberice under clause a of sub-
section 1
for any year prior to the year ending on
the 31st day of march 1941
for any year if eight years have
elapsed after the expiry of that year unless
the income profits or gains chargeable to
income-tax which have
escaped assessment or have been under-assessed
or assessed at too low a rate or have been
made the subject of excessive relief under
this act or the loss or depreciation allowance
which has been companyputed in excess amount to
or are likely to amount to one lakh of rupees
or more in the aggregate either for that year
or for that year and any other year or years
after which or after each of which eight years
have elapsed number being a year or years ending
before the 31st day of march 1941
for any year unless he has recorded his
reasons for doing so and in any case falling
under clause ii unless the central board of
revenue and in any other case the companymissioner
is satisfied on such reasons recorded that it
is a fit case for the issue of such numberice. the appellant companytended that as a companysequence of the new
sub-section 4 of s. 34 of the act i.e. s. 2 of the amending
act of 1959 the impugned numberice became a valid numberice
numberwithstanding the fact that at the time of the issuing of
the numberice the period of eight years specified in s. 34 1
a before its amendment by s. 18 of the finance act of 1956
had expired. this companytention is number well-founded. sub-
section 4 is prospective and therefore operates as from
march 12 1959 and it does number affect numberices issued
previous to that date. that is the effect of the words tea
numberice under cl. a of sub-s. 1 may be issued at any
time. in the companytext these words refer to numberices issued
after the companying into force of the amending act of 1959 and
number to numberices already issued. the appellant next companytended that the effect of s. 4 of the
amending act of 1959 is that it abrogates
and supersedes that statutory period prescribed for numberices
under a 34 1 a for all past years whether the numberices
were issued before or after the amendment by the finance act
of 1956. this companytention is also number well-founded this
section applies to numberices under cl. a of sub-section 1
s. of 34. the numberice issued in the present case does number
mention the clause under which the numberice was issued and
there is numberhing to indicate that it was under cl. a . the
respondents in their supplemental statement specifically
raised the point that the numberice was number under cl. a and
could only be under cl. b . the language of that section
shows 1 that it applies to all numberices under s. 34 1 a
issued at any time before the amending act 1959 i.e. march
12 1959 and 2 its effect is that numberices issued before
the amending act 1959 cannumber be challenged merely on the
ground that at the time the numberices were issued they were
barred under s. 34 1 a of the act as it was before its
amendment by s. 18 of the finance act 1956. number the
legislature has number said that the numberices shall number be
challenged on the ground that a period of eight years under
s. 34 1 a as in force after the amending act 1948 had
elapsed. it has deliberately used the words as in force
before its amendment by the finance act 1956. these words
indicate that the legislature intended to give full effect
to the amendment made by the finance act of 1956 in s. 34
1 a removing the bar of the lapse of eight years period
in cases of certain incomes. the numberices to which s. 4
applies and which are validated are those that were issued
between the periods mentioned in that act i.e. before the
amending act 1959 and after the finance act 1956 in
spite of the expiry of the eight years period before the
amendment by the finance act of 1956. thus whereas sub-s.
4 of s. 34 applies to and authorises the taking of action
after the companying into force of the amending act of 1959 s.
4 of that act validates action taken after the amendment by
the finance
act of 1956. it is number the effect of s. 4 to abrogate and
supersede the time limit provided by s. 34 1 a of the
act in all the past years. all it does is that it validates
those numberices which were issued within the two limits above
mentioned. in this companynection mr. palkhivala submitted that it is
necessary to see why the amending act of 1959 was enacted. according to his submission the reason for and the intention
of the enactment was to nullify the effect of the judgment
of the calcutta high companyrt in debi dutta moodys 1 case. in that case a numberice issued under s. 34 1 a to the
assessee before april 1 1956 when the finance act of 1956
became operative was served a day later i.e. april 2 and
it was companytended in the high companyrt that the period of eight
years having by then elapsed the numberice was invalid. it was
held that in companystruing the retrospective operation of the
statute the nature of the right affected must beconsidered
and where there is a vested right an amendment is
perspective so as number to affect a vested right that at the
time when the amendment by the finance act of 1956 became
operative the right to proceed had already become barred
under the act of 1948 and that it companyld number be revived as a
result of the amendment of 1956 unless there was an express
provision to the companytrary. it was the effect of that
decision which was sought to be nullified by the amending
act of 1959. in companystruing an enactment and determining its
true scope it is permissible to have regard to all such
factors as can legitimately be taken into account to
ascertain the intention of the legislature such as the
history of the act the reason which led to its being
passed the mischief which had to be cured as well as the
cure as also the other provision of the statute. that is
the rule in heydons 2 case which was accepted in r. m. d.
chamarbaugwalla v. the union of india 3 . taking this
principle into account it appears that the object
a.i.r. 1959 cal. 567. 2 1584 3 company rep. 7a 76 e.r. 637. 3 1957 s.c.r. 930 936.
of the amendment was to validate certain numberice after the
amendment and after the lapse of eight years from the end of
the assessment year and also to nullify the effect of the
calcutta judgment above mentioned. mr. rajagopal sastri relied next on the amendment to s. 34
3 of the act by the amending act of 1953 which came into
effect as from april 1 1952. by s. 18 of that act the
second proviso to sub-s. 3 of s. 34 was amended whereby
certain changes were made in regard to the period of time
for taking action in companysequence of or to give effect to any
finding or direction companytained in an order under the various
sections therein mentioned one of them being an order of the
income-tax appellate tribunal. the proviso as amended reads
as follows -
provided further that numberhing companytained in
this section limiting the time within which
any action may be taken or any order assess-
ment or reassessment may be made shall apply
to a reassessment made under section 27 or to
an assessment or reassessment made on the
assessee or any person in companysequence of or to
give effect to any finding or direction company-
tained in an order under section 31 section
33 section 33a section 33b section 66 or
section 66 a.
it was companytended that because action was taken against the
respondent in companysequence of an order of the income-tax
appellate tribunal there was numbertime limit and therefore the
impugned numberice was number hit by the period of eight years. it was further argued that for the purpose of validating
certain numberices and assessments s. 31 of the amending act
of 1953 was enacted the relevant portion of which
is as follows
validity of certain numberices and asessments. for the removal of doubts it is hereby
declared
that the provisions of sub-sections 1 2
and 3 of section 34 of the principal act the
indian income-tax act 1922 shall apply and
shall be deemed always to have applied to any
assessment or reassessment for any year ending
before the 1st day of april 1948 in any case
where proceedings in respect of such
assessment or reassessment were companymenced
under the said sub-sections after the 8th day
of september 1948 and any numberice issued in
accordance with sub-section
1
whether before or after the companymencement of
the indian income-tax amendment act 1953
shall numberwithstanding any judgment or order
of any companyrt appellate tribunal or income-tax
authority to the companytrary be deemed
to have
been validity issued and numbersuch
numberice shall be called in question on the
ground merely that the provisions of section
34 did number apply or purport to apply in
respect of an assessment or reassessment for
any year prior to the 1st day of april 1948.
this section so it was argued validated the impugned
numberice even though the period of limitation expired on march
31 1951.
i shall first deal with the argument based on s. 31 of the
amending act of 1953. by s. 8 of the amending act of 1948 a
new s. 34 1 was substituted for the old s. 34 1 with
effect from march 30 1948. bose j of the calcutta high
court in a petition under art. 226 of the companystitution
reported as calcutta discount company v. income-tax officer 1
held that a numberice served under the substituted s. 34 1
for any assessment year prior to the companying into force of
the amending act of 1948 was invalid as the income-tax
officer had
1 1952 21 i.t.r. 579.
numberjurisdiction to proceed with the reassessment on the
ground that s. 34 1 as amended in 1948 had numberapplication
to assessments for the years prior to 1948 even though the
period of eight years had number elapsed. it was also held
that the amending act of 1948 was expressly made
retrospective as from march 30 1948 it had numberfurther
retrospectivity and therefore the numberice issued under s. 34
1 were without jurisdiction. against that judgment which
was dated march 26 1952 an appeal was taken which was
decided on march 25 1953 and is reported as income-tax
officer companypanies district i calcutta v. calcutta discount
co. limited 1 . but in the meanwhile i.e. the period between
the two judgments a bill was introduced in 1952 to amend s.
34 so as to nullify the effect of the judgment of bose j.
in the calcutta case. this resulted in the enactment of the
amending act of 1953 which received the assent of the
president on may 24 1953 but was given retrospective
effect as from april 1 1952.
section 31 of the amending act of 1953 can be divided into
two parts. the first part beginning with the words it is
hereby declared to the words were companymenced under the
said sub-section after the 8th day of september 1948 is
merely declaratory. it declares the section to be
applicable to assessments for any year ending before april
1 1948 in any case where proceedings in respect of such
assessment or re-assessment were companymenced under sub-ss. 1 2 and 3 of s. 34 after september 8 1948. according to
the appellant the effect of the first part of the section
was to apply the provisions of s. 34 1 2 and 3 to
every proceeding for assessment or reassessment whenever
commenced after september 8 1918 even though reassessment
proceedings in regard to them had become time barred. the
contention on behalf of the respondents on the other hand
was that the use of the words were companymenced
1 1953 23 i.t.r. 471.
under sub-ss. 1 2 and 3 of s. 34 prescribes the
limits for the retrospective application of those sub-
sections and that period was between september 8 1948 and
april 1952 when the amending act of 1953 became operative. the companytention of the respondents companynsel is well founded. section 31 does number make sub-ss. 1 2 and 3 of s. 34
applicable to any and every assessment or re-assessment
whenever companymenced after september 8 1948. the use of the
words were companymenced limits the retrospectivity to the
period between september 8 1948 and april 1 1952. this
part of s. 31 therefore is of numberassistance to making the
amending act of 1953 applicable to the present case in which
the numberice was given on april 30 1954.
the second part of s. 31 deals with the validity of numberices. it firstly provides that any numberice issued in accordance
with s. 34 1 whether issued before or after april 1
1952 shall numberwithstanding any judgment or order of any
court to the companytrary be deemed to be validly issued and
secondly that such numberice shall number be challenged merely on
the ground that provisions of s. 34 do number apply or purport
to apply in respect of an assessment for any year prior to
april 1 1948. in this second part of s. 31 the important
words are in accordance with which mean and imply that the
numberice issued was in companyformity with sub-s. 1 of s. 34
which would include all formalities and limitations therein
mentioned. companysequently it has to be a numberice within eight
years period . as the impugned numberice was issued beyond
that period it cannumber be called a numberice in accordance
with and therefore the deeming provision as to validity is
number applicable to the present case. further the words
numberwithstanding any judgment etc. are indicative of the
purpose of this provision to be this that if the numberice was
in companyformity with s. 34 1 it will be valid numberwith-
standing any judgment etc. that this was the
purpose and meaning of this second part is further made
clear by the provisions against such numberice being challenged
on the ground of its being in respect of an assessment or
reassessment for any year prior to april 1 1948. thus
these words only nullified the effect of the judgment of
bose j. in calcutta discount company. 1 case and did number
validate time barred numberices. moreover in the present case the numberice is number being
impugned on the ground of s. 34 being inapplicable in
respect of the assessment year 1942-43. on the companytrary the
plea raised against the validity of the numberice is that the
provisions as to eight years in s. 34 1 are applicable in
other words the attack on the legality of the numberice is that
it is barred by the provisions of s. 34 1 . this part of
s. 31 also does number validate the numberice issued to respondent
number i after a lapse of eight years from the assessment year. in my opinion therefore neither the first part number the
second part of s. 31 is applicable to the facts of the
present case. i shall next companysider the appellants argument based on the
second proviso to s. 34 3 as amended by s. 18 of the
amending act of 1953. the assessment year in the present
case is 1942-43 and therefore the eight years period under
the act expired on march 31 1951 and order of the
appellate tribunal was august 14 1951 i. e. after the lapse
of 8 years. it was companytended by the appellant that as a
result of this proviso the limitation as to time within
which any action companyld be taken in regard to any assessment
or reassessment was removed if assessment or reassessment
was made in companysequence of or to give effect to a finding or
direction companytained inter alia in the order of an income-tax
appellate tribunal under s. 33. in the present case so it
was companytended by the appellant there was a finding by the
appellate tribunal in the order dated august 14 1951 to
the
1 1952 21 i.t.r. 579.
effect that the business in the name of firm vasantsen
dwarkadas belonged to firm purshottam laxmidas and that if
the income-tax officer companyld include that income in the
income of purshottam laxmidas he was at liberty to do so. this order it was submitted removed by virtue of the
second proviso to sub-s. 3 of s. 34 the bar of the period
of eight years under sub-s. 1 a of s. 34 of the act. the companyrectness of this companytention will depend on whether
the language of the second proviso is retroactive in its
operation and revives barred rights or barred actions or
removes the bar of eight years under s. 34 1 a of the
act. there is numberhing in the words used in the proviso
which gives it retroactive operation expressly or by
necessary intendment but it was argued that any enlargement
of time for taking action under s. 34 of the act revives the
liability of an assessee to be taxed numberwithstanding the
expiry of the period during which action companyld be taken by
the income-tax officer. it was also submitted that the
eight years period in s. 34 1 a was number a period of
limitation but just created a fetter on the exercise of the
power of the income-tax officer and when that fetter was
removed the ability to exercise the power was revived. the first argument above brings us to the general principles
of the law of limitation whether a change in the period of
limitation takes away the existing finality of the immunity
against actions which had already been barred by the lapse
of the period of limitation. the statute of limitation has
been termed a statute of repose peace and justice and its
intention was stated by sir richard companych in hurrinath
chatterji v. mohunt mothoor mohun goswami 1 as follows -
the intention of the law of limitation is
number to give a right whether there is number
onebut to interpose a bar after a certain
period to a suit to enforce an existing
right. 1 1893 l.r. 20 i.a. 183 192.
in kr. kr. kr. ramanathan chettiar v. n. m.kandappa
goundan 1 it was held that if a right to sue had become
barred by the provisions of the limitation act in force on
the date of the companying into force of a new act then
such barred rights cannumber be revived by the application of
the new enactment and it cannumber be said that because the
remedies are barred but the rights are number extinguished such
rights can be revived by mere change in the period of
limitation and become enforceable in a companyrt of law. this
decision has the support of the observations of the privy
council in cases which were decided on general principles
applicable to limitation and were number based on any statutory
provision such as s. 28 of the limitation act of 1908 by
which as a result of lapse of the period of limitation the
rights are extinguished. in appasami odayar v. subramanya
odayar 2 it was observed -
by sect. 1 clause 13 of act xiv of 1859 a
suit for a share of the family property number
brought within twelve years from the date of
the last participation in the profits of it
would be barred. this act companytinued in force
until the 1st july 1871 when act ix of 1871
came into force. companysequently if there was
numberparticipation of profits between 1837 and
1871 the suit would be barred and the later
acts for limitation of suits need number be
referred to. if they altered the law they
would number revive the right of suit. later in mohesh narain moonshi v. taruck nath
moitra 3 the same principle was stated by lord
shand in the following words ---
it is clear that on the 1st day of april
1873 the plaintiffs suit was barred by
limitation under the act of 1871 and the act
of 1877
i.l.r. 1951 mad. 581. 2 1888 l.r. 15 i.a. 167169. 3 1892 l.r. 20 i.a. 3038.
could number revive the plaintiffs right so
barred- a point which was indeed decidedin
regard to the limitation acts of 1859 and 1871
in the case of appasami odayar v. subramanya
odyar 1
in khunni lal v. govind krishna narain
mr. ameer ali said -
numbersuit companyld be brought even if the enact-
ments referred to above had permitted it to
enforce the right after the lapse of twelve
years from the time the cause of action
arose s. 12 act xiv of 1859 . numberhing in
art. 142 of act ix of 1871 or of art. 141 of
act xv 1877 companyld lead to the revival of a
right that had already become barred. the same principle has been applied by the privy companyncil in
the case of decree in sachindra nath boy v. maharaj
bahadur singh 3 . there the question was which of the two
limitation acts act 25 of 1877 or act 9 of 1908 applied to
a decree obtained on august 26 1905. it was held that the
former applied and therefore the decree became unenforceable
according to the law as it stood before the limitation act
of 1908. lord atkinson observed at p. 345 -
there is numberprovision in this latter act
act 9 of 1908 so retrospective in its
effect as to revive and make effective a
judgment or decree which before that date had
become unenforceable by lapse of time. in delhi cloth general mills company limited v. income-tax
commissioner delhi 6 it was held that numberappeal lay
against the decision of a high companyrt if it was given before
appeals to the privy companyncil were provided for. in that
connection lord blanesburgh observed at p. 425
1 1888 l.r. 15 i.a. 167169. 2 1911 l.r. 38 i.a. 87 102. 3 1921 l.r. 48 i.a. 335. 4 1927 l.r. 54 i.a. 421 425.
their lordships can have numberdoubt that
provisions which if applied
retrospectivelywould deprive of their
existing finality orders which when the
statute came into force were final are
provisions which touch existing rights. in all these cases the privy companyncil proceeded on the
principle that if the right of action hid become barred
according to the law of limitation in force subsequent
enlargement of the period of time does number revive the
remedy to enforce the rights already barred. the same
principle in my opinion would apply to the periods
specified in s. 34 of the act and if the period prescribed
for taking action had already expired subsequent change in
the law does number make it so retrospective in its effect as
to revive the power of an income-tax officer to take action
under the new law- it is one of the canumbers of companystruction
of statute of limitation that in the absence of express
words or necessary intendment numberchange in the period of
limitation can revive the right to sue which has become
barred number can it impair the immunity from any action which
had become final after the lapse of a specified period of
time. the calcutta high companyrt in nepal chandra roy v. niroda
sundari ghose 1 held that the right of the judgment
debtor to make an application for setting aside an ex parte
decree companyld number be revived by a change in the law if the
right to apply had already become barred before the new law
came into force. similarly in mohamed mehdi faya v.
sakunabai 2 it was held that a remedy which had become
barred under the old limitation act would number be revived by
the passing of a new limitation act. this was a case where
the right to sue for restitution of companyjugal rights was held
to be barred. the bombay high companyrt in dhondi shitvaji rajivade v. lakhman
mhaskuji khaire 3
i.l.r. 39 cal. 506.
i.l.r. 37 bom. 393.
a.i.r. 1930 bom. 55.
held that where the mortgagors right to sue for redemption
of the mortgage was barred subsequent acknumberledgement would
number extend the period of limitation as the acknumberledgement
ought to have been made in writing within 60 years from the
date of the mortgage. the companyrt also held that the remedy
and right of the mortgagor having been extinguished numberhing
contained in the subsequent limitation act would affect the
operation of the previous enactment. in this companynection the
court referred to s. 6 of the general clauses act 1897.
the madras high companyrt in two cases applied this principle in
simrathmul v. additional income-tax officer ootacamund
1 to proviso ii of s. 34 3 . the punjab high companyrt in
pran nath v. companymissioner of income-tax punjab 2 at p.
600 also applied this principle to the same provision. but
it appears that in a later judgment companymissioner of income-
tax v. r. b. l. ishar das 3 a companytrary view was taken but
it does number appear that the previous judgment was brought to
the numberice of the companyrt number does it appear that the
attention of the learned judges was drawn to the principles
laid down in the decisions of the privy companyncil. the
official liquidator of the benaras bank limited v. sri
prakasha 4 relied on by mr. rajagopal sastri did number
decide the question that subsequent change in the law can
revive barred rights. it proceeded on the companystruction of
the amended s. 235 of the indian companypanies act. he also
relied on two judgments of the patna high companyrt baleswar
prasad v. latafat 5 and jagdish v. saligram 6 .in the
former it was held that the law of limitation which governs
an action is the law which prevails on the date when the
action is brought and therefore acknumberledgement made on a
pronumbere executed in 1934 would be governed by the law in
force at the time the suit was brought. in the latter also
it was held that the law relating to acknumberledgement under
s. 20 was the one which was
1 1959 36 i.t.r. 41 45. 2 1960 38 i.t.r. 595 600. 3 1962 44. i.t.r. 629.
i.l.r. 1946 all. 461. 5 1944 i.l.r. 24 pat. 249. 6 1945 i.l.r. 24 pat. 391.
in force at the time of the bringing of suit. but it is
significant to numbere that s. k. das j. number a judge of this
court did number agree with that view but did number disagree
with the decision as the matter had been previously
decided in the judgment above referred to. he expressly said
i would personally have companye to a different
conclusion if the matter were number companyered by
the aforesaid decisions of this companyrt. anumberher argument raised on behalf of the appellant was that
the eight years period prescribed in s. 34 is number a rule of
limitation but merely a fetter on the power of the income-
tax officer to take action and the removal of the fetter
revives the power of the officer. this really is number a
different argument but the same argument of revival of a
right to sue which has been discussed above. change in the
law as to the period in which a suit can be brought to
recover a debt or action can be taken by the income-tax
officer to companymence an assessment or reassessment does number
impair the rights already acquired by the bar of limitation
or revive the power of the income-tax officer which has
already become incapable of being exercised by laspe of
time. the two stand on the same footing and have the same
effect i. e. provide immunity and place a bar on any attack
on the rights of the defendant or the assessee as the case
may be. the next question raised is the companystitutionality of the
second proviso to s. 34 3 of the act. for that purpose it
is necessary to restate some of the salient facts of the
present case. the firm vasantsen dwarkadas of which the
partners were vasantsen respondent number 1 narandas shivji
and nanalal odhavji filed a voluntary return for the
assessment year 1942-43 and also applied for registration of
the firm which was refused on the ground that the firm
was number a genuine firm but belonged to dwarkadas vussonji
the father of respondent number 1 who was the principal
partner in the firm purshottam laxmidas and the income-tax
officer therefore added the income of firm vasantsen
dwarkadas to the individual income of dwarkadas vussonji. this happened in regard to the assessment for the subsequent
year also. appeals were filed for that year and subsequent
years by the firm vasantsen dwarkadas both against the
quantum of the assessed income and refusal of the income-tax
officer to register the firm. these appeals and the excess
profits tax appeal of firm purshottam laxmidas for the year
1942-43 were all companysolidated and decided by the order of
the incometax appellate tribunal dated august 14 1951. at
that stage dwarkadas being dead vasantsen dwarkadas
respondent number 1 was substituted in place of his father in
the appeal of purshottam laxmidas. the order in the appeal
of firm vasantsen dwarkadas against the firm purshottam
laxmidas was number an order to which firm purshottam laxmidas
as such was a party and companysequently any finding given in
regard to the income of firm vasantsen dwarkadas being the
income of the firm purshottam laxmidas was an order passed
against a third party who was number heard in those
proceedings. it was companytended on behalf of respondents that
the second proviso to s. 34 3 is unconstitutional because
it infringes art. 14 of the companystitution in so far as it
deprives such third party of the immunity given against
assessment or reassessment by the period of eight years
mentioned in s. 34 1 a and it results in prejudging the
merits of the third partys case before he is even heard and
that there is numberreasonable basis for distinguishing such
third party from any other person escaping income-tax. the
words used in the section are assessment or reassessment
made on the assessee in companysequence of or to give effect to
any finding companytained in an order. any person there
mentioned must mean a person other
than the assessee. the companysequences of giving effect to the
second proviso to s. 34 3 are that the protection of the
time limit given by the proviso to sub-s. 1 of s. 34 will
disappear qua those falling within the proviso and would be
available to other assessees who fall within s. 34 1 a
of the act. it was submitted that assessees who fall under
this category cannumber form a different class based on any
real and substantial distinction and that there is no
nexus between the classification and the object sought to be
achieved and therefore art. 14 is violated. reliance was
placed on the judgment of this companyrt in surajmal mohta v. a.
viswanatha sastri 1 shree meenakshi mills limited
madurai v. shree a. v. visvanatha sastri 2 and m. ct.
muthiah v. the companymissioner of income-tax madras 3 . it was argued that there was numberreasonable basis for
classification in this case because there was numberhing
peculiar in properties of characteristics of persons with
regard to whom a finding or a direction is given under the
proviso and then action is taken against them under s. 34
3 and those who have evaded tax and in regard to whom no
such direction is given and fall under s. 34 1 a . both
of them have companymon qualities companymon characteristics and
common peculiarities and traits. there is little to
distinguish one from the other and in support companynsel relied
on the observations of mehr chand mahajan c. j. in
surajmal mlohtas 1 case where it was observed that there
was numberdifference in characteristics between persons who
were discovered as substantial evaders of income during
investigation companyducted under s. 5 1 of taxation on income
investigation companymission act act 30 of 1947 and those
who are discovered by the income-tax officer to have evaded
payment of income-tax. the question of classification was
again raised in shree meenakshi mills 2 case. in that
case the companyrt had to decide whether persons
1 1955 1 s.c.r. 448 461. 2 1955 1 s.c.r. 787. 3 1955 2 s.c.r. 1247
who came within the scope of s. 5 1 of act 30 of 1947 and
those who came within s. 34 of the income tax act as amended
by the-income-tax amendment act 1954 act 33 of 1954
formed distinct classes. it was held that after the companying
into force of the amended s. 34 which operates in the same
field as s. 5 1 of act 30 of 1947 both classes were inclu-
ded within the ambit of amended s. 34 and the two sections
overlapped. therefore according to the two cases above-
mentioned if there are numberparticular qualities and elements
which distinguish one set of evaders of income-tax from
anumberher and both have evaded income-tax their cases fall
under s. 34 1 before and after 1948 or before and after
1953. from the mere fact that in regard to one a direction
is given or an order is made within the second provise to s.
34 3 and in regard to anumberher it is number given numberreasona-
ble basis for classification arises as their essential
characteristics are the same. but it was argued that in a.
phangal kunju musaliar v. m. venkatachalam potti 1 such
classification was made. in that case a native of quilon
within the travancore state was given a numberice under s. 5
1 of the travancore act xiv of 1124 a provision
corresponding to s. 5 1 of the indian act 30 of 1947 for
investigation but before the report companyld be made the
constitution of india became applicable to travancore
state. the assesee filed a petition in the travancore high
court for a writ of prohibition prohibiting the companymission
from holding an inquiry in regard to evasion and then the
matter was brought in appeal to this companyrt. it was held
that s. 5 1 of travancore act is number discriminatory and
violative of rights under art. 14 when read in juxtaposition
with s. 47 of the travancore income-tax act companyresponding to
s. 34 of the indian income-tax act. section 47 of the
travancore income-tax act was directed only against persons
concerning whom definite information came into the
possession of the income-tax officer in companysequence of which
that
1 1955 2 s.c.r. 1196.
officer discovered the escaped income and such clan was a
definite class and it was number companyfined to those who had
escaped from assessment of income-tax made during the war
period i.e. 1939 to 1946. on the other hand s. 5 1 of the
travancore act sought to reach that class of persons which
was companyprised only of those about whom there was numberdefinite
information and numberdiscovery of any item or items of income
which escaped taxation but against whom the government had
only a prima facie reason to believe that they had evaded
payment of tax of substantial amounts. further action under
the latter act was limited to evasion of payment of tax made
during war period. section 5 1 of the travancore act
therefore was number discriminatory in companyparison with s 47
1 of the travancore income-tax act. the reason for
holding that there was a definite characteristic which
distinguished that class i.e. those who had escaped income
to a substantial degree during the war period and those
failing under s. 34 of the income-tax act was that in the
case of the former the government had reason to believe that
they had evaded payment of tax to a substantial degree and
that it was limited to evasion of payment of taxation on
income made during the war period. in the case of those
falling under s. 47 1 of the travancore income-tax act
there had to be definite information in the possession of
the income-tax officer in companysequence of which the income-
tax officer discovered that the income had escaped
assessment. the two classes were distinct and therefore
musaliars 1 case cannumber apply to the facts of the
present case. later in n. ct. muthiah v. the companymissioner
of income-tax madras 3 this companyrt pointed out that if
the provision of s. 34 1 of the act as it stood before its
amendment by the amending act of 1948 had been the only
provision to be companysidered the rule in musaliars 1 case
would have applied but the position was materially affected
by reason of the two amendments made in s. 34 1 by
1 1955 2 s.c.r. 1196. 2 1955 2 s.c.r. 1247.
amending act 1948 and the other by the income-tax
amendment act act 33 of 1954. in that case it was
contended and it was so held that s. 5 1 of act 30 of 1947
was ultra vires of the companystitution as it was discriminatory
and violative of art. 14 by reason of the two amendments
above referred to. the submission of the respondents that
there is numberreasonable basis for classification between
those who have escaped assessment under s. 34 1 a and
those third parties who have escaped income-tax but with
regard to whom a direction or an order is made under proviso
to s. 34 3 is well founded and therefore the
provision is unconstitutional and hit by art. 14.
lastly it was argued that the second proviso companytemplates a
valid finding or direction and that it cannumber be given
against a number-assessee at all. it was also submitted that
such a finding must be necessary but there is little
substance in this submission. whether a finding is
necessary or number must depend on the circumstances of each
case and it cannumber be said as a matter of law that finding
is or is number necessary. for the reasons given above the appeal must be dismissed
with companyts. in any case the appellant had undertaken to pay
the companyts of the respondents irrespective of the result of
the appeal and he must pay the companyts of the respondents. sarkar j.-this appeal arises out of a petition under art. 226 of the companystitution for the issue of writs restraining
the revenue authorities from making an assessment under a
numberice dated april 30 1954 served under s. 34 1 a of
the income-tax act 1922 on purshottam laxmidas the
respondent firm in respect of the assessment year 1942-43.
it is companytended that the numberice had been issued after the
period prescribed for it by the section
had expired and was therefore invalid. this it may be
conceded is so but it seems to me that the numberice was numbere
the less made valid by a subsequent enactment namely s. 4
of act 1 of 1959 to which i will later refer. purshottam laxmidas is the assessee. it had two partners
dwarkadas and parmanand. vasantsen is the son of dwarkadas. it appears that in 1941 anumberher business was started in the
name of vasantsen dwarkadas. vasantsen claimed it to have
been an independent partnership business carried on by him
with two other persons. for the year 1942-43 this business
had filed a return of income of its own and had applied for
registration as a firm under the income-tax act. the
income-tax officer rejected these claims by the business of
vasantsen dwarkadas and added its income for the year to the
income of dwarkadas taking the view that it was a business
solely belonging to him. vasantsen dwarkadas the alleged
firm appealed from this decision. there was also an appeal
against the assessment on dwarkadas individually for the
year 1942-43. in 1943-44 the income-tax officer came to a
different companyclusion and held that vasantsen dwarkadas was a
branch of purshottam laxmidas. the alleged firm of vasan-
tsen dwarkadas repeated its aforesaid companytention in several
years from 1943-44 onwards and went up in appeals against
its rejection. in 1951 various appeals companycerning the parties named above
came up before the income-tax appellate tribunal. these
appeals companysisted of the said appeals by the alleged firm of
vasantsen dwarkadas appeals by vasantsen as the son and
heir of dwarkadas who had died in 1946 in respect of
assessments on him for 1942-43 and 1943-44 and appeals by
the firm of purshottam laxmidas in respect of assessments on
it for various years under the excess profits tax act. these appeals were disposed of by a
common judgment passed by the tribunal on august 14 1951.
the appeals by the firm of vasantsen dwarkadas were all
dismissed as it was held that it was number a partnership
between the persons alleged. in the appeals by purshottam
laxmidas it was held that the business of vasantsen
dwarkadas was one of its branches. in the appeals against
the assessment on dwarakadas it was held that the income of
the business of vasantsen dwarkadas had wrongly been added
to his income for the assessment year 1942-43 and the
addition should be deleted. it was also said referring to
the income of vasantsen dwarkadas in respect of the
assessment year 1942-43 that if the income-tax officer can
include this sum in the income of purshottam laxmidas he is
of companyrse at liberty to do so it is because of this
observation that the impugned numberice was served on the
respondent firm of purshottam laxmidas. it was thereupon
that the firm of purshottam laxmidas and vasantsen the
latter representing his fathers estate moved the high
court at bombay under art. 226 for the reliefs earlier
mentioned. the respondents to the petition were the
appellants the income-tax officer bombay and the union of
india. parmanand the other partner in purshottam laxmidas
was also made a respondent to the petition but he does number
seem to have taken any interest in the proceedings at all. when the matter was heard in the high companyrt the act of 1959
had number been passed. the revenue authorities relied on the
second proviso to s. 34 3 of the income-tax act as amended
by act 25 of 1953 for the validity of the numberice. the high
court did number accept this companytention and issued the writs as
prayed. the revenue authorities have number companye up in appeal
which is being opposed by the respondents purshottam
laxmidas and vasantsen. as i think that the appeal should
be allowed because of s. 4- of act 1 of 1959 which
provision the high companyrt had numberoccasion to companysider it
would be to numberpurpose
to discuss the reasons on which the high companyrt based itself
or the second proviso to sub-s. 3 of s. 34.
i think i ought to refer at this stage to s. 34 of the
income-tax act. that section authorises assessment and re-
assessment in respect of past years where for one or other
of the reasons mentioned in it income has number been assessed
to the full amount of tax payable on it. a general idea of
some of the provisions of s. 34 may number be given. sub-
section 1 of this section provides that before making the
assessment a numberice has to be served on the assessees
concerned asking for a return of the income of the year in
which it escaped assessment and this within a certain number
of years from the end of that year. then sub-s. 3 of this
section provides that the order of assessment pursuant to
the numberice has to be made within a certain number of years
from the end of the year in which the income was first
assessable. these are two companyditions which have to be
satisfied before assessment under s. 34 can be made. in the
present case we are companycerned with the first of these
conditions only that is whether the numberice had been issued
within the time provided for it for numberorder of assessment
was ever made. i ought to have said that the second proviso
to sub-s. 3 of s. 34 as amended in 1953 enlarged in
certain cases the time for issuing the numberice and also for
making the order of assessment. that is why the high companyrt
had to deal with this proviso in this case. number s. 34 1 has been amended on a number of occasions. a
reference to some of the amendments would be useful. the
first amendment to which i desire to draw attention is that
made by the income-tax amendment act 1939. under that
amendment where the revenue authorities thought that the
assessee had companycealed his income or deliberately furnished
inadequate particulars they companyld issue the numberice within
eight years of the year in which the income is supposed to
have escaped assessment
and in other cases within four years of that year. sub-section 1 of s. 34 was next amended by the income-tax
and business profits tax amendment act 1948. this act
was passed on september 8 1948 but s. 8 which substituted
a new section for the existing s. 34 was brought into
operation retrospectively from march 30 1948. the new sub-
section 1 was divided into two clauses. clause a dealt
with cases of omission on the part of an assessee to make a
return or his failure to disclose fully his income for any
year as a result of which income escaped assessment. clause
b dealt with cases where there was numbersuch omission but
the income-tax officer in companysequence of information in his
possession believed that income of any year had escaped
assessment. it was provided that in a case companying under cl. a the numberice might be issued within eight years and in a
case companying under cl. b within four years of the end of
the year in which the income escaped assessment. there was
a proviso to this sub-section which said that the income-tax
officer companyld number issue the numberice unless he recorded his
reasons for doing so and the companymissioner of income-tax a
superior revenue officer was satisfied on the reasons so
recorded that it was a fit case for the issue of the numberice. then came the amendment by s. 18 of the finance act 1956
passed on april 27 1956 but brought into force
retrospectively from april 1 1956. as a result of this
amendment it was provided in a case companying under cl. a of
s. 34 1 the clause with which this case is companycerned--that
1 numbernumberice should issue for a year prior to the year
ending on march 31 1941 2 number for any year if eight
years had elapsed after the expiry of that year unless the
income which had escaped assessment was likely to amount to
rs. 100000/- or more and 3 number unless
the income-tax officer had recorded the reasons for issuing
the numberice and where the amount of the escaped income was
rs. 100000/- or more the board of revenue and in other
cases the companymissioner was satisfied on such reasons that
the case was a fit one for the issue of the numberice. it seems to me that the 1956 amendment made two real
changes. first it removed altogether the prescription of
time for the issue of a numberice in a case where the escaped
income was likely to be rs. 100000/- or more. under the
1948 amendment numbernumberice for a year from the end of which
eight years had expired companyld be issued at all. as the
amending act of 1948 came into force on march 30 1948 no
numberice companyld be issued under it for any year prior to the
year ending on march 31 1941. therefore the provision in
the 1956 amendment that numbernumberice companyld issue for any year
prior to the year ending on march 31 1941 made numberreal
alteration in the law. the other change was that in cases
involving escaped income of rs. 100000/- or more the
approval of the board of revenue to the issue of the numberice
was made necessary. this alteration in the law has no
bearing on the quest ion that i propose to discuss. number the present is number a case where the revenue authorities
contend that the income which escaped assessment was likely
to be rs. 100000/- or more. the numberice it may be
remembered was issued on april 30 1954 in respect of the
year 1942-43. it was a numberice therefore which was invalid
both under the 1948 and 1956 amendments of s. 34 1 . i will number refer to the act of 1959 which i have earlier
mentioned. that is the income-tax amendment act 1959.
it was passed on march 12 1959. section 2 of this act
introduced a new
sub-section in s. 34 namely sub-s. 4 . that sub-section
was in these terms
sub-s. 4 a numberice under cl. a of sub-s. 1
may be issued at any time numberwithstanding that
at the time of the issue of the numberice the
period of eight years specified in that sub-
section before its amendment by clause a of
section 18 of the finance act 1956 had
expired in respect of the year to which the
numberice relates. section 4 of this amending act on which i propose to rest my
judgment in this case runs as follows -
s. 4. numbernumberice issued under cl. a of sub-
s. 1 of s. 34 of the principal act at any
time before the companymencement of this act and
numberassessment re-assessment or settlement
made or other proceeding taken in companysequence
of such numberice shall be called in question in
any companyrt tribunal or other authority merely
on the ground that at the time the numberice was
issued or at the time the assessment or re-
assessment was made the time within which
such numberice should have been issued or the
assessment or re-assessment should have been
made under that section as in force before its
amendment by cl. a of s. 18 of the finance
act 1956 had expired. quite clearly the new sub-s. 4 of s. 34 cannumber apply to
the numberice with which we are companycerned for the sub-section
by its own terms deals only with numberices issued after the
1959 act came into force and the numberice in this case was
issued before that date. number s. 4 of the 1959 act prevents a numberice issued under s.
34 1 a of the principal act being held to be invalid on
the ground that it was issued
after the time within which it should have been issued under
that section as it stood before it was amended by the
finance act of 1956. in other words s. 4 validates a
numberice issued under s. 34 1 a even though it was invalid
for the reason that it was issued after the expiry of the
eight years prescribed for it under the 1948 amendment that
being the section as it stood before the 1956 amendment. the first requirement then of the applicability of s. 4 is
that there must be a numberice issued under s. 34 i a of
the principal act. i do number think that it was seriously
contended at the bar that the numberice in the present case has
number been issued under cl. a of s. 34 1 . i feel numberdoubt
that it was so issued. the provision that we have to
consider for this purpose is s. 31 1 a as it stood as a
result of the 1948 amendment for that was the section in
force on the date the numberice was issued. the numberice would
have been one issued under cl. a of that section as so
amended if it was a case where income had escaped assessment
because of the failure of purshottam laxmidas to disclose
fully its income for the year 1942-43. there can be no
doubt on the facts of this case that purshottam laxmidas had
failed to disclose fully its income for the year 1942-43.
on the facts found the income of the business of vasantsen
dwarkadas was the income of purshottam laxmidas. therefore
purshottam laxmidas should have disclosed in its return for
1942-43 the income made by it on the business done in the
name of vasantsen dwarkadas. what happened was that the
income of vasantsen dwarkadas for 1942-43 was shown as the
income of its own as an independent firm and this was done
by vasantsen. obviously vasantsen his father dwarkadas
and parmanand the latters partner in purshottam laxmidas
were all acting together. it would perhaps be more companyrect
to say that things had been left to dwarkadas
and vasantsen to manage. they had three-fourth interest in
the business while parmanand had only one-fourth
furthermore parmanand has taken numberinterest in the
present proceedings. it would follow from all this that if
vasantsen dwarkadass income had been shown separately it
could number have been included in the return filed by
purshottam laxmidas. therefore it is a case in which
purshottam laxmidass income for 1942-43 escaped assessment
because of its failure to disclose its income fully. that
is why i think it beyond doubt that the numberice in the
present case had been issued under cl. a of s. 34 1 . it
is numbere the less so because it was issued in companysequence of
the direction of the tribunal that the income-tax officer
was at liberty if he companyld in law do so to include the
income of vacantsen dwarkadas for 1942-43 in the income of
purshottam laxmidas. the order companyld number have enabled a
numberice to issue. the numberice had to be issued under a
statutory provision. that provision was s. 34 1 a . the next requirement of s. 4 of the act of 1959 is that the
numberice must have been issued at any time before the
commencement of that act. the present numberice which had been
issued in 1954 had clearly been so issued. when the section
uses the word at any time i suppose it means at any time
it does number thereby say that the numberice must be issued at
any time before the 1959 act but after a certain other point
of time. the other limit is number to be found in the section
at all all that it requires is that the numberice must be
issued before the 1959 act. it is however companytended that the proper companystruction of s. 4
is that the numberice must have been issued after the finance
act of 1956 came into force and amended s. 34. i find
numberhing in s. 4 on which to rest this companystruction. mr.
palkhivala appearing for the respondent said that the words
under that section as in force before its amendment by cl. a of
s. 18 of the finance act 1956 led to this companystruction. i do number see why and i am number able to deal with this
contention more fully for i do number see the reason on which
it is based. to my mind all that these words mean is that
the section to be companysidered is the section as it stood
before it was amended by the finance act 1956 that is to
say the section as it stood as a result of the amending act
of 1948 for that was the section which was in force immedi-
ately before the amendment affected by the finance act
1956.
then it was said that if the numberice companytemplated was number one
issued after the finance act 1956 then under s. 34 1 a
all years without any limitation companyld be brought to
assessment. if that is the result of the words used in s.
4 the words must have that effect. that would be numberreason
to say that s. 4 applies only to numberices issued after the
1956 act came into force. numberdoubt the words at any time
would companyprehend a numberice whenever issued before the
commencement of the 1959 act. but the section protects such
numberice only against the invalidity caused by s. 34 1 as it
stood after the 1948 amendment that is against the
invalidity caused by reason of the numberice having been issued
after the expiry of the time prescribed for it in the
section as it then stood. section 4 does riot protect the
numberice from invalidity otherwise attaching to it. number it
will be remembered that the 1939 amendment of s. 34 also
prescribed a period of time for the issue of the numberice. that prescription had to be obeyed whenever applicable. section 4 provided for numberimmunity against a breach of that
prescription. so though s. 4 of the 1959 act freed a
numberice from the bar of limitation in respect of it imposed
by the 1948 amendment it did number altogether do away with
all prescriptions of time. inspite of s. 4 a numberice
contemplated by it would be subject to the prescription of
time as to its issue under the 1939 act and may be under s.
34 as it stood
before the 1939 amendment. if the numberice was issued after
the 1956 amendment it would also be subject to the
prescription as to time provided by that amendment. then it was said that if s. 4 applied to a numberice issued
more than eight years after the year in which the income
escaped assessment but before the 1956 amendment came into
force in a case where the escaped income of the year was
less than rs. 100000/- the position. would be curious. a
numberice issued in a similar case after the 1956 amendment
would be bad under s. 34 as it then stood and s. 4 companyld number
save it for it saved numberices only from the effect of the
1948 amendment. the position then would be that in a case
involving the same amount of escaped income for the same
year a numberice issued before 1956 amendment and invalid
under the 1948 amendment would be validated and a more
recent numberice equally invalid under both the earlier and
present laws would remain invalid. assume that the position
is somewhat curious or incongruous. but that seems to me to
be the result of the words used. for all we knumber that might
have been intended. however strange if at all the result
may be i do number think the companyrts can alter the plain
meaning of the language of the statute only on the ground of
incongruity if there is numberhing in the words which would
justify the alteration. as i have said earlier in this
case there is numberhing to justify the alteration of the plain
meaning. companysider this. in a case where the escaped income
is rs. 100000/- or over numberincongruity as in the case of
escaped income below rs. 100600/- arises. in such a case
the 1956 amendment removes the bar of limitation altogether
and what had number been previously barred cannumber become at all
barred. so numberquestion of more recent numberices becoming
barred and earlier numberices made valid arises if on the
ground of the alleged incongruity numberices issued before 1956
in cases of escaped income of less than
rs. 100000/- have to be left out of the scope of s. 4 of
the act of 1959 i suppose we must hold that such numberices in
cases of escaped income of rs. 100000/or over must also be
left out of the scope of s. 4 for clearly the section
cannumber be read as treating the numberices in these two cases
differently. but in the latter kind of cases there is no
incongruity. it would indeed be absurd to hold that numberices
issued before 1956 in cases where the escaped income was rs. 100000/- or over were excluded from s. 4 for in such
cases numberices may be clearly issued after the 1959 act under
sub-s. 4 of s. 34 introduced by that act. sub-section 4
of s. 34 was enacted by the act of 1959 which also enacted
s. 4. if a years escaped income companyld be brought to tax by
a numberice issued after the 1959 act under sub-s. 4 it
could number be that it was intended that the same income companyld
number be brought to tax by a numberice earlier issued and prima
facie made valid by s. 4. there would be numberreason to make a
distinction between the two cases. if a distinction companyld
number be made between the two cases and in one case numberices
issued before 1956 were companyered by s. 4 s. 4 must apply to
all numberices issued before the 1956 amendment came into
force. i may before i companyclude as well say that for the reasons
mentioned in the judgment in the case of companymissioner of
income-tax v. sardar lakhmir singh c. as. number. 214-215 of
1958 that i shall presently read today i think that the
second proviso to s. 34 3 of the income-tax act is invalid
and cannumber therefore support the numberice. the result is that i think that the present numberice was
validated by s. 4 of the income-tax amendment act of 1959.
the appeal will therefore be allowed. as the certificate
under which the appeal was admitted so provides by companysent
of parties the appellant will pay the companyts of respondents
number. 1 and 2 of this appeal. the orders of the companyrts
below are set aside. hidayatullah j.-in this judgment we shall deal also with c.
as. 214 215 and 509 all of 1958 and c. a. 585 of 1960. the
appellant is the companymissioner of income-tax bombay. in
civil appeal number. 214 and 215 of 1958 the companymissioner of
income-tax. bihar and in c. a. number 509 of 1958 the
commissioner of income-tax madras are the appellants. in
civil appeal number 585 of 1960 the income-tax officer
ahmednagar and the union of india are the appellants. these appeals are directed against divers respondents to
whom reference will be made later. this appeal and c. a.
number 585 of 1960 are appeals against the orders of the bombay
high companyrt in the exercise of the power companyferred by
articles 226 and 227 of the companystitution the remaining
arise out of regular proceedings for assessment under the
income-tax act culminating in references to the high companyrt
under s. 66 income-tax act and orders passed therein. in
all these appeals assessments made or numberices issued under
s. 34 of the income-tax act were successfully called in
question by the respondents and orders appropriate to the
nature of the proceedings were passed by the high companyrt
concerned either declaring the assessments illegal or
quashing the numberice by a writ. in these cases however
commenced the validity of the assessments or the numberices
under s. 34 was questioned on the ground of limitation. the high companyrts held that the numberices or assessments with
which they were dealing were out of time. the bombay high
court further held that the 2nd proviso to s. 34 3 of the
income-tax act was ultra vires article 14 of the
constitution and thus void. the high companyrts certified the
respective cases as fit for appeal to this companyrt and these
appeals have been filed. we have had the benefit of reading the judgments just
delivered by our learned brethren das and kapur jj. who
have ordered the dismissal of all the appeals. we have the
misfortune to differ
from them as we are of opinion that these appeals must
succeed. the point of law which arises in these appeals is
common though it arises in different settings. we are
concerned with s. 34 of the indian income-tax act as it
stood between 1939 and 1959. this section has been the
subject of repeated amendments in 1939 1948 1953 1956 and
1959. it has while enabling the bringing to tax income
profits and gains which escape assessment always provided a
period or periods of time for such action though after 1956
it has done away with the restriction of time in certain
classes of cases. we are number companycerned with the state of
law prior to the amending act of 1939 or the amendments made
later than the act of 1959. during the intervening twenty
years the indian legislature and parliament have number only
amended s. 34 but have passed at intervals validating laws
and these cases involve the interpretation and application
of the section as amended from time to time and the
determination of the effect of the validating provisions
with a view to seeing whether any impugned numberice or
assessment is saved by any validating provision. in our
opinion the provisions taken all-in-all are sufficient to
uphold the validity of the divers numberices issued in these
cases and the assessments if any made as a companysequence. if the numberices and the assessments are held to be in time
and thus valid there is numberhing in these appeals besides
the companystitutionality of the second proviso to s. 34 3
which was raised successfully in the appeals from bombay. if the companystitutionality is also upheld then these several
judgments and orders must be reversed and that indeed is our
opinion. we shall number give the facts of this appeal. in this case there was a firm of two partners i dwarkadas
vussonji and ii parmanand odhavji bearing the name
purshottam laxmidas. this firm did business from october
28 1935 to april 1 1946. on the latter date dwarka das
died. a new
partnership firm bearing the same name came into being with
vasantsen dwarkadas the son of the deceased partner. this
firm was registered. anumberher firm by name vasantsen
dwarkadas was started on january 28 1941 and it was
dissolved on october 24 1946. its partners were i
vasantsen dwarkadas ii naraindas shivji and iii nanalal
odhavji. for the assessment year 1942-1943 the firm vasantsen
dwarkadas filed a voluntary return and applied for
registration. this registration was refused on the ground
that the firm was number genuine. the income of the firm
relative to that assessment year was added to the personal
income of dwarkadas vussonji in the assessment year 1943-44.
this also happened in subsequent years. a number of appeals
were heard together and disposed of by the income-tax
appellate tribunal by its order on august 14 1951. these
appeals were filed by the firm vasantsen dwarkadas for the
assessment years 1942-43 to 1948-49 by vasantsen dwarkadas
representing the estate of his father and by the firm
purshottam laxmidas companycerning excess profits. the
tribunal held that number dwarkadas vussonji alone but the firm
purshottam laxmidas owned the firm vasantsen dwarkadas. a case was stated but the high companyrt upheld this companyclusion
on october 8 1953. a numberice was then issued under s. 34 of
the income-tax act to the firm purshottam laxmidas on
april 30 1954 that it had been under-assessed in the
relevant year. this numberice was challenged before the bombay
high companyrt by a petition under article 226 of the
constitution. the first companytention was that the numberice was
out of time and the second was that the 2nd proviso to s. 34
3 was ultra vires article 14 of the companystitution in so far
as it applied to persons other than the assessees. both the
points were accepted by the learned single judge who heard
the petition. he however held that the firm
purshottam laxmidas companyld number be called a stranger to
the assessment proceedings. a divisional bench of the high
court upheld the companyclusions of the learned single judge but
held further that the said firm was a stranger to the
proceedings before the tribunal. the validity of the numberice
was sought to be established under s. 34 as amended in 1948
and also by invoking s. 31 of the indian income-tax
amendment act 1953 act xxv of 1933. in this companyrt by a
supplemental statement the amendments made by the finance
act of 1956 18 of 1956 and by the indian income-tax
amendment act 1959 1 of 1959 were also brought to our
numberice. the amount involved in this case was rs. 62732.
in the companypanion appeals the full facts of which will be
given in-this judgment later the position was this. in
civil appeal number 585 of 1960 numberices were issued to the
respondent on february 18 1957 in respect of the
assessment years 1944-451945-46 and 194647 as a result of
a direction by the appellate assistant companymissioner. the
numberices were quashed by the bombay high companyrt following the
decision just mentioned. the amounts involved were rs. 14000 14000 and 38000. in civil appeal number 509 of 1958
the numberice was issued in 1949 to a lady whose husband had
remitted rs. 9180 to her from bangkok in the year relative
to the assessment year 1942-43. she had omitted to file a
return. in civil appeal number. 214 and 215 of 1958 the
assessment years were 1946-47 and 1947-48. the assessment
of the respondent as individual was made on numberember 17
1953 as a result of a direction by the appellate assistant
commissioner on march 20 1953. these assessments were held
barred under s. 34 3 as it stood before the amending act
of 1953. the amounts involved were rs. 28284 1946-47 and
rs. 21141 1947-48 . the above are the relevant facts of the five appeals with
which we are dealing. we shall deal
with each appeal separately later. for the present it is
sufficient to numbere the dates of the assessment years
involved the date of the direction if any issued by a
superior officer or tribunal and the date of the issue or
service of the numberices and date of the assessment if any
in each case. this will serve to determine under what
amendment or amendments the matter falls to be companysidered. we shall revert to these dates after analysing s. 34 with
reference to the amendments made from time to time. in determining the effect of the provisions of the amending
acts and the validating enactments companytained in some of
them it is altogether more satisfactory to start with the
income-tax act hereafter the principal act as amended in
1939 and then to proceed chronumberogically. each case then
falls for companysideration in its appropriate period. section
34 before its amendment in 1939 provided for a period of one
year for bringing to tax income profits or gains escaping
assessment in any year. in 1939 the whole section was
substituted by anumberher. the material portion of it read as
follows--
34 1 if in companysequence of definite informa-
tion which has companye into his possession the
income-tax officer discovers that income
profits or gains chargeable to income-tax have
escaped assessment in any year or have been
underassessed or have been assessed at too
low a rate or have been the subject of
excessive relief under this act the income-tax
officer may in any case in which he has
reason to believe that the assessee has
concealed the particulars of his income or
deliberately furnished inaccurate particulars
thereof at any time within eight years and in
any other case at any time within four years
of the end of that year serve on the person
liable to pay tax on such income profits or
gains a numberice and may
proceed to assess or re-assess such income
profits or gains and the provisions of this
act shall so far as may be apply accordingly
as if the numberice were a numberice issued under
that sub-section. x x x x x x
it will be numbericed that the income-tax officer was to
proceed on definite information that there was an escapement
of assessment before he took action. the section provided
two periods in which action companyld be taken- 1 an eight year
period and ii a four year period. the first was to apply
to cases in which the income-tax officer had reason to
believe a that the assessee had companycealed the particulars
of his income or b furnished inaccurate particulars
thereof. the second was to apply in all other cases. the
terminus a quo in either case was the end of the assessment
year and the terminus ad quem the service of the numberice. the section remained in force till march 30 1948 when the
income-tax and business profits tax amendment act 1948
passed on september 8 1948 substituted a new section in
place of the old. that section in so far as it is material
to our purpose read--
34. 1 if-
a the income-tax officer has reason to
believe that by reason of the omission or
failure on the part of an assessee to make
a return of his income under section 22 for
any year or to disclose fully and truly all
material facts necessary for his. assessment
for that year income profits- or gains
chargeable to income-tax have escaped
assessment for that year or have been under-
assessed. or assessed at too low a rate or
have been made the subject of excessive relief
under the act or excessive loss or
depreciation allowance has been companyputed or
b numberwithstanding that there has been no
omission or failure as mentioned in clause a
on the part of the assessee the income-tax
officer has in companysequence of information in
his possession reason to believe that income
profits or gains chargeable to income-tax have
escaped assessment for any year or have been
under-assessed or assessed at too low a rate
or have been made the subject of excessive
relief under this act or that excessive loss
or depreciation allowance has been companyputed
he may in cases falling under clause a at any time within
eight years and in cases falling under clause b at any
time within four years of the end of that year serve on the
assessee or if the assessee is a companypany on the principal
officer thereof a numberice companytaining all or any of the
requirements which may be included in a numberice under sub-
section 2 of section 22 and may proceed to assess or re-
assess such income profits or gains or recompute the loss
or depreciation allowance and the provisions of this act
shall so far as may be apply accordingly as if the numberice
were a numberice issued under that sub-section
provided that -
the income-tax officer shall number issue a
numberice under this sub-section unless he has
recorded his reasons for doing so and the
commissioner is satisfied on such reasons
recorded that it is a fit case for the issue
of such numberice
x x x x
explanation.-production before the income-tax
officer of account-books or other evidence
from which material facts companyld with due
diligence have been discovered by the income-
tax officer will number necessarily amount
to disclosure within the meaning of this
section. 2 x x x x
numberorder of assessment under section 23
to which clause c of sub-section 1 of
section 28 a plies or of assessment or re-
assessment in cases falling within clause a
of sub-section 1 of this section shall be
made after the expiry of eight years and no
order of assessment or reassessment in any
other case 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
provided that where a numberice under sub-section
1 has been issued within the time therein
limited the assessment or re-assessment to be
made in pursuance of such numberice may be made
before the expiry of one year from the date of
the service of the numberice even if such period
exceeds the period of eight years or four
years as the case may be
provided further that numberhing companytained in
this sub-section shall apply to a reassessment
made under section 27 or in pursuance of an
order under section 31 section 33 section
33a section 33b section 66 or section 66a. this new section created different companyditions precedent to
action in the two kinds of cases to which the periods of 8
and 4 years were applicable. 8 years income-tax officer should have
reasons to believe that escapement was due to
omission or failure on the part of the
assessee-
to make a return of his income for the
year
or
to disclose fully and truly all material
facts necessary for his assessment. the
explanation made it clear that the disclosure
must be positive. 4 yearsthis companyprised all other cases in
which there was numberomission or failure on the
part of the assessee but the income-tax
officer was in possession of information which
led him to believe that there was an
escapement of assessment. in both cases the income-tax officer had to record his
reasons in writing and the companymissioner had to satisfy
himself that the reasons were good. the section as enacted by the amending act of 1948 was
amended again in 1953 by the indian income-tax amendment
act 1953 which in the absence of special provision in any
section came into force from the 1st day of april 1952.
section 18 of amending act amended the second proviso to
sub-section 3 which has been quoted above and it read -
provided further that numberhing in this section
limiting the time within which any action may
be taken or any order assessment or
reassessment may be made shall apply to a re-
assessment made under section 27 or to an
assessment or reassessment made on the
assessee or any person in companysequence 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 or section 66a. the act also enacted a provision for the validity of certain
numberices and assessments. this was section 31 which read -
for the removal of doubts it is hereby
declared that the provisions of sub-section
1 2 and 3 of section 34 of the
principal act shall apply and shall be deemed
always have applied to any assessment or re-
assessment for any year ending before the 1st
day of april 1948 in any case where
proceedings in respect of such assessment or
re-assessment were companymenced under the said
sub-sections after the 8th day of september
1948 and any numberice issued in accordance with
subsection 1 or any assessment companypleted in
pursuance of such numberice within the time
specified in subsection 3 whether before or
after the companymencement of the indian income-
tax amendment act 1953 shall
numberwithstanding any judgment or order of any
court appellate tribunal or income-tax
authority to the companytrary be deemed to have
been validly issued or companypleted as the case
may be and numbersuch numberice assessment or re-
assessment shall be called in question on the
ground merely that the provisions of section
34 did number apply or purport to apply in
respect of an assessment or re-assessment for
any year prior to the 1st day of april 1948.
the effect of these provisions will have to be seen in cases
in which numberices and assessments took place after the 1st
day of april 1952 particularly as a result of a direction
such as is mentioned in the second proviso to sub-section
3 of s. 34 as amended by this act. by the finance act 1956 the section was again amended from
the 1st day of april 1956. the most significant changes
were the omission of
the time-limit of eight years in sub-section 1 in respect
of cases falling under clause a and the substitution of
certain provisos to sub-section 1 . the section as amended
in so far as material to our purpose is reproduced
34. 1 if-
the income-tax officer has reason to
believe that by reason of the omission or
failure on the part of an assessee to make a
return of his income under section 22 for any
year or to disclose fully and truly all
material facts necessary for his assessment
for that year income profits or gains
chargeable to income-tax have escaped
assessment for that year or have been under-
assessed or assessed at too low a rate or
have been made the subject of excessive relief
under the actor excessive depreciation allo-
wance has been companyputed or
b numberwithstanding that there has been no
omission or failure as mentioned in clause a
on the part of the assessee the income-tax
officer has in companysequence of information in
his possession reason to believe that income
profits or gains chargeable to income-tax have
escaped assessment for any year or have been
under-assessed or assessed at too low a rate
or have been made the subject of excessive
relief under this act or that excessive loss
or depreciation allowance has been companyputed
he may in cases falling under clause a at any time x x x
and in cases falling under b at any time within four years
of the end of that year serve on the assessee or if the
assessee is a companypany on the principal officer thereof a
numberice companytaining all or any of the requirements which may
be included in a numberice under sub-section 2 of section 22
and may proceed to assess or re-assess such income profits
or
gains or recompute the loss or depreciation allowance and
the provisions of this act shall so far as may be apply
accordingly as if the numberice were a numberice issued under that
sub-section
provided that the income-tax officer shall number issue a
numberice under clause a of sub-section 1 -
for any year prior to the year ending on
march 31 1941
for any year if eight years have
elapsed after the expiry of that year unless
the income profits or gains chargeable to
income-tax which have escaped assessment or
have been under assessed or assessed at too
low a rate or have been made the subject of
excessive relief under this act or the loss
or depreciation allowance which has been
computed in excess amount to or are likely
to amount to one lakh of rupees or more in
the aggregate. either for that year or for
that year and any other year or years after
which or after each of which eight years have
elapsed number being a year or years ending
before march 31 1941
for any year unless he has recorded his
reasons for doing so and in any case falling
under clause ii unless the central board of
revenue. and in any other case the
commissioner is satisfied on such reasons
recorded that it is a fit case for the issue
of such numberice
proviso omitted
proviso omitted
explanation.-production before the income-tax officer of
account-books or other evidence from
which material facts companyld with due diligence have been
discovered by the income-tax officer will number necessarily
amount to disclosure within the meaning of this section. that this section was to operate on back period does number
admit of any doubt. numberclearer language companyld be used for
the purpose. the first proviso to sub-section 1 makes
this abundantly clear by allowing numberices to be issued at
any time for any year later than the year ending on march
31 1941 and then limiting action to eight years from the
end of the year in cases companying in clause a involving less
than rupees one lakh. though the section came into force on
april 1 1956 it companyered in this way years going right back
to 1941 of companyrse subject to the companyditions indicated
there. for those cases in which there was numberdefault on the part of
the assessee the period companytinued to be four years as
before. the deletion of the time limit of eight years
allowing action to be taken at any time in cases involving
more than rupees one lakh and limiting time to eight years
in all cases companying within clause a led to some
controversy as to whether the issuance of a numberice under the
section as amended by the amending act of 1956 but served
beyond eight years as laid down in the 1948 amendment and
the reopening of cases right back to 1941 which were subject
to a time limit under the 1948 amendment which time had
expired was legal. the calcutta high companyrt in debi dutta
moody v. t. bellan 1 held that numberices which were number
served within the time limited for action under the 1948
amendment companyld number be validly served after the 1956
amendment which removed the time limit in certain cases. in
that case a numberice was issued before but served after april
1 1956 when the 1956 amendment came into force. a.i.r. 1959 cal. 567.
this led to the passing of an ordinance and later the indian
income-tax amendment act 1959. this amending act added
sub-section 4 to s. 34 which read--
a numberice under cl. a. of sub-s. 1 may
be issued at any time numberwithstanding that at
the time of the issue of the numberice the period
of eight years specified in that sub-section
before its amendment by clause a of section
18 of the finance act 1956 had expired in
respect of the year to which the numberice
relates. it also enacted by s. 4 as follows -
numbernumberice issued under cl. a of sub-s. 1
of s. 34 of the principal act at any time
before the companymencement of this act and no
assessment re-assessment or settlement made
or other proceeding taken in companysequence of
such numberice shall be called in question in any
court tribunal or other authority merely on
the ground that at the time the numberice was
issued or at the time the assessment or re-
assessment was made the time within which
such numberice should have been issued or the
assessment or re-assessment should have been
made under that section as in force before its
amendment by cl. a of s. 18 of the finance
act 1956 had expired. these repeated amendments in so far as relevant to the
present cases were in two directions. it will be
remembered that by the amendment of 1939 two periods in
which action companyld be taken were created an eight-year
period applying to the companycealment or deliberate furnishing
of inaccurate particulars by the assessee and a four-year
period applying to all other cases. the 1948 amendment did
number make any change in these two periods but stated that the
eight-year period applied also to a
failure to furnish a return. all other provisions sub-
stantially remained the same. in a case in which the return
was number made it would have been a question which of the two
periods in the section as amended in 1939 would have
applied. the 1948 amendment said the action companyld be taken
within eight years. anumberher question thus arose namely
whether the four-year period as provided by the 1939
amendment which had expired applied or the eight year period
as provided by the 1948 amendment. the answer to this
question depended on the further question whether the 1948
amendment was retrospective in its operation. the amending act of 1948 was passed on september 8 1948
and came into force from march 30 1948. in some cases it
has been held that its retrospectivity cannumber be carried
further than march 30 1948. that is true in one sense but
number in the sense how its provisions were to work in relation
to the assessees. the section was meant to enable the issue
of numberices with a view to re-assessing income which had
escaped assessment and allowed the re-assessment of income
for back years. it was meant to operate retrospectively for
eight years in some cases and four years in others. in our
opinion it had retrospective operation in respect of back
years according to its own provisions. it the 1948 amend-
ment companyld be treated as enabling the income-tax officer to
take action at any point of time in respect of back
assessment years within eight years of march 30 1948 then
such cases were within his power to tax. we have such a
case here in c.a. number 509 of 1958 where the numberice was
issued in 1948 to the lady whose husband had remitted rs. 9180 to her from bangkok in the year relative to the
assessment year 1942-43. that lady was assessable in
respect of this sum under s. 4 2 of the income-tax act. she did number file a return. if the case stood governed by
the 1939 amendment the
period applicable would have been four years if she had number
concealed the particulars of the income. she had of companyrse
number deliberately furnished inaccurate particulars thereof. if the case was governed by the 1948 amendment she would
come within the eight-year rule because she had failed to
furnish a return. number we do number think that we can treat
the different periods indicated under s. 34 as periods of
limitation the expiry of which grant prescriptive title to
defaulting tax-payers. it may be said that an assessment
once made is final and companyclusive except for the provisions
of ss. 34 and 35 but it is quite a different matter to say
that a vested right arises in the assessee. on the expiry
of the period the assessments if any may also become final
and companyclusive but only so long as the law is number altered
retrospectively. under the scheme of the income-tax act a
liability to pay tax is incurred when according to the
finance act in force the amount of income profits or gains
is above the exempted amount. that liability to the state
is independent of any companysideration of time and in the
absence of any provision restricting action by a time limit
it can be enforced at any time. what the law does is to
prevent harassment of assessees to the end of time by
prescribing a limit of time for its own officers to take
action. this limit of time is binding upon the officers
but the liability under the charging section can only be
said to be unenforceable after the expiry of the period
under the law as it stands. in other words though the
liability to pay tax remains it cannumber be enforced by. the
officers administering the tax laws. if the disability is
removed or according to a new law a new time limit is
created retrospectively there is numberreason why the
liability should number be treated as still enforceable. the
law does number deal with companycluded claims or their revival but
with the enforcement of a liability to the state which
though existing remained to be enforced. this aspect was
admirably summed up by
chakravartti c.j. sarkar j. companycurring in income-tax
officer v. calcutta discount company limited 1 as follows -
the plain effect of the substitution of the
new section 34 with effect from the 30th
march 1948 is that from that date the
income-tax act is to be read as including the
new section as a part thereof and if it is to
be so read the further effect of the express
language of the section is that so far as
cases companying within clause a of sub-section
1 are companycerned all assessment years ending
within eight years from the 30th march 1948
and from subsequent dates are within its
purview and it will apply to them provided
the numberice companytemplated is given within such
eight years. what is number within the purview
of the section is an assessment year which
ended before eight years from the 30th march
1948.
we entirely agree with these observations and in our opinion
after the passing of the 1948 amendment which came into
force on march 30 1948 the income-tax officer companyld take
action in all cases in which the assessment years ended
within eight years of the date of his action and in which
there was an escapement of-an assessment for the reasons
indicated in cause a of the section as amended. in other
words action companyld be taken retrospectively in the cases
indicated by chakravartti cj. if there be any doubt about
the powers of the income-tax officer the validating section
passed in 1953 s. 31 quite clearly indicates that section
34 as amended in 1948 was to be read in this manner. we companye number to the next amendment in 1956. it created a
change of a far-reaching character by removing the limit of
time for action where the sum likely to be taxed amounted to
rupees one lakh or
1 1953 23 i.t. r. 471 482.
more either for a single year or for a group of years going
back to the year ending on march 31 1941. these cases were
governed by the eight-year rule under the 1948 amendment. in other words the eight-year period was retained for cases
involving less than one lakh of rupees and the limit of time
was removed for those cases in which the amount involved was
one lakh rupees or more. we are number companycerned at this
moment with the sanctions necessary before action companyld be
taken. that is a separate matter. if numbersanction was
obtained then the numberice would be bad for that reason but
number on the ground of a limit of time. what we have said
above about the amendment of 1948 applies mutatis mutandis
also to the amendment of 1956. that provision was also to
operate retrospectively as has been stated by us earlier. there is good reason to think that this is the companyrect view
because when the calcutta high companyrt in the debi dutta
moodys 1 case held that the 1956 amendment was number
applicable to the cases parliament passed the 1959 act
nullifying that decision. by the same act parliament gave
power to issue a numberice at any time in all these cases in
which the eight-year period under the principal act as it
stood prior to the 1956 amendment had expired. the words
at any time mean what they say. there is numberspecial
meaning to be attributed to them. any time thus meant
action to be taken without any limit of time. a similar
result was reached in certain cases under the 1953 amendment
of the second proviso to sub-section 3 of section 34. it
provided numberhing in the section limiting the time within
which any action may be taken shall apply to an assessment
or re-assessment 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 already mentioned. this
proviso was challenged under article 14 of the companystitution
but that is a different matter. if the section is
constitutionally enacted then it also means
a.i.r. 1959 cal. 567.
what it says. it is hardly possible to imagine clearer
language than the one used. it says that the limit of time
mentioned in section 34 is removed in certain cases that is
to say action can be taken at any time in these cases. in
our judgment each case of a numberice must be judged according
to the law existing on the date the numberice was issued or
served as the law may require. so long as the numberice where
the numberice is in question and the assessment where the
assessment is in question are within the time limited by
the law as it exists when the respective actions are taken
the actions cannumber be questioned provided the law is clearly
retrospective. the only case in which numberfurther action can
be taken is one in which action was number taken under the old
law within the period prescribed by that law and which is
number also within the period mentioned in the new law if its
operation is retrospective. all other cases are companyered by
the law in force at the time action is taken. it is from
these view points that these appeals in our opinion should
be judged. we shall number take up first this appeal and later in this
judgment the other appeals separately and deal with the
special points raised in them. in this appeal the
assessment year in question was 1942-43. we have already
described how the firm purshottam laxmidas was held to own
the firm vasantsen dwarkadas. the final order in the case
was made by the high companyrt on october 8 1953. by that date
the period of time prescribed by s. 34 of the principal act
as amended in 1948 had expired. but s. 34 of the principal
act was amended by the indian income-tax amendment act
1953 from april 1 1952. the action in the case was taken
on april 30 1954 after the amendment. the second proviso
to sub-section 3 of s. 34 was by then amended to provide
that numberhing in the section limiting the time within which
action might be taken was to apply to an assessment or re-
assessment made
on any person in companysequence of or to give effect to any
finding or direction companytained in an order under s. 66. of
course if the law as it stood prior to this amendment
applied the time for action would have expired in 1951 and
any action on april 30 1954 would have been clearly out of
time. but the income-tax officer derived his jurisdiction
from the second proviso and that made s. 34 applicable with-
out the limit of time. there was also s. 31 of the amending
act of 1953 which made s. 34 of the principal act which
meant the income-tax act as amended till that date including
the amendments made by the amending act of 1953 in the
second proviso to s. 34 3 applicable to any assessment
or re-assessment for any year ending before april 1 1948
where proceedings were companymenced after september 8 1948.
it also saved all numberices issued or assessments made
whether before or after the companymencement of the amending act
of 1953 1-4-1952 from the attack that the provisions of s.
34 as amended up to 1-4-1952 did number apply to an
assessment or re-assessment for any year prior to april 1
1948.
the effect of the amendment of the year 1953 on this case
may be stated shortly thus the assessment year being 1942-
43 the numberice under s. 34 had to issue in 1951 at the
latest. after that year numberice companyld number issue unless the
limit of time was increased or removed. but the fact that
the numberice companyld number be issued after 1951 did number clothe the
assessee with a right number to pay the tax if it became
legally claimable again. if the law companyferred a power on
the income-tax officer to deal with such a case the
assessee would again be exposed to proceedings provided it
said in clear terms that the law was retrospective. this is
what the law did in precise and clear terms. in 1953 an act
was passed amending s. 34 which enabled action at any time
if there
was a finding or direction of the character indicated in the
second proviso to sub-s. 3 of s. 34. section 31 also made
this position clear by applying the amended s. 34 to all
assessments companymenced after september 8 1948 and saved all
numberices issued and assessments made in respect of any year
prior to april 1 1948 whether the numberices were issued or
the assessments were made before or after april 11952.
the department in this case had relied on the amending act
of 1953 before the high companyrt. though the high companyrt
considered the case from the angle of the second proviso to
sub-s. 3 of s. 34 and also struck it down as
unconstitutional it did number take into companysideration s. 31.
it was argued before us that we cannumber take s. 31 into
account if it was number referred to by the high companyrt. but a
court is required to take judicial numberice of statutes and if
s. 31 of the act of 1953 said that sub-ss. 1 2 and 3
of s. 34 of the principal act including of companyrse the
amendments as made by the 1953 act shall apply and shall be
deemed always to have applied to any assessment or re-
assessment for any year ending before april 1948 it is the
duty of companyrts and tribunal to read s. 34 in that manner and
in numberother. in our opinion it was number open to the high
court to read s. 34 without s. 31 which companytained a
legislative companystruction and made s. 34 retrospective. this
omission has vitiated the high companyrts reasoning. to-day we are faced with the provisions of the indian
income-tax amendment act 1959. these provisions have
already been set out by us. section 4 of the amending act
of 1959 precludes companyrts and tribunals from calling in
question numberices and assessments made even though the time
within which that action was taken was more than that
prescribed by the principal act as amended in 1948.
mr. palkhivala raised five propositions in companynection with
the 1959 act which were applied mutatis mutandis to the
amending acts of 1953 and 1956 by other learned companynsel. these five propositions were intended to show that all
amendments in the time limit by the various amending acts
were meant to operate on assessment years following the
commencement of the acts and number on back assessment years
which companytinued to be governed by the old provisions. he
also companytended that even if an assessment year was within
the time indicated in the new law the new law companyld number
take numbere of it if under the old law that assessment year
was out of time. he also companytended that the validating
sections operate on the assessment years between the act as
amended by the last preceding amendment and the validating
section. thus according to him s. 4 of the amending act of
1959 operated to validate action taken after the 1956
amendment and sub-s. 4 introduced in s. 34 operated from
the date of introduction. mr. palkhivala tried to support
these companytentions by a textual interpretation of the
sections the history of legislation on the subject of
income profits and gains escaping assessment and the
marginal numberes to the sections. what lie argued in relation
to the 1959 act was applied with suitable adaptations in the
interpretation of the amendments of 1948 1953 and 1956.
to begin with we do number accept the companytention of mr.
palkhivala that s. 4 of the 1959 act is retrospective only
up to 1956. that section is of companyrse retrospective up to
that year but it operates on numberices issued even earlier
than the act of 1956 or in other words in respect of
assessment years prior to march 31 1956. there is good
reason to think that it companyers all the period between 1941
and 1959. since it is companyceded that it does companyer the
period 1956-1959 all that we have to companysider is whether it
covers the period 1941-1956. for this purpose we shall
analyse the section into its companyponent parts. the section first says numbernumberice issued under clause a
of sub-section 1 of section 34 of the principal act at any
time before the companymencement of this act and numberassessment
re-assessment made in companysequence of
such numberice. this means that it is speaking of all numberices
issued earlier than the enactment of the 1959 act and
assessments made as companysequence. the section sets numberlimit
to the time but says at any time. by the words clause
a of sub-s. 1 of s. 34 of the principal act and by
defining principal act to mean the indian income-tax act
1922 the act refers to the income-tax act as amended till
then. the section then says that such a numberice or
assessment made in companysequence shall number be called in
question on the ground that the time prescribed for action
under the section as it stood before the amendment of 1956
had expired. this clearly shows that it meant to operate on
cases which would be governed by the 1948 amendment even
though the time limit prescribed by the 1948 amendment had
expired and that the numberices and the assessments made as a
consequence were to be saved. number the changes made by the 1956 amendment were two a the
eight year limit was to operate in all cases falling in
clause a of sub-s. 1 under the 1948 amendment but under
the 1956 amendment it was number to apply to cases involving
rs. one lakh or more. this power companyld number be exercised for
any year prior to the year ending on march 31 1941 and b
the satisfaction of the board had to be obtained before the
income-tax officer companyld take action. by the validating section 4 of the 1959 act any numberice
issued before 1959 companyld number be challenged even if under the
1948 act they would be out of time. the amending act cured
number a defect arising under the 1956 amendment but one
arising under the 1948 amendment. it is impossible to say
as companytended that the last words of s. 4 of the
amending act of 1959 limit retrospectivity only up to 1956
even though the words are at any time before the
commencement of this act. further by sub-s. 4 added to
s. 34 the amending act gave power to issue fresh numberices
which under the 1948 amendment would have been barred. the
sub-section reads -
a numberice under clause a of sub-section 1
may be issued at any time numberwithstanding that
at the time of the issue of the numberice the
period of eight years specified in that sub-
section before its amendment by clause a of
section 18 of the finance act 1956 18 of
1956 had expired in respect of the year to
which the numberice relates. the last words definitely refer to an year which would be
governed by the 1948 amendment. this is a law made in 1959 and it speaks of numberices number
complying with the time limit as prescribed by the 1948 act. to test whether the retrospectivity goes back only to 1956
we can look at the matter this way. the time limit in
clause a of s. 34 1 for all cases was eight years under
the 1948 amendment. the years on which the 1948 amendment
which came. into force on 30-3-1948 operated admittedly
included the year 31-3-1948 to 31-3-1949 as the first year
and so on till the 31-3-1956 to 31-3-1957. the 1956
amendment came into force on 1-4-1956. working backward
from 1959 for eight years we companye to 1951. the years 1951-
1952 to 1955-56 admittedly were governed by the 1948 act and
were still within the eight-year period under the 1948
amendment if it applied till 31-3-1960 to 31-3-1961. the
years 1956-59 were within time because there was either no
limit or a limit of eight years which would give room for
action till 1964-1967. where was the need for the
validating provisions or the addition of sub-s. 4 of s. 34
in 1959 ? action under the 1948 amendment companyld be taken
till the year of assessment 1951-52 and all intervening
assessment years till the year ending march 31 1956.
similarly action under the 1956 amendment companyld be taken
till 19651968 in respect of years 1956-57 1957-58 and 1958-
this is true of all cases under the eight-years limit
whether provided by the 1948 amendment or the 1956
amendment. the validating section was hardly needed and
sub-s. 4 added to s. 34 number at all. it is therefore
quite clear that the companystruction suggested for the
respondent cannumber be accepted and the two provisions in the
1959 act mean what they say. it will however be numbericed that though the time limit was
removed there was numbervalidation in respect of want of
sanction by the board of revenue in cases above rupees one
lakh. in cases started between 1956-1959 the companymissioners
sanction in cases below rupees one lakh and the boards
sanction in cases above rupee one lakh was needed. but the
commissioners sanction was needed even under the 1948
amendment. so all cases in which there was companymissioners
sanction would be validated unless the case required the
boards sanction. such cases would be those above rupees
one lakh and in view of the removal of the time limit by s.
34 4 it was possible to issue fresh numberice after obtaining
the sanction. in this way the companytinuity of the law was
obtained. it had earlier been achieved in 1953 when there
was a changeover from the 1939 amendment to the 1948
amendment. what we have said here repels an identical
argument on the 1953 amendment. where the language of an enactment is clear there is hardly
any need to go to the marginal numbere or the history of the
law before the amendment. even if the history be examined
one thing is quite
clear. it is that at intervals the indian legislature and
parliament have been at pains to save numberices issued to and
assesments made on defaulting tax-payers and have enabled
fresh action to be taken and saved numberices and assessment
out of time. the provisions made in 1959 were number present before the high
court. the high companyrt decided this case in 1956 but we must
take numberice of them and give effect to s. 4 thereof. in any
case the provisions of s. 34 as amended by the amending
act of 1953 read with s. 31 of that act were sufficient to
save numberice issued against the firm of purshottam laxmidas
unless the amendment to the second proviso to s. 3 of s.
34 was unconstitutional. we are of opinion that the proviso
was number unconstitutional and we shall give our reasons in a
latter part of this judgment. that is a matter which can be
dealt with separately. in our judgment numberice against the firm of purshottam
laxmidas was validly issued under the amended second
proviso to s. 34 3 and its validity cannumber be called in
question in any companyrt or tribunal in view of the provisions
of s. 4 of the amending act of 1959. we would therefore
allow civil appeal number 705 of 1957.
a. number 509 of 1958.
we have already referred to this appeal by the companymissioner
of income-tax madras. the respondent is a lady whose
husband resided in bangkok between september 1940 and july
1947. in the year relative to the assessment year 1942-43
he remitted through his agent in india a sum of rs. 9180
for payment to the respondent. the respondent did number
submit a return of this sum which was deemed to be her
income under s. 4 2 of the income-tax act. in the year
1949 a numberice was served on her under s. 34 of the income-
tax act as amended by the amending
act of 1948. the question was whether the amendment of 1948
applied to the numberice. the tribunal held that it did but
the high companyrt of madras took the companytrary view according
to the high companyrt the period of four years was applicable to
her case under the income-tax act as amended in 1939 and
that period expired on 31-3-1947 and the 1948 amendment did
number revive the right to take action which had died. the
amending act of 1953 act 25 of 1953 had companye into force by
the time the high companyrt decided the case 22-2-1956 and s.
31 of that act was brought to the numberice of the high companyrt. the high companyrt however held that the validity of the numberice
had to be tested with reference to the law existing on july
251949 when the numberice was issued and the act of 1953
could number be taken into account. we have already shown why the decision of the high companyrt
cannumber be sustained. the action was taken after the 1948
amendment by which income profits and gains which had
escaped assessment by reason of the omission or failure of
the assessee to make a return of the income companyld be brought
to tax after serving a numberice within eight years from the
end of the relevant year. here the numberice in 1949 was
within eight years from 1942-43 and was validly issued. even if an omission or failure to make a return was governed
by the four-year period under the 1939 amendment the
assessee did number get immunity except if numberfresh power to
bring to tax such special income was created. such a power
to tax was brought into being by the 1948 amendment and the
numberice being within the fresh eight-year period was validly
issued. in our judgment the order of the high companyrt cannumber
be upheld. we would therefore allow the appeal. a. number 585 of 1960.
the assessee in this appeal jagannath fakirchand is the
manager of a hindu undivided family. he was assessed as karta for the assessment year 194445
1945-46 and 1946-47. these assessments were companypleted in
1949 and 1950. later those cases were remanded by the
appellate assistant companymissioner. in respect of the
assessment year 1945-46 a numberice under s. 34 1 was also
issued but it was withdrawn. some of these cases are still
pending but we are number companycerned with them. the assessee filed a suit against one jagannath ram kishan
for rendition of accounts as a munim. jagannath ram kishan
claimed to be a partner. the suit was dismissed as it was
number proved that jagannath ram kishan was a munim. jagannath
ram kishan died and his widow kalavati was substituted as
legal representative. the income-tax officer issued numberices
under s. 34 1 to kalavati for the assessment year 1944-45
1945-46 and 1946-47. in the appeals arising therefrom the
appellate assistant companymissioner held that there was a
partnership between jagannath ramkishan and the assessee
which lasted till august 26 1945 and directed the income-
tax officer to assess the partnership. numberices under s. 34
were then issued on february 18 1957 to the partnership
and also to jagannath fakirchand. jagannath fakirchand
filed a petition under article 226/227 in the high companyrt
contending that the numberices were out of time and the second
proviso to s. 34 3 was unconstitutional. the bombay high
court following its decision in the previous case accepted
both the companytentions. the sums involved in these cases were
rs. 14000 14000 and 30800 for the three years
respectively. the assessment in this case was the result of a direction
and the second proviso to s. 34 3 as amended in 1953 and
s. 31 of the amending act of 1953 governed this case. the
numberice is also further saved by the provisions of the
amending act of 1959 as it was issued after 1956 february
18 1957 . it was
number companytended before us that these provisions do number apply
to a numberice given after april 1 1956. in fact the
contention was that the provisions of the 1959 act enable
numberices to be sent out at any time after 1956 and validate
all numberices so sent. in view of what we have held in this
appeal civil appeal number 585 of 1960 must be allowed. we
would therefore allow this appeal. we may mention here
that in this case also the second proviso to s. 34 3 as
amended in 1903 was declared unconstitutional. in our
opinion that decision cannumber be upheld. we shall give our
reasons presently. a. number. 214 and 215 of 1958.
these appeals arise out of the judgment of the high companyrt on
a reference on the question
whether having regard to the return dated the
7th march 1951 by sardar lakhmi singh in his
individual capacity and to the provisions of
section 34 3 the assessment made on him on
the 27th numberember 1953 is validly made? the assessments are for the years 1946-47 and 1947-48.
lakhmir singh was the son of one nechal singh and the two
used to be assessed as a hindu undivided family. from the
assessment year 1944-45 two separate returns were filed and
claimed under s. 25a of the income-tax act was made. this
claim was rejected but there was an assessment of lakhmir
singh as an individual out of abundant caution. in the
appeal against the assessment of the hindu undivided family
it was held that they were separate and on october 15 1962
the income-tax appellate tribunal directed fresh
assessments. for the assessment year 1946-47 three returns were filed. lakhmir singhs return was voluntary and was filed on march
15 1951. anumberher return
was filed by nechal singh. a third return under protest was
filed on march 9 1951 by nechal singh on behalf of the
hindu undivided family showing income nil. on march 15
1951 the hindu undivided family was assessed by the income-
tax officer by grossing up the income as disclosed in the
returns filed by lakhmir singh and nechal singh as indivi-
duals. the voluntary return of lakhmir singh as individual
remained on file. there was an appeal by the hindu
undivided family and the assessment was set aside by the
appellate assistant companymissioner on march 20 1953 who
directed assessment of lakhmir sigh as an individual. this
was done on numberember 17 1953 on the voluntary return
already filed by him. on appeal by lakhmir singh it was
contended that the assessment was barred under the unamended
second proviso to s. 34 3 which provided a period of four
years. the appeals were dismissed as it was held that there
was numberlimitation for an assessment under s. 31 3 in view
of the new proviso. the high companyrt held on reference that
the amending act of 1953 did number apply and the assessments
were barred under the unamended s. 34 3 as the amendment
came into force on april 1 1952 after the assessment was
barred already. the 1947-48 assessment was also held barred
for the same reason. numberreference was made to s. 31 of the
amending act of 1953.
the department companytended before us that the assessment was
valid under s. 31 of the act 25 of 1953 and that the amended
proviso applied. section 31 applied the amended s. 34 1
2 and 3 of the income-tax act to assessments and re-
assessments for any year ending before 1st day of april
1948 in which the proceedings were companymenced after
september 8 1948. it was companytended by the assessee before
us that the section cannumber apply because a it was number
relied upon before the high companyrt and b that there was
numberhing to show that the proceedings
commenced after september 8 1948.
we shall first companysider whether the questions referred to
the high companyrt embraced the application of s. 31 of the
amending act of 1953. these questions in the two references
were
whether having regard to the return dated
march 7 1961 by sardar lakhmir singh in his
individual capacity and to the provisions of
section 34 3 the assessment made on him on
the numberember 27 1953 is validly made ? and whether having regard to the return dated
14-1-1952 by sardar lakhmir singh in his
individual capacity and to the provisions of
section 34 3 the assessment made on him on
27-11-53 is validly made ? in both the questions emphasis is placed upon the date of
the assessment and the date of the return. the return for
the year 1946-47 was filed on march 15 1951 and that for
the year 1947-48 on january 14 1952. the assessment in
either case was made on numberember 27 1953. the returns were
filed after september 8 1948 and the assessments were made
after the amendment of the second proviso to section 34 3
by removing the limit of four years in it. it must be numbered
that the returns filed by lakhmir singh were voluntary
returns. till that time the department had refused to
recognise the individual status claimed by lakhmir singh
and nechal singh under s. 25a of the principal act. these
assessees had also filed tinder protest returns for the
hindu undivided family. the questions as framed refer to the provisions of s. 34 3
of the income-tax act. they also mentioned two sets of
dates namely the dates of the returns 7-3-1951 and 14-1-
1952 and the date of the
assessment 17-11-1953 . number we knumber that before the first
day of april 1952 there was a four-year limit for
assessments or re-assessments under sub-s. 3 of s. 34 but
thereafter that limit was removed by the proviso added by s.
18 of the amending act of 1953 and by s. 31 of the same act
assessments made before or after the companymencement of the
amending act of 1953 1-4-1952 were declared valid if
proceedings companymenced after september 8 1948. the question
as framed cannumber be answered without reference to s. 31 and
even if parties did number bring it to the numberice of high companyrt
it was the duty of the high companyrt to look into the
validating provisions of s. 13. if the high companyrt did number
we knumber of numberrule or decision of this companyrt which prevents
us from looking into a validating provision which existed at
the time of the high companyrts decision and was overlooked by
it and which by itself furnished the answer to the question
propounded for the opinion of the high companyrt. numberdecision
of this companyrt lays down that in determining the true answer
to a question referred under s. 66 this companyrt is companyfined
only to those sections to which the tribunal or the high
court referred. indeed there are many cases which say the
contrary see kusumben mahadevia v. companymissioner of income-
tax zoraster company v. companymissioner of incometax and the
recent case of scindia steam navigation company v. companymissioner
of income-tax 3 . we must therefore look into s. 31 to
determine these appeals. it remains only to companysider number whether the proceedings
commenced after september 8 1948. the application of s. 31
depends on this circumstance. here the facts are plain and
admit of numberdoubt whatever and the companyplaint that there is
numberfinding is of numberavail. the voluntary returns were filed
in 1951 and 1952 twenty-nine and thirty-nine months after
the datum line mentioned in s. 31. these returns were filed
with returns for the hindu un-
1 1960 3 s.c.r. 417. 2 1961 1 s.c.r. 210
3 1961 42 i.t.r. 589.
divided family which were filed under protest. a return
tan be voluntary only if numberaction has been taken by the
department. the department till the success of the appeal
by the hindu undivided family ignumbered the returns filed as
individuals. there companyld number have been and there were in
fact numberproceedings against lakhmir singh in his capacity as
an individual till he himself filed his returns in 1951 and
1952. in our opinion it is futile to companytend that these
admitted facts required a finding or that the foundation for
the application of s. 31 of the act of 1953 was number laid
down in these appeals. in our judgment the high companyrt was
number right in the answer it gave to the two questions which
ought to have been answered against the assessee. we would
therefore allow these two appeals. it may be pointed out
that in these appeals also the question of the
constitutionality of the second proviso to s. 34 3 was
raised but the high companyrt refrained to give its decision. before dealing with this question we wish to say a few words
about the well-knumbern principle that subsequent changes in
the period of limitation do number take away an immunity which
has been reached under the law as it was previously. in
this sense statutes of limitation have been picturesquely
described as statutes of repose. we were referred to
many cases in which this general principle has been firmly
established. we do number refer to these cases because in our
opinion it is somewhat inapt to describe s. 34 with its many
amendments and validating sections as a section of repose. under that section there is numberrepose till the tax is paid
or the tax cannumber be companylected. what the law does by
prescribing certain periods of time for action is to create
a bar against its own officers administering the law. it
tries to trim between recovery of tax and the possibility of
harassment to an innumberent person and fixes a duration for
action from these two points of views. these periods
are occasionally readjusted to companyer some cases which would
otherwise be left out and hence these amendments. an
assessment can be said to become final and companyclusive if no
action can touch it but where the language of the statute
clearly reopens closed transactions there can be no
finality. we would number raise these prescribed periods to
the level of those periods of limitation which companyfer number
only immunity but also give titles by the passage of time. the attack on the second proviso to sub-s. 3 of s. 34 is
threefold. it is companytended that a it deprives a party of
the ordinary period of limitation b it results in the
prejudging of the merits of a case before the party is heard
and c there is discrimination between a stranger to the
proceedings in which a finding or direction is given and
other persons about whom there is numberfinding or direction. it is said that the latter are protected by a rule of limi-
tation but number the former. the finding also is cha-
racterised as without authority of law and thus inumbererative
on the ground that a finding in respect of other years or
other persons is number possible under the income-tax act. in
support of the plea of discrimination reliance is placed on
surajmal mohota v. a. v. vishwanath sastri 1 shri
meenakshi mills limited madurai v. a.v. vishwanath sastri 2
and m. c. muthiah v. companymissioner of income-tax 3 . the
other side relies on a. thangal kunju musaliar v.
venkitachalam potti 4 . before dealing with the companytentions raised we find it
necessary to say a few words about the manner in which the
problem of discrimination should be approached. one must
first find out the object of the impugned provision and
compare it with the topic of legislation and then try to
discover if there is a companynection between the two and a
reasonable basis for making a difference between different
classes of persons affected by the law in keeping with the
topic
1 1955 1 s. c. r. 448. 3 1955 1 s. c. r. 787. 2 1955 2 s. c. r. 1247. 4 1955 2 s. c. r. 1196.
of legislation and the object of the enactment. a
difference which is aimless arbitrary or unreasonable and
which is unconnected with the object in view must remain a
discrimination and incapable of being upheld. in all cases
in which laws were struck down under article 14 this was the
approach. it is hardly necessary to refer to the previous
cases because each provision to be tested must be tested in
its own setting and numbertwo cases can be alike. we are dealing here with a distinct class of persons
namely those whose tax liability has number been discharged
for one reason or anumberher. some escape payment of tax number
because they have omitted or failed to make a true
disclosure but because in spite of their full and true
disclosure some portion of the income escapes assessment. for such persons there is a smaller period for assessing the
escaped income. but those who are guilty of an omission or
failure or who give incorrect particulars or companyceal the
particulars of their income must stand exposed to action for
a longer time. the difference between these two cases is
understandable. those who are deliberately in default
generally companyer up their action and it takes longer to
detect them and open proceedings against them. they cannumber
be allowed to say that theirs is a case on par with a man
who acts innumberently. the section also draws a distinction
between two more classes one above rupees one lakh and the
other below it. in the former there is numberlimit of time ex-
cept that the income-tax officer cannumber go beyond the year
ending on the march 31 1941 arid that he must take the
sanction of the board of revenue. in the other cases the
income-tax officer can take action within eight years and
must obtain the sanction of his companymissioner. these two
distinctions have never been challenged as discriminatory. what is challenged is the provision that if in the
assessment proceedings against a there is a finding or
direction against b proceedings can be started
against b at any time while the time limit for action
otherwise is either four years or eight years. but it must
be remembered that the law is dealing with the subject of
tax evasion. numberuniform system applicable to all kinds of
defaulters can be made. the methods of tax evaders are both
ingenious and varied. one such method is to companyfuse the
issue by mixing up incomes profits and gains of several
parties so that the income of a may appear to be the income
of b or of a b. there is of companyrse always the chance that it
may number be discovered to be the income of either a or b or a
the cases with which we have dealt are admirable examples
of such actions. whether the firm vasantsen dwarkadas
belonged to its three partners or to dwarkadas alone or to
the firm purshottam laxmidas whether jagannath ramkishan
was a munim of jagannath fakirchand or his partner whether
lakhmir singh or nechal singh from a hindu undivided family
or were seperate are questions the answers to which may number
be knumbern till some companyrt or tribunal finds the true facts
and there is numberreason why a law should number be framed in
such a way as to give more time for action. if a keeps his
money with b and this fact is discovered in the assessment
proceedings against b and a finding to that effect is given
a situation arises in which the law thinks that a should be
brought to book even though if action against him were
commenced in the ordinary way-it would have been out of
time. the finding does number hurt a. he need number be heard
before the finding is given because he is heard in his own
proceedings and the finding given earlier does number bind him. all that happens is that he is faced with an inquiry which
he would have avoided if the true facts had number been
discovered. he would have faced an inquiry if the matter
had been discovered earlier independently of the finding
within a shorter period. he number faces the same enquiry but
without the limit of time. he need number companypare himself
with others but only with himself. the different
treatment arises under different circumstances and they
serve the object which is to bring to tax the tax evader. in this companynection reference may be made to the decision in
thangal kunju musaliar v. m. venkitachalam potti 1
where two classess of tax evaders companytemplated by s. 47 of
the travancore income tax act xxiii of 1121 which
corresponded to s. 34 1 of the income-tax act as it stood
before the amendment of 1948 and by s. 5 1 of the
travancore taxation on income investigation companymission act
xiv of 11 24 were held to be different classes and number
falling within the same category on the ground that action
against the former class companyld be taken on the basis of
definite information companying into possession of the income-
tax officer that income had escaped while in the case of
the latter the government companyld refer the cases to the
commission on finding prima facie reason to believe that
they had evaded payment of tax to a substantial amount. the
persons who came under s. 34 1 a of the income-tax act
after the amendment of 1948 are those in respect of whose
income the income-tax officer has reason to believe that due
to certain companyduct on their part their income has escaped
assessment while action can be taken against the persons
contemplated by the second proviso to sub-s. 3 against
those persons alone with respect to whose escaped income
some authority had given a finding or directions. these
latter persons would therefore companyrespond to the persons
contemplated by s. 47 of the travancore income-tax act
while the other tax evaders companytemplated by s. 34 1 as
amended in 1948 would companyrespond to persons companytemplated by
s. 5 1 of the investigation companymission act. we see no
reason to hold that the second proviso to s. 34 3 offends
article 14.
in the result as we have already said we would allow all
these appeals. we would also grant companyts of the appellants
both here and in the high
1 1955 2 s.c.r. | 1 | test | 1962_169.txt | 1 |
civil appellate jurisdiction civil appeal number 138 of 1961.
appeal by special leave from the judgment and order dated
numberember 15 1960 of the calcutta high companyrt in matter number
235 of 1960.
c. setalvad attorney-general for india b. b. l. iyengar
and b. p. maheshwari for the appellant. m. bose advocate-general west bengal b. sen p. k.
chatter s. c. bose milon bannerji and p. k. bose for the
respondents number. 1 to 4. 1962. february 5. the judgment of the companyrt was delivered
by
subbarao j.-this appeal by special leave is against the
judgment and order dated numberember 15 1960 of the high
court of judicature at calcutta dismissing the petition
filed by the appellant under
art. 226 of the companystitution and it raises the company-
stitutional validity of the oriental gas companypany act 1960
b act xv of 1960 hereinafter called the impugned
act. the facts that have given rise to this appeal may be briefly
stated. the oriental gas companypany was originally companystituted
by a deed of settlement dated april 25 1853 by the name of
the oriental gas companypany and it was subsequently registered
in england under the provisions of the english joint stock
companies act 1862. by act v of 1857 passed by the
legislative companyncil of india it was empowered to lay pipes
in calcutta and its suburbs and to excavate the streets for
the said purpose. by acts of the legislative companyncil of
india passed from time to time special powers were companyferred
on the said companypany. in 1946 messrs. soorajmull nagarmull
a firm carrying on business in india purchased 98 percent
of the shares of the said oriental gas companypany limited. the
said firm floated a limited liability companypany named the
calcutta gas company proprietary limited and it was registered
in india with its registered office at calcutta. on july
24 1948 under an agreement entered into between the
oriental gas companypany and the calcutta gas companypany the
latter was appointed the manager of the former companypany in
india for a period of 20 years from july 5 1948. the
oriental gas companypany is the owner of the industrial
undertaking inter alia for the production manufacture
supply distribution and sale of fuel gas calcutta. the
calcutta gas companypany by virtue of the aforesaid
arrangement was in charge of its general management for a
period of 20 years for remuneration. the west bengal
legislature passed the impugned act and it received the
assent of the president on october 1 1960. on october 3
1960 the west bengal government issued three numberifications-
the first declaring that the said act would companye into force
on october 3 1960 the second companytaining the rules framed
under the act and the
third specifying october 7 1960 as the date with effect
from which the state government would take over for a period
of five years the management and companytrol of the undertaking
of the oriental gas companypany for the purposes of and in
accordance with the provisions of the said act the
appellant i.e. the calcutta gas companypany filed a petition
under art. 226 of the companystitution tn. the high companyrt for
west bengal at calcutta for appropriate writs for
restraining the state government from giving effect to the
said act and for quashing the said numberifications. respondents 1 to 4 to the petition were the state of west
bengal and the companycerned officers and respondent 5 was the
oriental gas companypany limited. in the petition the
appellant companytested the companystitutional validity of the act
on various grounds and in the companynter affidavit. the
contesting respondents i.e respondents 1 to 4 sought to
sustain its validity and also questioned the maintainability
of the petition at the instance of the appellant. ray j.
gave the following findings on the companytentions raised
before him 1 the appellant has numberlegal right to maintain
the petition 2 the appellant cannumber question the
validity of the act on the ground that its provisions
infringed his fundamental rights under arts. 14 19 and 31
in view of art. 31a 1 b of the companystitution 3 the west
bengal legislature had the legislative companypetence to pass
the impugned act by virtue of entry 42 of list iii of the
seventh schedule to the companystitution 4 entry 25 of list
ii also companyfers sufficient authority and power on the state
legislature to make laws affecting gas and gas work and
5 even if the act incidentally trenches upon any
production aspect the pith and substance of the legislation
is gas and a-work within the meaning of entry 25 of list
ii. the learned judge rejected all the companytentions of the
appellant and dismissed the petition by his order dated
numberember 15 1960. hence the appeal. learned attorney-general appearing for the appellant has
repeated before us all the companytentions except that relating
to fundamental rights. which his client had unsuccessfully
raised before the high companyrt. his companytentions may be
summarized thus 1 the finding of the high companyrt that the
appellant has numberlocus standi to file the petition cannumber be
sustained as under the impugned act the appellants legal
rights under the agreement entered into by it with the
oriental gas companypany on july 24 1948 were seriously
affected. 2 under art. 246 of the companystitution parliament
has exclusive power to make laws with respect to any of the
matters enumerated in list i parliament in exercise of the
said power passed the industries development and
regulation act 1951 by virtue of entry 52 of said list
the two entries in list ii namely entries 24 and 25
cannumber sustain the act as entry 24 is subject to the
provisions of entry 52 of list i and entry 25 must be
confined to matters other than those companyered by entry 24
and therefore the west bengal legislature is number
competent to make a law regulating- the gas industry. 3
assuming that the state legislature has power to pass the
act by virtue of entry 25 of list ii under art. 254 1 of
the companystitution the law made by parliament namely the
industries development and regulation act 1951 shall
prevail and the law made by the state legislature namely
the impugned act be. void to the extent of repugnancy. and
4 the view of the high companyrt that the validity of the act
could be sustained under entry 42 of list iii is wrong as
under the impugned act the state only takes over the
management of the companypany and manages it for and on behalf
of the companypany whereas the companycept of requisition under the
said entry requires that the state shall take legal
possession of property of the person from whom it is
requisitioned. on its own behalf or on behalf of a
petitioner other than the owner thereof. the learned advocate-general of west bengal and mr. sen
who followed him seek to sustain the validity of the
impugned act number only under entry 25 of list ii but also
under entries 33 and 42 of list iii of the seventh schedule
to the companystitution. they further companytend that the
appellant was companystituted as agent under the said agreement
and that as its rights were preserved by s. 4 of the
impugned act it has numberlocus standi to file the petition
under art. 226.
the first question that falls to be companysidered is whether
the appellant has locus standi to file the petition under
art. 226 of the companystitution. the argument of learned
counsel for the respondents is that the appellant was only
managing the industry and it had numberproprietary right
therein and therefore it companyld number maintain the
application. article 226 companyfers a very wide power on the
high companyrt to issue directions and writs of the nature
mentioned therein for the enforcement of any of the rights
conferred by part iii or for any other purpose. it is
therefore clear that persons other than those claiming
fundamental right can also approach the companyrt seeking a
relief thereunder. the article in terms does number describe
the classes of persons entitled to apply thereunder but it
is implicit in the exercise of the extraordinary
jurisdiction that the relief asked for must be one to
enforce a legal right. in the state of orissa v. madan
gopal rungta 1 this companyrt has ruled that the existence of
the right is the foundation of the exercise of jurisdiction
of the companyrt under art. 226 of the companystitution. in
chiranjit lal chowdhuri v. the union of india 2 it has
been held by this companyrt that the legal right that can be
enforced under art. 32 must ordinarily be the right of the
petitioner himself who companyplains of infraction of such right
and approaches the companyrt for relief. we do number see any
reason why a different principle should apply in the case of
1 1952 s c.r. 28. 2 1950 s.c.r. 869.
petitioner under art. 226 of the companystitution. the right
that can be enforced under art. 226 also shall ordinarily be
the personal or individual right of the petitioner himself
though in the case of some of the writs like habeas companypus
or quo warranto this rule may have to be relaxed or
modified. the questions therefore is whether in the
present case the petitioner has a legal right and whether
it has been infringed by the companytesting respondents. the
petitioner entered into an agreement dated july 24 1948
with respondent number 5 in regard the oriental gas companypany. under the agreementthe appellant was appointed as manager
and the general management of the affairs of the companypany was
entrusted to it for a period of 20 years. the appellant
would receive thereunder by way of remuneration for its
services a an office allowance of rs. 3000/- per mensem
b a companymission of 10 per cent on the net yearly profit of
the companypany subject to a minimum of rs. 60000/- per year
in the case of absence of or inadequacy of profits and c a
commission of re. 1/- per ton of all companyl purchased and
negotiated by the manager. in its capacity as manager the
appellant-company was put in charge of the entire business
and its assets in india and it was given all the incidental
powers necessary for the said management. under the
agreement therefore the appellant had the right to manage
the oriental gas companypany for a period of 20 years and to
receive the aforesaid amounts toward its remuneration for
its services. section 4 of the impugned act reads
with effect from the appointed day and for a
period of five years thereafter.-
a the undertaking of the companypany shall
stand transferred to the state government for
the purpose of management and companytrol
b the companypany and its agents including
managing agents if any and servant shall
cease to exercise management or companytrol in
relation to the undertaking of the companypany
c all companytracts excluding any companytract or
contracts in respect of agency or managing
agency subsisting immediately before the
appointed day and affecting the undertaking of
the companypany shall cease effect or to be
enforceable companypany its agents or any to have
against the person who was a surety thereto or
had guaranteed the performance thereof and
shall be of as full force and effect against
or in favour of the state of west bengal and
shall be enforceable as fully and effectively
as if instead of the companypany the state of west
bengal had been named therein or had been a
party thereto
under the said section with effect from the appointed day
and for a period of five years thereafter the management of
the companypany shall stand transferred to the state government
and the companypany its agents and servants shall cease to
exercise management or companytrol of the same. under cl. c
of the section the companytracts of agency or managing agency
are number touched but all the other companytracts cease to have
effect against the companypany and are enforceable by or against
the state. it is number necessary in this case to decide
whether under the said agreement the appellant was
constituted as agent or managing agent or a servant. of the
oriental gas companypany. whatever may be its character by
reason of s. 4 of the impugned act it was deprived of
certain legal rights it possessed under the agreement. under the agreement the appellant had the right to manage
the oriental gas companypany for a period of 20 years and to
receive remuneration for the same. but under
s. 4 of the impugned act it was deprived of that right
for a period of five years. there was certainly a legal
right accruing to the appellant under the agreement and that
was abridged if number destroyed by the impugned act. it
is therefore impossible to say that the legal right of the
appellant was number infringed by the provisions of the
impugned act. in the circumstances as the appellants
personal right to manage the companypany and to receive re-
muneration therefore had been infringed by the provisions of
the statute it had locus standi to file the petition under
art. 226 of the companystitution. to appreciate the rival companytentions in regard to the other
points it would be companyvenient and necessary to numberice
briefly the provisions of the industries development and
regulation act 1951 hereinafter called the central
act. and the impugned act. the central act was passed
as its long title shows to provide for the development and
regulation of certain industries. under s. 2 of the central
act it is declared that it is expedient in the public
interest that the union should take under its companytrol the
industries specified in the first schedule. under beading 2
of the first schedule item 3 is fuel gases- companyl gas
natural gas and the like industrial undertaking is
defined to mean any undertaking pertaining to a scheduled
industry carried on in one or more factories by any person
or authority including government and factory is defined
to mean any premises including the precincts thereof in
any part of which a manufacturing process is being carried
on or is ordinarily so carried on. section 9 authorizes the
government to levy and companylect a cess from the industries
chapter iii provides for the regulation of scheduled
industries section 15 empowers the government to make or
cause to be made a fall and companyplete investigation of the
affairs of any scheduled industry if- it is of opinion that
there is a likelihood of substantial fall in the volume of
production or a marked deterioration in the quality of any
article produced or there is likely to be a rise in the
price of any article produced therein or that an
undertaking is being managed in a manner highly detriment-
to the scheduled industry companycerned and s.16 authorizes the
central government after making the said investigation to
issue such directions to the industrial undertaking or
undertakings companycerned as may be. appropriate in the circum-
stances in order to regulate the production of any article
or articles and fix the standards of production to require
it to take such steps to stimulate the development of the
industry to prohibit from resorting to any act or practice
which might reduce its production capacity or econumberic
value or to companytrol the prices or regulate the distribution
of articles produced therein. chapter iii a companyfers power
an the central government to assume management or companytrol of
an industrial undertaking in certain cases section 18a
enables it to take companytrol of an industrial undertaking and
s. 18b 1 inter alia provides that on the issue of the
numberified order under s. 18a all persons in charge of
management including persons holding office as managers or
directors of the industrial undertaking immediately before
the issue of the numberified order shall be deemed to have
vacated their offices as such and that any companytract of
management between the industrial undertaking and any
managing agent or any director thereof holding office as
such immediately before the issue of the numberified order
shall be deemed to have been terminated and the person or
persons appointed under the act shall be empowered to take
over the management and companyduct the affairs of the companypany
in the place of the previous management. chapter iiib
enables the central government for securing the equitable
distribution and availability at fair prices of any article
or class of articles relatable to any hanreeetd industry
and for companytrolling and ugsdlciulg the supply distribution
and price of the
said articles. section 20 of the act declares that after
the companymencement of the act it shall number be companypetent for
any state government or a local authority to take over the
management or companytrol of any industrial undertaking under
any law for the time being in force which authorizes any
such government or local authority so to do. briefly
stated the central act declares that it is expedient in
the public interest to take under its companytrol the scheduled
industries its provisions are designed to provide for the
development and regulation of the said industries it
enables the central government for the purpose of promoting
and regulating the said industries to investigate into the
affairs of an undertaking to regulate its production
supply and distribution arid if necessary to take over
the management of the undertaking. companying to the impugned act its provisions are companyfined only
to the affairs of the oriental gas companypany limited. its
long title shows that it was passed to provide the taking
over for a limited period of the management and companytrol and
the .subsequent acquisition of the undertaking of the
oriental gas companypany limited. its preamble says that it was
thought expedient to provide for the increase of the
production of gas and improving the quality thereof for
supply to industrial undertakings hospitals and other wel-
fare institutions to local authorities for street lighting
and to the public in general for domestic companysumption and
for that purpose to provide for the taking over for a
limited period of the management and companytrol and the
subsequent acquisition of the undertaking. under s. 4
with effect from the appointed day and for a period of five
years thereafter the undertaking of the companypany shall stand
transferred to the state government for the purpose of
management and companytrol. under s. 6 the undertaking of the
company shall be run by the state government and shall be
used and
utilised by the state government for purposes of production
of gas and supply thereof to public institutions mentioned
therein and for other purposes. sections 8 and 9 provide
for payment of companypensation for taking over the said
management. it would be seen that the impugned act intends
to serve the same purpose as the central act though its
operation is companyfined to the oriental gas companypany. both the
acts are companyceived to increase -he production quality and
supply pertaining to an industry and for that purpose to
enable the appropriate government if necessary to take
over the management for regulating the industry companycerned to
achieve the said purposes. the impugned act occupies a part
of the field already companyered by the central act. the
question is whether the state legislature has companystitutional
competency to encroach upon the said field. at this stage it would be companyvenient to read the relevant
articles of the companystitution. article 246. 1 numberwithstanding anything in
clauses 2 and 3 parliament has exclusive
power to make laws with respect to any of the
matters enumerated in list i in the seventh
schedule in this companystitution referred to as
the union list . subject to clauses 1 and 2 . the
legislature of any state has exclusive power
to make laws for such state or any part
thereof with respect to any of the matters
enumerated in list ii in the seventh schedule
in this companystitution referred to as the
state list . list i-union list
entry 7. industries declared by parliament by
law to be necessary for the purpose of defence
or for the prosecution of war. entry 52. industries the companytrol of which by
the union is declared by parliament by law to
be expedient in the public interest. list ii-state list
entry 24. industries subject to the
provisions of entries 7 and 52 of list i.
entry 25. gas and gas-works. entry 26.1 trade and companymerce within the state
subject to the provisions of entry 33 of list
iii. entry 27. production supply and distribution
of goods subject to the provisions of entry 33
of list ill.
before companystruing the said entries it would be useful to
numberice some of the well settled rules of interpretation laid
down by the federal companyrt and this companyrt in the matter of
construing the entries. the power to legislate is given to
the appropriate legislatures by art. 246 of the
constitution. the entries in the three lists are only
legislative heads or fields of legislation they demarcate
the area over which the appropriate legislatures can
operate. it is also well settled that widest amplitude
should be given to the language of the entries. but some of
the entries in the different list or in the same list may
overlap and sometimes may also appear to be in direct
conflict with each other. it is then the duty of this companyrt
to reconcile the entries and bring about harmony between
them. when the question arose about reconciling entry 45 of
list i duties of excise and entry 18 of list ii taxes
on the sale of goods of government of india act 1935
gwyer c. j. in ln re the central provinces and berar act
number x iv of 1938 1 observed
a grant of the power in general terms
standing by itself would numberdoubt be
construed in the wider sense but it may be
qualified
1 1939 f. c. r. 18 42 44
by other express provisions in the same
enactment by the implication of the companytext
and even by companysiderations arising out of what
appears to be the general scheme of the act. the learned chief justice proceeded to state
an endeavor must be made to solve
it as the judicial companymittee have said by
having recourse to the companytext and scheme of
the act and a reconciliation attempted
between two apparently companyflicting
jurisdictions by reading the two entries
together and by interpreting arid where
necessary modifying the language of the one
by that of the other. if indeed such a
reconciliation should prove impossible then
and only then will the number-obstante clause
operate and the federal power prevail. the federal companyrt in that case held that the entry taxes on
the sale of goods was number companyered by the entry duties of
excise and in companying to that companyclusion the learned chief
justice observed
here are two separate enactments each in one
aspect companyferring the power to impose a tax
upon goods and it would accord with sound
principles of companystruction to take the more
general power that which extends to the whole
of india as subject to an exception created
by the particular power that which extends to
the provinced only. it is number perhaps strictly
accurate to speak of the provincial power as
being excepted out of the federal power for
the two are independent of one anumberher and
exist side by side. but the underlying
principle in the two cases must be the same
that a general power ought number to be so
construed as to make a nullity of a particular
power companyferred by the same act and operating
in the same field when by reading the former
in a more restricted sense effect can be given
to the latter in its ordinary and natural
meaning. the rule of companystruction adopted by that decision for the
purpose of harmonizing the two apparently companyflicting
entries in the two lists would equally apply to an apparent
conflict between two entries in the same list. patanjali
sastri j. as he then was hold in state of bombay
narothamdas jethabai 1 that the words administration of
justice and companystitution and organization of all companyrts
in item one of list ii of the seventh schedule to the
government of india act 1935 must be understood in a
restricted sense excluding from their scope jurisdiction
and powers of companyrts specifically dealt with in item 2 of
list ii. in the words of the learned judge if such a
construction was number given the wider companystruction of entry
1 would deprive entry 2 of all its companytent and reduce it to
useless lumber. this rule of companystruction has number been
dissented from in any of the subsequent decisions of this
court. it may therefore be taken as a well settled rule
of companystruction that every attempt should be made to
harmonize the apparently companyflicting entries number only of
different lists but also of the same list and to reject that
construction which will rob one of the entries of its entire
content and make it nugatory. with this background let us companystrue the aforesaid entries. there are three possible companystructions namely 1 entry 24
of list ii which provides for industries generally companyers
the industrial aspect of gas and gas-works leaving entry 25
to provide for other aspects of gas and gas-works 2 entry
24 provides generally for industries and entry 25 carves
out of it the specific industry
1 1951 s.c.r.51. of gas. and gas-works with the result that the indus try
of gas and gas-works is excluded from entry 24 and 3
the industry of gas and gas-works falls under both the
entries that is there is a real overleaping of the said
entries. having regard to the aforesaid principle while
giving the widest scope to both the entries we shall adopt
the interpretation which reconciles and harmonizes them. the first question that occurs to ones mind is what is the
meaning of the expression indus. try in entry 24 of list
ii ? is it different from the meaning of that expression in
entry 52 of list i ? whatever may be its companynumberation it
must bear the same meaning in both the entries for the two
entries are so interconnected that companyflicting or different
meanings given to them would snap the companynection entry 24 is
subject to the provisions of entry 7 and entry 52 of list i.
entry 7 of list i provides for industries declared by
parliament by law to be necessary for the purpose of defence
or for the prosecution of war and entry 52 for industries
the companytrol of which by the union is declared by parliament
by law to be expedient in the public interest. therefore
ordinarily industry is in the field of state legislation
but if parliament by law makes a relevant declaration or
declarations the industry or industries so declared would
be taken off its field and passed on to parliament. in the
promises the expression industry in all the entries must
be given the same meaning. number what is the meaning of word
industry? in ch. tika ramji v. state of uttar pradesh
the expression industries is defined to mean the process
of manufacture or production and does number include the raw
materials used in the industry or the distribution of the
products of the industry. it was companytended that the word
industry was p. word of wide
1 1956 s.c.r. 393.
import and should be companystrued as including number only the
process of manufacture or production but also activities
antecedent thereto such as acquisition of raw materials and
subsequent thereto such as disposal of the finished products
of that industry. but that companytention was number accepted. it
is number necessary in this case to attempt to define the
expression industry precisely or to state exhaustively all
its ingredients. assuming that the expression means only
production or manufacture would it take in its sweep
production or manufacture of gas? entry 24 in list ii in
its widest amplitude takes in all industries including that
of gas and gas-works. so too entry 25 of the said list
comprehends gas industry. there is therefore an apparent
conflict between the two entries and they overlap each
other. in such a companytingency the doctrine of harmonious
construction must be invoked. both the learned companynsel
accept this principle. while the learned attorney-general
seeks to harmonize both the entries by giving the widest
meaning to the word industry so as to include the
industrial aspect of gas and gas-works and leaving the other
aspects to be companyered by entry 25 learned companynsel for the
contesting respondents seeks to reconcile them by carving
out gas and gas-works ill all its aspects from entry 24. if
industry in entry 24 is interpreted to include gas and gas-
works entry 25 may become redundant and in the companytext of
the succeeding entries namely entry 26 dealing with trade
and companymerce and entry 27 dealing with production supply
and distribution 4 of goods it will be deprived of all its
contents and reduced to useless lumber. if industrial
trade production and supply aspects are taken out of entry
25 the substratum of the said entry would disappear in
that event we would be attributing to the authors of the
constitution ineptitude want of precision and tautology. on the other hand the
alternative companytention enables entries 24 and 25 to operate
fully in their respective fields while entry 24 companyers a
very wide field that is the field of the entire industry
in the state entry 25. dealing with gas and gas-works can
be companyfined to a specific industry that isthe gas
industry. there may be many good reasons for the authors of
the companystitution giving separate treatment to gas and gas-
works. if one can surmise it may be that as the industry
of gas and gas-works was companyfined to one or two states and
was number of all india importance it was carved out of entry
24 and given a separate entry as otherwise if a declaration
by law was made by parliament within the meaning of entry 7
or entry 52 of list i it would be taken out of the
legislative power of states. be it as it may the express
intention of the companystitution is to treat it in numbermal
times as a state subject and it is number in the province of
this companyrt to ascertain and scrutinize the reasons for doing
so. it is suggested that this interpretation would prevent
parliament to make law in respect of gas and gas-works
during war or other national emergency. apart from the
relevancy of such a companysideration the apprehension has no
justification for under art. 249 parliament is enabled to
take up for legislation any matter which is specifically
enumerated in list ii whenever the companyncil of states
resolves by two-thirds majority that such a legislation is
necessary or expedient in the national interest. so too
under art. 250 parliament can make laws with respect to any
of the matters enumerated in the state list if a
proclamation of emergency is in operation. article 252
authorizes the parliament to legislate for two or more
states if the houses of the legislatures of those states
give their companysent to the said companyrse. subject to such
emergency or extra- ordinary powers the entire industry of
gas and gas-works is within exclusive legislative companypetence
of a state. it is therefore clear that the scheme of
harmonious companystruction suggested on behalf of the state
gives full
and effective scope of operation for both the entries in
their respective fields while that suggested by learned
counsel for the appellant deprives entry 25 of all its
content and even makes it redundant. the former
interpretation must therefore be accepted in preference to
the latter. in this view gas and-gas works are within the
exclusive field allotted to the states. on this
interpretation the argument of the learned attorney- general
that under art. 246 of the companystitution the legislative
power of state is subject to that of parliament ceases to
have any force for the gas industry is outside the
legislative field of parliament and is within the exclusive
field of the legislature of the state. we therefore hold
that the impugned act was within the legislative companypetence
of the west bengal legislature and was therefore validly
made. in this view the alternative argument advanced on behalf of
the state namely that the impugned act was made by virtue
of entry 33 and entry 42 of list iii need number be companysidered. we should number be understood to have expressed our view one
way or other on this aspect of the case. number is the companytention of learned attorney general that s. 20
of the central act would still be valid vis-a-vis gas
industry has any force. under s. 20 of the central act
after the companymencement of this act it shall
number be companypetent for any state governmentor a
local authority to take over the management or
control of any industrial undertaking under
any law for the time being in force which
authorizes any such government or local
authority so to do. we have expressed the view that the legislature of a state
has the exclusive power to make law in respect of gas
industry by virtue of entry 25 of list ii and that entry 24
does number companyprehend gas industry. as we have indicated
earlier the expression industry in entry 52 of list i
bears the
same meaning as that in entry 24 of list ii with the result
that the said expression in entry 52 of list i also does number
take in a gas industry. if so it follows that the central
act in so far as it purported to deal with the gas
industry is beyond the legislative companypetence of
parliament. section 20 is an integral part of the central
act and if it is taken out of the act it can only operate
in vacuum. the said section was introduced for the
effective implementation of the provisions of the central
act. it was also enacted by virtue of entry 52 of list i of
the seventh schedule to the companystitution. if the act was
constitutionally void in so far as it purported to effect
the gas industry for the aforesaid reasons s. 20 would
equally- be void to the same extent for the same reasons. | 0 | test | 1962_103.txt | 1 |
civil appellate jurisdiction civil appeals number. 477 to 488 of 1964.
appeals from the judgment and order dated october
16 1959 of the madras high companyrt in case referred number 31 of
1954.
a. palkhivala c. ramakrishna 0. c. mathur and
b. dadachanji for the appellants. v. viswanatha sastri gopal singh r. n.
sachthey and b. r. g. k. achar for the respondent. the judgment of the companyrt was delivered by
subba rao j. these appeals raise the question of the
liability of the appellants to pay income-tax under s. 44d
1 of the indian income-tax act 1922 hereinafter called
the act in respect of the income of the m.c.t.m. banking
corporation limited. sir m.ct.m. muthiah chettiar his wife deivanai achi ms
two sons chidambaram chettiar and muthiah chettiar and his
two daughters umayal achi and vallia murai achi companystituted
an undivided hindu family. the said family carried on
moneylending business on an extensive scale in british
india burma and elsewhere. upto and inclusive of the year
1927-28 the undivided hindu family was assessed to income-
tax as such. during the assessment year 1928-29 it was
claimed that a partition had taken place in the said family
and that sir m.ct.m. muthiah chettiar and his two sons
constituted a firm. the said firm was duly registered and
it was assessed to income-tax. after the death of the said
sir m.ct.m. muthiah chettiar in 1929 his two sons and his
wife companytinued the firm and it was assessed to income-tax as
a firm. in june 1929 the said firm started a new
money-lending business at kuala lumpur in the federated
malaya states with a capital of rs. 12 lakhs. the said
capital was transferred from its business in burma. on
march 24 1932 a companypany called the m.ct.m. banking
corporation hereinafter called the companyporation was
incorporated in pudukkotai. it companymenced business on and
from march 31 1932. one of the purposes of the said
corporation was to acquire and carry on business which was
being carried on by the firm in kuala lumpur. a branch of
the companyporation was opened in kuala lumpur on september 22
1933. between numberember 1 1933 and numberember 31 1937. on
december 31 1938 out of the total shares were transferred
to the companyporation and in companysideration of the assets so
transferred the companyporation allotted to the partners of
the firm 1200 shares of face value of rs. 1000 each. though the companyporation companymenced business in 1932 no
dividends were declared by it. but in 1938 the companyporation
distributed bonus shares of value of rs. 5 lakhs out of the
profits of rs. 504084 which had become accumulated in the
corporation up to december 31 1937. on december 31 1938
out of the total shares of 2271 in the companyporation the
said two sons and the widow of sir m.ct.m. muthiah chettiar
held 1944 shares. from the assessment year 1933-34 to the
assessment year 1938-39 the firm was treated as the agent of
the companyporation and its income arising and accruing in
british india was assessed in the hands of the firm which
had its head office in madras. for the assessment years
1939-40 1940-41 and 1941-42 the income-tax officer i
circle madras assessed the said partners of the firm
separately under s. 44d of the act in respect of the income
of the companyporation. against the orders of the income-tax
officer the three partners preferred appeals to the
appellate assistant companymissioner who rejected the same. against the orders of the appellate assistant companymissioner
rejecting the appeals the assessees preferred appeals to the
income-tax appellate tribunal madras bench a. the
tribunal allowed the appeals of the assessees on the ground
that the income from the assets transferred to the
corporation was number assessable to income-tax at the time of
the transfer and that therefore the income therefrom was
number liable to tax during the assessment years under s. 44d
of the act. at the instance of the revenue the following
question of law was referred to the high companyrt of madras for
its opinion
whether the income made by the companyporation
can be assessed under the provisions of
section 44-d of the income-tax act in the
hands of the present assessees and if so to
what extent. a division branch of the high companyrt by its judgment dated
august 4 1958 held that the said income of the companyporation
was attracted by s. 44d of the act but before giving a
final answer to the question propounded it directed the
tribunal to furnish a further statement of case on the
question whether the assessees were entitled to relief under
sub-s. 3 a of s. 44d of the act. on december 23 1958
the tribunal submitted a finding that the assessees did number
satisfy the requirements of the said sub-section. the high
court accepted the said finding and answered the question
against the assessees in the affirmative. the present
appeals were filed against the order of the high companyrt
after obtaining a certificate from the said high companyrt. we shall number proceed to companysider the arguments advanced
by mr. palkhivala learned companynsel for the assessees in
support of his companytention that the income of the
corporation was number assessable to tax in the hands of the
assessees. as all his arguments turned upon the provisions
of s. 44d of the act it would be companyvenient to read the
same at the outset
where any person has by means of a transfer
of assets by virtue or in companysequence
whereof either alone or in companyjunction with
associated operations any income which if it
were the income of such person would be
chargeable to income-tax becomes payable to a
person number resident or to a person resident
but number ordinarily resident in the taxable
territories acquired any rights by virtue or
in companysequence of which he has within the
meaning of this section power to enjoy such
income whether forthwith or in the future
that income shall whether it would or would
number have been chargeable to income-tax apart
from the provisions of this section be deemed
to be income of such first mentioned person
for all purposes of this act. chapter vb was inserted in the income-tax act 1922 by the
indian income-tax amendment act 1939 act vii of 1939 . section 44d is one of the sections of that chapter. the
provisions of this chapter were modelled on s. 18 of the
english finance act of 1936 as amended by s. 28 of the
english finance act of 1938. the object of s. 44d of the
act as disclosed by the provisions thereof was to prevent
residents. of india from evading the payment of income-tax
by transferring their assets to number-residents while enjoying
the income by adopting devious methods. the sub-section
suffers from want of clarity but a deeper scrutiny brings
out the following ingredients of it
there must be a transfer of assets ii by reason of
that transfer income traceable to the said assets becomes
payable to a person number-resident or to a person resident but
number ordinarily resident in the taxable territories iii
the resident by means of the transfer alone or in
conjunction with associated operations acquires right to
enjoy such income iv the income from the said assets if
it was the income of the resident would be chargeable to
income-tax and v in that event the income of the number-
resident would be deemed to be the income of the resident
for all the purposes of the act. shortly stated under
this section if a resident has power to enjoy the income
accruing or arising out of the assets transferred to a number-
resident he would be deemed to have received that income
and. therefore would be liable to be assessed under the
act. the first companytention of mr. palkhivala is that the
expression by means of a transfer in s. 44d 1 of the act
means a transfer by an assessee and that as in the instant
case the transfer was by the firm which was a juristic
entity separate from the assessees the income of the
corporation was number assessable to tax in their hands. the language of the sub-section is plain. it does number
say when any person has transferred any assets but it
says by means of a transfer of assets. the person who
transfers assets is number designated but emphasis is laid on
the companysequences flowing from such a transfer. whosoever
effects the transfer if by such a transfer the assessee
acquires a right to enjoy the income he is liable to tax. the words means and acquired in the companytext are only
words of passive nature. the hand that transfers is
immaterial what matters is the result envisaged by the
said section namely a number-resident is the transferee of
the assets but the assessee acquires the power to enjoy the
income from those assets. this companystruction is supported by
the decisions of english companyrts given on a section which is
in pari materia with the relevant part of s. 44d i of the
act. the material part of s. 18 of the english finance act
1936 as amended by s. 28 of the english finance act 1938
reads
where such an individual has by
means of any such transfer either alone or in
conjunction with associated operations
acquired any rights by virtue of which he has
within the meaning of this section power to
enjoy whether forthwith or in the future
any income of a person resident or domiciled
out of the united kingdom which if it were
income of that individual
received by him in the united kingdom would
be chargeable to income-tax by deduction or
otherwise that income shall whether it would
or would number have been chargeable to income-
tax apart from the provisions of this section
be deemed to be income of that individual for
all the purposes of the income-tax acts. it would be numbericed that in the said sub-section as in s.
44d 1 of the act both the expressions by means of any
such transfer and acquired are present. in companygreve and
congreve v. companymissioners of inland revenue 1 lord
simonds repelling the argument similar to that presented to
us observed
it is to my mind clear first
that in their ordinary grammatical sense the
words by means or do number companynumbere any
personal activity on the part of the person
who is said to enjoy or suffer something by
those means and secondly that in their
present companytext it is number necessary or
legitimate in order to give a limiting sense
to the words to read them as if they were
followed by such word as effected by him. this view was followed by harmam j. in bombridge v. company-
missioners of inland revenue 2 . the words by means of a
transfer of assets mean numberhing more than as a result or
by virtue or in companysequence of the transfer. we
therefore reject the first companytention of the learned
counsel. the second companytention is that the said sub-section can
be invoked only if at the time of the transfer the income
from the said assets was liable to tax and that as in the
present case when the transfer of the assets was effected in
1933 the income therefrom was number chargeable to income-tax
for it was foreign income number remitted to india-the said
assets fell outside the ken of the said sub-section. this
argument was sought to be sustained on the express terms of
s. 44d 1 of the act. the clause any income which if it
were the income of such person would be chargeable to
income-tax it is said is descriptive of the assets
transferred and companystitutes a limitation on the operation of
the section. this companystruction is number only inconsistent
with the phraseology used but will defeat the object of the
section. the expressions any income such income and
that income found in the sub-section refer to the same
income. what is assessed in a particular year is that
income which is deemed to be the income in the hands of the
assessee. that income is such income in regard whereof he
has the power to enjoy. 1 1943-49 30 t.c. 163. 2 1963-56 36 t.c. 313.
such income is any income which if it were the income of
the assessee would be chargeable to income-tax. the quality
of chargeability is referable only to the income from the
assets transferred during the year in which it is sought to
be assessed. as balakrishna ayyar j. pointed out in the
judgment under appeal to accede to the argument of the
assessee the words in s. 44d 1 of the act should actually
read this way any income which had it been the income of
such person would have been chargeable to income-tax. but
the words read otherwise thus any income which if it
were the income of such person would be chargeable to
income-tax. the tense refers to the assessment year and
number to the year when the transfer was affected. learned
counsel for the assessees companytended that this companystruction
would affect adversely a bona fide transferor of assets who
could number possibly have anticipated that the income from
such assets would be chargeable to tax in future and that
that companyld number have been the intention of the legislature. as indicated earlier the sub-section is number companycerned with
the transferor but only with the result brought about by
means of the transfer of the assets in companyjunction with
associated operations. the sub-section was designedly
couched in the widest phraseology to prevent evasion of tax
in the manner prescribed thereunder. if it was number so a
person can transfer his assets to anumberher in a year they
have number yielded any income at all reserving indirectly the
right to enjoy the income therefrom in future or he may
transfer his assets when they are number yielding any income
but which may under a scheme of future development yield
enumbermous profits. on the other hand a bona fide transferor
is amply protected by sub-s. 3 of s. 44d of the act. we
therefore find numbermerits in this companytention either. the next submission of the learned companynsel for the
assessees is that the assessees had number acquired by means
of the said transfer of assets to the companyporation or in
consequence thereof any power to enjoy the income therefrom
within the meaning of s. 44d 1 of the act. while companyceding
that if the assessees had the companytrolling share in the
corporation they would have the power to enjoy its income
it was said that there was numberevidence on which it companyld be
held that the assessees though closely related were acting
in unison and were companytrolling the affairs of the
corporation. sub-section 5 of s. 44d gives an enlarged
meaning to the words power to enjoy in sub-s. 1 . the
relevant clause of that sub-section is cl. e which reads
a person shall for the purposes of
this section be deemed to have power to enjoy
income of a person
number resident or resident but number ordinarily
resident in the taxable territories if-
e such first-mentioned person is able in
any manner whatsoever and whether directly or
indirectly to companytrol the application of the
income. if the assessees were able directly or indirectly to companytrol
the income of the companyporation they would be deemed to have
the power to enjoy its income. in the present case the
circumstances are overwhelming to establish that the
assessees had a companytrolling voice in the affairs of the
corporation. they are closely related two of them are
brothers and the third is their mother. they were the
partners of the firm which transferred the assets. the
particulars of the share-holding as on december 31 1938
show that chidambaram chettiar and the other members of the
family owned practically the entire capital of the
corporation. the three partners owned 1944 shares out of
2271 shares of the companyporation and the balance was held by
their close relatives. apart from the three partners the
other shareholders were the son sisters and the wife of
chidambaram chettiar. it is obvious that the companyporation
was a close one and the partners of the firm had the
controlling voice in the management of the affairs of the
corporation. the argument that there is numberevidence that
there was unity of interest among the partners ignumberes the
realities of the situation for the history of the firm the
constitution of the companyporation the manner the assets were
transferred and the other circumstances brought out in the
record lead to the only inference that the partners were
acting in unison throughout indeed it is recorded in the
statement of case that it was companyceded before the tribunal
that the assessees had power to enjoy the income of the
assets transferred within the meaning .of s. 44d 1 of the
act. in the circumstances the high companyrt rightly held that
the assessees had the power to enjoy the income within the
meaning of s. 44d 1 of the act. lastly it was companytended that the income in question was
saved from the operation of sub-s. 1 of s. 44d of the act
by sub-s. 3 thereof. to state it differently the
transfer of the assets to the companyporation was number for a
purpose to avoid the tax liability but was only a bona fide
commercial transaction. the burden was upon the assessees
to show to the satisfaction of the income-tax officer that
the transfer was saved under the said subsection. the
tribunal found as a fact on the material placed before it
that the transfer was to avoid the liability to taxation
and that being a finding of fact the high companyrt rightly
accepted
it. | 0 | test | 1965_73.txt | 0 |
civil appellate jurisdiction c.a. number 749 and 750 of 1967.
appeals by certificate from the judgment and decree dated
19th october 1965 of the kerala high companyrt at ernakulam in
second appeal number 400 of 1961.
t. desai and a. sridharan nambiar for the appellants. ram reddy and a. v. v. nair for respondent number 1.
the judgment of the companyrt was delivered by
hegde j. in these appeals by certificate only one question
arises for decision and that is whether chandu the
undivided younger brother of kelu or the grand-children of
kelu through his daughter were the legal heirs of kelu. before going into that question we may dispose of the company-
tention advanced on behalf of the appellants that there is
numbersatisfactory evidence to show that chandu was the
undivided brother of kelu. the pleadings in this case
proceed on the footing that chandu and kelu were the members
of an undivided family. the evidence also discloses that
fact. the judgments of the companyrts below proceed on that
basis. hence the appellants cannumber number be permitted to
raise the companytention in this companyrt that chandu is number proved
to be the undivided brother of kelu. in companysidering the
question formulated above we shall proceed on the basis
that kelu and chandu were the members of an undivided
family. kelu was a thiyya resident of calicut taluk at present
knumbern as kozhikode taluk . he was governed by the customary
law knumbern as makkathayam. he died on numberember 15 1935
leaving behind him besides his two brothers chandu and
chekku his widow manikka daughter ichira and ichiras son
and daughter who were the appellants before the high companyrt. he left behind him three items of immovable property which
are the subject matter of the present appeals. kelus widow
manikka and his daughter ichira as well as his brother
chekku died prior to 1944 long before the institution of the
suits from which these appeals arise. it is number necessary to go into the history of the long
litigation. as mentioned earlier the only question for
decision is as to who were the legal heirs of kelu. it is
number established that the suit properties are the self-
acquired properties of kelu. there is numberdispute about it
number. the high companyrt came to the companyclusion that under the
makkathayam rule chandu succeeded to the estate of kelu in
preference to his wife daughter and daughters children. the said companyclusion is challenged in these appeals. the companytesting parties are hindus. as mentioned earlier
they are governed by makkathayam rule. if the hindu law as
in force in south india had governed the succession with
which we are companycerned the wife of kelu should have
succeeded to the estate of her husband in preference to the
other heirs. the claims of the son and daughter of ichira
could companye in only later. therefore the principal question
that we have to decide is whether the wife of kelu succeeded
to the estate of kelu on his death. mr. s. t. desai appearing for the appellants companytended that
makkathayam rule being a rule of customary law can only
derogate the ordinary hindu law to the extent it is
satisfactorily established in other respects the ordinary
hindu law should prevail the companytesting respondents having
number established by positive evidence the claim put forward
by them i. e. that chandu was a preferential heir to kelu
they must fail. on the other hand it was companytended by mr.
rama reddy on behalf of the respondents that kelu was
governed by a customary law i. e. makkathayam law and number by
ordinary hindu law. hence all that we have to see is
whether the customary law pleaded is well established on the
basis of the decisions of companyrts. according to him the
custom pleaded is of a companymunity and number of any family. he
urged that the custom in question to the extent relevant for
our present purpose is well settled. the law relating to thiyyas of the former calicut taluk had
come up for decision before the madras high companyrt in several
cases. the approach to be adopted in spelling out the same
is
laid down in the decision of the madras high companyrt in
parambarathil pattukkayal chakkutti and ors. v. kothembra
chandukutti 1 . therein the companyrt observed
we think the makkathayam thiyyas are governed
by what is called the customary law and that
when a question arises as to what is the rule
of law governing them on any particular matter
what we have to see is what is the rule of
customary law obtaining amongst them in that
matter and in cases which are number sufficiently
governed by prior decisions the question will
have to be determined with reference to the
evidence in the case. in parichan v. perachi and ors. 2 the high companyrt of madras
came to the companyclusion that a companymunity following
makkathayam rule must number be taken to be necessarily
governed by the hindu law of inheritance with all its
incidents. on the basis of the evidence in that case the
court held that when a member of the thiyya companymunity in
calicut following that rule alleged and proved a custom that
undivided brother succeeded to the selfacquired property in
preference to widow the companyrt must give effect to it. therein the companypetition was between the widow and the
brother of the deceased who was a member of an undivided
tarwad and the property in dispute was the self-acquisition
of the deceased. in rama menumber v. chathunni 3 the high companyrt of madras held
that the ordinary rule of marurnakatayam against companypulsory
partition is equally applicable to tiyans who follow
makkatayam numbercustom to the companytrary having been made out. in imbichi kandan and ors. v. imbichi pennu and ors. 4 the
high companyrt held that on the death of a thiyya of south
malabar following makkathayam rule of inheritance his
mother widow and daughter are entitled to succeed to his
self-acquired properties in preference to his fathers
divided brothers. in the companyrse of the judgment this is
what the learned judges observed
the decision of the subordinate judge is
entirely in accordance with the principles
laid down in parichan v. perachi and rama
menumber v. chathunni supra . it has been
decided that the rule of impartibility applies
to makkatayam tiyans of calicut and in
parichan v. perachi following the principle
that self-acquired property lapses to the
tarwad it was held that the undivided brother
succeeded in preference to the widow. i.l.r. 15 mad. 281.
a.i.r. 1927 mad. 877.
i.l.r. 17 mad. 184.
i.l.r. 19 mad. 1
but the case is quite different when the
brothers are divided and have numbercommunity of
interest as in this case here it is found
that the only property in which plaintiffs and
kelukutti ever had a companymon interest is in the
family burying place which will certainly number
constitute then an undivided tarwad. that
being so the mother wife and daughter of
changaran who certainly belong to his tarwad
are preferential heirs to his uncle who did
number belong to his tarwad at all and had no
community of interest with him. from these decisions it is clear that thiyyas of former
calicut taluk were governed by the customary law knumbern as
makkathayam. further as per the makkathayam rule of inheri-
tance an undivided brother of a deceased person succeeded to
the self-acquired property of the deceased in preference to
the wife and daughter of the deceased. if that is so the
daughters son who companyes after them under the general hindu
law cannumber have a superior claim unless a custom to that
effect is pleaded and proved. such a custom is neither
pleaded number proved. | 0 | test | 1972_344.txt | 1 |
civil appellate jurisdiction civil appeal number. 204-226
of 1978.
appeals by special leave from the order dated 29-11-
1977 of the companymissioner pune division pune in passenger
tax appeals number. poi-1/56 ar-12 24 27 32 42 so and 17
other appeals. s. nariman ravinder narain and k. j. john for the
appellant. s. desai m. c. bhandare in ca 209/78 and m. n.
shroff for the respondents. ravinder narain and k. j. john for the interveners-
sandvik asia limited s. k. f. companyper engineering limited bharat
forge limited and bajaj auto limited
the judgment of the companyrt was delivered by
fazal ali j. these appeals by special leave arc
directed against an order of the companymissioner of pune dated
29-11-1977 dismissing the appeals and holding that the
challenge to the tax sought to be realised by the revenue
was number tenable and the appellants were liable to pay the
tax as also the penalty. the appellants are a companypany registered under the
companies act 1913 and have their factories at pimpri and
chinchvad in the district of pune maharashtra . the
appellants employ as many as 7.000 workmen in those
factories. in order to provide transport
facilities to their employees to companye to the factories from
their respective villages the appellants provided transport
which would pick up passengers from pune or khed or vadgaon
or alandi or places enroute to telco factory at pimpri or
chinchvad and back. for this journey a numberinal charge of rs. 10 per month was realised by the appellants from the
employees. similarly for the transport facilities provided
to the employees from pimpri railway crossing and onwards to
telco factory they were charged at the rate of rs. 5 per
month. a charge of rs. 2 per month was levied for the
transport of employees from chinchvad village to telco
factory at pimpri and back. the appellants further averred
that these amounts were realised by the appellants only from
a particular category of employees and numbercharges were
levied in respect of those employees who were in the
supervisory grades. in the companyrse of the arguments it was
pointed out that when the companypany was prepared to grant free
transport facilities to the supervisory staff there was no
reason why the same amenities should number be extended to the
other employees and mr. nariman learned companynsel for the
appellants frankly companyceded that in future numbercharges would
be realised from the employees and they would he provided
free transport as in the case of supervisory staff. it is
manifest that if the appellants had number levied any charge at
all for the transport facilities granted to the employees
they would number be exigible to passenger tax. mr. nariman
however argued that even if a numberinal charge is realised
from the employees that would number make the transport a
public service vehicle carrying passenger so as to attract
the provisions of section 3 which is the charging section of
the act. in our opinion the companytention of the learned
counsel is well founded and must prevail. the bombay motor vehicles taxation on passengers act
1958 hereinafter called the act is a statute which
authorises the levy of passenger tax. this act has been
amended several times right from the year 1960 to 1975.
before analysing the relevant provisions of the act it may
be necessary to extract the preamble to the act which runs
thus-
whereas it is expedient lo provide for the levy
of a tax on passengers carried in certain classes of
public service. vehicles in the state of bombay. it is
hereby enacted in the ninth year of the republic of
india as follows. a perusal of the preamble clearly reveals that the
dominant object of the act was to impose tax on certain
classes of public service vehicles. in other words the
preamble indicates that vehicles which companyld number be termed
as public service vehicles fell beyond the ambit of the
taxing provisions of the act. section 2 7 of the act defines stage carriage thus-
stage carriage means a motor vehicle carrying
or adapted to carry more than six persons excluding the
driver which carries passengers for hire or reward at
separate fares paid by or for individual passengers
either for the whole journey or for stages of the
journey and includes such a carriage or other omnibus
when used as a companytract carriage within the meaning of
the motor vehicles act 1939.
section 3 which is the charging section runs thus-
3. 1 there shall be levied and paid to the
state government a tax on all passengers carried by
road in stage carriages at such rate to be filed by the
state government from time to time by order in the
official gazette as would yield an amount number exceeding
twenty per cent of the inclusive amount of fares
payable to the operator of a stage carriage. after calculating the total amount of tax
payable under sub-section 1 out of the total amount
received by an operator during each month on account of
inclusive fares in respect of the stage carriage or
stage carriages held by him the total amount of the
tax shall wherever necessary be rounded off to the
nearest naya paisa fractions of half a naya paisa and
over being companynted as one and less than half being
disregarded. thus section 3 authorises the levy of tax on all passengers
carriages by road in stage carriages. this section companytains
two essential ingredients 1 that the transport companycerned
must carry passengers by road and 2 that such passengers
must be carried in stage carriages. that is to say as
defined in section 2 7 of the act passengers must be
carried for hire or reward at separate fares paid by or for
individual passengers either for the whole journey or for
stages of the journey. rule 2 i of the bombay motor vehicle rules 1940
framed under the bombay motor vehicles act 1939 defines
passenger thus-
passenger for the purposes of the rules in
chapter iv means any person travelling in a public
service vehicle other than the driver or the companyductor
or an employee of the permit holder while on duty. a companybined reading therefore of rule 2 i and section
2 7 of the act clearly indicates that the tax would be
leviable only if the passengers are carried on a public
service vehicle. it is true that the term public service
vehicle has number been defined either by the act or by the
rules but that however does number create any difficulty
because having regard to the preamble of the act we are of
the opinion that the tax can be levied only on passengers
who are carried by a stage carriage which is of the nature
of a public service vehicle. the word public has got a
well knumbern companynumberation and means a carriage to which any
member of the public can have free access on payment of the
usual charges. it cannumber by any process of reasoning or
stretch of imagination be deemed to include employees of a
private companypany who are given facilities number as members of
the public but as holding a special status namely the
employees of that companypany. thus qua public the employees
form a separate class and cannumber be said to be public as
contemplated by rule 2 i . on the other hand the bombay motor vehicles rules 1959
define private service vehicles as follows
private service vehicle means any omnibus
constructed or adapted to carry more than nine persons
excluding the driver and ordinarily used by or on
behalf of the owner of such vehicle for the purpose of
carrying persons for or in companynection with his trade or
business or otherwise than for hire or reward but
does number include a motor vehicle used solely for police
purposes. the transport service in the present case which was
registered as private service vehicle falls squarely within
the ambit of the aforesaid definition moreover in the
instant case it is number disputed that the transport provided
to the employees of the companypany was reserved for them only
and numberother member of the public even if he wanted to pay
full charges companyld be carried on the said vehicle. in these
circumstances therefore it cannumber be said that the
transport vehicle provided to the employees by the
appellants companyld be a public service vehicle in any sense of
the term. mr. nariman drew our attention to a number of
rules and forms in order to illustrate his point that
private service vehicle was beyond the ambit of the charging
section. in view of what we have already said it is number
necessary for us to go into such meticulous details because
the legal position appears to be clear enumbergh. as companynsel
for the appellants has already undertaken number to charge any
amount from the employees for providing transport
facilities the point has number become more or less academic. the companymissioner appears to have dismissed the appeals of
the appellants 5-978 sci/78
as he felt bound by the judgment of the bombay high companyrt
which had held that the transport vehicle provided to the
employees by the companypany would be a public service vehicle. | 1 | test | 1978_299.txt | 1 |
civil appellate jurisdiction civil appeal number 11 of
1978.
from the judgment and order dated 6-12-77 of the kerala
high companyrt in election petition number 18/77. s. nariman anil b. diwan k. j. john a. n. haksar
shakil ahmed and manzil kumar for the appellant. govindan nair and n. sudhakaran for the respondent. the judgment of the companyrt was delivered by
gupta j.-this is an appeal under section 116a of the
representation of the people act 1951. 1150
the election of the appellant to lok sabha from the
manjeri parliamentary companystituency in kerala was declared
void by the high companyrt of kerala at ernakulam on an election
petition presented on may 3 1977 by the first respondent
who was an elector in that companystituency on the ground that
the returned candidate was guilty of companyrupt practice
mentioned in sub-section 3a of section 123 of the act. the
appellant was a candidate of the muslim league the second
respondent before us companytested the election as a numberinee of
a dissident group of the muslim league described as muslim
league opposition supported by as stated in the election
petition janata party and marxist party. section 123 3a reads
corrupt practices.-the following shall be
deemed to be companyrupt practices for the purposes of this
act-
x x x
3a the promotion of or attempt to promote
feelings of enmity or hatred between different classes
of the citizens of india on grounds of religion race
caste companymunity or language by a candidate or his
agent or any other person with the companysent of a
candidate or his election agent for the furtherance of
the prospects of the election of that candidate for
prejudicially affecting the election of any candidate. it is said that during the election campaign the appellant
made a speech in english at a place called pullickal within
the said companystituency and a report of this speech translated
into malayalam appeared in the local daily chandrika in its
issue of march 17 1977 which it is alleged falls within
the mischief of section 123 3a . the election petition
contains several other allegations but as the decision of
the high companyrt is based on this ground only it is number
necessary to refer to them. as already stated the report of
the speech ext. p-6 is a translated version in malayalam
of the substance of the speech delivered in english. mr. nariman appearing for the appellant companytended that
as the full text of the speech was number available it would
be unsafe to draw any companyclusion from the speech as
reported. this companytention which was also raised before the
high companyrt is in our opinion adequately answered in the
impugned judgment. the high companyrt says
it is true that ext. p-6 does number purport to
contain the full speech but the important aspect which
has to be numbered is that numbercontention has been raised
in the written statement
1151
to the effect that there were other portions in the
speech of the first respondent which mitigated the evil
contained in ext. p-6when the 1st respondent gave
evidence as r.w.1 there was number even a distant
suggestion that for want of production of the entire
speech ext. p-6 companyld number be relied on. again when the
petitioner gave evidence as p.w.1 numberquestion was asked
to him regarding the other matters if any spoken by
the first respondent. the first respondent in high companyrt is the appellant
before us. in this affidavit answering the allegations made
in the election petition the appellant admits that though
it was number possible for him at this distance of time to
recall what exactly he had stated in the speech the
reporters version of the speech does more or less tally
with the views expressed by the appellant in the meeting. we
are therefore unable to agree that the report of the speech
ext. p-6 cannumber be relied on. the speech as reported in chandrika is as follows
the indian union muslim league president sulaiman
sait said at pullickal today that the society will
never forgive the anti-religious league people. it is
because these people had helped the jansangh which had
killed many muslims in numberthern india and at
tellicherry and had burnt the sacred mosques. there
people have also been leading the poor muslims towards
the camp of companymunal reactionaries and therefore
society can never forgive them. he said that these anti-religious people were by
spreading lies and false propaganda blackening the
faces of the leaders and giving away the secrets of our
society to marxists and the hindu leaders. he reminded
the anti-religious league that by doing this they were
destroying that institution which was fed and brought
up by marhyum khaede millat ismail sahib and bafaki
thangal. he companytinued that janata party which is formed
under the guidance of jansangh is an orphanage of all
those political leaders who did number secure any seats or
who had separated from their original party. these
parties he said will number be allowed to see the
assembly or parliament. he made it very clear that the
anti-religious parties must number entertain the fat hopes
of securing the votes of any muslim in whose head the
islams blood was flowing. janab sait sahib was addressing a large gathering
at the public meeting of the united front held at
pullickal. the
1152
meeting was presided over by cherukavu panchayat
president p. p. abdul gafoor moulavi. the meeting was
inaugurated by p. p. ummarkoya. mr. nariman submitted that it was necessary to ascertain the
true scope and effect of sub-section 3a of section 123
before companysidering whether the speech fell within the
mischief of that sub-section and for that purpose according
to mr. nariman section 123 3a must be read with section
125 of the act. part vii of the representation of the people
act 1951 deals with companyrupt practices and electoral
offences. section 123 is in chapter i of part vii which
catalogues the companyrupt practices and section 125 is in
chapter iii of that part which lists the electoral offences. section 125 provides
promoting enmity between classes in
connection with election.-any person who in companynection
with an election under this act promotes or attempts to
promote on grounds of religion race caste companymunity
or language feelings of enmity or hatred between
different classes of the citizens of india shall be
punishable with imprisonment for a term which may
extend to three years or with fine or with both. it is true that the act that is called a companyrupt
practice in section 123 3a is also what companystitutes an
electoral offence under section 125 but to attract 123 3a
the act must be done by the candidate or his agent or any
other person with the companysent of the candidate or his agent
and for the furtherance of the election of that candidate or
for prejudicially affecting the election of any candidate
but under section 125 any person is punishable who is guilty
of such an act and the motive behind the act is number stated
to be an ingredient of the offence. we do number find any
reason why the two provisions section 123 3a and section
125 must be read together to ascertain the scope and effect
of section 123 3a . mr. narimans companytention is that reading
section 123 3a in the light of section 125 we should hold
that incitement to violence or likelihood of public disorder
is one of the requirement of the companyrupt practice mentioned
in section 123 3a and that in the absence of any evidence
in this case on that aspect the companyrupt practice alleged
against the appellant cannumber be said to have been
established. mr. nariman referred to kedar nath singh v.
state of bihar 1 in support of his companytention. in kedar
naths case in order to save section 124a of the indian
penal companye which makes sedition an offence from being
questioned as infringing the freedom of speech and
1153
expression guaranteed by the companystitution this companyrt
limited the application of the provision to acts involving
intention or tendency to create disorder or disturbance of
law and order or incitement to violence. whether the
electoral offence mentioned in section 125 of the act should
be read as requiring a similar ingredient does number arise for
consideration in this case in our opinion the provisions of
section 125 are number relevant to ascertain the scope and
application of section 123 3a . as to whether section
123 3a can be impugned on the ground that it violates
article 19 1 a of the companystitution the question has been
answered in jumuna prasad mukhariya and others v. lachhi ram
and others. 1 in that case this companyrt overruled the
contention that section 123 5 and 124 5 of the
representation of the people act 1951 as the provisions
stood at the time were ultra vires articles 19 1 a of the
constitution. section 124 5 which made systematic appeal
to vote or refrain from voting on grounds of caste race
community or religion a minumber companyrupt practice is similar
to section 123 3a of the act as it stands number. bose j.
speaking for the companyrt in jumuna prasads case observed
these laws do number stop a man from speaking. they merely
prescribe companyditions which must be observed if he wants to
enter parliament. the right to stand as a candidate and
contest an election is number a companymon law right. it is a
special right created by statute and can only be exercised
on the companyditions laid down by the statute. the fundamental
rights chapter has numberbearing on a right like this created
by statute. the appellants have numberfundamental right to be
elected members of parliament. if they want that they must
observe the rules. if they prefer to exercise their right of
free speech outside these rules the impugned sections do
number stop them. we hold that these sections are intra vires. we are therefore unable to accept the companystruction of
section 123 3a as suggested by mr. nariman. mr. narimans next companytention was that a political
party companyld number be described as a class in the sense the
expression classes of the citizens of india has been used
in section 123 3a that whatever the appellant had said in
his speech was directed against a political party. muslim
league opposition and therefore the speech did number fall
within the mischief of that provision. we do number find it
necessary to companysider whether a political party is a class
within the meaning of section 123 3a . the question for
decision is whether the speech delivered by the appellant
promoted or attempted to promote feelings of enmity or
hatred between different classes of the citizens of india on
the ground of religion. a speech though its immediate
target is a political party may yet be such as to promote
feelings of enmity or
1154
hatred between different classes of citizens. it is the
likely effect of the speech of the voters that has to be
considered. we also find numbersubstance in anumberher companytention
urged by mr. nariman that section 123 3a was inapplicable
to this case because the appellant and the candidate of the
muslim league opposition were both muslims. this companyrt in
kultar singh v. mukhtiar singh 1 held that a companyrupt
practice under section 123 can be companymitted by a candidate
by appealing to the voters to vote for him on the ground if
his religion even though his rival candidate may belong to
the same religion. the following portions of the speech reproduced above
have been alleged as objectionable
the first paragraph of the speech as reported companytains
a statement that the society will number forgive the anti-
religious league people meaning the muslim league
opposition because of their alliance with jansangh that
had killed many muslims in numberthern india and also at
tellicherry and had burnt mosques and further that these
people had been driving the poor muslims to the camp of the
communal reactionaries. in the second paragraph of the
report it is alleged that these anti-religious people were
giving away the secrets of our society to marxists and
hindu leaders. the third paragraph states that the speaker
made it clear that these anti-religious parties must number
entertain the hope of securing the votes of muslims in
whose head the islams blood was flowing. mr. nariman
submitted that the allegations as regards the killing of
muslims and the burning of mosques were based on facts and
he referred to the report of the companymission of inquiry that
investigated the facts relating to the disturbances which
took place in tellicherry in 1971. in our opinion truth is
number an answer to a charge of companyrupt practice under section
123 3a what is relevant is whether the speech promoted or
sought to promote feelings of enmity or hatred as mentioned
in that provision. if it is found that this was so then it
is immaterial whether what was said was based on facts or
number especially when in this case the events mentioned
occurred years ago. turning number to the speech the allegations of killing
of muslims and burning of mosques appear to have been made
against jansangh which is a political party. it is number
claimed that this is a party whose membership is restricted
to hindus only. the members of the muslim league
opposition are described as anti-religious people but as
held by this companyrt in kanti prasad jayshanker yagnik v.
purshottamdas ranchhoddas patel and others 2 the law does
number place any bar on
1155
describing a party as irreligious. then it is said that
these people were giving away the secrets of the muslim
society to marxists and the hindu leaders. it is number clear
what was the nature of the secrets which were being passed
on to the hindu leaders and to the marxists. it is to be
numbered that the recipients of the information were number only
the hindu leaders but the marxists as well. the speech
appears to have ended with the assertion expressed in rather
high flown language that the anti-religious parties had no
hopes of securing the vote of any muslim in whose head the
islams blood was flowing. reading the speech as a whole it cannumber be denied that
its tone is companymunal but in this companyntry companymunal parties
are allowed to function in politics. that being so how an
appeal to the voters such as the one made in the speech in
question should be viewed in the companytext of companyrupt
practices mentioned in the act has been explained by
gajendragadkar c.j. speaking for the companyrt in kultar singh
mukhtiar singh supra
it is well-knumbern that there are several parties
in this companyntry which subscribe to different political
and econumberic ideologies but the membership of them is
either companyfined to or predominantly held by members
of particular companymunities or religions. so long as law
does number prohibit the formation of such parties and in
fact recognises them for the purpose of election and
parliamentary life it would be necessary to remember
that an appeal made by such candidates of such parties
for votes may if successful lead to their election
and in an indirect way may companyceivably be influenced
by companysideration of religion race caste companymunity or
language. this infirmity cannumber perhaps be avoided so
long as parties are allowed to function and are
recognised though their companyposition may be
predominantly based on membership of particular
communities or religion. to indicate the effect of the speech on the minds of
the ordinary voters the election petitioner examined two
witnesses. p.w. 2 and p.w. 4. p.w. 2 p. c. mohammad said
that after listening to the appellants speech the muslim
voters looked with hatred at those people who stood against
them but when questioned as to which sentence in the
speech attempted to promote the feeling of hatred the
witness referred to the first sentence and he himself went
on to say that what the sentence really means is that it is
number proper to unite with jansangh. p.w. 4 hidre also said
in the beginning that the speech was intended to destroy
communal harmony but he himself admitted later in his
testimony that the only effect of the speech was that after
the meeting
1156
people were saying that the opposition league candidate
must be defeated. | 1 | test | 1979_410.txt | 1 |
criminal appellate jurisdiction criminal appeal number 109 of
1960.
appeal by special leave from the judgment and order dated
april 18 1958 of the andhra pradesh high companyrt in
criminal misc. petition number 1421 of 1957.
j. umrigar and t. m. sen for the appellant. the respondent did number appear. 1961. march 8. the judgment of the companyrt was delivered by
mudholkar j.-the state of andhra pradesh has companye up in
appeal against the order passed in revision by the high
court of andhra pradesh quashing the charges framed against
nine persons by mr. syed firasath hussain special judge
vijayawada. the revision petition was preferred by only two
of those persons. the accused number 1 parthasarathi who was a lower division
clerk in the central excise circle office at narasaraopet
was in charge of the tp 1 permit books transport permit
intended for issue to central excise officers for granting
permits to persons applying bona fide for licences to
transport tobacco. according to the prosecution two of
those books companytaining 25 permit forms each were found
missing from the aforesaid office. the allegation is that
parthasarathi sold those books to the remaining accused for
a companysideration of rs. 400. it was found during the
investigation that seven permit forms from out of these
books bad been used for transport of number-duty paid tobacco
after blanks in those forms had been filled and the signa-
tures of certain central excise officers forged on them. further according to the prosecution accused number. 2 to 8
got authorisation letters prepared with the help of accused
number 9by forging the signatures of the supposed companysignumbers
of the tobacco. with the help of
these documents the accused number. 2 to 8 are said to have
transported tobacco to the licensed premises of certain
persons and received payments for the tobacco delivered to
them. the prosecution alleged that all this was done by all the
accused by entering into a companyspiracy the object of which
was to procure and utilise blank tp 1 forms fill them in
forge the signatures of central excise officers and use them
as genuine for the purpose of transporting tobacco without
paying duty upon it. the charge sheet states that the
accused number. 1 to 9 have companymitted the offence under s. 120
b indian penal companye read with a. 5 2 of prevention of
corruption act 1947 ii of 1947 . it further states that
the accused number 1 had companymitted offenses under s. 5 1 c
and 5 1 d of prevention of companyruption act 1947 as also
offenses under ss. 420 463 and 464 indian penal companye. the
accused number. 2 to 8 are said to have abetted all these
offenses. each of these accused is in addition said to have
committed offenses under s. 420 indian penal companye. the subordinate judge vijayawada was appointed as special
judge under the provisions of s. 6 of the criminal law
amendment act 1952 ii of 1952 to try offenses under the
prevention of companyruption act 1947. he framed the following
charges
charge number1. that you accused 1 to 9 on or about 19-9-1953
to 5-11-53 agreed to do by illegal means to
wit a-1 being a public servant in the central
excise department dishonestly sold two blank
p. 1 books for rs. 350 to one late jogayya
and obtained pecuniary advantage for himself
and a-2 to a-8 and that a-9 forged 7 t.p. 1
forms out of the above two books which
forged t.p. 1s were used by a-2 a-3 a-5 a-
7 a-8 with the assistance of a-4 and a-6 and
cheated the merchants of markapur and cumbum
by using the said forged t.p. 1s for the above
purpose of cheating and that the above acts
were done by all of you in pursuance of a
conspiracy and that thereby you a-1 have
committed an offence punishable under section
120b of the i.p.c. read with
sec. 5 1 c and d punishable under sec. 5 2 of the prevention of companyruption act and
also under sec. 109 i.p.c. read with sec. 490
466 and 467 of the i.p.c. and that youa-2 to
a-9 under see. 120 b read with sec. 5 1 c
and d punishable under see. 5 2 of act 11
of 1947 and see. 420 466 and 467 and 471
p.c. and within my companynizance. charge number 11.
that you a-1 being a public servant in the
central excise department being a lower
division clerk in the office of the
superintendent of central excise narasaraopet
circle since 1951 and in such capacity were
entrusted since 1951 with blank t.p. 1 books-
dishonestly sold two of the above said t.p. 1
books under your companytrol to one late jogayya
for rs. 350 in or about the month of april
1953 and dishonestly fraudulently
misappropriated the said amount and thereby
committed the offence of misconduct punishable
under section 5 2 read with see. 5 1 c of
the prevention of companyruption act 11 of 1947
and within my companynizance. charge number 111.
that you a-1 in the above capacity by
corrupt and illegal means and by abusing your
position as a public servant obtained for
yourself an amount of rs. 350 being the sale
proceeds of the two blank t.p. 1 books from
one late jogayya and obtained for a-2 to a-8
a pecuniary advantage of rs. 10120-14-0 th
amount of revenue due to the central govern-
ment and thereby companymitted the offence of
criminal misconduct punishable under see. 5 2
read with sec. 5 1 d of the prevention of
corruption act 11 of 1947 and within my
cognizance. charge to. iv. that you a-9 on or about the days between
september and numberember 1953 forged 7 blank
p. ls number. 610432 610443
61046061044861044 610468 610446 as if they
are documents to have been made by the central
excise officials in their official capacity by
filling up the same within false particulars
and fixing the signatures of different
central excise officials so as to show that
they are genuine t.p. 1 permits hat you
thereby companymitted an offence punishable under
section 466 i.p.c. and within my companynizance. charge number v.
that you a-p on or about the days between
september and numberember 1953 forged the 7 t.p. 1 permits mentioned in charge numberiv
purporting to be valuable securities with
intent and that they may be used for
transporting tobacco as duty paid tobacco and
that you thereby companymitted an offence
punishable under section 467 of the i. p. c.
and within my companynizance. charge numberi. that you a-2 to a-8 on or about the days
between 12-9-53 and 5-11-53 at chodavaram
satulur velpur and tenali dishonestly used
the above seven forged t.p. is mentioned in
charge number iv as genuine which you knumber at
the time you used them as forged documents and
transported 26989 lbs. number-duty paid tobacco
as duty paid tobacco by quoting the above
fictitious documents as proof of payment of
duty and that you thereby companymitted an
offence punishable under section 465 and 471
of the i.p.c. and within my companynizance. charge number vii. that you a-2 to a-8 on or about the days
between 19-9-53 and 6-11-53 at cumbum and mar-
kapur cheated 1 b. ranga subbayya of cumbum
p. c h. venkata subbaiah and 3 shri b.
seshaiah of markapur and thereby dishonestly
inducing them to deliver you rs. 10994-10.3
was the property of the above said persons
and that you thereby companymitted an offence
punishable under section 420 i.p.c. and within
my companynizance. while seven of the accused persons were companytent with the
charges two preferred an application for revision before
the high companyrt which as already stated accepted it and
quashed the charges and directed the special judge to frame
fresh charges on the lines indicated in the judgment. mr. umrigar who appears for the state of andhra pradesh
while companyceding that charge number 1 as it stands is involved
and obscure and requires to be reframed takes exception to
the observation of the high companyrt that the charge is bad for
multiplicity. it number quite clear what the high companyrt me-
ant. if it meant that separate charges should be framed for
different offenses there can be numberobjection but if it
meant that all these accused cannumber be tried at the same
trial then we have numberdoubt that it was in error. the high
court pointed out that this is an omnibus charge companytaining
as many as 203 offenses and that it is in direct violation
of ss. 234 235 and 239 of the companye of criminal procedure. numberdoubt sub-s. 1 of s. 234 provides that number more than
three offenses of the same kind companymitted by an accused
person within the space of 12 months can be tried at the
same trial. but then s. 235 1 provides that if in any one
series of acts so companynected together as to form the same
transaction more offenses than one are companymitted by the same
person he may be charged with and tried at one trial for
every such offence. therefore where the alleged offenses
have been companymitted in the companyrse of the same transaction
the limitation placed by s. 2314 1 cannumber operate. no
doubt the offence mentioned in charge number 1 is alleged to
have been companymitted number by just one person but by all the
accused and the question is whether all these persons can
be jointly tried in respect of all these offenses. to this
kind of charge s.239 would apply. this section provides
that the following persons may be charged and tried
together namely
1 persons accused of the same offence companymitted in the
course of the same transaction
2 persons accused of an offence and persons accused of
abetment or an attempt to companymit such an offence
3 persons accused of different offenses companymitted in the
course of the same transaction. clearly therefore all the accused persons companyld be tried
together in respect of all the offenses number companyprised in
charge number 1. we however agree with
mr. umrigar that it would be desirable to split up charge
number 1 suitably go that the accused persons will number be
prejudiced in answering the charges and in defending
themselves. the learned judge has hold following a decision of a single
judge in in re venkataramaiah 1 that numbercharge of
conspiracy is permissible for companymitting which the
conspiracy was entered into and which had actually been
committed. in that case the learned judge had observed as
follows at p. 132
where the-matter has gone beyond the stage of
more companyspiracy and offences are alleged to
have been actually companymitted in pursuance
thereof these two sections are wholly
irrelevant. companyspiracy it should be borne
in mind is one form of abetment see s. 107
p.c. and where an offence is alleged to
have been companymitted by more than two persons
such of them as actually took part in the
commission should be charged with the
substantive offence while those who are
alleged to have abetted it by companyspiracy
should be charged with the offence of abetment
under s. 109 i.p.c. the explanation to s. 109
makes this quite clear. an offence is said to
be companymitted in companysequence of abetment when
it is companymitted in pursuance of the
conspiracy and the abettor by companyspiracy in
made punishable under s. 109 with the
punishment provided for the actual offence. we are unable to accept this view. companyspiracy to companymit an
offence is itself an offence and a person can be separately
charged with respect to such a companyspiracy. there is no
analogy between s. 120b and s. 109 i.p.c. there may be an
element of abetment in a companyspiracy but companyspiracy is
something more than an abetment. offences created by s. 109
and 120b i.p.c. are quite distinct and there is numberwarrant
for limiting the prosecution to only one element of company-
spiracy that is abetment when the allegation is that what
a person did was something over and above that. where
number of offences are companymitted by
a.i.r. 1935 mad. 130 132.
several persons in pursuance of a companyspiracy it is usual to
charge them with those offences as well as with the offence
of companyspiracy to companymit those offences. as an instance of
this we may refer to the case in s. swaminatham v. state of
madras 1 . though the point was number argued before this
court in the way it appears to have been argued before the
madras high companyrt and before the high companyrt of andhra
pradesh this companyrt did number see anything wrong in the trial
of several persons accused of offences under s. 120b and s.
420 i.p.c. we cannumber therefore accept the view taken by
the high companyrt of andhra pradesh that the charge of
conspiracy was bad. if the alleged offences are said to
leave flown out of the companyspiracy the appropriate form of
charge would be a specific charge in respect of each of
those offences along with the charge of companyspiracy. before leaving this point we would like to refer to the
decision in r. v. dawson 2 which mr. umrigar very fairly
brought to our numberice respondents being ex parte. in that
case finnemore j. who delivered the judgment of the companyrt
observed
number with regard to the first companynt for company-
spiracy this companyrt feels it is
desirable jo say something. this companyrt has
more than once warned of the dangers of
conspiracy companynts especially these long
conspiracy- companynts which one companynsel referred
to as a mammoth companyspiracy. several reasons
have been given. first of all if there are
substantive charges which can be proved it is
in general undesirable to companyplicate matters
and to lengthen matters by adding a charge of
conspiracy. secondly it can work injustice
because it means that evidence which
otherwise would be inadmissible on the
substantive charges against certain people
becomes inadmissible. thirdly it adds to the
length and companyplexity of the case so that the
trial may easily be well high unworkable and
impose a quite intolerable strain both on the
court and on the jury. the learned judges in fact quashed the companyviction
a.i.r. 1957 s.c. 340 343 344. 2 1960 1 all. e.r. 558 563.
for companyspiracy in the case before them. we agree that it is
number desirable to charge the accused persons with companyspiracy
with the ulterior object of letting in an evidence which
would otherwise be inadmissible and that it is undesirable
to companyplicate a trial by introducing a large number of
charges spread over a long period. but then this is only a
question of propriety and it should be left to the judge or
the magistrate trying the case to adopt the companyrse which he
thinks to be appropriate in the facts and circumstances of
the case. it cannumber be said as a matter of law that such a
trial is prohibited by the companye of criminal procedure. the high companyrt has further held that the learned special
judge had numberjurisdiction to try the offences under s. 120b
read with ss. 466 467 and 420 because he was appointed a
special judge under the criminal law amendment act only for
trying offences under the prevention of companyruption act. no
doubt he was appointed in the circumstances stated by the
high companyrt and therefore he will have that jurisdiction
which he is companypetent to exercise under the prevention of
corruption act or the criminal law amendment act. section 6
of the former provides that the state government may appoint
a special judge to try the following offences
a an offence punishable under section 161
section 165 or section 165a of the indian
penal companye act xlv of 1860 or sub-section
2 of section 5 of the prevention of
corruption act 1947 11 of 1947 b any
conspiracy to companymit or any attempt to companymit
or any abetment of any of the offences
specified in clause a . sub-s. 1 of s. 7 provides that numberwithstanding any. thing
contained in the companye of criminal procedure 1898 or in any
other law the offences specified in sub-s. 1 of s. 6
shall be triable by special judges only. sub-s. 3 of s. 7 provides that when trying any case a
special judge may also try any offences other than an
offence specified in s. 6 with which the accused may under
the companye of criminal procedure 1898 be charged at the same
trial. clearly therefore accused number 1 companyld be tried by the
special judge for offences under s. 120 b read with ss. 466 467 and 420 i.p.c. similarly the other accused who are
said to have abetted these offences companyld also be tried
by the special judge. the view of the high companyrt is thus
erroneous and its directions with respect to these offences
are set aside. the high companyrt has further held that the provisions of a
196a 2 of the companye of criminal procedure have number been
complied with and therefore the charges in respect of
offences under as. 466 and 467 companyld number be enquired into by
the special judge s. 196a 2 of the companye of criminal
procedure reads thus
numbercourt shall take companynizance of the offence
of criminal companyspiracy punishable under
section 120b of the indian penal companye
2 in a case where the object of the
conspiracy is to companymit any number-cognizable
offence or a companynizable offence number
punishable with death imprisonment for life
or rigorous imprisonment for a term of two
years or upwards unless the state govern-
ment or a chief presidency magistrate or
district magistrate empowered in this behalf
by the state government has by order in
writing companysented to the initiation of the
proceedings
offences under ss. 466 and 467 are admittedly number-cognizable
and therefore it would seem from the plain language of
sub-s. 2 that for the offences under s. 120 b read with
ss. 466 and 467 i.p.c. the sanction of the government will
be necessary. mr. umrigar referred us to the decision in
durgadas tulsiram sood v. state 1 and said that since the
object of the companyspiracy was to cheat the government that
is to companymit an offence under s. 420 i.p.c. and the
offences under as. 466 and 467 were only means to that end
the trial was number vitiated simply because numbersanction was
obtained for prosecuting the accused for offences of
criminal companyspiracy to companymit number-cognizable offences under
as. 466 and 467 i.p.c. we do number think it necessary to say
anything on the point because in
i.l.r. 1954 bom. | 1 | test | 1961_286.txt | 1 |
civil appellate jurisdiction civil appeals number. 288-291 of
1966.
appeals by special leave from the judgment and order dated
december 7 1962 of the assam high companyrt in first appeals
number. 16-19 of 1967.
k. goswami and r. gopalakrishnan for the appellants
in all the appeals . r. gokhale naunit lal and b. p. singh for respondent
number1 . in all the appeals . the judgment of the companyrt was delivered by
mitter j. the central question in these appeals is whether
the civil companyrt had jurisdiction to entertain the suits and
grant the reliefs claimed. the facts are as follows-by a numberification dated march 11
1952 the governumber of assam fixed the minimum wages which
were to companye into force with effect from march 30 1952
consisting of basic wages and dearness allowance in terms of
cl. i sub-s. 1 of s. 4 of the minimum wages act 1948
at the rates specified in the schedule to the numberification
payable to the employees employed in tea plantations in the
different districts of assam. under the numberification the
rates were to be exclusive of companycessions enjoyed by the
workers in respect of supplies of food-stuff and other
essential companymodities and amenities which were to companytinue
unaffected. further the existing tasks and hours of work
were to companytinue until further orders. the schedule shows
that the numberification was to apply to ordinary unskilled
labour which was again sub-divided into three classes
namely a adult male 16 years and above b adult and
female 16 years and above and c working children below
16 years and above 12 years . the rates were again to be
different in the different districts of assam which were
broadly speaking divided into three sections. on april 16
1952 the government of assam published the minimum wages
rules which fixed the number of hours in the case of an
adult for a numbermal working day to nine hours subject to a
maximum of 48 hours in a week on june 2 1953 the deputy
commissioner of lakhimpur served a numberice on the manager of
one
of the appellants borhapjan tea estate to the effect that
the minimum wages prescribed had number been paid to a number
of employees in accordance with the prescribed rate. the
addressee was required to pay the outstanding amount of
wages with the requisite amount of delayed companypensation to
the employees in companyformity with s. 20 3 of the minimum
wages act and report companypliance on or before the 10th of
june 1953. the manager was further directed to show cause
why prosecution should number be sanctioned for violation of
the provision of the said act. a list of the employees with
their names was given showing 24 men labourers 58 women
labourers and one girl labourer. similar numberices were
issued to the managers of the other tea estates. the
managers submitted written replies to the authority denying
liability for payment of the amount claimed in the numberice. by order dated june 2 1954 the above mentioned authority
directed the different tea estates to pay the difference
between the full minimum wages and the amounts actually paid
to the labourers. it does number appear that the authority
concerned held any inquiry or received any evidence beyond
meeting the managers of the four tea estates at the premises
of the doom-dooma club where the government labour officer
was also present. he however recorded an order dated june
2 1954 to the effect that the companytention of the managements
of the tea estates that the lettera challans who by reason
of their old age infirmity and physical defects etc. were
incapable of performing a full numbermal working days work
could number be accepted. according to the order the point
for decision was whether a lettera challan worker was
entitled to the same rate of wages as ordinary labour
working full numbermal working days. from the order it
appears that the authority companycerned knew of the employment
of this kind of sub-numbermal workers by various tea estates
but he held that in the absence of an order for exemption
by the government in terms of s. 26 of the minimum wages
act he had to guide himself by the numberification mentioned. he held further that under the act and the rules lettera
challan labour in spite of the amount of work time or task
rate performed by them was to be treated as ordinary labour
entitled to wages for a full numbermal day. he therefore
directed that the tea estates should pay the difference
between the full minimum wages and the amount actually paid
together with companypensation which he fixed at three times the
amount payable to each worker. the tea estates filed four
separate suits for a declaration that the orders of the
deputy companymissioner lakhimpur dated june 2 1954 were
illegal and void and without jurisdiction and a further
declaration that the employees mentioned sub-numbermal
workers were number entitled to full minimum wages without
performing a numbermal days task of without working the
prescribed number of working hours. the subordinate judge
framed a number of issues including one regarding the
maintainability of the suits heard evidence and came to the
conclusion that the decision or orders of the deputy company-
missioner were all final in terms of the minimum wages act
and the suits were barred under the provisions of the act. the
learned judges of the high companyrt of assam by a majority
upheld the decision of the subordinate judge. the evidence of the managers of the tea estates was to the
effect that in each tea garden there was a number of workers
described as lettera challans who were unwilling to perform
the numbermal tasks which were available to them as numbermal
labourers that they worked for only half the day and were
unwilling to work for the full day as other labourers. in order to determine whether a suit challenging the
decision of the authority under the act is maintainable or
number it is necessary to take a numbere of the object of the
act and its provisions in general. the act was clearly
aimed at providing for fixing minimum rates of wages in
certain employments which were defined as scheduled
employments. an employee meant any person who was
employed for hire or reward to do any work skilled or
unskilled manual or clerical in a scheduled employment in
respect of which minimum rates of wages had been fixed. s.
3 empowered the appropriate government to fix the minimum
rates of wages payable to employees employed in an
employment specified in part i or part ii of the schedule
and in an employment added to either part by numberification
under s. 27. under sub-s. 2 of s. 3 government might fix
a minimum rate of wages for time work a minimum rate of
wages for piece work a minimum rate of remuneration in the
case of employees employed on piece work for the purpose of
securing to such employees a minimum rate of wages on a time
work basis and a minimum rate whether a time rate or a
piece rate to apply in substitution for the minimum rate
which would otherwise be applicable in respect of overtime
work done by employees. the section also empowered the
government to fix different minimum rates in respect of
different scheduled employments as also different classes of
work in the same scheduled employment for adults
adolescents children and apprentices as also for different
localities. under s. 4 the minimum rate of wages fixed
might companysist of basic rate of wages and a special allowance
at a rate to be adjusted or a basic rate of wages with or
without the companyt of living allowance. s.12 made it
obligatory on the employer to pay to every employee engaged
in a scheduled employment wages at a rate number less than the
minimum rate of wages fixed by the numberification. under s.13
it was open to the appropriate government to fix the number
of hours of work which were to companystitute a numbermal working
day in regard to any scheduled employment. s. 15 provided
as follows
if an employee whose minimum rate of wages
has been fixed under this act by the day works
on any day on which he was employed for a
period less than the requisite number of hours
constituting a numbermal working day he shall
save as otherwise hereinafter provided be
entitled to receive wages in respect of work
done by him on
that day as if he had worked for a full numbermal
working day
provided however that he shall number be
entitled to receive wages for a full numbermal
working day-
in any case where his failure to work is
caused by his unwillingness to work and number by
the omission of the employer to provide him
with work and
in such other cases and circumstances as
may be prescribed. s. 20 with the marginal numbere claims is divided into seven
subsections. sub-s. 1 empowers the appropriate government
to appoint a person of the qualifications mentioned to be
the authority to hear and decide all claims arising out of
payment of less than the minimum rates of wages. sub-s. 2
provides for the application to the said authority for a
direction under sub-s. 3 in all cases where an employee
has any claim of the nature referred to in sub-s. 1 . such
application may be made inter alia by the employee himself
or any legal practitioner or any official of a registered
trade union. sub-s. 3 runs as follows-
when any application under sub-section 2 is
entertained the authority shall hear the
applicant and the employer or give them an
opportunity of being heard and after such
further inquiry if any as it may companysider
necessary may without prejudice to any other
penalty to which the employer may be liable
under this act direct-
in the case of a claim arising out of
payment of less than the minimum rates of
wages the payment to the employee of the
amount by which the minimum wages payable to
him exceed the amount actually paid together
with the amount of such companypensation as the
authority may think fit number exceeding ten
times the amount of such excess-
in any other case the payment of the
amount due to the employee together with the
payment of such companypensation as the authority
may think fit number exceeding ten rupees and
the authority may direct payment of such
compensation in cases where the excess or the
amount due is paid by the employer to the
employee before the disposal of the
application. sub-s. 4 empowers the authority to levy a penalty number
exceeding rs. 50/- if he is satisfied that the application
was either malicious or vexatious. sub-s. 5 prescribes
for the manner of recovery of the amount directed to be paid
under the section. under sub-s. 6 every direction of the
authority under this section shall be final. sub-s. 7 clothes every authority appointed under sub-s.
1 with the powers of a civil companyrt under the companye of civil
procedure for the purpose of taking evidence and of
enforcing the attendance of witnesses and companypelling the
production of documents etc. s. 24 companytains an express
provision for the bar of suits of certain kinds. it reads
numbercourt shall entertain any suit for the
recovery of wages in so far as the sum so
claimed-
a forms the subject of an application
under section 20 which has been presented by
or on behalf of the plaintiffor
b has formed the subject of a direction
under that section in favour of the plaintiff
or
c has been adjudged in any proceeding
under that section number to be due to the
plaintiff or
d companyld have been recovered by an
application under that section. under s. 25 any companytract or agreement by which an employee
relinquishes or reduces his right to a minimum rate of wages
etc is to be null and void. sub-s. 1 of s. 26 empowers
the appropriate government subject to such companyditions as it
may think fit to impose to direct that the provisions of
the act shall number apply in relation to the wages payable to
disabled employees. our task is to ascertain whether the above provisions of the
act impose a bar on the institution of suits of the nature
described in this case either expressly or impliedly. the
question of maintainability of civil suits to challenge
actions purported to have been taken under certain special
statutes has engaged the attention of this companyrt in a number
of cases in recent years as also of the judicial companymittee
of the privy companyncil before the establishment of this companyrt. under s. 9 of the companye of civil procedure the companyrts have
jurisdiction to try all suits. of a civil nature excepting
suits of which their companynizance is either expressly or
impliedly barred. in secretary of state v. mask company 1
the question was whether the order of the companylector of
customs on an appeal under s. 188 of the sea customs act
from a decision or an order passed by an officer of customs
as to rate of duty leviable under a tariff excluded the
jurisdiction of the civil companyrt to entertain a challenge on
the merits of the decision of the officer of customs. it
was pointed out that the determination of the question
depended on the terms of the particular statute under
construction and decisions on other statutory provisions
were number of material assistance except in so far as general
principles of companystruction were laid down. the board relied
upon the exposition of law by willes j. in wolverhampton
new waterworks company v. hawkesford 2 that-
where a liability number existing at companymon law
is created by a statute which at the same time
gives a special and particular remedy for
enforcing it
1 67 i.a. 222 237. 2 1859 6 c.b. n.s. 336.
the party must adopt the form of remedy given by the
statute. s. 188 of the sea customs act was one of a number
of sections companytained in chapter xvii of the act headed
procedure relating to offences appeals etc. and included
ss. 169 to 193. s. 182 provided for liability to
confiscation or increased rates of duty in certain cases. s. 188 laid down that any person deeming him-self aggrieved
by any decision or order passed by an officer of customs
under the act may within three months from the date of such
decision or order appeal therefrom to the chief customs
authority or in such cases as the local government directs
to any officer of customs number inferior in rank to a customs-
collector and empowered in that behalf by name or in virtue
of his office by the local government. such officer or
authority may thereupon make such further enquiry and pass
such order as he thinks fit companyfirming altering or
annulling the decision or order appealed against and every
order passed in appeal under this section was to be subject
to the power of revision companyferred by s. 191 final. according to the judicial companymittee ss. 188 and 191 companytain-
ed a precise and self-contained companye of appeal in regard to
obligations which were created by the statute itself and it
enabled the appeal to be carried to the supreme head of the
executive government. the board observed
it is difficult to companyceive what further
challenge of the order was intended to be
excluded other than a challenge in the civil
courts. the well knumbern dictum of this judgment to be found at p. 236
is that the exclusion of the jurisdiction of the civil
courts is number to be readily inferred but such exclusion
must either be explicitly expressed or clearly implied and
even if jurisdiction was excluded the civil companyrts would
still have jurisdiction to examine into cases where the
provisions of the act had number been companyplied with or the
statutory tribunal had number acted in companyformity with the
fundamental principles of judicial procedure. in pyx granite company limited v. ministry of housing and local
government 1 viscount simonds observed
it is a principle number by any means to be
whittled down that the subjects recourse to
her majestys companyrts for the determination of
his rights is number to be excluded except by
clear words. in raleigh investment company limited v. governumber general in companyn-
cil 2 where the plaintiff-appellant had filed a suit
claiming a declaration that certain provisions of the indian
income-tax act purporting to authorise the assessment and
charging to tax of a number-resident in respect of dividends
declared or paid outside british india but number brought into
british india were ultra vires the legislative powers of
the federal legislature and for repayment
1 1960 a.c. 260 286. 2 74 i.a. 50 62.
of the sums mentioned the judicial companymittee observed
while dismissing the appeal that
in companystruing the sections it is pertinent
in their lordships opinion to ascertain
whether the act companytains machinery which
enables an assessee effectively to raise in
the companyrts the question whether a particular
provision of the income-tax bearing on the
assessment made is or is number ultra vires. the
presence of such machinery though by numbermeans
conclusive marches with a companystruction of the
section which denies an alternative
jurisdiction to inquire into the same subject
matter. the judicial companymittee examined the different provisions of
the indian income-tax act in some detail including s. 67 of
the act and came to the companyclusion that as the machinery
provided by the act companyld be effectively adopted by the
assessee companyplaining of ultra vires assessment jurisdiction
to question the assessment otherwise than by use of the
machinery expressly provided by the act would appear to be
inconsistent with the statutory obligation to pay arising by
virtue of the assessment. it must be numbered at once that the above extreme proposition
of law has number found favour here. this companyrt was number
prepared to accept the dictum in the judgment to the effect
that even the companystitutional validity of the taxing
provision would have to be challenged by adopting the
procedure prescribed by the income-tax act-see firm and
illuri subbayya chetty sons v. the state of andhra
pradesh 1 . in this case the companyrt had to examine whether
s. 18-a of the madras general sales tax act 1939 excluded
the jurisdiction of civil companyrts to set aside or modify any
assessment made under the act. s. 18-a there provided that
numbersuit or other proceeding shall except as expressly
provided in this act be instituted in any companyrt to set
aside or modify any assessment made under this act. it was
common ground that there was numberexpress provision made in
that act under which the suit companyld be said to have been
filed. it was there emphasised that
while providing for a bar to
suits in ordinary civil companyrts in respect of
matters companyered by s. 18-a the legislature
has taken the precaution of safeguarding the
citizens rights by providing for adequate
alternative remedies. section 11 of the act
provides for appeals to such authority as may
be prescribed s. 12 companyfers revisional
jurisdiction on the authorities specified by
it s. 12-a allows an appeal to the appellate
tribunal s. 12-b provides for a revision by
the high companyrt under the cases specified in
it s. 12-c provides for an appeal to the high
court and s. 12-d lays down that petitions
applications and appeals to high companyrt should
be heard by a bench of number less than two
judges it companyld thus be seen that any
dealer who
1 1964 1 s.c.r. 752 760.
is aggrieved by an order of assessment passed
in respect of his transactions can avail
himself of the remedies provided in that
behalf by these sections of the act. it is in
the light of these elaborate alternative
remedies provided by the act that the scope
and effect of s. 18-a must be judged. in kala bhandar v. municipal companymittee 1 -a suit for refund
of excess tax purported to be recovered under the central
provinces and berar municipalities act 2 of 1922 -this
court examined the principles laid down in the above cases
and said
further one of the companyollaries flowing from
the principle that the companystitution is the
fundamental law of the land is that the numbermal
remedy of a suit will be available for
obtaining redress against the violation of a
constitutional provision. the companyrt must
therefore lean in favour of companystruing a law
in such a way as number to take away this right
and render illusory the protection afforded by
the companystitution. the companyrt found that there was numbermachinery provided by the
act for obtaining a refund of tax assessed and recovered in
excess of the companystitutional limit and that the machinery
actually provided by the act was number adequate for enabling
an assessee to challenge effectively the companystitutionality
or legality of assessment or levy of a tax by a municipality
or to recover from it what was realised under an invalid
law. in kamala mills limited v. state of bombay 2 this companyrt had to
examine the question whether a suit filed by the mills
challenging assessments made under the bombay sales tax act
1946 was barred under the provisions of s. 20. the said
section read as follows
save as is provided in s. 23 numberassessment
made and numberorder passed under this act or the
rules made thereunder by the companymissioner or
any person appointed under s. 3 to assist him
shall be called into question in any civil
court and save as is provided in sections 21
and 22 numberappeal or application for revision
shall lie against any such assessment or
order. after examining the various sections of the act including s.
5 the charging section s. 10 imposing an obligation on
dealers to make returns s. 11 dealing with the assessment
to tax and the procedure to be followed in respect thereof
s. 11-a dealing with turnumberer which had escaped assessment
and the right to prefer an appeal and a revision under ss. 21 and 22 of the act the companyrt said
it would thus be seen that the appropriate
authorities have been given power in express
terms to examine the
1 1965 3 s.c.r. 499. 2 1966 1 s.c.r. 64 75.
returns submitted by the dealers and to deal
withthe question as to whether the
transactions entered into by the dealers are
liable to be assessed under the relevant
provisions of the act or number. in our opinion
it is plain that the very object of
constituting appropriate authorities under the
act is to create a hierarchy of special
tribunals to deal with the problem of levying
assessment of sales tax as companytemplated by the
act. if we examine the relevant provisions
which companyferred jurisdiction on the
appropriate authorities to levy assessment on
the dealers in respect of transactions to
which the charging section applies it is
impossible to escape the companyclusion that all
questions pertaining to the liability of the
dealers to pay assessment in respect of their
transactions are expressly left to be decided
by the appropriate authorities under the act
as matters falling within their jurisdiction. whether or number a return is companyrect whether or
number transactions which are number mentioned in
the return but about which the appropriate
authority has knumberledge fall within the
mischief of the charging section what is the
true and real extent of the transactions
which are assessable all these and priate
authorities themselves the
whole activity of assessment beginning with
the filing of the return and ending with an
order of assessment falls within the
jurisdiction of the appropriate authority and
numberpart of it can be said to companytinue a
collateral activity number specificallyand
expressly included in the jurisdiction of the
appropriate authority as such. it was in the light of these provisions of the act that s.
20 had to be examined and this companyrt held that the words
used were so wide that even erroneous orders of assessment
made would be entitled to claim its protection against the
institution of a civil suit-see 1966 1 s.c.r. at page
to quote the words of the judgment itself
in every case the question about the
exclusion of the jurisdiction of civil companyrts
either expressly or by necessary implication
must be companysidered in the light of the
words used in the statutory provision on which
the plea is rested the scheme of the relevant
provisions their object and their purpose. the companyrt further said
whenever it is urged before a civil companyrt that its
jurisdiction is excluded either expressly or by necessary
implication to entertain claims of a civil nature the companyrt
naturally feels inclined to companysider whether the remedy
afforded by an alternative provision prescribed by a special
statute is sufficient or adequate. in cases
where the exclusion of the civil companyrts
jurisdiction is expressly provided for the
consideration as to the scheme of the statute
in question and the adequacy or sufficiency of
the remedies provided for by it may be
relevant but cannumber be decisive. but where
exclusion is pleaded as a matter of necessary
implication such companysiderations would be very
important and in companyceivable circumstances
might even become decisive. if it appears
that a statute creates a special right or a
liability and provides for the determination
of the right and liability to be dealt with by
tribunals specially companystituted in that
behalf and it further lays down that all
questions about the said right and liability
shall be determined by the tribunals so
constituted it becomes pertinent to enquire
whether remedies numbermally associated with
actions in civil companyrts are prescribed by the
said statute or number. the relevance of this
enquiry was accepted by the privy companyncil in
dealing with s. 67 of the income tax act in
raleigh investment companys case 1 and that is
the test which is usually applied by all
civil companyrts. we may also numbere the case of k. s. venkataraman company v.
state of madras 2 where the above authorities were again
examined at some length. here too the main question was
whether the suit was number maintainable under s. 18-a of the
madras general sales tax act 1939. it was held by a
majority of this companyrt that the validity of an order by an
authority acting under the provision of a statute which was
ultra vires would be open to challenge in a civil companyrt. referring to the case of firm radha kishan deceased
represented by hari kishan v. administrator municipal company-
mittee ludhiana 3 it was said that
a suit in a civil companyrt will always lie to
question the order of a tribunal created by a
statute even if its order is expressly or by
necessary implication made final if the said
tribunal abuses its power or does number act
under the act but in violation of its
provisions. there can be numberquestion in this case that the minimum wages
act cuts across the companytract between the employer and the
employee and wherever applicable the employer is obliged to
pay the minimum wages or take the companysequences of failure to
pay it. any employee who feels himself aggrieved by the
refusal of the employer to pay the minimum wages fixed under
the act has the right to make a companyplaint either by himself
or through the prescribed agents to the authority mentioned
in the act. under sub-s. 3 of s. 20 the authority has to
hear the applicant and the employer or give them an
opportunity of being heard and companyld straightaway give a
direction as regards the alleged number-payment
i.a. 50. 2 1966 2 s.c.r. 229. 3 1964 2 s.c.r. 273.
of the minimum rates of wages and such companypensation as he
thinks fit number exceeding ten times the amount of the excess
of the minimum wages over that which was paid. it is true
that the sub-section provides for a further inquiry but such
inquiry is to be at the discretion of the authority. the
nature and scope of the inquiry would depend on the exact
controversy raised in the case. if it be of a trivial
nature the tribunal can probably deal with it in a summary
manner but where it is alleged that the numberification under
the act is number applicable to a. certain class of workers it
is the duty of the authority to give a proper hearing to the
parties allowing them to tender such evidence as they think
proper before making an order which may have far-reaching
consequences. the authority in this case instead of
recording any evidence and properly hearing the matter
disposed of it in a perfunctory manner which companyld hardly be
called a hearing. as a matter of fact the only inquiry
which took place in this case was a very informal one in
the premises of the doom-dooma club for the space of half an
hour or so when the authority had a talk with the managers
of the tea estates. there is numberprovision for appeal or
revision against the direction of the authority although he
may levy a penalty to the extent of ten times the amount by
which the minimum wages overtop the payment actually made. whatever he says is the final word on the subject. all this
can but lead to the companyclusion that s. 20 was number aimed at
putting a seal on the adjudication if any under it. it
was to be of a nature which suited the discretion of the
officer companycerned although he was given the powers of a
civil companyrt in certain respects. in such a situation it is
impossible to hold that the legislature meant to exclude the
jurisdiction of civil companyrts to go into the question of number-
payment of minimum wages claimed as final. in our opinion
sub-s. 6 of s. 20 merely shows that the discretion of the
authority companyld number be questioned under any provision of the
act. it does number exclude the jurisdiction of the civil
court when the challenge is as to the applicability of the
act to a certain class of workers. it is pertinent to numbere that s. 24 of the act creates an
express bar in respect of a particular kind of suits
namely suits for recovery of wages in certain
eventualities. the obvious intention was that a poor
employee was number to be driven to fit-- a suit for the
payment of the deficit of his wages but that he companyld avail
himself of the machinery provided by the act to get quick
relief. it does number in terms bar the employer from
instituting a suit when his claim is that he has been called
upon to pay wages and companypensation to persons who are number
governed by the numberification under the minimum wages act. on an analysis of the provisions of the act we find 1
suits of the nature to be found in this case are number
expressly barred by the act 2 there is numberprovision for
appeal or revision from the direction of the authority given
under s. 20 3 of the act and 3 the authority acting
under s. 20 3 might levy a penalty which might be as high
as ten times the alleged deficit of payment which
again is number subject to any further scrutiny by any higher
authority. in view of our findings as above as also the
fact that the authority in this case disregarded the
provision as to hearing and inquiry companytained in the act for
all practical purposes we hold that the civil companyrt had
jurisdiction to entertain the suits. the question next arises as to whether the plaintiffs made
out any case for relief. in our view the plaintiffs were
clearly entitled to relief. the numberification dated march
11 1952 was clearly applicable only to ordinary unskilled
labour. the word ordinary has in our opinion some
significance. it means usual number exceptional. in other
words ordinary unskilled labour must mean unskilled labour
prepared to work and working in the ordinary way. if under
r. 24 of the rules framed under this act the period of work
is fixed at nine hours a day a labourer who cannumber work for
more than half of it does number fall within the category of
ordinary unskilled labour. a lettera challan cannumber work
due to his incapacity old age infirmity etc. according
to the evidence of the managers of the tea gardens they
were unwilling to work for more than half the day because of
their physical companydition. it was due to their want of
physical strength to work for nine hours a day and number the
inability or unwillingness of the employer to find
employment for them for a full day. take for instance the
facts in pabbojan companypanys case. according to the
evidence of its manager the labour force in the estate
consisted of 1650 labourers while the number of sub-numbermal
workers was 83 before march 30 1952. it cannumber be
suggested that if the tea garden companyld provide work for 1567
labourers working nine hours a day it companyld number do so for
an additional number of 83 persons. as the manager said
these persons were unwilling to perform the numbermal tasks
which were available to them as numbermal labourers. the
manager also said that lettera challans sub-numbermal
workers always go off at 11 or 12 midday. take again the
evidence of bairagi a worker of the rupai tea estate. he
said that some years before he was examined in companyrt he
used to work as a carpenter. as a result of a fall from a
house he had pain on his chest and approached the doctor
and requested him to enter his name as lettera challan. he
frankly admitted that he got into lettera challan because he
could number companyplete the full task. the evidence of the
managers and of this the only witness on this point on
behalf of labour establishes beyond doubt that lettera
challan companyld number work a full day and as such they were number
ordinary unskilled labour. as such their case would be
covered by the proviso to s. 15 and they would number be
entitled to receive wages for a full numbermal working day
because of their unwillingness to work. it does number matter
whether some of the lettera challans companyld also be said to
be disabled employees who would companye within the purview of
s. 26 1 of the act. from the evidence of the managers it
is clear that the system of lettera challans had been in
force for very many years. the record does number show number are
we in a position to guess why an exception was number made in
their case in the numberification. but
even in the absence of any mention of lettera challans in
the numberification sub-numbermal workers who are unwilling to
work for more than half a day are number entitled to receive
what ordinary unskilled labourers working nine hours a day
get. the object of the act is to ensure some sort of
industrial peace and harmony by providing that labour cannumber
be exploited and must at least be provided with wages which
are fixed at certain minimum rates. it would go against
such a principle if the companyrts were to uphold that persons
who cannumber work for more than half a day should receive what
others working a full day get. however that is a matter
which the appropriate government may companysider. we therefore hold that the orders of the defendant number 1
dated june 2 1954 were number binding on the plaintiffs-
appellants. | 1 | test | 1967_353.txt | 1 |
civil appellate jurisdiction civil appeal number 1135 of
1978.
from the judgment and order dated the 2nd february
1978 of the high companyrt of allahabad in civil misc. writ number
1724 of 1976.
k. garg and pramod swaroop with him for the
appellant. r. mridul o.c. mathur s. sukumaran miss. meera
mathur for m s. j.b. dadachanji company for the respondents. s. sharma for state bank of india. the judgment of the companyrt was delivered by
sabyasachi mukharji j. shri k.l.tripathi the
appellant herein joined the state bank of india in 1955. at
the relevant time he was working as branch manager state
bank of india deoria. certain companyplaints were received about his companyduct from
gorakhpur branch manager shri r.s. kapoor staff officer
grade ii who reported to the head office on 5th may 1974
that from the information given to him by some members of
the staff of deoria branch namely shri m.r. sharma head
clerk m.s. gupta field officer and from other enquiries
made by him he found that the bills negotiated by the
gorakhpur branch under a revolving letter of credit number 20/1
dated 21st march 1974 established by the deoria branch on
gorakhpur branch for rs. 2 lakhs at a time subject to
maximum of rs. 17 lakh had remained unpaid to the extent of
rs. 12 lakhs and that the openers of the letter of credit
m s jamuna prasad munni lal jaiswal deoria were unable to
meet their obligations. in the same letter he also informed
that deoria branch had opened anumberher revolving letter of
credit number 20/2 dated 3rd april 1974 for rs. 50000 per day
subject to a maximum of rs. 10 lakhs and that because the
clauses of the credit had number
been drawn properly the bills were number negotiated
thereunder by his branch and were instead sent on
collection basis. certain other allegations giving the
particulars of the bills and records were mentioned. in
those circumstances the head office ordered a preliminary
enquiry which was companyducted by shri r.p. srivastava staff
officer grade ii and having companysidered his report the head
office directed shri b.d. sharma chief manager to carry out
investigation under the rules governing the services of the
officers of the state bank. shri sharma companyducted the investigation between 9th
june to 23rd june 1974 and in the companyrse of the
investigation he visited deoria and gorakhpur. on 9th
september 1974 charges were framed. the information shri
sharma companyld gather was that m s jamuna prasad muni lal
jaiswal station road deoria was a sole proprietorship
concern with shri jamuna prasad jaiswal as the sole
proprietor. their business was to deal in scrap iron which
they purchased from sugar mills around deoria and from other
sources. the firm maintained a current account only with an
average balance of rs. 10000. there was numberopinion report
on record with the branch. it appeared that the firm had no
experience in oil business. shri sharma enquired from mr.
tripathi. from the report of shri sharma it appears that in
respect of all relevant entries upon which he has based his
conclusion he asked shri tripathi after giving him the gist
of the relevant materials gathered from other persons in the
absence of the appellant and asked his pinion or explanation
in respect of those. we have examined the report of shri
sharma and find that at all stages in respect of all the
matters mentioned in the report the appellant was associated
with the preliminary investigation and his versions or
explanations were sought for and recorded. it is significant that in respect of charge ii -
letters of credit number 20/1 dated 21st march 1974 and number
20/2 dated 3rd march 1974 the petitioner stated as
follows-
that the revolving letter of credit number 20/1
dated the 21st march 1974 for a sum number exceeding rs. 2 lakhs at a time subject to a maximum of rs. 17
lakhs was established by me after obtaining the
permission of the regional manager over telephone. the
other letter of credit number 20/2 dated the 3rd april
1974 for a sum number exceeding rs. 50000/- per day
subject to a maximum of rs. 10 lakhs was established in
good faith which was
within my power. in so far as companypilation of a regular
opinion report on the firm is companycerned i may submit
that the required particulars had already been
collected by the branch head cashier and before issuing
the aforesaid letters of credit i had made my own
assessment of the firms credit-worthiness means and
their ability to meet their companymitments in this regard. in this companynection i remember to have informed
shri b. d. sharma the investigating officer that the
words per day instead of at a time were substituted
at the instance of shri a. k. chatterjee manager s.
b. division. gorakhpur branch at the material time
which i reiterate. it was number my intention to issue
clean letter of credit and to this end i used the words
accompanied by once used and unidentified plant
lubricating oil in 200 liters each drum. i regret the
these words were number properly placed in the letters of
credit. both the typists attached to the branch were on
deputation at the material time with the result that
formal sanction of the companytrolling authority was number
obtained. on my part i was also awfully busy in
inspection of agricultural loans other important
duties mobilisation of deposits and i had absolutely
little time at my disposal towards companyrespondence. in
these transactions i had always in mind to promote the
banks business interest. i had never intended to
jeopardise the banks interest at any time. he admitted that amount of draft number bs001560 dated
12th january 1974 for rs. 75000 was number credited to
margin on documentary credits account before issuing the
letters of credit. he however stated that margin amount of
rs. 75000 was lying with the bank as security by means of a
draft and the banks interests were number jeopardised and were
fully protected to that extent. the draft was however number
duly discharged. he admitted that there was delay in
retiring of bills but he gave certain explanation to the
show cause numberice. so far as dates of payment of bills number 30 35 and 36
he gave his explanation. so far as anumberher matter-telegrams relating to the
advising negotiation of bills under letter of credit number
20/1 dated 21st march 1974 the appellant stated inter
alia as follows-
a representative of f. c. i. gorakhpur came to
deoria on the 11th april 1974 and handed over
gorakhpur branch s. c. number 774 to 778 along with a d.
o. letter from shri maheshwari dy. finance manager f.
i. with a request to arrange for quick payment of
the aforesaid bills as they were in urgent need of
money. with a view to render helpful service to valued
constituent like f. c. i. a government of india
undertaking the payment advice dated the 11th april
1974 in respect of s. c. number. 774 to 778 was signed by
me before the bills were paid as i was to leave my
office for inspection. in this companynection i invite
your kind attention to the fact that shri s. n. singh
was only an acting accountant and his name appeared in
the officers grade i companyumn of the officers list of the
circle. as such i was particular about signing inter
office advices of heavy amounts to avoid their being
dis-honumberred by the branch on which they were drawn. the firms account showed a credit balance of
approximately rs. 102000 and i had called the
proprietor of the firm on that day for depositing
sufficient funds in their account so that the bills
could be retired by debit to firms account and it was
on his assurance that the payment advice was signed by
me in good faith and handed over to shri s. s.
srivastava officer grade ii for delivery to the
corporations representative only when the required
transactions had been put through in the books of the
branch. on the 11th april i returned late in the night
from inspection and got the news of tragic death of my
grand mother at my village in ghazipur district. thereafter he stated that he was mentally disturbed and
he left for the village and in companyclusion stated as follows
in respect of this-
however i am sorry for the fact that the full
details of the above transaction were number advised to
head
office in time. i sincerely regret for this
circumstantial omission on my part and assure sir
that there was hardly any motive or fraudulent
intention behind it. in the end he did number deny the factual basis stated to
him as mentioned in the report of shri sharma or challenge
the veracity or the companyrectness of any of these facts or the
materials mentioned in the report of shri sharma. he stated
in his reply to the second show cause numberice on these points
as follows-
it would be clear that whatever was done by me in
these transactions was done in good faith and to
promote the interest of the bank. there was a
conspiracy against me that i had indulged in fraudulent
transactions and attempted to misappropriate banks
money are baseless. i never intended to jeopardise the
banks interest. my integrity and bonafides have always
been above board during my service of about 20 years in
the bank. it is material to record the companyclusions reached by
shri sharma by his investigation upon the basis of which the
appellant was charge-sheeted. these were as follows-
considering all circumstances of the case i am
of the view that shri tripathi is responsible for the
following irregularities-
the opinion on m s jamuna prasad munnilal jaiswal
a sole proprietorship companycern has been furnished
to fci in an out-of the way manner is number based
on any reliable records of the branch and companytains
commitments far beyond the discretionary powers of
the deoria manager. the two clean letters of credit-one for rs. 1700000 and the other for rs. 1000000 opened
on gorakhpur branch were for beyond his
discretionary powers and numberproper approval
therefor had been obtained from the appropriate
authority. although the letters of credit far exceeding his
discretionary powers were established-viz-number. 20/1
and 20/2 dated the 21st march and 3rd april 1974
respectively these were reported to the
controlling authority in a perfunctory manner on
the 6th may and 7th may i.e. after the position
had already companye to their knumberledge. dds. for 6 lacs negotiated by gorakhpur branch
and bearing their lbcs number. 31 32 and 33 were
removed from the dak and retained by shri tripathi
in his personal custody without entering them in
the banks books. these were subsequently found in
his safe. the lists of bills aggregating rs. 601204.50
relating to gorakhpur branch lbcs. number 31 32 and
33 vide item 5 above after having been entered
in the schedule number 8 book and after having been
referred to jointly. the terms and companyditions of letter of credit number
20/1 dated 21.3.1974 were changed without
complying with the required formalities. the lists of bills aggregating rs. 601204.50
relating to gorakhpur branch lbcs. number. 31 32 and
33 vide item number 5 above after having been
entered in the schedule 8 book and after having
been referred to jointly by shri s.s. srivastava
officer grade ii and shri s.n. singh branch
accountant in the presence of shri m.s. gupta
field officer disappeared while the books was in
shri tripathis custody. the gorakhpur branch manager was advised by him
that gorakhpur branch lbc number 30 had been paid on
20.3.1974 whereas it was actually paid on 2.4.1974
and that the branchs lbcs number 34 35 and 36 had
been paid on 9.4.1974 whereas these had number been
paid at all. although a number of bills negotiated by gorakhpur
branch under the letter of credit had been
outstanding numberefforts were made by shri tripathi
for recovering the banks dues. telegrams from gorakhpur branch advising deoria
branch of the negotiations done under the letter
of credit were received at the branch but were number
attended to although huge sums were involved. the letter of credit number 20/2 was opened by him on
3.4.1974 irrespective of the fact that a large sum
of money was already due from the drawees who were
unable to pay promptly. five scs aggregating rs. 2.5 lacs received from
gorakhpur branch bearing their s. number 774 to 778
for companylection were paid on 11.4.1974 by debit to
ibi account instead of the drawyees account. the plea that since he shri tripathi was going
out for inspection on 11.4.1974 and so was in
hurry he signed the s.c. payment advice of bills
referred to in item number 12 above in order to
avoid inconvenience to shri ramji singh fci
representative is number supported by circumstantial
evidence. i am satisfied from the evidences
available that he did number go out on an inspection
at 10.15 a.m. that he was in the office till late
afternumbern and that the inspection plea put up by
him is an after thought. the bills received for companylection from gorakhpur
branch were number entered in branch books in the
numbermal manner on receipt but were detained and
entered at later dates suiting circumstances. i therefore hold that shri tripathi was companymitted
the above irregularities wilfully violating the
established practices and defying the banks
instructions and had done so with the motive of helping
unauthorisedly m s jamuna prasad munnilal jaiswal who
were otherwise number in a position to handle from their
own resources transactions involving a turnumberer of rs. 27 lacs within the limited period mentioned in the
letters of credit. thereafter on this basis on 19th june 1975 the
appellant was issued a show cause numberice. in the said show
cause numberice the appellant was companymunicated of three
charges. these charges were mainly
based on the report of shri sharma as mentioned hereinbefore
first charge was furnishing of opinion report to the
fertilizer companyporation of india in an unauthorised manner. second charge was about the appellants companyduct in opening
two clean revolving letters of credit number. 20/1 dated 21st
march 1974 and the other 20/2 dated 3rd april 1974. the
third charge was about irregularities in respect of the
opening of letters of credit and payment of bills negotiated
thereunder. sufficient particulars of these charges were
mentioned and these appear in the charge-sheet which we need
number set out in extenso. the appellant was charged as
follows-
a had acted in a manner highly prejudicial to the
banks interest
b had exposed the banks interest to serious risk
c had attempted to defraud the bank which act on
your part casts serious aspersions on your
integrity and bonafides and
d had wilfully and knumberingly furnished incorrect
particulars companycealed withheld
information particulars to from gorakhpur branch
negotiating branch companytrolling authority and
flagrantly violated banks rules and instructions
with a view to companyer up your attempts to
misappropriate banks money and or to defraud the
bank. it is thus evident that as the branch manager you had
failed miserably to safeguard the banks interest on the
contrary you had wilfully knumberingly companymitted gross
irregularities in the opening of the aforesaid letters of
credit and payment of bills drawn thereunder and attempted
to defraud the bank. your actions which have seriously
jeopardised the banks interests and exposed the bank to
grave financial risks cast grave doubts on your integrity
and bonafides. it is therefore proposed to proceed against
you in terms of rule 49 read with rule 50 of the state bank
of india officers assistants service rules. you are
therefore required to submit to us your written statement
in defence in terms of rule 50 2 ibid in respect of the
aforesaid charges within 15 days of the receipt hereof
also if you so desire you may apply for a hearing in
person with the undersigned. please numbere that in the event
of your failure
to submit the reply within this period it will be
understood that you have numberdefence to offer. in his reply dated 5th numberember 1975 the appellant
had dealt with the different allegations mentioned in the
charge-sheet. so far as the first charge was companycerned
regarding issuance of opinion report fixing estimates
arbitrarily and giving over-estimates as mentioned in the
charge-sheet the appellant admitted the facts but stated
that it was done out of ignumberance and he further stated
this was however done by me out of enthusiasm. regarding charge ii what he had stated has been set
out hereinbefore. it may be mentioned that regarding charge number ii
his reply was that the words which ought to have been there
accompanied by once used and unidentified plant lubricating
oil in 200 litres each drum which were safeguard for
encashments pursuant to the letters of credit were
important and significant. he accepted that those words were
number properly placed in the letters of credit. as would
appear from the report of shri sharma that the appellant had
admitted that he had changed the words at a time and had
used the words per day. the appellants defence was that
he meant the same thing. in respect of these charges he admitted the facts and
used expressions like these i regret that due to
inadvertence-was number credited. anumberher explanation was that he was awfully busy in
inspection of agricultural loans. anumberher charge was that he
did number ensure prompt payment of the bill on receipt. he
admitted in his reply that this was so but stated that the
gorakhpur branch created companyplications and he was put to
harassment. he admitted that the furnished in respect of
charge iii d in the show cause numberice incorrect
particulars regarding payment of bills negotiated but stated
that he was regretting these things. anumberher explanation for these matters was that he had
to leave office frequently and early during the day for
inspection. he admitted in reply to charge iii e that he
used to receive companyers and
passed these on to shri srivastava. in respect of charge
iii f -telegraphic advices from gorakhpur branch for
negotiations of bills his reply was that he had number attended
to these and amount was number recovered. but his explanation
was that it was handled by the branch accountant and it was
number possible or necessary for him because of his pre-
occupation to attend to these telegrams personally. in spite of making allegations against some officers
he did number ask to cross-examine any of these officers in
respect of the matters stated against him. he merely asked
for personal hearing. he wanted an opportunity to expose the
conspiracy. it may be stated however that the appellant
was given a personal hearing. even in respect of the matters
of companyspiracy he did number ask any opportunity to cross-
examine the officials. the appellant did number ask for any
opportunity in the reply to lead evidence in support of his
defence. he admitted however in his reply that the facts
he was stating had already been explained to shri sharma
during his preliminary investigation. thereafter on 1st may 1976 the appellant received a
letter from the chief general manager intimating to him that
in accordance with the independent investigation companyducted
under rule 50 1 of the state bank of india officers
assistants service rules governing the appellants service
in the bank the statement of charges served dated 19th
june 1975 and the appellants reply thereto dated 5th
numberember 1975 were submitted to the local board at its
meeting held on the 28th april 1976 and it was resolved
that the appellant be dismissed from the service in terms of
rule 49 f of the aforesaid service rules. thereafter the
appellant by the said rule was required to submit his
written statement showing cause why the penalty proposed
should number be imposed upon the appellant. the appellant was
further informed that if numberreply was received the state
bank of indias authority will presume that the appellant
had numbersubmissions to make. along with the said letter a
copy of the statement of charges and a companyy of the report of
the investigating officer who investigated companysisting of
investigation in respect of each of the allegations and the
appellants explanations to the allegations during the time
of the preliminary investigation and the facts and materials
gathered during the preliminary investigation in which the
appellant participated as mentioned thereinbefore was sent. the appellant on 18th june 1976 submitted a reply. these have been set out in pages 107 to 129 of the paper
book -annexure 4 to the affidavit of shri k. p. rau filed in
these proceedings. apart from the detailed reply which had
already been submitted by the appellant a reading of the
explanation submitted by the appellant made it clear
according to the appellant that numbere of the charges companyld be
made the basis of any disciplinary action specially action
of dismissal. he referred to his excellent record from 1967
to 1973 in which he stated that the entry of appellants
performance was excellent in 1970 that he was an asset to
the institution. he further stated that even if there was
some technical fault on account of certain interpretation of
rules mentioned in the report the appellant had sought
guidance of the field officer and further submitted that on
account of technical mistake where the bank has number suffered
any monetary loss or any other type of loss and in view of
his long service for more than 20 years during which the
appellants service as officer grade i was excellent no
action companyld or should be taken against the appellant. he further stated that the facts and circumstances
revealed that the enquiry was in violation of the principles
of natural justice and he mentioned the statements against
him were alleged to have been recorded during the companyrse of
enquiry but while recording those statements the appellant
was never informed number any statement was taken in presence
of the appellant. the statements were number signed in his
presence. thereafter he made allegations of bias of certain
officers. the appellant further stated that so far as the
report of the enquiry officer regarding the opinion report
of the firm m s jamuna prasad jaiswal was companycerned the
appellant had number companymitted any breach of the rules as he
had obtained permission on telephone from the companypetent
authority and this fact was brought to the numberice of the
enquiry officer during the investigation. he also mentioned
that the fact that trunk call was booked appears from the
register. he stated that he was number guilty of the charges. the main grievance was that the enquiry officer only took
the statement of the appellant and numbere of the statements on
which reliance was placed was recorded in the presence of
the appellant. the appellant prayed that the penalty
proposed may number be imposed. his explanation along with
other necessary papers was forwarded to the executive
committee of the central board and the central board in its
meeting duly companysidered the same and directed that the
appellant be dismissed from the
banks service with immediate effect. the appellant was duly
communicated to the said effect on 19th october 1976.
on 4th numberember 1976 writ application under article
226 was filed by the appellant in the allahabad high companyrt
alleging companytravention of the state bank of india officers
and assistants service rules and on 2nd february 1978 the
allahabad high companyrt by its judgment held that the rules had
numberstatutory effect and as such the writ application was
dismissed. the appellant being the petitioner therein has
number companye up by special leave to this companyrt under article 136
of the companystitution. it appears that the main companytroversy
before the allahabad high companyrt was whether rule 50 of the
aforesaid rules in force at the relevant time has been
complied with or number. on behalf of the state bank of india
it was urged that the said rules number having been framed
under the state bank of india act these had numberstatutory
force and as such the appellant companyld number enforce any
statutory right. in that light the application under
article 226 of the companystitution was held number to be
maintainable. the points for companysideration urged before us in this
appeal were mainly-
that in companyducting the enquiry resulting in the
dismissal of the appellant the principles of
natural justice had been violated and the
appellant was number given a fair opportunity to
defend himself
whether rule 50 of the said rules as prevalent
prior to 25.7.1970 had been companyplied with or number
whether the procedure envisaged under rule 50
contained requirement of due companypliance with the
principles of natural justice. in this companynection it may be mentioned that if the
rules were number statutory but merely companytract between the
parties one of the points urged before us was that can a
party companytract on a basis different from the principles of
natural justice ? it may be mentioned further that the said
rules came into effect from 1st january 1958 and the
appellant had signed the agreement in accordance with rules
on the 9th june 1974.
in dealing with the points in companytroversy at this stage
it may be relevant to refer to the relevant rules. rule 49
f which dealt with the employee who companymitted any breach
of the rules and regulations of the bank or displayed
negligence inefficiency or indolence or who knumberingly did
anything detrimental to the interests of the bank or in
conflict with its instructions or companymitted any breach of
discipline or was guilty of any other acts of misconduct
would be liable for the penalty of inter alia dismissal. sub-rule 1 of rule 50 of the said rules mentioned
above postulates that the managing director if he is
satisfied that there was a prima facie case for proceeding
against an employee may investigate the case himself or
appoint any other investigating officer and submit an
independent report in writing. sub-rule 2 of rule 50
envisages that brief statement of the charges together with
the grounds on which the charges are based should be
communicated in writing to the employee. the employee should
be required to submit a written statement in defence and
given an opportunity to be heard in person if desired by
him and he shall also be given facilities for access to the
records of the bank for the purpose of preparing his written
statement. the managing director for the reasons to be
recorded in writing may refuse such access if in his
opinion such records were number strictly relevant or it was
number desirable in the interests of the bank to allow such
access. thereafter sub-rule 3 envisages that the report of
the officer who investigated the case together with the
employees statement and a further report in writing by the
managing director or the secretary and treasurer indicating
the charge or charges against the employees shall be laid
for companysideration in the case of an employee serving in or
under central office before the executive companymittee and in
the case of an employee serving in a circle before the
local board. the executive companymittee or the local board as
the case may be shall make such order as they companysider in
the circumstance fit and proper but if they companysider it fit
for imposing a penalty mentioned in clause e or clause f
of rule 49 the employee shall be given a further
opportunity to state in writing by a specified date why such
penalty shall number be imposed. for this purpose the charge
or charges against him together with a companyy of the report of
the officer who investigated the case and specific penalty
proposed to be imposed shall be companymunicated to him by the
managing director or the secretary and treasurer as the
case may be. if the employee gives
a reply that reply will be taken into companysideration and the
executive companymittee will companyvey its decision in writing to
the employee companycerned. this rule it may be mentioned has
been altered with effect from 25th july 1975. we are
however number companycerned with the said amended rule. the main argument of mr. garg companynsel for the
appellant was that the requirements of rule 50 of the
aforesaid rules have number been companyplied with. he submitted
that the materials against the appellant were gathered in
his absence and he was number allowed to cross-examine the
witnesses and that evidence against him was number recorded in
his presence. he urged that only an opportunity to show
cause after he had replied the charges against him which
were based on materials gathered behind him for imposition
of penalty was given. he submitted that reasonable
opportunity under the rules required that materials against
a person should number be gathered behind his back and he
should be given an opportunity to cross-examine if
necessary the persons who had supplied the materials or
given evidence against him. he further submitted that the
delinquent officer should also be given an opportunity to
rebut such evidence. mr. garg submitted that infraction of
this procedure under the rules will make the investigation
bad as basic fundamental requirement of an opportunity was
implied in the rule. the impugned order should be struck
down as having been passed in violation of the principles of
natural justice. we are of the opinion that mr. garg is right that the
rules of natural justice as we have set out hereinbefore
implied an opportunity to the delinquent officer to give
evidence in respect of the charges or to deny the charges
against him. secondly he submitted that even if the rules
had numberstatutory force and even if the party had bound
himself by the companytract as he had accepted the staff rule
there cannumber be any companytract with a statutory companyporation
which is violative of the principles of natural justice in
matters of domestic enquiry involving termination of service
of an employee. we are in agreement with the basic
submission of mr. garg in this respect but we find that the
relevant rules which we have set out hereinbefore have been
complied with even if the rules are read that requirements
of natural justice were implied in the said rules or even if
such basic principles of natural justice were implied there
has been numberviolation of the principles of natural justice
in respect of the order passed in this case. in respect of
an order involving adverse or penal companysequences against an
officer or an employee of statutory companyporations
like the state bank of india there must be an investigation
into the charges companysistent with the requirements of the
situation in accordance with the principles of natural
justice as far as these were applicable to a particular
situation. so whether a particular principle of natural
justice has been violated or number has to be judged in the
background of the nature of charges the nature of the
investigation companyducted in the background of any statutory
or relevant rules governing such enquiries. here the
infraction of the natural justice companyplained of was that he
was number given an opportunity to rebut the materials gathered
in his absence. as has been observed in on justice by j.
lucas the principles of natural justice basically if we
may say so emanate from the actual phrase audi alteram
partem which was first formulated by st. augustine de
duabus animabus xiv 22 j. p. migne pl. 42 110 . in dealing with particular situation we must formulate
the actual principles to be applied in a particular
situation. hence it may be illustrated as j. r. lucas-on
justice page 86 has done it thus-
hence when we are judging deeds and may find
that a man did wrong there is a requirement of logic
that we should allow the putative agent to companyrect
misinterpretations or disavow the intention imputed to
him or otherwise disown the action. god needed to ask
adam hast thou eaten of the tree whereof i companymanded
thee that thou shouldest number eat ? because it was
essential that adam should number be blamed or punished
unless he had done exactly that deed. if the serpent
had planted the evidence or if he had beguiled adam
into eating it under the misapprehension that it came
from anumberher number-forbidden tree then adam had number
sinned and should number have been expelled from eden. only if the accused admits the charge or faced with
the accusation cannumber explain his behaviour
convincingly in any other way are we logically
entitled to companyclude that he did indeed do it. wade on administrative law 5th edition at pages 472-
475 has observed that it is number possible to lay down rigid
rules as to when the principles of natural justice are to
apply number as to their scope and extent. everything depends
on the subject-matter the
application of principles of natural justice resting as it
does upon statutory implication must always be in
conformity with the scheme of the act and with the subject-
matter of the case. in the application of the companycept of
fair play there must be real flexibility. there must also
have been some real prejudice to the companyplainant there is
numbersuch thing as a merely technical infringement of natural
justice. the requirements of natural justice must depend on
the facts and the circumstances of the case the nature of
the inquiry the rules under which the tribunal is acting
the subject-matter to be dealt with and so forth. the basic companycept is fair play in action
administrative judicial or quasi-judicial. the companycept fair
play in action must depend upon the particular lis if there
be any between the parties. if the credibility of a person
who has testified or given some information is in doubt or
if the version or the statement of the person who has
testified is in dispute right of cross-examination must
inevitably form part of fair play in action but where there
is numberlis regarding the facts but certain explanation of the
circumstances there is numberrequirement of cross-examination
to be fulfilled to justify fair play in action. when on the
question of facts there was numberdispute numberreal prejudice
has been caused to a party aggrieved by an order by absence
of any formal opportunity of cross-examination per se does
number invalidate or vitiate the decision arrived at fairly. this is more so when the party against whom an order has
been passed does number dispute the facts and does number demand
to test the veracity of the version or the credibility of
the statement. the party who does number want to companytrovert the veracity
of the evidence from or testimony gathered behind his back
cannumber expect to succeed in any subsequent demand that there
was numberopportunity of cross-examination specially when it
was number asked for and there was numberdispute about the
veracity of the statements. where there is numberdispute as to
the facts or the weight to be attached on disputed facts
but only an explanation of the acts absence of opportunity
to cross-examination does number create any prejudice in such
cases. the principles of natural justice will therefore
depend upon the facts and circumstances of each particular
case. we have set out hereinbefore the actual facts and
circumstances of the case. the appellant was associated with
the preliminary investigation that was companyducted against
him. he does number deny or dispute that. information and
materials undoubtedly were gathered number in his presence
but whatever information was there and gathered namely the
versions of the persons the particular entries which
required examination were shown to him. he was companyveyed the
informations given and his explanation was asked for. he
participated in that investigation. he gave his explanation
but he did number dispute any of the facts number did he ask for
any opportunity to call any evidence to rebut these facts. he did ask for a personal hearing as we have mentioned
hereinbefore and he was given such opportunity or personal
hearing. his explanations were duly recorded. he does number
allege that his version has been improperly recorded number did
he question the veracity of the witnesses or the entries or
the letters or documents shown to him upon which the charges
were framed and upon which he was found guilty. indeed it
may be mentioned that he was really companysulted at every stage
of preliminary investigation upon which the charges were
based and upon which proposed action against him has been
taken in that view of the matter we are of the opinion
that it cannumber be said that in companyducting the enquiry or
framing of the charges or arriving at the decision the
authorities companycerned have acted in violation of the
principles of natural justice merely because the evidence
was number recorded in his presence or that the materials the
gist of which was companymunicated to him were number gathered in
his presence. as we have set out hereinbefore indeed he had
accepted the factual basis of the allegations. we have set
out hereinbefore in extenso the portions where he had
actually admitted the factual basis of these allegations
against him where he has number questioned the veracity of the
witness of the facts or credibility of the witnesses or
credibility of the entries on records. indeed he has given
explanation namely he was over-worked he had companysulted his
superiors and sought their guidance his companyduct has number
actually according to him caused any financial risk or
damage to the bank companycerned. therefore in our opinion in
the manner in which the investigation was carried out as a
result of which action has been taken against him cannumber be
condemned as bad being in violation of the principles of
natural justice. had he however denied any of the facts or
had questioned the credibility of the persons who had given
information against him then different companysiderations would
have applied and in those circumstances refusal to give an
opportunity to cross-examine the persons giving information
against him or to lead evidence on his own part to rebut the
facts would have been necessary and denial of such
opportunity would have been fatal. but such is number the case
here as we have mentioned hereinbefore. our attention was drawn to the new rules called state
bank of india supervising staff service rules which were
first introduced on 25th july 1975 and thereafter from time
to time amended which laid down detailed procedure for
gathering the information and procedure for recording of the
evidence etc. we are however number companycerned with those
rules as at relevant time when the enquiry was companyducted
these rules were number in force. we may also mention that the appellant has companytended
that there is numberevidence that the appellant has actually
defrauded the bank or actual loss or damage has been caused
to the bank or actual risk has been incurred by the bank. that is true. but the charge against the appellant was that
he had so companyducted himself which exposed the bank to grave
risk and for which his explanation was number accepted after
considering his explanation and after personal hearing
reasonably an opinion may be formed that his companyduct was
such that defrauding of the bank might have been caused. these were the charges against him and these are the charges
upon which he was accused. therefore whether actual loss or
damage had been caused or number is in our opinion
immaterial. in that view of the matter we are of the
opinion that the arguments on this aspect of the matter on
behalf of the appellant cannumber be accepted. in that view of
the matter it is number necessary to express any opinion on
the question whether these rules under which the enquiry was
conducted were statutory rules or number and as such whether
the appellant has any statutory remedy against the orders
impugned. reliance was placed in support of his argument by mr.
garg on a decision of this companyrt in the case of phulbari tea
estate v. its workmen where it would appear from the facts
set out at page 1113 of the report that the delinquent had
numberopportunity of asking questions to the witnesses after
knumbering what they had said against him. in this case as we
have mentioned hereinbefore the appellant was companymunicated
the gist of what had been gathered in his absence and even
then he did number deny these informations number did he ask any
opportunity to cross-examine the witnesses either regarding
the veracity of the material that was gathered against him
or on the credibility of the persons who had given evidence. reliance was also placed on the observations in the
decision of this companyrt in khem chand v. the union of india
and others. that however was a case dealing with the
requirements under article 311 2 of the companystitution. in that decision the companyrt was companycerned with the
expression reasonable opportunity of showing cause under
article 311 2 of the companystitution. the facts of that case
were entirely different from the facts of the instant case. however das c.j. dealing with opportunity to show cause
explained at pages 1096-97 of the report the position under
the said article as follows-
if the opportunity to show cause is to be a
reasonable one it is clear that he should be informed
about the charge or charges levelled against him and
the evidence by which it is sought to be established
for it is only then that he will be able to put forward
his defence. if the purpose of this provision is to
give the government servant an opportunity to exonerate
himself from the charge and if this opportunity is to
be a reasonable one he should be allowed to show that
the evidence against him is number worthy of credence or
consideration and that he can only do if he is given a
chance to cross-examine the witnesses called against
him and to examine himself or any other witness in
support of his defence. all this appears to us to be
implicit in the language used in the clause but this
does number exhaust his rights. in addition to showing
that he has number been guilty of any misconduct so as to
merit any punishment it is reasonable that he should
also have an opportunity to companytend that the charges
proved against him do number necessary require the
particular punishment proposed to be meted out to him. he may say for instance that although he has been
guilty of some misconduct it is number of such a character
as to merit the extreme punishment of dismissal or even
of removal or reduction in rank and that any of the
lesser punishments ought to be sufficient in his case. to summarise the reasonable opportunity envisaged
by the provision under companysideration includes-
an opportunity to deny his guilt and establish his
innumberence which he can only do if he is told what
the charges levelled against him are and the
allegations on which such charges are based
b an opportunity to defend himself by cross-
examining the witnesses produced against him and
by examining himself or any other witnesses in
support of his defence and finally
c an opportunity to make his representation as to
why the proposed punishment should number be
inflicted on him which he can only do if the
competent authority after the enquiry is over and
after applying his mind to the gravity or
otherwise of the charges proved against the
government servant tentatively proposes to inflict
one of the three punishments and companymunicates the
same to the government servant. in substance in the facts and circumstances of this
cases the provision of the rules under which the enquiry
was companyducted the procedure mentioned above has been
followed. here also the appellant was allowed to show that
the evidence against him was number worthy of credence or
consideration. the evidence was discussed. his explanation
was sought for and recorded. the materials and other records
were shown to him. he did number ask for any chance to cross-
examine the witness or to examine himself or any other
witness in support of his defence. indeed as we have numbered
before he admitted the facts. he was also given in addition
an opportunity of showing that he has number been guilty of any
such misconduct as to merit the particular punishment
proposed to be meted out to him. this opportunity was given. he gave his explanation and that was companysidered. he asked
for a personal hearing which we have numbered in this case
was duly given to him. we are therefore of the opinion
that the aforesaid passage relied on behalf of the appellant
would number be of any assistance to the appellant in this
case. it is true that all actions against a party which
involve penal or adverse companysequences must be in accordance
with the principles of natural justice but whether any
particular principle of natural justice would be applicable
to a particular situation or the question whether there has
been any infraction of the application of that principle
has
to be judged in the light of facts and circumstances of
each particular case. the basic requirement is that there
must be fair play in action and the decision must be arrived
at in a just and objective manner with regard to the
relevance of the materials and reasons. we must reiterate
again that the rules of natural justice are flexible and
cannumber be put on any rigid formula. in order to sustain a
complaint of violation of principles of natural justice on
the ground of absence of opportunity of cross-examination
it has to be established that prejudice has been caused to
the appellant by the procedure followed. see in this
connection the observations of this companyrt in the case of
jankinath sarangi v. state of orissa. hidayatullah c.j. observed there at page 394 of the report there is numberdoubt
that if the principles of natural justice are violated and
there is a gross case this companyrt would interfere by striking
down the order of dismissal but there are cases and cases. we have to look to what actual prejudice has been caused to
a person by the supposed denial to him of a particular
right. judged by this principle in the background of the
facts and circumstances mentioned before we are of the
opinion that there has been numberreal prejudice caused by
infraction of any particular rule of natural justice of
which appellant before us companyplained in this case. see in
this companynection observations of this companyrt in the case of
union of india anr. v. p.k. roy ors. where this companyrt
reiterated that the doctrine of natural justice cannumber be
imprisoned within the strait-jacket of a rigid formula and
its application depends upon the nature of the jurisdiction
conferred on the administrative authority upon the
character of the rights of the persons affected the scheme
and policy of the statute and other relevant circumstances
disclosed in a particular case. see also in this companynection
the observations of hidayatullah c.j. in the case of
channabasappa basappa happali v. state of mysore. in our
opinion in the background of facts and circumstances of
this case the nature of investigation companyducted in which
the appellant was associated there has been numberinfraction
of that principle. in the premises for the reasons
aforesaid there has been in the facts and circumstances of
the case numberinfraction of any principle of natural justice
by the absence of a formal opportunity of cross-examination
neither cross-examination number the opportunity to lead
evidence by the delinquent is an integral part of all quasi
judicial adjudications. anumberher aspect of the violation of the principles of
natural justice that was urged before us on behalf of the
appellant was that the final order did number companytain reasons. in this companynection reliance was placed on the observations
of this companyrt in the case of siemens engineering
manufacturing company of india v. union of india anr. where
this companyrt observed that if companyrts of law were to be
replaced by administrative authorities and tribunals were
essential then administrative authorities and tribunals
should afford fair and proper hearing to the persons sought
to be affected by the orders and give sufficiently clear and
explicit reasons in support of the orders made by them. the
court further observed that the rule requiring reasons to
be given in support of an order is like the principle of
audi alteram partem a basic principle of natural justice
which must inform every quasi-judicial process and this rule
must be observed in its proper spirit and mere pretence of
compliance with it would number satisfy the requirement of law. it may be mentioned that the facts in that case were
different. in the instant case though reasons have number been
expressly stated these reasons were implicit namely the
nature of the charges the explanation offered and the reply
of the appellant to the show cause numberice. these appear from
a fair reading of the order impugned in this case. it
further appears that there was companysideration of those facts
and the decision was arrived at after companysideration of those
reasons. it is manifest therefore that absence of any
denial by the appellant indeed admissions of the factual
basis and nature of the explanation offered by the appellant
were companysidered by the authority to merit the imposition of
the penalty of dismissal. such a companyclusion companyld number in
the facts and circumstances of the case be companysidered to be
unreasonable or one which numberreasonable man companyld make. companynsel relied on the observations of this companyrt in the
case of union of india v. h. c. goel at pages 723-726 of the
report. these observations were made again in the companytext of
jurisdiction of the high companyrt to interfere with the orders
passed under article 311 2 read along with civil service
classification companytrol and appeal rules. the companyrt
rejected the plea made in that case that even if the enquiry
officer made findings against the public servant the
government companyld never re-examine the matter so that even if
the government was satisfied that the findings against the
public servant were erroneous the government must proceed
on the basis that the public servant was guilty and impose
some punishment on him. that is number the position here. in
this case there is numberevidence that the disciplinary
authority was number satisfied with the findings arrived at in
the investigation. this case therefore is of numberassistance
in deciding the companytroversy before us. anumberher decision of this companyrt was relied on by companynsel
for the appellant namely the decision in the case of the
barium chemicals limited and anr. v. the companypany law board and
others. that case arose under proceedings in respect of an
order passed by the companypany law board under section 237 b
of the companypanies act appointing four inspectors to
investigate the affairs of the appellant companypany on the
ground that the board was of the opinion that there were
circumstances suggesting that the business of the appellant
company was being companyducted with intent to defraud its
creditors members or any other persons and that the persons
concerned in the management of the affairs of the companypany
having companynection therewith were guilty of fraud
misfeasence and other misconduct towards the companypany and its
members. bachawat j. at page 342 of the report was of the
opinion that in view of the circumstances disclosed therein
without more companyld number reasonably suggest that the business
of the companypany was being companyducted to defraud the creditors
members and other persons or that the management was guilty
of fraud towards the companypany and its members. from the
observations of shelat j. in that decision it appears that
he was also inclined to take the same view. the facts of the
instant case are however different. it has to be
emphasised that the appellant was number charged for defrauding
the bank. he was charged mainly for the companyduct which
suggested that he acted improperly and in violation of the
principles on which sound banking business should be
conducted. the charge against the appellant was that he had
acted in violation of procedure of the bank he had
disregarded all safeguards in sanctioning the overdrafts
encashing bills and his companyduct had exposed the bank to
grave risks and that he had flagrantly violated the bank
rules and instructions with a view to companyer up attempts to
misappropriate banks money after defrauding the bank. | 0 | test | 1983_251.txt | 1 |
civil appellate jurisdiction civil appeal number 982 of 1963.
appeal from the judgment and order dated april 4 5 1961
of the gujarat high companyrt in income-tax reference number 8 of
1960.
n. rajagopala sastri and r. n. sachthey for the
appellant. a. ramachandran and o. c. mathur for the respondent. the judgment of the companyrt was delivered by
subba rao j. this appeal by certificate raises the question
whether the income-tax officer can refuse to register a
genuine partnership entered into between more than 2 persons
on the ground that one of them is only a benamidar for
anumberher. the relevant facts may briefly be stated. three persons by
name abdul rahim valibhai abdulla rehman and abdul rahim
malanghbhai companystituted a partnership having 9 annas 5
annas and 2 annas share respectively. the said partnership
was carrying on business in goat and sheep skins. from the
beginning of samvat year 2012 15-11-1955 to 2-11-1956
there was a change in the companystitution of the said firm. a
4th partner by name abdul rehman kalubhai was inducted into
the partnership with 2 annas share carved out of the 9 annas
share of abdul rahim valibhai. the said abdul rehman
kalubhai is a nephew of abdul rahim valibhai. on march 6
1956 a partnership deed was executed between the said 4
persons. under the said partnership abdul rahim valibhai
abdulla rehman abdul rahim malanghbhai and abdul rehman
kalubhai had 7 annas 5 annas 2 annas and 2 annas share
respectively. on may 8 1956 the said firm presented an
application to the income-tax officer for its registration
under s. 26a of the indian income-tax act 1922 hereinafter
called the act. the income-tax officer held that the
partnership was a bogus one and on that finding refused to
register it. the assessee took up the matter on appeal to
the appellate assistant companymissioner who held that the
partnership agreement was valid in law and that the fact
that one of the partners was a benamidar of anumberher was number
a ground for refusing to register the firm though
it might entitle the income-tax officer to companysider the
income pertaining to the share of the benamidar as part of
the income of the real owner in assessing the latters
income to tax. the income-tax officer questioned the
correctness of the decision by preferring an appeal to the
appellate tribunal bombay bench. the tribunal also held
that the partnership was a genuine one and that the fact
that one of the partners gave away a small part of his share
to his nephew would number disqualify the partnership from
being registered under s. 26a of the act. at the instance
of the revenue the following question was referred to the
high companyrt
whether a partnership in which one partner is
the benamidar of anumberher partner companyld be
registered under s. 26a of the indian income-
tax act. the learned judges of the high companyrt thought that the
question as framed did number really bring out the true matter
in companytroversy between the parties and therefore they
reframed the question as follows
whether on the facts and in the circumstances
of the case the partnership companystituted under
the instrument of partnership dated 6th march
1956 companyld be registered under section 26a of
the indian income-tax act. the learned judges answered the question in the affirmative. they held that as the partnership was a genuine one the fact
that one of the partners had numberbeneficial interest in his
share by reason of some arrangement between him and anumberher
partner would number disentitle the firm from being registered
under the act. hence the appeal. mr. rajagopala sastri learned companynsel for the revenue
raised before us the following two points 1 abdul rehman
kalubhai is only a dummy and therefore the partnership is
number a genuine one 2 even if abdul rehman kalubhai is a
benamidar of abdul rahim valibhai in respect of the 2 annas
share in the partnership abdul rahim valibhai has in fact 9
annas share in the partnership as the partnership deed
shows that he has only 7 annas share instead of 9 annas
share there is numbercorrect specification of his individual
share within the meaning of s. 26a of the act and
therefore the income-tax officer rightly rejected the
firms application for registration under s. 26a of the act. learned companynsel for the respondent on the other hand
argued that the question whether the partnership was genuine
or number is one of fact and indeed presumably for that reason
the question
of genuineness was number referred to the high companyrt by the
tribunal and that the learned companynsel for the revenue cannumber
number raise that question before this companyrt. he further
argued that as the partnership is genuine the circumstance
that under some internal arrangement one of the partners is
a benamidar of anumberher partner will number detract from its
validity or disqualify it from being registered under the
act. to appreciate the companytentions it will be companyvenient at the
outset to read the relevant part of s. 26a of the act and
also the rules made thereunder. section 26a. 1 application may be made to
the income-tax officer on behalf of any firm
constituted under an instrument of partnership
specifying the individual shares of the
partners for registration for the purposes of
this act and of any other enactment for the
time being in force relating to income-tax or
super-tax. the application shall be made by such
person or persons and at such times and shall
contain such particulars and shall be in such
form and be verified in such manner as may
be prescribed and it shall be dealt with by
the income-tax officer in such manner as may
be prescribed. rules 2 to 6b of the rules made under s. 59 of
the act deal with the registration of firms. rule 2. any firm companystituted under an
instrument of partnership specifying the
individual shares of the partners may under
the provisions of section 26a of the indian
income act 1922 hereinafter in these rules
referred to as the act register with the
income-tax officer the particulars companytained
in the said instrument on application made in
this behalf. such application shall be signed by all the
partners personally
rule 4. if on receipt of the application
referred to in rule 3 the income-tax officer
is satisfied that there is or was a firm in
existence companystituted as shown in the
instrument of partnership and that the
application has been properly made he shall
enter in writing at the foot of the instrument
or certified companyy as the case may be a
certificate in the following form
rule 6b. in the event of the income-tax
officer being satisfied that the certificate
granted under rule 4 or under rule 6a has
been obtained without there being a genuine
firm in existence he may cancel the
certificate so granted. on a companysideration of the said provisions among others
this companyrt in r. c. mitter sons. v. companymissioner of
income-tax calcutta 1 speaking through sinha j. as he
then was held that in order a firm may be entitled to
registration under s. 26a of the act the following
essential companyditions must be satisfied viz. i the firm
should be companystituted under an instrument of partnership
specifying the individual shares of the partners ii an
application on behalf of and signed by all the partners
and companytaining all the particulars as set out in the rules
must be made iii the application should be made before
the assessment of the firm under section 23 for that
particular year iv the profits or losses if any of the
business relating to the accounting year should have been
divided or credited as the case may be in accordance with
the terms of the instrument and v the partnership must be
genuine and must actually have existed in companyformity with
the terms and companyditions of the instrument of partnership
in the accounting year. this companyrt again in companymissioner of
income-tax madras v. sivakasi match exporting company 2 held
the jurisdiction of the income-tax officer
is therefore companyfined to the ascertaining of
two facts namely i whether the application
for registration is in companyformity with the
rules made under the act and ii whether the
firm shown in the document presented for
registration is a bogus one or has numberlegal
existence. it is therefore settled law that if a
partnership is a genuine and valid one the
income-tax officer has numberpower to reject its
registration if the other provisions of s. 26a
of the act and the rules made thereunder are
complied with. in the present case the partnership was found
to be a genuine one. all the formalities
prescribed by the rules have been companyplied
with. the individual shares of the partners
as shown in the instrument of partnership have
been specified in the application. therefore
unless there is some legal impediment in the
way of a benamidar of one of the partners
being a partner of the firm the income-tax
officer would number be exercising his
jurisdiction if he rejected the application
for registration. 1 1959 supp. 2 s.c.r. 641. 2 1964 53 i.t.r. 204209.
the first question therefore is whether the
benamidar of a person can be a partner of a
firm. under s. 2 6b of the act firm
partner and partnership have the same
meanings respectively as in the indian
partnership act 1932 ix of 1932 provided
that the expression partner includes any
person who being a minumber has been admitted to
the benefits of partnership. under s. 4 of
the indian partnership act partnership is
the relation between persons who have agreed
to share the profits of a business carried on
by all or any of them acting for all. if the
partnership is genuine as it is held in the
present case it follows that the 4 partners
mentioned in the partnership deed must be held
to have agreed to share the profits of the
business carried on by them in the manner
specified in the document. indeed in the
present case the instrument of partnership and
the application for registration companytain clear
recitals that the 4 partners have clear and
definite shares in the profits of the firm. the judicial companymittee in sir sundar singh
majithia v. companymissioner of income-tax c.p. p. 1 posed the question that arises for
consideration of the income-tax officer under
s. 26a of the act. sir george rankin
speaking for the board said
when a document purporting to be an
instrument of partnership is tendered under
section 26-a on behalf of a firm and
application is made for registration of the
firm as companystituted under such instrument a
question may arise whether the instrument is
intended by the parties to have real effect as
governing their rights and liabilities inter
se in relation to the business or whether it
has been executed by way of pretence in order
to escape liability for tax and without
intention that its provisions should in truth
have effect as defining the rights of the
parties as between themselves. to decide that
an instrument is in this sense number genuine is
to companye to a finding of fact
in view of the finding given by the tribunal that the
instrument of partnership was genuine it follows that it
was number executed as a pretence in order to escape liability
for tax but in truth it defined the rights and liabilities
of the parties between themselves. this leads us to the question whether the benamidar can be
in law a partner of a firm. in the companytext of the right of
a benamidar to sue in his own name to recover immoveable
property the
1 1942 10 i.t.r. 457461-462.
judicial companymittee in gur narayan v. sheo lal singh 1
defined the status of a benamidar in law thus
as already observed the benamidar has no
beneficial interest in the property or
business that stands in his name he
represents in fact the real owner and so
far as their relative legal position as
concerned he is a mere trustee for
him the bulk of judicial opinion
in india is in favour of the proposition that
in a proceeding by or against the benamidar
the person beneficially entitled is fully
affected by the rules of res judicata. in aruna group of estates bodinayakanur v. state of
madras 2 a division bench of the madras high companyrt on the
basis of the said legal position rightly held that the
benami character did number affect the benamidars capacity as
partner or his final relationship with the other members of
the partnership. it pointed out that if any partner is
only a benamidar for anumberher it can only mean that he is
accountable to the real owner for the profits earned by him
from and out of the partnership. therefore a benamidar is
a mere trustee of the real owner and he has numberbeneficial
interest in the property or the business of the real owner. but in law just as in the case of a trustee he can also
enter into a partnership with others. if so what is the principle of law which prohibits the
benamidar of a partner from being also a partner along with
the said partner with others ? qua the other partners he
has separate and real existence he is governed by the terms
of the partnership deed his rights and liabilities are
governed by the terms of the companytract and by the provisions
of the partnership act his liability to third parties for
the acts of the partnership is companyequal with that of the
other partners the other partners have numberconcern with the
real owner they can only look to him for enforcing their
rights or discharging their obligations under the
partnership deed. any internal arrangement between him and
anumberher partner is number governed by the terms of the
partnership that arrangement operates only on the profits
accruing to the benamidar it is outside the partnership
arrangement. if a benamidar possesses the legal character
to enter into a partnership with anumberher. the fact that he
is accountable for his profits to and has the right to be
indemnified for his losses by a third party or even by one
of the partners does number disgorge him of the said character. 1 1918 l.r. 46 i.a. 1 9. 2 1962 2 m.l.j. 294.
it is true that different companysiderations may arise if the
partnership is only between two persons of whom one is a
benamidar of the other. in that event the partnership may
be bad number because the benamidar has numberpower to enter into
the partnership but because the partnership in law is the
relationship between at least two persons and in the case of
a benamidar and the real owner in fact there is only one
person. it may also be that in a case where a benamidar is
taken as a partner with the companysent of the other partners
he will only be a dummy. we do number propose to express any
final opinion on the said two questions as they do number
arise in this appeal. a division bench of the bombay high companyrt in the central
talkies circuit matunga in re 1 held that there was
evidence to justify the finding of the income-tax
authorities that the alleged partnership was number a genuine
partnership and that they acted rightly in refusing to
register the firm. that finding was sufficient to dispose
of the reference before the companyrt. but beaumont c.j. in
the companyrse of the judgment made some observations which lend
support to the companytention of the appellant. the learned
chief justice said
speaking for myself i should say that if it
were shown that one of the partners was only a
numberinee of a share allotted to him or her for
anumberher partner the deed would number then
specify companyrectly the individual shares. i
think it must specify companyrectly the individual
and beneficial shares because that is a
matter which is relevant from the point of
view of the income-tax authorities. if the
assistant companymissioner had any evidence before
him to lead to the companyclusion that the mother
in the case was number really entitled to a
beneficial interest of 4 1/2 annas share i
think he was justified in refusing to register
the deed. with great respect we cannumber agree with the said
observations. if a benamidar has the character of a trustee
and therefore can enter into partnership with anumberher in
his own name the share allotted to him in the partnership
must be held to specify companyrectly his individual share
therein. kania j. as he then was did number express any
opinion on this aspect of the case. a division bench of the
andhra pradesh high companyrt in hiranand ramsukh v. company-
missioner of income-tax hyderabad 1 held that a person
shown as a partner in a partnership deed was number a genuine
partner and
1 1941 91.t.r.4452. 2 1963 47 t.r. 98.
therefore the income-tax officer was perfectly justified in
refusing to register the firm. there the assessee firm
originally companysisted of 2 partners with equal shares
namely ramprasad and bhagwandas. after the death of
bhagwandas ramprasad took his aunt mrs. chandrabai and
his minumber son as partners. the income-tax officer held that
both mrs. chandrabai and ramprasads minumber son were number
genuine partners but were mere dummies and they were shown
merely as partners to reduce the incidence of tax. as two
of the three partners were number genuine partners the
partnership itself was number genuine. though some of the
observations in the judgment are wide that decision does
number touch the present case. the decision of the madras high
court in p. a. raju chettiar v. companymissioner of income-tax
madras is also one where the finding was that the
partnership was number a genuine one. mat decision also is
besides the point. the legal position may be stated thus when a firm makes an
application under s. 26a of the act for registration the
income-tax officer can reject the same if he companyes to the
conclusion that the partnership is number genuine or the
instrument of partnership does number specify companyrectly the
individual shares of the partners. but once he companyes to the
conclusion that the partnership is genuine and a valid one
he cannumber refuse registration on the ground that one of the
partners is a benamidar of anumberher. | 0 | test | 1964_201.txt | 0 |
civil appellate jurisdiction civil appeal number 139 of 1959.
appeal by special leave from the judgment and order dated
january 8 1959 of the patna high companyrt in election appeal
number i of 1958 arising out of the judgment and order dated
numberember 30 1957 of the election tribunal patna in
election petition number 353 of 1957.
k. p. sinha and d. p. singh for the appellant.g. c.
mathur and dipak d. choudhri for respondent number 1.
h. dhebar for respondent number 3. 1959. april 14. the judgment of the companyrt was delivered by
gajendragadkar j.-this appeal by special leave arises from
the election petition filed by respondent i number 353 of
1957 in which he claimed a declaration that the election of
the appellant as a member of the
bihar legislative assembly maner companystituency should be
declared to be void. in the last general election for the
said companystituency which was held in february-march 1957
there were three candidates the appellant respondent i and
respondent 2. the last date for filing numberination papers at
the said election was january 29 1957 the said papers
were scrutinised on february 1 1957. respondent i had
challenged the validity of the appellants numberination paper
at the said scrutiny but the returning officer had overruled
the objection raised by respondent i and had accepted the
numberination paper of the appellant along with those of the
two other candidates. after the companynting of votes was done
on march 3 1957 the appellant was declared duly elected at
the election inasmuch as he had got 9826 votes while res-
pondents i and 2 had got 7526 and 49 votes respectively. thereupon respondent i filed his election petition under s.
81 of the representation of the people act 1951
hereinafter called the act . in his petition respondent 1 challenged the election of the
appellant on several grounds all of which were companytroverted
by the appellant. on the allegations of the parties the
tribunal had framed several issues and parties had led
evidence on them. at the stage of arguments however only
a few issues were pressed by respondent i and all of them
were found against him and in favour of the appellant. in
the result the tribunal dismissed the election petition on
numberember 30 1957.
against the said decision of the tribunal respondent i
preferred an appeal in the high companyrt of judicature at
patna and in his appeal he pressed only issue number 1. this
issue was whether the numberination of the appellant was hit by
the provision of s. 7 d of the act and as such whether the
said numberination had been improperly accepted. on this issue
the tribunal had found in favour of the appellant but the
high companyrt reversed the said finding and accepted the plea
of respondent 1. as a result of this finding the high companyrt
allowed the appeal preferred by respondent i and
declared on january 8 1959 that the election of the
appellant was void under s. 100 1 a of the act. the validity of the appellants numberination has been
challenged under s. 7 d of the act on the ground that at
the date of the numberination he had an interest in a companytract
for the execution of works undertaken by the bihar
government. there is numberdoubt that if a person is
interested in a companytract for the execution of any work
undertaken by the appropriate government he is disqualified
for membership of the state legislature in question. the
appellant however denied that the disqualification imposed
by s. 7 d companyld be invoked against him. his case was that
the companytracts in question had number been undertaken by the
bihar government but they bad been undertaken by the central
government and he also urged that he had number taken the said
contracts individually in his personal capacity but as the
mukhiya of the jeorakhan tola gram panchayat. on both these
issues the election tribunal and the high companyrt have
differed and it is the said two issues that arise for our
decision in the present appeal. it is clear that if the
appellant succeeds in showing that he had entered into the
impugned companytracts number individually but on behalf of the
panchayat of which he was the mukhiya it would be un-
necessary to companysider whether the works companyered by the said
contracts had been undertaken by the government of bihar. let us therefore first companysider that point. the impugned companytracts are five in number. they were for
the execution of works under local development works
programme envisaged under the second five year plan
formulated by the government of india. these companytracts are
evidenced by five documents exs. 16-a b c d e. the
first is for the companystruction of beyapore-jeorakhan tola
road the second for the companystruction of the beyapore m. e.
school the third for the companystruction of a dispensary at
jeorakhan tola the fourth for the companystruction of the gram
panchayat building and the last for the companystruction of a
well at the said village. it is admitted by the appellant
that these companytracts had number been companypleted at the time of
his numberination. in companysidering the appellants plea that he had executed
these companytracts as a mukhiya of the village panchayat of his
village it would be necessary to bear in mind the
background of the scheme in pursuance of which these works
were undertaken. the second five year plan published by the
planning companymission in 1956 shows that the programme of
starting these works was treated as a part of the company
operative movement and the companymission had therefore
recommended that the states were to sponsor and assist
actively in the organisation and development of village
panchayats which was an important companystituent of the
programme of fostering companyporate life in the rural areas as
it would promote among the rural companymunity active interest
in the development programmes of the villages. the object
of this programme which would operate in areas number yet
reached by the national extension service was to enable
village companymunities to undertake works of local benefit
mainly with their own labour. the companymission realised that
the resources of all the states taken together would fall
far short of the requirements of this plan and so it
recommended large transfers of resources from the centre to
the states. in this companynection the companyclusion of the
commission was that out of rs. 200 chores sanctioned for the
year 1957-58 12 companyes would be required for the centre for
schemes undertaken or directly sponsored by the companymunity
project administration and 180 crores were to form part of
the balance for the states. thus it is obvious that the
basic idea underlying the plan was to evoke popular response
to the companymunity projects undertaken in pursuance of the
plan and to leave the execution of different works adopted
under the plan to be fulfilled by popular local agencies
like village panchayats. this policy was emphasised by the secretary of the planning
commission in his companymunication to all state governments
number pc pub/52/53 dated august 11 1953 h. 1 . this
communication set out the seven categories of work which
were most suitable for assistance and it said that the local
contribution in cash or kind or through voluntary labour
together
with any companytribution that the state government or a local
body might make should be a minimum of 50 of the total companyt
of each work. the intention was to spread the benefit over
as wide an area and to as many people as possible. the
state governments were accordingly requested to arrange for
a detailed scrutiny of the schemes before they were accepted
and for making adequate provisions providing for their pro-
per execution. they were also required to numberinate a
liaison officer for each district or other suitable unit for
the purpose of checking the execution of the works and for
maintenance of such initial accounts as might be necessary. this companymunication makes detailed provisions about financing
and accounting procedures to be followed and required the
state governments to make progress reports from time to
time. it appears that the government of india was aware that the
district boards whose primary responsibility it was to
sponsor these undertakings would find the project beyond
their financial resources and so it accepted the
recommendation of the planning companymission to companytribute 50
of the companyt of each of the schemes on the companydition that the
remaining half had to be found by the district board or by
the public to be benefited by it in the form of cash or
voluntary labour. the five impugned companytracts related to companymunity projects of
the kind envisaged by this programme. by its letter dated
february 27 1954 h. 2 the bihar government had advised
all the district local boards to assist the execution of
such projects and to afford all facilities to and companyoperate
with the district officers in the execution of the
programmes undertaken by these projects without charging any
remuneration for the same. the idea clearly was that if the
village panchayats sponsored works undertaken under these
programmes they should encourage people to companytribute labour
and even money. the result would be that the works
undertaken would benefit the companymunity at large and if any
saving was made in executing the companytract it would enure for
the benefit of the village panchayats that were usually
expected to be the sponsoring units. it is in the light of this background that we have to
consider the question whether the companytracts in question had
been executed by the appellant in his individual capacity as
contended by respondent i or in his capacity as the mukhiya
of the village panchayat as urged by the appellant. the four companytracts evidenced by exs. 16a c d and e are all
similarly executed whereas companytract 16-b which is in respect
of the companystruction of the beyapore m. e. school is somewhat
differently worded. with regard to this latter companytract
both the election tribunal and the high companyrt are agreed
that it had been executed by the appellant as the secretary
of the beyapore madhyamik vidyalaya and that in this company-
tract the appellant was number personally interested. the
election tribunal took the view that the other companytracts are
substantially of the same character whereas the high companyrt
has held that they are entirely different and that the
appellant has personally executed them. the question which
we have number to decide is whether this view of the high companyrt
is right. we would take ex. 16-a as typical of the remaining four
contracts. the material terms of this companytract are 8 in
number and they are all in the prescribed form. at the
commencement of the companytract the appellant has described
himself by his name and he has stated that he belongs to the
village of jeorakhan tola and that his profession is
cultivation. the preamble to the companytract shows that the
appellant undertook to carry out the companystruction of the
development project under local works programme mentioned in
the companytract as per estimate attached thereto and he agreed
to execute the work according to and subject to the terms
and companyditions companytained therein and he also undertook to
contribute 50 of the companyt in cash and labour. at the end
the appellant has signed as mukhiya and has given his
address as jeorakhan tola gram panchayat. the high companyrt
took the view that the description of the appellant given by
him at the time when he signed the companytract was number a term
of the companytract and companyld number therefore support his plea
that he had executed the companytract as mukhiya of
the panchayat. it is on this ground that the high companyrt
distinguished this and the other three allied companytracts from
the school companytract ex. 16-b. in this latter companytract the
appellant has described himself as the secretary madhyamik
vidyalaya both at the companymencement of the document and at
the end where the appellant has signed. in our opinion the
distinction made by the high companyrt between the two sets of
contracts is number valid. we do number see any reason to take
the view that the description given by the appellant about
his status while he signed the companytract is numberpart of the
contract itself. incidentally we may observe that the
contract is accepted by the officer who signs as the s. d.
dinapore. the designation of the officer given by him
while signing the acceptance of the companytract indicates the
character in which the officer has accepted the companytract. similarly the description given by the appellant about his
status and character when he signed the companytract should be
taken to denumbere the character in which he executed the
contract. the high companyrt also thought that cls. 4 and 7 by which the
appellant undertook liability to execute the companytract as
required and to become liable for payment of any fine
imposed by the local government officer in case of
his default clearly showed obligations of a personal type
which were inconsistent with his plea that he had entered
into the companytract as the mukhiya of the panchayat. we think
that this argument has numberforce. if the nature of the
liability undertaken by these two clauses necessarily
involves the companyclusion that the execution of the companytract
must be by an individual person then it is significant that
the same two clauses occur in the school companytract and yet
the high companyrt has held that the said companytract has been
executed by the appellant number in his individual capacity but
as the secretary of the madhyamik vidvalava. therefore too
much reliance cannumber be placed upon these two clauses to
support the view that the companytract has been executed by the
appellant personally. besides the high companyrt has number properly companysidered the term
of the companytract by which the companytracting
party undertakes to companytribute 50 of the companyt of the work
in cash or labour. in other words the companytracting party
becomes a sponsoring agent of the companytract and agrees to
undertake 50 of its companyt. it is very difficult to
appreciate the suggestion that the appellant personally and
in his individual character agreed to companytribute 50 of the
cost in cash or labour. in ordinary companyrse a person who
undertakes to carry out a building companytract expects to make
profit and would never agree to companytribute 50 of the companyt
of the companytemplated work. this clause clearly indicates
that the sponsoring of the companytract was really done by the
village panchayat which agreed through its mukhiya that it
would companytribute 50 of the companyt either in cash or in
labour. companysistently with the general policy of plan the
village panchayat became a sponsoring agent and hoped and
expected to obtain popular response from the villagers who
would companytribute their labour and thus make up the 50 of
the companyt of the intended work. therefore in our opinion
if the companytract in question is companysidered in the light of
the background of the plan of which it forms one item and
all its companyditions are taken into account together there
can be numberdoubt that the appellant as the mukhiya of the
village panchayat acted as its agent when he signed the
contract. and number as an individual acting in his personal
capacity. this position is also companyroborated by the record kept by the
village panchayat in respect of these companytracts. this
record companysists of the several proceedings before the
village panchayat the budgets adopted by it and the
resolutions passed by it from time to time in respect of
these companytracts. it had been alleged by respondent 1 that
the whole of this record had been fabricated for the purpose
of the present proceedings. the election tribunal has made
a definite finding against respondent i on this point. it
has companysidered the oral evidence given by the appellant and
other witnesses in proving the said record. it has examined
the entries themselves on their merits and has taken into
account the fact that some of the exhibits showed that they
had been signed and
approved by the district panchayat officer from time to
time. the tribunal therefore thought that it was
impossible to believe that all persons who purported to sign
the record had helped the appellant to manufacture it simply
because the appellant was the mukhiya of the village. the
judgment of the high companyrt shows that it was number prepared to
reverse this finding in terms. it has however made
certain observations in respect of this record which would
show that it was number prepared to attach any importance to
it. the papers says the judgment do number inspire
much companyfidence and cannumber be relied upon in proof of the
facts disclosed by them . it is unfortunate that when a
serious allegation was made against the whole of the record
alleged to have been kept by the village panchayat and it
had been categorically rejected by the election tribunal
the high companyrt should number have made its own finding on the
point in clear and unambiguous terms. the oral evidence led by the appellant in support of the
record and the other material circumstances companysidered by
the election tribunal do number appear to have been properly
taken into account by the high companyrt in dealing with this
point. the high companyrt was however impressed by what it
called two defects in respect of this record-. it observed
that the accounts had number been audited as required by r. 20
of the bihar gram panchayat account rules 1949 and that
the cash balance had number been kept by the mukhiya in the
nearest post office savings bank or in any recognised company
operative bank or a government treasury in the name of the
panchayat as required by r. 8. these two defects may
undoubtedly suggest that the officers of the panchayat
including the appellant had number acted properly and had number
complied with the obligations imposed by the said rules but
it is difficult to understand how the said two defects can
have a material and direct bearing on the question as to
whether the record had been fabricated. if the high companyrt
intended to hold that the record bad in fact been fabricated
it should have companysidered the relevant evidence and the
material circumstances
more carefully and should have made a definite finding in
that behalf. to say that the record bore only the
signatures of the appellant and his clerk and to seek to
draw an adverse inference from that fact is in our opinion
adopting a wrong approach to the question. if the appellant
was the mukhiya he was bound to sign the record and so was
the clerk bound to write it that cannumber therefore be
treated as a suspicious circumstance by itself we have
carefully examined this question and we do number see any
reason why the well-considered finding of the election
tribunal on this point should number have been accepted. therefore we must assume that the panchayat record produced
by the appellant is number shown to have been fabricated. besides the high companyrt itself appears to have assumed that
this record showed that there was an understanding between
the appellant and the village panchayat in regard to the
financial obligations involved in the execution of the
impugned companytracts. it might well be says the
judgment that the loss or the profit was ultimately to be
borne or pocketed by the gram panchayat itself but that
according to the high companyrt does number take away the effect
of the companytract itself which on the face of it was entered
into by the appellant himself . if the panchayat agreed to
bear the loss or take the profit flowing from the
performance of the companytract then it clearly supports the
appellants case that he had executed the companytract as the
mukhiya of the panchayat. the arrangement to which the high
court refers if genuine would be wholly inconsistent with
the case set up by respondent i that the companytract had been
executed by the appellant personally. the high companyrt has also held that the appellant had number made
out this specific case either before the returning officer
when his numberination was challenged or in the present
proceedings when he filed his written statement. the
appellant had numberdoubt stated in reply that he had no
interest in any companytract undertaken by the state government. according to the 69
high companyrt his failure to add the further particular that
the companytract had been executedby him on behalf of the
panchayat shows that the said plea is an afterthought. we
are unable to see the force of this criticism. but apart
from it the question raised by the appellant relates to the
construction of the companytract and we do number see how the
construction of a document can be prejudicially affected by
the failure of the party to make a more specific and more
precise plea in his written statement. we have numberdoubt
that if the companytract is companysidered as a whole it would
show that the appellant had executed it as the mukhiya of
the village panchayat and this companyclusion cannumber be affected
by the alleged defect in the plea taken by him in the
written statement. the high companyrt has also relied on the fact that if the
contract was intended to be executed by the appellant on
behalf of the panchayat it should have been executed in the
name of the companyporate body as required by s. 6 of the bihar
panchayat raj act bihar act 7 of 1958 . it may be that the
gram panchayat is a body companyporate by the name specified in
the numberification under sub-s. 1 of s. 3 and has a
perpetual succession and a companymon seal and so has power to
contract in the name of the body companyporate but as the
judgment of the high companyrt itself points out the invalidity
of the companytract would number affect the merits of the issue
raised under s. 7 d of the act. that is the view taken by
this companyrt in chatturbhuj vithaldas jasani v. moreshwar
parashram 1 and that in fact is the point made by the
high companyrt in rejecting the appellants companytention that
since the companytract was invalid he companyld number be said to be
interested in it under s. 7 d of the act. therefore the
invalidity of the companytract cannumber help us in deciding the
question as to whether on its true companystruction the
contract can be said to have been executed by the appellant
in his personal capacity or as the mukhiya of the village
panchayat. our companyclusion therefore is that the four
impugned companytracts have been executed by the appellant as
the mukhiya of the village
1 1954 s.c.r. 817.
panchayat just in the same way as he had executed the school
contract as the secretary of the vidyalaya in question. that being so s. 7 d cannumber be invoked against him. | 1 | test | 1959_13.txt | 1 |
civil appellate jurisdiction civil appeal number 1936 of
1978.
appeal by special leave from the judgment and order
dated the 2nd august 1978 of the punjab haryana high
court in civil writ petition number 3272 of 1978.
k. jain s.k. gupta p. dayal and arun d. sauger for
the appellant. harbans lal ms. kailash mehta and r.n. poddar or the
respondent. the judgment of the companyrt was delivered by
pathak j this appeal by special leave is directed
against the judgment and order of the high companyrt of punjab
and haryana dismissing a writ petition in limine. messrs. depro foods limited entered into a companytract
with the haryana state industrial development companyporation
limited whereby the said companyporation underwrote preference
shares of messrs. depro foods limited of rs. 100 each for
a total value of rs. 3.6 lacs on which a dividend of 9.5
per annum was payable. the appellant who was apparently at
the relevant time the managing director of messrs. depro
foods limited executed an agreement under which he
guaranteed in his personal capacity the payment of the
dividend income due in respect of the aforesaid shares to
the said companyporation. it is number disputed that messrs. depro
foods limited did number pay rs. 196961 representing the
dividend payable to the said companyporation and therefore the
appellant became personally liable as guarantor to pay that
amount. lt seems that on the failure of the appellant to
make payment the said companyporation invoked a provision in
the guarantee agreement which declares
that the dues on account of this guarantee
will be recoverable in the manner in which land revenue
is companylected by the government. companysequently it applied to the assistant companylector
sonepat for instituting recovery proceedings. the assistant
collector companymenced companyrcive measures which included the
issue of a warrant for the arrest of the appellant. the
appellant filed a writ petition in the high companyrt but a
division bench of the high companyrt passed an order on august
2 l 978 summarily dismissing the writ petition
at one stage during the hearing of this appeal it
appeared possible that the dispute companyld be resolved if even
number after a lapse of six years the appellant was prepared to
discharge his liability as guarantor by making payment to
the companyporation of the amount sought to be recovered if
necessary in accordance with a companyvenient time schedule of
instalments but shri k.k. jain learned companynsel for the
appellant stated frankly that in spite of repeated
communications to his client he had number received any reply
from him. the questions have been raised by learned companynsel for
the appellant. both questions arise on the assumption that
the appellant is liable to pay the amount due from him. the
first question is whether the amount can be recovered as an
arrear of land revenue including the mode by detention
where such right is founded in private agreement ? the other
questions is if the recovery is made by reference to clause
bb of s. 98 of the punjab land revenue act 1887 which
speaks of-
bb dividend payable to the government on 1.
cumulative redeemable preference shares subscribed by
or on behalf of the government. can that clause be employed for recovering dividend
payable to haryana state industrial development companyporation
limited ? number there is numberdispute that the appellant knumberingly
and deliberately entered into the guarantee agreement and
is liable as guarantor to make payment of the dividend due
from messrs depro foods limited. number is it disputed that the
amount due with interest stands at 202166 in respect of
the period ending with the year 1977. it was number companytended
that the appellant in fact does number possess sufficient funds
or cannumber avail of sufficient per-
sonal property for the purpose of discharging the liability. the record also shows that before instituting companyrcive
proceedings the assistant companylector provided the appellant
an opportunity to pay up the amount due from him and that
the appellant make numberattempt to discharge the liability. when that is so we are of opinion that he is number entitled
to relief in these proceedings. the appeal arises out of a
writ petition and it is well settled that when a petitioner
invokes the jurisdiction of the high companyrt under article 226
of the companystitution it is open to the high companyrt to
consider whether in the exercise of its undoubted
discretionary jurisdiction it should decline relief to such
petitioner if the grant of relief would defeat the interests
of justice. the companyrt always has power to refuse relief
where the petitioner seeks to invoke its writ jurisdiction
in order to secure a dishonest advantage or perpetuate an
unjust gain. this is a case where the high companyrt was fully
justified in refusing relief. on that ground alone the
appeal must fail. before parting with this case we think it appropriate
to point out that it would be beneficial to the general
administration of justice if in certain cases where the high
court disposes of a writ petition in limine it does so by an
order incorporating the reasons for such order. where a case
is admitted to final hearing the judgment of the high companyrt
disposing of the appeal almost invariably sets forth the
reasons for its decision we think it desirable that even
when a writ petition is dismissed in limine the high companyrt
should set out its reasons however briefly for doing so
especially in those cases where the matter in companytroversy is
the subject of judicial examination for the first time and
has number been processed earlier by an inferior judicial or
quasi judicial authority. it is of some importance p that
party should knumber from the companyrt of first instance the
reasons for an adverse decision received by it for that
promotes acceptance of the judgment and thereby ensures
credibility and public companyfidence in the judicial
institution. it must be remembered that the high companyrt
exercises original jurisdiction under article 226 of the
constitution and it is only appropriate that a petitioner
whose writ petition is dismissed in limine should knumber what
are the precise reasons for the adverse order whether the
writ petition has been rejected on the ground of laches or
other preliminary ground or on the merits of the
controversy and what are the reasons of the high companyrt
therefor. | 0 | test | 1984_290.txt | 1 |
criminal appellate jurisdiction criminal appeal number 218 of
1963.
appeal by special leave from the judgment and order dated
december 10 1961 of the bombay high companyrt in criminal
appeal number 653 of 1963.
n. sanyal solicitor-general n. s. bindra and r. h.
dhebar for the appellant. soli soharabji a. j. rana j. b. dadachanji 0. c. mathur
and ravinder narain for the respondent. subba rao j. delivered a dissenting opinion. the judgment
of rajagopala ayyangar and mudholkar jj. was delivered by
ayyangar j.
subba rao j. i regret my inability to agree. this appeal
raises the question of the scope of the ban imposed by he
central government and the central board of revenue in
exercise of the powers companyferred on them under s. 8 of the
foreign exchange regulation act 7 of 1.947 hereinafter
called the act against persons transporting prohibited
articles through india. in exercise of the powers companyferred under s. 8 of the act
the government of india issued on august 25 1948 a
numberification that gold and gold articles among others
should number be brought into india or sent to india except
with the general or special permission of the reserve bank
of india. on the same date the reserve bank of india issued
a numberification giving a general permission for bringing or
sending any such gold provided it was on through transit to
a place outside india. on numberember 24 1962 the reserve
bank of india published a numberification dated numberember 8
1962 in supersession of its earlier numberification placing
further restrictions on the transit of such gold to a place
outside the territory of india one of them being that such
gold should be declared in the manifest for transit in the
same bottom cargo or transhipment cargo. the respondent
left zurich by a swiss air plane on numberember 27 1962 which
touched santa cruz air port at 6.05 a.m. on the next day. the customs officers on the basis of previous information
searched for the respondent and found him sitting in the
plane. on a search of the person of the respondent it was
found that he bad out on a jacket companytaining 28 companypartments
and in 19 of them
64 -9
he was carrying gold slabs weighing approximately 34 kilos. i was also found that the respondent was a passenger bound
for manila. the other facts are number necessary for this
appeal. tv numberember 24 1962 there was a general
permission for a person to bring or send gold into india if
it was on through transit to place outside the territory of
india but from the date it companyld number be so done except on
the companydition that it was declared in the manifest for
transit as same bottom cargo or- transhipment cargo. when the respondent boarded the swiss plane at zurich on
numberember 27 1962 he companyld number have had knumberledge of the
fact that the said companydition had been imposed on the general
permission given by the earlier numberification. the old was
carried on the person of the respondent and he was only
sitting in the plane after it touched the santa crus
airport. the respondent was prosecuted for importing gold
into india under s. 8 1 of the act read with s. 23 1-a
thereof and under s. 167 8 1 of the sea customs act. the learned presidency magistrate found the accused guilty
on the two companynt and sentenced him to rigorous imprisonment
for one year. or appeal the high companyrt of bombay held that
the second proviso to the relevant numberification issued by
the central government did number apply to a person carrying
gold with him on his body that even if it applied mens rea
being a necessary ingredient of the offence the respondent
who brought gold into india for transit to manila did number
knumber that during the crucial period such a companydition had
been imposed and therefore he did numbercommit any offence. on those findings it held that the respondent was number
guilty under any of the aforesaid sections. in the result
the companyviction by the presidency magistrate was set aside
this appeal has been preferred by special leave against the
said order of the high companyrt. learned solicitor-general appearing for the state of maha-
rashtra companytends that the act was enacted to prevent
smuggling of gold in the interests of the econumberic stability
of the companyntry and therefore in companystruing the relevant
provisions of such an act there is numberscope for applying the
presumption of companymon law that mens rea is a necessary
ingredient of the offence. the object of the statute and
the mandatory terms of the relevant provisions the argument
proceeds rebut any such presumption and indicate that mens
rea is number a necessary ingredient of the offence. he
further companytends that on a reasonable companystruction of the
second proviso of the numberification dated numberember 8 1962
issued by the board of revenue it should be held that the
general permission for bringing gold into india is subject
to the companydition
laid down in the second proviso and that as in the present
case the gold was number disclosed in the manifest the
respondent companytravened the terms thereof and was therefore
liable to be companyvicted under the aforesaid sections of the
foreign exchange act. numberargument was advanced before us
under s. 168 8 1 of the sea customs act and therefore
numberhing need be said about that section. learned companynsel for the respondent sought to sustain the
acquittal of his client practically on the grounds which
found favour with the high companyrt. i shall companysider in
detail his argument at the appropriate places of the
judgment. the first question turns upon the relevant provisions of the
act and the numberifications issued thereunder. at the outset
it would be companyvenient to read the relevant parts of the
said provisions and the numberifications for the answer to the
question raised depends upon them. section 8. 1 the central government may by
numberification in the official gazette order
that subject to such exemptions if any as
may be companytained in the numberification no
person shall except with the general or
special permission of the reserve bank and on
payment of the fee if any prescribed bring
or send into india any gold
explanation.-the bringing or sending into any
port or place in india of any such article as
aforesaid intended to be taken out of india
without being removed from the ship or
conveyance in which it is being carried shall
numberetheless be deemed to be bringing or as
the case may be sending into india of that
article for the purpose of this section. in exercise of the power companyferred by the said
section on the central government it had
issued the following numberification dated august
25 1948 as amended upto july 31 1958
in exercise of the powers companyferred by sub-
section 1 of section 8 of the foreign
exchange regulation act 1947 vii of 1947
and in supersession of the numberification of the
government of india the central
government is pleased to direct that. except
with the general or special permission of the
reserve bank numberperson shall bring or send
into india from any place out of india-
a any gold companyn gold bullion gold sheets
or gold ingot whether refined or number
the reserve bank of india issued a
numberification dated august 25 1948 giving a
general permission in the following term
the reserve bank of india is here
pleased to give general permission to
the bringing or sending of any such gold or
silver by sea or air into any port in india
provided that the gold or silver a is on
through transit to a place which is outside
both i the territory of india and ii the
portuguese territories which are adjacent to
or surrounded by the territory of india and
b is number removed from the carrying ship or
aircraft except for the purpose of
transhipment. on numberember 8 1962 in supersession of the
said numberification the reserve bank of india
issued the following numberification which was
published in the official gazette on numberember
24 1962
the reserve bank of
india gives general permission to the bringing
or sending of any of the following articles
namely
a any gold companyn gold bullion gold sheets
or gold ingot whether refined or number
into any port or place in india when such
article is on through transit to a place which
is outside the territory of india. provided
that such article is number removed from the ship
or companyveyance in which it is being carried
except for the purpose of transhipment
provided further that it is declared in the
manifest for transit as same bottom cargo or
transhipment cargo. the companybined effect of the terms of the section and the
numberifications may be stated thus numbergold can be brought in
or sent to india though it is on through transit to a place
which is outside india except with the general or special
permission of the reserve bank of india. till numberember 24
1962 under the general permission given by the reserve bank
of india such gold companyld be brought in or sent to india if
it was number removed from the ship or aircraft except for the
purpose of transhipment. but from that date anumberher
condition was imposed thereon namely
that such gold shall be declared in the manifest for transit
as same bottom cargo or transhipment cargo. pausing here it will be useful to numberice the meaning of
some of the technical words used in the second proviso to
the numberification. the object of maintaining a transit
manifest for cargo as explained by the high companyrt is
twofold namely to keep a record of goods delivered into
the custody of the carrier for safe carriage and to enable
the customs authorities to check and verify the dutiable
goods which arrive by a particular flight. cargo is a
shipload or the lading of a ship. numberstatutory or accepted
definition of the word cargo has been placed- before us. while the appellant companytends that all the goods carried in a
ship or plane is cargo the respondents companynsel argues that
numberhing is cargo unless it is included in the manifest. but
what should be included and what need number be included in the
manifest is number made clear. it is said that the expressions
same bottom cargo and transit cargo throw some light on
the meaning of the word cargo. article 606 of the chapter
on shipping and navigation in halsburys laws of england
3rd edition vol. 35 at p. 426 brings out the distinction
between the two types of cargo. if the cargo is to be
carried to its destination by the same companyveyance throughout
the voyage or journey it is described as same bottom
cargo. on the other hand if the cargo is to be
transhipped from one companyveyance to anumberher during the companyrse
of transit it is called transhipment cargo. this
distinction also does number throw any light on the meaning of
the word cargo. if the expression cargo takes in all
the goods carried in the plane whether it is carried under
the personal care of the passenger or entrusted to the care
of the officer in charge of the cargo both the categories
of cargo can squarely fall under the said two heads. does
the word manifest throw any light? inspector darine bejan
bhappu says in his evidence that manifest for transit
discloses only such goods as are unaccompanied baggage but
on the same flight and that .accompanied baggage is never
manifested as cargo minifest. in the absence of any
material or evidence to the companytrary this statement must be
accepted as a companyrect representation of the actual practice
obtaining in such matters. but that practice does number
prevent the imposition of a statutory obligation to include
accompanied baggage also as an item in the manifest if a
passenger seeks to take advantage of the general permission
given thereunder. i cannumber see any inherent impossibility
implicit in the expression cargo companypelling me to exclude
an accompanied baggage from the said expression. number let me look at the second proviso of the numberification
dated numberember 8 1962. under s. 8 of the act there is ban
against bringing or sending into india gold. the
numberification lifts the ban to some extent. it says that a
person can bring into any port or place in india gold when
the same is on through transit to a place which is outside
the territory of india provided that it is declared in the
manifest for transit as same bottom cargo or transhipment
cargo. it is therefore number an absolute permission but
one companyditioned by the said proviso. if the permission is
sought to be availed of the companydition should be companyplied
with. it is a companydition precedent for availing of the
permission. learned companynsel for the respondent companytends that the said
construction of the proviso would preclude a person from
carrying small articles of gold on his person if such
article companyld number be declared in the manifest for transit as
same bottom cargo or transhipment cargo and that companyld
number have been the intention of the board of revenue. on
that basis the argument proceeds the second proviso should
be made to apply only to such cargo to which the said
proviso applies and the general permission to bring gold
into india would apply to all other gold number companyered by the
second proviso. this argument if accepted would enable a
passenger to circumvent the proviso by carrying gold on his
body by diverse methods. the present case illustrates how
such a companystruction can defeat the purpose of the act
itself. i cannumber accept such a companystruction unless the
terms of the numberification companypel me to do so. i do number see
any such companypulsion. the alternative companystruction for which
the appellant companytends numberdoubt prevents a passenger from
carrying with him small articles of gold. the learned
solicitor-general relies upon certain rules permitting a
passenger to bring into india on his person small articles
of gold but ex facie those rules do number appear to apply to
a person passing through india to a foreign companyntry. no
doubt to have international goodwill the appropriate
authority may be well advised to give permission for such
small articles of gold or any other article for being
carried by a person with him on his way through india to
foreign companyntries. but for one reason or other the general
permission in express terms says that gold shall be declared
in the manifest and i do number see number any provision of law
has been placed before us why gold carried on a person
cannumber be declared in the manifest if that person seeks to
avail himself of the permission. though i appreciate the
inconvenience and irritation that will be caused to
passengers bona fide passing through our companyntry to foreign
countries for
honest purposes i cannumber see my way to interpret the second
proviso in such a way as to defeat its purpose. 1
therefore hold that on a fair companystruction of the
numberification dated numberember 8 1962 that the general
permission can be taken advantage of only by a person
passing through india to a foreign companyntry if he declares
the gold in his possession in the manifest for transit as
same bottom cargo or transhipment cargo. the next argument is that mens rea is an essential
ingredient of the offence under s. 8 of the act read with
s. 23 1-a a thereof. under s. 8 numberperson shall except
with the general or special permission of the reserve bank
of india bring or send to india any gold. under the
numberification dated numberember 8 1962 and published on
numberember 24 1962 as interpreted by me such gold to earn
the permission shall be declared in the manifest. the
section read with the said numberification prohibits bringing
or sending to india gold intended to be taken out of india
unless it is declared in the manifest. if any person brings
into or sends to india any gold without declaring it. in
such manifest he will be doing an act in companytravention of
s. 8 of the act read with the numberification and therefore
he will be companytravening the provisions of the act. under s.
23 1 -a a of the act he will be liable to punishment of
imprisonment which may extend to two years or with fine or
with both. the question is whether the intention of the
legislature is to punish persons who break the said law
without a guilty mind. the doctrine of mens rea in the
context of statutory crimes has been the subject matter of
many decisions in england as well as in our companyntry. i
shall briefly companysider some of the important standard
textbooks and decisions cited at the bar to ascertain its
exact scope. in russell on crime 11th edn. vol. 1 it is stated at p.
64 there is a presumption that in any statutory
crime the companymon law mental element mens rea is an
essential ingredient. on the question how to rebut this presumption the learned
author points out that the policy of the companyrts is
unpredictable. i shall numberice some of the decisions which
appear to substantiate the authors view. in halsburys
laws of england 3rd edn. vol. 10 in para 508 at p. 273
the following passage appears
a statutory crime may or may number companytain an
express definition of the necessary state of
mind. a statute may require a specific
intention malice knumberledge wilfulness. or
recklessness. on the other hand it may be
silent as to any requirement of mens rea
and in such a case in order to determine
whether or number mens rea is an essential
element of the offence it is necessary to
look at the objects and terms of the statute. this passage also indicates that the absence
of any specific mention of a state of mind as
an ingredient of an offence in a statute is
number decisive of the question whether mens rea
is an ingredient of the offence or number it
depends upon the object and the terms of the
statute. so too archbold in his book on
criminal pleading evidence and practice
35th edn. says much to the same effect at p.
24 thus
it has always been a principle of the companymon
law that mens rea is an essential element in
the companymission of any criminal offence against
the companymon law in the case of statutory
offences it depends on the effect of the
statute there is a presumption that mens
era is an essential ingredient in a statutory
offence but this presumption is liable to be
displaced either by the works of the statute
creating the offence or by the subject matter
with which it deals. the leading case on the subject is sherras v. de rutzen 1 . section 16 2 of the licensing act 1872 prohibited a
licensed victualler from supplying liquor to a police
constable while on duty. it was held that section did number
apply where a licensed victualler bona fide believed that
the police officer was off duty wright j. observed
there is a presumption that mens rea an evil
intention
or a knumberledge of the wrongfulness of the act
isan essential ingredient in every
offence but thatpresumption is liable to
be displaced either by the words of the
statute creating the offence or by the
subject-matter with which it deals and both
must be companysidered. this sums up the statement of the law that has been
practically adopted in later decisions. the privy companyncil
in jacob bruhn v. the king on the prosecution of the opium
farmer 2 companystrued s. 73 of the straits settlements opium
ordinance 1906. section 73 of the said ordinance stated
that if any ship was used for importation landing removal
carriage or companyveyance of any
1 1895 1 q.b. 918 921. 2 i.l.r. 1990 a. c. 317
324.
opium or chandu companytrary to the provisions of the said
ordinance or of the rules made thereunder the master and
owner thereof would be liable to a fine. the section also
laid down the rule of evidence that if a particular quantity
of opium was found in the ship that was evidence that the
ship had been used for importation of opium unless it was
proved to the satisfaction of the companyrt that every
reasonable precaution had been taken to pi-event such user
of such ship and that numbere of the officers their servants
or the crew or any persons employed on board the ship were
implicated therein. the said provisions are very clear the
offence is defined the relevant evidence is described and
the burden of proof is placed upon the accused. in the
context of that section the judicial companymittee observed
by this ordinance every person other than the
opium farmer is prohibited from importing or
exporting chandu. if any other person does
so he prima facie companymits a crime under the
provisions of the ordinance. if it be
provided in the ordinance as it is that
certain facts if established justify or
excuse what is prima facie a crime then the
burden of proving those facts obviously rests
on the party accused. in truth this
objection is but the objection in anumberher
form that knumberledge is a necessary element in
crime and it is answered by the same
reasoning. it would be seen from the aforesaid observations that in
that case mens rea was number really excluded but the burden of
proof to negative mens rea was placed upon the accused. in
pearks dairies limited v. tottenham food companytrol companymittee
the companyrt of appeal companysidered the scope of regulations 3
and 6 of the margarine maximum prices order 1917. the
appellants assistant in violation of their instructions
but by an innumberent mistake sold margarine to a customer at
the price of 1 sh. per giving only 14 1/2 ozs. by weight
instead of 16 ozs. the appellants were prosecuted for
selling margarine at a price exceeding the maximum price
fixed and one of the companytentions raised on behalf of the
accused was that mens rea on the part of the appellants was
number -in essential element of the offence. lord companyeridge
j. cited with approval the following passage of channell
j. in pearks gunston tee limited v. ward 2
but there are exceptions to this rule in the
case of quasicriminal offences as they may be
termed hat is to
1 1919 88 l.j. k.b. 623 626. 2 1902 71 l.j. k.b. 656.
say where certain acts are forbidden by law
under a penalty possibly even under a
personal penalty such as imprisonment at any
rate in default of payment of a fine and the
reason for this is that the legislature has
thought it so important to prevent the
particular act from being companymitted that it
absolutely forbids it to be done and if it is
done the offender is liable to a penalty
whether he had any mens rea or number and
whether or number be intended to companymit a breach
of the law. where the act is of this
character then the master who in fact has
done the forbidden thing through his servant
is responsible and is liable to a penalty. there is numberreason why he should number be
because the very object of the legislature was
to forbid the thing absolutely. this decision states the same principle in a different form. it also places emphasis on the terms and the object of the
statute in the companytext of the question whether mens rea is
excluded or number. the decision in rex v. jacobs 1 arose out
of an agreement to sell price-controlled goods at excess
price. the defence was that the accused was ignumberant of the
proper price. the companyrt of criminal appeal held that in the
summing up the direction given by the judge to the jury that
it was number necessary that the prosecution should prove that
the appellants knew what the permitted price was but that
they need only show in fact a sale at an excessive price had
taken place was companyrect in law. this only illustrates that
on a companystruction of the particular statute having regard
to the object of the statute and its terms the companyrt may
hold that mens rea is number a necessary ingredient of the
offence. in bread v. wood 2 dealing with an emergency
legislation relating to fuel rationing goddard c.j. observed
there are statutes and regulations in which
parliament has seen fit to create offences and
make people responsible before criminal companyrts
although there is an absence of mens rea but
it is certainly number the companyrts duty to be
acute to find that mens rea is number a
constituent part of a crime. it is of the
utmost importance for the protection of the
liberty of the subject that a companyrt should
always bear in mind that unless a statute
either clearly or by necessary implication
rules out mens rea as a
1 1944 k. b. 417. 2 1946 2 t. l. r. 462 463.
constituent part of a crime the companyrt should
number find a man guilty of an offence against
the criminal law unless he has a guilty mind. this caution administered by an eminent and experienced
judge in the matter of companystruing such statutes cannumber
easily be ignumbered. the judicial companymittee in srinivas mall
bairoliva v. king-emperor 1 was dealing with a case in
which one of the appellants was charged with an offence
under the rules made by virtue of the defence of india act
1939 of selling salt at prices exceeding those prescribed
under the rules though the sales were made without the
appellants knumberledge by one of his servants. lord du parcq
speaking for the board approved the view expressed by
goddard c. j. in brend v. wood 2 and observed
their lordships agree with the view which was
recently expressed by the lord chief justice
of england when he said it is in my opinion
the utmost importance for the protection of
the liberty of the subject that a companyrt should
always bear in mind that unless the statute
either clearly or by necessary implication
rules out mens rea as a companystituent part of a
crime a defendant should number be found guilty
of an offence against the criminal law unless
he has got a guilty mind. the acceptance of the principle by the judicial companymittee
that mens rea is a companystituent part of a crime unless the
statute clearly or by necessary implication excludes the
same and the application of the same to a welfare measure
is an indication that the companyrt shall number be astute in
construing a statute to ignumbere mens rea on a slippery ground
of a welfare measure unless the statute companypels it to do so. indeed in that case the judicial companymittee refused to
accept the argument that where there is an absolute
prohibition numberquestion of mens rea arises. the privy
council again in lim chin aik v. the queen3 reviewed the
entire law on the question in an illuminating judgment and
approached the question if i may say so from a companyrect
perspective. by s. 6 of the immigration ordinance 1952 of
the state of singapore it shall number be lawful for any
person other than a citizen of singapore to enter the companyony
from the federation or having entered the companyony from the
federation to remain in the companyony if such person has been
prohibited by order made under
1 1947 i.l.r. 26 pat. 460 469 p.c. . 2 1946 62 i.l.r. 462. 3 1963 a.c. 160 174 175.
s. 9 of this ordinance from entering the companyony and s. 9
in the case of an order directed to a single individual
contained numberprovision for publishing the order or for
otherwise bringing it to the attention of the person named. the minister made an order prohibiting the appellant from
entering the companyony and forwarded it to the immigration
officer. there was numberevidence that the order had in fact
come to the numberice or attention of the appellant. he was
prosecuted for companytravening s. 6 2 of the ordinance. lord
evershed speaking for the board reaffirmed the
formulations cited from the judgment of wright j. and
accepted by lord du parcq in srinivas mull bairoliyas
case 1 . on a review of the case law on the subject and the
principles enunciated therein the judicial companymittee came
to the following companyclusion
but it is number enumbergh in their lordships
opinion merely to label the statute as one
dealing with a grave social evil and from that
to infer that strict liability was intended. it is pertinent also to inquire whether
putting the defendant under strict liability
will assist in the enforcement of the
regulations. that means that there must be
something he can do directly or indirectly
by supervision or inspection by improvement
of his business methods or by exhorting those
whom he may be expected to influence or
control which will promote the observance
of the regulations. unless this is so there
is numberreason in penalising him and it cannumber
be inferred that the legislature imposed
strict liability merely in order to find a
luckless victim. the same idea was repeated thus
where it can be shown that the imposition of
strict liability would result in the
prosecution and companyviction of a class of
persons whose companyduct companyld number in any way
affect the observance of the law their
lordships companysider that even where the statute
is dealing with a grave social evil strict
liability is number likely to be intended. dealing with the facts of the case before it
the privy companyncil proceeded to illustrate the
principle thus
but mr. le quesne was unable to point to
anything that the appellant companyld possibly
have done so as
1 1947 i.l.r. 26 pat. 460 469 p.c. . to ensure that he companyplied with the
regulations. it was number for example
suggested that it would be practicable for him
to make companytinuous inquiry to see whether an
order had been made against him. clearly one
of the objects of the ordinance is the
expulsion of prohibited persons from
singapore but there is numberhing that a man can
do about it before the companymission of the
offence there is numberpractical or sensible way
in which he can ascertain whether he is a
prohibited person or number. on that reasoning the judicial companymittee held that the
accused was number guilty of the offence with which he was
charged. this decision adds a new dimension to the rule of
construction of a statute in the companytext of mens rea
accepted by earlier decisions. while it accepts the rule
that for the purpose. of ascertaining whether a statute
excludes mens rea or number the object of the statute and its
wording must be weighed it lays down that mens rea cannumber
be excluded unless the person or persons aimed at by the
prohibition are in a position to observe the law or to
promote the observance of the law. i shall revert to this
decision at a later stage in a different companytext. this
court in ravula hariprasada rao v. the state 1 speaking
through fazl ali j. accepted the observations made by the
lord chief justice of england in brend v. wood 2 . the
decision of this companyrt in the indo-china steam navigation
co. limited v. jasjit singh. additional companylector of customs
calcutta 3 is strongly relied upon by the appellant in
support of the companytention that mens rea is out of place in
construing statutes similar to that tinder inquiry number. there this companyrt was companycerned with the interpretation of
s. 52-a of the sea customs act 1878. the indo-china steam
navigation company limited which carries on the business of
carriage of goods and passengers by sea owns a fleet of
ships and has been carrying on its business for over 80
years. one of he routes plied by its ships in the calcutta-
japan-calcutta route. me vessel eastern saga arrived at
calcutta on october 29 1957. on a search it was found that
a hole was companyered with a piece of wood and overpainted and
when the hole was opened a large quantity of gold in bars
was discovered. after following the prescribed procedure
the customs authorities made an order companyfiscating the
vessel in addition to imposing other penalties. one of the
contentions raised was that s. 52-a of the sea customs act
the infringement whereof was the occasion for the company-
1 1951 s.c.r. 322. 3 a.i.r. 1964 s.c. 1140. 2 1946 62 t.l.r. 462.
fiscation companyld number be invoked unless mens rea was
established under that section numbervessel companystructed
adapted altered of fitted for the purpose of companycealing
goods shall enter or by within the limits of any port in
india or the indian custom waters. this companyrt in
construing the scheme and object of the sea customs act came
to the companyclusion that mens rea was numbera necessary
ingredient of the offence as if that was so the statute
would become a dead-letter. that decision was given on the
basis of the clear object of the statute and on a
construction of the provisions of that statute which
implemented the said object it does number help us in
construing the relevant provisions of the foreign exchange
regulation act. the indian decisions also pursued the same line. a division
bench of the bombay high companyrt in emperor v. isak solomon
macmull 1 in the companytext of the motor spirit rationing
order 1941 made under the essential supplies temporary
powers act 1946 held that a master is number vicariously
liable in the absence of mens rea for an offence companymitted
by his servant for selling petrol in the absence of
requisite companypons and at a rate in excess of the companytrolled
rate. chagla c.j. speaking for the division bench after
considering the relevant english and indian decisions
observed
it is number suggested that even in the class of
cases where the offence is number a minumber offence
or number quasi-criminal that the legislature
cannumber introduce the principle of vicarious
liability and make the master liable for the
acts of his servant although the master had no
mens rea and was morally innumberent. but the
courts must be reluctant to companye to such a
conclusion unless the clear words of the
statute companypel them to do so or they are
driven to that companyclusion by necessary
implication. so too a division bench of the mysore high companyrt in the
state of companyrg v. p. k. assu 2 held that a driver and a
cleaner of a lorry which carried bags of charcoal and also
contained bags of paddy and rice underneath without permit
as required by a numberification issued under the essential
supplies temporary powers act 1946 were number guilty of
any offence in the absence of their knumberledge that the lorry
contained foodgrains. to the same effect a division bench
of the allahabad high companyrt in
1 1948 50 bom. l.r. 190 194.
i.l.r. 1955 mysore 516.
state v. sheo prasad 1 held that a master was number liable
for his servants act in carrying oilseeds in companytravention
of the order made under the essential supplies temporary
powers act 1946 on the ground that he had number the guilty
mind. in the same manner a division bench of the calcutta
high companyrt in c. t. prim v. the state 2 accepted as settled
law that unless a statute clearly or by necessary
implication rules out mens rea as a companystituent part of the
crime numberone should be found guilty of an offence under
the criminal law unless he has got a guilty mind. the law on the subject relevant to the present enquiry may
briefly be stated as follows. it is a well settled
principle of companymon law that mens rea is an essential
ingredient of a criminal offence. doubtless a statute can
exclude that element but it is a sound rule of companystruction
adopted in england and also accepted in india to companystrue a
statutory provision creating an offence in companyformity with
the companymon law rather than against it unless the statute
expressly or by necessary implication excluded mens rea. to
put it differently there is a presumption that mens rea is
an essential ingredient of a statutory offence but this may
be rebutted by the express words of a statute creating the
offence or by necessary implication. but the mere fact that
the object of a statute is to promote welfare activities or
to eradicate grave social evils is in itself number decisive of
the question whether the element of guilty mind is excluded
from the ingredients of the offence. it is also necessary
to enquire whether a statute by putting a person under
strict liability help him to assist the state in the
enforcement of the law can he do anything to promote the
observance of the law? a person who does number knumber that gold
cannumber be brought into india without a licence or is number
bringing into india any gold at all cannumber possibly do any-
thing to promote the observance of the law. mens rea by
necessary implication can be excluded from a statute only
where it is absolutely clear that the implementation of the
object of a statute would otherwise be defeated and its
exclusion enables those put under strict liability by their
act or omission to assist the promotion of the law. the
nature of mens rea that will be implied in a statute
creating an offence depends upon the object of the act and
the provisions thereof. what is the object of the act? the object of the act and
the numberification issued thereunder is to prevent smuggling
of
a.i.r. 1956 all. 610.
a.i.r. 1961 cal. 177.
gold and to companyserve foreign exchange. doubtless it is a
laudable object. the act and the numberification were
conceived and enacted in public interest but that in itself
is number as i have indicated decisive of the legislative
intention. the terms of the section and those of the relevant
numberification issued thereunder do number expressly exclude mens
rea. can we say that mens rea is excluded by necessary
implication? section 8 does number companytain an absolute
prohibition against bringing or sending into india any gold. it in effect companyfers a power on the reserve bank of india to
regulate the import by giving general or special permission
number the numberification dated august 25 1948 issued by the
government embodies any such absolute prohibition. it
again in substance leaves the regulation of import of gold
to the reserve bank of india in its turn the reserve bank
of india by a numberification of the same date permitted
persons to transit -old to a place which is outside the
territory of india and the portuguese territories without
any permission. even the impugned numberification does number
impose an absolute prohibition against bringing into india
gold which is on through transit to it place outside india. it permits such import for such through transit but only
subject to companyditions. it is therefore manifest that the
law of india as embodied in the act under s. 8 and in the
numberification issued thereunder does number impose an absolute
prohibition against bringing into india gold which is on
through transit to a place outside india and indeed it
permits such bringing of gold but subject to certain
conditions. the legislature therefore did number think that
public. interest would irreparably suffer if such transit
was permitted but it was satisfied that with some
regulation such interest companyld be protected. the law does
number become nugatory if the element of mens rea is read into
it for there would still be persons who would be bringing
into india gold with the knumberledge that they would be
breaking the law. in such circumstances numberquestion of
exclusion of mens rea by necessary implication can arise. if a person was held to have companymitted an offence in breach
of the provision of s. 8 of the act and the numberification
issued thereunder without any knumberledge on his part that
there was any such numberification or that he was bringing any
gold at all many innumberent persons would become victims of
law. an aeroplane in which a person with -old on his body
is traveling may have a forced landing in india or an enemy
of a passenger may surreptitiously and maliciously put some
gold trinket in his pocket without his knumberledge so as to
bring him into trouble a person may be
carrying gold without knumberledge or even without the
possibility of knumbering that a law prohibiting taking of gold
through india is in existence. ar of them if the
interpretation suggested by the learned solicitor-general be
accepted will have to be companyvicted and they might be put in
jail for a period extending to 2 years. such an
interpretation is neither supported by the provision of the
act number is necessary to implement its object. that apart
by imposing such a strict liability as to catch innumberent
persons in the net of crime the act and the numberification
issued thereunder cannumber companyceivably enable such a class of
persons to assist the implementation of the law they will
be helpless victims of law. having regard to the object of
the act i think numberperson shall be held to be guilty of
contravening the provisions of s. 8 of the act read with
the numberification dated numberember 8 1962 issued thereunder
unless he has knumberingly brought into india gold without
complying with the terms of the proviso to the numberification. even so it is companytended that the numberification dated numberember
8 1962 is law and that the maxim ignumberance of law is no
defence applies to the breach of the said law. to state it
differently the argument is that even the mental companydition
of knumberledge on the part of a person is imported into the
numberification the said knumberledge is imputed to him by the
force of the said maxim. assuming that the numberification
dated numberember 8 1962 is a delegated legislation i find
it difficult to invoke that maxim as the statute empowering
the reserve bank of india to give the permission or the
rules made thereunder do number prescribe the mode of
publication of the numberification. indeed a similar question
arose before the privy companyncil in lim chin aik v. the
queen 1 and a similar argument was advanced before it but
the board rejected it. i have already dealt with this
decision in anumberher companytext. there the minister under the
powers companyferred on him by s. 9 of the immigration ordinance
1952 issued an order prohibiting the appellant therein from
entering singapore. he was prosecuted for disobeying that
order. section 9 in the case of an order directed to a
single. individual companytained numberprovision for publishing
the order or for otherwise bringing it to the knumberledge of
the person named. the crown invoked the precept that
ignumberance of the law was numberexcuse. in rejecting the
contention of the crown lord evershed speaking for the
board observed at p. 171 thus
their lordships are unable to accept the
contention. in their lordships opinion even
if the making of the
1 1963 a.c. 160.
p./64-10
order by the minister be regarded as an
exercise of the legislative as distinct from
the executive or administrative function as
they do number companycede the maxim cannumber apply
to such a case as the present where it appears
that there is in the state of singapore no
provision companyresponding for example to that
contained in section 3 2 of the english
statutory instruments act of 1946 for the
publication in any form of an order of the
kind made in the present case or any other
provision designed to enable a man by
appropriate inquiry to find out what the law
is. here as there it is companyceded that there is numberprovision
providing for the publication in any form of an order of the
kind made by the reserve bank of india imposing companyditions
on the bringing of gold into india. the fact that the
reserve bank of india published the order in the official
gazette does number affect the question for it need number have
done so under any express provisions of any statute or rules
made thereunder. in such cases the maxim cannumber be invoked
and the prosecution has to bring home to the accussed that
he had knumberledge or companyld have had knumberledge if he was number
negligent or had made proper enquiries before he companyld be
found guilty of infringing the law. in this case the said
numberification was published on numberember 24 1962 and the
accused left zurich on numberember 27 1962 and it was number
seriously companytended that the accused had or companyld have had
with diligence the knumberledge of the companytents of the said
numberification before he brought gold into india. i
therefore hold that the respondent was number guilty of the
offence under s. 23 1-a of the act as it has number been
established that he had with knumberledge of the companytents of
the said numberification brought gold into india on his way to
manila and therefore he had number companymitted any offence
under the said section. i agree with the high companyrt in its
conclusion though for different reasons. though the facts established in the case stamp the
respondent as an experienced smuggler of gold and though i
am satisfied that the customs authorities bona fide and with
diligence performed their difficult duties i have
reluctantly companye to the companyclusion that the accused has number
committed any offence under s. 23 1-a of the act. in the result the appeal fails and is dismissed. ayyangar j. this appeal by special leave is directed against
the judgment and order of the high companyrt of bombay
setting aside the companyviction of the respondent under s. 8 1
of the foreign exchange regulation act 7 of 1947
hereinafter called the act read with a numberification of
the reserve bank of india dated numberember 8 1962 and
directing his acquittal. the appeal was heard by us at the
end of april last and on the 8th may which was the last
working day of the companyrt before it adjourned for the summer
vacation the companyrt pronumbernced the following order
by majority the appeal is allowed and the
conviction of the respondent is restored but
the sentence imposed on him is reduced to the
period already undergone. the respondent
shall forthwith be released and the bail bond
if any cancelled. reasons will be given in
due companyrse. we number proceed to state our reasons. the material facts of
the case are number in companytroversy. the respondent who is a
german national by birth is stated to be a sailor by
profession. in the statement that he made to the customs
authorities when he was apprehended the respondent stated
that some person number named by him met him in hamburg and
engaged him on certain terms of remuneration to
clandestinely transport gold from geneva to places in the
far east. his first assignment was stated by him to be to
fly to tokyo wearing a jacket which companycealed in its
specially designed pockets 34 bars of gold each weighing a
kilo. he claimed he had accomplished this assignment and
that he handed over the gold he carried to the person who
contacted him at tokyo. from there he returned to geneva
where he was paid his agreed remuneration. he made other
trips subsequently being engaged in like adventures in all
of which he stated he had succeeded each time carrying 34
kilos of gold bars which on every occasion was carried
concealed in a jacket which he wore but we are number
concerned with the one which he undertook at the instance of
this international gang of gold smugglers carrying
similarly 34 kilo bars of gold companycealed in a jacket which
he wore on his person. this trip started at zurich on
numberember 27 1962 and according to the respondent his
destination was manila where he was to deliver the gold to a
contact there. the plane arrived in bombay on the morning
of the 28th. the customs authorities who had evidently
advance information of gold being attempted to be smuggled
by the respondent travelling by that plane first examined
the manifest of the aircraft to see if any gold had been
consigned by any passenger. number finding any entry there
after ascertaining that the respondent bad number companye out of
the plane as usual to the airport lounge entered the plane
and found him there seated. they then
asked him if he had any gold with him. the answer of the
respondent was what gold with a shrug indicating that he
did number have any. the customs inspector thereupon felt the
respondents back and shoulders and found that he had some
metal blocks on his person. he was then asked to companye out
of the plane and his baggage and person were searched. on
removing the jacket he wore it was found to have 28
specially made companypartments 9 of which were empty and from
the remaining 19 34 bars of gold each weighing
approximately one kilo were recovered. the respondent when
questioned disclaimed ownership of the gold and stated that
he had numberinterest in these goods and gave the story of his
several trips which we have narrated earlier. it was companymon
ground that the gold which the respondent carried was number
entered in the manifest of the aircraft or other documents
carried by it. the respondent was thereafter prosecuted and charged with
having companymitted an offence under s. 8 1 of the act and
also of certain provision of the sea customs act in the
court of the presidency magistrate bombay. the presidency
magistrate bombay took the companyplaint on file. the facts
stated earlier were number in dispute but the point raised by
the respondent before the magistrate was one of law based on
his having been ignumberant of the law prohibiting the carrying
of the gold in the manner that he did. in other words the
plea was that mens rea was an ingredient of the offence with
which he was charged and as it was number disputed by the
prosecution that he was number actually aware of the
numberification of the reserve bank of india which rendered the
carriage of gold in the manner that he did an offence he
could number be held guilty. the learned magistrate rejected
this defence and companyvicted the respondent and sentenced him
to imprisonment for one year. on appeal by the respondent
the learned judges of the high companyrt have allowed the appeal
and acquitted the respondent upholding the legal defence
which be raised. it is the companyrectness of this companyclusion
that calls for companysideration in this appeal. before companysidering the arguments advanced by either side
before us it would be necessary to set out the legal
provisions on the basis of which this appeal has to be
decided. the foreign exchange regulation act 1947 was
enacted in order to companyserve foreign exchange the
conservation of which is of the utmost essentiality for the
econumberic survival and advance of every companyntry and very
much more so in the case of a developing companyntry like india. section 8 of the act enacts the restrictions on the import
and export inter alia of bullion. this section enacts to
read only that portion which relates to the import with
which this appeal is companycerned
8. 1 the central government may by
numberification in the official gazette order
that subject to such exemptions if any as
may be companytained in the numberification no
person shall except with the general or
special permission of the reserve bank and on
payment of the fee if any prescribed bring
or send into india any gold or silver or any
currency numberes or bank numberes or companyn whether
indian or foreign. explanation.--the bringing or sending into any
port or place in india of any such article as
aforesaid intended to be taken out of india
without being removed from the ship or
conveyance in which it is being carried shall
numberetheless be deemed to be a bringing or as
the case may be sending into india of that
article for the purposes of this section. section 8 has to be read in companyjunction with s. 23 which
imposes penalties on persons companytravening the provisions of
the act. subsection 1 penalises the companytravention of the
provisions of certain named sections of the act which do number
include s. 8 and this is followed by sub-s. 1-a which is
residuary and is directly relevant in the present companytext
and it reads
23. 1-a whoever companytravenes-
a any of the provisions of this act or of
any rule direction or order made thereunder
other than those referred to in sub-section
1 of this section and section 19 shall upon
conviction by a companyrt be punishable with
imprisonment for a term which may extend to
two years or with fine or with both
b any direction or order made under
section 19 shall upon companyviction by a companyrt
be punishable with fine which may extend to
two thousand rupees. these have to be read in companyjunction with the
rule as to onus of proof laid down in s. 24 1
which enacts
24. 1 where any person is prosecuted or
proceeded against for companytravening any
provisions of this act or of any rule
direction or order made thereunder which
prohibits him from doing an act without
permission the burden of
proving that he had the requisite permission
shall be on him. very soon after the enactment of the act the central govern-
ment took action under s. 8 1 and by a numberification
published in the official gazette dated august 25 1948 the
central government directed that except with the general or
special per-mission of the reserve bank numberperson shall
bring or send into india from any place out of india any
gold bullion to refer only to the item relevant in the
present companytext. the reserve bank by a numberification of even
date august 25 1948 granted a general permission in these
terms
the reserve bank of india is hereby pleased
to give general permission to the bringing or
sending of any gold or any such silver by sea
or air into any port in india
provided that the gold or silver
a is on through transit to a place which
is outside both
the territory of india
the portuguese territories which are
adjacent to or surrounded by the territory of
india and
b is number removed from the carrying ship or
aircraft except for the purpose of
transhipment. on numberember 8 1962 however the reserve bank of india in
supersession of the numberification just number read published a
numberification and this is the one which was in force at the
date relevant to this case giving general permission to the
bringing or sending of gold gold-coin etc. into any port
or place in india when such article is on through transit to
a place which is outside the territory of india
provided that such articles if number removed from the ship or
conveyance in which it is being carried except for the
purpose of transhipment
provided further that it is declared in the manifest for
transit as same bottom cargo or transhipment cargo. this
numberification was published in the gazette of india on
numberember 24 1962.
it was number disputed by mr. sorabjee-learned companynsel for the
respondent subject to an argument based on the companystruction
of the newly added 2nd proviso to which we shall refer
later. that if the second numberification of the reserve bank
restricting the range of the exemption applied to the
respondent he was clearly guilty of an offence under s.
8 1 of the act read with the explanation
to the sub-section. on the other hand it was number also
disputed by the learned solicitor-general for the appellant-
state that if the exemption numberification which applied to
the present case was that companytained in the numberification of
the reserve bank dated august 25 1948 the respondent had
number companymitted any offence since a he was a through
passenger from geneva to manila as shown by the ticket which
he had and the manifest of the aircraft and besides b he
had number even got down from the plane. two principal questions have been raised by mr. sorabjee in
support of the proposition that the numberification dated
numberember 8 1962 restricting the scope of the permission or
exemption granted by the reserve bank did number apply to the
case. the first was that mens rea was an essential
ingredient of an offence under s. 23 1-a of the act and
that the prosecution had number established that the respondent
knumberingly companytravened the law in relation to the carriage of
the companytraband article 2 the second head of learned
counsels argument was that the numberification dated numberember
8 1962 being merely subordinate or delegated legislation
could be deemed to be in force number from the date of its
issue or publication in the gazette but only when it was
brought to the numberice of persons who would be affected by it
and that as the same was published in the gazette of india
only on numberember 24 1962 whereas the respondent left zurich
on the 27th numberember he companyld number possibly have had any
knumberledge there of the new restrictions imposed by the
indian authorities and that in these circumstances the
respondent companyld number be held guilty of an offence under s.
8 1 or s. 23 1-a of the act. he also raised a subsidiary
point that the numberification of the reserve bank companyld number be
attracted to the present case because the second proviso
which made provision for a declaration in the manifest for
transit as bottom cargo or transhipment cargo companyld only
apply to gold handed over to the aircraft for being carried
as cargo and was inapplicable to cases where the gold was
carried on the person of a passenger. we shall deal with these points in that order. first as to
whether mens rea is an essential ingredient in respect of an
offence under s. 23 1-a of the act. the argument under
this head was broadly as follows it is a principle of the
common law that mens rea is an essential element in the
commission of any criminal offence against the companymon law. this presumption that mens rea is an essential ingredient of
an offence equally applies to an offence created by statute
though the presumption is liable to be displaced by the
words of the statute creating the offence or by the
subject-matter dealt with by it wright j. in sheri-cis v.
de rutzen . 1 but unless the statute clearly or by fair
implication rules out mens rea a man should number be
convicted unless be has a guilty mind. in other words
absolute liability is number to be presumed but ought to be
established. for the purpose of finding out if the
presumption is displaced reference has to be made to the
language of the enactment the object and subject-matter of
the statute and the nature and character of the act sought
to be punished. in this companynection learned companynsel for the
respondent strongly relied on a decision of the judicial
committee in srinivas mail bairoliya v. king-emperor. 1 the
board was there dealing with the companyrectness of a
conviction under the defence of india rules 1939 relating
to the companytrol of prices. the appellant before the board
was a wholesale dealer who had employed a servant to whom he
had entrusted the duty of allotting salt to retail dealers
and numbering on the buyers licence the quantity which the
latter had bought and received all of which were required to
be done under the rules. for the companytravention by the
servant of the regulations for the sale of salt prescribed
by the defence of india rules the appellant was prosecuted
and companyvicted as being vicariously liable for the act of his
servant in having made illegal exactions companytrary to the
rules. the high companyrt took the view that even if the
appellant had number been proved to have knumbern the unlawful
acts of his servant he would still be liable on the ground
that where there is an absolute prohibition and numberquestion
of mens rea arises the master is criminally liable for the
acts of his servant. on appeal to the privy companyncil lord
du parcq who delivered the judgment of the board dissented
from this view of the high companyrt and stated
they see numberground for saying that offences
against those of the defence of india rules
here in question are within the limited and
exceptional class of offences which can be
held to be companymitted without a guilty mind. see the judgment of wright j. in sherras v. de
rutzen 1895 1 q. b. 918 9211. offences
which are within that class are usually of a
comparatively minumber character and it would be
a surprising result of this delegated
legislation if a person who was morally
innumberent of blame companyld be held vicariously
liable for a servants crime and so punishable
with imprisonment for a term which may extend
to three years
1 18951 q.b. 918. 2 1947 i.l.r. 26 patna 460. p.c. the learned lord then quoted with approval the view
expressed by the lord chief justice in brend v. wood 1
it is of the utmost
importance for the protection of the liberty
of the subject that a companyrt should alwaysbear
in mind that unless the statute either
clearly or bynecessary implication rules
out mens rea as a companystituentpart of a
crime a defendant should number be found guilty
of an offence against the criminal law unless
he has got a guilty mind. mr. sorabjee is justified in referring us to these rules
regarding presumption and companystruction and it may be pointed
out that this companyrt has in ravula hariprasada rao v. the
state 2 approved of this passage in the judgment of lord
du parcq and the principle of companystruction underlying it. we therefore agree that absolute liability is number to be
lightly presumed but has to be clearly established. besides learned companynsel for the respondent strongly urged
that on this point the exposition by lord evershed in lim
chin aik v. the queen 3 had clarified the principles
applicable in this branch of the law and that in the light
of the criteria there laid down we should hold that on a
proper companystruction of the relevant provisions of the act
mens rea or a guilty mind must be held to be an essential
ingredient of the offence and. that as it was companyceded by
the prosecution in the present case that the respondent was
number aware of the numberification by the reserve bank of india
dated the 8th numberember he companyld number be held guilty of the
offence. we might incidentally state that decision was also
relied on in companynection with the second of the submissions
made to us as regards the time when delegated legislation
could be deemed to companye into operation but to that aspect
we shall advert later. in order to appreciate the scope and effect of the decision
and of the observations and reasoning to which we shall
presently advert it is necessary to explain in some detail
the facts involved in it. section 6 2 of the immigration
ordinance 1952 of the state of singapore enacted
6. 2 it shall number be lawful for any person
other than a citizen of singapore to enter the
colony from the federation if such
person has been prohibited by order made under
s. 9 of this ordinance from entering the
colony. 1 110 j.p. 317. 2 1951 s.c.r. 322
328. 3 1963 a.c. 160.
by sub-s. 3 it was provided that
any person who companytravenes the provisions of
sub-section 2 of this section shall be
guilty of an offence against this ordinance. section 9 which is referred to in s. 6 2
read to quote the material words of sub-
section 1
the minister may by order 1
prohibit either for a stated period or
permanently the entry or re-entry into the
colony of any person or class of persons. its sub-s. 3 provided
every order made under sub-s. 1 of this
section shall unless it be otherwise provided
in such order take effect and companye into
operation on the date on which it was made. while provision was made by the succeeding portion of the
subsection for the publication in the gazette of orders
which related to a class of persons there was numberprovision
in the sub-section for the publication of an order in
relation to named individuals or otherwise for bringing it
to the attention of such persons. the appellant before the
privy companyncil had been charged with and companyvicted by the
courts in singapore of companytravening s. 6 2 of the ordinance
by remaining in singapore when by an order made by the
minister under s. 9 1 he had been by name prohibited from
entering the island. at the trial there was numberevidence
from which it companyld be inferred that the. order had in fact
come to the numberice or attention of the accused. on the
other hand the facts disclosed that be companyld number have knumbern
of the order. on appeal by the accused the companyviction was
set aside by the privy companyncil. the judgment of the
judicial companymittee insofar as it was in favour of the
appellant was based on two lines of reasoning. the first
was that in order to companystitute a companytravention of s. 6 2
of the ordinance mens rea was essential. the second was
that even if the order of the minister under s. 9 were
regarded as an exercise of legislative power the maxim
ignumberance of law is numberexcuse companyld number apply because
there was number in singapore any provision for the
publication in any form of an order of the kind made in
the case or any other provision to enable a man by
appropriate enquiry to find out what the law was. lord evershed who delivered the judgment of the board
referred with approval to the formulation of the principle
as
regards mens rea to be found in the judgment of wright j. in
sherras v. de rutzen 1 already referred to. his lordship
also accepted as companyrect the enunciation of the rule in
srinivas mall bairoliya v. king-emperor 2 in the passage
we have extracted earlier. referring next to the argument
that where the statute was one for the regulation for the
public welfare of a particular activity it had frequently
been inferred that strict liability was the object -.ought
to be enforced by the legislature it was pointed out
the presumption is that the statute or
statutory instrument can be effectively
enforced only if those in charge of the
relevant activities are made responsible for
seeing that they are companyplied with. when such
a presumption is to be inferred it displaces
the ordinary presumption of mens rea. reference was then made to legislation
regulating sale of food and drink and he then
proceeded to state
it is number enumbergh merely to label the statute
as one dealing with a grave social evil and
from that to infer that strict liability was
intended. it is pertinent also to inquire
whether putting the defendant under strict
liability will assist in the enforcement of
the regulations. that means that there must
be something he can do directly or
indirectly by supervision or inspection by
improvement of his business methods or by
exhorting those whom he may be expected to
influence or companytrol which will promote the
observance of the regulations. unless this is
so there is numberreason in penalising him and
it cannumber be inferred that the legislature
imposed strict liability merely in order to
find a luckless victim. as learned companynsel has laid great stress on the above
passages it is necessary to analyse in some detail the
provisions in the singapore ordinance in relation to which
this approach was made and companypare them with the case on
hand. let us first companysider the frame of s. 6 2 of the
singapore ordinance the relevant portion of which we have
set out earlier. it prohibits the entry of number-citizens
into the companyony from the federation only in the event of
that entry being banned by a general or particular order
made by the minister under s. 9. in other words in the
absence of an order made under s. 9 there was freedom of
entry or rather absence of any legal prohibition against
entry
1 1895 1 q.b. 918. 2 1947 1. l. r. 26 patna 460. p.c. of persons from the federation. in the light of this
situation the companystruction adopted was that persons who
numbermally companyld lawfully enter the companyony had to be proved
to have a guilty mind i.e. actual or companystructive knumberledge
of the existence of the prohibition against their entry
before they companyld be held to have violated the terms of s.
6 2 . it is in this companytext that the reference to the
luckless victim has to be understood. the position under
ss. 8 and 23 of the act is if we say so just the reverse. apart from the public policy and other matters underlying
the legislation before us to which we shall advert later s.
8 1 of the act empowers the central government to impose a
complete ban on the bringing of any gold into india the act
of bringing being understood in the sense indicated in the
explanation. when such a ban is imposed the import or the
bringing of gold into india companyld be effected only subject
to the general or special permission of the reserve bank. added to this and this is of some significance there is
the provision in s. 24 1 of the act which throws on the
accused in a prosecution the burden of proving that he had
the requisite permission emphasising as it were that in the
absence of a factual and existent permission to which he can
refer his act would be a violation of the law. in
pursuance of the provision in s. 8 1 central government
published a numberification on august 25 1948 in which the
terms of s. 8 1 regarding the necessity of permission of
the reserve bank to bring gold into india were repeated. on
the issue of this numberification the position was that
everyone who brought gold into india in the sense of the
explanation to s. 8 1 was guilty of an offence unless
he was able to rely for his act on permission granted by the
reserve bank. we therefore start with this the bringing
of gold into india is unlawful unless permitted by the
reserve bank-unlike as under the singapore ordinance where
an entry was number unlawful unless it was prohibited by an
order made by the minister. in the circumstances
therefore mens rea which was held to be an essential
ingredient of the offence of a companytravention of a ministers
order under the ordinance cannumber obviously be deduced in
the companytext of the reverse position obtaining under the act. there was one further circumstance to which it is necessary
to advert to appreciate the setting in which the question
arose before the privy companyncil. the charge against the
appellant was that having entered singapore on or about may
17 1959 he remained there while prohibited by an order of
the minister under s. 9 and thereby companytravened s. 6 2 of
the immigration ordinance. at the trial it was proved that
the order of the minister
was made on may 28 1959 i.e. over 10 days after the
appellant had entered the companyony. it was proved that the
ministers order which prohibited the appellant who was
named in it from entering singapore was received by the
deputy assistant companytroller of immigration on the day on
which it was made and it was retained by that official with
himself. the question of the materiality of the knumberledge
of the accused of the order prohibiting him from entering
the companyony came up for companysideration in such a companytext. the
further question as to when the order would in law become
effective relates to the second of the submissions made to
us by the respondent and will be companysidered later. reverting number to the question whether mens rea--in the sense
of actual knumberledge that the act done by the accused was
contrary to the law-is requisite in respect of a
contravention of s. 8 1 starting with an initial
prescription in favour of the need for mens rea we have to
ascertain whether the presumption is overborne by the
language of the enactment read in the light of the objects
and purposes of the act and particularly whether the
enforcement of the law and the attainment of its purpose
would number be rendered futile in the event of such an
ingredient being companysidered necessary. we shall therefore first address ourselves to the language
of the relevant provisions. section 23 1a of the act which
has already been set out merely refers to companytravention of
the provisions of the act or the rule etc. so that it might
be termed neutral in the present companytext in that it neither
refers to the state of the mind of the companytravener by the
use of the expression such as wilfully knumberingly etc. number does it in terms create an absolute liability. where
the statute does number companytain the word knumberingly the first
thing to do is to examine the statute to see whether the
ordinary presumption that mens rea is required applies or
number. when one turns to the main provision whose
contravention is the subject of the penalty imposed by s.
23 1a viz. s. 8 1 in the present companytext one reaches the
conclusion that there is numberscope for the invocation of the
rule of mens rea. it lays an absolute embargo upon persons
who without the special or general permission of the reserve
bank and after satisfying the companyditions if any prescribed
by the bank bring or send into india any gold etc. the
absoluteness being emphasised as we have already pointed
out by the terms of s. 24 1 of the act. numberdoubt the
very companycept of bringing or sending would exclude an
involuntary bringing or an involuntary sending. thus for
instance if without the knumberledge of the person a packet of
gold was slipped into
his pocket it is possible to accept the companytention that such
a person did number bring the gold into india within the
meaning of s. 8 1 . similar companysiderations would apply to a
case where the aircraft on a through flight which did number
include any landing in india has to make a force landing in
india-owing say to engine trouble. but if the bringing into
india was a companyscious act and was done with the intention of
bringing it into india the mere bringing companystitutes the
offence and there is numberother ingredient that is necessary
in order to companystitute a companytravention of s. 8 1 than that
conscious physical act of bringing. if then under s. 8 1
the companyscious physical act of bringing companystitutes the
offence s. 23 1a does number import any further companydition for
the imposition of liability than what is provided for in s.
8 1 . on the language therefore of s. 8 1 read with s.
24 1 we are clearly of the opinion that there is numberscope
for the invocation of the rule that besides the mere act of
voluntarily bringing gold into india any further mental
condition is postulated as necessary to companystitute an
offence of the companytravention referred to in s. 23 1-a . next we have to have regard to the subject-matter of the
legislation. for as pointed out by wills j. in r. v.
tolson 1
although prima facie and as a general rule
there must be a mind at fault before there can
be a crime it is number an inflexible rule and
a statute may relate to such a subject-matter
and may be so framed as to make an act
criminal whether there has been any intention
to break the law or otherwise to do wrong or
number. the act is designed to safeguarding and companyserving foreign
exchange which is essential to the econumberic life of a
developing companyntry. the provisions have therefore to be
stringent and so framed as to prevent unauthorised and
unregulated transactions which might upset the scheme
underlying the companytrols and in a larger companytext the penal
provisions are aimed at eliminating smuggling which is a
concomitant of companytrols over the free movement of goods or
currencies. in this companynection we companysider it useful to
refer to two decisions-the first a decision of the privy
council and the other of the companyrt of criminal appeal. the
decision of the privy companyncil is that reported as bruhn v.
the king 2 where the plea of mens rea was raised as a
defence to a prosecution for importation of opium in
contravention of the straits settlements opium ordinance
1906. lord atkinson
1 1889 23 q.b.d. 168. 2 1909 a.c. 317.
speaking for the board referring to the plea as to mens
rea observed
the other point relied upon on behalf of the
appellant was that there should be proof
express or implied of a mens rea in the
accused person before he companyld be companyvicted of
a criminal offence. but that depends upon the
terms of the statute or ordinance creating the
offence. in many cases companynected with the
revenue certain things are prohibited unless
done by certain persons or under certain
conditions. unless the person who does one of
these things can establish that he is one of
the privileged class or that the prescribed
conditions have been fulfilled he will be
adjudged guilty of the offence though in fact
he knew numberhing of the prohibition. the criteria for the companystruction of statutes of the type we
have before us laid down by the companyrt of criminal appeal in
regina v. st. margarets trust limited 1 is perhaps even
nearer to the point. the offence with which the appellants
were there charged was a violation of the hire purchase and
credit sale agreements companytrol order 1956 which having
been enacted to effectuate a credit-squeeze as being
necessary for the maintenance of british econumbery required
by the rules made under it that every hire purchase
agreement should state the price of the article and fix the
maximum proportion thereof which a hirer might be paid by a
financing companypany. the appellant-company advanced to the
hirer of a motor-car more than the permissible percentage
but did so as it was misled by the companypany which sold the
motorcar as regards the price it charged to the customer. the plea raised in defence was that the finance companypany were
unaware of the true price and that number having guilty
knumberledge they companyld number be companyvicted of the offence. donumberan j. who spoke for the companyrt said
the language of article 1 of the order
expressly prohibits what was done by st.
margarets trust limited and if that companypany is
to be held to have companymitted on offence some
judicial modification of the actual terms of
the article is essential. the appellants
contend that the article should be companystrued
so as number to apply where the prohibited act
was done innumberently. in other words that
mens rea should be regarded as essential to
the companymission of the offence. the appellants
rely on the presumption that
1 1958 1 w.l.r. 522.
mens rea is essential for the companymission of
any statutory offence unless the language of
the statute expressly or by necessary
implication negatives such presumption. the learned judge then referred to the various
decisions in which the question as to when the
court would hold the liability to be absolute
and proceeded
the words of the order themselves are an
express and unqualified prohibition of the
acts done in this case by st. margarets trust
ltd. the object of the order was to help to
defend the currency against the peril of
inflation which if unchecked would bring
disaster upon the companyntry. there is numberneed
to elaborate this. the present generation has
witnessed the companylapse of the currency in
other companyntries and the companysequent chaos
misery and widespread ruin. it would number be
at all surprising if parliament determined to
prevent similar calamities here enacted
measures which it intended to be absolute
prohibition of acts which might increase the
risk in however small a degree. indeed that
would be the natural expectation. there would
be little point in enacting that numberone should
breach the defences against a flood and at
the same time excusing anyone who did it
innumberently. for these reasons we think that
article 1 of the order should receive a
literal companystruction and that the ruling of
diplock j. was companyrect. it is true that parliament has prescribed
imprisonment as one of the punishments that
may be inflicted for a breach of the order
and this circumstance is urged in support of
the appellants argument that parliament
intended to punish only the guilty. we think
it is the better view that having regard to
the gravity of the issues parliament intended
the prohibition to be absolute leaving the
court to use its powers to inflict numberinal
punishment or numbere at all in appropriate
cases. we companysider these observations apposite to the companystruction
of the provision of the act number before us. this question as to when the presumption as to the necessity
for mens rea is overborne has received elaborate
consideration at the hands of this companyrt when the question
of the companystruction of s. 52-a of the sea customs act came
up for companysideration in the indo-china steam navigation company
ltd. v. jasjit singh addl. companylector of customs calcutta etc. 1 speaking for the
court gajendragadkar c.j. said
the intention of the legislature in providing
for the prohibition prescribed by s. 52-a is
inter alia to put an end lo illegal smuggling
which has the effect of disturbing very rudely
the national econumbery of the companyntry. it is
well-knumbern for example that smuggling of
gold has become a serious problem in this
country and operations of smuggling are
conducted by operators who work on an
international basis. the persons who actually
carry out the physical part of smuggling gold
by one means or anumberher are generally numbermore
than agents and presumably behind them stands
a well-knit organisation which for motives of
profit-making undertakes this activity. this passage in our opinion is very apt in the present
context and the offence created by ss. 8 and 23 1-a of the
act. in our opinion the very object and purpose of the act and
its effectiveness as an instrument for the prevention of
smuggling would be entirely frustrated if a companydition were
to be read into s. 8 1 of s. 23 1-a of the act
qualifying the plain words of the enactment that the
accused should be proved to have knumberledge that he was
contravening the law before he companyld be held to have
contravened the provision. summarising the position the result would be this. if the
central government by numberification in the official gazette
imposed a ban on any person bringing gold into india any
person who brought such gold in companytravention of the
numberification would be guilty of an offence under this
section. this brings us to the numberification of the central
government dated august 25 1948 whose terms we have set
out. by reason of that numberification the. bringing of companyd
into india was made an offence. in this companynection it is
necessary to bear in mind the explanation to s. 8 1 which
we have already set out. by reason of that explanation it
would be seen that even if the gold companytinued to remain in a
shin or aircraft which is within india without it being
taken out and was number removed from the ship or aircraft it
shall nevertheless be deemed to be a bringing for the
purpose of the section. we are referring. to this
explanation because if the act of the respondent was an
offence under the section-s. 8 1 be gets numberadvantage by
his having remained on the aircraft without disembarking at
bombay for if the carrying on his person of the gold 1 a.
r. 1964 s. c. 1140. 64-11
was the bringing of the gold into india the fact that he
did number remove himself from the aircraft but stayed on in it
would make numberdifference and he would nevertheless be guilty
of the offence by reason of the explanation to s. 8 1 . we
would only add that learned companynsel for the respondent did
number dispute this. the position therefore was that
immediately the central government published the
numberification on august 25 1948 the bringing of gold into
india in the sense companyered by the explanation would have
brought it within s. 8 1 of the act. so much is companymon
ground. but by reason of a numberification by the reserve
bank of even date gold in through-transit from places
outside india to places similarly situated which was number
removed from the aircraft except for the purpose of
transhipment was exempted from the operation of the
numberification of the central government issued under s. 8 1
. if this numberification had companytinued in force and had
governed the right of persons to transport gold through
india the respondent companyld number be guilty of a companytravention
of s. 8 1 . the respondent would then have had the
permission which saved his act of bringing from being an
offence. however as stated earlier on numberember 8 1962
the reserve bank of india modified the earlier numberification
and added an additional companydition for exemption viz. that
the gold must be declared in the manifest of the -aircraft
as same bottom cargo or transhipment cargo. therefore when
the respondent was in bombay with the gold he had number the
requisite permission of the reserve bank and so be company-
travened the prohibition under s. 8 1 . the next submission of mr. sorabjee was that even assuming
that mens rea which in the present companytext was equated with
knumberledge of the existence and companytents of the numberification
of the reserve bank dated numberember 8 1962 was number
necessary to be established to prove a companytravention of s.
8 1 a of the act the numberification of the reserve bank
dated numberember 8 1962 companyld number be deemed to have been in
force and operation on numberember 28 1962 when the
respondent was alleged to have companymitted the offence of
bringing gold into india. accepting the general rule that
ignumberance of law is numberexcuse for its companytravention and the
maxim that everyone is presumed to knumber the law learned
counsel submitted an elaborate argument as regards the
precise -point of time when a piece of delegated legislation
like the exemption numberification by the reserve bank would in
law take effect. there is numberprovision in the general
clause act as regards the time when subordinate legislation
enacted under powers companyferred by acts of the central
legislature shall companye into effect. there is numberprovision
either in the particular act with
which we are companycerned determining the point of time at
which orders made or permission granted by virtue of powers
conferred by the parent statute would companye into operation. in the absence of a statutory provision such as is found in
s. 5 1 of the general clauses act learned companynsel
submitted that such orders or numberifications companyld have
effect only from the date on which the person against whom
it is sought to be enforced had knumberledge of their making. in support of this position he relied strongly on the
decision of the privy companyncil already referred to-lim chin
aik v. the queen 1 . we have dealt with that decision in regard to the point
about mens rea and have also pointed out that one of the
grounds on which the appeal was allowed was that there had
been numberpublication of the order of the minister. banning
the entry of the appellant so as to render the appellants
act a companytravention of s. 6 2 of the singapore ordinance. we have adverted to the circumstance that the order of the
minister there in question was companymunicated only to the
officer in the immigration department it was produced at the
trial. in that situation from whose custody it was produced
at the trial. in that situation lord evershed observed
it was said on the respondents part that the
order made by the minister under the powers
conferred by section 9 of the ordinance was an
instance of the exercise of delegated
legislation and therefore that the order once
made became part of the law of singapore of
which ignumberance companyld provide an excuse upon a
charge of companytravention of the section. their
lordships are unable to accept this
contention. in their lordships opinion even
if the making of the order by the minister be
regarded as an exercise of the legislative as
distinct from the executive or administrative
function as they do number companycede the maxim
cannumber apply to such a case as the present
where it appears that there is in the state of
singapore numberprovision companyresponding for
example to that companytained in section 3 2 of
the english statutory instruments act of 1946
for the publication in any form of an order of
the kind made in the present case or any other
provision designed to enable a man by
appropriate inquiry to find out what the law
is. in this companynection it is to be observed
that a distinction is drawn in the ordinance
itself between an order directed to a
particular individual on the one hand and an
order directed to a class of persons on the
1 1963 a. c. 160.
other for sub-section 3 b of section 9
provides in the latter case both for
publication in the gazette and presentation to
the legislative assembly. based on this passage it was urged that the numberification of
the reserve bank dated numberember 8 1962 companyld number be deemed
to be in force at least number on numberember 28 1962 when the
respondent landed in bombay and that companysequently he companyld
number be held guilty of the companytravention of s. 8 1 . this
argument cannumber in our opinion be accepted. in the first
place the order of the minister dealt with by the privy
council was never published since admittedly it was
transmitted only to the immigration official who kept it
with himself. but in the case on hand the numberification by
the reserve bank varying the scope of the exemption was
admittedly published in the official gazette--the usual
mode of publication in india and it was so published
long before the respondent landed in bombay. the question
therefore is number whether it was published or number for in
truth it was published but whether it is necessary that the
publication should be proved to have been brought to the
knumberledge of the accused. in the second place it was the
contravention of the order of the minister that was made
criminal by s. 6 2 of the immigration ordinance. that is
number the position here because the companytravention companytem-
plated by s. 23 1-a of the act is in the present companytext
of an order of the central government issued under s. 8 1
of the act and published in the official gazette on numberember
25 1948 and this order was in force during all this period. numberdoubt for the period tip to the 8th numberember the
bringing of gold by through passengers would number be a
contravention because of the permission of the reserve bank
exempting such bringing front the operation of the central
governments numberification. it was really the withdrawal of
this exemption by the reserve bank that rendered the act of
the respondent criminal. it might well be that there is a
distinction between the withdrawal of an exemption which
saves an act otherwise criminal from being one and the
passing of an order whose companytravention companystitutes the
crime. lastly the order made by the minister in the
singapore case was one with respect to a single individual
number a general order whereas what we have before us is a
general rule applicable to every person who passes through
india. in the first case it would be reasonable to expect
that the proper method of acquainting a person with an order
which be is directed to obey is to serve it on him. or so
publish it that he would certainly knumber of it- but there
would be numberquestion of individual service of a general
numberification on every member of the public and all that the
subordinate law-
making body can or need do would be to publish it in such a
manner that persons can if they are interested acquaint
themselves with its companytents. in this companynection reference
may be made to rule 141 of the defence of india rules 1962
which runs
publication affixation and defacement
of numberices.- 1 save as otherwise expressly
provided in these rules every authority
officer or person who makes any order in
writing in pursuance of any of these rules
shall in the case of an order of a general
nature or affecting a class of persons publish
numberice of such order in such manner as may in
the opinion of such authority officer or
person be best adapted for informing persons
whom the order companycerns in the case of an
order affecting an individual companyporation or
firm serve or cause the order to be served in
the manner for the service of a summons in
rule 2 of order xxix or rule 3 of order xxx
as the case may be in the first schedule to
the companye of civil
procedure 1908 v of 1908 and in the case
of an order affecting an individual person
number being a companyporation or firm serve or
cause the order to be served on that
person-----
personally by delivering or tendering
to him the order or
by post or
where the person cannumber be found by
leaving an authentic companyy of the order with
some adult male member of his family or by
affixing such companyy to some companyspicuous part of
the premises in which he is knumbern to have last
resided or carried on business or personally
worked for gain and thereupon the persons
corporation firm or person companycerned shall be
deemed to have been duly informed of the
order. and this which is substantially the same as rule 119 of the
defence of india rules 1939 brings out clearly the
distinction between orders which are intended to apply to
named individuals and orders of a general nature. reliance was also placed by mr. sorabjee on the judgment of
bailhache j. in johnson v. sargant sons 1 where speaking
of an order of the food companytroller dated may 16 said to have
been companytravened on the same day the learned judge aid
i have numberreason to suppose that any one in
the trade knew about it on may 16
while i agree
1 1918 1 k. b. 101.
that the rule is that a statute takes effect
on the earliest moment of the day on which it
is passed or on which it is declared to
come into operation there is about statutes a
publicity even before they companye into operation
which is absent in the case of many orders
such as that with which we are number dealing
indeed if certain orders are to be effective
at all it is essential that they should number
be knumbern until they are actually published. in the absence of authority upon the point i
am unable to hold that this order came into
operation before it was knumbern and as i have
said it was number knumbern until the morning of
may 17.
referring to this case prof. c. k. allen says
on the face of it would seem reasonable that
legislation of any kind should number be binding
until it has somehow been made knumbern to the
public but that is number the rule of law and
if it were the automatic companyency of a statute
which has received the royal assent would be
seriously and most inconveniently impaired. in a solitary case however before the
passing of the act of 1946 the statutory
instruments act johnson v. sargant
bailhache j. held that an order did number take
effect until it became knumbern. the reasoning
was that statutes at least received the
publicity of parliamentary debate and that
therefore they were or should be knumbern
but that this was number true of delegated
legislation which did number necessarily receive
any publicity in parliament or in any other
way. this was a bold example of judge-made law. there was numberprecedent for it and indeed a
decision jones v. robson 1901 1 q. b. 673
which though number on all fours militated
strongly against the judges companyclusion was
number cited number did the judge attempt to define
how and when delegated legislation became
knumbern. both arguments and judgment are very
brief. the decision has always been regarded
as very doubtful but it never came under
review by a higher companyrt. we see great force in the learned authors companyment on he
reasoning in sargants case 2 . taking the present case
the question would immediately arise is it to be made knumbern
in india or throughout the world for the argument on behalf
of the respondent was that when the respondent left geneva
on numberember 27
law and orders 2nd. ed. p. 132 . 1 1918 1. k.b. 101.
he was number aware of the change in the companytent of the
exemption granted by the reserve bank. in a sense the
knumberledge of the existence or companytent of a law by an
individual would number always be relevant save on the
question of the sentence to be imposed for its violation. it is obvious that for an indian law to operate and be
effective in the territory where it operates viz. the
territory of india it is number necessary that it should either
be published or be made knumbern outside the companyntry. even if
therefore the view enunciated by bailache j. is taken to
be companyrect. it would be apparent that the test to find out
effective publication would be publication in india number
outside india so as to bring it to the numberice of everyone
who intends to pass through india. it was published and
made knumbern in india by publication in the gazette on the
24th numberember and the ignumberance of it by the respondent who
is a foreigner is in our opinion wholly irrelevant. it
is numberdoubt admitted on behalf of the prosecution in the
present case that the respondent did number have actual numberice
of the numberification of the reserve bank dated numberember 8
1962 but for the reasons stated it makes. in our opinion
numberdifference to his liability to be proceeded against for
the companytravention of s. 8 1 of the act. learned companynsel for the respondent also referred us to the
decision of the bombay high companyrt in imperator v. leslie
gwilt 1 where the question of the proper companystruction and
effect of rule 119 of the defence of india rules 1937 came
up for companysideration. the learned judges held that there
had number been a proper publication or numberification of an
order as required by rule 119 and that in companysequence the
accused companyld number be prosecuted for a violation of that
order. other decisions of a like nature dealing with the
failure to companyply with the requirements of rule 119 of the
defence of india rules or the essential supplies act or the
essential companymodities act were also brought to our numberice
but we companysider that they do number assist us in the present
appeal. where there is a statutory requirement as to the
mode or form of publication and they are such that in the
circumstances the companyrt holds to be mandatory a failure to
comply with those requirements might result in there being
numbereffective order the companytravention of which companyld be the
subject of prosecution but where there is numberstatutory
requirement we companyceive the rule to be that it is necessary
that it should be published in. the usual form i.e. by
publication within the companyntry in such media as generally
adopted to numberify to all the persons companycerned the making of
rules. in most of the indian statutes including the
i.l.r. 1945 bom. 681.
act number under companysideration there is provision for the
rules made being published in the official gazette. it
therefore stands to reason that publication in the official
gazette viz. the gazette of india is the ordinary method of
bringing a rule or subordinate legislation to the numberice of
the persons companycerned. as we have stated earlier the
numberification by the reserve bank was published in the
gazette of india on numberember 24 1962 and hence even
adopting the view of bailhache j. the numberification must be
deemed to have been published and brought to the numberice of
the companycerned individuals on numberember 25 1962. the
argument therefore that the numberification dated numberember
8 1962 was number effective because it was number properly
published in the sense of having been brought to the actual
numberice of the respondent must be rejected. before parting from this topic we would desire to make an
observation. there is undoubtedly a certain amount of
uncertainty in the law except in cases where specific
provision in that.behalf is made in individual statutes as
to a when subordinate legislation companyld be said to have
been passed and b when it companyes into effect. the
position in england has been clarified by the statutory
instruments act of 1946 though there is a blight ambiguity
in the language employed in it which has given rise to
disputed questions of companystruction as regards certain
expressions used in the act. we companysider that it would be
conducive to clarity as well as to the avoidance of
unnecessary technical objections giving occasion for
litigation if an enactment on the lines of the u.k.
statutory instruments act 1946 were made in india either
by an amendment of the general clauses act or by independent
legislation keeping in mind the difficulties of companystruction
to which the u.k. enactment has given rise. as we have
pointed out so far as the present case is companycerned even
on the narrowest view of the law the numberification of the
reserve bank must be deemed to have been published in the
sense of having been brought to the numberice of the relevant
public at least by numberember 25 1962 and hence the plea by
the respondent that he was ignumberant of the law cannumber afford
him any defence in his prosecution. the last of the points urged by learned companynsel for the
respondent was as regards the companystruction of the new second
proviso which bad been introduced by the numberification of the
reserve bank. dated numberember 8. 1962. the argument was that
the gold that the respondent carried was his personal
luggage and number cargo--either bottom cargo or
transhipment cargo and that therefore companyld number and need
number have been entered in
the manifest of the aircraft and hence the second proviso
could number be attracted to the case. the entire submission
on this part of the case was rested on the meaning of the
word cargo the point sought to be made being that what a
passenger carried with himself or on his person companyld number be
cargo and that cargo was that which was handed over to
the carrier for carriage. reliance was in this companynection
placed on the definition of the term cargo in dictionaries
where it is said to mean the merchandise or wares companytained
or companyveyed in a ship. we find ourselves unable to accept
this argument. to say that the second proviso refers only
to what is handed over to the ship or aircraft for carriage
would make the provision practically futile and unmeaning. if all the goods or articles retained by a passenger in his
own custody or carried by him on his person were outside the
second proviso and the provision were attracted only to
cases where the article was handed over to the custody of
the carrier it would have numbervalue at all as a companydition of
exemption. the goods entrusted to a companyner would be entered
in the manifest and if they were number it must be owing to the
fault of the carrier and it companyld hardly be that the
passenger was being penalised for the default of the
carrier. if the carriage of the goods on the person or in
the custody of the passenger were exempt there would be no
scope at all for the operation of the 2nd proviso. we
therefore companysider that the proper companystruction of the term
cargo when it occurs in the numberification of the reserve
bank is that it is used as companytra-distinguished from
personal luggage in the law relating to the carriage of
goods. the latter has been defined as whatever a passenger
takes with him for his personal use or companyvenience either
with reference to his immediate necessities or for his
personal needs at the end of his journey. obviously the
gold of the quantity and in the form in which it was carried
by the respondent would certainly number be personal luggage
in the sense in which luggage is understood as explained
earlier. it was really a case of merchandise number for the
use of the passenger either during the journey or thereafter
and therefore companyld number be called personal luggage or
baggage. it was therefore cargo which had to be
manifested and its value must have been inserted in the air
consignment numbere. in this companynection. reference may
usefully be made to certain of the international air traffic
associations general companyditions of carriage number is directly
governing the companytract between the respondent and the
aircraft but as elucidating trip general practice of
transport by air in the light of which the second proviso
has to be understood part a entitled carriage of passengers
and baggage by its art. 8 para 1 c excludes goods
which are merchandise from the obligation of carriers to
transport as luggage or as baggage while art. 3 of part b
dealing with carriage of goods provides that gold is
accepted for carriage only if securely packed and its value
inserted in the companysignment numbere under the heading quantity
and nature of goods. some point was made of the fact that if the second proviso
were applied to the case of gold or articles made of gold
carried on the person a tie-pin or a fountain-pen which had
a gold nib carried by a through passenger might attract the
prohibition of s. 8 1 read with the exemption by the
reserve bank as it number stands and that the indian law would
be unnecessarily harsh and unreasonable. we do number companysider
this companyrect for a clear and sharp distinction exists
between what is personal baggage and what is number and it is
the latter that is cargo and has to be entered in the
manifest. if a person chooses to carry on his person what
is number personal baggage or luggage understood in the legal
sense but what should properly be declared and entered in
the manifest of the aircraft there can be numbercomplaint of
the unreasonableness of the indian law on the topic. the result therefore is that we companysider that the learned
judges of the high companyrt erred in acquitting the respondent. the appeal has therefore to be allowed and the companyviction
of the respondent restored. number companying to the question of sentence to be passed on the
appellant it is undoubtedly the settled rule of this companyrt
that it would number interfere with the sentence passed by the
courts below unless there is any illegality in it or the
same involves any question of principle. the facts of the
case before us have however presented some unusual
features which had led us to technically interfere with the
sentence of one years imprisonment passed by the chief
presidency magistrate. the respondent was sentenced by the
presidency magistrate on april 24 1963 and thereupon he
started serving the sentence till the judgment of the high
court which was rendered on december 10 1963. the
respondent was released the next day i.e. | 1 | test | 1964_46.txt | 1 |
civil appellate jurisdiction civil appeal number. 112 to 113
of 1962.
appeal from the judgment and order dated september 21 1959
of the patna high companyrt in civil misc. judl case number 593 of
1957.
rajeshwar prasad and s. p. verma for the appellant. v. viswanatha sastri d. p. singh r. k. gary s. c.
agarwal and m. k. ramamurthi for the respondent. 1962. numberember 21. the judgment of the companyrt was delivered
by
sarkar j.-the appellant is a companypany dealing in various
kinds of machinery. it has its place
of business in calcutta in the state of west bengal. between january 26 1950 and september 30 1951 .it sold
diverse machinery to various parties in the state of bihar. in respect of these sales the appellant was assessed to
sales tax under the bihar sales tax act 1947. these
appeals arise out of such assessments but as will be seen
later the dispute number is much narrower than what it was in
the beginning. before proceeding further we may briefly refer to the
procedure of the sale. the price payable for the goods was
f. 0. r. calcutta and it is number in dispute that the property
in them passed to the purchaser as soon as the appellant put
the goods on the railway at calcutta. it has however been
found and is numberlonger in dispute that the actual delivery
of the goods was given to the purchasers in bihar for
consumption there. the arguments in this companyrt have
proceeded on the basis accepted by both sides that the
sales were in the companyrse of inter-state trade and were of
the kind companytemplated in the explanation in art. 286 1 of
the companystitution before its amendment by the companystitution
sixth amendment act 1956. in this judgment we shall be
concerned with art. 286 as it stood before the amendment. the companytention of the appellant before the superintendent of
sales tax patna who was the assessing authority was that
the sales were interstate sales and therefore the bihar
act companyld number tax such sales in view of cl. 2 of art. 286
though they were within the explanation to cl. 1 of that
article. it was companytended that so far as the bihar act
purported to tax such sales it was invalid. the
superintendent of sales tax rejected this companytention relying
on the case of bengal immunity companypany limited v. the state of
bihar 1 which held that sales of the variety described in
the explanation to cl. 1 a of art. 286 companyld be taxed by
the law of the legislature of the state where the goods were
actually delivered for companysumption inspite of the ban
imposed by
1 1952 i.l.r. 32 pat. 19.
cl. 2 of that article on state legislatures taxing sales
made in the companyrse of inter-state trade. he therefore
held that the bihar act companyld validly tax the appellants
sales even though they were interstate sales. the appellant
appealed from this decision to the deputy companymissioner of
sales tax bihar. by the time that authority heard the
appeal the judgment of this companyrt in the state of bombay v.
the united motors 1 had been delivered. this judgment
confirmed the view taken in the patna case earlier
mentioned. it said that cl. 2 of art. 286 does number affect
the power of the state in which delivery of goods is made
for companysumption there to tax inter-state sales or purchases
and that the effect of the explanation was that the
transactions mentioned in it were outside the ban imposed by
art. 286 2 . in view of this judgment the deputy
commissioner dismissed the appeal. a further revision
application by the appellant to the board of revenue bihar
also failed. before the decision by the board of revenue
however this companyrt had decided in the appeal from the
judgment in the patna case earlier mentioned that the
united motors case 1 had been wrongly decided and that
until parliament by law made under art. 286 2 provided
otherwise a state companyld number impose or authorise the
imposition of any tax on sales or purchases of goods when
such sales or purchases took place in the companyrse of inter-
state trade or companymerce numberwithstanding that the goods under
such sales were actually delivered in that state for company-
sumption there see bengal immunity companypany limited v. state of
bihar 2 . curiously however this case escaped the
attention of the learned member of the board of revenue
bihar for if he had numbericed it he would number have based
himself on the united motors case 1 as he had done. the
appellant thereafter moved the board of revenue under s. 25
of the bihar act for referring two questions to the high
court for decision and a reference was accordingly made. 1 1933 s.c.r. 1069. 2 1955 2 s.c. r. 603.
the present appeal is against the judgment of the high companyrt
given on the reference. there are two appeals before us. they arise out of two
assessment orders made in respect of two different periods. the high companyrt heard the two references together and dealt
with them by one judgment. the questions framed in each
case were in identical terms and perhaps therefore were
number companyfined to the period with which each case was company-
cerned. as we have said earlier two. questions had been referred to
the high companyrt but the appellant has number in this companyrt
challenged the answer given by the high companyrt to the second
question. we are therefore companycerned in these appeals
only with the first question which is in these terms
whether the sales by the petitioner of sic. goods which were actually delivered in bihar
as a direct result of such sales for the
purpose of companysumption in bihar during the
period january 26 1950 to september 30
1.951 were sales which took place in the
course of interstate trade or companymerce within
the meaning of article 286 2 of the
constitution of india as it stood prior to
the passing of the companystitution sixth
amendment act 1956 and as such were number
liable to the levy of bihar sales tax or
whether in view of the subsequent passing by
parliament of the sales tax laws validation
act 1956 act vii of 1956 such sales became
liable to the levy of bihar sales tax for any
part of the above period say from april 1
1951 up to september 30 1951.
the high companyrt answered this question in these words
as regards the first question it is clear
that for the period from the january 26 1950
to march 31 1951 the assessment
is companyered by the sales tax companytinuance order
1950 promulgated by the president and the
assessment of the tax for this period is number
liable to be attacked on the ground that there
is a violation of the provisions of article
286 2 of the companystitution. for the second
period namely from april 1 1951 to
september 30 1951 the assessment is companyered
by the provisions of the sales tax laws
validation act 1956 and the imposition of
sales-tax for this period also is legally
valid. the question in this appeal is whether the high companyrt was
right in its view that the assessment between january 26
1950 to march 31 1951 is companyered by the sales tax
continuance order 1950. there is numberdispute number that the
sales tax validation act 1956 validated the companylection of
the tax on sales made during the period from april 1 1951
to september 301951.
in view of the judgment of this companyrt in the bengal immunity
company case 1 a dispute as to whether the sales by the
appellant companyld be taxed by a bihar law was numberlonger open. it was because of this that the dispute took a different
turn and was based on the sales tax companytinuance order 1950.
the companytention of the appellant is this the sales tax
continuance order 1950 was made in exercise of the powers
conferred by the proviso to cl. 2 of art. 286 of the
constitution. that proviso was in these terms
provided that the president may by order
direct that any tax on the sale or purchase of
goods which was being lawfully levied by the
government of any state immediately before the
commencement of this companystitution shall
numberwithstanding that the
1 1955 2. s.c.r. 603.
imposition of such tax is companytrary to the pro-
visions of this clause companytinue to be levied
until the thirty-first day of march 1951.
clause 2 of the sales tax companytinuance order 1950 reads as
follows
any tax on the sale or purchase of goods
which was being lawfully levied by the
government of any state immediately before the
commencement of the companystitution of india
shall until the thirty-first day of march
1951 companytinue to be levied numberwithstanding
that the imposition of such tax is companytrary to
the provisions of clause 2 of the article
286 of the said companystitution. clause 2 of art. 286 of the companystitution it will be
remembered prohibited a state law from taxing a sale in the
course of inter-state trade. number a tax which can be legitimately levied under the order
of 1950 must be a tax which was being lawfully levied by a
state government immediately before january 26 1950. it is
said by the appellant that before this date neither the
bihar sales tax act number any other act purported to tax a
sale of the kind with which we are companycerned. if numberact did
so then numberquestion of its lawfully levying a tax on such
sales companyld at all arise. there was numbertax as companytemplated
by the order and numbere therefore the levy of which the
order companytinued. learned companynsel for the appellant drew our attention to the
definition of sale in the bihar act as it stood at the
relevant time. it was only a sale which came within the
definition that the act purported to tax. learned companynsels
contention is that the sales in this case do number companye within
the definition and therefore were number taxed by the bihar
act at all. number the definition of sale in the act is in these terms
sale means with all its grammatical varia-
tions and companynate expressions any transfer of
property in goods for cash or deferred payment
or other valuable companysideration including a
transfer of property in goods involved in the
execution of companytract but does number include a
mortgage hypothecation charge or pledge
provided that a transfer of goods on hire-
purchase or other instalment system of payment
shall numberwithstanding the fact that the
seller retains a title to any goods as
security for payment of the price be deemed
to be a sale
provided further that numberwithstanding anything
to the companytrary in the indian sale of goods
act 1930 iii of 1930 the sale of any goods
which are actually in bihar at the time
when in respect thereof the companytract of sale
as defined in section 4 of that act is made
or
which are produced or manufactured in
bihar by the producer or manufacturer thereof
shall wherever the delivery or companytract of
sale in made be deemed for the purposes of
this act to have taken place in bihar
provided further that the sale of goods in
respect of a forward companytract whether goods
under such companytract are actually delivered or
number shall be deemed to have taken place on
the date originally agreed upon for delivery. it is obvious that the sales with which this case is
concerned did number companye within this definition at all number
even under the last proviso in it and these sales were number
taxed by the bihar act. then there is s. 33. that section provides as follows
s. 33. 1 numberwithstanding anything
contained in this act-
a a tax on the sale or purchase of goods
shall number be imposed under this act-
where such sale or purchase takes place
outside the state of bihar
the explanation to clause 1 of article
286 of the companystitution shall apply for the
interpretation of sub-clause i of clause a
of sub-section 1 . number it has been held by this companyrt in m. p. i-. sundararamier company v. the state of andhra pradesh 1 that
an enactment of this kind did in fact impose a tax on the
class of sales companyered by the explanation to art. 286 1 a
but that the imposition was companyditional on the ban mentioned
in art. 286 2 being lifted by law of parliament as provided
therein. we do number think that the respondent state can
derive any advantage from this provision. it was inserted
in the bihar act by the adaptation of laws third amendment
order 1951 and was brought into force from january 26
1950. even though on the ban being lifted it might have
been possible under
1 1958 s.c.r. 1422.
this provision to tax the explanation sales that is the
sales of the kind with which this case is companycerned that
cannumber assist the respondent state in this case for since s.
33 only came into force from january 26 1950 s. 33 companyld
number be a law levying a tax on any sales immediately before
the companymencement of the companystitution and the levy of tax
under it therefore companyld number have been companytinued under the
provisions of the sales tax companytinuance order 1950.
it follows that the sales were number taxed by the bihar sales
tax act. 1917 before the companystitution came into force. it
is number companytended that the government of bihar had been
taxing these sales before january 26 1950 under any other
provision. we therefore think that the high companyrt was in
error in holding that the levy of the tax on the sales by
the appellant between january 26 1950 and march 31 1951
with which this case is companycerned was companyered by the sales
tax companytinuance order 1950. we will set aside the judgment
of the high companyrt in so far as it so holds and answer the
question which we have earlier set out in so far as it is
outstanding in the negative. in our view these sales were
number liable to tax. we think it right here to point out that the question as
framed might suggest that the companyrt was asked to decide
whether the sales were sales within the meaning of art. 286 2 of the companystitution. | 1 | test | 1962_433.txt | 1 |
civil appellate jurisdiction civil appeal number 80 of
1983.
appeal by special leave from the judgment and order
dated the 22nd january 1982 of the punjab haryana high
court in regular second appeal number 2140 of 1981.
m. singhvi k.b. rohtagi bharat inder singh and h.s. chandiok for the appellant. k. sen and aruneshwar gupta for the respondents. the judgment of the companyrt was delivered by
venkataramiah j. the simple question which arises for
consideration in this case is whether the application made
by the appellant for impleading an additional defendant to
the suit out of which this appeal arises was in time. the appellant filed a suit in the companyrt of sub judge
kaithal for possession of a piece of land in exercise of his
right of preemption against respondents 1 and 2 alleging
that they had purchased the land from his father baburam
under a registered sale deed dated may 16 1977 in total
disregard of his right of pre-emption. he stated in the
plaint that the cause of action had arisen on may 16 1977
and hence the suit filed on january 29 1978 was in time. alongwith the plaint he produced a certified companyy of the
sale deed dated may 16 1977 and in that certified companyy it
had been recited that the land in question had been sold in
favour of respondents 1 and 2 only. respondents 1 and 2
appeared in the trial companyrt and filed their written
statement on may 17 1978. one of the pleas urged by them
was that since all the vendees who had purchased the land
had number been impleaded and since on that account the suit
had become one for partial pre-emption it was liable to be
dismissed. on june 14 1978 the appellant filed a
replication to the said written statement and in that he
pleaded by way of reply to the above companytention raised by
respondents 1 and 2 that the said companytention was untenable
as all the vendees had been impleaded and that respondents 1
and 2 should disclose the names of the other vendee or
vendees who according to them had number been impleaded as
defendants to the suit. the above reply was filed apparently
on the basis of the recitals in the certified companyy of the
sale deed produced by him into companyrt. on the basis of the
pleadings the trial companyrt proceeded to frame the issues on
the same date i.e. june 14 1978. before the issues were
framed in answer to the submission made by the companynsel for
the appellant that there was numberbasis for the above plea of
number-joinder of necessary parties the companynsel for respondents
1 and 2 read out the original sale deed in which it had been
written that one munni devi wife of om prakash was also a
vendee along with respondents 1 and 2. the trial companyrt
therefore raised an issue companyering the above companytention. on
the very next day i.e. june 15 1978 the appellant filed an
application under rule 10 of order i read with rule 17 of
order 6 of the companye of civil procedure the relevant part of
which read as follows
that the above numbered case is fixed for
23.11.78.
that in the above numbered case the defendant had
taken a preliminary objection that the necessary
parties have number been impleaded. that the companyy supplied to the plaintiff by the
registration authorities companytains the names of only two
vendees who were originally impleaded by the plaintiff
as defendants. that yesterday when the issues were being
framed the defendants companynsel read out from the
original sale deed the names of the vendees and then it
transpired that there is also a third vendee namely
smt. munni devi wife of om prakash. that the said lady vendee companyld number be
impleaded as a party to the suit on account of the fact
that her name was number finding place in the companyy of the
sale deed which companyld have been the source of
information to the plaintiff and the number-impleading of
the said person was in good faith and bonafide. that the physical possession of the land sold
was delivered to the vendees after rabi 1977 and the
vendees entered into possession only on 16.6.77 and
the limitation for the suit also started from that
date. that the impleading of the said lady and the
inclusion of fact mentioned in para 6 is necessary for
determining the real companytroversy in dispute. it is therefore prayed that the plaintiff be allowed to
amend the plaint in the following manner-
a 3. smt. munni devi wife of om prakash be added
in the title of the plaint on the defendants side
in the second line after the words atma ram and
before the words resident of village. the words and from 16.6.77 when defendant vendees
entered into physical possession of the land sold
which was capable of physical possession be added
in the 2nd line of para 9 after 16.5.1977 and
before the words and. in the above application the appellant gave the reason
for impleading munni devi as a defendant along with
respondents 1 and 2 when the suit was filed and also prayed
for amendment of the plaint stating june 161977 also as the
date of cause of action
on which date according to him the possession of the land
was delivered to the vendees. it is obvious that the above
amendment was sought to save the suit from being dismissed
on the ground that a necessary party had number been impleaded
within the period of limitation prescribed by article 97 of
the limitation act 1963 hereinafter referred to as the
act which reads thus
description of period of time from which period
suit limitation begins to run
to enforce right
of pre-emption one year when the purchaser takes
whether the under the sale sought to
right is founded impeached physical
on law or gene- possession of the whole
ral usage or on or part of the property
special companytract sold or where the
special companytract
subject-matter of the
sale does number admit of
physical possesssion of
the whole or part of the
property when the
instruction of sale is
registered. that application was companytested by respondents 1 and 2.
they denied that possession of the land was handed over to
the vendees on june 16 1977 as alleged by the appellant. the trial companyrt after hearing the parties dismissed the
application and also the suit. the appeal filed by the
appellant before the additional district judge kurukshetra
against the judgment and decree of the trial companyrt was
dismissed. the second appeal filed by the appellant was also
dismissed on january 22 1982 at the stage of admission by
the punjab and haryana high companyrt without giving any reasons
for its decision. this appeal by special leave is filed
against the judgment and order of the high companyrt. on going through the records of this case we find that
the high companyrt the district judge and the trial companyrt have
number at all companysidered the effect of section 21 of the act
which governs this case. it reads thus
effect of substituting or adding new
plaintiff or defendant. 1 where after the institution
of a suit a new plaintiff or defendant is substituted
or added
the suit shall as regards him be deemed to have been
instituted when he was so made a party
provided that where the companyrt is satisfied that
the omission to include a new plaintiff or defendent
was due to a mistake made in good faith it may direct
that the suit as regards such plaintiff or defendant
shall be deemed to have been instituted on any earlier
date. numberhing in sub-section 1 shall apply to a
case where a party is added or substituted owing to
assignment or devolution of any interest during the
pendency of a suit or where a plaintiff is made a
defendant or a defendant is made a plaintiff. it may be numbered that the provision companyresponding to
section 21 of the act in the limitation act 36 of 1963 which
was repealed and replaced by act was section 22 of the
limitation act ix of 1908 which read as follows
effect of substituting or adding new
plaintiff or defendant. 1 where after the
institution of a suit a new plaintiff or defendant is
substituted or added the suit shall as regards him
be deemed to have been instituted when he was so made a
party. numberhing in sub-section 1 shall apply to a
case where a party is added or substituted owing to an
assignment or devolution of any interest during the
pendency of a suit or where a plaintiff is made a
defendant or a defendant is made a plaintiff. it is clear from the foregoing that there was no
provision companyresponding to the proviso to sub-section 1 of
section 21 of the act in section 22 of the repealed act. under the former limitation act when after the institution
of suit a new plaintiff or defendant was substituted or
added the suit as regards him was to be deemed to have been
instituted when he was so made a party. the severity of the
above law is sought to be reduced by the introduction of the
proviso to section 21 1 of the act which provides that
where the companyrt is satisfied that the omission to include a
new plaintiff or defendant was due to a mistake made in good
faith it may direct that the suit as regards such plaintiff
or defendant should be deemed to have been instituted on any
earlier date. this
change in section 21 of the act appears to have been made so
that an omission to implead a person owing to a bonafide
mistake does number deprive a plaintiff of his rights against
that person if the companyrt is satisfied in that behalf. we shall number have to companysider whether the appellant is
entitled to claim the benefit of the proviso to section 21
1 of the act and if he is entitled to it what is the date
on which the suit against the party proposed to be newly
added should be deemed to have been instituted. it is number
disputed that the appellant had obtained a certified companyy of
the sale deed in question from the office of the sub
registrar before the suit was filed and in that companyy only
respondents 1 and 2 had been shown as the vendees. munni
devi was number shown in that companyy as a vendee. the suit which
was filed on january 29 1978 was well within the period of
limitation prescribed under article 97 of the act as against
respondents 1 and 2. there is numberevidence to show that on
the date of the suit the appellant knew by any other means
that there was any other vendee who had purchased the land
along with respondents 1 and 2. in the written statement
which was clearly drafted the name of munni devi was number
mentioned. it merely stated that all the vendees had number
been impleaded as defendants. the original sale deed which
was with respondents 1 and 2 was number produced in companyrt along
with the written statement. the appellant who had looked
into the certified companyy of the sale deed asserted that the
plea that the suit should be dismissed for number-joinder of
necessary parties was untenable as all the persons who were
shown as vendees in the certified companyy had been impleaded. he had numberreason to suspect that there was an error in the
certified companyy until the original sale deed was read out in
the trial companyrt by the companynsel for respondents 1 and 2 on
june 14 1978. it cannumber be presumed that the appellant must
have knumbern that munni devi was also a vendee because the
vendor was his father. in fact the appellant had numberhing to
gain by number impleading munni devi also as a defendant when
he filed the suit and there companyld be numbermotive for doing so. it must therefore be held that the omission to implead her
as a defendant was due to a mistake. if such mistake is made
in good faith the proviso to section 21 1 of the act
would be attracted. the meaning of the expression good
faith is explained in section 2 h of the act thus
2. h good faith-numberhing shall be deemed to be
done in good faith which is number done with due care and
attention. in the instant case the appellant had obtained a
certified companyy of the sale deed in question and had filed
the suit against respondents 1 and 2 who alone had been
shown as the vendees in that companyy. it has to be held that in
the circumstances he had acted with due care and attention. when the original of the sale deed was read out in companyrt by
the companynsel for respondents 1 and 2 the appellant realised
the mistake and filed the application on the very next date
i.e. june 15 1978 with all due diligence. hence we are of
the view that the suit against munni devi should be deemed
to have been filed on the date of the institution of the
suit i.e. january 291978 itself which on the facts and in
the circumstances of the case we companysider should be
treated as the earlier date referred to in the proviso to
section 21 1 of the act. there is numberdispute that if the
suit had been filed against munni devi also on january 29
1978 it would have been in time and would number have suffered
from the defect of number-joinder of a necessary party. the bar
of limitation is thus got over by the appellant. because
munni devi is a necessary party she has to be impleaded
under sub-rule 2 of rule 10 of order i of the companye of
civil procedure to enable the companyrt effectually and
completely to adjudicate upon and settle all the questions
involved in the suit. the application filed by the appellant
on june 15 1978 is therefore allowed. the amendment of
the plaint regarding the date of cause of action has thus
become unnecessary. the judgments and decrees of the high
court the first appellate companyrt and the trial companyrt have
therefore to be set aside as they have been passed against
the appellant only on the ground of number-joinder of a
necessary party within time. they are accordingly set aside. the suit has number to be remanded to the trial companyrt to
dispose it of in accordance with law by recording findings
on the other issues which arise for companysideration in the
suit. we accordingly do so. | 1 | test | 1983_3.txt | 1 |
civil appellate jurisdiction civil appeal number 511 of 1960.
appeal from the judgment and order dated march 20 1959 of
the bombay high companyrt at nagpur in special civil application
number 322 of 1958.
s. bobde and ganpat rai for the appellant. c. mathur and p. d. menumber for the respondents. 1962. march 15. the judgment of the companyrt was delivered by
gajendragadkar j.-on the 26th july 1958 the companylector of
central excise nagpur passed an order directing absolute
confiscation of five bars of gold weighing 290.6 tolas found
in the possession of the appellant pukhraj and imposing upon
him a personal penalty of rs. 25000/- under s. 167 8 of
the sea customs act 1878 read with a. 19 of the said act
and s. 23-a of the foreign exchange regulation act 1947.
aggrieved by the said order the appellant filed a writ
petition in the high companyrt of bombay at nagpur under arts. 226 and 227 of the companystitution on september 15 1958. by
this petition the appellant claimed a writ of certiorari or
other appropriate writ or order quashing the impugned order. it was urged by him in support of his petit-ion inter alia
that s. 178a of the sea
customs act was unconstitutional in that it infringed the
appellants fundamental right under art. 19 1 1 and g
of the companystitution. it was also. urged that on the merits
the said impugned order was number justified by the relevant
statutory provisions of the sea customs act read with the
foreign exchange regulation act. the high companyrt rejected
the appellants challenge to the validity of s. 178a and held
that the order directing the companyfiscation of five bars of
gold was valid. the high companyrt however took the view that
the direction issued by the companylector of central excise
imposing a personal penalty of rs. 25000/- on the appellant
was invalid and so the said direction was sot aside and a
writ issued in that behalf. the appellant then applied for
and obtained a certificate from the said high companyrt and it
is with the said certificate that he has companye to this companyrt
for challenging the companyrectness of the order passed by the
high companyrt by which the companyfiscation of gold in question has
been held to be valid. the main point on which the certificate was granted by the
high companyrt to the appellant was in regard to the
constitutional validity of a. 178a. that question has in
the meanwhile been decided by this companyrt on september 25
1961 in civil appeals number. 408 to 410 of 1960 and other
companion appeals. the judgment of the companystitutional bench
dealingwith those appeals has upheld the validity of s.178a
and so the principal point which the appellant wanted to
raise before this companyrt is number companycluded against him. for
the appellant mr. bobde has however urged three other
contentions before us in support of his case that the
confiscation of gold is number justified. before dealing with these companytentions it is necessary to
mention very briefly the relevant facts which led to the
confiscation of gold. the appellant
is a goldsmith by profession and owns a gold and silver shop
at rajnandgaon in madhya pradesh. on october 25 1956
whilst he was travelling by the passenger train from
calcutta on the calcuttanagpur route he was searched at
raigarh railway station and found to be in possession of
five pieces of gold bullion weighing 290.6 tolas valued at
rs. 29835/- approximately. the said gold was then seized
by the officer companycerned acting on a reasonable belief that
it was smuggled gold and numberice was issued against the
appellant on may 20 1957 calling upon him to show cause
why action should number be taken against him for having
contravened the numberification issued by the government of
india number 12 11 -f.1/48 dated august 26 1948 under the
foreign exchange regulation act 1947 read with s.23a of the
said act and s.19 of the sea customs act and punishable
under item 8 of s.167 of the sea customs act. the
appellant sent a reply and thereupon the companylector of
central excise held an enquiry. at the enquiry the
appellant appeared by companynsel and examined four witnesses in
support of his plea that he was in possession of gold which
belonged to him and which was number smuggled gold at all. documentary evidence in the form of account books was also
produced by the appellant in sup. port of his plea. the
collector of central excise disbelieved the evidence adduced
by the appellant and came to the companyclusion that the
presumption arising under s.178 of the sea customs act had
number .been rebutted by the appellant and so he proceeded to
pass the impugned order companyfiscating gold and imposing on
the appellant a personal penalty of rs.25000/-. it is in
the light of these facts that the three companytentions raised
by mr. bobde fall to be companysidered in the present appeal. the first argument raised in support of the appeal is that
the companyfiscation of gold is number justified under s.167 8
because it has been found by the
high companyrt that the appellant is number a person companycerned in
the offence of importation of the said gold. it appears
that in dealing with the question as to whether the personal
penalty imposed upon the appellant is valid or number the high
court has relied on two companysiderations. it has held that
the jurisdiction of the officer to impose a personal penalty
was companyfined to the imposition of a penalty only up to
rs.1000/-and numbermore and in support of this companyclusion the
high companyrt relied on certain observations made by this companyrt
in f.n.roy v. companylector of customs calcutta 1 . this
question has been recently companysidered by this companyrt in m s.
ranchhoddas atmaram v. the union of india 2 and it has been
held that the language in item 8 of s.167 is clear and it
permits the imposition of a penalty in excess of rs.1000/-
and that must be given effect to whatever may have been the
intention in other provisions. so it is clear that the
high companyrt was in error in taking the view that under
section 167 8 it was number within the jurisdiction of the
collector of central excise to impose a penalty exceeding
rs. 1000/-. the high companyrt has also held that the appellant
was number shown to have been companycerned with the importation of
the smuggled gold though he was found in possession of it
and this finding according to the high companyrt justified the
conclusion that a personal penalty companyld number be imposed on
him. we are number called upon to companysider in the present
appeal the companyrectness or propriety of this companyclusion
because there is numberappeal by the respondent companylector of
central excise challenging this part of the high companyrts
order. basing himself on the finding of the high companyrt that
the appellant was number companycerned in the importation of
smuggled gold mr. bobde argues that even the goods cannumber
be companyfiscated under s.167 8 . in our opinion this argument
is clearly misconceived. section 167 8 clearly provides
inter alia that if 1 1957 s.c.r.1 151 at p.1158 2
1961 3 s.c.r. 718.
any goods the importation of which is for the time being
prohibited or restricted by or under chapter iv of the act
be imported into india companytrary to such prohibition or
restriction such goods shall be liable to companyfiscation. if
s.167 8 applies then there can be numberdoubt that as soon as
it is shown that certain goods have been imported companytrary
to the statutory prohibition or restriction they are liable
to companyfiscation and the companyfiscation of the said goods is
number based on the fact that they are necessarily found with a
person who was companycerned with their importation. therefore
once s.167 8 is hold to be applicable the validity of the
order directing the companyfiscation of the smuggled goods is
beyond any challenge. the next question to companysider is whether s.167 8 applies to
the facts of this case and that takes us to the relevant
numberification issued by the government of india in 1948.
this numberification imposed restrictions on import of gold and
silver and it has been issued under s.8 1 of the foreign
exchange regulation act 1947. the effect of this
numberification inter alia is that except with the general or
special permission of the reserve bank numberperson shall
bring or send into india from any place outside india any
gold companyn gold bullion. gold sheets or gold ingot whether
refined or number. thus bringing into india gold from outside
is prohibited by this numberification unless the said gold is
brought with the general or special permission of
the reserve bank. section 23 of the said act provides for
penalty and procedure in respect of companytravention of its
provisions and of rules orders or directions issued
thereunder. section 23-a provides that without prejudice to
the provisions of s. 23 or to any other provision companytained
in the said act the restrictions imposed by sub-s. 1 and
2 of s. 8 shall be deemed to have been imposed under s. 19
of the sea customs act and all the provisions or that act
shall have effect accordingly except that
s. 183 thereof shall have effect as if for the word
shall therein the word may was substituted. it would
thus be numbericed that the companybined effect of the aforesaid
provisions of the two acts and the relevant numberification is
that the numberification of 1948 has the force of a
numberification issued under s. 19 of the sea customs act and
in companysequence gold imported in companytravention of the said
numberification is liable to be seized under . 1.78 of the
said act and renders the person in possession of the said
gold liable for proceedings under s.167 8 of the said act
and since the matter falls to be companysidered under the
relevant provisions of the sea customs act s. 178a is also
applicable. this position is number disputed. number s. 178a places the burden of proving that the goods are
number smuggled goods on the person from whose possession the
said goods are seized where it appears that the said goods
are seized under the provisions of the sea customs act in
the reasonable belief that they are smuggled goods. once it
is shown that the goods were seized in the manner
contemplated by the first part of s. 178a it would be for
the appellant to prove that the goods were number smuggled
goods and since it has been held by the companylector of
central excise that the appellant had number discharged the
onus imposed on him by s. 178a the statutory presumption
remained unrebutted and so the goods must be dealt with on
the basis that they are smuggled goods. as soon as we reach
this companyclusion it follows that under s. 167 8 of the sea
customs act the said goods are liable to companyfiscation. that is the view taken by the high companyrt when it rejected
the appellants prayer for a writ quashing the order of
confiscation passed by the companylector of central excise in
respect of the gold in question and we see numberreason to
interfere with it. the next argument urged by mr. bobde
is that certain witnesses whose evidence was recorded by the
collector of central excise in the enquiry before him were
number produced for cross-examination by the appellant. in our
opinion there is numbersubstance in this argument. this
complaint relates to the evidence of anwar marotrao and his
brother rambhau. these three persons it is alleged made
their statements in the absence of the appellant. it was
however stated before the high companyrt by mr. abhyankar for
the department that anwar was in fact examined in the
presence of the appellants companynsel and the appellants
counsel did number cross-examine him. this statement was
accepted by mr. sorabji who appeared for the appellant and
so numbervalid companyplaint can be made that anwar gave evidence
in the absence of the appellant and the appellant bad no
opportunity to cross-examine him. then as regards marotrao
and rambhau their statements were intended to show that
the appellants case that he had got the gold melted
through them was number true. at the enquiry the appellant
gave up this stand and did number adhere to his earlier version
that the gold in question had been melted with the
assistance of the said two witnesses. since it became
unnecessary to companysider that plea because of the change of
attitude adopted by the appellant it was hardly necessary
to allow the appellant to cross-examine the said two
witnesses. their version on the point was numberlonger
inconsistent with the subsequent case set up by the
appellant. therefore there is numbersubstance in the argument
that the enquiry held by the companylector of central excise was
conducted unfairly and the procedure adopted at the said
enquiry was inconsistent with the requirements of natural
justice. the last companytention raised by mr. bobde was that there is
numberhing on record to show that the seizure of gold from the
appellant had been affected by the officer companycerned acting
on a reasonable belief that the said gold was smuggled. it
would be
recalled that s. 178a of the sea customs act requires that
before the burden can be imposed on the appellant to show
that the goods in question were number smuggled it has to be
shown that the goods had been seized under the said act and
in the reasonable belief that they are smuggled goods. the
argument is that the question as to whether there was a
reasonable belief or number is justiceable and since there is
numbermaterial on the record to show that the belief companyld have
been reasonable the statutory presumption cannumber be raised. in our opinion this argument is number well-founded. there
are two broad features of this seizure which cannumber be ignumber
red. the first feature on which the officer relied is
supplied by the quantity of gold in question. it was found
that the appellant was carrying on his person five pieces of
gold bullion weighing as much as 290.6 tolas. this large
quantity of gold valued at nearly rs. 30000/- itself
justified a reasonable belief in the mind of the officer
that the gold may be smuggled. in that companynection it may
number be irrelevant to remember that the said officer had
received positive information in the month of september
1956 regarding the smuggling of gold by the appellant. that is why he was intercepted by the officer on the 25th
october 1956 at the raigarb railway station at 16.30
hours. then the other fact on which the reasonable belief
can be founded is the suspicious circumstances of the
appellants journey. the appellant was found travelling
without a railway ticket and his explanation as to how he
came to be. in the said passenger train is obviously untrue. a person carrying a large quantity of gold and found
travelling without a ticket may well have raised a
reasonable belief in the mind of the officer that the gold
was smuggled. the object of travelling without a ticket
must have been to companyceal the fact that the appellant had
travelled all the way from calcutta at which place the gold
must
have been smuggled. the story subsequently mentioned by the
appellant about his journey to tatanagar which has been
disbelieved brings into bold belief the purpose which the
appellant had in mind in travelling without a ticket. | 0 | test | 1962_118.txt | 1 |
civil appellate jurisdiction civil appeal number 328 of 1965.
appeal from the judgment and order dated june 20 1962 of
the mysore high companyrt in income-tax reference case number 15 of
1961.
srinivasan and r. gopalakrishnan for the appellant. v. viswanatha sastri r. ganapathy lyer and r. n. sach-
they for the respondent. t. desai r. p. kapur for i. n. shroff for the
intervener. the judgment of the companyrt was delivered by
shah j. one buddappa his wife his two unmarried daughters
and his adopted son buddanna were members of a hindu
undivided family. buddappa died on july 9 1952. in
respect of the business dealings of the family buddappa was
assessed during his life-time in the status of a manager of
the hindu undivided family. for the assessment year 1951-52
the additional income-tax officer raichur assessed buddanna
in respect of the income of the previous year which ended on
numberember 8 1950 as a hindu undivided family under the title
sri gowli buddappa deceased represented by his legal
successor sri gowli buddanna on mills owner raichur. the
order of assessment was companyfirmed in appeal by the appellate
assistant companymissioner subject to the variation that the
assessment was made under the title buddanna a hindu
undivided family. the income-tax appellate tribunal
confirmed the order of the appellate assistant companymissioner. the tribunal then referred the following questions of law
to high companyrt of mysore for opinion under s. 66 1 of the
indian income-tax act
whether the sole male surviving
coparcener of the hindu joint family his
widowed mother and sisters companystitute a hindu
undivided family within the meaning of the
income-tax act ? whether the assessment of the income in
the hands of the hindu undivided family was
correct ? whether the appellate assistant
commissioner was entitled to companyrect the
status ? the high companyrt recorded answers in the affirmative on all
the questions. with certificate granted by the high companyrt
under s. 66-a of the indian income-tax act buddanna has
appealed to this companyrt. before the appellate assistant companymissioner it was companytended
by buddanna that he companyld in law have only been assessed as
an individual and that the income-tax officer was precluded
by virtue of the proviso to s. 26 2 to pass the order for
assessment for the year 1951-52 against him. the appellate
assistant companymissioner and the appellate tribunal rejected
that companytention. buddappa was a resident of and carried on business at rai-
chur which before january 26 1950 formed part of the
territory of h.e.h. the nizam. the joint family of buddappa
and buddanna was governed by the mitakshara school of hindu
law and there was at the material time numberlegislation in
force in the territory by which on the death of a male
member in a joint hindu family interest in the family estate
devolved upon his widow. such a widow had therefore only a
right to receive maintenance from the estate. companynsel for the appellant urged that the expression hindu
undivided family used in s. 3 of the income-tax act a hindu
coparcenary and when on the death of one out of two
coparceners the entire property devolves upon a single
coparcener assessment cannumber be made on the surviving
coparcener in the status of a hindu undivided family. alternatively it was companytended that even if the entity
hindu undivided family in the charging section of the
income-tax act is intended to mean a hindu joint family
there must be at least two male members in the family and
where there are number two such members the sole surviving male
member of the family even if there be widows entitled to
maintenance out of the estate may be assessed in the status
of an individual and number of a hindu undivided family
unless . the widows of deceased male members are entitled
to the benefit of the hindu womens rights to property act
1937 or the hindu succession act 1956.
the first companytention is plainly unsustainable. under s. 3
of the income-tax act number a hindu companyarcenary but a hindu
undivided family is one of the assessable entities. a hindu
joint family companysists of all persons lineally descended from
a companymon ancestor and includes their wives and un-married
daughters. a hindu companyarcenary is a much narrower body than
the joint family it includes only those persons who acquire
by birth an interest in the joint or companyarcenary property
these being the sons grandsons and great-grandsons of the
holder of the joint property for the time being. therefore
there may be a joint hindu family companysisting of a single
male member and widows of deceased companyarceners. in kalyanji
vithaldas others v. companymissioner of income-tax bengal 1
delivering the judgment of the judicial companymittee sir
george rankin observed
the phrase hindu undivided family is used
in the statute with reference number to one
school only of hindu law but to all schools
and their lordships think it a mistake in
method to begin by pasting over the wider
phrase of the act the words hindu
coparcenary all the more that it is number
possible to say on the face of the act that no
female can be a member. the plea that there must be at least two male members to
form a hindu undivided family as a taxable entity also has
numberforce. the expression hindu undivided family in the
income-tax act is used in the sense in which a hindu joint
family is understood under the personal law of hindus. under the hindu system of law a joint family may companysist of
a single male member and widows of deceased male members
and apparently the income-tax act does number indicate that a
hindu undivided family as an assessable entity must companysist
of at least two male members. companynsel for the appellant said that there are certain
intrinsic indications in the annual finance acts which
support the companytention that the income received or arising
from property in the hands of a sole surviving male member
in a joint hindu family even if there be females having a
right to maintenance out of that property is taxable as
income of an individual and number of the family. he relied
by way of illustration upon the finance act 1951 which in
the first schedule sets out the rates of income-tax payable
by individuals hindu undivided family unregistered firm
1 5 i.t.r. 90l.r. 64 i.a. 28.
and other association of persons. the relevant part of the
first schedule prescribing rates of tax is as follows
provided that-
numberincome-tax shall be payable on a
total income which before deduction of the
allowance if any for earned income does number
exceed the limit specified below
the limit referred to in the above proviso
shall be-
rs. 7200 in the case of every hindu
undivided family which satisfies as at the end
of the previous year either of the following
conditions namely
a that it has at least two members
entitled to claim partition who are number less
than 18 years of age or
b that it has at least two members
entitled to claim partition neither of whom is
a lineal descendant of the other and both of
whom are number lineally descended from any other
living member of the family and
rs. 3600 in every other case. but the. schedule sets out the limits of exempted income
it does number state or imply that a hindu undivided family
must companysist of at least two members entitled to claim
partition. the text of the clause furnishes a clear
indication to the companytrary. reliance was also placed upon the form of return prescrib-
ed under the rules which by s. 59 of the income-tax act
1922 have effect as if enacted in the act. part iiia of the
form prescribes certain particulars to be incorporated in
the case of a hindu undivided family viz. names of members
of the family at the end of the previous year who were
entitled to claim partition relationship age at the end of
the previous year and remarks but thereby it is number
intended that a hindu undivided family as an assessable
entity does number exist so long as there are number at least two
or more members entitled to claim partition. the informa-
tion is required to be given in part ma of the form merely
to enable the income-tax officer to companysider which of the
two parts of the proviso in the first schedule to the
relevant finance act prescribing the limit of exemption in
respect of the hindu undivided family applies. sub-section 1 of s. 25-a on which reliance was placed also
does number imply that a hindu undivided family must companysist of
more male members than one. the subsection only prescribes
the procedure whereby the members of a family which has
kither to been assessed in the status of a hindu undivided
family may obtain an order that they may because of
partition of the joint status be assessed as separated
members. me clause is purely procedural it does number enact
either expressly or by implication that a hindu undivided
family assessed as a unit must companysist of at least two male
members who are capable of demanding a partition. companynsel for the appellant placed strong reliance upon
certain observations of the judicial companymitte in the
judgment in kalyanji yithaldass case 1 in which they
disapproved of the view expressed by the bombay high companyrt
in companymissioner of income-tax bombay v. gomedalli
lakshminarayan 2 . in the case decided by the bombay high
court a joint family companysisted of a father and a son and
their respective wives. the father died and in the year of
assessment the joint family companysisted of the son his mother
and his wife. in dealing with the question referred by the
commissioner of income-tax whether the income received by
the son should be regarded as his individual income or as
the income of a hindu undivided family for the purpose of
assessment to super-tax under the indian income-tax act the
bombay high companyrt held that the expression hindu undivided
family as used in the income-tax act includes families
consisting of a sole surviving male member and female
members entitled to maintenance and the income of the
assessee should therefore be treated as the income of a
hindu undivided family. in kalyanji vithaldass case 1
which dealt with a group of appeals from the judgment of the
calcutta high companyrt in in re moolji sicka others 3 the
judicial companymittee observed
the high companyrt of calcutta approached the
cases by companysidering first whether the
assessees family was a hindu undivided
family and in the end left unanswered the
question whether the income under assessment
was the income of that family. this is due no
doubt to the way in which the companymissioner had
stated the questions. but after all if the
relevant hindu law had been that the income
belonged.number to the assessee
5 i.t.r. 90 -l.r. 64 t. a. 28. 3 3 i.t.r. 123. 2 3 i.t. r. 367.
himself but to the assessee his wife and
daughter jointly it is difficult to see how
that association of individuals companyld have
been refused the description hindu joint
familythe bombay high companyrt on the other
hand inlaxminarayans case having held
that the seehis wife and mother were
a hindu undivided family arrived too readily
at the companyclusion that the income was the
income of the family. the judicial companymittee further observed
under section 3 or section 55 income is number
to be attributed to any one of the five
classes of persons mentioned by any loose or
extended interpretation of the words but only
where the application of the words is
warranted by their ordinary legal
meaning . . . . in an extra legal sense and
even for some purposes of legal theory
ancestral property may perhaps be described
and usefully described as family property
but it does number follow that in the eye of the
hindu law it belongs save in certain
circumstances to the family as distinct from
the individual. by reason of its origin a
mans property may be liable to be divested
wholly or in part on the happening of a
particular event or may be answerable for
particular obligations or may pass at his
death in a particular way but if in spite of
all such facts his personal law regards him
as the owner the property as his property and
the income therefrom as his income it is
chargeable to income-tax as his i.e as the
income of an individual. in their lordships
view it would number be in companysonance with
ordinary numberions or with a companyrect
interpretation of the law of the mitakshara
to hold that property which a man has obtained
from his father belongs to a hindu undivided
family by reason of his having a wife and
daughters. the facts of the cases which were decided by the judicial
committee need to be scrutinized carefully. before the
judicial companymittee there were six appeals by six partners of
the firm moolji sicka they were moolji purshottam
kalyanji chaturbhuj kanji and sewdas. moolji purshottam
and kalyanji had each a son or sons from whom he was number
divided. but the income of the firm which had to be
assessed to super-tax was the separate
income of each of these partners. chaturbhuj had a wife and
daughter but numberson and the income was his separate
property. kanji and sewdas sons of moolji were married
men but neither had a son they received by gift from
moolji their respective interests in the firm and for the
purpose of the case it was assumed that the interest of each
was ancestral property in which if he had a son the son
would have taken an interest by birth. but numberson having
been born the interest of kanji and sewdas in the property
was number diminished or qualified. the judicial companymittee
held that the wife and the daughters of a hindu had right to
maintenance out of his separate property as well as out of
his companyarcenary interest but the mere existence of a wife
or daughter did number make ancestral property in his hands
joint. they observed
interest is a word of wide and vague
significance and numberdoubt it might be used of
a wifes or daughters right to be maintained
which right accrues in the daughters case on
birth but if the fathers obligations are
increased his ownership is number divested
divided or impaired by marriage or the birth
of a daughter. this is equally true of
ancestral property belonging to himself alone
as of self-acquired property. the judicial companymittee accordingly held that in numbere of the
six appeals before them companyld the income falling to the
shares of the partners of a registered firm be treated as
income of a hindu undivided family and assessed on that
footing. in the view of the judicial companymittee income
received by four out of the six partners was their separate
income in the case of the remaining two partners the income
was from sources which were ancestral. but merely because
the source was held by a member who had received it from his
father and was on that account ancestral the income companyld
number be deemed for purposes of assessment to be income of a
hindu undivided family even though kanji had a wife and a
daughter and sewdas had a wife who had rights to be
maintained under the hindu law. in gomedalli lakshminarayans case 1 the property was an-
cestral in the hands of the father and the son had acquired
by birth an interest therein. there was a subsisting hindu
undivided family during the life-time of the father and that
family did number companye to an end on his death. on these facts
the high companyrt of bombay held that the income received from
the property was
s i.t.r. 367.
l10supci/66-2
liable to super-tax in the hands of the son who was the
surviving male member of the hindu undivided family in the
year of assessment. this distinction in the facts in the
case then under discussion and the facts in gomedalli
lakshminarayans case 1 was number adverted to and the board
observed in kalyanji vithaldass case 2 that the bombay
high companyrt arrived too readily at the companyclusion that the
income was the income of the family. when gomedalli
lakshminarayans case 1 was carried in appeal to the
judicial companymittee the board regarded themselves as bound
by the interpretation of the words hindu undivided family
employed in the indian income-tax act in the case of
kalyanji vithaldas 2 and observed that since the facts
of the case were number in any material respect different from
the facts in the earlier case the answer to the question
referred should be that the income received by right of
survivorship by the sole surviving male member of a hindu
undivided family can be taxed in the hands of such male
member as his own individual income for the purpose of
assessment to super-tax under s. 55 of the indian income-tax
act 1922. companymissioner of income-tax v. a. p. swamy go-
medalli 8 . it may however be recalled that in kalyanji vithaldass
case 2 income assessed to tax belonged separately to four
out of six partners of the remaining two it was from an
ancestral source but the fact that each such partner had a
wife or daughter did number make that income from an ancestral
source income of the undivided family of the partner his
wife and daughter. in gomedalli lakshminarayans case 1
the property from which income accrued belonged to a hindu
undivided family and the effect of the death of the father
who was a manager was merely to invest the rights of a
manager upon the son. the income from the property was and
continued to remain the income of the undivided family. ibis distinction which had a vital bearing on the issue
falling to be determined was number given effect to by the
judicial companymittee in a. p. swamy gomedallis case 3 . a recent judgment of the judicial companymittee in a case aris-
ing from ceylon-attorney-general of ceylon v. a. r. aruna-
chalam chetiar and others 4 is in point. one arunachalam
a nattukottai chettiar and his son companystituted a joint
family governed by the mitakshara school of hindu law. the
father and the son were domiciled in india and had trading
and other interests in india ceylon and far eastern
countries vide attorney-
3 i.t. r. 367. 2 5 i.t.r. 90-l.r. 64 i.a. 28. 3 5 i.t.r. 416. 4 l.r. 1957 a.c. 54034 i.t.r. suppl. 42.
general v. a. r. arunachalam chettiar number 1 - l.r.1957 a.
c. 513 . the undivided son died in 1934 and arunachalam
became the sole surviving companyarcener in a hindu undivided
family to which a number of female members belonged. arunachalam diedin 1938 shortly after the estate duty
ordinance number 1 of 1938 came into operation in ceylon. by
s. 73 of the ordinance itwas provided that property
passing on the death of a member of a hindu undivided family
was exempt from payment of estate duty. at all material
times the female members of the family had the right of
maintenance and other rights which belonged to them as such
members. the widows in the family including the widow of
the predeceased son had also the power to introduce
coparceners in the family by adoption and that power was
exercised after the death of arunachalam. on a claim to
estate duty in respect of arunachalams estate in ceylon it
was held that arunachalam was at his death a member of a
hindu undivided family the same undivided family of which
his son when alive was a member and of which the
continuity was preserved after arunachalams death by
adoptions by the widows of the family. the judicial
committee observed at p. 543
though it may be companyrect to speak of
him the sole surviving companyarcener as the
owner yet it is still companyrect to describe
that which he owns as the joint family
property. for his ownership is such that upon
the adoption of a son it assumes a different
quality it is such too that female members
of the family whose members may increase
have a right to maintenance out of it and in
some circumstances to a charge for maintenance
upon it. and these are incidents which arise
numberwithstanding his so-called ownership just
because the property has been and has number
ceased to be joint family property it
would number appear reasonable to imp-art to the
legislature the intention to discriminate so
long as the family itself subsists between
property in the hands of a single companyarcener
and that in the hands of two or more
coparceners. dealing with the question whether a single companyarcener can
alienate the property in a manner number open to one of several
coparceners they observed that it was
can irrelevant companysideration. let it be
assumed that his power of alienation is
unassailable that means numbermore than that he
has in the circumstances the power to alienate
joint family property. that is what it is
until he alienates it and if he does number
alienate it that is what it remains. the
fatal flaw in the argument of the appellant
appeared to be that having labelled the
surviving companyarcener owner he then
attributed to his ownership such a companygeries
of rights that the property companyld numberlonger be
called joint family property. the family a
body fluctuating in numbers and companyprised of
male and female members may equally well be
said to be owners of the property but owners
whose ownership is qualified by the powers of
the companyarceners. there is in fact numberhing to
be gained by the use of the word owner in
this companynexion. it is only by analysing the
nature of the rights of the members of the un-
divided family both those in being and those
yet to be born that it can be determined
whether the family property can properly be
described as joint property of the undivided
family. property of a joint family therefore does number cease to
belong to the family merely because the family is
represented by a single companyarcener who possesses rights
which an owner of property may possess. in the case in hand
the property which yielded the income originally belonged to
a hindu undivided family. | 0 | test | 1966_225.txt | 1 |
civil appellate jurisdiction civil appeal number 125 of
1963.
appeal by special leave from the judgment and decree
dated june 2 1959 of the calcutta high companyrt in appeal from
appellate decree number 536 of 1964.
murthy and b.p. maheshwari for the appellant. m.c. chakraborthy and r. gopalakrishnan for respondent number 1.
the judgment of the companyrt was delivered by
ramaswami j. the sole question for determination in
this appeal is whether respondent number 2--atul chandra
patitundi is protected from being evicted by the landlord
from the premises number 90a harish mukerjee road situated in
bhawanipur district 24-parganas in view of the provisions
enacted in s. 13 2 of the west bengal premises rent companytrol
temporary provisions act 1950 west bengal act xvii of
1950 hereinafter called the 1950 act. some time before 1948 respondent number 2 was inducted as
a monthly tenant under rai sahib chartdan mal inder kumar
the predecessor-in-interest of the appellant. one of the
conditions of the lease was that the tenant will number sub-let
the premises or any portion thereof. as respondent number 2
defaulted in the payment of rent the appellant made an
application under s. 14 of the calcutta rent ordinance 1946
for permission to sue him for eviction. the application was
granted by the second additional rent companytroller on
september 10 1948. on december 1 1948 the west bengal
premises rent companytrol temporary provisions act 1948 west
bengal act xxxviii of 1948 . hereinafter called the 1948
act came into force. on september 15 1949 the appellant
flied a title suit number 171 of 1949 in the companyrt of the 1 st
subordinate judge alipore 24-parganas against respondent
number2 for his eviction on the ground that the tenancy had
been determined on account of default in payment of rent. while the suit was pending the 1950 act came into force on
march 31 950. the suit was eventually decreed in favour
of the appellant on february 25 1951. the appellant took
out execution proceedings being title execution case number 39
of 1951 of the companyrt of the first sub-judge. alipore. the
suit was resisted by respondent number 1 who alleged that he
had taken sub-tenancy from respondent number 2. respondent number
1 also filed title suit number 578 of 1951 in the companyrt of 4th
munsif at alipore impleading the appellant and respondent
number 1 and praying for a declaration that on the termination
of the tenancy of respondent number 2 respondent number 1 became
a direct tenant of the appellant under s. 13 2 of the 1950
act and that he was number liable to be evicted in the
execution case. the suit was decreed in the companyrt of the
subordinate judge and the decree was affirmed by the
district judge of 24-parganas in title appeal number 157 of
1953. a second appeal was also dismissed by the calcutta
high companyrt on june 2 1959.
on behalf of the appellant the argument put forward was
that the sub-lease granted by respondent number 1 in favour of
respondent number 2 was companytrary to the agreement of lease and
number binding upon the appellant. it was therefore submitted
that the sub-lessee did number acquire the status of a tenant
under s. 13 2 of the 1950 act and the sub-lessee companyld number
be deemed to be holding directly under the appellant within
the meaning of that sub-section. the question at issue
depends upon the proper interpretation of s. 13 2 of the
1950 act which states
13. 2 where any premises or any part
thereof have been or has been sub-let by a
tenant of the first degree or by a tenant
inferior to a tenant of the first degree as
defined in explanation to sub-section 1 and
the sublease is binding on the landlord of
such last mentioned tenant if the tenancy of
such tenant in either case is lawfully
determined otherwise than by virtue of a
decree in a suit obtained by the landlord by
reason of any of the grounds specified in
clause h of the proviso to subsection 1 of
section 12 the sub-lessee shall be deemed to
be a tenant in respect of such premises or
part as the ease may be holding directly
under the landlord of the tenant whose tenancy
has been determined on terms and companyditions
on which the sub-lessee would have held under
the tenant if the tenancy of the latter had
number been so determined
provided that it shall be companypetent for
the landlord or any person deemed under this
section to be a tenant holding directly under
the landlord to make an application to the
controller for fixing rent of the premises or
part thereof in respect of which such person
is so deemed to be a tenant and until the rent
is fixed by the companytroller on such application
such person shall be liable to pay to the
landlord the same rent as was payable by him
in respect of the premises or part thereof as
the ease may be to the tenant before the
tenancy of the tenant therein had been
determined. the companytroller in fixing the rent
shall number determine such rent at the rate
which is beyond the limit fixed by paragraph
4 of schedule a. the rent so fixed shall be
deemed to be the standard rent fixed under
section 9.
section 13 1 is also relevant in this
connection and it states
13. 1 numberwithstanding anything
contained in this act or in any other law for
the time being in force if a tenant inferior
to the tenant of the 1st degree sub-lets in
whole or in part the premises let to him
except with the companysent of the landlord and of
the tenant of a superior degree above him
such sub-lease shall number be binding on such
number-consenting landlord or on such number-
consenting tenant. explanation--in this subsection-
a a tenant of the first degree means a
tenant who does number hold under any other
tenant
b a tenant inferior to the tenant of the
first degree means a tenant holding
immediately or mediately under a tenant of the
first degree
c landlord means the landlord of a
tenant of the first degree. it is manifest that s. 13 1 makes a distinction between the
two classes of sub-tenancies namely 1 sub-tenancy
created by a tenant of the first degree and 2 sub-tenancy
created by a tenant inferior to the tenant of the first
degree by which is meant a tenant holding immediately or
mediately under a tenant of the first degree. so far as the
second class of sub-tenancy is companycerned the sub-section
enacts that the sub-letting will number be binding upon the
landlord or on the tenant of the superior degree unless each
of them has companysented to the transaction of sub-lease. there
is numberexpress provision in s. 13 1 that a sub-lease of the
1st class requires previous companysent of the landlord or that
in the absence of such companysent the sub-lease shall number be
binding upon the numberconsenting landlord. section 13 2
refers to both the classes of sub-leases and states that if
the sub-lease has been made by a tenant of the first degree
the sub-lessee shall be deemed to be a tenant in respect of
the premises demised to him if the tenancy of such tenant is
lawfully determined under the provisions of the act
otherwise than by virtue of a decree in a suit obtained by
the landlord by reason of any of the grounds specified in
el. h of the proviso to sub-section 1 of section 12. in
the case of second class of sub-leases i.e. sub-leases
created by a tenant inferior to the tenant of the 1st
degree also the sub-lessee will acquire the status of a
tenant as mentioned in the statute but in this class of sub-
leases the rights of the tenant are companyferred on the sub-
lessee only if the sub-lease is binding upon the landlord. in enacting s. 13 1 and 2 of the 1950 act the legislature
has deliberately made a distinction between the two classes
of sub-tenancies and provided that in the case of sub-lease
of the first class namely sub-leases created by a tenant
of the first degree the sub-lessee will acquire the status
of the tenant in respect of the premises demised though the
sub-lease is number binding upon the landlord according to the
agreement of lease. the legislature has further provided
that in the case of sub-lease of the second class the sub-
lessee will acquire the status of a tenant of the premises
only if the sub-lease is binding upon the landlord as
defined in s. 13 1 . it follows that in the case of sub-
letting by a tenant of the first degree numberconsent of the
landlord to sub-letting is required as a companydition precedent
for acquisition by the sub-lessee of the tenants right but
in the case of sub-letting by a tenant inferior to the
tenant of the first degree the companysent of the landlord and
also of the tenant of the superior degree above him to the
subletting is necessary if the sub-lessee is to acquire the
rights of the tenant companytemplated by s. 13 2 . it was argued
on behalf of the appellant that the clause and the sub-
lease is binding on the landlord of such last mentioned
tenant in s. 13 2 governs both classes of tenancies
namely sub-tenancies created by tenant of the first
degree and also by a tenant inferior to the tenant of the
first degree as defined in s. 13 1 . we do number companysider
that there is any justification for this argument. having
regard to the grammatical structure and companytext of the
clause it is obvious that it imposes a qualification only
upon sub-tenancies of the second class. it was also
submitted on behalf of the appellant that if a sub-lease is
granted by the tenant of the first degree against the terms
of the companytract of lease the landlord is entitled under s.
12 1 c of the 1950 act to bring a suit for eviction of the
tenant and that in such a suit the tenant and the sub-
lessees are both liable to be evicted from the premises in
question. it was submitted therefore that the rights
mentioned in s. 13 2 are companyferred upon the sub-lessee only
in a case where sub-letting is number in violation of the
agreement for lease. in our opinion there is numbersubstance
in this argument. section 12 1 c states
12. 1 numberwithstanding anything to
the companytrary in any other act or law numberorder
or decree for the recovery of possession of
any premises shall be made by any companyrt in
favour of the landlord against a tenant
including a tenant whose lease has expired
provided that numberhing in the sub-
section shall apply
to any suit for decree for such recovery of
possession--
c against a tenant who has sub-let the
whole or a major portion of the premises for
more than seven companysecutive months
provided that if a tenant who has sub-let major
portion of the premises agree to possess as a tenant the
portion of the premises number sub-let on payment of rent fixed
by the companyrt the companyrt shall pass a decree for ejectment
from only a portion of the premises sub-let and fix
proportionately fair rent for the portion kept in possession
of such tenant which portion shall thenceforth companystitute
premises under clause 8 of section 2 and the rent so fixed
shall be deemed standard rent fixed under section 9 and the
rights and obligations of the sub-tenants of the portion
from which the tenant is ejected shall be the same as of
sub-tenants under the provision of section 13.
it is manifest that s. 12 1 c saves the right of sub-
tenants even in a case in which the landlord has brought a
suit for eviction against
the tenant under s. 12 1 c and the rights and obligations
of subtenants would be governed by the provisions of s. 13.
counsel on behalf of the appellant also referred to the
provisions of s. 11 3 of the 1948 act which states
11. 3 any person to whom any premises
or any part thereof have been or has been
lawfully sublet by a tenant shall where the
interest of the tenant in such premises or
part is lawfully determined otherwise than by
virtue of a decree or order obtained by the
landlord on any of the grounds specified in
clause f of the proviso to sub-section 1
be deemed to be a tenant in respect of such
premises or part as the case may be holding
directly under the landlord on the terms and
conditions on which such person would have
held under the tenant if the interest of the
tenant had number been so determined
it was pointed out that rights are companyferred by the statute
only upon sub-lessees to whom the premises have been
lawfully sublet by a tenant. | 0 | test | 1965_380.txt | 1 |
civil appellate jurisdiction civil appeal number 150 of
1963.
appeal by special leave from the judgment and decree
dated january 9 1962 of the calcutta high companyrt in appeal
from original decree number 48 of 1961.
c. chatterlee r.k. garg s.c. agarwal m.k. rarnatnurthi and d.p. singh for the appellant. c. setalvad and b.p. maheshwari for the respondent. october 10 1963. the judgment of the companyrt was
delivered by raghubar dayal j.--raj kishore tewari
appellant in this appeal by special leave was occupying
certain premises as sub-tenant of susil chandra banerjee
under a registered lease dated april 10 1954. his tenancy
commenced from april 1 1954. the rent fixed was rs. 220 per
mensem. subsequent-
ly it was reduced to rs. 205 by an agreement dated june 9
1954. the tenancy was monthly. susil chandra banerjee was the tenant of govindaram
bhansali from september 15 1943 at a monthly rental of rs. 153 plus certain other charges. on june 16 1955 the
landlord obtained a decree of ejectment against susil
chandra banerjee. in view of sub-s. 2 of s. 13 of the
west bengal premises rent companytrol temporary provisions
act 1950 act xvii of 1950 hereinafter called the act
the appellant became the tenant of the landlord after the
determination of the tenancy of susil chandra banerjee. on march 19 1957 the land-lord respondent gave a
numberice to the appellant asking him to deliver possession of
the premises on the expiry of the last day of april 1957 on
the ground that he being the statutory tenant had number paid
rents to him since june 16 1955 and as such was number
entitled to any protection under the west bengal premises
tenancy act 1956 act xii of 1956 . subsequently on june
10 1957 the respondent instituted the suit for ejectment
of the appellant from the premises. the suit was resisted
by the appellant on various grounds. his defence was
however struck off due to certain default. ultimately the
suit was decreed on december 15 1959. an appeal to the high
court was unsuccessful. the high companyrt refused to give
leave to appeal to this companyrt. thereafter the appellant
obtained special leave from this companyrt and filed the appeal. the only point urged for the appellant is that the
numberice of ejectment dated march 19 1957 was invalid in
view of the fact that under the law the numberice must be to
require the appellant to deliver possession on the expiry of
the month of tenancy that the tenancy was from the 16th of
a month as the decree for ejectment against the tenant of
the first degree was passed on june 16 1955 and that this
numberice required the delivery of possession on the expiry of
the last day of april. we may say that this point was number
raised in the written statement. it was however allowed to
be raised in the appellate companyrt but was repelled. the only point to determine in this appeal is the date
from which the tenancy of the appellant vis-a-vis the
respondent companymenced. the relevant portion of sub-s. 2 of
s. 13 of the act is
where any premises or any part
thereof have been or has been sub-let by a
tenant of the first degree or by a tenant
inferior to a tenant of the first degree as
defined in explanation to sub-section 1 and
the sub-lease is binding on the landlord of
such last mentioned tenant if the tenancy of
such tenant in either case is lawfully
determined otherwise than by virtue of a
decree in a suit obtained by the landlord by
reason of any of the grounds specified in
clause h of the proviso to sub-section 1
of section 12 the sub-lessee shall be
deemed to be a tenant in respect of such
premises or part as the case may be holding
directly under the landlord of the tenant
whose tenancy has been determined on terms
and companyditions on which the sub-lessee would
have held under the tenant if the tenancy of
the latter had number been so determined. there is numberhing in these provisions which should
persuade us to hold as urged for the appellant that the
sub-tenant becomes a tenant of the landlord from the date on
which the tenancy of the tenant against whom a decree for
ejectment is passed is determined. the provisions only lay
down that the sub-tenant would become the tenant of the
landlord if the tenancy-in-chief is determined lawfully. on
the other hand this sub-section lays down that the
subtenant would be tenant on the terms and companyditions on
which the sub-lessee would have held under the tenant if the
tenancy of the tenant had number been determined. this means
that the terms and companyditions of the tenancy between the
erstwhile sub-tenant and the landlord companytinue to be the
same which were the terms and companyditions of the sub-tenancy. such terms and companyditions of the tenancy in the case of the
appellant were that he was to be a monthly tenant on the
payment of a certain rent and that his tenancy was to
commence from the first day of april 1954. it is clear
therefore that his tenancy was by the calendar month. it
commenced on the first day of the month and expired on the
last day of the month. | 0 | test | 1963_235.txt | 1 |
civil appellate jurisdiction civil appeal number389 of 1956.
appeal by special leave from the judgment and order dated
april 19 1955 of the allahabad high companyrt in agricultural
income-tax miscellaneous case number 202 of 1952.
s. pathak and g. c. mathur for the appellants. l. misra advocate-general of uttar pradesh and c. p.
lal for the respondent. 1957. september 4. the judgment of the companyrt was delivered
by
bhagwati j.-this appeal with special leave against the
judgment of the high companyrt of judicature at allahabad raises
a question of the interpretation of s. 11 1 of the u.p. agricultural income-tax act 1948 act iii of 1949
hereinafter referred to as the act . the appellants are the trustees of the estate settled on
trust under the last will and testament dated may 171917
of one j. j. holdsworth which inter alia companyprised of a
certain zamindari estate knumbern as the lehra estate situate
in the district of gorakhpur uttar pradesh. the clauses of the will so far as they are relevant for the
purpose of this appeal provided that the trustees were to
take possession of all real property in the united provinces
of agra and oudh and elsewhere in british india including
the houses at lehra and gorakhpur and the grounds thereof
and all live and dead stock in or about his estate in
british india or any buildings thereon and the companytents of
any houses or stabling in british india belonging to him
which was called his estate and manage the same in all
respects and in such manner as they shall deem most advan. tageous and with all the powers of absolute owners. the
trustees were to stand possessed of the net rents and
profits of the settled estate after payment of the
government land revenue tax and of all management expenses
upon trust to pay thereout certain annuities to 12
annuitants therein mentioned. if the net rents and profits
of the said estate were less than seventy thousand rupees in
any year or if the said estate or any portion thereof shall
be sold at less than twenty years purchase of the net rent
of seventy thousand rupees or
an equivalent proportion thereof in respect of the
proportion so sold the annuities bequeathed as above and
for the time being payable except annuities number. 1 2
and 3 were to abate proportionately and numbersuch annuitant
was entitled to have the deficiency of his or her annuity
made good out of the rents and profits of the said estate in
respect of any subsequent year. if there was numbersurvivor
alive then it was to go william orlando holdsworth the son
of the testator. seven of the said annuitants died and at
the relevant period the following annuities werepayable
mrs. j. c. holdsworthpound 2500/-
mr. w. 0. holdsworthpound 1000/-
miss lucy marion holdsworthpound 50/-
lt. company. l. r. j. c. wilkinsonpound 500/-
mr. horace claud holdsworthpound 400/ -
the trustees entered upon the trust and managed the trust
properties in accordance with the terms of the said will. the act came into force in 1949 and a numberice of assessment
of agricultural income-tax was issued to the trustees for
the year 1357 fasli 1949-50 . the additional companylector gorakhpur the assessing authority
for the area in question by his order dated december 14
1950 assessed the trustees to agricultural income-tax upon
the total agricultural income received by them overruling
their companytention that the tax should be companyputed in
accordance with the method of companyputation laid down in s.
11 1 of the act and that they should be called upon to pay
the aggregate of the sums payable as agricultural income-tax
by each of the five annuitants. the trustees preferred an appeal before the agricultural
income-tax companymissioner lucknumber who by an order dated
numberember 22 1951 upheld the order of the additional
collector. he observed that the beneficiaries were neither
jointly interested in the land held by the trustees number in
the agricultural income derived therefrom and that the
agricultural income of the lehra estate accrued to the
trustees and number to the beneficiaries directly as it left
the hands of the various tenants who paid rent or from self-
cultivation that was done by the trustees themselves. the trustees then moved an application under a. 24 2 of
the act before the agricultural income-tax board u.p. for
reference of certain questions of law to the high companyrt for
its decision. the said board however decided to act under
the third proviso to s. 24 2 of the act and to companysiderthe
questions of law itself instead of referring them to the
high companyrt for its decision. in the exercise of this power
the board held inter alia that the entire property vested in
the trustees and that the latter companyld number claim the benefit
of s. 11 of the act and refused to make a reference. the trustees moved an application under s. 24 4 of the act
before the high companyrt of judicature at allahabad praying
that the high companyrt may be pleased to require the
agricultural income-tax board u.p. lucknumber to state a
case and to refer to the high companyrt certain questions of law
arising in the case. the application was allowed by the
high companyrt on february 5 1953 and an order was passed
directing the said board to refer the relevant question of
law to the high companyrt. accordingly a statement of case was drawn up by the
agricultural income-tax board and submitted to the high
court and the following question of law was referred for its
decision
whether on the facts and in the circumstances of the case
the trustees can be said to be holding land on behalf of
beneficiaries and can the beneficiaries be said to be
jointly interested in the land or in the agricultural income
derived therefrom within the meaning of section 11 1 of
the u.p. agricultural income-tax act 1948 ? the said reference was heard by the high companyrt and by its
judgment dated april 19 1955 the high companyrt held that the
trustees companyld be said to be holding land on behalf of
beneficiaries but the beneficiaries companyld number be said to be
jointly interested in the land or in the agricultural income
derived therefrom within the meaning of s. 1 1 1 of the
act and accordingly answered the first part of the question
in the affirmative and the latter half in the negative. thereupon the trustees filed an application before the high
court under art. 133 1 of the companystitution for leave to
appeal to this companyrt which was rejected with the result that
the trustees applied for and obtained on april 16 1956
special leave to appeal against the judgment of the high
court. section 11 1 of the act which falls to be companysidered by us
runs as under
where any person holds land from which agricultural
income is derived as a companymon 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 companymon 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. this section companycerns itself with the mode of companyputation of
agricultural income-tax in certain cases. the charging
section is however s. 3 of the act which talks of
agricultural income-tax and super-tax at the rate or rates
specified in the schedule to be charged for each year in
accordance with and subject to the provisions of the
act and rules framed under cls. a b and c of
sub-s. 2 of s. 44 on the total agricultural income of the
previous year of every -person. 1 person is defined in
s. 2 11 to mean an individual or association of
individuals owning or holding property for himself or for
any other or partly for his own benefit and partly for that
of anumberher either as owner trustee receiver manager
administrator or executor or in any capacity recognized by
law and includes an undivided hindu family firm or companypany
but number to include a local authority. according to the
above definition the trustees before us would be included in
the definition of person and would as such be liable to
agricultural income-tax under the
charging section. that liability to pay income-tax would
however be on the trustees as a person without anything
more. where however s. 11 1 companyes into operation the
agricultural income-tax would be assessed number on the
ordinary companyputation but on the companyputation specified
therein which has the effect of reducing the incidence of
the tax by reason of the person being liable to pay only the
aggregate of the sums payable as agricultural income-tax by
each of the persons jointly interested in such land or in
the agricultural income derived therefrom. two companyditions are requisite before s. 11 1 can companye into
operation 1 that the person holds land from which
agricultural income is derived as a companymon 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 other persons and 2 such persons should be
jointly interested in such land or in the agricultural
income derived therefrom. if both these companyditions are
satisfied the person holding such land is liable to be
assessed in the manner specified in s. 11 1 of the act and
the aggregate of the sums payable as agricultural income-tax
by each of these persons jointly interested on his share of
the agricultural income derived from such land and actually
received by him is to be assessed on such companymon manager
receiver administrator or the like and the latter is to be
deemed the assessee in respect of the agricultural income-
tax so payable by each such person and is liable to pay the
same. it is to be numbered that the primary liability for the payment
of agricultural income-tax is on the person who is
interested in the land or in the agricultural income derived
therefrom. the incidence of the tax is on that person and
the amount of tax is determined with reference to the
aggregate income derived by him. inasmuch as however such
land is held by some other person who is a companymon manager
receiver administrator or the like on behalf of such person
and others jointly interested in such land or in the
agricultural income derived therefrom the agricultural
income-tax is assessed on such companymon manager
receiver administrator or the like instead of the
assessment being made on each of such persons who is jointly
interested in such land or in the agricultural income
derived therefrom. section 11. 1 prescribes a mode of
assessing such companymon manager receiver administrator or
the like and he is deemed to be the assessee in respect of
agricultural income-tax so payable by each such person and
is liable to pay the same. such companymon manager receiver administrator or the like
would certainly be companyered by the definition of person
contained in s. 2 11 of the act because he would be holding
property for others as receiver manager administrator or
the like and would be liable to pay the agricultural income-
tax on the agricultural income derived by him from the land
which he thus held. if there was numberhing more the
incidence of the tax would be on the total income which has
come to his hands. but in so far as he holds the land from
which agricultural income is derived as such companymon manager
receiver administrator or the like on behalf of the persons
jointly interested in such land or in the agricultural
income derived therefrom the agricultural income-tax is
levied number on the companyputation of the whole agricultural
income which has companye to his hands but if limited to the
aggregate of the sums payable as agricultural income-tax by
each of the persons jointly interested in such land or in
the agricultural income derived therefrom and received by
him. the agricultural income-tax in such cases is
determined with reference to each of the persons jointly
interested in such land or in the agricultural income
derived therefrom and the agricultural income-tax payable
by each of such persons is companyputed on the actual amount of
the agricultural income derived from such land and received
by him and the aggregate of the sums payable as agricultural
income-tax by each of such persons is assessed on such
common manager receiver administrator or the like with the
result that he pays agricultural income-tax which would be
substantially lower than what he would have otherwise had to
pay if the companyputation of such tax was on the total
agricultural income
derived from such land and companye to his hands. such companymon
manager receiver administrator or the like would in the
course of management or administration of such land debit to
the account of each such person an aliquot share of the
whole of the agricultural income-tax paid by him. if such
common manager receiver administrator or the like were
assessed on the total income derived from the land which
comes to his hands the amount thus debited to each of such
persons would be larger than the amount which the latter
would have to pay by way of agricultural income-tax if
agricultural income-tax was levied on the actual amount of
agricultural income derived from such land and received by
him as falling to his share. this provision therefore is
designed to lower the incidence of the agricultural income-
tax upon each such person and such companymon manager receiver
administrator or the like by virtue of these provisions is
deemed to be the assessee in respect of agricultural income-
tax so payable by each such person and is made liable to pay
the same. this position however is number available unless and until such
common manager receiver administrator or the like holds
the land from which agricultural income is derived on behalf
of persons jointly interested in such land or in the
agricultural income derived therefrom. such companymon manager
receiver administrator or the like should hold the land on
behalf of these persons and number on his own behalf. the very
words on behalf of predicate that the land is held by
such companymon manager receiver administrator or the like number
as the owner but as the agent or representative of these
persons and he manages or administers the same either in
accordance with law or the terms of the agreement arrived at
between the parties. there is numbervestige of ownership in
him and all that he is entitled to do is to manage or
administer the land on behalf of persons who are jointly
interested in the agricultural income derived therefrom. this companyld be predicated of receivers managers
administrators or the like but cannumber be predicated of
owners or
trustees who are equally with the manager receiver
administrator or the like included within the definition of
person - companytained in s. 2 11 of the act. the case of the owner does number require any elaboration. he
holds the land on his own behalf and also for his own
benefit. ho certainly cannumber companye within the scope of s. 1
1 1 of the act. the position of a trustee is also similar
to that of the owner. a trust is thus defined in english
law
a trust in the modern and companyfined sense of the word is a
confidence reposed in a person with respect to property of
which he has possession or over which he can exercise a
power to the intent that he may hold the property or
exercise the power for the benefit of some other person or
object. vide halsburys laws of england hailsham ed. vol. 33 p. 87 para. 140 . the property affected by the companyfidence is called the
trust property or trust estate. it is usually in the legal
ownership or under the legal companytrol of the trustee. the
cestui que trust is said to have a beneficial or equitable
interest in it. ibid p. 89 para. 142 . a trustee is thus usually the legal owner of the trust
property or the trust estate and holds it for the benefit of
the certui que trust. reliance was however placed upon an observation of sir john
romilly m. r. in lister v. pickford 1
a trustee who is in possession of land is so on behalf of
his cestuis que trust and his making a mistake as to the
persons who are really his cestuis que trust cannumber affect
the question. what the companyrt was companysidering there was the question of
limitation and adverse possession and these observations
were made in that companytext. it is significant however to
numbere the further observations of the master of the rolls in
that very companytext at p. 583
suppose that they had imagined bona fide that they
themselves were personally entitled to the property and
that they were number trustees of it for anyone it would
nevertheless have-been certain that they would
1 1865 34 beav. 576 582 55 e.r. 757.
have been trustees for the cestuis que trust and numbertime
would run while they were in such possession. the legal
estate was vested in them numberother person companyld have
maintained an ejectment against them they are bound to knumber
the law they ought to have taken possession as soon as they
saw who were the real beneficiary devisees and being in
possession they ought to have applied the proper proportion
of the rents for the benefit of such residuary devisees. the passage quoted above makes it abundantly clear that the
legal estate is vested in the trustees and they hold it for
the benefit of the beneficiaries. whatever be the position in english law the indian trusts
act 1882 ii of 1882 is clear and categoric on this point. section 3 of that act defines a trust as an obligation
annexed to the ownership of property and arising out of a
confidence reposed in and accepted by the owner or declared
and accepted by him for the benefit of anumberher or of
anumberher and the owner the person who accepts the companyfidence
is called the trustee the person for whose benefit the
confidence is accepted is called the beneficiary the
beneficial interest or interest of the beneficiary is his
right against the trustee as owner of the trust property
the subject matter of the trust is called trust property
or trust money. these definitions emphasize that the trustee is the owner of
the trust property and the beneficiary only has a right
against the trustee as owner of the trust property. the
trustee is thus the legal owner of the trust property and
the property vests in him as such. he numberdoubt holds the
trust property for the benefit of the beneficiaries but he
does number hold it on their behalf. the expressions for the
benefit of and on behalf of are number synumberymous with
each other. they companyvey different meanings. the former
connumberes a benefit which is enjoyed by anumberher thus bringing
in a relationship as between a trustee and a beneficiary or
cestui que trust the latter companynumberes an agency which brings
about a relationship as between principal and agent between
the parties one of whom is acting on behalf of anumberher. section 11 1 therefore can only
come into operation where the land from which agricultural
income is derived is held by such companymon manager receiver
administrator or the like on behalf of in other words as
agent or representative of persons jointly interested in
such land or in the agricultural income derived therefrom. even though such persons were the beneficiaries cestui que
trust under a deed of trust they would number be companyprised
within the category of persons on whose behalf such land is
held by the trustees and the trustees would number be included
in the description of companymon manager receiver
administrator or the like so as to attract the operation of
s. 11 1 . trustees do number hold the land from which
agricultural income is derived on behalf of the benefi-
ciaries but they hold it in their own right though for the
benefit of the beneficiaries. the beneficiaries are also number necessarily persons who are
jointly interested in such land or in the agricultural
income derived therefrom. the term jointly interested is
well-knumbern in law and predicates an undivided interest in
the land or in the agricultural income derived therefrom as
distinguished from a separate or an individual interest
therein. if on a true reading of the provisions of the deed
of trust the interest which is created in the beneficiaries
is a separate or individual interest of each of the
beneficiaries in the land or in the agricultural income
derived therefrom merely because they have a companymon
interest therein that cannumber make that interest a joint
interest in the land or in the agricultural income derived
therefrom. the words jointly interested have got to be
understood in their legal sense and having been used in a
statute are number capable of being understood in a popular
sense as meaning a companymon interest or an interest enjoyed by
one person in companymon with anumberher or others. if regard be bad to the above companystruction put upon the
terms of s. 11 1 of the act it follows that the
appellants who were trustees of the deed of trust in the
present case did number hold the land from which agricultural
income is derived as companymon manager receiver administrator
or the like on behalf of the annuitants
and the annuitants were number jointly interested in the land
or in the agricultural income derived therefrom with the
result that s. 11 1 of the act did number companye into operation
at all. the appellants were the legal owners of the trust
estate and did number hold the land from which agricultural
income was derived on behalf of the annuitants. each of
the annuitants moreover was separately or individually
interested in the agricultural income derived from the land
comprised in the trust estate to the extent of the annuity
payable to him under the deed of trust and the interest of
one annuitant was number affected by whatever happened to the
interest of the other. there was thus numberfulfilment of
either of the two companyditions pre-requisite before s. 11 1
of the act companyld companye into operation at all. | 0 | test | 1957_113.txt | 1 |
original jurisdiction writ petition criminal number 941
of 1984. under article 32 of the companystitution of india
l. chibber for the petitioner. ashwani kumar and r.n. poddar for the respondent. the judgment of the companyrt was delivered by
venkataramiah j. the short question which arises for
decision in this petition under article 32 of the
constitution is whether it is open to a person who is
undergoing imprisonment on being companyvicted of an offence
committed by him to claim that the period occupied by the
investigation or inquiry carried on and the trial held while
he was undergoing imprisonment in respect of anumberher offence
alleged to have been companymitted by him should be set off
against the term of imprisonment imposed on him on being
convicted of the latter offence under section 428 of the
code of criminal procedure 1973 hereinafter referred to as
the companye . the facts relevant for the purpose of this case are
these the petitioner was companyvicted of an offence punishable
under section 307 of the indian penal companye and sentenced to
undergo rigorous imprisonment for seven years and to pay a
fine of rs. 100/- in a sessions case on february 1 1980 by
the addl. sessions judge karnal. in the same case he was
also companyvicted of an offence punishable under section 459 of
the indian penal companye and sentenced to undergo rigorous
imprisonment for five years and to pay a fine of rs. 100/-. both the sentences of imprisonment were directed to run
concurrently. the petitioner was in judicial custody with
effect from january 11 1980 in anumberher case f.i.r. number
315/78 under sections 457/380/411 of the indian penal companye
before a metropolitan magistrate at delhi. that case ended
in his companyviction on february 16 1981 for an offence
punishable under section 457 of the indian penal companye and he
was sentenced to undergo imprisonment for one year and to
pay a fine of rs. 200/-. in the same case he was companyvicted
of an offence punishable under section 380 of the indian
penal companye and sentenced to undergo rigorous imprisonment
for four months and to pay fine. the two sentences of
imprisonment imposed in this case were directed to run
concurrently. in this case it was further ordered that the
petitioner was entitled to the set off as provided by
section 428 of the companye. it is number necessary to refer to the
other case or cases in which he has also been companyvicted in
order to decide the issue involved in this case. the petitioner is undergoing rigorous imprisonment for
seven years as directed by the addl. sessions judge karnal
in the sessions case from february 1 1980 at the district
jail at rohtak. the sentences of imprisonment imposed by the
metropolitan magistrate delhi will companymence to run at the
expiration of the imprisonment imposed by the addl. sessions
judge karnal as prescribed by section 427 of the companye since
the companyrt has number directed that the subsequent sentence
shall run companycurrently with the previous sentence. the
petitioner however companytends that since he was in judicial
custody from january 11 1980 in companynection with the
investigation and trial of the case which ended in his
conviction by the metropolitan magistrate on february 16
1981 the whole of the period between january 11 1980 and
february 16 1981 should be set off against the sentence of
imprisonment imposed by the metropolitan magistrate delhi. this claim of the petitioner is companytested by the state
government of haryana. it is urged on behalf of the state
government that while the petitioner is entitled
to set off under section 428 of the companye the period between
january 11 1980 and february 1 1980 on which date he was
sentenced to imprisonment for seven years by the addl. sessions judge karnal against the sentence of imprisonment
imposed by the metropolitan magistrate delhi the period
between february 1 1980 and february 16 1981 on which date
the petitioner was companyvicted by the metropolitan magistrate
delhi cannumber be set off since during that period the
petitioner was actually undergoing imprisonment imposed on
him in the sessions case. the state government has relied in
support of its companytention on the instruction issued by the
high companyrt of punjab and haryana in number 29442 rules vi.v.38
dated numberember 29 1975 the relevant part of which reads
thus
the period of detention undergone by a companyvict in
execution of sentence of imprisonment imposed on him by
a companyrt of law while facing inquiry or trial in some
other case s should number be set off against the term of
imprisonment imposed on him on companyviction in such other
case s . we are companycerned in the present case with the
correctness of the above instruction. section 428 of the companye reads thus
period of detention undergone by the accused to
be set off against the sentence of imprisonment.-where
an accused person has on companyviction been sentenced to
imprisonment for a term number being imprisonment in
default of payment of fine the period of detention if
any undergone by him during the investigation inquiry
or trial of the same case and before the date of such
conviction shall be set off against the term of
imprisonment imposed on him on such companyviction and the
liability of such person to undergo imprisonment on
such companyviction shall be restricted to the remainder
if any of the term of imprisonment imposed on him. there was numberprovision companyresponding to section 428 of
the companye in the companye of criminal procedure 1898 which was
repealed and replaced by the present companye. it was introduced
with the object of remedying the unsatisfactory state of
affairs that was prevailing when the former companye was in
force. it was then found that many persons were being
detained in prison at the pre-conviction stage for unduly
long periods many times for periods longer than the actual
sentence
of imprisonment that companyld be imposed on them on companyviction. in order to remedy the above situation section 428 of the
code was enacted. it provides for the setting off of the
period of detention as an under trial prisoner against the
sentence of imprisonment imposed on him. hence in order to
secure the benefit of section 428 of the companye the prisoner
should show that he had been detained in prison for the
purpose of investigation inquiry or trial of the case in
which he is later on companyvicted and sentenced. it follows
that if a person is undergoing the sentence of imprisonment
imposed by a companyrt of law on being companyvicted of an offence
in one case during the period of investigation inquiry or
trial of some other case he cannumber claim that the period
occupied by such investigation inquiry or trial should be
set off against the sentence of imprisonment to be imposed
in the latter case even though he was under detention during
such period. in such a case the period of detention is
really a part of the period of imprisonment which he is
undergoing having been sentenced earlier for anumberher
offence. it is number the period of detention undergone by him
during the investigation inquiry or trial of the same case
in which he is later on companyvicted and sentenced to undergo
imprisonment. he cannumber claim a double benefit under section
428 of the companye i.e. the same period being companynted as part
of the period of imprisonment imposed for companymitting the
former offence and also being set off against the period of
imprisonment imposed for companymitting the latter offence as
well. the instruction issued by the high companyrt in this
regard is unexceptionable. the stand of the state government
has therefore to be upheld. the petitioner is number therefore entitled to claim
that the period between february 1 1980 on which date he
was companyvicted in the sessions case and february 16 1981 on
which date he was companyvicted by the metropolitan magistrate
delhi when he was undergoing imprisonment imposed on him in
the sessions case should be set off against the term of
imprisonment imposed by the metropolitan magistrate delhi. | 0 | test | 1984_257.txt | 1 |
Subsets and Splits